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Rishi Sunak and his priorities: he hasn’t achieved a single one.
Yesterday (Wednesday, June 21, 2023) was not a good day to be Rishi Sunak.
Neither was Monday – but that’s another story.
We knew he failed on inflation because it’s the big headline.
But what about his other targets?
The UK’s debt pile, meanwhile, reached more than 100 per cent of economic output for the first time since 1961 as government borrowing more than doubled in May, according to official figures.
So it did:
The wrong kind of economic record to ser. From @ONS just now: “Public sector net debt (PSND ex) at the end of May 2023 was £2,567.2 billion and provisionally estimated at 100.1% of GDP. The last time the debt-to-GDP ratio was above 100% was March 1961”
It shows up the lie in George Osborne’s evidence to the Covid Inquiry this week, too: Osborne claimed he had needed to repair the “seriously impaired public finances”.
He said: “If we had not had a clear plan to put the public finances on a sustainable path then Britain might have experienced a fiscal crisis, we would not have had the fiscal space to deal with the coronavirus pandemic when it hit,” he said.
But when he became Chancellor in May 2010, the UK’s national debt stood at £1.03 trillion. He promised to eliminate it altogether (which is kindergarten economics; the debt is merely a yardstick of private investment in the UK’s economy) – and today’s figures show the extent of his massive failure.
Okay, how about the small boat Channel crossings?
On Sunday, it was revealed that more than 1,100 people had arrived on small boats in the past three days.
The cumulative number of arrivals in 2023 now stands at a provisional total of 10,472, according to the latest data from the Home Office.
We already know NHS waiting lists are not falling (because health service funding is being siphoned off by private health firms as profit?) and intelligent commentators say the Bank of England’s expected response to the inflation figures will stifle economic growth by sucking all the spare money out of the system.
This is what happens when you let Conservatives get their hands on the workings of government: they clown around like the idiots they are until everything breaks down.
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— redsarah99🇵🇸 #BlackLivesMatter (@redsarah99) May 13, 2023
That’s right – more than nine-tenths of the government’s borrowing is from itself.
So when you hear a Tory saying how important it is to balance the books, keep that in mind.
Because it isn’t all that important at all.
And you already know you should ignore anyone compring a nation’s finances to those of a household, right?
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Need a miracle: after 13 years of Tory government, so does most of the United Kingdom.
The German magazine Der Spiegel (The Mirror) has offered readers in that country a depressing summary of life in the UK – with predictions of worse to come:
Food shortages, moldy apartments, a lack of medical workers: The United Kingdom is facing a perfect storm of struggle, and millions are sliding into poverty. There is little to suggest that improvement will come anytime soon.
Things aren’t going well for the United Kingdom these days. For the past several months, the flow of bad news has been constant, the country’s coffers are empty, public administration is ineffective and the nation’s corporations are struggling. As this winter came to an end, more than 7 million people were waiting for a doctor’s appointment, including tens of thousands of people suffering from heart disease and cancer. According to government estimates, some 650,000 legal cases are still waiting to be addressed in a court of law. And those needing a passport or driver’s license must frequently wait for several months.
Boarded up windows and signs reading “To Let” and “To Rent” have become a common sight on the country’s high streets, while numerous products have disappeared from supermarket shelves. Recently, a number of chains announced that they would be rationing cucumbers, tomatoes and peppers for the foreseeable future.
Last year, 560 pubs closed their doors forever, with thousands more soon to follow, according to the industry association. Without Oxfam, the Salvation Army and other charitable organizations that operate second-hand stores, numerous city centers would have almost no shops left at all.
Last week, the International Monetary Fund forecast that in no other industrialized nation would the economy develop as poorly as in Britain this year. Even Russia is expected to end up ahead of the UK.
Whereas the number of billionaires in the UK – at 177 – is higher than it has ever been, millions of Britons have slid into poverty. Newspapers and television channels are full of cheap recipes and shows like Jamie Oliver’s “£1 Wonders.” Since December, hardly a day has passed without a strike by bus drivers, medical workers, teachers, public servants, university employees or rail workers. Last week, assistant doctors across the country went on strike for four days, with the media calling on the populace to avoid all activities that could result in injury.
Nowhere is the feeling of having “lost the future” stronger than in Britain, according to the public opinion pollsters from Ipsos. In 2008, the year of the banking and financial crisis, 12 percent of people in the UK believed that their children would be worse off than them. Now, that number is 41 percent, Ipsos has found.
The magazine doesn’t mince words when discussing responsibility for the crisis. It’s down to the Conservative government in general – and Boris Johnson in particular, it seems:
Many simply no longer trust their speechifying politicians in Westminster to get much done. The Tory party, which has been in power now for a dozen years, has gone through four prime ministers since 2016 alone.
Even if the fifth in the series, Prime Minister Rishi Sunak, is doing all he can to leave behind the period of sloganeering and slapstick, the UK isn’t likely to recover from his predecessors any time soon. Particularly not from Boris Johnson, who still refuses to admit any personal responsibility for the plight in which Britain finds itself and continues to bleat in a huff from the sidelines.
Even as his country slid further and further into the abyss, Johnson spent years absorbing all political momentum like a black hole, instead throwing his energy into projects like bringing back imperial measurements, announcing his intent to build a sinfully expensive royal yacht named Britannia and convincing the populace that he was building a “global,” or even a “galactic Britain,” a reference to the country’s budding space program.
Yet in early January, when the first 11 satellites ever to be launched from British soil were to head into space from Cornwall, the mission failed, and they ended up in the Atlantic instead. Excitement about the launch had been limited anyway, with an earthly populace that would have been happy with functioning school toilets.
The article goes on to examine a few case studies – including the National Health Service, on which it quotes the current average waiting time for an ambulance: 93 minutes.
“This country was already on its knees before Brexit, before the endless phase of political trench warfare and before the pandemic,” the article concludes.
“And now, it seems as though it has dialed 999 and is waiting in vain for the paramedics to show up.”
That’s how they see the UK in Germany. Considering where Der Spiegel lays the blame, is it something to think about when casting your vote in the local elections – and the general election that will eventually follow?
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Spaffer: Boris Johnson splurged hundreds of billions of pounds during the Covid crisis and his successors have continued the trend. It all went to people who were already rich and has caused huge hardship to the poor, and nobody in government wants to re-balance the situation. Why?
It’s time to follow up on Gary Stevenson, the former City trader who became an economist and anti-inequality campaigner.
Last time, I shared Gary’s contributions to the BBC’s Politics Live via a YouTube clip that became extremely popular, with more than 140,000 views as I type this. Rest assured, there will be more content on YouTube in the future!
Now, Gary himself has shared what he himself took from his experience on the show, with which I’d like to couple his more recent clip, What is money? Together, I think they may explain why it’s so important that we find out who has the £700 billion that Boris Johnson’s government has splurged, and find a way to get them to spend it back into the economy or tax it off of them.
Here’s the first clip:
So: an enormous amount of money has been transferred from the government to the richest people in the UK, leading to a huge increase in government debt which triggers austerity, and a big increase in cash accumulation by the richest, leading to inflation and a cost-of-living crisis. The reasons for that are below.
Nobody in government seems to know where the money has gone – £14,000 for every adult in the UK. I don’t have 14 grand. Do you? Who’s got it, then? And what are they doing with it? They don’t want to say it has gone to the richest people in the country.
And they definitely don’t want to admit that their decision to hand over that money has forced you into extreme poverty!
That money could be put to good use, if the people who have it spend it back into the economy, one way or another. What did we get for it? Was it worth the cost? If not, something needs to be done.
Here’s the other clip:
Money is created by central banks and loaned out to others – so for every penny anybody has, there is a penny of debt somewhere; the total amount of money, minus the total amount of debt, always equals zero.
So if one group of people – like a government – goes heavily into debt, somebody else must be accumulating money or credit.
(The government then has to pay interest on the debt, and in a closed system, that means taxing more out of the economy than it put in; this is a way of regulating the money supply, of course. Commercial banks that borrow from the central bank would charge higher interest than it does when they make loans, in order to make their profit – meaning they rely on the system putting you into debt.)
We know that the government spent – splurged – £700 billion during and after Covid – £14,000 per UK adult. But every UK adult hasn’t had £14,000 from the government; somebody else had it.
People who are in debt – including governments – need to get money back from people who are in credit, otherwise they can’t balance their books. Until they can manage such a feat, that debt creates austerity – it harms public sector pay and public services don’t get the investment they need.
The problem is that only a small number of people are in credit, while the government – representing all of us – and a lot of others are in debt. There’s an imbalance between the large number of people owing money and the small number who have it, and (by the way) can lend it, and can therefore demand interest from the people to whom they lend it, in the same way a bank can.
So now, not only do we have a huge amount of government debt to pay off, but we may have private debt as well, because the cost of living has risen.
And why has the cost of living risen?
As Gary said, there has been a massive increase in asset prices: both gold and shares have hit (by now, I think) an all-time high, and that’s because rich people have been buying them up, with a view to profiting on them – because they have so much money, it won’t hurt them to invest much of it.
This creates scarcity, and that pushes up prices, meaning that ordinary people cannot afford to buy as much as they could before. The amount of resources available within the economy is the same, more or less, but fewer people can take advantage of it because the redistribution of money means they can’t afford it.
We have seen a resource run low – gas – and that has simply piled extra pressure on the poor.
We have a government that is not interested in resolving its £700 billion debt. Instead, it is planning to spend even more. So prices will continue to rise and living standards – for the majority – will continue to fall.
And that is why the current Conservative government has presided over the largest increase in inequality in UK history.
It occurs to This Writer that pushing huge debt onto the vast majority of the population may have been government policy all along.
Expect (probably) a video clip in the near future, explaining why.
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The grinning Kwarteng: in his next public statement, he’ll announce a plan to deal with the debt he created in his last public statement. Who’s willing to bet he’ll cut your public services to the bone?
Who reckons he’s going to cut public services?
Kwasi Kwarteng, who by some miracle is still Chancellor of the Exchequer, has announced that he will set out his new (detailed, he says) plan to cut public debt and balance the government’s finances, on October 31. That’s nearly a month before his previously-announced date, November 23.
An independent forecast of how the economy will perform in coming years, by the Office of Budget Responsibility, will be published at the same time, so we will all be able to judge whether his plan is worth the paper it’s written on.
The statement will come days before the Bank of England announces its latest decision on interest rates – on November 3. We’ll definitely know if ‘Queasy’ Kwarteng has got it wrong by then, and if interest rates rise again, it’ll be further evidence.
Today’s announcement is yet another u-turn for Liz Truss’s hapless government; Kwarteng claimed on October 4 that the plan would be announced on November 23, as he had originally stated and that “people have been reading the runes and the pauses”.
It turns out that those people knew more about the future than he did. How normal for a government that simply doesn’t know what it is doing from one day to the next.
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The Department for Work and Pensions has refused to stop taking money from already-inadequate benefit payments – and has hidden the decision by releasing it while the media were focused on the Queen’s funeral.
MPs on the Commons’ Work and Pensions Select Committee called for the DWP to stop debt repayments being deducted from benefits, back in July.
They said deductions should be restarted only when inflation eased or benefit levels caught up.
It seems DWP chiefs have spent around two months waiting for “a good day to bury bad news”, as the saying goes.
[MPs] said the debt deductions were causing “hardship” for “households currently struggling with huge financial pressures”, and people needed “breathing space”.
Nearly half (45%) of people on Universal Credit are currently having deductions taken out of their benefits to repay debts, at an average of £62 a month. The debts are typically caused by historic overpayments and other errors, advance payments made during the five-week-wait for Universal Credit, and by arrears on energy costs and other priority bills. Currently the government can deduct up to a quarter of someone’s benefits each month to repay these debts.
MPs heard from charities including the Joseph Rowntree Foundation that these deductions were “a key factor in destitution”. The Trussell Trust said the practice was pushing “people into destitution and needing to turn to a food bank”.
Now brace yourself for the DWP’s nonsense justification for putting people into destitution:
the Department for Work and Pensions said it did not believe pausing deductions was “necessarily in the claimant’s best interest”. It said that if that deductions were paused between now and the April 2023 rise, people might then not notice the impact … when it comes … and people might “feel no better off”.
But they’re not going to feel better-off anyway if the whole uplift has to go towards servicing debts that could be avoided if the DWP simply paused these deductions for a while.
The government also rejected MPs’ calls to bring forward the uprating of benefits, currently not due to take effect till April 2023. In April this year, benefits were increased by an inflation rate that was seven months out of date – rising 3.1%, at a point when inflation was already running at 9%.
So already, people on benefits are receiving far less than they should, simply to keep up with inflation.
Claimants are eligible for additional money to help with housing costs – but this is “not intended” to cover the rent fully in many areas, meaning people have to make that shortfall up from their benefits, too. MPs called for the housing element to be increased, as happened during the pandemic, but the government rejected this call, too, citing its work on helping people on benefits save for a deposit to buy a house instead. According to housing charity Shelter, most private tenants have a shortfall, as the maximum amount is set to cover only the lowest 30% of rents in any given area, and there are other exclusions as well.
It should be easy to conclude from this that the Tory “benefit” system is unfit for purpose and the sooner they are taken out of its administration, the better.
And the reason the DWP is refusing to take action to stop people on benefits from falling into debt and destitution should be clear: that is exactly what the Tory system is designed to do.
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Sanction centre: people paying back debts to the benefit system are being penalised for being poor by the current Tory cost of living crisis because their situation forces them into the hands of high-interest doorstep lenders who will make their situation worse. Isn’t the benefit system supposed to keep people out of debt?
It is amazing that this has to be spelt out for people but, with us all having to deal with the Tory squeeze on our incomes, this may have evaded a few people.
The cost of living crisis has hit the poorest people and families worst, with people on benefits suffering the worst after 10 long years of punitive Tory cut after punitive Tory cut.
The Resolution Foundation has already pointed out that the poorest households are facing a higher rate of inflation than richer people.
This is because the rising cost of home services (like energy bills), transportation and food is having a greater effect on people with less income and fewer savings to pay for them; it’s not rocket science.
So the headline inflation rate for the lowest tenth of families is around 10.3 per cent, while it is 8.7 per cent for the richest tenth. This is the greatest disparity since cost of living data began to be collected at the start of this century.
Now the Joseph Rowntree Foundation has produced a study showing that a decade of social security cuts, underfunding, and punitive government debt collection terms are pushing low-income families – particularly benefit claimants – into financial crisis.
In many situations, people were forced to choose between feeding their loved ones and making their rent payments on time, as described in the study. 2.3 million homes had already gone without both.
Low-income individuals have resorted to borrowing, adding £12.5 billion in new debt in 2022 out of a total of £22 billion. They owe high-cost lenders, such as doorstep lenders and illegal loan sharks, a total of £3.5 billion, which jeopardises their future financial stability.
Families are already having a difficult time making their payments. Since October of last year, total personal debt arrears have more than quadrupled from £1.8 billion to £3.8 billion, and JRF anticipates that these arrears will continue to grow as interest rates rise.
Unsettlingly, the research discovered that the government is making life extremely difficult for people by exploiting the benefits system to collect some debts, sometimes at exorbitant rates. Families receiving assistance without these “debt deductions” suffer less than those who are obliged to have them.
JRF has suggested a simple way to ease the burden on these claimants: allow them to repay their debt more slowly while the cost of living crisis is ongoing, rather than cutting their income by a quarter every month.
And Universal Credit entitlements should increase to ensure that – at a bare minimum – people are able to afford the essentials when they fall on hard times.
This is, of course, entirely logical. The benefit system is intended to ensure that people don’t fall into debt at all – not simply to make them prey to loan sharks at a slower speed.
But we’re seeing no announcements about this from Rishi Sunak or Therese Coffey.
All we’ve had are big headlines about payouts to everybody, including £400 for every house – meaning people who own multiple dwellings receive that amount many times, in comparison with the poor who only have one.
This Site has stated it before: it’s a big subsidy for the rich. And the fact that the poor are being driven to loan sharks makes it all the more obscene.
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Rishi Sunak: I like this shot because he looks nervous. If I was in his position, asking Tory backbenchers to raise taxes, I’d be nervous too.
Rishi Sunak has been accused of wasting billions of pounds of public money – your money – because he failed to insure against interest rate rises on government debt.
It means higher than necessary payments on £900bn of reserves created through the quantitative easing (QE) programme, according to the National Institute of Economic and Social Research.
The loss over the past year is around £11 billion, the think tank estimates.
The Treasury has retaliated by saying NIESR’s proposal would undermine the independence of the Bank of England and be “hugely damaging” to the credibility of how public finances are managed.
Not only that, but there is an argument that, even if the Treasury had been able to predict the rate rise (which is possible), it would have been a potentially expensive bet – taking chances with the system.
Really?
Read the arguments here – if you can make sense of them.
The question for us as laypeople is, what do we think is more irresponsible – damaging the credibility of the public finances by pressuring the Bank of England to take a particular action, or damaging the credibility of the public finances by wasting £11 billion?
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Nazanin Zaghari-Ratcliffe has, quietly and with dignity, made nonsense of claims by Boris Johnson and his government that they worked tirelessly to free her.
A newspaper reporter on the BBC’s Politics Live tried to say current foreign secretary Liz Truss was to be praised for achieving the release, but we all know her actions were not even slightly motivated by concern for Ms Zaghari-Ratcliffe.
Truss paid a £400 million debt the UK owed Iran in the hope that it would win a deal for cheap fossil fuels to alleviate the cost-of-living crisis her government has forced on its fellow citizens.
Ms Zaghari-Ratcliffe’s calm comments on the way she was mistreated by UK foreign secretaries – including Truss and current prime minister Boris Johnson – should act like daggers in the heart of the Tory government:
'Richard said to thank the foreign secretary. I do not really agree with him on that level… What's happened now should have happened six years ago'
Tory voters: take note – if you were in trouble, a Tory government would treat you no better.
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