A regular commentator on the blog, whose identity is known to me, has posted this in the comments section:
Next week, I'm representing my firm at a working dinner with Reeves and her PPS Strathern. The occasion is for foreign firms operating in the City to hear what Labour proposes and makes their case.
Labour is already working with the big UK and US banks, in tandem with the Blair Foundation, and liaises regularly with UK Finance.
I'm happy to relay questions and send a read-out.
Suggestions are welcome. Please make them serious ones that might be raised on such an occassion.
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A point of particular help to the City who wish to hire migrant workers who need rental accommodation in the capital would be a reassurance that Labour would not bring in rent controls. Or other barriers to the rental market operating, and ideally liberalise to make it easier for workers to find rentals.
I am sure she would be pleased to agree
Richard and Bourne. I feel that the best economic analysis and facts show the reverse. We need several mechanisms to keep housing affordable.
– Rent controls prevent charging what the market will bear
-Even the Wall Street Journal agrees with Adam Smith on land value taxes
The Wall Street Journal has a video, ‘The Invisible Role Taxes Play in America’s Housing Shortage’. The land value tax discourages people from hoarding and speculating on land. https://www.youtube.com/watch?v=gJqCaklMv6M
– inclusionary zoning discourages bidding up the price of land
– raising capital gain inclusion rates for commercial real estate transactions, discourages speculation and flipping.
– banks should be regulated to have more modest appraisals which determine mortgage amounts.
And for those thinking investors will be discouraged from building, I suggest that the price of land would fall and non-profits and governments could afford to build more.
Aside from all the analysis out there on these measures, there is two simple facts. There is not enough housing, and high prices mean less building because fewer people can afford the product. The price structure has to come down.
Yesterday I gave evidence @ a parliamentary select committee on energy (https://parliamentlive.tv/Event/Index/5dbc3bd2-8354-411a-b75a-79d785495af8)
I sat next to Stakraft – a Norweigan state-owned power generator active in the UK. Other (wholly-owned) state owned power companies active in the UK include EdF and Vattenfall (off-shore wind). Majority state owned companies include Orsted (off-shored wind).
Given the states concerned are liberal democracies that see a benefit from having a partially/totally state owned power company, what are Labour’s plans and if it has a plan how does it plan to fund this company and what would be the scope of its actions. If it has no plan – why not, given all the companies appear to be profitable.
Excellent question
https://www.rfi.fr/en/france/20230217-electricity-supplier-edf-loses-%E2%82%AC18-billion-worst-result-in-company-s-history
It’s complicated – EDF is not so profitable at home
So?
Is that an obligation?
Depends if you’re trying to tell the Shadow Chancellor to nationalise or create a nationalised entity on the basis that they always make a profit.
The assumption that profiut is the purpose of business is one I do not agree with
Fair point ref EdF & not making a profit …………..in 2022 – when it had a load of reactor problems (which have since been solved). The article was dated April 2023 and referred to events in 2022. Also, the French market, into which EdF sells most of its electricity only has a very small day-ahead market, expressed another way – most of EdFs elec is forward sold in periods ranging from a couple of weeks to… a couple of years (I’m not offering a point of view – the French regulator produces the data). Works fine when markets are stable – not so wonderful when they go bonkers.
Buying expensive elec abroad applies to the events of late-2021 through to end 2022 – after which prices became somewhat more normal. What usually happens is that France imports cheap surplus Spanish (& German) elec – usually when those two markets have surpluses due to excess REs elec. Data backs this up.
All that said – I was making a general point – most state owned elec generators are profitable – if you live in the UK, some of the money you pay for elec goes to, The Danish state (Orsted), the Norwegian state (Statkraft), the Swedish state (Vattenfall) and the French state (EdF). Expressed another way, you are helping citizens in other EU countries – perhaps this was not the intention when the Tories privatised generation – but it is an outcome. As they (don’t) say: charity begins at home and in this case ends up with citizens in other countries. – a direct outcome of neoliberal economics when implemented by one country & largely ignored by others.
https://www.heraldscotland.com/news/24031448.scottish-wildcats-aberdeen-wind-farm-decision-goes-judicial-review/
Vattenfall is not just offshore. They have already started to knock down trees in the forest where the wildcats are, even though there was a judicial review going on.
Haven’t heard the results of that yet, but there were bulldozers there a few weeks ago.
It’s in the Cairngorms, by the way.
I am so grieved to read this. Having wept impotent tears of rage as I watched an ancient beech tree a hundred yards away from our front door being brutally sawn down, that I mistakenly believed would be safe for my lifetime, in order to allow the electrical wiring for a turbine so close that most days I now need to wear industrial grade ear defenders outside. I am so angry for those poor wildcats.
We are used to such state funded ecological vandalism here in Northern Ireland. A recent example being the the toxic poisoning of Lough Neagh by DUP MP Edwin Poots pro polluting policies.
We are from off and also practised in paralegal confrontations with Big Boys but there was nought we could do to stop the local corrupt DUP run council from effectively allowing a huge noisy de facto wind farm in a populated rural area. Breaking every planning regulation in the granting of permissions. The usual reasons – local (armed) friends with benefits shenanigans. It has made our house and all others caught in the noise and flicker pit, unsaleable. The profiteering wind power company has gifted £20,000 to the ‘local community’ as recompense but none of our neighbours seems to know where that is going. They have also destroyed an otter refuge above where we are in an alleged protected site of outstanding natural beauty. The environment is powerless against politically connected profiteers.
The Balance of Payments (BOP) ‘records international transactions in goods and services, other net income from abroad and current transfers to and from abroad. The current account data provides the main material for economic analysis. Purchases on the current account require financing. If a country is running a current account deficit with the rest of the world then there is a requirement for foreign currency in excess of the rest of the world’s requirement for domestic currency’ (ONS). This is a structural problem for the UK.
The BOP runs a long term deficit in the UK; of around 3-4% of GDP. Looking to Labour meeting the UK’s climate change targets, what impact will the end of North Seal Oil dependency have on the structural deficit, and how does Labour plan to resolve the long term problem?
How can a government that creates money, have “no money” as claimed by Labour?
Can you spend your way out of recession, or do you need to cut spending to get out of a recession?
In 1945, when the economy was on it’s knees after a Recession and a World War, spending our way out of recession worked within a less than 10 years and gave us the Welfare state.
Today, 15 years after the last great Recession and 15 years of cuts to public spending, we are still in need of growth?
Which has the track record for improving the economy and public services, spending or constraining spending?
Not that I disagree in principle – in my view she ought to be put in the rack and asked these questions – but these guys are surely meeting with Reeves simply to check Labour’ll be ok with them doing some looting in the UK; would these and similar questions be appropriate, that given?
The person asking here is sympathetic to the views of this blog
If we are then to assume that these folk are scouts for those wanting to make genuine investment in the UK ie set up manufacturing facilities etc then, if they aren’t asking themselves, I’d want to know how Reeves can assure them there’ll be social stability here given contaminated foodstuffs together with black market goods of uncertain provenance and quality are likely to be pouring in through the unprotected borders round the freeport areas. Who wants to be setting up a business in an environment where food riots are on the horizon?
“Are good quality health, education, transport and housing a luxury that can only be afforded if we have a strong economy? Or are they, in fact, the prerequisite to achieving a strong economy?”
Prerequisites
Does she agree with Margaret Thatcher’s view that “there is no such things as government money”?
Two inter-related questions.
Do you understand the UK government can create money as a medium of exchange from thin air?
Do you understand why this is a prerequisite for stable market capitalism to exist?
The Australian historian David Blaazer makes a prudent point about government need in relationship to money when he says the following in relation to the development of it in one of his papers featuring the British Isles:-
“The state requires a stable system of values in order to proclaim and to calculate what is owed to it, and what it owes.”
https://www.tandfonline.com/doi/epdf/10.1080/14490854.2016.1156158?needAccess=true
Does she think the growth of inequality the UK in the last four and a half decades is a problem? If not, why not? But if so what will she do to reduce inequality? Does she think that wealth is adequately taxed compared to income? (I expect she will talk about raising the bottom but she also needs to think about the 1%, 0.1% and 0.01%.)
Does she believe interest rates are an effective tool to address inflation driven by supply constraints caused by covid and war? Is there is a risk of a wage-price spiral? She is bound to say yes and yes.
What is more important, wealth or wellbeing? Does she think GDP is an important number and why? How accurate is it? What does it miss out? How about balance of payments?
Is immigration a good thing or a bad thing?
Is private sector involvement in the delivery of public sector services a good thing or a bad thing? A more nuanced answer will explain how she would stop overspend on defence contacts, prevent the regulatory failures that led to Grenfell, the failure of privatisation of eg water and the railways, and Fujitsu’s role in the Post Office scandal.
In each case, I’m most interested in why she thinks what she thinks. What is the factual evidence base for her view? Or is it just received wisdom and opinion?
Thanks
Does she understand the gravity of the climate crisis and is committed to putting in place the £28 billion plan and how dangerous any delay is?
In economics, do you have to speculate to accumulate?
Is Labour considering putting a stop to Right to Buy in social housing to enable the council housing sector to catch up with demand with its development plans and use of RTB receipts?
(Currently, I see no justification for continuing to pursue RTB as current policy of the Tory party, nor as any policy at all given the amount of families in B&B accommodation up and down the country).
Labour has laid out plans to alter the planning system to enable more houses to be built but what are its plans with regard to brownfield sites? Are there any plans to subsidise brownfield site remediation to encourage redevelopment?
( The idea that it is just the planning system that slows down affordable housing production is fanciful in the least).
If Labour is concerned about housing supply, does it have any plans to help or fund and form the modern methods of construction (MMC) sector market which would enable homes to be brought on line much more quickly? If so, does it have any plans to create a market for MMC (including a legal basis of the properties, renewal and refurbishment/sustainability strategies – all with long term support from Govt)?
(MMC has a role and a future if only it were legitimised with a proper legal and management principles that did not kowtow to the traditional market).
Thanks.
Given Mrs Reeves is an economist does she agreement with this very recent statement (Wednesday) by Mrs Lagarde, head of the ECB:
“Many economists are actually a tribal clique,” [They] are among the most tribal scientists that you can think of. They quote each other. They don’t go beyond that world. They feel comfortable in that world. And maybe models have something to do with it.”
If she does agree with it – what does she propose to do – in terms of a “tribal clique” in the UK whose models largely discount the possibility of “exogenous shocks” such as pandemics, climate change-induced weather events, and sudden supply shortages?
Ms Lagarde should have suggest that economists try walking about
How does the Labour Party think that prostituting themselves more to the already rich and powerful is actually going to help those who cannot afford to eat or live decently on a fraction of the money that the bankers get even when working full time.
Reeves will be fully primed with her mantra scripted – not to engage directly with any questions.
But, nevertheless, along the lines of some others on here:
‘ Given the failure of 14 years of austerity, and restrictions on public spending, which has produced a static economy, increased income and wealth inequality, millions in destitution (according to Rowntree etc) a collapsing NHS with millions waiting for treatment, and many bankrupt local authorities, do you think :
1 – there are lessons to be learned from the immediate post war rebuilding of the economy – the creation of the NHS, millions of houses built, much of it using public investment, not only private?
2 – there are lessons from the many serious economists who say there is money to invest, through reform of some taxes and relief’s on higher and unearned income, connecting savings and pensions with investment, and/or government money creation, and that much of our so-called ‘borrowing’ is owed to ourselves & doesnt have to be repaid.
3 – there are lessons from Keynes’ quote – ‘ anything we can actually do we can afford’?
Does she think that politicians should answer questions directly, or fudge around the issue if they think the public won’t like their answer?
Britain imports nearly 40% of its food. Food is potentially a far larger and less tractable problem than energy. As climate change impacts food production and food prices rise, what will Labour’s food security plan be?
You have chosen to hamstring yourselves with arbitrary fiscal rules. Do you genuinely subscribe to this economic illiteracy?
I would ask Rachael Reeves how her government would respond to a Trump administration withdrawing support for Ukraine. I hope the answer would be that the UK and EU would step up their contributions to make up for a US withdrawal.
Should we citizens be fitting in with the needs of the economy or should the economy be designed to fit the needs of we citizens?
Given the economic successes brought about by the Biden administration in the USA through government investment in infrastructure projects, can Rachel Reeves explain how further austerity in the UK will improve the economic circumstances of the nation, given there are 14 years worth of evidence to show that it will not.
Is it time Labour started to look at the “migrant crisis” in a different way? Trying to keep people out does not work. Desperate people will continue to do desperate things. Instead of keeping them hanging about, at great expense to the public purse and detriment to the asylum seekers health and well being, why not try making basic necessary checks quickly, give them a visa and let them work. In 3 or 5 years, if they have been working/studying and not been in trouble, let them stay. Who knows how many builders, engineers, teachers, carers, Drs, nurses or entrepreneurs we already have here, ready and willing to make a contribution and enhance our society
The government does know how many professional people we have here unable to work because of immigration rules, stuck in hotels. Some of them are working in charities just to stop themselves going mad in the system.
Question for Rachel Reeves
Foreign firms operating in the city are more likely to see future investment opportunities if the UK economy is geared towards public and private investment in economic activity which bolsters the public sector, business and services. Investment in public services is key here because it is a labour intensive part of the economy. It not only generates jobs in this sector but also for businesses and services in every constituency, as well as meeting the demands that the public most wants eg better public services across the board.
The public wants the next government to supply a more secure future for themselves and their communities, where wages and conditions improve and more local jobs are available. There are ways to fund that investment.
QUESTION Given the above, what does Rachel Reeves think of the idea of using the tax-subsidised savings that many people have in ISAs and pension savings accounts. The scale of funding that could be available is seen by the fact that people save £70 billion a year into ISAs https://www.taxresearch.org.uk/Blog/2023/11/20/the-reform-of-the-use-of-isa-funds-could-result-in-the-saving-of-at-least-3-7-billion-of-tax-subsidies-a-year/ and £140bn into pensions. https://www.taxresearch.org.uk/Blog/2023/11/30/reforming-the-conditions-attached-to-pension-tax-relief-could-release-35-billion-a-year-for-investment-in-a-uk-green-new-deal/ If, in exchange for the tax advantages, these savings were required to be linked to new socially and environmentally necessary investment, more than £100bn of funding for such a programme could be found a year. https://www.taxresearch.org.uk/Blog/2023/11/20/the-reform-of-the-use-of-isa-funds-could-result-in-the-saving-of-at-least-3-7-billion-of-tax-subsidies-a-year/ . https://www.taxresearch.org.uk/Blog/2023/11/30/reforming-the-conditions-attached-to-pension-tax-relief-could-release-35-billion-a-year-for-investment-in-a-uk-green-new-deal/ .
Technically that might increase government borrowing, because even things like NS&I are included in that so-called debt, but so what when the result would be the future people desire and the economy that the country needs now? It would of course also increase the investment opportunities for the foreign investors in this meeting
I recognise some of those!
How will you work on the public private partnership where business expects a healthy, educated workforce. The country needs investment in so many areas will you revisit your view on tax and use the work of academics such as Richard Murphy to design a pick and mix of taxes which will kick start the economy whilst reducing tax on the poorest eg increasing personal allowances.
Will you review the education of the bank of england panel who only seem to understand demand lead inflation and not supply lead inflation which has lead to the bank of england raising interest rates which has been detrimental to the uk economy.
Does she think it is acceptable that the DWP can inspect any bank account into which benefits are paid?
Will she continue the practice?
https://www.chroniclelive.co.uk/news/cost-of-living/dwp-confirms-two-things-looking-28474405
I can terll you the answer to that: it is yes. Labour did not object to this in the Commons.
Doesn’t necessarily mean they approve, it could easily be they don’t but also don’t want the roasting they’d get from the media for saying so, especially with an election in the wind.
Given that Labour is on the cusp of having immense power and the privilege to be able to change things in our country, who is she intending benefit from these changes? If it were a choice between normal workers and the City of London, who would she choose?