Heroes: The Colour Purple 

 

‘I never meant to cause you any sorrow 

I never meant to cause you any pain’ 

 
When you cross red and blue you get purple, and with Chancellor Hunt abolishing non-dom tax status, and Labour trying to be moderate Tories, it’s all purple now. 

Rather than commenting on the budget, we will talk inequality.     

Analysis by the Joseph Rowntree Foundation (‘JRF’), which included an opinion poll of C. 5,000 people across Britain carried out by YouGov, found that C. 75% were ‘very worried‘ or ‘fairly worried‘ about funding for the NHS and other public services, compared with less than half who were concerned about tax cuts. 

The general secretary of Prospect, Mike Clancy, said: ‘Every time this government finds itself in a difficult spot, it conjures up a phantom villain to pin its failings on. But after 14 years in charge, blaming hardworking civil servants and supposed wokery simply won’t wash with voters.’ 

Former Tory chancellor Ken Clarke seems to have a better grip on reality and the government’s plans to buy votes with tax cuts. He told Times Radio the public wanted to be reassured that there was a prospect of ‘getting back to the kind of growth with low inflation that steadily improves our public services and daily way of life‘. 

The reality is stark; the JRF said households’ average post-tax earnings at the start of 2024 were as much as £1,900 a year lower than at the start of 2021. Working households could benefit from rising wages and lower inflation as the UK economy recovers from recession, but progress would be limited and unable to overcome this earlier shortfall. 
 

‘average post-tax earnings at the start of 2024 were as much as £1,900 a year lower than at the start of 2021’

 
JRF’s chief economist, Alfie Stirling, said the prospect of a ‘second lost decade‘ could follow 14 years of stalled progress to raise living standards, including the failure to increase average workers’ pay substantially above pre-2008 levels after inflation was taken into account. 

A large part of the problem are man-made; our fiscal rules which are presented as being absolute, whereas,  they are of our own making. In addition, they are totally arbitrary; we have had seven sets of fiscal rules since 2010. These rules, intended rein in politicians who might be tempted to abuse government spending programmes for political or ideological ends, have led only to politicians spending too little. 

This is why our public services and infrastructure are so under-financed. I had hoped that Labour would break this mould, but the shadow chancellor, Rachel Reeves, appears to be equally unimaginative, if  ditching the party’s flagship £28bn green investment pledge is any guide. 

Reeves seems desperate to avoid accusations of profligacy, and appears to have adopted the Tories’ gloomy debt pledge, wanting debt as a percentage of national income to be forecast to fall in 5-years. In practice this rule is so vague it can be met without debt ever actually falling as a share of GDP. 

To ensure the health of the economy, there must be a better way of deciding how much the government should be borrowing and spending. 
 

‘Rachel Reeves, appears to be equally unimaginative, if  ditching the party’s flagship £28bn green investment pledge is any guide’

 
Whilst Andy Haldane, the Bank of England’s former chief economist, and Lord O’Neill, who served in George Osborne’s Treasury, argue that the current rules need a shake-up, Tim Leunig, who advised Rishi Sunak as chancellor, suggests replacing fiscal rules with a 250-word OBR-approved summary of Britain’s economic position at the budget, and the effect of the government’s proposals on that position. He argues that a chancellor ‘who spent more on proven investments, whether that is capital, or improving education, or getting people back into work‘ could then defend them on the basis that they would benefit the economy.  

What is certain is that doing nothing isn’t an option. We have already had one recession, to have second would be catastrophic.  

A survey of 2,018 people aged 16 and over in England, by Healthwatch England, found that poorer people find it much harder to access NHS care than the well-off:  
 

• 42% of those who described their financial situation as ‘really struggling’ said they had trouble getting to see a GP, double the 21% of those who were ‘very comfortable’. 
• 38% of the worst-off found it hard to get NHS dental care, compared with 20% of the better-off. 
• 28% of the very poor had difficulty accessing mental health treatment, whereas only 9% of the very comfortable did so. 

 

• 26% of poorer people said they found it hard to obtain A&E care compared with 19% of the well-off. 

 
Healthwatch also found a socioeconomic divide in people’s experiences of NHS care:  
 

• 21% of the ‘really struggling’ felt they were not listened to by the last health professional they saw, whereas just 7% of the better-off said that. 
• 18% of poorer felt the person they last saw did not involve them in decisions about their care, compared to 9% of richer people (9%)  

 
The links between poverty and ill-health are well known, and the findings have prompted fears that the NHS is too often a ‘two-tier service’ with access closely related to wealth, and calls for it to do more to make services more accessible to everyone. 

A Department of Health and Social Care spokesperson said: ‘The government is working to ensure everyone across the country can access the highest quality healthcare when and where they need it.’ 

They cited the recent dental recovery plan’s aim to create an extra 2.5m appointments a year, a growing number of GP appointments and increasing use of pharmacists to diagnose and treat ailments as evidence of the government’s commitment to improve patients’ access. 

In addition to the rich-poor divide there is the divide between London and the SE and the rest. 
 

‘In addition to the rich-poor divide there is the divide between London and the SE and the rest’

 
The accountancy firm EY forecasts that London and the SE will grow by 2% and 2.1%, respectively – above every other region, and significantly stronger than in the north-east of England, Wales and Scotland where growth would average closer to 1.5%. 

Overall it said economic growth across the UK would average 1.9% a year between 2024 and 2027 – spurred by lower inflation, a strong jobs market and the prospect of interest rate cuts from the Bank of England. 

Despite levelling up efforts, it said London and the south-east would increase their overall contribution to the UK economy from 39% in 2023 to 40% in 2027, having already increased from 36% in 2005. 

Rohan Malik, UK and Ireland managing partner for government and infrastructure at EY, said: ‘The UK’s longstanding geographic inequalities mean that many of the country’s high-growth sectors have coalesced around a select few locations, and these areas will reap the biggest rewards as the country returns to prosperity in the coming years‘. 

I had always though that ‘levelling up’ was aimed primarily at the northern towns and cities scarred by deindustrialisation, however, this week’s budget suggested the government’s definition now stretches to Buckinghamshire, Canary Wharf and Cambridge. 

In the section of his speech on ‘historic underinvestment in our nations and regions‘, Hunt hailed new devolution deals for Surrey and Buckinghamshire. 

He also promised £242m that he said would build up to 8,000 homes in Barking Riverside and Canary Wharf – as well as attracting life sciences firms to the east London financial district. 

Totally contradicting the chancellor, EY warned that a lack of targeted regional support and concentration of high-value economic activities in some parts of the UK – such as professional services and technology – meant the recovery was likely to exacerbate regional divisions. They predict that three of the five slowest growing areas from 2024 to 2027 will be in the north of England, with Aberdeen (0.8% annual average growth), Blackpool (1.1%), Warrington (1.3%), Cumberland (1.3%) and Dundee (1.4%) trailing the rest of the UK. 
 

‘EY expects Reading to overtake Manchester as the UK’s fastest-growing location’

 
EY expects Reading to overtake Manchester as the UK’s fastest-growing location, with annual growth of 2.5% between 2024 and 2027 fuelled by the town’s position on the M4 corridor enabling it to benefit from an expansion in the technology sector. 

The wider Thames Valley and locations including Windsor and Maidenhead would also benefit from an expansion in big tech. Manchester and Bristol were expected to follow with average growth of 2.2% each over the next three years. 

In addition, the Institute for Public Policy Research North’s annual State of the North reports that wealth inequality between the north and south of England will continue to grow, with the gap reaching £228,800 per head by 2030. The report also states that although the average wealth of people in England has grown from about £226,300 in 2010 to £290,800 by 2020, inequalities between regions have almost doubled in the same period. 

Not surprisingly, the highest level of wealth exists in the SE, with average wealth per head being £415,200 – around £195,400 more than the north’s £219,750. 

Wealth inequality continues to rise with  the richest 10% holding C.50% of all wealth. However, inter-regional differences are evident as the relative levels of wealth inequality are higher in areas in the north than in the SE. 
 

‘Wealth inequality continues to rise with  the richest 10% holding C.50% of all wealth’

 
If current trends continue, the IPPR forecasts a greater unemployment gap – with London’s employment rate set to be 66% in 2030, compared with 56% in the north-east. 

Inequality has been one of the key Tory achievements since 1979, therefore it should come as no surprise that people have had enough. An Ipsos poll found that support for Tories has reached the lowest level since it started this regular poll tracker in 1978. The state of play is: 

‘Labour 47% (-2 pts), Conservatives 20% (-7), Liberal Democrats 9% (+2), Green 8% (+1), Reform UK 8% (+4), Other 7% (+2).’ 

These numbers are reflected in the growing discontent expressed by voters in the so-called ‘Blue Wall’. 

Prof Will Jennings, from Southampton University, says: ‘That sort of M3 corridor – call it the blue wall, call it just the south of England – is home to the sorts of demographic that are increasingly challenging for the Conservatives. 

‘They used to be areas that were affluent, car-owning, employed. Those demographics, through the period of political change we’ve seen over the last five years, since Brexit, have drifted away from the Conservatives. It doesn’t mean all these seats are going to go red and orange but it does mean that the Conservatives are going to have some real fights on their hands.’ 
 

‘That sort of M3 corridor – call it the blue wall, call it just the south of England – is home to the sorts of demographic that are increasingly challenging for the Conservatives’

 
Al Pinkerton, the LibDem candidate in the levelling up secretary, Michael Gove’s constituency of Surrey Heath says he continues receiving complaints about the state of the NHS, the cost of living, sewage in the rivers, and a broader mistrust of politicians, with some people saying they will back the right-wing Reform party. 

‘People used to say about Surrey, it was the old joke, stick a blue rosette on – insert farmyard animal here – and it would win. It’s just not the case. Even though we have fought hard for that change, it’s happened remarkably quickly.’ 

This was evident last may when the LibDems won control on Surrey Heath borough council from the Tories after a series of risky investments blew a hole in the finances. 
 

‘the first parliament in modern history to see a fall in living standards’

 
The following is a suitable epitaph for the 14-yrs of Tory misrule;  

Research by the Resolution Foundation thinktank, found that household incomes are on course to fall for the first time over the course of a parliament despite this week’s budget. 

Fourteen years of falling real wages, the foundation said that after adjusting for inflation, household disposable incomes were poised to fall by 0.9% between 2019 and the end of 2024 – ‘the first parliament in modern history to see a fall in living standards’. 
 

‘We want your homes, 

We want your lives, 

We want the things you won’t allow us‘ 

 
Eschewing the temptation to express his antipathy towards the budget, Philip returns us to the well-trodden and

This week’s budget looks as if it is proof of the quotes, “Insanity is said to be doing the same thing over and over again and expecting different results.

Firstly, there is the “unfunded” element, which, I assume, is in tribute to “Loopy” Liz and Crazy Kwarteng. Or, maybe, Jezza has one-eye on Loopy Liz returning as leader as needing a chancellor.

Then, there are his continued arguments that an economy can cut its way to growth, which he continues to insist is working when, clearly, it is not.

The audience for his austerity-infused oration in parliament was behind him, as she sought to win them over by reducing NIC by 2p, and playing to the gallery by quoting a discredited right-wing economic theory – the Laffer curve – that says lower tax rates for the rich will lead to higher tax revenues.

As a result, his policy of freezing tax thresholds quickly exposed the intention of raising taxes to their highest level since 1948. Rather than squeezing the wealthy to pay for tax cuts, the 7-million people who will pay tax for the first time, or join the higher tax band, will be impacted. At the same time, cuts are being made to many frontline services. The Joseph Rowntree Foundation said real-terms spending on non-NHS services will be £17bn lower by the end of the decade.

If we think back to the 2019 election campaign, the Tories claimed to be the party of the NHS, so much for that with 7.6 million patients waiting for hospital treatment. As the article demonstrates, Levelling-up has just been a bad joke, reduced to targeting the wealthy home counties and the citadel of high finance, Canary Wharf.

The Tories are spent; factionalised and out-of-touch. Even their pretence at economic competence has been fatally exposed, as GDP per capita has grown slowly at a time when there are ever louder calls to tackle poverty, deal with an ageing society and invest in a green transition.

What we have is an unholy mess, a government borrowing more and spending less. The best Hunt can offer is hoping to revive the economy by reducing public investment by £20bn more than he planned last November.

There is no attempt at investment, let alone investment growth which could raise productivity and living standards. Remember Reagan’s question;  “Are you better off now than you were four years ago?” For the vast majority the answer is a resounding NO.

At best, all Hunt served up was stealing Labour’s policies on dentistry, the cost of living and taxing non-doms, and laying traps for Labour in an attempt to cast them as profligate.

The best I can say is this will be the last Tory budget for a number of years.

Musically, we start with Prince and “Purple Rain”, and play-out with “Mis-shapes” by Pulp

@coldwarsteve
 

 

Philip 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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