I have set myself the target of writing this mini blog about once a week to catch up on the main headlines and themes of the week. It is almost a journal for myself with a few friends who look in to see what I have been thinking. I am grateful for regular readers and those who comment across social media to help me refine my thinking and thought process.
After returning from a highly successful Labour Party conference last week I was absolutely buzzing about being involved in front line politics again. As the Loughborough seat selection will start soon I have been approached by those wanting to go for it as well as some lovely people who suggested I came back! I will deal with this all in a specific blog soon. For the record it would take something pretty seismic for me to go back!
So what has happened this week? As I write the Chancellor has been across the radio waves backing down on one element of his mini budget – the 45p tax rate. Perhaps we should start there for now. It is enough of a story in itself and sums up the problems for the Tory Party. It is not the Party conference Truss or Kwartang expected. Usually new party leaders get an easy ride and a warm welcome.
I will keep this brief today because who knows what might have changed by the time I have finished. An hour is now a long time in politics.
The Mini budget was a full blow re-set of Tory right wing ideology. It also demonstrated what we know about Truss and Kwartang. They are arrogant ideologues who don’t want to hear anything that doesn’t fit their right wing think tank narrative. This experiment with the economy is borne out of a murky world of secretly funded think tanks and lobbyists. Some of them now at the heart of government running the show. These people think they know more than everyone else and won’t listen to caution. They have surrounded themselves with the most slavishly loyal group of Ministers you could imagine.
They crashed the market through their arrogance. The media defence from Truss on local BBC radio was a disaster and only highlighted how unsuited she is to high office. The mini budget got mixed into their energy package and therefore was a PR disaster. The Markets were rightly spooked and punished them. The defences put up by loyal Ministers was so awful to watch.
They were saved last week by the £65bn intervention from the BoE but only at the cost of interest rate rises and more to come. Mortgage costs increasing will far outstrip any tax cut being offered.
It is not the 45p top rate of tax is not the main economic issue – that was announcing £40-50bn of borrowing to pay for tax cuts. I support borrowing to invest in government, but not to pay for day to day running costs. The markets clearly feel the same. Now that borrowing is going to cost a lot more thanks to a government that clearly was too arrogant to understand the consequences of its own budget. Perhaps if they hadn’t sacked the boss at the Treasury and ignored the OBR we may not have been in this mess. But of course we are run a cabal of brexiteers who have had ‘enough of experts’.
The 45p was more of a mistake because alongside lifting the ban on bankers bonus payments and the Chancellor attending a champagne reception with Hedge Fund managers straight after the mini budget it sets a very clear tone. Especially when this week we will learn that public spending cuts are coming alongside making the poor on benefits even poorer. Our country is in deep decline and about to get a lot worse whilst they drink champagne.
The Tories this week are up to 30pts behind in the polls for a reason. The nasty party are back and proud of it. The public mood has shifted. The 45p rate was symbolic. So some will forgive them for doing a screeching U-Turn, others will be less forgiving. It has not been a costless ‘mistake’ When public sector cuts ad interest rates are making mortgages unaffordable we will all be paying a price.
This is going to a tough two years – but only if Truss lasts that long. All bets are off how quickly this all ends!
The 45p change account for about £2bn of the £45bn of unfunded tax cuts. It doesn’t change the economic consequences.
The Tory backbenchers now smell blood. They can push the PM around. The majority didn’t want her s PM and the majority fear losing their seats. It is not difficult to see this is not going to be an easy conference or an easy 18 months until the next election. If it lasts that long!
So I have reverted to more commentary on twitter as things change so fast!
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