HP Source: Are we approaching the end of an era?

 

We Don’t Need This Fascist Groove Thing, 22^nd October: Are we approaching the end of an era

 

 

‘Have I done something wrong?

What’s wrong’s the wrong that’s always in wrong….’

 

As readers will know from the continuous themes in these articles, I believe the country is in a dark place, indeed the whole world feels unsettled. Whilst the impact of Covid cannot be discounted, it is an excuse for this, rather than the actual cause.

The bigger picture shows a rise in populist leaders, typically right-wing, such as the current Johnson government. The prime reason for his success is playing on the inequality of voters who feel ‘left behind.’

The cause of this disenchantment is generally accepted as being the GFC of 2008 and the austerity policy that followed. Central banks should be praised for stopping a systemic economic collapse, historically low interest rates and QE benefitted only the few, rentiers (owners of assets), for the majority life has stagnated.

The first sign of a backlash was the 2016 EU referendum which saw ‘Leave’ triumph, a decision endorsed by the sweeping majority achieved by Johnson, in an election dominated by the ‘lets gets Brexit done’ slogan.

The underlying, but dominant theme, in both the referendum and the election was the wealth gap, the north-south divide which first became prominent some 40-yrs earlier when the Conservatives, led by Margaret Thatcher, triumphed in the 1979 election.
 

What we are seeing today is, I believe, the beginning of the end of that era

 

What we are seeing today is, I believe, the beginning of the end of that era; one that began with the optimism of a new broom sweeping clean the stagnation of the 1970s, and ends with the chaos and confusion sown by the most ham-fisted, incompetent bunch of politicians we have had the misfortune to encounter.

Thatcher arrived in Downing Street in May 1979 at the end of a traumatic decade that had seen a three-day week, inflation topping 25%, a bailout from the International Monetary Fund and the winter of discontent, her mission was to reverse Britain’s three decades of economic decline relative to other western countries.

In the ensuing decade the last remnants of the war disappeared, the trade unions were crushed, there was ‘Big Bang’ in the City, council house sales, the privatisation of large chunks of industry, the encouragement of inward investment, tax cuts, attempts to roll back the state, a deep manufacturing recession, a boom in North Sea oil production, and support for the creation of a single market in Europe.

Britain ceased to be the sick man of Europe and entered the 1990s with its reputation enhanced. The economy had become more productive, more competitive and more profitable. Deep-seated and long overdue reforms of the 1980s paved the way for the long 16-year boom between 1992 and 2008.
 

Britain ceased to be the sick man of Europe and entered the 1990s with its reputation enhanced

 

On the downside Thatcher wiped out more than 15% of Britain’s industrial base with her dogmatic monetarism leaving the economy over-dependent on the de-regulated City.

Wage growth was depressed as weak trade unions no longer ensured wage increases keep pace with inflation, squandered the once-in-a-lifetime windfall of North Sea oil on unemployment pay and tax cuts, and made the UK the unbalanced, unequal country it is today. The government’s welfare bill has been increased by tax credits and housing benefit caused by the labour market reforms and council house sales.

Thatcherism emerged over the course of her premiership, privatisation did not feature in the 1979 election campaign, while the tougher approach to trade union reform had only really become evident since the winter of discontent, and even then was a gradual process. By the mid-1980s the Conservative government’s economic policy was based on a handful of core principles:
 

• Controlling inflation was preferred to full employment
• Trade Unions were effectively crushed.
• Industrial policy was based around denationalising industries such as BT, who’s shares the public were encouraged to buy broadening the appeal of capitalism.
• People who ‘wanted to get on in life’, were aided by tax cuts to encourage entrepreneurship.
• Council houses were sold broadening the base of home ownership

 

GDP, continued to fall during her premiership, a trend which continues to this day. ⁽¹⁾
 

Government	Years	Annualised growth rate
Conservative	1951–64	2.82%
Labour	1964–70	2.22%
Conservative	1970–74	2.59%
Labour	1974–79	2.31%
Conservative	1979–97	2.09%
New Labour	1997–2010	1.37%
Coalition (Cons./Lib.Dem)	2010–15	1.32%
Conservative	2015–	1.13%

 

To explain why I regard this as the end of an era, let’s consider what Thatcherism meant for British families. ⁽²⁾ These figures show families got richer; the median household earned the equivalent of £270.74 a week in 1979. By 1990, this had increased by 26% to £341.58. Unfortunately, these gains were not evenly distributed:
 

• The bottom 10% of families had a weekly income of £151.58 in 1979, by 1990 this had risen to £158.57.
• The top 10%, saw their incomes increasing from the equivalent of £472.98 in 1979 to £694.83 in 1990.

 

More recent data can be found at; https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/691917/households-below-average-income-1994-1995-2016-2017.pdf

This inequality put more people into poverty ⁽³⁾ as it is typically measured.
 

• The number of children in poverty almost doubled under Thatcher, from 1.7 million in 1979 to 3.3 million in 1990.
• Pensioner poverty in the same period increased too, from 3.1 million to 4.1 million. Those numbers rise still further if housing costs are factored in.

 

The decline of both manufacturing and mining led to rising structural unemployment. Unemployment rose from 5.3% in 1979 and peaked at 11.9% in 1984. In 1990, it stood slightly higher than when her era began, at 6.9%.
 

‘As railhead towns feel the steel mills rust,

Water froze, In the generation,

Clear as winter ice This is your paradise..’

 

In summary:
 

• The wealth gap increased which had a knock-on effect of increasing health inequalities. As a result, those born in the 1980s are often less affluent than their parents.
• Thatcher’s home ownership policy were of short-term benefit, and by May 2017, Teresa May, the incumbent Conservative PM, admitted this is her conference speech, promising a ‘new generation of council houses’ to ‘fix our broken housing market’.
• The policy of creating democratic capitalism had short-term success, in the long run an increasing proportion of the UK’s productive assets and housing stock is now in the hands of foreign capitalists, while British households run up increasing debt to compensate for stagnant incomes.

 

Today we are still implementing similar policies, even austerity has it roots in her desire for prudence and a balanced budget. With the Johnson regime, I believe we are seeing the end of an era.

Their policies have further divided the country along both geographical and generational lines. Whilst the Johnson government can, rightly, be accused of going off piste, the roots of their ideas lie with Thatcherism.

Today, in-place of the miners we have cities such as Manchester trying to stand-up to the governments mis-guided tier system for fighting the pandemic. In their resistance they are effectively supported by the government’s own scientific advisers who say that regional restrictions will not work.
 

‘Those Northern Lights, so pretty,

Those big big big wide streets,

Those useless MPs…’

 

As with the miners Greater Manchester has been defeated, Labour leader Sir Keir Starmer said the ‘collapse of the talks’ was a ‘sign of government failure’.

Earlier, Communities Secretary Robert Jenrick said Mr Burnham (the Mayor of Greater Manchester) had been ‘unwilling to take the action that is required to get the spread of the virus under control’, adding: ‘I have therefore advised the prime minister that these discussions have concluded without an agreement.’

Responding to the news, Sir Keir said: ‘The Conservatives have been treating local communities, particularly in the Midlands, North West and North East, and their leaders with contempt. Labour recognise the need for stricter public health restrictions. However, that must be accompanied by extra financial support.’

William Wragg, Conservative MP for Hazel Grove in Greater Manchester, tweeted that the ‘sense of failure’ was ‘overwhelming’. He added: ‘I shall avoid political comment until I have heard Matt Hancock’s statement in House of Commons this evening.’

This constant string of failure highlights Johnson’s dictatorial tendencies. His government is forced towards extremism by their incompetence, his own weaknesses has forced him to turn from playing the fool to acting the tough guy. Wherever possible he tries to govern without the consent of parliament and the police have sweeping powers.

His attempts to nullify this latest outbreak of the virus are doomed to fail. His advisers in Sage have told him the way to avoid a ‘large epidemic with catastrophic consequences’, is to order a ‘circuit-breaking’ lockdowns at half term, and probably at Christmas and Easter, by which time we may have a vaccine. If there is to be another U-turn it will likely be too late to make a difference.

Instead he is trying to force on the north of England restrictions that his own advisers say won’t work, losing him the support of the public and therefore their buy-in to his plans

Lockdowns or circuit breakers are only an effective strategy for so long, the more time it takes to develop a vaccine the more this method will fail. The only solution is to test, trace and isolate carriers.
 

our money has been lavished on the undeserving with nothing tangible to show for it

 

The Treasury has allocated £12bn for this project, and there are questions about how this has been allocated. It would seem the prime beneficiaries are the management consultants, who are reputed to be paid up to £6,250 a day, and crony capitalists with links to the Vote Leave elite.

To date the lavish funding has failed to deliver sufficient tests, been too slow to tell the infected they have the virus and made errors that led to 16,000 positive cases were missed.

The public should be fuming, our money has been lavished on the undeserving with nothing tangible to show for it. £12bn has been wasted, as those in charge of it have failed to drive the infection rate below the critical threshold.

The new surge in the virus, and the restrictions and local lockdowns it has triggered, are caused in large part by the catastrophic failure of the test-and-trace system.

Their failure should surprise no one, and was caused by the government’s ideological commitment to the private sector. This commitment had three impacts:
 

• money that could have saved lives has been diverted into corporate profits
• inexperienced consultants and executives have been appointed over the heads of qualified public servants
• instead of responsive local systems, the government has created a centralised monster.

 

Centralisation, or more accurately the desire for control is a major failing, all experience here and abroad shows that local test and trace works better.

While, according to the latest government figures, the centralised system currently reaches just 62.6% of contacts, local authorities are reaching 97%, despite the fact that they have been denied access to government data, and were given just £300m, in contrast with the £12bn for national test and trace.

This obsession with the private sector is another legacy of Thatcher, their oft repeated mantra is that the public sector is wasteful and inefficient while the private sector is lean and competitive. Yet the waste and inefficiency caused by privatising essential public health functions is off the scale. ⁽⁴⁾

Of course, when all else fails there always the rallying cry of ‘patriotism.’ As I write this, I have no doubt that the Vote Leave veterans in No 10 are already ramping up the language of treachery and sabotage. If it was good enough to secure Brexit, it might hoodwink people as the government’s management of the pandemic.

The public has a duty to obey government, going to the pub has become a nation’s right, and anyone daring to criticise the failure of track and trace is guilty of an unpatriotic attack on ‘our NHS’.

Take Matt Hancock (if only someone would) who responded to a query from the Labour MP for Slough, Tanmanjeet Singh Dhesi, about availability of testing by saying: ‘I will not have this divisive language. I simply won’t have it!’
 

‘I will not have this divisive language. I simply won’t have it!’

 

This crass and stupid behaviour is typical of Hancock, and Johnson who, whenever Keir Starmer criticises his handling of the pandemic, takes every opportunity to accuse him of playing politics and ignoring ‘the national interest.’

The Tories are continuously playing the patriotism card against Starmer whenever he attacks their failings. This is faux patriotism; it is more chauvinistic conceit that is exclusive rather than inclusive. Patriotism should bring the population together not be used as a tool to divide it.

Sometimes being a patriot means standing up for the silent majority against bullying leaders, e.g. Marcus Rashford’s work to feed hungry children, which has brought the 22-year-old footballer endless personal attacks and a rebuff from No 10.

Johnson and his mob don’t care about the whole of the country, they look after their mates by handing out contracts with no competitive tender process, and are happy to isolate the half of the country they tricked into voting for them with promises of jam tomorrow.

From the maelstrom of the virus mishandling to, we turn to what must be the greatest national act of harikari is many years, Brexit.

Anyone who has followed this column will know that I considered any exit negotiations to be, at best, a token gesture. Ever since Johnson won a sweeping electoral mandate ‘no deal’ was a nailed-on certainty.
 

‘I hope it haunts me ’til I’m hopeless,

I hope it hits you when you go…’

 

All of which makes the latest charade in parliament that much more farcical.

For the record, Michael Gove was addressing the house and castigating the EU bloc for their failure to negotiate with us, N.B. by that he means we sent over our terms and the EU are meant to gratefully agree.

During his speech he was made aware of a tweet from the EU’s chief negotiator, Michel Barnier, which appeared to agree to the government’s demands for the resumption of talks in pursuit of a deal.

However, despite Michael Gove performing a U-turn at the dispatch box and praising a ‘constructive move’ by the EU minutes after declaring the talks ‘effectively ended’.

Gove championed this as a U-turn, however a No 10 spokesman said the PM had noted the EU’s offer to ‘intensify’ the talks during a call between Barnier and his British counterpart on Monday but insisted there remained no basis yet to resume the negotiation.

The spokesman said: ‘This was a constructive discussion. The UK has noted the EU’s proposal to genuinely intensify talks, which is what would be expected at this stage in a negotiation. However, the UK continues to believe there is no basis to resume talks unless there is a fundamental change of approach from the EU. This means an EU approach consistent with trying to find an agreement between sovereign equals and with acceptance that movement needs to come from the EU side as well as the UK. The two teams agreed to remain in close touch.’

This leaves only 4-week of this farcical charade left before the parliamentary ratification process begins. The process will be simple, Johnson will tell us that we are a wonderful nation we are, how much better off we will be without the parasites from the EU constraining us, and anyone not believing him will be deemed unpatriotic.

Unsurprisingly, the governments decision not to restart talks has left both the German chancellor, Angela Merkel, and the French president, Emmanuel Macron bemused, as they had said on Friday that they were willing to compromise on the most contentious issues of domestic subsidy control and EU access to British fishing waters.

Clearly, they think they are negotiating in good faith, rather than dealing with what has been a fait accompli since Johnsons electoral triumph.

Within this editorial I have tried to explain how Tory policies, with their foundations in the Thatcher governments have continued to influence subsequent administrations.

What started as the adoption of Milton Friedman’s monetarist theories to control inflation, saw the beginning of a 2-speed Britain, the north-south divide.
 

the final protest of the unwanted and unrewarded who rebelled

 

This divide has continued to grow, and fuelled by the post-GFC experiment with austerity, led us to Brexit. This was the final protest of the unwanted and unrewarded who rebelled and, satiated by the lies of unscrupulous politicians believed that Brexit and tory government was the answer to their problems. The reality is the opposite, people such as Johnson are the cause of them.

Covid is just another example of that divide, e.g. currently Merseyside, Greater Manchester, and Lancashire are on tier-3 alert, whilst all of the NE is on tier 2 alert level, along with much of Yorkshire, and, Cheshire. This means that 14 out of 16 million people in the north of England are now living under additional restrictions.

It is reported that the ‘true’ unemployment rate in Liverpool was 19% before the pandemic.

Half of renters and a quarter of mortgage holders in the north-west lack the ‘financial resilience’ to cover a 20% loss of household employment income lasting into the new year. Rishi Sunak’s local furlough scheme implies a 34% reduction in wages for hospitality workers potentially through to March.

Put more simply, economically they do not have the wherewithal to sustain these new restrictions.

Public Health England said that areas such as Bolton, Manchester, Oldham and Rochdale ‘never really left the epidemic phase. The lack of state-provided basic income support and regulation of blue-collar workplaces could have helped to contain the virus, as would have a locally run test-and-trace system that cut out the private sector.

As my previous points make clear we entered the pandemic with the highest regional inequalities of any major economy. Looking forward to how we exit Covid what is clear is that, historically either London or the SE has bounced back strongest from every recession since the 1973 OPEC crisis.
 

either London or the SE has bounced back strongest from every recession since the 1973 OPEC crisis

 

Since May, the Treasury has been agitating for spending cuts as well as tax rises to ‘enhance credibility and boost investor confidence’, a second round of austerity will wreak havoc in the North, including the new Tory voters seduced by Johnsons promise of ‘levelling up’.

The north-south divide has become a geographical reflection of how Britain is run, and for whom. As Tom Nairn observed in The Break-Up of Britain, the rule of thumb in UK politics is that the City controls the Treasury, and the Treasury controls the state – one of the most centralised in the rich world.

No longer is this a case of northern industry versus London finance, but of the latter calling the shots over anaemic services-based regional economies.

In some ways the divide, exacerbated by Covid, is shifting from north-south to haves and have nots.

London recorded the highest number of excess deaths through the first wave of Covid-19, with working-class Newham and Brent worst afflicted. It also suffered the most job losses between March and June, with the low-paid likely bearing the brunt. Owen Hatherley notes in his book Red Metropolis that given the extremes of wealth and poverty in the capital, ‘the first victims of London’s system’ are typically Londoners themselves.

The government of London, as Hatherley puts it, hasn’t answered to the needs of poorer inhabitants for some time, whereas affluent London ‘never had it so good’ as after the financial crisis, according to David Cameron’s enterprise tsar, Lord Young:
 

• Median household wealth in the capital soared by 78% between 2008 and 2018.
• Existing house-price and financial-asset bubbles were inflated to new heights by Bank of England quantitative easing, although it also increased rents and mortgage debt.
• The Bank has acknowledged that, by 2014, quantitative easing had pushed up the value of assets held by the richest 10% of households, clustered in and around the capital, by £350,000 per household.

 

This have/have nots inequality was worsened by the Covid influenced £745bn to steady financial markets, whilst Sunak’s £4bn stamp duty holiday intended to help buyers has proved a boon for existing homeowners.

The Evening Standard celebrates that ‘surging London house prices have hit a new all-time high as the remarkable post-lockdown property boom gathers momentum’, although ‘the increases will dismay first-time buyers struggling to get a toe hold on the property ladder’.

Whatever alert level a region finds itself in, the haves will be helped to adapt and recover, while the rest of the population are an after-thought.

Just over 40-yrs from the heady expectations of Thatcherism we can now see that her successes were, in the main, short-lived, whereas the inequalities begun by her policies show no sign of abating.

The reality is clear, the Conservatives care only for themselves and their traditional supporters, the rest are simply cannon fodder to be rounded up ever 5-years and fed bullshit. Johnson’s only concern for the voters in the so-called ‘red wall’ was as a number and a cross on the ballot paper.

A new report shows that for many of these voters, their numbers up, as they will be disproportionately affected by Brexit even in the event of a deal being agreed. The report classes 35 of the constituencies as ‘vulnerable’ to a Brexit job shock because they rely so heavily on manufacturing.

For example, in Bury North, a seat the Tories won from Labour by 105 votes, there are 4,500 people in manufacturing jobs, many in the chemical industry, a sector recently identified as at risk from Brexit.

The chemicals company BASF, which has six sites in the UK, has said Brexit will add a £1bn of costs to its business, even if there is a deal, potentially threatening the future of some of its operations and those in supply chains that use their chemicals in paint, coatings and agriculture. This is because it faces £50,000-£60,000 in additional costs to go through a new compliance process for each of its 1,300 unique chemicals, because the UK is coming out of the EU’s Reach regulation system.

Coming on top of Covid, Brexit could be the final nail in our coffin.

One of the Thatcher’s more lasting successes was her commitment to the single market. She helped to bring about the Single European Act in February 1986 (the first significant change to the Treaties of Rome of 1957) and was a central architect of European integration. ⁽⁵⁾

What is often overlooked is that Thatcher was a big fan of the European single market, perhaps she understood what patriotism meant. What we can say with confidence is that she would never have broken international law, and that she had respect for Parliament and its procedures.

If this is to be the end of the era she was the architect of, then the current incumbents shame her memory.
 

‘A one-man showdown, teach us how to fail,

We’re off the streets now, And back up the road on the riot trail…’

 

Notes:

1. https://academic.oup.com/cje/article/44/2/319/5550923
2. The figures come from a series of measures calculated by the Institute for Fiscal Studies, which calculated household incomes after tax (and any income from benefits), and put them into monetary amounts relative to 2010-11 prices, stripping out the effects of inflation.
3. The common international standard for poverty is a relative one: a family earning less than 60% of the median income, meaning its members are excluded from many aspects of a nation’s life. By this measure, though, a family in poverty in 1990 may be richer than one not in poverty in 1979.
4. The full, and sorry story of the cronyism and waste can be found at:

https://www.theguardian.com/commentisfree/2020/oct/21/government-covid-contracts-britain-nhs-corporate-executives-test-and-trace

5. https://ukandeu.ac.uk/margaret-thatcher-the-critical-architect-of-european-integration/

 

A very different piece this week – ‘rather than just trot out this weeks’ failings, which, by now are so consistent that it’s mind numbing, I wanted to show a bigger picture’ Philip said in his preamble, and that is what he has done by tracing back some of the inequality that has been a mainstay of his column, to the very deliberate policies of Thatcherism – and what he believes may be the end of her era.

In doing so, Philip neatly brings things up to date by identifying the causes of the disaffection that led to the rise of populism, and gifted Brexit to those playing to the base instincts of being ‘left behind’ or in some way having cause to fear.

Philip believes that much of the division in the country can be traced back to the wealth gap, the City/industrial, north/south divide created by Mrs Thatcher’s administration, but after the privations of the 70s, there was a tide of optimism as Britain shook off its image as the ‘Sick Man of Europe’ and powered ahead, Big Banging and with Loadsamoney.

However, the spoils were not shared equally and as more children and pensioners slipped into poverty those at the top of the heap got wealthier; in drawing parallels with the defeat of the miners and the emasculation of the trade unions, Philip believes that Andy Burnham has just suffered an inevitable defeat as the divide becomes between the haves and the have nots.

One thing’s for certain, the virus is back with a vengeance, and with the north particularly hard hit, those in hospitality in receipt of 67% of an already inadequate wage will be facing a bleak Christmas; one that can hardly be improved by an ‘Australian Deal’ (sic) Brexit – is a Cornish pasty a substantial meal if served with ‘sprouts and an eggnog?

Unlikely to ever be a card-carrying member of Mrs Thatcher’s fan club, Philip does however acknowledge her achievements and accepts that she was a conviction politician, albeit dancing to a different beat to him (see lyrics below); whereas her belief in an efficient private sector was heartfelt, the current crop’s record of awarding billions of pounds worth of contracts to untried and unqualified contractors and funny handshakers seems more Sicilian than Scouse, and we don’t have a world-beating track and trace system to prove it.

Things are reaching such a crescendo on either side of the Pond, if feels as though Meg Ryan should be announcing the lyrics this week; Philip certainly seems to have got carried away – fully 34 points up for grabs, and online entries encouraged from all those in Tier 1.

First up ‘a classic from north of the border. Cool post-punk vibe’ – 3 pts for The Associates, 3 for ‘Party Fears Two’, and 3 bonus points for the deceased singer¹; next ‘back to London and punks only stayers’ – 3pts for Straight to Hell’ and 1pt for the Clash.

Third-up ‘one of John Peel’s all-time faves’ the inimitable Mark E Mark and The Fall (3pts) and the appropriate ‘Hit the North’ (3pts); then ‘back north of the border now, for a band that never quite cracked it’ – 3 apiece for Aztec Camera and ‘Oblivious’.

Last but not least ‘this is guitar based indie at its very best’ 3pts for Sonic Youth, 3pts for ‘Teenage Riot’ and a bonus 3 for the name of the album^2. Enjoy!
 

_{1 – Billy Mackenzie}

_{2 – Daydream Nation}
 

 

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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