The last month has been economically traumatic, but a resumption of the status quo ante, while welcome for many, brings with it some profound questions about how we got here, where we go next, how to get there and the nature of our economy.
While the so-called mini-Budget poured fuel on the fire, in truth the ingredients were already assembled for a toxic economic cocktail. Many seem to have forgotten that back at the beginning of August the Bank of England forecast a 15-month recession, in a drastic downgrade of its previously milder pessimism in May.
Of course, markets are as much a metric of emotion as they are a mathematical exercise. The sudden darkness in the sky above Threadneedle Street made many in the City jittery – how could the Bank have been so far off the mark so recently? Those of us of a monetarist persuasion were not surprised. In recent years, central banks have paid scant attention to the money supply, domestically and internationally. For differing reasons, everyone is braced for the Bank’s November forecast.
To right the ship, the Chancellor and Prime Minister now have some tough choices to make. They have hinted several times that taxes will have to rise, and spending will have to fall. In contemplating this dreadful double-whammy, there are some broad principles they must have at hand. These will be tested by Parliament and, most notably, through the Treasury Committee, for which I am standing for election as chair.
The first is that not all government spending is equal. The Prime Minister and Chancellor should decide what is icing and what is cake, and then spend and save accordingly.
Until last week I was Secretary of State for Education, trying to support a sector struggling with rising costs. Headteachers across the land are gritting their teeth and sharpening their pencils to make next year’s budget work. So imagine my surprise when I read that a transport minister had boasted at the dispatch box that the Government plans to spend £9.9 billion on “cycling and walking objectives”.
A government must have priorities, and its spending – and any consequent savings – must reflect them. Instead, the Treasury has historically conducted difficult spending reviews on a departmental basis, salami slicing in order to spread the pain widely. As a result, secretaries of state compete to defend their budgets. This de facto divide-and-rule means policy objectives are easily lost and everything becomes a priority, which means nothing is.
Furthermore, children and their education were indisputably among the worst-affected by the pandemic. Surely it would be indefensible not to prioritise them now, even at the expense of “walking objectives”. And surely an educated workforce is an essential element of a productive economy.
The second principle is that all tax has an impact on the economy, either directly or by changing behaviour, and almost all of it eventually impacts on the consumer.
Companies, for instance, don’t actually pay tax. They just price it in as an overhead, so consumers pay tax for them when we buy their goods or services. Their national insurance, corporation tax and even their employees’ income tax is priced into everything you buy, with VAT on top. That first nibble of a Kit Kat is actually a mouthful of tax.
In his Mais Lecture in February, then chancellor Rishi Sunak, now Prime Minister, described a “great slowing down” across the western world that began even before the Covid pause. “Productivity, living standards, and dynamism are not growing fast enough.”
At a time when so many families and businesses are struggling, how will higher taxes help us overcome this “great slowing down”? A dynamic economy is one where capital seeks out ideas and takes risks to create wealth. How does tax policy help create this economy?
Finally, we must acknowledge that many people believe the economy is still not working for them. Too many of our fellow citizens feel excluded from our national balance sheet. Yes, they have income, and employment levels are high, but recent estimates show that more than a quarter of Brits have less that £500 in savings, and around 10 million people have less than £100. Home ownership is declining and – among the young – falling fast. Ordinary people hold less and less of the stock exchange and few own shares in the company they work for. We have become a capitalist country where fewer and fewer people have any capital. This is an existential crisis for capitalism as a system.
The next few months are going to be tough, and I don’t envy the Chancellor as he wrestles with our public finances. But he will have struck the right balance if he can demonstrate to the British people that the Government sees their financial struggles and will not exacerbate them; that he and the Prime Minister share their priorities and will invest in them; and, critically, that we believe in a property-owning democracy where everyone has the chance to call themselves an owner.
Kit Malthouse is Conservative MP for North West Hampshire
No.
Many *know* the economy is not working for them.
I find it interesting that Mr. Malthouse’s view is that more people in the UK should be able to become capitalists, yet his party’s policies enable the wealthiest people and companies to take and sequester huge amounts of capital. Unless the Conservatives mitigate this tendency in the economy, the average Briton will never have a hope of becoming part of the society he envisions.
One can’t become a home-owner if the houses are all bought up by buy-to-let landlords, nor can one own business premises if they’re all already in the hands of banks. Nor can one build up one’s capital if that money is being leeched away every month in rental fees.
In a couple of weeks we are going to watch the spectacle of a parade of Tory ministers in turn explaining why nurses shouldn’t have a pay rise that matches inflation – because tax cuts for the best off were the priority.
It’s like seeing a car a mile up the road, and just knowing it’s going to crash.
The conservatives are extremely lucky they still have 2 years left. They were on the precipice of being wiped out.
Many believe that the government is not working for them.
Acknowledging that the UK is a capitalist society where the majority of people don’t have any capital is surprisingly perceptive for a Conservative politician.
> **We** must acknowledge that many believe the economy is not working for them
What ‘we’? A huge swathe – and growing – *are* the many who *know* the economy is not working for them.
Presenting it as though anyone reading such an article hasn’t yet accepted what people ‘believe’ is very disingenuous.
Let’s acknowledge who is responsible for that. You cannot blame anyone else when living standards have got worse across the board and it is you who have been in power for twelve years. Sure, COVID and the war in Ukraine came out of nowhere, however austerity and Brexit were entirely self-inflicted; our response to the pandemic was also self-inflicted. The economy does not work for people because the Tories have made it so it does not, it is not some moral failing of the working class.
We just don’t care – finished the sentence for you 😂
We must acknowledge, many are not living in reality.
The tories are a victim of their own success. They have always had a mandate of protecting the wealthy and enriching their friends. The problem is that they’ve now gone too far and the wealth inequality has reached levels that prevent the creation of new Tory supporters.
Since every man and woman got the right to vote, the Conservative party has relied on the reliable process of people becoming more Conservative as they age and accrue wealth. The older generations are always wealthier, more likely to vote and to vote for the party that is protecting their wealth. Now though the millennial generation and below are simply not accruing that wealth and as such are not becoming more Conservative. We’re seeing the eradication of their future voter base and they still haven’t realised it. It’s like the rest of us can see a brick wall on the road up ahead but the Tory at the wheel is keeping his foot to the floor.
One billion USD represents the life-earning potential of 500 Americans (2 million for their whole life of working).
​
They gamble with more money than you will reasonably earn in your life.
​
They print, we rent.
Money is an abstract form of greed that is self serving. Once society depends on it enough, it becomes more important than drugs or sex – or life itself.
​
Life is literally too expensive, because there are too many successful people who profit.
This sentence is structured like the old “I am sorry you FEEL this way”.
Economy. It’s not working. It cost my home, everything I owned. I got a spare room at a parents. I imagine in the not too distant future I’ll be sleeping rough.
How about acknowledging that it’s not a matter of belief; the economy isn’t fucking working for us and this government never intended it to.
Even this title pisses me off.
they “believe” it’s not working for then. But us economists know it _really_ is working for them because they can buy an iphone now – imagine living in the 80s, you couldn’t have an iphone then! Fuck off.
Government is supposed to make citizens lives better. They failed. They’ve failed because they haven’t tried, most of them are self-serving, they extract value from the country for they’re own benefit and then fuck off after they’re out. It’s despicable. And the common UK idiot is bought off with being increasing brutal to minorities and the culture war bullshit.
“We must acknowledge that the economy is only working for the wealthy.” FTFY
18 comments
The last month has been economically traumatic, but a resumption of the status quo ante, while welcome for many, brings with it some profound questions about how we got here, where we go next, how to get there and the nature of our economy.
While the so-called mini-Budget poured fuel on the fire, in truth the ingredients were already assembled for a toxic economic cocktail. Many seem to have forgotten that back at the beginning of August the Bank of England forecast a 15-month recession, in a drastic downgrade of its previously milder pessimism in May.
Of course, markets are as much a metric of emotion as they are a mathematical exercise. The sudden darkness in the sky above Threadneedle Street made many in the City jittery – how could the Bank have been so far off the mark so recently? Those of us of a monetarist persuasion were not surprised. In recent years, central banks have paid scant attention to the money supply, domestically and internationally. For differing reasons, everyone is braced for the Bank’s November forecast.
To right the ship, the Chancellor and Prime Minister now have some tough choices to make. They have hinted several times that taxes will have to rise, and spending will have to fall. In contemplating this dreadful double-whammy, there are some broad principles they must have at hand. These will be tested by Parliament and, most notably, through the Treasury Committee, for which I am standing for election as chair.
The first is that not all government spending is equal. The Prime Minister and Chancellor should decide what is icing and what is cake, and then spend and save accordingly.
Until last week I was Secretary of State for Education, trying to support a sector struggling with rising costs. Headteachers across the land are gritting their teeth and sharpening their pencils to make next year’s budget work. So imagine my surprise when I read that a transport minister had boasted at the dispatch box that the Government plans to spend £9.9 billion on “cycling and walking objectives”.
A government must have priorities, and its spending – and any consequent savings – must reflect them. Instead, the Treasury has historically conducted difficult spending reviews on a departmental basis, salami slicing in order to spread the pain widely. As a result, secretaries of state compete to defend their budgets. This de facto divide-and-rule means policy objectives are easily lost and everything becomes a priority, which means nothing is.
Furthermore, children and their education were indisputably among the worst-affected by the pandemic. Surely it would be indefensible not to prioritise them now, even at the expense of “walking objectives”. And surely an educated workforce is an essential element of a productive economy.
The second principle is that all tax has an impact on the economy, either directly or by changing behaviour, and almost all of it eventually impacts on the consumer.
Companies, for instance, don’t actually pay tax. They just price it in as an overhead, so consumers pay tax for them when we buy their goods or services. Their national insurance, corporation tax and even their employees’ income tax is priced into everything you buy, with VAT on top. That first nibble of a Kit Kat is actually a mouthful of tax.
In his Mais Lecture in February, then chancellor Rishi Sunak, now Prime Minister, described a “great slowing down” across the western world that began even before the Covid pause. “Productivity, living standards, and dynamism are not growing fast enough.”
At a time when so many families and businesses are struggling, how will higher taxes help us overcome this “great slowing down”? A dynamic economy is one where capital seeks out ideas and takes risks to create wealth. How does tax policy help create this economy?
Finally, we must acknowledge that many people believe the economy is still not working for them. Too many of our fellow citizens feel excluded from our national balance sheet. Yes, they have income, and employment levels are high, but recent estimates show that more than a quarter of Brits have less that £500 in savings, and around 10 million people have less than £100. Home ownership is declining and – among the young – falling fast. Ordinary people hold less and less of the stock exchange and few own shares in the company they work for. We have become a capitalist country where fewer and fewer people have any capital. This is an existential crisis for capitalism as a system.
The next few months are going to be tough, and I don’t envy the Chancellor as he wrestles with our public finances. But he will have struck the right balance if he can demonstrate to the British people that the Government sees their financial struggles and will not exacerbate them; that he and the Prime Minister share their priorities and will invest in them; and, critically, that we believe in a property-owning democracy where everyone has the chance to call themselves an owner.
Kit Malthouse is Conservative MP for North West Hampshire
No.
Many *know* the economy is not working for them.
I find it interesting that Mr. Malthouse’s view is that more people in the UK should be able to become capitalists, yet his party’s policies enable the wealthiest people and companies to take and sequester huge amounts of capital. Unless the Conservatives mitigate this tendency in the economy, the average Briton will never have a hope of becoming part of the society he envisions.
One can’t become a home-owner if the houses are all bought up by buy-to-let landlords, nor can one own business premises if they’re all already in the hands of banks. Nor can one build up one’s capital if that money is being leeched away every month in rental fees.
In a couple of weeks we are going to watch the spectacle of a parade of Tory ministers in turn explaining why nurses shouldn’t have a pay rise that matches inflation – because tax cuts for the best off were the priority.
It’s like seeing a car a mile up the road, and just knowing it’s going to crash.
The conservatives are extremely lucky they still have 2 years left. They were on the precipice of being wiped out.
Many believe that the government is not working for them.
Acknowledging that the UK is a capitalist society where the majority of people don’t have any capital is surprisingly perceptive for a Conservative politician.
> **We** must acknowledge that many believe the economy is not working for them
What ‘we’? A huge swathe – and growing – *are* the many who *know* the economy is not working for them.
Presenting it as though anyone reading such an article hasn’t yet accepted what people ‘believe’ is very disingenuous.
Let’s acknowledge who is responsible for that. You cannot blame anyone else when living standards have got worse across the board and it is you who have been in power for twelve years. Sure, COVID and the war in Ukraine came out of nowhere, however austerity and Brexit were entirely self-inflicted; our response to the pandemic was also self-inflicted. The economy does not work for people because the Tories have made it so it does not, it is not some moral failing of the working class.
We just don’t care – finished the sentence for you 😂
We must acknowledge, many are not living in reality.
The tories are a victim of their own success. They have always had a mandate of protecting the wealthy and enriching their friends. The problem is that they’ve now gone too far and the wealth inequality has reached levels that prevent the creation of new Tory supporters.
Since every man and woman got the right to vote, the Conservative party has relied on the reliable process of people becoming more Conservative as they age and accrue wealth. The older generations are always wealthier, more likely to vote and to vote for the party that is protecting their wealth. Now though the millennial generation and below are simply not accruing that wealth and as such are not becoming more Conservative. We’re seeing the eradication of their future voter base and they still haven’t realised it. It’s like the rest of us can see a brick wall on the road up ahead but the Tory at the wheel is keeping his foot to the floor.
One billion USD represents the life-earning potential of 500 Americans (2 million for their whole life of working).
​
They gamble with more money than you will reasonably earn in your life.
​
They print, we rent.
Money is an abstract form of greed that is self serving. Once society depends on it enough, it becomes more important than drugs or sex – or life itself.
​
Life is literally too expensive, because there are too many successful people who profit.
This sentence is structured like the old “I am sorry you FEEL this way”.
Economy. It’s not working. It cost my home, everything I owned. I got a spare room at a parents. I imagine in the not too distant future I’ll be sleeping rough.
How about acknowledging that it’s not a matter of belief; the economy isn’t fucking working for us and this government never intended it to.
Even this title pisses me off.
they “believe” it’s not working for then. But us economists know it _really_ is working for them because they can buy an iphone now – imagine living in the 80s, you couldn’t have an iphone then! Fuck off.
Government is supposed to make citizens lives better. They failed. They’ve failed because they haven’t tried, most of them are self-serving, they extract value from the country for they’re own benefit and then fuck off after they’re out. It’s despicable. And the common UK idiot is bought off with being increasing brutal to minorities and the culture war bullshit.
“We must acknowledge that the economy is only working for the wealthy.” FTFY