According to the FT:
Chancellor Rachel Reeves will not raise taxes in next week's Spring Statement, Labour officials said, as they tried to dismiss Conservative claims that she is preparing an “emergency Budget”.
Reeves will instead turn to public spending reductions — a combination of welfare cuts and savings to the planned budgets of Whitehall departments — to rebuild adequate headroom against her fiscal rules.
So, the choice is to let the best off enjoy their wealth and to punish all those who rely on the state.
It is very hard to work out who Labour hates more, the state or those who need it - which it would appear they do not think that they do.
This is not necessary, of course. As I keep saying, we could tax those with wealth more. It really would not be hard.
Austerity has been chosen instead.
Reeves will, of course, no doubt deny that she has chosen austerity, but look for definitions of it, and you will find a strong consensus around it being measures aimed at reducing public sector debt and budget deficits through spending cuts, tax increases, or a combination of both. That is what she is going to do. Austerity it will be then, and all because of a fixation with a fiscal rule that is utterly inconsequential.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Even the FT (alphaville) agrees….
“So this time around, sating the fiscal rules gods means relieving a lot of people of their benefits. Everyone is entitled to their own views on whether that is good or bad thing, but hopefully we can agree on this: it’s not a great thing to be in effect forced to do so by made-up rules.”
Correct
Guardian headline today “Biggest cuts since austerity era… “.
When did we leave austerity ? I thought it was continuous and ongoing since 2010?
Agreed
But “TINA!”* she will say, channelling her hero, Mrs.. Thatcher.
“YTIABA!”** we must shout, loudly, and explain why. Again and again and again.
A fiat currency and a central bank.
Easily obtainable taxes from those who can afford it.
Central bank action on interest rates.
The macro-economic folly of balanced or surplus budgets.
The economic stimulus (multiplier effect) in recessionary or flat times of increasing the incomes of the poor. (allied with the pointlessness of increasing the inactive savings of the rich)
The utter immorality of asking the poor to pay for the increasing wealth of the rich (current Labour MPs may need help with understanding that point).
The danger of imminent societal breakdown (traditionally pitchforks in UK, or in France, substitute cobblestones).
Merz, in Germany.
*TINA! – There Is No Alternative!
**YTIABA! – Yes There Is A ****** Alternative!
In this mornings Grauniad I noticed this;
“Around 9.268m people were neither in work nor looking for a job in the November-January quarter, or 21.5% of 16 to 64 year olds.
…
The 9.268m people economically inactive in November-January included 2.4m students, 1.6m people looking after family or the home, 221,000 temporarily sick, 2.8m long-term sick, and around 1m retired people.”
The figures above total 8 million. Where are the missing 1.2 million?
Are they the idle rich?
Who knows?
My first guess was that the missing group theyre counting is children, but the number is not high enough.
Maybe its just people are working, just not earning enough to pay income tax. Seems like they are counting people they don’t want to admit to though. Additionally most of those economically inactive students will actually have part time jobs, so the whole thing seems suspect to me!
Agreed
There are stats, stats and you know the rest
O/T but it seems who were quite correct not to travel to the U.S.A, as I see a French scientist has been detained at Houston, Texas Airport, because he had expressed a personal opinion of Trump. Presumably critical.
This may be a conspiracy theory too far but I remember Michael Hudson saying more than a decade ago that Greece and the UK were experiments in how to turn a poor and a wealthy country into bastions of neoliberalism?
I also remember at the same time, New Labour think tanks (along with the City) arguing that in order to compete with China, India and the global south, wages in the UK must fall, the welfare safety net must be dismantled and employment/environmental protections removed.
This looks less like a mistaken adherence to ‘fiscal rules’ but rather another step in a highly developed ‘plan’.
In any event, Daniela Gabor wrote (https://www.theguardian.com/commentisfree/article/2024/jul/02/labour-plans-britain-private-finance-blackrock) ‘The Labour party has a plan for returning to power…BlackRock will privatise Britain – our housing, education, health, nature and green energy – with our taxpayer money as sweetener.’
I’m no expert but surely this is well on the road to corporatism? It certainly does not look like democratic socialism.
You are right
Reeves is an MP & thus gets mail from her constituents. Some of it must, in one way or another, relate to austerity. Perhaps she just ignores it? Or maybe it never gets to her (must be a busy life being finance minister). It begs the question on the thought processes of Reeves and the people in the finance ministry & central bank – “it’s not happening to me so its not happening”? or “UK serfs on gov’ “welfare” don’t vote and thus don’t count”?….or perhaps its just the monomainia “fiscal rule” nonesense. Puzzling.
I suspect her mail is answered for her by someone who wants to be an MP next time
On my dog walk today I was thinking about what could possibly drive the advisers and politicians putting budgeting according to an arbitrary constraint ahead of citizens’ needs. Are they just cruel? Do they truly believe they have to be seen to be meeting this target to be considered economically sound? Or did they seek electoral power to dismantle what remains of the welfare state, hand everything over to the private sector to run powered by public money, and take plum jobs in that sector when they get voted out of office? The motivation for all this is what I cannot understand. It’s so alien. Perhaps it’s just the cognitive dissonance caused by Labour people doing as much, if not more, damage than the Tories, who we knew were just out to protect their own class interests.
Some economists genuinely believe that the neoclassical / neoliberal theory is close to nirvana :
– people payed what they are worth
– markets achieve best distribution of resources
– small government to not get in the way
– maximum libertarian freedom
– close to an anarchists dream society
They refuse to confront all the inconsistencies in neoliberal equilibrium economics/politics.
Others are afraid to speak out / rock the boat.
Others are simply exploitive, selfish, good for nothings enriching themselves or their benefactors.
Too true. When is austerity not austerity? Anas Sarwar has reacted to the allegation of austerity by denying the Chancellor and his party are imposing it with the imprecation “Go get a dictionary”. How we laugh.
So, they are shrinking the economy by £5billion per year and expecting growth?
Surely there has to be a backbench revolt. If not now, then when?
Kim sj-
The 2024 backbencher intake must be looking on with horror, reading emails from appalled constituents, hearing everybody and their dogs saying that there is no perceptible difference between Starmer-Labour and Cons policy. Perhaps two or three by-election wipeouts will make it impossible to ignore that unless there is a big change of course, dumping Starmer, Reeves, McSweeney, they will be out of a job in 2029. Or possibly sooner.
When you look at the latest figures for working-age people not in work or looking for work, then these are at 21.5%, a quarterly and annual drop. You wouldn’t know that the trend is downwards from the statements from the Work and Pensions Secretary or others in the Labour leadership.
COVID did cause a noticeable increase in this figure, but after that it’s started coming down. This tends to suggest that the whole basis of estimates that the welfare bill is going out of control may be doubtful.
As such, it’s then hard to avoid a concern that they’re not only choosing to hit those least able to accommodate the economic blow, but they’re also using the wrong figures. For those affected, at least, austerity never ended – they did not have adequate access to services because of existing austerity measures which were not reversed. And now they’re being hit again by even harsher measures.
Why oh why are the politicians in thrall to Treasury who in turn are fixated on balancing the books like a well trained book-keeper. But they run a national economy and do not need to balance the books in the way they think. It is like the Great Depression of the 1930s never happened and they have not learnt a thing that Keynes showed them.
One thought I had after watching that video of Gary Stevenson that you shared. He mentioned that since the 1980s, the wealth that was shared by working class, middle class, government and the wealthy, has moved to fill the coffers of the wealthy, leaving the other three segments poorer.
One of the keys to wealth is the ownership of assets, from which they claim the right to charge rents in the forms of interest, royalties, rent etc. Well in this digital age, one of the key assets is data, and individuals own their own data. To date we have been forced to give away that data for free, and the digital owners of software then sell on the data to make huge profits.
So my suggestion to help redistribute part of the wealth back to the people is that companies who want to use the data owned by an individual, must pay a rent to the individual. This would of course require a strong government to demand this happen via the so called rule of law, with the amount of rent to be enough to reduce the monopoly profits currently being earned. Of course, if this does not work, there is always other options such as outlined in your Wealth Report, in conjunction with the reversal of the rental flow.
What do you think?
I like it
We are a long way from having such governments
If anything reifies better the corruption and capture of our politics by the rich, it is austerity for sure.
Dr. Jay Watts, a consultant clinical psychologist, posted on X: “Can we take a moment for the sheer cruelty of increasing reassessments & face-to-face assessments—when terror of them has been explicitly linked to suicide & self-harm in Prevention of Future Deaths reports? Labour knows this. Yet here we are.” This is bloodthirsty economics. And, like all cruelty, totally unnecessary.
I would like to point out the consequences of cutting welfare.
So the poor will get less money and so will spend less. Note that the poor can not save any money so their welfare will all spent into the economy and taxed.
This means that the taxes from the poor will also reduce, possibly by the same amount as the cut in welfare.
So the poor will starve and the government will get no more tax.
Correct
What will Labours campaign slogan be for the local elections?
This is not just austerity, it is Labour austerity.
A once great party is dying on its feet, the leadership are deaf to any and all voices in the party who don’t agree with them and seek to silence or remove them from office or even expel them. The broad church has turned into a narrow aisle.