I’m So Bored With the USA: Fine Words, Good Intentions, But…..

 

A change in format this week, as the editorial to lead into the main article.

 

The big event was the Labour conference and the much hyped speech from PM Starmer. Seeing the headlines and how he was taking the fight to Nigel Farage and Reform filled me with hope.

He was clear that the country faces an existential contest between decency and grievance, renewal versus decline, and jibed that Reform is a party that doesn’t like or “believe in Britain”.

On the face of it, he is right. Farage / Reform are just a nasty bunch of racists, populated by failed ex-Tories, and assorted flotsam and jetson. They have no answers to the countries problems, moreover they are the problem. They offer no solutions only someone to blame.

Unfortunately, the government isn’t offering solutions either, only more of the same; economic orthodoxy, and tough talk on immigration.

There was nothing that showed they have any proposals to deal with the cost of living crisis.

Borrowing from my main text, Unite research showed that, post Covid, many workers incomes have stagnated, whereas the cost of food has increased by 38%. Over the same time period, over biggest food retailer has paid out £12bn to shareholders.

Something, somewhere is very wrong.

 

‘post Covid, many workers incomes have stagnated, whereas the cost of food has increased by 38%. Over the same time period, over biggest food retailer has paid out £12bn to shareholders’

 

Every business sector has a reason why it can’t pay more in taxes, but clearly there is plenty of fat for some. The problem is vested interest, lobby groups, and a government frightened of its own shadow. This country is steeped in the establishment, it’s why we are in decline.

Another example of the establishment is the guilty verdict on Micelle Mone and her dodgy PPE. Now, I have no sympathy for what she did, I find it unacceptable that other businesses who did the same will escape. For anyone that doubts this, watch “The Covid Contracts” on ITVX, Michelle Mone is the tip of the iceberg.

Her crime was not to be part of the establishment. She, as with Angela Rayner, pulled herself up be her bootstraps (maybe bra straps might be more accurate), but, ultimately, their faces don’t fit.

In the UK “big still fucks small”

Lyrically, we start with The Clash and “Armageddon Time”, and end with “To Hell With Poverty!” by the Gang of Four

 

“A lotta people won’t get no supper tonight

A lotta people won’t get no justice tonight”

 

 

‘In the UK “big still fucks small”

 

 

Domestically, this week’s main event is the Labour conference in Liverpool.

The first day was all about the chancellor Reeves, whose speech was somewhat more cogent that her earlier interviews.

There was the usual we have tough choices to make, and she highlighted the government’s decision when presented with a choice between “invest or decline”, Reeves said, “we chose investment”.

Within this investment she talked about the £29bn for the NHS, school breakfast clubs, a number of new transport links and 2,000 extra GPs. This was effectively the return from raising taxes and loosening her fiscal rules at last year’s budget.

I am always fascinated to know where these extra people such as the 2,000 GPs are conjured up from.

The key point was when she partially relaxed her financial rules, telling conference that she no longer stands by last year’s pledge not to raise taxes , saying “the world has changed” due to a mixture of conflicts, US tariffs and higher borrowing costs.

She was however, specific, that VAT wouldn’t be increased as she believe it would be hit working people directly and would stoke inflation. Both are hard to argue with.

Despite all of this, the chancellor has no intention of loosening her adherence to fiscal orthodoxy, as she made it clear that to Labour figures, likely including Andy Burnham, that “peddling the idea” the government could abandon fiscal responsibility to free up more money for public spending was “dangerously wrong” and risked serious damage to the economy.

She reminded listeners of the chaos wrought by “loopy” Liz Truss’s budget of 2022, although she was delivering unfunded tax cuts for the wealthy, rather than investments in infrastructure that can drive growth.

 

‘she no longer stands by last year’s pledge not to raise taxes’

 

Clearly, she also has the neoliberal economics of the Tories and Reform in her sights, and she also referred to their message that the country is broken, and our best days are behind us.

There was an attempt to reach out to the struggling majority, when she said: “I know that things are still difficult, bills are too high, getting ahead can feel tough, and there are still too many obstacles in the way for businesses. And so, our central economic objective is to change that.”

It is one thing sympathising with people, but, as with other parties there was total lack of “how”. The polls show that people are tired of words. Labour, like the Tories, are now viewed as having tried and failed.

The comment, “there are still too many obstacles in the way for businesses”, worries me. It is just more confirmation that her hopes are misplaced in deregulation.

She did try to leave party members and MPs with a positive to take back to their constituencies, telling them that Labour is still the party standing up for working people, citing workers’ rights, the increase in the minimum wage, and action to tackle youth unemployment and fix public services.

There are two major issue here; time and messaging. The electorate, rightly or wrongly, expect the government to undo 14-yrs of Tory misrule in 14-months, and their every mis-step is gleefully seized upon by a Tory dominated media.

This leads onto messaging; the party doesn’t have a GB News TV channel, a Telegraph or Mail whipping-up discontent. Therefore, they need to get modern, social media is a key influencer, but, when you compare Labour’s usage with Reform’s, they look amateurish.

 

‘They decided to fight Reform by becoming them’

 

As part of this messaging, alongside how they impart the message, there is also what do they say, and to who.

If Starmer and his advisers want to see what not to do, they should refer to the Tories. They decided to fight Reform by becoming them, which resulted in their worst election performance in living memory. The voters that turned to Reform were, and still are, lost. But, critically, their turn to the right alienated moderate voters who defected to Labour and the LibDems.

The lesson for Labour is clear. Those lost to Reform might well be gone, instead look left; those that defected from the Tories and Labour’s own more left-leaning supporters are now looking to the LibDems and the Greens. These voters are concentrated in urban areas and university towns, seats that the party cannot afford to neglect. If Labour is to lose the next election it will be based on left-leaning voters defecting.

This is the basis of the message being delivered by Starmer’s opponents within the party.

Andy Burnham said: “There’s a calling for more to take to the doorstep. If I look at the world right now, and you think of the populist right, whatever we may think about what they’re doing, they are putting big things on the table.

 

‘If Labour is to lose the next election it will be based on left-leaning voters defecting’

 

“Well, we have to do the same the other way, never pandering to them, but put big ideas on the table.”

He proposed several changes to the government’s economic policies, including rewriting the fiscal rules to make it easier to invest, scrapping the two-child benefit cap, imposing a land value tax and launching a review of council tax.

He defended his previous comments about the bond markets, and instead, he said the chancellor should consider modifying her debt rule, which says debt must be forecast to fall at the end of a five-year period, to allow her to borrow more capital investment.

On the EU, he said: “I want to rejoin. I hope in my lifetime I see this country rejoin the European Union.”

Perhaps, there is too much focus on the big picture, the economy. For the majority economic growth and GDP means little. They, live pay cheque to pay cheque, and have more immediate concerns, which were spelt-out by Sharon Graham, the General secretary of Unite.

Statistically, between 1945 and 2008, it was the norm to have a real (above inflation) increases in average wages. This ceased to be the case post-GFC. Had it have been maintained, the average worker would be £11,000 a year better off.

Alongside falling wages there was austerity. Between 2010 and 2019, there was an unprecedented 4% real term cut in spending on public services. One of the biggest losers was local government. Even today they are still impacted, and in the last 2-yrs councils have had to sell £2.9bn of public assets, including sports clubs and day centres.

Whilst the majority have seen their incomes stagnate, inflation has returned, especially hitting food prices which have increased by 38% since 2021, with forecasters predicting a further rise of C.6%. over the same time frame energy bills have increased by 44%, with the price cap predicted to increase again next week.

However, whilst the majority struggle to put food on the table, Tesco has paid out £12.4bn to shareholder since 2021. Further research shows that the top 200 energy companies recorded profits of more than £30bn in 2024.

 

‘the top 200 energy companies recorded profits of more than £30bn in 2024’

 

In fact all manner of businesses are prospering: A Unite study of 17,000 companies found that average profit margins have soared by 30% since pre-pandemic levels.

This is where the government has become disengaged from the electorate. Instead of dealing with what is clearly a cost-of-living crisis, they are focussed on arbitrary fiscal targets, leading to ongoing panic whenever new economic data is published, with little in the way of long-term planning for jobs and industry.

This focus has led to some awful decisions impacting pensioners and disabled people. There is also a misguided focus on deregulating the City, and endorsing “loopy” Liz’s promise to uncap bonuses. It’s so déjà vu.

Whilst labour has taken steps to increase health spending, last years increase of 2.8% was well below the average of 4.2% p.a. for the years 1966 and 2010.

There is much that could be done to make society more equal, all of which would find majority support, such as a wealth tax of the top 1% at an annual rate of 1%, equalising capital gains tax with income tax rates and extending national insurance to apply to investment income.

Starmer in his address to conference took on Farage. I wont waste words on this other than to briefly repeat what I have written so many times, and in today’s editorial.

As I wrote in the editorial, I wanted to like Starmer’s speech and welcome a realisation of a change in direction, but there is no real change.

 

‘I wanted to like Starmer’s speech and welcome a realisation of a change in direction, but there is no real change’

 

Chancellor Reeves and the new home secretary, Shabana Mahmood, showed the parties new colours. Their new governing philosophy is based on fiscal restraint, border control from the state, good behaviour from the public. Whilst this might deflect attacks from the right, it will unsettle Labour’s base and blur the party’s moral line.

Starmer, despite what we hoped for and standing-up for what he believes in, also highlighted what he doesn’t believe in, E.G., fiscal expansion, redistribution and dealing with living standards. There were missed opportunities to score a hit on Reform’s grievance based politics, such as the government’s £5bn Pride in Place scheme.

He also fell into the same trap as the Democrats in the last US election when saying “the defining mission of this government is to grow the economy”, which means little to Main St, a subject I highlighted in “Darklands”. The fundamental point is that Reform’s rise is not just about identity. It is rooted in public discontent with day-to-day economic insecurity, NHS waiting lists and the sense of drift. This is no different to the appeal of Trump.

 

‘a growing belief that the traditional political parties do not speak for them or care about their concerns.’

 

“National renewal” may lay at the heart of his ambitions, but it will remain just an ambition without fiscal firepower. Whilst there are some projects proposed for infrastructure, green energy and social housing, the day-to-day funding required to sustain public services such as social care and local government remains squeezed.

The appeal of Andy Burnham, centres around his a willingness to think differently about economic policy and cultural challenges. As I wrote earlier, the electoral coalition that underpinned Labours 2024 victory is fast diminishing, and he needs material improvements to fight-off both left and right.

Ultimately, he delivered fine words and good intentions, but with his adherence to self-imposed fiscal rules it is difficult to see how the party delivers the services required, and the help the majority need in dealing with the cost-of-living crisis.

With crucial elections next May, it will be interesting to see whether simply taking on Reform is sufficient. I fear that unless he delivers material benefits, and people feel better off, it won’t be.

Instead, they are continuing to focus on immigration. The home secretary proposed raising the threshold for indefinite leave to remain (ILR) from five years to ten, with successful applicants being required to have no criminal record, speak English to a high standard, be in work, receive no benefits, and give back to their community.

Clearly the party’s leadership team sees this as a way to counter both Reform, whilst insulating itself from the soft‑left threat posed by Andy Burnham. If there is a goal, it appears to be centre around tough talk on migration and spending while attempting to deliver fairness and security.

Trying to be everything to everyone rarely works. The ILR proposals may alienate ethnic minority and liberal voters. This isn’t a challenge to Reform it is a tribute. Yes, it might keep Reform at bay, but at the cost of unravelling Labour’s own coalition from within.

The attacks on Reform as racist seem poorly aimed. Voters on the left will see that whilst the PM described Reform’s plan to deport migrants already settled in the UK as “racist and immoral”, the only difference between them is that Labour will only target future applicants. Ultimately, for many of these voters that will be a step too far. Conversely, for those attracted to Reform the proposal doesn’t go far enough.

It could be that Mahmood is seeking to fundamentally reposit the party, defining herself as a future Labour leader and a patriotic, plain-speaking, Muslim home secretary. The basis for her doctrine is that migrants have to earn the right to reside here. But this will come at a price as it will alienate a considerable portion of the electorate.

It is wrong to dismiss all of those that protested with Tommy Robinson in London as racists. They are, aa I have written many times before, simply people who have lost faith in a system, politicians and political parties who, they perceive, as being part of system that is rigged against them.

Instead, they are protesting against a seemingly endless cost of living crisis, part of an economic system that is broken. Collectively, they share a growing belief that the traditional political parties do not speak for them or care about their concerns.

 

 

“To hell with poverty we’ll get drunk on cheap wine

To hell with poverty”

 

@coldwarsteve

 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

 

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