inequality‘There’s nothing in my dreams 
Just some ugly memories’ 

Only 3-months ago the Tories were celebrating a narrow byelection victory Uxbridge. Sunak told us that the next general election was ‘not a done deal’. 

Uxbridge was, as many thought, a false dawn, the discontent in the outer London seat over the expansion of the city’s Ulez. 

Last Thursday saw normal service resumed as Labour won Tamworth, a leave-voting Tory stronghold, with 23.9% swing. Mid Bedfordshire was also won by Labour with a 20.5% swing; Labour overtured a Conservative majority of 24,664, the biggest in postwar byelection history. 

Conservative ministers spent Friday spinning the yarn that all this was typical end-of-term government blues, involving habitual Tory voters staying at home rather than a mass of enthusiasm for Keir Starmer’s party. 

In fairness these continuing byelection humiliations do appear based more on the party alienating itself rather than enthusiasm for Labour. In Tamworth, the Labour vote rose by less than a thousand. They won because the Tory vote collapsed by more than 20,000. In Mid-Beds, the Labour vote was slightly down on the 2019 election. They won because the Conservative vote imploded by more than 26,000. 

The obvious point is that many Tory voters aren’t turning out because they are fed-up with the government. The other factor, which is highly scary for the Tories if it also happens at the general election, is that their vote couldn’t be motivated to turn out to stop Labour.  

‘continuing byelection humiliations do appear based more on the party alienating itself rather than enthusiasm for Labour’

In truth, neither result could be deemed an ‘upset’ or ‘shock’. The party has run out of stream and ideas, it muddles from crisis-to-crisis, and is profoundly unpopular. They have lost eight byelections since the summer of 2021, just as they did in the 1990s at the end of another long period of Tory rule.  

Sunak is beset by problems, in addition to likely missing all of the 5-pledges that he made at the beginning of the year: 

  • The NHS waiting lists are growing not falling, 
  • More schools have been found suffering from crumbling concrete, 
  • Prisons in England and Wales are so overcrowded that judges have been told to delay the sentencing of people convicted of serious crimes and to spare lesser offenders from jail time. 

The PM’s attempt to relaunch the government and rebrand himself at the Tory conference in Manchester has flopped. Presenting himself as ‘the change‘ that Britain needs after what he called 30 years of failure succeeded only in aggravating every living former Conservative PM from John Major onwards, and was largely ignored by the electorate. 

His decision to turn further right on culture war issues and away from environmental policies, announcing a watering down of green targets, all predicated on what he thought he saw in Uxbridge. Since then ministers have been spreading speeches with conspiracy theories about 15-minutes cities, and imaginary Labour plans to tax meat, and attacks on transgender issues. 

This strategy was a gamble, risking further alienating more liberal-minded Conservative supporters in so-called blue wall commuter belt seats, in a desperate bid shore up the base and prevent a drift towards the Nigel Farage-founded Reform UK. 

The votes Reform UK received was slightly in excess of Labour’s majority. In Tamworth, Reform UK held its deposit, winning 5.4% of the vote to come third. The Conservatives’ 2019 campaign was helped by Farage not standing candidates in any Tory-held seats, a Brexit-based truce that won’t be repeated. 

Internally, the Tories looks more fragmented than ever. The right holds sway, demanding immediate tax cuts because that’s the Tory way, or so they tell us. 

They might be accurate if they said ‘looking after their own’, as Sunak is rumoured to be considering a tax cut for the 5-million highest earners and reducing stamp duty in an attempt to ease the pressure on his leadership after two historic byelection defeats. 

‘Sunak is rumoured to be considering a tax cut for the 5-million highest earners and reducing stamp duty in an attempt to ease the pressure on his leadership’

How will this be funded? In its editorial the Telegraph wrote; the government must ‘restrict‘ the benefits bill and our ‘out-of-control welfare state.’ 

In next month’s autumn statement the chancellor will set out the benefit levels for next April, which traditionally rise by September’s inflation rate. However, there’s a growing expectation that benefits levels will either remain static a rise be less than inflation, I.E., a real-terms cut. Unemployment benefits have already fallen by 9% since 2010, meaning that we already have the lowest unemployment benefit in western Europe, paying just 17% of previous in-work income. France and Germany pay 66%, while Belgium pays 90%. 

If this is the way to fund tax cuts it looks like another blunder. The annual British Social Attitudes survey has asked the same questions for 40 years: ‘Most people who get social security don’t really deserve any help’, only 19% now agree, in 2005 the number was 40%. 

The IFS calculates that the Treasury saves £1.4bn for every 1% benefits fall below inflation. This windfall provided by low-earning food-bank users, is the perfect way to cut taxes for the best off by raising the threshold for top-rate taxpayers. Levelling-up is so last year, darling. Phoebe Philo’s first own label collection shows next week, how else can hard-pressed millionaires afford that! 

The Times reports that the Conservatives are also planning to either reduce stamp duty or abolish IHT as part of next years’ general election manifesto, provided the economy is stronger. 

A senior Tory told the Times that reducing stamp duty would be ‘aspirational‘ and improve the economy in addition to attracting middle-class voters who had left the party. 

Really, this sums up Sunak; blithely clueless. We have the greatest cost-of-living crisis in memory; kids going hungry, people can’t afford heating, the bank of choice is the food bank, and he wants to cut tax for the highest earners. It simply beggars belief. 

‘Really, this sums up Sunak; blithely clueless’

As for stamp duty; whilst many are struggling with the mortgage they have due to BoE raising interest rates, he wants to make it easier to move house!  

To his credit, super-rich Rishi is a family man. Not only did he let his wife exploit a tax loophole which meant she hadn’t paid tax for years, as chancellor his controversial fund to support startups during the Covid pandemic invested nearly £2m in companies linked to her. 

Carousel Ventures, a company part-owned by Akshata Murty’s venture capital firm, received an investment of £250,000 from the Future Fund to help fund its ownership of a luxury underwear business called Heist Studios. 

This is the fourth business linked to Murty that has received an investment from the fund. As well as Carousel Ventures, Murty also had shareholdings in New Craftsmen, which received a £250,000 Future Fund loan; Mrs Wordsmith, which got £1.3m from the fund; and Digme Fitness, which received an unknown amount over £125,000, according to the terms of the fund. All three businesses went into administration. 

None of Murty’s investments that benefited from the Future Fund appear publicly on Sunak’s register of ministerial interests.  

Whilst the elite feather their own nests, a study by The Urban Big Data Centre (UBDC) shows how the social fabric of the UK’s biggest cities is being transformed by sky-high rents and cuts to housing benefits as thousands of low-income private renters are pushed out of central areas, accelerating the ‘suburbanisation’ of poverty. 

The trend – driven also by the gentrification of once largely working-class neighbourhoods and the selloff of social homes – is excluding poorer people from inner cities and deepening divisions between rich and poor. 

‘excluding poorer people from inner cities and deepening divisions between rich and poor’

Low-income private renters, who a decade ago might have lived in city centres, are increasingly being displaced to a shrinking pool of affordable homes on the urban periphery and beyond, often with poorer access to public transport, jobs and public services. 

The phenomenon in part reflects the growth of private landlords in the UK over the past 30-yrs. In 1991 only 10% of households lived in privately rented housing, now it is 20%, many of which are families. More than 30% of children in poverty live in privately rented homes. 

According to the study, 10-yrs ago C.20% of UK privately rented homes were affordable for households in receipt of housing benefits. This fell to 9% by 2020. Housing benefit rates have been frozen since then, making inner cities, where private rents have risen fastest, even less accessible to poorer people. 

To summarise this part of today’s article, Rishi fiddles while Britain burns. It’s that simple! I don’t think he’s clueless, I just don’t believe that he cares. 

Before signing off, I will turn to the crisis in the Middle East. As before I am not taking sides merely trying to make sense of what I read. 

As President Biden said, Israel needs to learn from the mistakes America made post-9/11. Rather than just hunting down the culprits, al-Qaida, they invaded the country that harboured them, Afghanistan, and one that had nothing to do with it, Iraq. The US ‘war on terror’ cost hundreds of thousands of lives, brought al-Qaida into places where it did not previously exist, including Iraq, and gave birth to new and even darker terror, the Islamic State. 

‘Rishi fiddles while Britain burns. It’s that simple! I don’t think he’s clueless, I just don’t believe that he cares’

Israel appears to be making the same mistakes. They need to ensure that Hamas is stripped of the capacity to ever repeat what it did two weeks ago; a war with Hamas alone, not the people of Gaza. Blockades, denying its citizens food, water and medicine, inflicts pain on the entire population. 

Aside from falling foul of international law, it also runs counter to Israel’s own interests by weakening overseas support, and helping to tighten Hamas’s grip over Gaza.  

It feels like the Israelis are walking into the trap that Hamas had so carefully set for them when they perpetrated the sabbath bloodbath on 7th October. 

Attacking enclosed areas such as cities is historically difficult, with defenders utilising tunnels and back streets that amount to one giant booby trap. Israel will likely suffer heavy casualties as well as  inflicting them; both outcomes will suit Hamas. A heavy Palestinian death toll is an asset in the propaganda war. While Israeli casualties will support Hamas’s claim to be the true defender of Palestine rather than their secular nationalists rivals, Fatah. 

Hamas, and its Iranian backers want a long, bloody war, one that will derail recent moves towards ‘normalisation‘ of relations between Israel and several of its neighbours, most crucially Saudi Arabia, yearn for. Even if the infrastructure of Hamas is destroyed, the hatred that powers it will grow in the hearts of a new, bereaved generation of Palestinians 

Whist the focus is on Gaza, people are losing sight of what is happening elsewhere, E.G., the West Bank.   

Over the last year alone 110 sq km (42 sq miles) has been annexed by Israeli settlers. 

‘This looks like Viet Nam all over again; General Vo Nguyen Giap the VC commander had a simple strategy, as the underdog he had to make the war unwinnable for the other side’

Men from Angels of Peace are part of a broad, violent and successful political project to expand Israeli control of the West Bank that has accelerated, say activists, since the 7 October attacks by Hamas. 

Taking land by building homes and communities is slow and expensive. Taking control of large swathes of dry hills needed to feed a herd of animals, by intimidating and isolating Palestinian shepherd, is much more efficient. 

This has been the most successful land-grab strategy since 1967,’ said Yehuda Shaul, a prominent activist who is director of the Israeli Center for Public Affairs thinktank, and a founder of Breaking the Silence, an NGO that exposes military abuses in occupied areas. 

About 450,000 Israelis have settled in what is now Area C of the West Bank – the area under full Israeli military and political control – since the occupation of the Palestinian territories began in 1967, some motivated by religious or nationalistic reasons, and others by the cheaper cost of living. 

The United Nations office for the coordination of humanitarian affairs (OCHA) said: ‘A total of 1,105 people from 28 communities – about 12% of their population – have been displaced from their places of residence since 2022, citing settler violence and the prevention of access to grazing land by settlers as the primary reason.’  

In a climate of fear for Palestinians – the Israeli human rights group B’Tselem said soldiers and settlers have killed 62 Palestinians over 10 days – the displacement of herders has sped up, say activists. 

There are humanitarian tragedies wherever you turn, both sides aren’t covering themselves in glory. Hamas, and the Iranian are playing a long game, seeking to destabilise the situation and isolate Israel, who, in my opinion are helping them achieve their goal. 

This looks like Viet Nam all over again; General Vo Nguyen Giap the VC commander had a simple strategy, as the underdog he had to make the war unwinnable for the other side. 

‘They pray to Allah and they pray to the Lord 
And mostly they pray about love and war’ 

‘And I think to myself, what a wonderful world….’ Really?

Rousing stuff from Philip, but what a sobering backdrop; he says it better than I could:

This week we continue with the situation in the middle east. As I will continue to say, this column does not, and will not take sides. Instead I will try to disseminate what I see and make sense of it. I think most people will agree that Hamas needs to be emasculated, to ensure that I can never wage war again.

But, in doing so, Israel needs to be careful how it treats the “civilian” population, in order not to create the next generation of Hamas. Which, when you read the following, suggests that Israel isn’t getting the message

The emphasis is on damage, not accuracy,” declared the Israel Defence Forces (IDF). “Gaza will eventually turn into a city of tents,” said one IDF official, adding, “There will be no buildings.” Israel’s economy minister, Nir Barkat, told ABC News that hostages and civilian casualties will be secondary to destroying Hamas, “even if takes a year”.

Domestically, the Tories seem to be plumbing new depths.

After two  more crushing defeats in “safe” seats, this more and more has the feel of the last days in the bunker. Instead of a stand and die policy the regime is proposing to starve the poor and use the proceeds to further enhance the wealthy.

The proposed freeze or below inflation increase in benefits to fund tax cuts for higher rate payers is beyond cynical, it’s cruel.

Sunak is clearly intelligent and can see the problems, therefore I can only assume he doesn’t care. If he doesn’t know, he should read The Joseph Rowntree Foundation report which shows that C.3.8m people experienced destitution in the UK last year.

This has historic parallels with Chile under General Pinochet when “the Chicago Boys” experimented with monetarism

Their pro-business policies had an overwhelming impact that can be seen today in nearly every area of social life: education, health care, the pension system, and more.

Did it work? Well, yes and no, or rather yes, if you were already wealthy.

Chile’s economic growth has been exceptional: its GDP leaped from $14 billion in 1977 to $247 billion in 2017.

However, the country’s economic inequality is frightening: 28.1 percent of the total income is concentrated among 1 percent of the population, making Chile one of the world’s most unequal nations.

It should also be noted that Pinochet had his own way of dealing with the “opposition”, persecuting leftists, socialists, and political critics, resulting in the executions of 1,200 to 3,200 people, the internment of as many as 80,000 people, and the torture of tens of thousands.

Destitution, poverty and the “the Chicago Boys” will be discussed in greater depth in the next column.

Lyrically, we start with Iggy and the Stooges “Gimme Danger” from the 1973 Album “Raw Power”, often referred to as the first punk record.

We play out with Neil Young’s “Love and War”; the song, recorded in2010, addresses the troubles in Afghanistan and Iraq as Young sings, “Daddy won’t ever come home“, to a child who lost his father in the conflict.


Philip Gilbert 2Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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