As the Guardian has noted:
Part of [Rachel Reeves'] plan to grow the UK economy involves persuading cautious Britons to take more risks with their savings. It's a win-win, she says. British business gets more investment, and savers get better returns. The “nation of shopkeepers” becomes a nation of investors.
The confusion of savings and investment in that piece is, of course, typical. But let's ignore that and instead note that the Guardian did a survey to see if people like what Reeves is planning. The answer is resounding. They don't.
Quite reasonably, and at this moment utterly justifiably, people in this country think stock markets are too risky to go near.
Reeves is, then, setting out to fail. Creating a policy that people inherently mistrust and which they will not be persuaded by is a recipe for political failure, and that is what Reeves is setting herself up to deliver.
Why didn't she find this out before she set out on this ridiculous path? That is the obvious question to ask. But there again, dogmatists always ignore evidence, and if Reeves is anything, it an unthinking dogmatist.
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And of course as your recent video pointed out, when we purchase shares they are almost all second hand and very rarely are there new shares issued in which money we invest goes to fund new or existing companies. Rachal Reeves ought to know that, and if she doesn’t then shame on her for misleading people!
This needs repeating a million times over. All dumping money into second shares does is drive up the stock price and therefore bonuses for the board members with their share price linked remuneration packages. Nothing of value is being created.
“plan to grow the UK economy”? Reeves has no such plan; she refuses to invest in the UK economy, its NHS or its infrastructure. She is inviting the private sector to do it for her (and of course for their own profit).
There was an incredible stupid discussion on BBC Radio Scotland, GMS this morning, in which Lord Foulkes (Labour) argues that voters should be compelled to vote. The interview, typical of BBC Scotland was deeply ignorant and ill-informed about the subject matter (a cynical piece of political spin by all parties involved, not least the BBC for peddling this tripe); which attempted to confuse the issue further by the interviewer gratuitously criticising a Conservative critic of Foulkes proposal, as conflating democracy with capitalism; because he happened to use a business metaphor to make his point.
To be clear, turnouts in general elections have been falling since 1945, when people actually believed politics could change people’s lives for the better, and when 85% of the registered electorate turnout out to vote for Attlee and Labour. Turnout in general elections has been heading sharply south ever since, and increasingly sharply (long term we are heading south of 60%, and toward 50% turnout); after politicians consistently over the next eighty years grossly failed to deliver what was promised, and worse proved to be largely both grossly incompetent, and selfish.
The public discovered that political parties care only about office and power (typically to serve narrow and privileged vested interests with no interest in anything but themselves): and not about improving people’s lives, or fighting increasing poverty or declining living standards effectively. Low turnout is the bellwether of the stark failure of political parties; of inadequate politicians, and their scandalous manipulation of the FPTP system for Party advantage, and the Labour-Conservative Westminster Cartel; and to protect their intersts as political parties, that is all that matters to them. in spite of their efforts – the Cartel is collapsing – as the success of Reform (a crackpot Party) clearly demonstrates.
The failed Parties and failed politicians now want to bring in compulsory voting, so they can point to turnout and claim the public supports them; using legal compulsion as a cynical operation to protect, a corrupted, decayed and failed electoral system that nevertheless keeps them in power. We are already living through a a modern reprise of the Rotten Borough electoral system that collapsed in 1832. Foulkes is a perfect illustration of the species. WE urgently require to change the electoral system on at least the scale of 1832. It is already fifty years too late.
If they do bring in compulsory voting we need a mass campaign to ensure that the number of defaced ballots is always published along with the correctly cast votes. That way the voters could give the representative politicians a clear middle finger 🙂
Australians are compelled to vote.
There is an interesting article on The lighthouse website, part of which is shown below,
“ Compulsory voting arguably leads to a more legitimate process: people are forced to actually register a preference which means governments more accurately reflect the wants of the community, not just the most passionate, committed and enthusiastic.
One of the other things that compulsory voting does is dampen down the extremes. It means politicians have to listen to everyone, not just the noisiest groups or individuals. Compulsory voting moderates our politics.
On the other hand, critics of compulsory voting say that it not only violates the individual’s right to choose whether or not to engage with the political process, it can make political parties complacent. They don’t have to work too hard to give people a reason to turn up to vote.
Notwithstanding these objections that are periodically raised, Australians it seems, are attached to compulsory voting. From the 1940s, when polling was first conducted on the issue, there’s been a consistently strong majority opinion in its favour.
Unless there is a major change in the political culture it is likely to remain a key element in Australia’s electoral system.”
But first, let’s get proportional representation in.
Compulsory voting is being used in the UK to legitimise an electoral system that the British electorate is quite clearly deserting., because they are disgusted by the politics they are being given. The tipping point is being approached, the Westminster Cartel is aware its failure is being exposed, and throwing out the offer that will hide its failure. The purpose of compulsory voting is to demonstrate an increase in voting, and use it to claim there is wholesale confidence in the system; but without changing the two-party cartel from its grip on power and office for the Single Transferable Party (STP).
The STP are not interest in representative government ,that actually represents the electorate. They are terrified of proportional representation (with Scotland an unpalatable precedent for the end of single party absolute control of Government policy); and a non-Party list proportional system scares them even more. The STP is solely interested in retaining its monopoly of office and power in Westminster, forever. They do not care a fig about your ho-hum, on the one hand, on the other, em look at Australia. For the STP all that is guff; but they will love the knots you are tying yourself in to help them out. This is about naked power, here in Britain, and how to hang on to it, and give nothing to the public they supposedly represent; badly disguised as democracy and basic decency.
I’ll accept compulsory voting as long as there is a “None of them” option and that option is reported in the count. Compulsory or not there should be that option
Mr Warren:
Nail
Firmly
Hit
On Head.
The point you make about Reeves (and her adviser’s) not appearing to do any research into this before announcing such a policy is the clincher for me, as a student, teacher and researcher of government and policy making. I find it utterly astounding. Indeed, had any student me and my colleagues taught public administration to back in the day, submitted a piece of work lacking such research we’d have struggled to pass them.
And that’s before we even start to talk about the the various Thatcher initiatives to encourage the public to buy shares (e.g. 4.5 million British Gas sold at the time of privatisation, now just over half a million classed as small shareholder – i.e. 500 shares or less). But what was the key ingredient of the “success” of these initiatives? That the shares were sold at an artificially cheap (sorry, “discounted”) price – so everyone who bought them knew they could sold then a week later and make money. And, second – but even more importantly – you were buying shares in established enterprises that had previously been government owned – and in many cases the government kept an interest – at least initially. So your investment was effectively risk free.
That’s not what’s on offer now from Reeves and co. And speaking as someone whose fortunate enough to have some savings I suspect I speak for many in my position when I say that I’ll leave them where they are with NS&I.
I commend your efforts to encourage readers of your blog to write to their MP using ChatGBT. Although I have yet to use ChatGBT, I do write to my MP quite regularly only to receive rather stock answers. My MP is the former Labour Chancellor Annelise Dodds so I wrote to her about your proposal to use ISA savings for core investment in the Green New Deal, infrastructure, NHS etc. This was in response to a blog that you posted some time ago and I mentioned that blog post as the source and legitimacy of the proposal.
While I doubt I described it as well as you had, my letter was forwarded by Anneliese Dodds in a letter she wrote to HM Treasury where she enclosed my correspondence. In a stunning reply I just received from Dodds I was amazed to read a response from Emma Reynolds MP Economic Secretary to the Treasury, which was enclosed in her reply. I then forward this correspondence to you as I thought you might be interested to read how Reynolds defends current Labour policy.
I know you have a lot of replies here plus email correspondence to read through, but I hope that this minor success will at least reinforce your policy of encouraging your blog readers to write to their MPs. Keep up the great work that you are doing informing the public.
I also just experimented by asking Google the following very basic question:
Does the UK Government create money to spend into the economy?
Google’s reply was crystal clear:
Yes, the UK government does create money, primarily through the Bank of England, to fund its spending. This creation of money is distinct from the money created by commercial banks through lending. The UK government, as a currency issuer, doesn’t need to “earn” money before it can spend; it can create new money to fund its expenditures.
There followed further explanations and links to the Bank of England that clarify the different types of money creation, explaining how banks create money when people take out a loan. How can our UK Government continue to perpetrate a bald faced lie knowing that the ‘verified’ truth is so easily available via a Google search.
Thanks Kim, and thanks for writing to your MP.
You are not alone: quite a number of people have done so and Emma Reynolds must be bored with replying to letters on issues I raise. I hope so. She was a spokesperson for the City of London before returning as a Labour MP.
I face a porbolem with posting replies: I could overwhelm the blog with them and so have decided not to do so. Sorry.
“the Guardian did a survey to see if people like what Reeves is planning. The answer is resounding. They don’t.”
Your conclusion is potentially misleading as, unless defined otherwise definition, ‘people’ tends to imply the (adult) population as a whole, whereas this survey was carried out (BTW, not by the Guardian but by YouGov, as indicated under the graphic) sought only the reasons among a sample of ‘4,566 people unwilling to invest savings in stocks and shares’, which – while of interest in itself – tells us nothing about the proportion of ‘people’ as a whole who are unwilling to invest.
I checked out the Guardian article, and it says nothing more than that – and indeed concludes ‘The chancellor is basically right – more people should be investing, and there are things that could be done to help this’, while also stressing the need for better financial education, along with suitable warnings of the risks to be aware of in ‘investing’ in stocks & shares.
Apologies then. I misread – but the article was clearly meant to be read as I interpreted it, in my opinion.
Then we will have to disagree for once.
The intention of the article is difficult to discern, but the headline of the article reads :
“Rachel Reeves’s ‘save less to invest’ policy could be brilliant for ordinary Britons – or a disaster”
and the opening statement seems to sum up well the intended take-away message:
“People know about savings. But investing in stocks and shares? Not so much. Ministers have a duty to be clear about the benefits and risks”.
Be that as it may, my main point remains that neither the survey (among people selected on the basis of their unwillingness to invest in stocks & shares) nor anything else in the article provide any evidence to determine the answer to your question.
It would be good to know that most people in the country will not be fooled by what Rachel Reeves is pushing for, but as yet I see no evidence one way ot the other.
It’s not a ‘win win’ situation. Taking a risk does not mean you get a better return!
Is what is being proposed similar to the US 401k? If it is, then a large portion of savings will be eaten up by fees charged by those managing the accounts. If it isn’t and she is suggesting people just invest on their own…well, that’s worse. People are not well versed in investing and are unaware of the risk. 2008 wasn’t that long ago, and if people had invested their savings in the market then, many would have been wiped out. Some younger people will be told to stick it out and play the “long game”, but if you are close to retirement, your savings could be gone when you need it most. This is highly irresponsible for a supposed left of center government. This government is almost worse than the Tories.
Essentially, yes; these are equivalent to 401ks.
Some observations:
Australia: it is compulsory to register to vote and attend the voting station. It is no compulsory to actually cast your vote.
USA 401KS: Trump has announced that the US financial services will have access to 410s for investment purposes. Sound familiar.
Australia:
Under the Electoral Act, the actual duty of the elector is to attend a polling place, have their name marked off the certified list, receive a ballot paper and take it to an individual voting booth, mark it, fold the ballot paper and place it in the ballot box.
Because of the secrecy of the ballot, it is not possible to determine whether a person has completed their ballot paper prior to placing it in the ballot box. It is therefore not possible to determine whether all electors have met their legislated duty to vote. It is, however, possible to determine that an elector has attended a polling place or mobile polling team (or applied for a postal vote, pre-poll vote or absent vote) and been issued with a ballot paper.
Back in the late 1980s I was working for an IT firm. There were only a couple of dozen of us employed and the under the partnership that owned it, salary and benefits were good. This included a generous pension scheme.
When I sat down with the financial adviser I insisted that my pension was important to me and I didn’t want a scheme where the value would go down as well as up. He said that I’d likely not make so much of a return as I would on more ‘volatile’ (my word not his!) saving schemes – especially as there where many years before I’d be taking a pension. However, he respected my wishes, and in the end my ‘With Profits’ scheme greatly outperformed those of my colleagues who had to suffer various financial dips along the way.
Rachel Reeves will not be convincing me that she knows what she’s doing.
🙂
I took the same approach
I have a pension as a result.