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September 10, 2024 - 7:00am
After announcing that his government would cut winter fuel payments, Keir Starmer is now facing down a potentially major rebellion. Ten Labour MPs have signed a non-binding motion calling for the measure to be delayed ahead of this evening’s vote. Sharon Graham, the general secretary of Unite, accused the Prime Minister on Sunday of “picking the pockets of pensioners” who are the main target of the cuts.
Starmer himself, meanwhile, seems unfazed, saying that his government must be “prepared to be unpopular”. This is strange politics from a Labour leader. Starmer seems to be drawing on his background in the Civil Service and as head of the Crown Prosecution Service, where this sort of language is commonplace and people often compete for who will make the toughest decision. Yet this sort of messaging makes for awful politics — particularly when it comes from the Left.
Unsurprisingly, Starmer’s favourability ratings are crashing through the floor. He was never popular — two days before the election his net favourability rating was around -18% — but in recent weeks it has fallen a further three percentage points to -21%. If this continues, and the current rebellion grows in the future, Starmer might find out soon enough that the “tough talk” that enabled him to progress in the Civil Service might impair him in office.
The reality is that Starmer and his Chancellor misled the public. While it is true that Rachel Reeves stated that the situation with the public finances was grim during the election, neither she nor the Prime Minister explained to the British people that if Labour were elected the population would be treated to a harsh campaign of fiscal austerity. The public voted for Labour in the hope that it would fix the economy after the Tories were judged to have mishandled it. But now they are getting the same stagnant economy with tax hikes and spending cuts.
Labour no doubt hopes that an impending cut to interest rates in the United States might allow the Bank of England to cut rates in Britain, and that this might juice the economy. While an interest rate decline in Britain might help lift the housing market at the margin, it would have a minimal impact on overall growth and hence on tax revenues. In addition, it appears that the Federal Reserve is watching an indicator known as the “Sahm rule”, which currently reads as if the United States is entering a recession. If this were to occur, the austerity currently imposed by the Starmer government would become far worse as unemployment claims rose and tax revenues fell.
The Prime Minister is listening intently to his former colleagues in the Civil Service while undertaking this austerity. But what is so frustrating to many is that it was these same civil servants who supported the ideas which led to the overspending in the first place. Winter fuel payments are being cut because the sanctions and counter-sanctions that occurred due to the Ukraine war led the Government to introduce an enormously costly energy price guarantee which is now also quietly being cut. No one ever explained to the public or even to the politicians the severe economic consequences of the war — and most people are still unaware that these consequences are at the heart of the present austerity.
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SubscribeStarmer, Starmer, pension harmer!
Hey! Hey! 2TK*! How many pensioners froze today?
*2-Tier Keir
You can just see the Hypothermometer across the media on a daily basis this Winter. It can get up to 4k before anyone cavils based on Labour’s own numbers. Reputational suicide. Numpty amateurs.
Reeves & Co (Pension Thieves) PLC
As they say, vote labour, get “conservative”.
If “public finances are grim”, how is that to be fixed without tax hikes, spending cuts, or some combination of both?
I hope you haven’t already bought into the first Labour Big Lie there. Which includes the “£22bn black hole” that they largely dug themselves (and which their own pre-election access to government figures would have revealed if true).
The Labour strategy is clearly to lie – and lie big.
Meanwhile, while “pursuing economic growth”, everything they actually do will act to reduce or kill growth.
Only catastrophic Labour incompetence can save us now. So there’s still hope …
My point is that if a government needs money, it can do one of three things: 1) raise taxes, 2) cut spending, 3) sell assets. All the assets are gone, which leaves 1) and 2).
Perhaps omitting option 4) borrow more money ? That was certainly Gordon Brown’s approach. May not be available right now.
It’s also untrue that the government has no assets. They have massive land and property holdings that they don’t efficiently use (in some cases don’t use at all). The MoD is the prime example. The land and buildings to front line staff ratio must be at an all time high right now.
But that all hangs on the big “if” – if the government *needs* more money. I’m not convinced. They certainly *want* more money. I neither need nor want the sort of big government that’s coming our way.
The 4th is borrowing.
More debt is rarely rhe answer. People only lend money at low rates to enterprises or countries they think will succeed. Borrowing at higher rates without a credible growth plan means interest eats hugely into the cost of every service. That means less public services and higher taxes.
It also means kicking the expensive debt can further down the road to your children’s children.
The biggest mistake was the Treasury borrowing money on index linked Bonds. So when the Interest rate sky rocketed, so did our debt payments.
Nope. If it successfully fosters economic growth, the pie gets larger.
True, but that is not a “right now” thing. I’m sure that if a magic wand could be waved, and the size of the economy thereby increased, the government would do that.
It depends what level of growth you project.
If you have some plan (however fanciful) as to how some growth might occur then you can project some additional revenue off the back of it and the books balance.
If you spent several years prior to the election pouring the coldest possible water on anything that looked like an industrial strategy and point blank refusing to say where all the growth was going to come from, then you can’t then put that into a spreadsheet as the source of your increase in GDP. And then you have to service your debts using an economy that isn’t growing and then you get a black hole.
You didn’t have to like the specifics of the Green New Deal as an industrial strategy but at least it was a strategy. My guess is that it was the name that did for it – altogether too progressive. If they had rebranded it the Sustainable Growth Strategy, it would have sounded sensible and serious and they could probably have got it through the dismal filter which apparently defined pre-election discourse.
My personal preference would be to spend £10bn a year for a decade building a million council houses. That’s a conservative estimate of the number of affordable homes we need (based on the number of Renting Pivately, claiming Housing Benefit but still unable to afford the rent). Doing that would actually enable you to hit the 300,000 homes a year target (instead of the <200,000 we’re doing now – the extra houses generate a roughly 1.3% boost to the economy on their own (£40bn).
£10bn a year is a lot but it gets offset – first because the public sector is getting a rent-generating asset in return (it isn’t beeing paid back from general taxation) but also because you are saving on the housing benefit bill (most new tenants will be moving out of Private Renting – which probably offsets about a third of the costs). And the tenants themselves are lifted out of induced poverty, which increases their spending power and lifts the economy as well (poverty is very expensive for the exchequer).
That is basic government – it’s approximately 1,000 times easier and more certain than building, say, a battery factory. It’s good politics too – affordable homes appeal to the red wall, and lefty progressives alike. It’s even palatable to bosses (because their workers’ wages will go further when their housing costs go down). But they will not do it.
You had me until the bit about focusing building on council houses. That just propagates welfare dependency, which is a drain on the state and a drain on the energy and efforts of productive people.
If you’d just said building, I’d still have said that’s only half a growth strategy, because the perpetual need element of home building is that the need for more at the same rate recedes each year as housing stock increases. It’s not sustainable.
Well look, they are two distinct points. 1. You need a growth strategy 2. Here’s mine.
You agree with 1 but not 2. Fine
And, actually, I agree with you on the latter point. You can’t deliver huge housing growth forever. But the Country is currently in the brown and sticky and it also needs more housing at the moment. Just because a policy isn’t sustainable in the long run doesn’t mean it isn’t worth doing in the short to medium run. As Keynes said, “in the long run, we’re all dead.”
But, as to Council housing increasing welfare dependency. The alternative is the current position, in which about 5m households live in the Private Rented Sector and of them, about a third are eligible for help with housing costs. Of these households, about 60% have housing costs that exceed the limit on benefits established by George Osborne in 2013. By the Government’s own admission, those households do not have sufficient money to maintain a decent standard of living.
These are the 1 million households that I say need social housing.
They are already benefit dependent and they will remain so unless they can earn enough to afford the rent in the private sector. Depending where you live, that can be a big ask.
However, if you were to give them a Council house, their housing costs would fall dramatically, potentially by 50% or more. That would vastly reduce their ongoing need for benefits. It would also mean that, if they were to earn a bit more, they would get to keep it, instead of having it all taken away again in the form of benefit reduction.
Such situations are referred to as benefit traps. Why work harder if the government will only reduce your benefits? And the higher the income you need to live without benefits, the harder it is to escape the trap. Cheap housing actually reduces benefit dependency because it reduces the income you need to live without benefits and escape the trap.
I would also say that the presence in the Labour market of a large number of people who are, effectively unable to benefit from wage increases has ramifications beyond those on benefits. If half of the workforce in a low waged sector won’t benefit from a pay rise, why would they agitate for one? And if half the workforce won’t push for an increase, it is vastly harder for the other half (the ones who don’t get benefits) to secure one.
In this sense, current benefit policy has the same effect of suppressing wage growth that high levels of unemployment had in the past.
What’s wrong with building council houses? Leaving it to the private sector has resulted in record rents and house prices so why shouldn’t the government step in when the private sector clearly isn’t working as intended?
Record rents and house prices are also a drag on the economy as every penny spent paying for shelter is less money people have to spend on productive businesses that create jobs and growth
All we have to do is repatriate the 10 million most recent immigrants. Houses cheap as chips, no need to blanket the south-east with cheap and shoddy council housing.
Well yes, that would be an option in theory but, since it would massively decrease the size of the economy and thus reduce the tax base with which we were going to service our existing debts, I’m not sure it helps with the financial black hole issue.
Maybe that’s a price worth paying for you but I’m fond of my neighbours thanks.
Every ponzi scheme has to end in tears.
The real metric we should be concerned with – GDP per capita – might increase.
I don’t much care how large “the economy” is. I’m far more concerned with quality over quality. Seems to work for countries like Switzerland.
The current road to “growth” is like increasing your weight by binging on junk food rather than building muscle mass – i.e. far easier to achieve impressive looking gains, but actually harmful.
Possibly but this was a conversation about servicing debt. And that is about the aggregate size of your economy because we have already incurred those debts. If you tell a substantial proportion of the working populaiton to get lost, then you are shooing them out of the door and agreeing to pay their tab yourself.
And that is before we get into the feasibility / desirability of this approach.
When I hear the term “industrial strategy”, I generally think what is being proposed is socialism.
An industrial strategy is just Government having a view about how it is going to grow the economy. Margaret Thatcher had one – it was to break the grip of the unions, focus the country on services and de-regulate the City. She didn’t call it an industrial strategy but it was a set of principles around which the activity of Government could be orgainsed. Likewise, the not-very-socialist nation of Singapore has a very comprehensive set of industrial policies,
Increased tax take, through economic growth: productivity improvements, investment in new businesses and technologies, business efficiency improvements, productivity improvements, higher wages, profitable small businesses, better investment decisions, lower taxes, more competitive prices, people buying more.
It should be a virtuous circle, but apart from more housebuilding, Starmer’s moves so far are all anti growth.
The left never factors in that humans need incentives to do their best – and deterrents not to do their worst.
For heaven’s sake Deb, whatever else Keir Starmer may be, he is not the left.
Funny that John McDonnell has said, hey these are the policies that Jeremy Corbyn introduced on his campaign and he congratulated Keir Starmer on pushing them through.
If only we had a Michael Gove to destroy Starmer the way he did Corbyn. The way he dismantled, bit by bit, the sheer arrogance and treachery of Corbyn, was something to behold. And to think a disciple of the archtraitor now resides at No10. It’s a truly horrific scenario.
Priceless
John McDonnell is magnanimous in defeat and he doesn’t do dirty linen in public.
He is perfectly aware that the versions of the policies that Starmer has retained from the 2017 and 2019 are faint echoes of the originals.
The Mail’s reporting of that is simply mischievous.
Ask the Stand with Ukraine-ers who keep shoving money at the oligarchs in Kiev.
Might have known Pilkington would have to shoehorn in the Ukrainian war at some point. Even though Britains economic malaise is decades in the making, the author has to bring every subject back to the Russian sanctions
Lots of money was spent on COVID lockdowns and testing and tracing.
Meanwhile, lots of people were untreated for various illnesses, so the workforce is now unhealthier and less productive.
Also vaxx injuries…
Lots of money was spent on dealing with Covid, but the productivity of the British workforce has been declining for decades, and we’ve got young people just not up for it.
We’re becoming more and more uncompetitive with the developing world. And as parts of the world dry up, we will be competing for scarce resources.
It’s correct to mention the Ukraine War because it’s caused energy price spikes which affect the cost of everything, plus grain and other food ingredients shortages.
Wrong battle, for pittance return, underpinned by a pack of pre-election lies.
Starmer as PM: I’m reminded of Bob Marshall-Andrews’ summation of Jacqui Smith’s performance as Home Secretary: “A pleasant enough woman, but about 200 metres out of her depth”. This, of course, was in Gordon Brown’s “Ministry of All the Talents”.
One might say he’s a man with an empty toolbox, since the only experience and tools he seems to have are the legal and civil service ones. Not the right tools for many of the jobs he’s going to have to deal with.
If only he had a tool maker in the family…
Or… the biggest tool in the box.
Neither were pleasant but both are hugely inept.
Good thing, ahem, that every little move that Ms Reeves makes is to dethrone her Starminator.
Starmer took the picture of Thatcher down because he knew the one thing Thatcher never did, which elevated her way above him, was lie to the public. Starmer, one the other hand, has consistently lied to the public.
He hasn’t got the balls to tell people the truth.
If money is short you can either go out and try and earn some more, or tighten your belt to manage on what you have. A third, more efficient, route would be to cut out waste (immigrants, DEI, quangos etc) and release business from bondage (tax, regulations).
Billions to other countries.
From America, and with only partial attention being paid, Starmer looks a lot more Tory than the Tories… if only he could implement the Rwanda plan. Seriously, even the immigrant issue seems better with Labor, did Starmer not just say that channel boats would actually turn chancers back to France?
Are you American. It’s Labour in the UK
I think that was clarified in the first two words of his post.
“Maggie Thatcher, milk snatcher“ was a wonderful chant! Total nonsense, of course, but then most demo chants are precisely that. I remember complainants at the time listing all the terrible health effects her reforms would bring about. None happened and education money was better spent on raising standards.