Published 30th October 2021
Tories’ budget gamble is a wolf in sheep’s clothing
- £150 Billion of additional public expenditure;
- The end of the public sector pay freeze;
- Real terms spending increases for every government department apart from Defence;
- Reduction in Universal Credit taper from 63p in the pound to 55p in the pound;
- Living wage increased from £8.91 per hour to £9.50 per hour.
This is a budget that Gordon Brown would have been proud to present in his pomp as Chancellor of the Exchequer.
The fact that it was delivered by Rishi Sunak is a damning indictment of the Tories abandonment of a key plank of Conservatism: core fiscal restraint and a clear indicator of just how far to the left the fulcrum of British politics has shifted.
Accepting that inflation is likely to average 4% (twice the Bank of England target) is not unreasonable in the short term as the economy rebounds from the pandemic, not forgetting that the decision to lockdown on 3 occasions to date has increased borrowing by over £400 Billion and counting. Note “average 4%” implying it is likely to peak nearer to 5%.
Rising inflation leads to increased interest rates as night follows day and within 24 hours many lenders increased mortgage interest rates by up to 0.35%.
It will not be the last such increase and combined with rising inflation, is likely to leave many of the electorate with less net disposable income before the next General Election, not to mention hundreds of thousands suffering house repossessions or at least racking up mortgage arrears.
A high wage, high growth economy is in principle a wholesome objective. Sunak’s budget assumes a current year growth rate of 6.5%. By 2024, growth is forecast to fall to just 1.3% when government borrowing is expected to fall to (just) £100 Million addition to the national debt.
To achieve high growth and reduce borrowing, tax cuts and spending restraints are good bed fellows.
The recent hike in National Insurance will hit the employed and business owners, who if they dare to take a dividend from retained profits will be hit 3 times, once through their personal PAYE, once through Employer’s contributions on their employees PAYE and yet again on their dividend payments. A nasty triple whammy.
Instead of fostering an enterprise economy to facilitate growth, skills development and optimism leading to long-term planning, the government has achieved the opposite.
Rishi Sunak is highly intelligent and considered by many to be the most well versed Chancellor of the Exchequer since Nigel Lawson. Gambling on 6.5% growth this year is the politics of folly.
Tax receipts for the current year are £46 Billion ahead of Office for Budget Responsibility expectations. The Tories’ long standing belief was that cutting taxes increases tax revenue, a theory that has been consistently proven.
As little as 2 years ago, these very words fell from Ministers lips. To have pivoted to now believing that higher taxes will lead to higher tax receipts is at best misguided and at worst economically reckless.
There is a real danger of stagflation where modest growth is swamped by spiralling inflation leaving everyone as a loser. Every 1% increase in interest rates adds £23 Billion to the annual national debt servicing.
All of this leaves me with 2 observations. The first is a reiteration of my previous comments that the Conservative & Unionist Party is a misnomer. The second is a rhetorical question: do the Tories want to win the next General Election?
COP26 or cop out?
Despite expending masses of CO2 in the process, the so called great and the good are assembling in Glasgow to wring their hands and release even more CO2 at this weekend’s talking shop, which could easily have been a virtual event. There are notable absentees in any event but I can’t think why.
With Stanley and Carrie Johnson and Zac Goldsmith leading Boris Johnson by the nose towards spending £1.2 trillion of taxpayers money on achieving carbon neutrality by 2050, I am backing the Daily Telegraph’s campaign for a referendum on whether or not the public back this policy.
I am a reluctant supporter of referenda per se but this eye watering and reckless waste of money is gesture politics that is making us a laughing stock in the developed and developing world.
Notwithstanding the UK has outsourced some of its domestic CO2 production to others (and then often pays more to import the goods than if they were made here), our headline figure of less than 1% of global CO2 is de minimis.
Given the amount of CO2 that China, India and Germany alone will generate through burning coal for the foreseeable future, the only relevant zero is the level of justification for scrapping gas boilers and internal combustion engines in the current proposed timeframes.
The inability to cost effectively recycle lithium batteries or upscale hydrogen power will take years to come around. In the interim, over 1/3 of utility bills are used to fund green energy development, at a time when wholesale gas and electricity prices are spiralling.
Once the global elite have left Glasgow, it is time to ask the public if they really want to add another £1.2 Billion towards an already eye watering national debt. This madness must end.
French sabre rattling and EU intransigence may yet deliver WTO Brexit by stealth
With the French presidential election looming and Marine Le Pen resurgent in the latest polling, it is little surprise that the rhetoric from the Elysees Palace is ramping up.
What better piñata for Emmanuel Macron than Brexit Britain? The seizing of a UK fishing boat, the fine imposed on another, both apparently for breaching regulations on landing their catches is the tip of the iceberg. It is telling that the captain of the boat seized will only appear in court after the presidential election. I wonder why.
In diplomatic terms, the UK’s summoning of the French Ambassador for a dressing down, combined with “2 can play that game” from George Eustice and Liz Truss’ refusal to rule out military action suggests that the Johnson government will at least fight rhetoric with rhetoric.
The UK’s (correct) refusal to grant permits to around 50 French trawlers who are unable to evidence that they have not regularly fished in British waters over the last 5 years has led to a series of threats including cutting off the electricity to Jersey.
The French really showed their hand when admitting that the UK needs to be punished for Brexit. Macron remains odds on to secure a further presidential term despite the gilets jaunes protests that threatened briefly to terminally destabilise his current tenure.
With Germany in a post Merkel state of flux (and no government), Macron is now arguably the leader with the most muscles to flex in the current EU27.
This helps to explain the impasse over revisions to the Northern Ireland Protocol. The likelihood of Article 16 being triggered grows by the day. Those WTO Brexit believers may yet get their wish by stealth.
With the EU in legal disputes with 23 of its 27 participants, a full on feud with Britain is at least, a useful distraction.
Resignation of Kathleen Stock a victory for the mob
I have little in common with the fundamental beliefs of Dr Kathleen Stock. As a radical feminist, she is highly respected within the bubble of her academic peers but has committed the cardinal sin of asserting the primacy of biological sex over gender preference.
If this is transphobic, (it is not but bear with me here), the majority of opinion in the UK is likewise. The disgraceful behaviour of masked “activists” at the University of Sussex, combined with inappropriate statements from Dr Stock’s own trade union made her continued employment untenable (despite the laudable and public support of the Vice Chancellor).
Those who truly claim to believe in free speech have lost another brick in their defensive wall. You may not like Kathleen Stock as a person. You may disagree fundamentally with her views. By removing her right to exercise free speech in academia, mob rule has won and been further galvanised.
A reminder. Less than 4,500 gender recognition certificates have been issued in the UK since 2005. Between 0.5% and 0.8% of the population identify as trans gender. I wish Dr Stock every success in seeking future employment. Unlike JK Rowling, she could be cancelled.
To think she will be the last lamb to be sacrificed at the altar of identity politics is delusional unless the mob juggernaut is repelled. Let this be a warning to all who talk a good game on free speech but sit on their hands and do nothing when it is under threat. Appeasement never ends well, just ask Neville Chamberlain.
Insulate Britain – the John Redwood solution
I have given up expecting that Sadiq aka “Genghis” Khan and Cressida Dick will stop the hypocrites that demand insulated homes across the nation (apart from theirs of course) to avoid the (not) inevitable climate catastrophe.
The best hope the British public have for a reduction in disruption is a supply chain failure in superglue and hi vis bibs combined with a really cold winter.
Unless of course common sense prevails and the government listens to Sir John Redwood. In his typically acerbic style, Sir John cuts through to protect the taxpayer by rejecting the notion of imprisonment for these domestic terrorists and in a further nod to their hypocrisy, recommends removing their driving licences.
Given the amount of these so called activists that not only drive cars with internal combustion engines, that will certainly help to reduce their CO2 emissions, which is ultimately their objective right?
God Save The Queen
With Charles and William trotting out the mantra of the World Economic Forum, Andrew continuing to duck and dive from his legal “difficulties” like a champion boxer and Harry continuing his relentless attacks on the Royal Family, it comes as no surprise that our recently widowed Queen is being advised to rest for a further fortnight.
This is yet another annis horribilis. Our 95 year old monarch has led the monarchy with almost unparalleled distinction for almost 70 years. I fear for the future of “The Firm” once she is no longer monarch.
Charles is an adulterer who has been publicly rehabilitated but cannot stop himself from wading into everything from climate change to the Great Reset.
William enjoys a lot of popularity, not least due to his wife’s favourable comparison and stoicism compared to the Duchess of Sussex but he must avoid replicating his father’s interference in matters over which he would be better advised to keep his own counsel.
It is self evident that the Queen is much nearer the end than the beginning of her reign. I wish a full recovery from her latest malaise. The last thing this country needs now is a weak man as its monarch.
God Save The Queen.
© justchrisdavies 2021