Mr Brightside: Buy Now, Pay Later….

 

“A little more bite and a little less bark 

A little less fight and a little more spark” 

 
Much can, and indeed has been said about the last 14-yrs of Tory misrule, and a failed, tired, economic policy that they first tried some 40+yrs ago. 

Aside from the money squandered on PPE to enrich their mates, test and trace and offshoring to Rwanda, there is their constant attempts to cut taxes, even in the last 12-months. It has a desperation to it that echoes Hitlers last days as he order imaginary division to stand and die! 

Post-covid, the economy has been in no fit state to absorb tax cuts, especially not at the top-end, yet they continued. All based on mythical economic growth and slashing services that have all but ceased to exist due to previous cuts. 

Today, the chancellor, Rachel Reeves revealed a £22bn shortfall in spending plans for this year, all of which were based on unfunded, and often undisclosed commitments. 

Included in these commitments was £6.4bn on the asylum system, £1.6bn on transport, and, on public sector pay, the Tories had made recommendations to the pay review bodies without telling them what would be affordable. That was almost unprecedented. 

Implementing these pay review recommendations will cost extra £9bn not funded under Tory plans. 

As a result. Reeves is asking departments to find £3bn to help the new government meet these recommendations. 

Addressing the overall will require measures worth £5.5bn this year, and more than £8bn next year. 

Now, this will likely be met by the right-wing morons media screaming “Labour, tax and spend”, when the problem lies with the “shocking inheritance” left for Labour, and former chancellor “presiding over a black hole and still campaigning for tax cuts”. 

Last week the PM told business leaders this week that the public finances were “in the worst place since the second world war.” 
 

‘PM told business leaders this week that the public finances were “in the worst place since the second world war”’ 

 
“They spent taxpayers’ money like no tomorrow because they knew someone else would have to pick up the bill. It now falls to Labour to fix the foundations of our economy and that work has already begun.” 

The former chancellor Jeremy Hunt is said to have believed that pay demands would have eaten all of the Conservative government’s fiscal headroom – one of the key reasons for Rishi Sunak calling an early election as it became clear there could be no promised tax cuts. 

Former chancellor Jeremy Hunt made a bad situation worse, sanctioning expensive cuts to national insurance contributions and paid for them by slashing public investment and freezing departmental budgets already hit by 14-years of austerity. 

Clearly there is a suspicion that Hunt deliberately did not act to address the looming spending shortfall, as a source said, “Jeremy Hunt is going to have a lot of explaining to do”. 

Suggestions that the scale of the problem were already known are incorrect. 
 

‘there is a suspicion that Hunt deliberately did not act to address the looming spending shortfall’

 
The government’s independent forecaster, the Office for Budget Responsibility, lays out each year the extent of the public spending shortfall according to what it is told by the Treasury. But Hunt gave a false picture of the government’s likely commitments, prompting the OBR boss Richard Hughes to declare that the OBR assessment last year read like a work of fiction. 

Max Mosley, an economist at the National Institute of Economic and Social Research said, Labour were only ever going to be able to truly assess the state of our finances when they took over government.  

Another area the Tories turned a blind eye to were strikes, not least the junior doctors, who seem to have been on strike for years! 

Today, No 10 says it is ‘determined to bring strikes to end’ after report claims junior doctors to be offered pay rise worth 20% 

The Times reports that The British Medical Association’s (“BMA”) junior doctors committee has recommended an offer that includes a backdated pay rise of 4.05 per cent for 2023-24, on top of an existing increase of between 8.8 per cent and 10.3 per cent. 
 

‘the government is determined to do the hard work necessary to finally bring these strikes to an end‘

 
Junior doctors will be given a further pay rise of 6 per cent for 2024-25, which will be topped up by a consolidated £1,000 payment. This is equivalent to a pay rise of between 7 per cent and 9 per cent. 

The overall package represents a pay rise of about 20 per cent. The BMA’s committee has agreed to put the offer to its members, and if it is accepted it will bring an end to industrial action. 

Asked about the report at the Downing Street lobby briefing, the PM’s spokesperson said: 

“As we’ve said before, we’re committed to working to find a solution, resolving this dispute, but I can’t get into detailed running commentary on negotiations. 

We’ve been honest with the public and the sector about the economic circumstances we face. But the government is determined to do the hard work necessary to finally bring these strikes to an end.” 

An area that could help address this shortfall is tax avoidance. 

Last week there were reports that super-rich were using offshore a scheme, known as a qualifying non-UK pension scheme (“QNUPS”),  to avoid multimillion pound inheritance and capital gains tax bills. 
 

‘an example where someone had placed £30m into the scheme to protect it from inheritance taxes, implying almost £12m of taxes saved by the client’s children’

 
QNUPS have added advantages to wealthy investors, such as no limit on the size of contributions”, as well allowing individuals to invest “a much broader range of asset classes than traditional pensions [including] property, stocks, shares and art/antiques”, according to one promoter. 

The Guardian made public an example where someone had placed £30m into the scheme to protect it from inheritance taxes, implying almost £12m of taxes saved by the client’s children. 

In addition to personal tax avoidance there is the corporate sector which is suffering on a global scale. 

Last year, the EU Tax Observatory said that, in 2022, corporations shifted $1tn (35% of the profits they earned outside their home countries) to tax havens, with governments losing out between $240bn and $600bn annually.  

In 2023, the seven biggest US pharmaceutical companies paid no tax in America on global profits of more than $40bn.  

Despite growing corporate profits, the effective tax rate companies face worldwide has declined by a third since 1975. Poor nations, desperate for cash to deal with environmental and fiscal crises, are the biggest losers. Lower-income countries’ tax losses ($47bn) are equivalent to half of their public health budgets. 
 

‘the seven biggest US pharmaceutical companies paid no tax in America on global profits of more than $40bn’

 
Attempts by the UN to rectify this, have continually been derailed with countries including the UK and the US, as well as the EU, attempted to frustrate proceedings. These nations preferred the pro-rich, corporate-friendly way of doing things when they ran tax rules under the Organisation for Economic Co-operation and Development.  

Its 2019 proposals would have seen 80% of “redistributed profits” flow to wealthy counties while lower middle-income nations lost out. That approach led to rising anger over glaring imbalances. As Joseph Stiglitz, a Nobel laureate in economics, pointed out this month: “Tax avoidance has impeded governments all over the world from providing basic services to their citizens, contributing to global inequality, which is at an all-time high. Fewer than 3,000 people hold nearly $15 trillion – equivalent to the annual GDP of Germany, India, Japan, and the United Kingdom combined.” 

The UK has a historic responsibility for this mess. Along with its network of overseas territories and crown dependencies, it is responsible for nearly a quarter of global corporate tax loss. Alex Cobham, chief executive of the Tax Justice Network, applauds Labour ministers’ tough rhetoric against tax-dodging. He asks whether they will now “opt for continuity with the previous Conservative government’s policy and continue to frustrate efforts at the UN? Or will they mark out a new course for the UK on the world stage and support international efforts to curb tax abuse?”  
 

‘Fewer than 3,000 people hold nearly $15 trillion – equivalent to the annual GDP of Germany, India, Japan, and the United Kingdom combined’

 
Sadly, this is just another example of how government has existed to serve the few at the expense of the majority. 

What else has been happening…? 

The Olympics have started, and big-up’s to Adam Peaty for showing the mental courage to come back and win a silver medal, only being denied a record equalling third by a fraction of a second.    

In Manchester plod once again disgraced themselves, as an officer kicked and stamped on the head of a clearly defenceless person. There are suggestions of mitigating circumstances, but, at best, this look to be a massive over reaction. 

Needless to say, the even bought the usual pond life to the surface, as agitators such as George Galloway and Tommy Robinson shared the video with their hundreds of thousands of followers. Nigel Farage’s Reform UK poured petrol on the fire when Lee Anderson, the party’s MP for Ashfield in Nottinghamshire, said he would give a medal to the officer, who now faces criminal charges for assault. 
 

‘Manchester plod once again disgraced themselves’

 
Ahhh yes, Tommy Robinson…. 

Tommy is now a fugitive after screening the film, “Silenced” in Trafalgar Square on Saturday. The film repeats false claims he made about a Syrian refugee that led to him losing a libel case in 2021. 

Thousands of people marched in central London on Saturday as part of a protest organised by Tommy Robinson, as well as a counter-protest. 

The Met, who had deployed some1,000 officers across the capital to “keep the peace”, said eight people had been arrested and several emergency workers were assaulted, though none were seriously injured. 

The crowd for Robinson’s protest gathered outside the Royal Courts of Justice before marching down the Strand to Trafalgar Square, where a rally was held, chanted “Rule, Britannia!”, “England till I die”, and “We want our country back”. The Met also said it was investigating videos shared online in which “racist and anti-Muslim” chants could be heard. 

Speakers at the rally denounced immigration and multiculturalism as well as the Covid vaccines, while people in the crowd waved British, English and Israeli flags and placards that read: “Not far right, just right.” 

Adam Payter, representing the Solicitor General, said Robinson was arrested following a ‘large demonstration’ in central London, which featured the showing of a film that was ‘central to this application’ and showed a ‘flagrant’ and ‘admitted’ breach of the court order. 
 

‘As a columnist, Braverman reunited with Anderson, and linking-up with Farage is almost too much to hope for!’ 

 
It is believed Robinson left the country hours after being released on unconditional bail following his arrest over the weekend. 

Whilst not directly correlated, the Tory leadership battle will have an impact on where the futures of people such as Robinson, Farage and Anderson go. Should the party elect someone from the right then we can expect to see them more closely aligned with Reform policywise, giving enhanced credence to their racist rhetoric. 

With nominations closed, there are three representing the more moderate side of the party, Messrs Tugenhat, Stride and Cleverley, and for the right Messrs Jenrick, Patel, and Badenoch. 

The big surprise is no Braverman, who’s nonappearance is explained by a lack of support from MPs making it unlikely she would make the final-2. This has been met with dismay by many of the party membership, who feel that their wishes are being overlooked. As a result it is likely we will see more members deserting to join Reform, perhaps along with Ms Braverman.  

As a columnist, Braverman reunited with Anderson, and linking-up with Farage is almost too much to hope for! 
 

“I had to crucify somebody today 

And I don’t dig what you gotta say”  

Good news in that the mini-moon is apparently over, and we can look forward to getting back to business as ususal at HP.

The loss of the winter fuel allowance was an unexpected blow to pensioners previously spared the indignity of having to choose to heat or eat; notwithstanding the fact that Labour were always going to cry foul over the mess they inherited, but can it really be fair that whilst your granny will have to pay tax on the heating fuel she’ll need to survive the winter, aviation fuel attracts no such duty.

I do wonder sometimes if we look through the right side of the lens. So what’s Philip’s take?:

‘Things are starting to move at long last.

The chancellor has laid bare the Tories shocking mismanagement of the economy, which appears to have been based on hoped for growth, yet more cuts, and sleight of hand.

The last, somewhat sad attempts at buying the election with tax cuts failed miserably, but has left Labour in-charge of a debacle.

This, alongside the wanton economic destruction committed by Liz of 45-days should destroy the notion of the Tories economic capabilities for many a year.

Given that Sunak was PM and chancellor for circa 4-yrs his loss must have been Goldman Sachs gain!

Of the course, the Tory press will see and spin it a different way; “tax and spend”, Labour “can’t manage money”, etc.. Once can only wonder at their blind obedience or total stupidity.

Elsewhere racism shows no signs of going away. The behaviour of a Madchester Manchester police officer kicking a defenceless man in the head might only be surpassed by Lee Anderson, the Reform MP for Ashfield in Nottinghamshire, saying he would give him a medal!

As for the Tory leadership campaign, well…….what do you get when you cross three moderates with three extremists? Six idiots!

Musically, we start with the “king” Elvis and a “Little Less Conversation”, just for those Tories who tried making 1+1+10.  To finish we turn to Madchester with the Mondays and “Kinky Afro”. Enjoy!

Philip.

 
@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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