Sep
2024
Mr Brightside: “Sorry Seems to be the Hardest Word”
DIY Investor
27 September 2024
“What’ve I gotta do to make you care?”
Can there have been a worse start to a governments term in office? Obviously, this is asked excluding Liz Truss who, we can only hope, will never be surpassed.
On Breakfast TV he was asked 4-times to apologise to pensioners for scrapping their winter fuel allowance, and 4-times he refused to.
The Labour leadership has lost a highly anticipated motion at the party’s conference that called on ministers to reverse the cuts to winter fuel payments.
The defeat will come as a blow to Downing Street, as the prime minister and his ministerial team had repeatedly said throughout the party conference that the move demonstrated they could be trusted with taxpayers’ money.
Sharon Graham, the general secretary of Unite, opened the debate, criticising Starmer for removing the allowance while “leaving the super-rich untouched”.
‘Can there have been a worse start to a governments term in office?’
She added: “We are the sixth richest economy in the world; we have the money. Britain needs investment, not austerity mark II. We won’t get any gold badge for shaving peanuts off our debt.
“It’s the wrong decision, and it needs to be reversed.”
While the conference vote was highly significant, the prime minister could still go ahead and impose the cut to the allowance.
But, what did the PM deliver in his keynote address?
On the plus side there was the “Hillsborough law” requiring state bodies and private firms to truthfully assist public investigations; backing homes for veterans, young carers and victims of domestic abuse; and saying that students would be “touched by art” by being able to study creative subjects at school.
Ineviably he told conference that there would be more “unpopular” decisions to repair Britain, which could lead to increased tension between the grassroots and the leadership.
He stressed a cultural and economic affiliation with “working people”. Within this he accepted that some have concerns over high levels of illegal immigration, although he sought to defuse accusations of encouraging racism by making an impassioned attack on the scourge of racism. There was a clear favouring of workers over those on benefits, including pensioners, which likely means that cuts to winter fuel payments is likely to be reflected elsewhere.
‘And then there is the old growth chestnut that has been flogged to death, not least by Liz Truss’
With a focus on the employed rather than the unemployed, it will be interesting to see if the governments workers’ rights proposals are watered down by business interests.
And then there is the old growth chestnut that has been flogged to death, not least by Liz Truss. Interestingly Starmer is staying with her 2.5% a year, and there was echoes of her attacks on the “anti-growth coalition”. However, unlike Truss, Labour will use the fruits of growth to improve public services rather than tax cuts for the wealthy.
There was no mention of any form of social contract to avoid growth coming at the expense of the environment, or all of its proceeds going to the rich. As such, we could see an extension of current rentier economy, where profit is gained from control of scarce resources.
Labour Together could be described as Labour thinktank noted that whilst Labour won by Labour, much of the success was due to Tory misgovernment and “their corruption and incompetence”. They went onto say: “Britain’s democracy is not delivering. A majority of voters for all parties have little faith in politicians’ desire to help ordinary people.”
‘There was no mention of any form of social contract to avoid growth coming at the expense of the environment, or all of its proceeds going to the rich’
And finished by saying: “This Labour government has been cautiously hired, on a trial basis, liable to prompt dismissal if it deviates even slightly from its focus on voters’ priorities.”
Voters priorities aren’t growth they are much closer to home, more money in their pockets and public services. Their priorities are the NHS, the need for change and the cost of living. LibDem voters are the same, as were those who switched to Starmer after backing Boris Johnson in 2019.
Immigration is only a priority for Tories and Reform voters.
Along with these three priorities is the need for action now. When asked how long they will wait before there’s “a noticeable difference to the cost of living”, half of Britons give it till 2026.
The last two governments have been elected with substantial majorities, yet we are still told they can’t deliver what they promised because of forces beyond their control.
Starmer and Reeves have pledged to deliver the highest sustained GDP growth of all the G7 countries, but voters don’t care because it doesn’t benefit them. As the Foundational Economy collective reported, of all the growth in take-home pay between 1999 and 2020, the top 10% of earners made off with 25%, while the bottom 10% got only 3%.
‘we are still told they can’t deliver what they promised because of forces beyond their control’
This lack of understanding is exactly what drove Brexit. Ministers missing the big picture, whilst Farage who, understands voters saw what they didn’t.
It isn’t enough for ministers to tell us we cant afford it. Starmer should look back to his predecessors such as Clement Atlee, he didn’t let the fact that we were broke after WW2 stop his government from creating the NHS, a welfare state and quality council homes.
All the growth fixated economic policy of the last 40-yrs has managed is to make rentiers richer. The combined wealth of our richest 350 households is greater than the GDP of Poland. Worse, it become a self-fulfilling prophecy as they continue to get richer whist millions of British workers become poorer. We have 4.3m children living in poverty, and that is likely to get worse before it gets better. For a Labour government to continue with the two child benefit cap beggars belief.
Last week, the housing charity Shelter published new research showing that one in 78 children in England – 152,000, in total – are homeless, and living in temporary accommodation. At the last count, households on English councils’ housing waiting lists had reached 1.29m, the highest number in 10 years.
‘For a Labour government to continue with the two child benefit cap beggars belief’
This shameful data can be explained by the fact, that in 2022-23, only 9,561 new social homes were completed in England. The housing associations that now dominate the social sector and the local authorities that provide council housing, rental income is 15% lower in real terms than 10 years ago – a decline partly caused by rent caps – while outgoings are spiralling, thanks to the rising cost of basic housing materials, and the necessity of meeting new environmental and building standards. The long out-dated right-to-buy policy constantly diminishes councils’ housing stocks, as well as the rationale for putting up new homes.
To help counter this, it is expected that chancellor Reeves will announce a plan to annually increase social rents by inflation plus 1%. Whilst this will help balance the books of councils and housing associations, it places an addition financial burden on the already overstretched budgets of tenants.
Angela Rayner, the housing minister, has already stated her policy of building 300,000 new homes each year, something we haven’t achieved since the late 1960s. at that time, councils were responsible for half of all housing supply, whilst they might be willing to resume that role they don’t have the finances. Twenty English councils recently called for a one-off injection of £644m to make up for lost revenue, and pointed to a black hole in councils’ housing budgets that is set to reach £2.2bn by 2028. In reality any growth in housebuilding is going to require considerable long-term financial backing from central government.
‘we have utilities not fit for purpose, laden with unmanageable debt, all to benefit shareholders with ever increasing dividends‘
Privatisation is a classic example of this, we have utilities not fit for purpose, laden with unmanageable debt, all to benefit shareholders with ever increasing dividends
If we are to protect the NHS by implementing preventative measures pushing children into poverty only adds to their health issues. The same can be said of retaining the winter fuel payment for pensioners would have enabled them to keep warm and avoid colds, flu, etc..
Something similar can be said for other parts of the economy. Workers power has done much to raise living standards in Scandinavia. Encouraging the green economy as the US has done with Biden’s inflation reduction act is helping to transition infrastructure and business to sustainably which creating jobs that is helping to level-up the country. What did we do? We said the £28bn climate investment fund was unaffordable.
‘What did we do? We said the £28bn climate investment fund was unaffordable’
Two LSE researchers, Professor John van Reenen, Dr Anna Valero, are now part of the chancellors new council of economic advisers. Previously they had co-written a report which warned that Labour’s planning reforms and an end to political chaos would not be enough to persuade the private sector to invest in Britain. They argued that Britain needed to invest to grow, focusing on the threat of the climate emergency. Spending £26bn of public money would generate almost twice as much private investment.
Current fiscal rules require daily spending to be funded by taxes and debt falls within five years, the necessary money is unavailable. If the fiscal rules aren’t changed, it is difficult to see how the government can achieve its ambitions, and could lead to continuing stagnating innovation and growing joblessness, leading to long‑term economic stagnation.
We are small because we think small, acting big is not a substitute. That’s why the US is so much more prosperous.
All these “tough decisions” and priorities of the last 40-yrs have made the rich richer at the expense of the majority, and the lives of vulnerable people harder, not standing up to the powerful.
‘We are small because we think small, acting big is not a substitute’
Reform understand this, they might not have the answers but they have someone to blame, immigrants.
Before finishing the royals show that we aren’t all in this together.
The cost of the grant that funds them is due to increase by more than 53% in the next year to £132m – a rise of £45m.
Official royal accounts released earlier this year revealed that profits of over £1bn from the crown estate mean the taxpayer-funded sovereign grant, which pays for the royal family’s official duties, will increase from £86.3m in 2024-25 to £132m in 2025-26.
Republic, an anti-monarchy organisation that campaigns for a British republic, has analysed the “true cost” of the royal family to the public and claimed that it now exceeds £500m a year.
‘I would like to be positive about the new government, but I am struggling to do so’
I would like to be positive about the new government, but I am struggling to do so. You could almost make a case under the trade descriptions act to say this isn’t Labour, it’s the Tories masquerading as Labour. It’s samo, samo, and can only lead to more voters becoming disenchanted with the mainstream parties and turning to Reform as an alternative solution.
The barbarians may not get in, but they will certainly be knocking on the door….
“Now, who is that knocking?
Who’s knocking at my chamber door?”
‘Oh dear, where to start….
It’s such a sea of disappointment. Is it even Labour that won the election?
All I can conclude is that, the majority of people, voters and politicians alike, are all so influenced by Thatcherism that they cannot see beyond it. If it isn’t tax cuts, it’s chasing growth, fiscal orthodoxy now demands disciplines that reduce debt.
Added to that the world we live in continues to get faster, news is more immediate, and expectations are influenced in the way. In Thatcher’s days a government would have been given time, and, with the help of a war, continued to support the government.
Today, as the column identifies that time horizon has been condensed, now the PM has 18-24 months, which is pretty much in-line with what I wrote in “Tick, tock, tick, tock”.
Reform don’t need to campaign, all they need to do is reorganise, tighten-up their vetting procedures and wait for the government to take itself apart. They already poll more actual votes than the LibDems, and the Tories, the official opposition, seem likely to be a decaf version of Reform.
This is little different to mainland Europe, or for that matter the US. In the later the benefits of the Inflation Reduction Act have yet to reach Main St, whilst the former seems constrained with the same economic orthodoxy that inhibits us.
There does seem to be a number of commentators and economists who see this, and understand that governments need to spend, but spending to invest, improving infrastructure, creating jobs, stimulating demand, all of which has a positive influence on tax receipts.
Lyrically, a departure from this column’s modus operandi as open with Elton John and “Sorry Seems to be the Hardest Word”, which is dedicated to our PM who seems to not do sorry, let’s hope he remembers to say thank you. As a trade-off I have indulged myself as we exit to “Sister Ray” by the Velvet Underground. There have been many descriptions of this 17-minute perverse bedlam that is just so good!
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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