Was the manifesto, which is the foundation of the election of Keir Starmer and his team to run the UK, a Trojan Horse? Were the promises of no undisclosed tax hikes, of not being a slave to dogma, of being pro-business, of making growth the priority, of governing for all not just supporters and of total integrity and honesty like the gift left behind by King Agamemnon and his armies when they pretended to end their siege of Troy? Inside the gift was the reality, the opposite of what was offered, and Troy was destroyed as a result.
THE BUDGET – TIME FOR SOCIALISTS TO PARTY
The budget announced by Rachel Reeves, Chancellor of the Exchequer, with the blessing of Keir Starmer and his cabinet of Ministers, has produced a wealth of commentary. If one’s belief is that the State is the driver of economic success and that individual effort and work is secondary to State enterprise, then this budget will have pleased the advocates of socialism as reflecting a true prioritisation of the public sector over private endeavour. Much of the commentary below reflects the reaction of a number of economists and other experts: some may be Labour opponents, but some, such as the IFS, although not ardent socialists are also not opposed to a Labour Government. £40 billion of tax rises, principally on businesses as employers through National Insurance and other measures, is not pro-business or pro-growth.
It was promised that there would be no more pouring of vast amounts of taxpayers’ money down the NHS black hole without major reforms of the NHS. But that is precisely what has happened as to £22billion with reform required but without reforms being specified. And what consequence can there be if reforms do not happen? Will the Government then take money away from the NHS? And all this as the NHS is reported to be advertising a Diversity and Inclusion senior executive position for some £139,000 a year. The same people seem to be running the NHS as before who have a track record of management not through progressive change and efficiency but by blaming all incompetence and defects on a lack of funds, and so their only solutions are to demand more cash.
While Ministers drone on about a broken NHS, it is by no means broken as there are areas where a great service and care is provided. Some Hospital Trusts and many professionals are beacons of good practice: but there does not seem to be any sign of even those best practices and management skills being spread compulsorily across the health service: and good attitudes and motivations barely need much money to inculcate. Much expert wisdom seems to suggest that this £22 billion will go the usual way, absorbed by normal spend, such as on higher wages.
The Government inherited a significant gap in future finances. But, despite Ministers declaring that the Office for Budget Responsibility endorsed the alleged £22 billion black hole, their report fell far short of doing so. Was the public being misled by a fiction created as a disguise for spending and tax increases long contemplated? There seems little disagreement among experts that a substantial part of the spending gap is caused by new policies ,it appears, to give pay rises in the public sector, as well as train services which are being nationalised, well above and in some cases multiples of inflation. However, there is an increase in the minimum wage, which must be welcome as it benefits the poorer people who work: but the cost must be borne by businesses, and, with all other such costs so borne, might be seen as another blow to the private sector punch bag. It is certainly not a growth measure.
Experts say that investment in infrastructure by the Government can assist growth, but the private sector will have to cough up too for that to be meaningful. It is good there is some money for education and school buildings, as well as healthcare infrastructure: but the amounts are not big, so more will be needed, presumably from the taxpayer.
VAT on private school fees was not part of the Trojan Horse, nor were removal of non-dom tax benefits, both being pre-election promises. These will probably realise immaterial tax sums but satisfy and arise from socialist dogma and make no growth contribution. However, inheritance tax changes make pension pots, in the private sector, subject to income tax and farmland now caught by the inheritance tax net certainly are new revelations from the Trojan Horse and are aimed at the wealthier in society, but with evident and certainly negative side effects. Thousands of farms are not owned by the rich and will almost certainly have to be sold to pay the tax on the farmer’s death. Will these farms die? Is that intended? These farm-owners are largely hard workers, lovers of the land some, not a normal socialist target. Is dogma overriding sense? The social consequences of discouraging pension pots are potentially undesirable: saving for pension is surely to be encouraged so that people take responsibility for their old age needs, as the State pension is a major drag on funds already. And yet all the while too the pensions of the public sector are untouched. Is this fair or dogma? The Government is redistributing wealth not growing it.
This was hailed as the budget where workers, it being still unknown exactly who these are, will not be affected adversely. After the event Chancellor Reeves has admitted that is not true and some will be so affected. This was hailed as a growth budget and still is by the Prime Minister and the Chancellor despite the fact that forecasts from the Office for Borrowing Responsibility over this Parliament show a reduction in growth rates not an increase. And the PM cites the coming employment legislation giving power to the worker’s elbow as growth legislation: businesses and a lot of experts and journalists seem to find that incredible. The Trojan Horse has worked. But the public is not stupid: by simply giving plans and actions a growth label does not mean they achieve growth. And since the Budget, the Government now endorses Councils reducing workers’ week to 4 days for 5 days’ pay, and the Mayor of London, Sadiq Khan, gives tube drivers of ASLEF a 4 day week for 5 days’ pay, and presumably if they work a fifth day that is overtime. The private sector will have to pay for these giveaways.
Experts say current government behaviour looks like an old-style tax, borrow and spend Labour budget and Government, which they pretend not to be. If it looks like a pig, smells like a pig and sounds like a pig, what is it likely to be? Keir Starmer denies that characterisation as he says the key lies in reform which he will bring, still without saying what reform except in more employee rights.
Perhaps worst of all, there seems to be little in the Budget where people have found hope and reason for economic optimism: this consistent with the broken Britain narrative which is the UK Government’s perverse motto to encourage investment and belief in the future of the UK. Who is deluding who? There seems to be a growing media narrative that perhaps lies have been told by Keir Starmer and his Ministers.
IS THERE ANOTHER GROWTH ENGINE?
Some people believe that the engines of growth lie not in the public sector; that the job of Government is to provide a framework in which the private sector can thrive and only the private sector will deliver the growth which is the Government’s declared major objective. Matt Ridley, science writer, author and journalist, records that productivity in the UK private sector grew by 50% in the last 30 years but grew almost not at all in the public sector. Clearly the private sector is a growth engine. Clearly too the public sector represents an opportunity for massive improvement but nothing in the budget materially grasps that opportunity, with no real efficiency measures proposed. Downsizing the public sector means shedding workforces and changing culture to be performance driven, but is it reasonable to ask whether this is possible without changing the leaders of the public sector? After all the Civil Service itself is bloated since pre pandemic, and largely wants to stay at home to work, and so will its leaders encourage a performance environment? Meanwhile the private sector takes a beating.
Many commentators consider that innovation, entrepreneurship, technology and risk taking combined are key to future UK economic success. People and new enterprises are to be encouraged. Investment in young ambitious people and their ideas is essential. In the past it is invention which made Britain great (not slavery as some suggest), and patents, themselves a great invention, prove the point. But nothing in the Budget or anything, reform or otherwise, yet proposed by this Government, is encouraging this potential for growth: can it be believed that Keir Starmer and Rachel Reeves really believe they are the most pro-business government and growth-driven? Or are they simply incompetent and do not have in their experience any business or innovation or risk-taking understanding?
The toughening of the Capital Gains Tax regime, in addition to the other anti-business measures, is another deterrent message to young ambitious people who want to build success in a technology driven world. People need to see potentially fair reward for their efforts to make it worthwhile expending those efforts in the UK. A recent news article emphasised the draw for aspiring people of lower tax regions such as Dubai, with clean streets and low crime etc. and a style of modern living which at least on the surface is attractive. While the UK has great advantages of culture and history and a real past of pride and success as a tiny Island, all these advantages are being eroded by an elitist culture of denigration. There is a risk that a number of the best and brightest of our young will leave this country because there is no obvious welcome mat for their success. That will spell a future of stagnation, and the budget and the philosophy behind it reinforce that prospect.
TIME FOR A U-TURN
Just as before the election, Keir Starmer kept a lot of plans secret, reforms have yet to be disclosed. Assuming they are cut from the same wood as the policies and budgets to date, these reforms will be underpinned by socialism. But they have not yet been released from the Trojan Horse, and so can be altered without surprise. And Keir Starmer has a history of changing without hesitation if it suits the moment. For example, pre-election as Leader of his party he promised nationalisation of energy and water, and a stop to student loans, and once elected these were ditched. He is no longer anti-nuclear weapons or Brexit. The list of discarded plans and policies is long. He can still find a path to growth, but he needs to reform not just his plans but himself. Or else the Troy of the UK will fall to those extreme forces hidden from the public to get through the gate of the election, but now emerging from the Trojan Horse and perhaps overwhelming the short-lived optimism of change promised by the new Government.
It is surely time for an intervention by leaders of important British institutions to speak plainly and forcefully about the dangerous direction of travel and demand a U-turn.
Everybody in this country must surely want the government to succeed in its declared primary purpose of growing the UK more quickly than any of the major free economies. Its actions must however reflect its words.
