Tag Archives: economy

Davey: Sunak asleep at the wheel

Listening to Rishi Sunak speak today, you wouldn’t think that the country is in the grip of economic turmoil and crisis in the NHS. You don’t have to go far to read of NHS trusts and boards calling major incidents, or London Ambulance saying they will only wait 45 minutes before leaving patients in hospital corridors. Everywhere there are accounts of traumatised, stressed nurses, doctors and patients in A and E departments up and down the country.

It is all very grim.

Sunak’s five priorities would fail the SMART objective test on any work training day.

He could claim he had done them without alleviating much suffering. I mean what does “NHS waiting lists will fall” actually mean for someone who has been told that they can have an appointment for their hernia in mid 2024? What does “the economy will grow” mean? A tiny decimal point which makes no measurable difference? Reduce national debt – to what, how and what will that mean for public services? And a piece of red meat for the xenophobic right about getting rid of asylum seekers. The one specific pledge, to halve inflation, seems to be going to happen anyway according to the Bank of England forecasts.

It’s all very cynical.

Ed Davey was unimpressed, saying:

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A socio-economic impert’s thoughts on the OBR’s report and the Autumn Statement

An impert is interested in a subject and tries to find out more about it. The writer aims to become a socio-economic impert because the writer considers it impossible, in reality, to separate “economics” from its inevitable social consequences.

The foundational OBR’s report is in error because it omits sectoral balances. Whenever a government has a debt, the non-government sectors of the domestic, the business and the foreign, must have a surplus. The valid question is the size of the difference between governmental expenditure and its tax gathering. Too much is harmful as is too little. Without this surplus of money, homes and businesses do not have enough money with which to function. As currently presented, “Balanced Books” are a disaster for regular people.

By extension, sectoral balances tell you where money has come from and where it goes, but not necessarily in that order!

Another hidden truth is that inflation is a year on year calculation. This year, pre-conflict inflation is used as the basis for this year’s conflict affected calculation and so is high. Next years will be based on conflict affected inflation figures and so is incredibly unlikely to be other than less.

The Autumn Statement does not differentiate between the causes of inflation. There are various internal and external causes. The current inflation has significant external causes, such as the Ukraine conflict and the opportunistic raising of prices by power companies. The latter are invalid profits because they are out of proportion to actual research and development, production and distribution costs. Again using the sectoral balance model, we  can see that these extractive “profits”  come not from worth or need, but from the exploitation of fellow human beings.

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22 November 2022 – today’s press releases

  • Debt figures: Conservative Chancellors have blown black hole in Britain’s finances
  • Welsh Liberal Democrats to Vote to Withhold Legislative Consent on the Northern Ireland Protocol Bill
  • OECD forecast: Damning verdict of the Government’s economic record
  • Sewage: Budget means almost £500 million less to tackle the sewage crisis
  • Levelling Up Bill: Conservative chaos to blame for cancellation of vote

Debt figures: Conservative Chancellors have blown black hole in Britain’s finances

Responding to new ONS figures showing the scale of UK government borrowing in October, Liberal Democrat Treasury spokesperson Sarah Olney said:

These figures reveal just how badly the long list of Conservative Chancellors have trashed our economy. This Government has blown a massive black hole in Britain’s finances and is now expecting hardworking families to pick up the bill.

It is a national scandal that big banks are getting massive tax cuts whilst the squeezed-middle gets clobbered with endless tax rises.

The sensible way to solve this is surely to tax the richest companies making bumper profits. We can’t trust this Conservative Government to clean up their own mess. They should never be trusted to run our country’s economy.

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15 November 2022 – today’s press releases

  • ONS earnings figures: Economic mismanagement is leaving pay packets stretched further than ever
  • Vaughan Gething Qatar Press Briefing – More Soundbites Rather than Real Solidarity
  • Liberal Democrats Raise Concerns Over the Impact of Australian and New Zealand Trade Deals on Wales
  • Conservatives failing to count cost of windfall tax loophole

ONS earnings figures: Economic mismanagement is leaving pay packets stretched further than ever

Responding to the latest ONS labour market and earnings figures which show pay falling in real terms, Liberal Democrat Treasury spokesperson Sarah Olney MP said:

This Government’s economic mismanagement is leaving pay packets stretched further than ever before just as bills spiral out of control.

This is the worst cost of living crisis in a generation and Thursday is judgement day for the latest Conservative Chancellor in post. He cannot make the same mistakes as his predecessors who crashed the economy and left families to pick up the bill.

Thanks to the Conservative party’s botched budget and reckless mismanagement of the economy, homeowners are being forced to pay hundreds of pounds more a month on their mortgage whilst their take home pay is eaten away by inflation. The public will never forgive Conservative MPs for this.

Vaughan Gething Qatar Press Briefing – More Soundbites Rather than Real Solidarity

Responding to Vaughan Gething’s press conference where he continued to defend the Welsh Labour Government sending a delegation to Qatar during the World Cup, Welsh Liberal Democrat Leader Jane Dodds said:

I am not convinced by the arguments set out today by Vaughan Gething nor previous arguments from the Welsh Labour Government seeking to justify this morally unjustifiable trip.

The Welsh Government should be upfront about its intentions going to Qatar, it is not to ‘support Team Wales’ but is to seek investment.

These tainted investment opportunities are going to come at the cost of providing diplomatic legitimacy to Qatar’s hosting of this tournament despite the country’s atrocious human rights record that has left over 6,500 migrant workers dead, punishes being gay with execution or imprisonment and treats women as lesser human beings.

Vaughan Gething has stated that the Welsh Government will “proactively use Wales’ place in the World Cup in Qatar to promote our strong Welsh values”, yet today has again not provided any evidence on how the Government will do this.

The last time I checked, unless the three ministers have been promote to Team Cymru itself and are going to be on that pitch, their presence isn’t going to affect how our national team performs and our national team are already upholding our values.

If Labour actually wanted to show solidarity with those living under Qatar‘s poor human rights record, or the families of the victims that have died during the construction of World Cup stadiums, they would cancel their unjustifiable trip immediately and instead join the vast majority of fans who will be watching the games from home, and to show some consistency on “saving them air miles” that was used to justify the Welsh Government not attending COP27 last week.

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We should not oppose some stealth taxes

The autumn statement on 17th November will probably provide reassurance for the markets, but bad news in other respects.  We don’t yet know how the unpleasant ‘medicine’ will be mixed, but it will include higher taxes (including stealth tax rises through long term freezes to personal allowances), cuts to services and to government investment, and real terms cuts to some welfare payments.

Elements of our response to the forthcoming statement are easy.  1 The Tories got us into this mess through the Truss shambles, through Brexit, and through the lack of policies to build a decent economy over many years of poor stewardship.  2 We don’t want cuts to services and to welfare.  3 We should increase levies on companies which have happened to have benefitted from the war in Ukraine.  But when it comes to any tax rises that may be proposed in the statement, we need to think carefully.  We need to balance the short term expediency of pointing out everything the government is doing which could be unpopular, against longer term considerations of how to deliver a better society.

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Olney: PM’s apology brings nothing but cold comfort

Yesterday afternoon, Penny Mordaunt was given an impossible job – defending the indefensible. She was asked to deputise for the Prime Minister in the Commons for Labour’s urgent question on the sacking of the Chancellor.

Mordaunt did much better than Truss ever could have done. She had a reasonable balance of “**** you”, humility, and even a bit of sincerity in the face of quite an onslaught from opposition MPs. It is hard to imagine anyone having a go at the opposition when they were part of a government that had made a crap economic situation much worse.

Labour missed a trick …

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Olney: Jeremy Hunt expects people to pay for Conservative mistakes

Jeremy Hunt’s media round this morning was sobering stuff. Tax rises and public spending cuts seem to be the order of the day.  While he might talk about protecting the most vulnerable, Conservatives have never been good at understanding how to do that.

Our Treasury spokesperson Sarah Olney had this to say:

This may be a new Chancellor but it’s still the same old Conservative party whose failed economic experiment has cost this country billions.  Now Jeremy Hunt expects struggling families and pensioners to pay the price for those mistakes.

Thousands of families are facing increased mortgage costs and rising prices at the checkouts while our struggling public services will have their spending slashed.

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Why our Country and our Party need an Emergency Lib Dem Special Conference – Now

In less than 26 minutes on Friday 23 September Liz Truss and Kwasi Kwarteng took an axe to what remains of the British Economy and the hopes and prospects of so many ordinary people, and totally destroyed the last vestiges that the Conservatives are the party of Economic competence. By the end of the day the pound had crashed over 4% in value (and is still falling) and the FTSE a further 2%, undermining the savings, pensions, and prospects of workers, the retired and the unemployed, be they Teachers, Doctors, Farmers, workers in industry or workers in entertainment. It affects them all.

However only a few days before, Federal Board and Federal Conference Committee decided to completely cancel Party Conference and put everything on hold until Spring Conference is held In York next March. While the decision that it would be seen to be inappropriate to hold conference during the period leading up to the Queen’s funeral was totally justified, it was totally misguided to think that the Lib Dems, as a party, should have no opportunity to say anything about the new prime minister and her deeply damaging new ideas for six months.

Every Lib Dem who met Liz Truss when she was, temporarily, a member of our party, seems to have quickly formed the view that she was a young lady with an eye for self-publicity and an extremely radical view on things – but it wasn’t a Liberal Democratic view, as she quickly found out as they began to question the reasoning behind her vision.

Everyone who works in Business knows that real growth and progress comes slowly, and need careful planning and sustained amounts of effort over years and sometimes decades.  The desire for a quick fix, a dash for growth based on throwing vast amounts of borrowed money at its supporters, underpinned by a total lack of understanding of simple economic realities is no substitute for hard work and effort.  Sacking a Permanent Secretary on Day One and calling the most outrageous gamble with our nation’s economy “A Fiscal Event” in order to avoid OBR scrutiny shows linguistic cunning that Vladimir Putin would be proud of.

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Public spending and the social contract 

Raising the rate of domestic economic growth, against the background of a global economic recession which may well be worsened by the current downturn within China, cannot have been the main rationale for the Truss and Kwarteng’s ‘fiscal event’.  The underlying purpose was to force public spending cuts, to shrink the size of the state and to make it more difficult for a successor government to raise taxes sufficiently to restore the social democracy that adequate public spending underpins.  Simon Clarke, now ‘levelling up’ minister, has specifically remarked on what he sees as the over-extension of the UK’s welfare state.

If current ministers were serious about introducing supply-side reforms they would recognise that public investment is needed to repair current inadequacies.  Low productivity is partly the result of inadequate education and training, most evident in basic skills for our domestic workforce.  Years of under-funding for pre-school support (yes, we should have fought harder against the coalition’s killing of the ‘Sure Start’ programme), for state schools and further education colleges, are to blame.  But as the Conservative chair of the Commons Education Committee has just protested, the new government has only talked about grammar schools and entry to Oxbridge so far, leaving education and training for the vast majority of British citizens to one side.

The UK has a lower proportion of its population in work or looking for work than many other advanced countries.  That’s not just due to the rising number of retired; it’s also because we have such a high proportion of people under 66 who are unfit for work or long-term unwell.  Underfunding of the NHS, and in particular of public health programmes that focus on healthy lifestyle, explains a good deal of this.  Lengthy waiting times for treatment translate into absence from the workforce.

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Productivity isn’t everything: understanding the growth debate

Economic growth is at the heart of the current political debate. And yet growth is a complex aggregate statistic, and few people take the trouble to pick apart what is actually happening to it, as opposed to speculating what in theory might be happening. That has created a vacuum into which think tanks, economic commentators and politicians project their own hobbyhorses without fear of serious challenge. So what really is going on?

The main mistake people make is to assume that the main driver of growth is productivity. This is exemplified by the famous quote from American liberal economist Paul Krugman: ”Productivity isn’t everything, but in the long run it is almost everything.” Cue a furious debate on a “productivity puzzle” or “gap”, especially here in Britain – supported by  unreliable productivity measurements. Productivity is such a heterogeneous and hard-to measure phenomenon that measurements depend heavily on assumptions – and it is hard to understand their significance anyway. Prior to the crash, for example, improvements to Britain’s measured productivity depended almost entirely on two narrow sectors: financial services, whose profits proved largely illusory, and “business services” a shadowy sector the real value of whose output is hard to be sure of.

But help is at hand. American economist Dietrich Vollrath decided to pull apart growth figures to settle the debate on why American growth had slowed so much in the 21st Century compared to second half of the 20th – this debate isn’t just a British thing. As it happened, he had his own hobby horse which he was convinced was behind the issue – the growing market power of large companies. Vollrath found that two thirds of the decline in growth rates (1.25% per annum per capita at the time he was doing the work – a very similar figure to the UK) was down to demographics – the proportion of working people to the population as a whole, which has been declining as the dynamics of the baby boom work themselves out. Nearly half of the rest was down to what economists call the “Baumol effect” – named after an economist who pointed out that increases in productivity lead to a shift to economic sectors with lower productivity. As we get more efficient at making mobile phones, for example, we don’t buy more mobile phones – we spend the surplus on things like healthcare or designer clothes instead. Incidentally, he found little evidence that his own hobby horse, market power, had much effect, and none that tax changes and deregulation did – except changes that restricted worker mobility, and especially restrictions to house building. He called the two principal phenomena the problems of success and published his findings in a book: “Fully grown: Why a Stagnant economy is a Sign of Success.” This was rated as one of The Economist magazine’s books of the year for 2020, though its writers have failed to take its findings to heart.

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Welcome to my day: 26 September 2022 – a bad time to be poor, or vulnerable, or…

High inflation, rising interest rates and a mad scientist approach to economic management do not tend to instil confidence, as the markets indicated on Friday, following Kwasi Kwarteng’s “this is not a budget” statement. The hedge fund guys have already made hay – they obviously had a pretty good idea what was coming – and now the rest of us can find out what is in store.

There is little doubt that there is much that needs to be done in order to build a thriving future for the United Kingdom. From how our country is governed, to the supply of housing or provision of energy, and onto protecting our environment, many tough decisions will need to be taken. And, from a “customer perspective”, some patience is needed too. You can’t turn round the NHS overnight, just as infrastructure projects, especially big, strategic ones, don’t happen just because someone announces the intention no about it.

But the first thing you need is government that can think strategically, and not just about securing its own future in office. The outgoing administration seemed solely focussed on this week’s headline, making it to next weekend without imploding. But you would have to admit that this one does seem to have a strategy, even if it seems hard to credit it.

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The Conservatives no longer stand for a stable economy

Friday’s Kwasi-Budget was not officially a budget, despite being on of the most important fiscal statements since the Thatcher era. Because it was not a budget, it was not scrutinised by the Office of Budget Responsibility. That is yet another example of the Conservatives trying to circumvent processes designed to ensure that government’s act rationally.

This was a budget that will make top earners even more wealthy, while leaving the country and the poorest more impoverished. It was a budget based on the discredited myth of trickle-down economics. It was a budget that will allow wealthier people to dine out in style while those on the breadline scramble for crumbs.

This is an idealist budget driven by a leader who is beginning to make Margaret Thatcher look left wing.

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Davey: We have most right wing government in modern history

In an interview with the Guardian yesterday, Ed Davey discussed Liz Truss’s administration ahead of tomorrow’s budget that is not a budget. He said of Truss:

She is saying some of the most extraordinary ideological things. She has appointed probably the most right wing government in modern history. And it seems completely out of touch.

He said Truss’s decision to style Friday’s announcement as a “fiscal event” rather than a budget seemed to be aimed at preventing the independent Office for Budget Responsibility (OBR) scrutinising its impact.

The failure to have an OBR assessment shows the economy is being run by ideology, not a plan. They clearly don’t want the evidence, because that would be unhelpful to their argument. And that should trouble everybody.

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Which public services will the Conservatives shrink further?

Liz Truss has just handed Liberal Democrat campaigners a powerful set of questions to put to Tory MPs. She insists that tax cuts are the answer to Britain’s economic problems – amounting to 1-2% of GDP, perhaps more once the full package of proposed cuts emerges. She’s pledged to raise defence spending by 1% of GDP – for which, sadly, there is a case when Russia intervention in Ukraine threatens European security. She’s promising to provide financial support for household and business energy bills, likely to amount to between 2% and 4% of GDP over the coming year, without offsetting the cost through a windfall tax on energy companies of the sort that most of our continental neighbours are levying. Other government programmes will have to be slashed to prevent public deficits spinning out of control.

So what cuts in other public services will Conservative MPs accept in order to prevent government debt spiralling and the pound sinking further on international markets? A squeeze on schools, or policing, or on the already-overstretched NHS? Holding down public service pay, while letting bankers’ bonuses soar? Slashing public investment in hospitals and transport infrastructure, and reducing local authority budgets further, thus saying goodbye to the promises of ‘Levelling Up’ that helped them to win the last general election? Or holding down benefits, leaving the poorest in our society even poorer? Ask every Conservative MP what further cuts they will support – or whether they will oppose this tax-cutting strategy.

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21 September 2022 – today’s press releases

  • Business energy bills announcement: a temporary sticking plaster
  • IFS debt analysis: Taxpayers footing the bill for Truss’s ideological obsessions
  • Conservatives handing banks a £6 billion tax cut, new research reveals
  • Calls for an Investigation into Failed Welsh Government Insulation Schemes
  • Demands Welsh Government ‘Names and Shame’ Property Developers Failing to Act on the Building Safety Scandal
  • Dental Crisis: Only 34% of Patients in Southwark Have Been Seen by an NHS Dentist in Past Two Years

Business energy bills announcement: a temporary sticking plaster

Responding to the government announcement on bills for businesses and the public sector, Liberal Democrat Treasury Spokesperson, Sarah Olney MP said:

This temporary sticking plaster comes too late for the many small businesses that already closed their doors for the last time because they couldn’t afford soaring bills.

The Conservatives have sat on their hands for months while treasured pubs, cafes and high street shops went to the wall.

This delayed announcement will leave our small businesses, schools and hospitals under a cloud of damaging uncertainty. The government have no plan beyond these next six months, paralysing businesses who need to make decisions for the long term. Support for high streets and public services should be in place for at least the next year and include measures to improve energy efficiency and cut bills in the long term.

The announcement shows the Conservatives have no plan and no understanding of the pressures facing our businesses and public services.

IFS debt analysis: Taxpayers footing the bill for Truss’s ideological obsessions

Responding to IFS analysis which shows debt is being left on an unsustainable path by the government, Liberal Democrat Treasury Spokesperson Sarah Olney said:

Liz Truss is asking hard-pressed taxpayers to fund her ideological obsessions in the middle of the biggest cost of living crisis in a generation. This is no way to govern Britain.

The Conservatives are prioritising record oil company profits and bankers’ bonuses whilst families struggle to pay their own heating bills.

This Government has lost all sense of fiscal responsibility. Future generations will be paying off the Conservatives’ debt for years to come with no guarantee of economic growth.

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Another day, another new Conservative Prime Minister to muck up our lives

Boris Johnson and Liz Truss are in for an absolute treat today. It’s more of a faff to get to Balmoral than a quick spin up the Mall to Buckingham Palace, but the journey from Aberdeen through Royal Deeside is absolutely gorgeous. The heather in the hills round about Aboyne is particularly stunning, even if it is, as forecast, tipping it down.

I am so glad that they are going north to see the Queen. The 96 year old monarch has earned the right to say that they should come to her.

I wonder what arrangements have been made for Boris and Carrie to get back from Balmoral. Normally the outgoing PM gets a taxi from Buckingham Palace. Will the estate manager drop them in Ballater so they can get the bus back to Aberdeen to catch the Easyjet back down south? Probably not, but it’s an amusing thought.

Much has been said about the new Prime Minister’s bulging in tray. Competing economic, energy, international and health crises require urgent action. I don’t think we are emphasising enough, though, the extent to which all these issues have been made worse by the foolish actions of the Conservative Party in Government since 2015.  From David Cameron’s ill-advised pledge to hold a referendum on our EU membership, to Theresa May’s and Boris Johnson’s choice to pursue the most extreme form of Brexit, they have helped create much tougher economic circumstances than in similar economies.

Sectors like social care are falling apart because of their anti-immigrant ethos. As care workers went back to the EU, our disabled and elderly friends and family found that the help that they relied on disappeared.

Boris Johnson’s boasterish farewell speech this morning didn’t mention this. He didn’t get Brexit done. He left a predictably impossible situation in Northern Ireland and the new PM intends to take the nuclear option of breaking international law rather than find a more pragmatic solution.  Deaths from Covid in the UK are the highest in Europe and the long term consequences of their pretence that the pandemic is over are being felt by too many people.

It takes some brass neck to deliver such a bullish speech when you have been forced from office in disgrace after the resignation of half of your government. Tim Farron summed it up this morning:

Jo Swinson said back in 2019 that the worst thing about Boris Johnson was that he just didn’t care. He simply couldn’t be bothered to understand how his Government’s actions affected people. Liz Truss, similarly, shows no sign of giving a damn and she doesn’t have anything like the charisma of her predecessor.

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Lib Dems comment on dire economic news – but we need to say more

This week has had more than its fair share of dire economic news. The prospect of a deep, prolonged recession at a time of soaring prices means that people on the lowest incomes are really going to suffer. Let’s think about what that looks like. It means that people on the lowest incomes will simply not be able to afford the basics that they need to survive. If they don’t face the prospect of losing their home, heating it to an adequate level will be a challenge.  Putting food on the table will be tough.  Even if they just manage to get by, an unexpected car repair bill, or a washing machine breakdown, could be problems that they can’t cope with. It is quite likely that we will see levels of poverty and suffering that we thought were gone for good.

It’s the most terrifying economic landscape since 2008. And with recession comes the prospect of people losing their jobs. We didn’t have energy and living costs on a steep upward curve then.

I remember only too well the recession of the 1980s. That ITN Jobs round up every Friday showing so many jobs being lost every week. Soaring unemployment as, one by one, our key manufacturing industries crumbled.  Remember UB40’s One in Ten?

At that point though the welfare state met more of your living costs if you lost your job. You at least had some chance of getting by. And students could get help with Housing Benefit and could sign on during the long Summer holiday if they couldn’t get a job. Now, benefits are less generous, and woe betide you if you dared have more than two children since 2017 because you won’t be able to claim any Universal Credit for them.

During the 90s recession, I worked in the civil courts in England and it was heartbreaking to see the huge rise in both mortgage and rent possession cases. Each one of those meant that someone was in danger of losing their homes, and many did.

As interest rates rise, so do mortgages. Already high private sector rents are likely to increase as landlords pay more on their buy to let mortgages.

It all seemed terrible back then, but now the prospects and the pressures on incomes are even worse.

Inflation on its own is bad enough but then you have a nearly £1300 rise in energy costs from their already high level from October with the prospect of further rises every three months. If you are on a low income you are more likely to be on a prepayment meter and will find it more difficult to access help while you pay proportionately higher prices.

And all the time prices continue to rise with the Bank of England warning that inflation could hit 13%.

There is not much in the way of respite coming your way. The extra money already announced isn’t going to go very far if you are low paid.

All of this comes at a time when the Conservative Government have been cutting public services for too long. So where councils might have been able to provide much needed help in the past, they are not able to do so now. Advice agencies also need investment so that they can help people find their way through and advocate on their behalf.

Senior Liberal Democrats have been talking about the crisis. Here’s Ed Davey on the news of the energy price cap rise:

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Is GDP almost everything?

In 1968, Bobby Kennedy made a much-celebrated speech in which he denigrated Gross National Product (GNP, now usually replaced by Gross Domestic Product, GDP) as a measure of America’s well-being. He said:

… counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them … Yet does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials … it measures everything in short, except that which makes life worthwhile …

Financial Times columnist Janan Ganesh voices his disdain for this view in a recent article:

Yes – GDP is almost everything: The recession should kill off the romantic idea that growth is a mixed blessing.

He says, rightly, that wealthy countries tend to do better on indicators such as homicide rates than poor countries. Yes, poor countries do badly on a range of social indicators. But Kennedy was talking only about America. The richer we are, the less an increase in wealth boosts our well-being.

Ganesh also says:

The looming recession will be painful. But it will also drive a certain kind of post-materialist humbug from polite discourse. Growth will be harder to dismiss as a bean counter’s tawdry obsession when there is so little of the stuff to go round.

Yes, growth will be missed if it’s replaced by recession – growth is good for the feel-good factor and not everyone is post-materialist.

Recession would hit poor people in the rich world hard but we don’t need growth to eliminate most rich-world poverty. We just need to be fairer and more generous to people whose earning power is low.

Ganesh doesn’t mention the costs of growth – such as the demise of the stable physical climate in which our civilisations have evolved. We seem to be getting into a zone where we lose our ability to limit global warming and where our physical environment deteriorates eventually to where the present human population can no longer be supported. The change may be so rapid that, for one or more generations, perhaps in most of the world, human life will be nasty, brutish and short. Whatever the scale of the resulting fall in GDP, the decline in human well-being would be catastrophic.

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Crown Imperial Madness

Yesterday was a day of pageantry, cheering crowds and an unforced display of respect for the monarch from many in our nation. Boris Johnson’s government has now crowned that achievement with proposals that will make the UK a laughing stock worldwide. Proposals to bring back imperial measurements fly in the face of modernity and the needs of enterprise. But they suit the needs of this out of touch government, which seems to believe that if we bring back crowns on beer glasses and allow grocers to sell only in imperial measures it will lift the popular mood.

Although this scheme is the brainchild of Jacob Rees Mogg, who seems to be living in the century before last, business minister Paul Scully is the fall guy who today is presenting the daftest idea to come out of any government’s stable in decades. Not so much Build Back Better as Build Back Backwards.

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Ed Davey highlights “Sunak Scam” and other Lib Dems respond to Chancellor’s statement

Ed Davey was unimpressed with the package announced by Rishi Sunak aimed at helping people with the soaring cost of living.

He described it as the “Sunak Scam.”

The Chancellor is hammering families with a £800 tax hike this year, more than wiping out what he announced today.

It is the Sunak scam, promising you help but picking your pockets while you’re not looking.

Soaring inflation and devastating tax rises have left proud families who never dreamed they would find themselves in trouble struggling to pay the bills.

The British people need help right now, but instead have been left abandoned again for months on end.

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Can the UK recession be avoided?

Just before polling day the Bank of England published the May Monetary Policy Report as well as increasing the Bank Rate to 1%. They expect the Bank Rate to continue to increase and peak at 2.5% by “mid-2023”. They state, “That predominantly reflects the significant adverse impact of the sharp rises in global energy and tradable goods prices on most UK households’ real incomes and many UK companies’ profit margins.” They expect unemployment “to rise to 5½% in three years’ time”.

They state, “CPI inflation is expected to peak at slightly over 10% in 2022 Q4, which would be the highest rate since 1982”.

“Total real household disposable income is projected to fall in 2022 by the second largest amount since records began in 1964 before picking up thereafter” they forecast. Total demand in the economy will fall below total supply by the fourth quarter of this year. They quote an ONS survey of March where 42.5% of people, “said they had cut spending on non-essentials” due to lower real incomes.

This means that people will be able to buy fewer things. Demand for items will decrease. This leads to businesses producing less and unemployment increasing.

The Monetary Policy Committee produce different projections based on different assumptions. Their main projections are based on the assumption that the Bank Rate “rises to around 2½% by mid-2023, before falling to 2% at the end of the forecast period”. However, they also state that, “In projections conditioned on the alternative assumption of constant interest rates at 1%, activity is projected to be materially stronger than in the MPC’s forecasts conditioned on market rates. As a result, unemployment remains close to its current rate over the forecast period, instead of rising by around 1½ percentage points. CPI inflation is forecast to be significantly higher, with inflation projected to be 2.9% and 2.2% in two years’ and three years’ time respectively.” Also economic growth in the second quarter is higher – in 2023, 0.3% compared to 0%; in 2024, 0.6% compared to 0.2%; and in 2025, 0.9% compared to 0.7%. With their main projections they forecast negative growth of 0.2% in the first quarter of 2023 and 0.8% in the third quarter. Also with this forecast it is likely that economic growth in 2023 will be either zero or close to zero.

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“There is a great deal of ruin in a nation” — But how much? And where is it?

When the Chancellor raises National Insurance, are the effects the same everywhere? We don’t know.  But we ought to — regional inequality in the UK is so stark that comparisons to reunified Germany bear out. If fiscal policy plays a role in this, we need to know ‘how much’ and ‘where’.

There’s very good reason to ask for answers: long-established economic theory holds that governments will create poverty through taxation on economic activity:

All economic principles must be tried and proved at the margin. On marginal land there is no surplus above non-land costs, hence there is no taxable

Posted in Op-eds | 5 Comments

Christine Jardine: Families need a lifeline to help with impact of inflation

Today inflation reached a 30 year high of 5.5%. Lib Dem Treasury Spokesperson called for the Government to take action to help those facing being cold and hungry as a result:

Families are facing an unprecedented cost of living crisis, with a triple whammy of spiralling energy bills, Conservative tax rises and 30-year high inflation.

People are worried about heating their homes and putting food on the table, yet all we’ve seen from this Government is half measures and a raft of tax hikes in April. That’s not the leadership people need in this crisis.

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What we should have been saying in our response to the budget

On Thursday I received an email from Dan Schmeising giving me a link to an “exclusive budget briefing” setting out our reaction to Wednesday’s budget.

The budget briefing states:

  • Provide at least the full recommended £15 billion to fund the catch-up needed in Education over three years.
  • “Double the Warm Home Discount on energy bills and extend it to everyone on Pension Credit and Universal Credit”.
    Why haven’t we included extending it to the legacy benefits? The Warm Home Discount is currently a £140 refund on a person’s energy bills if they receive particular benefits.
  • Implement (it is implied) our 10-year plan to insulate homes.
  • “Invest £150 billion into a Green Recovery Plan to promote active and zero-emission travel, protect our countryside and clean up our air. This will be paid for by taxing the wealthy and frequent fliers – not the less well-off”.
    We don’t say we want to do this over three years and if we want to split the money evenly into £50 billion a year or invest £30 billion in the first year, £50 billion in the second and £70 billion in the third. We don’t say how much the extra taxes will raise.
  • Restore spending 0.7% of our Gross National Income on Overseas Development Aid.

The budget briefing includes, “The Local Government Authority projects councils will be facing an £8 billion black hole in their budgets by 2024. The Tory Government has responded with… £4.8 billion.”

This £4.8 billion is £1.6 billion a year. But we don’t say we would provide the £8 billion and we should.

Posted in Op-eds | Also tagged | 97 Comments

Getting a story out – the Liberal Democrat press team in action over furlough extension

The Press Team at Lib Dem HQ don’t just write press releases and send them out, hoping that journalists will publish them. They actively go out and try and get them published. A great success story is a push on the end of furlough, highlighting a letter written to Chancellor Rishi Sunak by Lib Dem Treasury Spokesperson Christine Jardine asking him to extend furlough for six months to those sectors which are still struggling such as tourism, travel and the creative arts.

Christine says this is important to avoid a “tidal wave” of job losses as the scheme comes to an end.

Christine points out that the cost of six months’ vital support would cost less than last year’s Eat Out to Help Out scheme.

Christine urged the Chancellor to “consider the impact on the lives of those that could find themselves out of a job at the end of the week.” She added it would be “devastating for countless families already facing a winter of spiralling bills and cuts to working benefits.”

Christine said:

The withdrawal of furlough risks having a devastating impact on countless families already facing a winter of soaring energy bills.The government needs to rethink its approach or the country could face a Coronavirus Black Thursday.

The Liberal Democrats are demanding that furlough is extended for the industries that are being hardest hit by the pandemic, to prevent a tidal wave of job losses in the coming weeks.This would support the most vulnerable workers through winter and cost less than what ministers spent on last year’s Eat Out to Help Out scheme.

Thousands of people relying on furlough are worrying about their livelihoods at a time when the impact of the pandemic is far from over. Supporting them and their families is both the right and responsible thing to do.

So where was this covered?

Basically everywhere:

The Independent 

The Standard

Wales online

ITV

The Graun

Sky News

Trade Travel Gazette – article by Christine

Trade Travel Gazette – report

City AM 

The Metro 

The Scotsman 

The Mirror 

The Express and Star

The Torygraph

Planet Radio

Even the Fail

Well done to the press team.

And if you want to see Christine’s letter to the Chancellor, it’s here.

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Christine Jardine: Government breaking promises and backbone of our economy

Christine Jardine slammed the Government’s proposed increase in National Insurance constributions in the debate yesterday.

The full text of her speech is below:

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Observations of an Expat: The High Seas

About the only time the world’s land-based public thinks about seaborne traffic and the globalised trade it underpins is when they look above the parapets of their sand castles and spy a ship on the distant horizon.

Or, when something happens, such as a war or a vital sea artery is blocked and prices creep up and super market shelves start to empty.

The latter is happening.

Posted in Op-eds | Also tagged | 5 Comments

An economy for society based on Lib Dem values

We are part of a wide fellowship in search of an intrinsically fairer economy and social outcomes. We stand explicitly for the ‘well-being of the individual’.

We are democrats. Democracy binds our society together, but struggles to do so when our day to day experience of economic life does not accord with our values of mutual support and well-being. A plural democratic society requires a plural economy and politics but we do not have either.

I founded a not-for-profit organisation advocating the use of our existing housing stock to create affordable tenancies, and identified it as an intervention to societise the housing market, correcting its imperfections (homeswithinhomes.org). I realised we need systemic change in favour of society and our common good, a system that co-exists with capitalism and statism in all its forms but is uniquely identifiable and attributable to a philosophy elevating collective values of equality.

These values will appeal to a significant part of the general population, they are core Lib Dem values. We are uniquely placed to give a voice to such market based, societal economic reform and by doing so can help develop a unique economic platform reflecting Lib Dem ideology, of equality and liberty, with l believe, mass electoral appeal.

Our economy developed during a period when there was no universal franchise, nor meaningful women’s or minority rights and little societal perspective. This history, based on outdated notions of ownership and control, of private share ownership on the one hand and state control of production on the other has driven us towards economic and political polarities; we have an economy that is not mixed enough.

Posted in Op-eds | Also tagged | 7 Comments

Unforgivable choices – Lib Dems respond to the Spending Review

For the second time in three days, Christine Jardine pressed the Government to do more to help those who have thus far been excluded from Government support. Three million self-employed people have had nothing since March and some have had no income at all because they work in areas that aren’t yet open. In March they were stressed. Eight months on, they are desperate.

Rishi Sunak was dismissive, but not as egregious as Boris Johnson had been the other day when Christine questioned him.

“I hope we haven’t excluded anyone” said the PM. If he doesn’t know that there is a massive All-Party Parliamentary Group fighting for these people, if he hasn’t been aware of the many questions that have been asked in Parliament, then that shows unforgivable ignorance. If he did know of the plight of the three million, his remarks show callous disregard.

Later, Christine talked to BBC News arguing against the public sector pay freeze and the abandonment of the 0,7% aid target.

On that international aid issue, Wendy Chamberlain highlighted how the Government had gone back on its word:

Ed Davey said that the Chancellor had made some unforgivable political choices:

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22 October 2020 – today’s press releases

  • Economic support plans made “on the hoof” are failing millions
  • Tracing failures shows Hancock needs to overhaul test and trace

Economic support plans made “on the hoof” are failing millions

The Liberal Democrats have accused the Chancellor of “making up plans on the hoof” when it comes to financial support for businesses and workers impacted by COVID-19. Responding to the Chancellor’s statement in the House of Commons today, Liberal Democrat Treasury Spokesperson Christine Jardine said:

Yet again the Chancellor is taken by surprise by events unfolding exactly as predicted months ago. He has utterly failed to address the gravity of the economic crisis, with people and businesses facing devastating pressure across the country.

Beyond tinkering around the edges of the Job Support Scheme and correcting some of its blatant errors, he has offered nothing for those slipping into poverty. 67% of salary is just not enough for people to get by on. The Chancellor is making up plans on the hoof and is failing millions of people.

We need real leadership from Government, not a patchwork of ever-changing measures. It’s clearer than ever that the Government should have kept the furlough scheme in place as the Liberal Democrats called for, yet they are too proud to do the right thing and U-turn.

Posted in News and Press releases | Also tagged , , and | 6 Comments
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