Rishi Sunak got so much wrong yesterday.
He is taking away the extra support those on Universal Credit have enjoyed this kast year.
The NHS needed a boost of £10bn a year. It got £3bn.
The care sector suffered in the same way.
The cut in overseas aid angered his backbenchers, and rightly so.
The public sector pay freeze will cause anger when we are more than ever dependent on those who work for the state.
All these errors, and others, are obvious.
But he also got the capital spending budget hopelessly wrong.
As I, and others, have long been arguing the need is for investment in energy transformation, above all else. That is insulation, triple glazing, boiler replacement, heat pump installation and renewable energy generation capability across our building stock.
Now I agree that there is nothing very big and politically sexy about this. There are, most especially, no big plaques on giant prijects. So we got the promise of those instead, and most especially wholly unnecessary road-building plans, and a range of other projects with really long lead times, which means that most jobs will not be created for years to come, as is even true with housebuilding programmes. which means none of these projects meets the need for immediate economic impact, or job creation.
But greening our buildings does do that. The programme could start next week. The training for it could be happening simultaneously. The project would last at least a decade. It would create jobs in every constituency, unlike the big-ticket items. And cumulatively the impact would be bigger.
But that's not what Sunak has chosen to do. He's gone for the worst investment route possible for the green agenda, for the jobs agenda, and for the recovery agenda.
As ever, I have to despair.
And simultaneously I have to hope that one day the penny will drop on what is required to really address the economic and sustainability issues in this country, because it clearly has not as yet.
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Thank you for pointing this please keep it up, we can get it amplified somehow as it is a necessity to do so.
It’s almost as if the policy is to crush the proles back into peasants and serfs.
He says all this now, yes, but you can bet there’ll be any number of mini-budgets coming in the months ahead in which he’ll be rowing back furiously from his current position. Just wait till the shortages hit in January and unemplyment and food prces start to soar. He’ll have trouble reducing benefits in that environment. April, when he threatens to reduce UC, is a world away. IMO by contrast the entire social security system will need to be transformed and upgraded. Yesterday was just politics. He won’t be revealing his real policies till coming events force him to.
Why do we keep hoping that a Tory government will do the right thing? Have they ever? It’s not in their genes, it’s not in their ideology, it doesn’t benefit their backers, and it doesn’t find favour with their base of supporters, even if many of the latter would benefit from a green new deal, climate action, government sponsored job creation, more support for the public sector (re the latter: I’m surprised how many of my co-workers in the NHS still vote Conservative!) etc. Pinning these hopes on a Tory government is just a waste of energy and time.
So then our thoughts turn to the Labour Party – sadly under FPTP presenting the only chance, however slim, of a non-Tory government. And the big question is, when Starmer has finished making the Labour Party palatable to the Establishment, will they still have the inclination and the gumption to do any better if they get in in 2024?
From today’s Guardian even by a humourous John Grace are a reflection of its economic journalists constant misunderstanding
“Rishi is the Monopoly chancellor who is writing cheques he has no idea if he will be able to cash.”
How depressing that the Guardians economic ripostes to Sunak are as misguided as his own.
Agreed
Today the Guardian’s Larry Elliot is simply reporting verbatim what the IFS has said, under the headline “IFS says UK needs £40bn of tax rises and spending cuts to balance books”
Aditya Chakraborty got much closer to the truth in yesterday’s Guardian, although I have yet to see anyone there really “get it”.
“Austerity will be the pantomime villain of the next five years, forever waiting in the wings to be called on by the right or the press — and yet warded off by Sunak and Johnson. The country will keep on borrowing big amounts all the way through the first half of this decade. The great dirty secret of British politics is that, despite all the appeals to “prudence”, no government has run a budget surplus since the dotcom boom, right at the start of the millennium. Over the decades I have been writing about economics, government after government has kidded itself it can turbo-charge growth and pay down the deficit. This is the stuff of fantasy.”
As Larry often tells me, he’s the messenger, and. not often the message
It doesn’t stop me moaning at him….
I hate to add to the bad news but I’m sure they might be planning to prop up the private sector/stimulate the economy by widening privatisation again.
It will create loans and stuff like that for the City (and a bit of GDP to help the figures ) and no doubt any sales will be under priced waiting for FOB (friends of Boris) to clean up nicely and start once again to transfer money from the hoi polloi to the rich.
But reflecting more on this post, you can just imagine the discussion can’t you amongst state hating Tory neo-libs who are torn between doing something for the people because of the political consequences of not doing so but are then held back by their idiotology, because of course doing something positive and doing it well gives legitimacy to something that they hate and want to undermine.
That’s what I see – anti-legitimacy policies – deliberately done to make Government look bad creating a default reaching out to the markets or private sector who not only want to make a profit but are themselves caught up in the pandemic as well as leaving citizens to fend for themselves.
It appears that no one at No.10 ever considered that the market/private sector would be hit hard by Covid too because of the obsession with public/bad, private /good mantra (as well as hollowing out public sector capacity to deal with such events).
I don’t know about you, but I’m tired of ideology.
I suspect you’re not wrong PSR. They’ll see privatisation as win/win/win as they flog off ‘inefficient’ state institutions for cash, shrink the state and pander to their right wing members, MPs and voters.
Any promises they’ve made about the NHS can be assumed to be as empty as any of their other promises
I was listening to David Edgerton yesterday. He as talking about how the British elite are wrapped up in idea of British exceptionalism (Brexit will unleash the power of British innovation and Britain will lead the technological revolution etc). This is, of course, mythologized thinking from our leaders. Failing spectacularly will hopefully put ‘British exceptionalism’ to bed and then we’ll be able to build a country whose goals are more realistic and more humane. Doesn’t help us now though. But certainly I would expect that ideas on how to run a country using the power of a fiat currency should gradually break through to mainstream as ‘polishing a turd’ becomes increasingly impossible even for our most masterful propagandists.
Not a word from Sunak about Brexit. Because obviously leaving the transitional/implementation/whatever period at the end of December, either with or without a deal, will have no impact on the UK economy. Utterly daft. I expect yet another emergency financial statement early next year as the wheels start to come off, because the EU will stick to the rules, even if Michael Gove seems to think rules should not apply to the UK. https://www.independent.co.uk/news/uk/politics/brexit-border-michael-gove-rules-b1761600.html The EU is a creature of law: without rules, it is nothing. It should not be a surprise to anyone that customs officers in France or Germany or anywhere else in the EU are not going to take a pragmatic “laissez-faire” view. It is not the way their legal system or business practice works: heaven help you if the paperwork is not all in order.
Meanwhile, we are hoping that mass testing (false positives and false negatives, anyone?) and vaccines (so, systems for delivery of two doses to 65 million people, perhaps twice a year?) will come to the rescue early next year, particularly as the weather improves and we can spend more time outside. Just remember, we locked down for the first time in *March* 2020, just the spring was starting. It took time for infection and deaths rates to be substantially improved – May or June at the earliest. That is the summer. And there were three “peaks” for Spanish flu – mid-1918, late-1918 and early-1919. It can happen again.
In many ways, this may not be the beginning of the end, but just the end of the beginning.
” The EU is a creature of law: without rules, it is nothing.” Indeed, and exactly the same goes for Boris and his cabinet – do they not understand that once they denounce the law they have no standing? It’s only the law which gives them their authority. Abandon it, and they abandon their own position.
Sadly predictable. Covid deaths and other preventable ones in the NHS are less important than impossible and unnecessary budget balancing and debt repayments. Fossil fuel profits seemingly more important than planetary survival. When will they ever learn!
I f only we had a decent functioning opposition instead of one going down a Stalinist control route and focusing on in fighting about antisemitism. Boy has that been a successful topic for destroying the Labour party. What an unbelievable disappointment Starmer is.
Can we not reopen this debate here?
I know many are passionate on this issue but I think debate ion Starmer is not the best use of my time
Still no hint of a broad public stimulus. Where is the discretionary income going to come from the keep businesses afloat? The public are skint, there may be pent up demand, but people don’t have the money to make good on it. Debt driving consumer consumption may well be a long term casualty of Covid, as nobody I know is disposed to using debt to consume anymore; the fragility of their finances has come as a shock to them, and they are frightened.
You should not be surprised by Sunak’s behaviour this has been going on for centuries!
When the Bank of England was established in 1694 an amazing sleight of hand took place.
William III was short of specie (commodity money) particularly silver coin to pursue the wars Britain was engaged in.
Ostensibly in return for a privately subscribed loan of £1.2 million not only was tax money hypothecated to repay this loan but the right to create and issue bank notes was granted to the new bank.
As Christine Desan says on page 311 of her book “Making Money: Coin, Currency and the Coming of Capitalism” the loan was actually paid to the government in the form of newly created BoE bills and bank notes not specie!
As William Lowndes, Secretary to the Treasury, perceptively said in his 1691 paper about the proposal to create the Bank of England “Remarks upon the Proposals for Establishing a Fund to Raise Two Millions.” 1691:-
“Who can think that posterity will be willing to pay a tax of £110,000 per annum not for the support of their own government, for the time being, but to go into the pockets of private men, strangers as well as natives, for money advanced to their ancestors when it will be in their power to acquit the public of such a burdern.”
Thanks
We seem to have overlooked Daniela Gabor’s sterling (see what I did there?) efforts in the Guardian today “The government is not a household, and it does not have a credit card that can be maxed out. Fiscal heretics know this, and reject the idea that we face a public debt crisis. There are numerous reasons why this narrative is flawed. The government, unlike a household, has a central bank that can keep borrowing costs under control. The Bank of England, like other central banks across Europe, has this year bought more than 80% of all debt issued by the British government. It hasn’t done so under political pressure, but because independent central banks have come to accept that large-scale purchases of government bonds are a legitimate and effective monetary policy instrument.
And unlike households, governments can rely on the financial sector to buy their debt in times of crisis. Modern financial institutions view government debt as the ultimate risk-free asset, a safe haven to run to when economic shocks hit. For instance, on 26 November, one day after Sunak warned that “the economic emergency has just begun”, investors were prepared to lend for 50 years to the UK government at an interest rate of less than 1%.”
https://www.theguardian.com/commentisfree/2020/nov/26/uk-maxed-out-credit-card-bad-economics-pandemic-austerity
I tweeted it not long ago with enthuisiasm
The IFS gets “re-tweeted” by all the mainstream media with never a detailed explanation why the government must balance it’s books nor an explanation why a privately owned Bank of England set up in 1694 was creating money from thin air for the government to spend. If a private sector BoE can do this let alone a nationalised one the issue is modulating inflation and deflation not balancing the government’s books! You have to be exceedingly stupid not to understand this!
The derisory £3b a year for the NHS is just 16% of the £18.2b a year promised to fund the NHS on the side of the infamous Brexit Bus with Johnson posing in front of. If I’ve got my calculations right…
Wrong on Public vs Private sector pay. Even the IFS has a graph and argument to show this:
https://www.bbc.co.uk/news/55089900