It seems that Rachel Reeves is determined to get as much wrong as she possibly can in her role as Chancellor of the Exchequer. News of two new gaffes in the making is emerging today, both in the FT.
In the first such story, that paper reports that Reeves is looking at using a private finance initiative (PFI) approach to funding a £9 billion new road scheme tat will create a new Thames crossing.
Four questions very obviously arise. One is to ask why we need new road schemes but cannot afford green investment. The failure to address the economic reality we actually face demands answers.
Second, the reason why London gets priority yet again has to be asked. Has Reeves heard of the world outside the M25, even as a Leeds MP?
Third, there is the obvious point to be made that if the City can find £9bn to fund this PFI scheme, it could just as readily find £9bn to deposit with the government to do it.
Fourth, as I pointed out yesterday, the government does not actually need to borrow funds to do a scheme like this. The decision to issue gilts to cover deficits is a purely political one. They can as readily be covered by taking more National Savings and Investments deposits. Or they could not be covered at all: the Bank of England could cover the funding. But what is not required is easily the most expensive and risky option for the government, which is a private-sector partnership deal where the cost of funding alone will be considerably in excess of what the government itself would pay.
We have to presume more disasters of this sort are in the making.
Then there is Rachel Reeves' other gaffe in the making to consider, which more than demonstrates she had learned nothing at all from the debacles of the Gordon Brown era. The FT is reporting that:
Reeves, speaking on the margins of a trip to New York last week, said: “We are pushing the regulators to demonstrate that they are taking seriously the competitiveness of our financial services sector.
“One of the commitments is to go through the rule book and tear up rules that are unnecessary or duplicative and we're determined to do that,” she added.
In particular, the Treasury, clearly with political approval, is questioning whether a new consumer compensation scheme for those impacted by consumer banking fraud should go ahead this October because it might reduce the competitiveness of the City. In other words, the cost of bank failure is to be borne by the victim in the Treasury view, presumably endorsed by Reeves, and not by those whose failings let it happen. This is so reminiscent of the worst of Brown's ‘light touch regulation' that I have horrible feelings of déjà vu.
I was told by many before the election, when I warned of the danger that Reeves represented, that I was being overly harsh and even unfair. In office, I was assured, she would show her true colours. Now I can report that she is doing that, and those colours are at least as bad, or even worse than I imagined they might be. It seems that she is intent on repeating all the mistakes that Gordon Brown made.
This is going to end in tears.
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A decade on, it should be clear to everyone that Private Finance Initiatives (PFI) are an utter failure. These articles explain:
Private Finance Initiative: hospitals will bring taxpayers 60 years of pain (2011)
https://www.telegraph.co.uk/news/politics/8279974/Private-Finance-Initiative-hospitals-will-bring-taxpayers-60-years-of-pain.html
The Impact and Legacy of the PFI in UK Schools (2021)
https://politicalquarterly.org.uk/blog/the-impact-and-legacy-of-the-pfi-in-uk-schools/
REVEALED: The true scale of school PFI debts (2016)
https://schoolsweek.co.uk/the-true-scale-of-school-pfi-debts/
PFI: Challenging overly expensive contracts (2021)
https://www.headteacher-update.com/content/best-practice/pfi-challenging-overly-expensive-contracts
Thank you
The phrase that comes to mind is, “Bought and paid for”.
I wonder if she has the wit to realise what she is doing (nudged by big donors from finance), or if is simply a case that she is fully aware of pandering to the financial sector. I’d imagine a very nice sinecure awaits her in the City after she’s turfed out of the job when her ‘plan’ for growth fails miserably.
How utterly depressing. As you say, why do we need a new Thames crossing? It would seem she can’t understand what a disaster PFI is.
I’m fuming at this.
I’m almost speechless…………………….
So much for the female impact on politics and life!
I’m just remembering how Reeve-cividist banged on about her sex/gender/whatever when she was appointed. She joins Merkel (‘Murk-all’) – the ‘respected’ German female politician who in order to get around ECB spending rules went and raided the nationalised railway budget and left it in a mess whilst we have climate emergency on our hands.
Maybe Feminism is just another materialistic cult or has become one? And BTW – this needs unpicking. Like Thatcher, Reeves will be a poster girl for the City.
Capitalism corrupts everything it touches it seems.
And politics just ratifies insanity and greed.
Profoundly disappointing.
Successful women, (as Rachel Reeves most certainly is) will have to behave in such a way as to “pass” in a capitalist, corporate, male dominated working environment. Many women refuse to “pass” precisely because it goes against ther (our) better judgement, and the way we prefer to work. The “glass ceiling” is another means of illistrating this phenomenon. When you get to a certain level of management in most organisations, you have to start managing upwards, playing the corporate game, and in doing so you then can no longer manage downwards, or sideways, looking after your staff or clients. It’s a choice men and women have to make. I suspect more men than women are happy to take that route.
I’m not excusing Reeves, but I expect she has chosen to behave the way she does, because otherwise, she would not be Chancellor. It’s a bit harsh to criticise her for behaving as all her male predecessors have done.
I have to disagree
I am nit allowing excuses on gender lines. I am arguing on competence and she said that was what she offered. She isn’t.
Helen
If I was just reprising one of Helena Kennedy’s ‘Eve Was Framed’ (1993) principles and applying a higher, unrealistic level of moral judgement on women because a ‘woman should not behave like that’, then I would be guilty as charged.
My reaction however is stimulated by just how many ‘if women ruled the world’ articles I see in the Guardian purporting to show how all would be well with the world if only more women were in control rather than those like me – with a willy.
Thatcher got credibility because female voters could sense that she too did the shopping in her household and knew what the pound in her pocket was worth. A handbag speaks a thousand words. But then this well educated and intelligent women went on to tell lies about taxpayer’s money and deny she’d ever been attracted to the economic ideas von Hayek or Friedman after pauperising the country.
Did the men – or should we say ‘vegetables’ (thank you Spitting Image’) she rubbed shoulders with make poor old Maggie what she was? Read Ian Gilmour’s ‘Dancing with Dogma’ (1992) for you answer (yes I know he is a male of the species and maybe patriarchal but I’d have good old fashioned toff patriarchy over bloody Neo-liberalism any day of the week for what the latter has done me or thee).
No, Maggie was perfectly formed before that – like a bouncing betty landmine waiting to be set off. You can take the Maggie out of Grantham, but not Grantham out of the Maggie. What she was, was a good old fashioned lower middle class snob looking out of her father’s shop window at his customers thinking how superior she was because they were coming to where SHE lived to give money to Daddy.
Look, my point is this really – identity politics – man, women, whatever, LGB&T, Indian, Pakistani, White English, Welsh, Cornish, disabled etc., – we make heavy weather of it at our level of society but the higher you go, and the bigger your wad – or the prospect of your wad getting bigger – identity does not mean a thing because there is only ONE identity that matters these days you see: Wealth. You’re either on the way to it or you’ve got it.
And in that world, your genitals, the colour of your skin or accent etc., don’t mean a thing. Wealth is colour blind because all it sees is money. And if you ain’t got it, you ain’t in it! And it can’t see you! I mean look at the last Tory cabinet!!
And that sums up Reeves in a nutshell to me. She cannot see us.
What she believes in has worked for her and that’s about it. That can only be dogma. That is her problem and now ours. So now, because of Power, Position and Money she’s going try to utilise that for us in government policy. And even if she fails, she will still win personally. She’ll never have to worry about working or money ever again as she enriches the already rich and grows their money.
I suppose I’m talking about the dark side of capitalism Helen. Money changes people. Men and women. It does something to the brain – it’s a form of corrupting alchemy. It loosens our inhibitions and checks on our more unsocial behaviour and our need for other people.
A great sickness has lain across these lands since 1979. Reeves is the latest iteration of it.
@Pilgrim Slight Return
Agreed! Full marks!
Not just disappointing, PSR, infuriating. I have long thought Reeves to be either corrupt or an imbecile.
Rachel Reeves is Labour’s Liz Truss – inept, idiotic, and plain stupid.
Hierarchical power is in itself harmful. Corruption is not required.
PFI, is one of the reasons waiting lists in the NHS is so high and growing.
To get within the PFI limit the capacity (number beds & equipment) were shrunk to mean occupancy, or even lower. Since occupancy is a skewed distribution this appeared OK as median occupancy was lower then mean, but of course that means occupancy is now over 90%. That means admissions are delayed, and hospital acquired infections rise, lowering admissions even more….
Plus the money spent on the NHS goes largely to private financial institutions, not to treating the sick.
John Major’s worse legacy to us all was PFI.
I believe the same argument applies to Education….
Thank you and well said, Richard.
Having taken part in meetings with what were then the shadow Treasury and Business teams, it’s probably worse. Reeves has outsourced her thinking to the City, three working groups assembled and managed by Blair’s team, and been given a shopping list of state activities to be looted. There’s no “family silver” left apart from what the state does or should.
Reeves, like many Blairites and Brownites from the south, just leveraged connections to bag a safe northern seat. They have little interest in the world outside, not even within the M25, but SW1 only.
@ readers: Please have a look at these two Naked Capital posts and scroll down to my comments for more background:
https://www.nakedcapitalism.com/2024/05/tony-blair-and-his-associates-are-waiting-in-the-wings-to-seize-back-power-in-the-uk.html and
https://www.nakedcapitalism.com/2024/02/why-is-tony-blair-so-desperate-for-the-uks-national-health-service-to-sell-off-its-patients-health-data.html
Richard wrote:
“It seems that she is intent on repeating all the mistakes that Gordon Brown made. This is going to end in tears.”
As someone involved with regulatory and trade policy, if I was a I regulator, this would fill me with dread. Morale is already low in that community and little better in Whitehall. There are not enough wise old heads around.
We can see the sequel. A fresh faced and well spoken Tory, likely in alliance with Reform, will emerge in a few years and say Labour failed to mend the roof when the sun was shining, Labour broke Britain etc.
It is all so predictable….
and so depressing!
And when this fresh-faced new Tory gets back into power, you can guarantee that the LINO grouping will disappear back into the shadows. A weaker left-leaning Labour leadership will then take charge and find themselves immediately be monstered with disinformation by the right-wing media. I wonder if antisemitism will be the stick with which they are beaten next time, or whether we’ll see something else appear?
All I can think of Starmer and his flunkies right now is stupid, stupid, stupid. And nobody in the media will deign to point out how stupid they are being.
I’ll keep on saying it until I’m blue in the face. The powers that be must be using some form of brainwashing (subliminal advertising) to turn normal human beings into automatons,
Remember that ‘subliminal messaging’ , while legal in most countries has been illegal in the UK since the 50’s and, as far as I’m aware hasn’t been repealed.
Surely some adventurous go getting young lawyer can bring a test case against the likes of young Elon – or the like.
In the meantime, I keep going back to the immortal words of Billy Connelly.
“Anyone who shows the slightest interest in being a politician should be immediately banned from being a politician”
Well the rightwing press have only just started on how useless Starmer / this Labour Government is. I don’t think they will be short of criticism – just for all the wrong reasons !
Stupid AND sneaky.
William Hague in Times today is ranting about “the abandonment of £1.3 billion of funding for tech and AI projects, most of which was intended to build an exascale computer in Edinburgh”.
Reason given? “it was unfunded — the money wasn’t there, and a growth strategy means controlling the budget.”
Sneaked out on August 2 after house rose.
Totally absurd
“Anyone who shows the slightest interest in being a politician should be immediately banned from being a politician”
or the USA version
Anyone who would make an excellent politician does not have the ability to get elected.
Many thanks for your insightful comments. Colonel.
Thank you, Larry.
I think you’re the Larry I know and will e-mail shortly.
I think that history shows that “light touch regulation” always ends bad, especially with anything to do with finance, but throw in water, housing, etc, the list is endless. Also, Public/Private initiatives are often seen as a gravy train by private business to make money off the state. Does it ever improve the service? I’m struggling to think of any public/private initiatives that were value for money and successful. If there is one, I’d like to know. The lesson from privatisation in general is that we don’t get a better service, and it costs more.
Why is there this continuing myth that private does things better?
I wish I knew
As I see it, those arguing for greater involvement of the private sector are either uninformed or have a vested interest in ensuring the state shrinks to a level where they can collect more rent (in the broader sense of the term).
The former have their opinions shaped by mass media and I suspect the latter do not really believe private delivers better outcomes for most people but it’s a means to an end and their wealth shields them from negative effects.
A modern hospital in my home town was knocked down (unnecessarily imo) and rebuilt with PFI money. Interest rate excessive. Actuaries worked out that with tax they would pay on interest, it wasn’t too bad. The PFI company then decamped to a tax haven so that tax yield disappeared and we end up paying excessive interest forever and a day.
If PFI were to have a motto it would surely be: “Build one Hospital, pay for three”.
🙂
The epitome of Einstein’s definition of idiocy – doing the same thing again and again in the belief that this time the result will be different.
Einstein reputedly said something even worse — Doing the same thing over and over again expect a different result is the definition of insanity.
Scammer & Co are shills who work for the rich and themselves – end of story! Out of sheer economical and financial ignorance the majority of British people undermine themselves by carrying on electing such governments. Take the test go ask your friends and relatives to explain the pros and cons of PFI.
If the housing crisis is getting worse why is Reeves wasting labour and construction resources on massive road schemes that take resources away from new build housing (preferably council) and adding to the climate criisis as well l by the amount of concrete and steel needed and the co2 from the extra traffic it will attract? How many milions of disillusioned Labour voters will there be now?
With regard to housing, see this article from The Independent:
https://www.independent.co.uk/news/business/comment/starmer-planning-housing-development-b2582613.html?lid=aon42tlqyid4&utm_medium=email&utm_source=braze&utm_campaign=Step%201&utm_term=IND_subs_emails
If this is true, Starmer’s housing plans will NOT work.
Correct
Unless Reeves opens the invetsment tap to build local infrastructure new homkes cannot be built
The NIMBYs will be overjoyed as the NIMBYs will not have to lift a finger.
If the “infrastructure” is not present then building or development cannot proceed.
This is how it goes down in the USA. Is it different in England?
Same here
Depressing indeed. I thought that given the disaster of PFI for hospitalss and schools, in plain sight, the new govt would find it impossble to do this again.
Are they really delegating economic policy to Blair’s gang of ‘advisors’ ? That should be impossible – against ministerial codes or parliamentary standards – given Blair’s business interests in the City and potential conflicts of interest.
Again, the 2008 financial crash – should be still fresh enough in the memory to guard against dismantling controls on City risk taking. It’s precisely the opposite of what is needed to compensate for the Citiy’s reduced status after brexit that they are all so worried about.
I suppose the best that can be hoped for is that Reeves is floating these ideas in the FT – to find out what the kick back against this folly might be – so she can say to her paymasters – ‘I dont think they will wear this’.
She was talking about ‘difficult decisions’. These are not difficult – they are not needed.
Its beginning to shape up as bad as you feared Richard.
Reflecting on this, and how desperate it looks, all the Tories have done is left us in such a mess, and Labour are just so ignorant of the latent power of government, that the City is just sitting there waiting for the knock at the door.
For the City, it’s pure opportunism.
For us, it’s like falling ill and having the equivalent of Joseph Mengele on hand to ‘get us better’.
Shocking.
The Age of Exploitation is here to stay.
PFI – Public Fleecing Initiative
I do not now, and never have, believed that privatisation/PFI are considered ‘mistakes’ by politicians.
They know perfectly well what they are doing, and for whom – not the general public at large but the small minority of wealthy backers, wealthy connected interests and the politician’s own career step into becoming one of the former, just as Blair has done. For these people it is a great success.
Until the public at large gets annoyed enough with the country going backwards, and fed up with stupid distractions like ‘immigration’ and government debt, the situation will continue.
Unless climate change intervenes first and ‘efficiently restructures’ society. I do wonder, but have no answer to why the wealthy/super wealthy continue to drive resource consumption? They have more than enough. They shall suffer from climate catastrophe as much as.anyone else, even in bunkers. Who wants to live in a bunker? Why not try to mitigate climate change instead? I do not understand their constant need for ever more money. It’s a disease of their minds.
Separate question, Richard. Do you ever read anything by Cory Doctorow @doctorow ?
A lot to agree with and re your question, only occassionally, but I am aware of them
I guess the ultra wealthy assume a rising tide aka sea levels will lift all luxury megayachts that they can have built for themselves. There does seem to be a willy waving contest as to who can build the biggest.
As the PFI Rip-Off continues so too does the Great Scottish Resources Rip-Off:
“A multi-billion pound subsea cable that can shift vast amounts of renewable electricity between Scotland and England has been given the go-ahead by regulators.SSEN Transmission says the energy transfer project is needed to move energy around the grid on days when the wind doesn’t blow or demand is high. The two 315-mile (507km) cables will run from Peterhead in Aberdeenshire to Drax in North Yorkshire and will initially work alongside a similar link down the west coast. It is part of wider moves to modernise and increase capacity on the energy transmission network for the shift away from fossil fuels to tackle climate change.”
The most interesting part for Scots:
“ALTHOUGH THE LINK CAN CARRY ELECTRICITY IN BOTH DIRECTIONS, THE MAJORITY IS EXPECTED TO FLOW OUT OF SCOTLAND.”
Of course, it is.
Meanwhile, our people pay more for electricity in Scotland than anywhere else in the UK (or Western Europe).
Is there no end to the benefits of the Union!
And will Government Expenditure and Revenue Scotland be adjusted for that?
Nobody here pays attention to GERS except to laugh when the figures are announced.
True…but I will need to comment on them yet again soon because for reasons that defy all logic the SNP still produces them
Might possible reasons, causes and/or purposes for the officially sanctified myth/delusional ideological belief that private is better then public include?
1) Inappropriate/deficient primary and secondary education
2) “Captured”/bigoted tertiary education of economics/finance and politics
3) Ideological blind spots
4) Filtering out of those with heterodox attitudes and concepts, especially those with valid hétérodoxies
4) Our country having a democratic facade behind which is a cartel of oligarchies which include the finance industry, the leadership of the principal political parties and the mainstream media, including the B B C
5) Our “ deep state” or continuous establishment being zealous members of the “Neoliberal Empire” aka. “The West”
6) ?
All of those, and greed
“Second, the reason why London gets priority yet again has to be asked.”
Because Greater London is where the people and “votes” are located.
This is true in Florida with major financial resource allocation to the *I-4 corridor (Tampa-Orlando-Daytona Beach)
*The I-4 corridor (Tampa-Orlando-Daytona Beach) is “swing vote” country.
Statisticians produce the GERS figures. They will be announced tomorrow.
I will be watching paint dry – literally – instead.
Politicians instruct the statisticians
Scotland expects a fair price for its resources – not zero.
England would expect the same if the resources belonged to that country.
We do not expect our people to suffer in a country with plenty of resources to suit the needs of 5.5 million of us.
She is not making a mistake, she is not doing it wrong.
She is doing exactly what is in the plan. Extract wealth from the public sector and place it in private hands. It’s as simple as that.
Scammer & Co can’t have the rich paying their fair share of taxes so hey ho let’s pretend we can balance the books with loads of the Public Fleecing Initiative! And the donkeys voted for it!
My experience in the Labour Party is that most females – and males – abandon all principles if they wish to have any position or power (or ££££). The contrast between Labour 50 years ago and now is profound. Barbara Castle would’ve got nowhere. When we had a constituency GM to decide whether to have open meetings or continue with representatives (always right wingers) the massed ranks of the executive – males and females – argued that open meetings were unfair to women as they had to look after the kids! My wife suggested that the males should get some childcare practice in. We won, until after lockdown
Rachel Reeves studied PPE at the University of Oxford, which is pretty much the standard entry qualification into the establishment. Her first job after leaving university was with the Bank of England.
https://www.theguardian.com/education/2017/feb/23/ppe-oxford-university-degree-that-rules-britain
It’d be interesting to see what has and is being taught at Oxford about PFI as part of the PPE economics syllabus and also if it gets taught as part of the PPE politics syllabus. A bad idea in the former but a good idea in the latter perhaps?
Final point. Liz Truss has a PPE degree. Enough said.
There was a report from UCL and in inews in May that Mazzucato might join Labour’s Economic policy team – Thought at the time it was too good to be true. Surely she would have little truck with PFI….
It was said Starmer was an admirer – —- wishful thinking.
I’m perplexed by this item. I suppose they don’t look at the Guardian on-line – let alone click on the ‘Climate crisis’ tab, but if they did, the main stories are:
First, ‘The dumbest climate conversation of all time’: experts on the Musk-Trump interview. Trump talked about ‘nuclear warming’ while Musk said the only reason to quit fossil fuels is that their supply is finite.
Second, US workers launch Heat Week to fight for ‘the right to water, shade and rest’. In probably the hottest summer ever, workers are organizing in 13 cities to raise alarm about workplace heat exposure.
Third, Greece takes stock of wildfires that raged through Athens suburbs. Opposition and media turn on government as firefighters work to contain ‘scattered hotspots’
Fourth, Heat aggravated by carbon pollution killed 50,000 in Europe last year – study. Continent is warming at much faster rate than other parts of world, leading to fires, drought and health problems.
Fifth, Italian hospitals report rise in heat cases as weather fails to deter tourists. Number of people seeking emergency care for heat-related illnesses is up in cities including Rome, Florence and Venice
Sixth, Trump would pull out of Paris climate treaty again – and Harris faces tough choices. If elected, the Democrat is likely to face a trade-off over manufacturing jobs and economic independence from China. Barry Eichengreen.
Seventh, For those with power and rich donors – the AC is always on, even if it’s melting outside. This has been a summer of extreme heat around the world. The Guardian is investigating how it harms our planet and leaves. George Monbiot.
Eighth, Western Australia’s EPA has made a big call on a major gas expansion. Will state and federal governments back it up? The environmental regulator has a history of backing fossil fuels – that is why its preliminary view on Woodside’s Browse project is extraordinary. Adam Morton.
If they understood at least a couple of these stories, and if they have children or grandchildren, or they care about others’ children …
They think they can buy their way out
On the question of motives and intentions… “The purpose of a system is what it does.”
https://www.anildash.com//2024/05/29/systems-the-purpose-of-a-system/
Is it possible that she actually is after growth? This kind perhaps?
https://www.celebritynetworth.com/richest-politicians/gordon-brown-net-worth/