I’m So Bored With the USA: Too Big To Fail

 

“Sixteen and time to pay off

I got this job in a piss factory inspecting pipe”

 

 

Over the life of this column we explored government spending priorities, in 2020 in “This Government Priorities are all Wrong”, more recently in “Priorities Dear Boy….Priorities!” and “A Tale of Two Priorities”

 

All were written when during Toriy governments, today we will look at Labour’s priorities. Or, I would if I could make sense of them. There has been much talk of change, alleviating poverty, and some big numbers on investments, especially in housing. The number are all distorted by being over five or ten years, making the commitment seem more substantial than it actually is.

What the government makes abundantly clear is, it would like to do more, if only….there is the constant reminder of the £22bn blackhole they inherited, and, despite some fiddling round the edges, tight spending controls. If anything, the Starmer administration is more famous for spending cuts; firstly, the embarrassing debacle over winter fuel allowances, and now benefits for the disabled.

Picking on the disabled appears to be a bridge too far, with up to 120 Labour MPs proposing to pass a so-called “reasoned amendment”, halting the passage of a bill and preventing it from passing its second reading. They say that provisions “have not been subject to a formal consultation with disabled people, or co-produced with them, or their carers”.

Also they want to postpone progress until the Office for Budget Responsibility publishes its analysis of the employment impact of the changes this autumn. The amendment adds that most of the additional employment support funding will not be in place until the end of the decade.

The government’s own impact assessment estimates that 250,000 people will be pushed into poverty as a result of the provisions, including 50,000 children, and there are calls for an assessment of the impact of the changes on health or care needs and for the conclusion of other reviews.

 

‘The government’s own impact assessment estimates that 250,000 people will be pushed into poverty’

 

 

The changes, which are at the centre of a £4.8bn welfare cuts package, will mean even people who are unable to wash half their body or cook a meal for themselves will be denied the payments if they have no other impairments.

It appears that the amendment is led by the Treasury select committee chair, Meg Hillier, and a number of other committee chairs. It has also been signed by former cabinet minister Louise Haigh and Vicky Foxcroft, who quit as a Labour whip last week.

The intent doesn’t appear to be to wreck the welfare bill but, with so many Labour MPs uneasy about it, that could be the eventual outcome.

Ministers have argued that dropping, or even watering down, the welfare plans could leave a multibillion-pound black hole in Chancellor Reeves’s attempts to balance the budgets.

But Hillier said: “We recognise that the financial situation is difficult. As the chancellor says governing is about choices. We don’t disagree that there is a need to reform welfare but it’s hard to deliver the proposed improvements in the proposed timescale. And disabled people must be protected.”

I can’t help thinking that this is another Reform and hard-right trap that Starmer and Labour have fallen for with their talk of “overdiagnosis”. This ideas is support by Nigel Farage and Kemi Badenoch, although the is becoming increasingly irrelevant. The odd one out is the heath secretary, Wes Streeting, but I have always thought he was a closet Tory.

Government spending comes down to priorities, which appear to be driven by grabbing headlines. Big projects are ideal for this, whereas smaller, simpler projects such as filling-in potholes, which would keep everything ticking over aren’ grand enough.

The problem with these big projects is that we aren’t any good at them; they are delivered billions over budget, and years late.

HS2 is a classic example; when it was initially announced in 2013, the plan was to split into eastern and western branches north of Birmingham. The eastern branch was to connec the Midland Main Line at Clay Cross in Derbyshire and the East Coast Main Line south of York, with a branch to a terminus in Leeds. The western branch would have had connections to the West Coast Main Line at Crewe and south of Wigan, branching to a terminus in Manchester.

Boris Johnson dismissed HS2 as a “gimmick” and hacked off its NE limb, and then Rishi Sunak hacked off its NW one. What is left is of little value, a surplus line from an isolated station in central Birmingham to Acton in London, and possibly on to Euston.

In support of the Euston extension, Heidi Alexander, the Secretary of State for Transport, has reversed Sunak’s insistence that new extension be privately financed. Euston will gain four to six extra platforms, at the staggering cost of £6bn.

The money could have been used to rebuild London’s most derelict hospitals, but that isn’t grand enough. Whisper it, but HS2, at current costs, will cost taxpayer C.£2,000 each.

 

 

‘Whisper it, but HS2, at current costs, will cost taxpayer C.£2,000 each’

 

Big corporations like the big money that comes from prestige projects, primarily because they become too big to fail. Business knows that government will keep throwing cash in no matter how much overbudget it becomes.

Alongside HS2 there is the planned Lower Thames Crossing, which has just received a further £590m. As a comparison, the funding allocated in the spending review for local amenities such as parks, libraries and swimming pools across the whole of England was £350m. All this for less than a mile of road. The project comprises 14-miles of road, at a total projected cost of £9.2bn.

The Transport Action Network (“TAN”) thinks this is an underestimate; necessary upgrades to junctions and connecting roads to take the extra traffic, have been excluded from the total, disguising the full cost, estimates to be £16bn. That’s more than £15bn allocated by the chancellor for buses, trains and trams in England, outside London, 7x what the Treasury allocated to fix schools classrooms.

No matter how you look at it, our priorities seem wrong, people need to come first. Instead the majority feel betrayed by government and traditional politics, into this void steps populism. I have made all the anti-populist arguments before; no polices only grievances, the politics of hate, successful in opposition only as their policies are unworkable.

Trump is a classic example, promising everything to everyone, especially those “left behind”, and catering only for the rich.

Nigel Farage, the UKs answer to Trump, is constantly evolving, promising everything to everyone. He’s a public school educated, ex-City trader, whose political pin-up was Margaret Thatcher. In 2022, he told us the Truss mini-budget debacle “was the best Tory budget since 1986.”

Now, he is calling for the nationalisation of British Steel, when, only 2-yrs ago, he had questioned why British taxpayers’ money should be used to keep the business going. In 2018 he told an interviewer: “I supported Margaret Thatcher’s modernisation and reforms of the economy. It was painful for some people, but it had to happen.”

Clearly, Farage has his sights set on Labour’s traditional heartlands: the former mill towns, pit villages and workshops in the North and the Midlands, the steel towns of south Wales and the shipyards of Scotland. He knows these are winnable, Boris Johnson proved that in 2019.

 

 

‘Farage has his sights set on Labour’s traditional heartlands: the former mill towns, pit villages and workshops in the North and the Midlands, the steel towns of south Wales and the shipyards of Scotland’

 

Almost all the Reform target seats backed Brexit, including 15 Labour won from the Tories in 2024. Most had only been Tory since 2019, when many decades-old Labour seats backed Boris Johnson’s “levelling up” and “get Brexit done” messages.

These Labour heartlands were hollowed-out by Thatcher’s deindustrialisation, and subsequent governments have done little to rejuvenate them. This is a familiar theme for hard-right politicians. Trump’s MAGA base is in the US rust belt, the Alternative für Deutschland (AfD) targets east German auto workers. Their playbook is the same; anti-net zero, sky-high energy prices and threats to sovereignty.

Farage and Trump are promising to roll back net zero, which, they say will boost manufacturing jobs in heavier polluting sectors, such as oil and gas, coal, steel and chemicals.

Zia Yusuf, the ex-chair and now DOGE guru of Reform, a Former Goldman Sachs banker and millionaire startup founder, explained why working-class voters were turning to them; “If you go and speak to people who live in these communities, they just feel completely betrayed.”

“[As with] one of the things Trump is trying to do – whatever your views on the approach he is taking – I think we’ve got to manufacture more things here. We’ve got to have energy security. We can’t be in a crazy situation where we’re unable to produce primary steel.”

In response to Reform’s message of reindustrialisation Labour is fighting back. Rachel Reeves placed investment and regional economic “renewal” at the heart of her spending review, namechecking places that would be sprayed with cash.

Will Jennings, the professor of political science and public policy at the University of Southampton, said: “The structure of support for Reform, much like for the Brexit party and Ukip before it, very much tends to be in particular areas, described often, sometimes unhelpfully, as ‘left-behind towns’. They tend to be older, have former manufacturing industries, tend to be distant from Westminster, and tend to have suffered economic loss.”

Reform came second to Labour in 89 constituencies at the 2024 general election. Most of the constituencies are in the north and Midlands.

Recent predictions from MRP models show Reform would win at least 180 seats if an election was held tomorrow, including nearly all of the places where it placed second to Labour in 2024.

When Margaret Thatcher came to power in 1979, Britain’s industrial base, despite dwindling from its peak, still contributed 30% to GDP. Many areas were also still dominated by industry, such as Hartlepool, Burnley and Stoke-on-Trent, where more than half of all jobs were in manufacturing. Today manufacturing accounts for C.10% of GDP.

These jobs were rarely replaced, if they were, it was with lower-paid, insecure work. Many towns were effectively built around industry, when it went the whole towns was decimated.

Austerity was the final insult. Research by academics at the University of Staffordshire showed cuts since 1984 have disproportionately affected coalfield and deindustrialised areas, including reductions in welfare and benefit worth £32.6bn between 2010 and 2021.

Whatever Farge might promise some are not so easily fooled. Paul Nowak, the general secretary of the TUC, said: “The hypocrisy is stunning. This is a guy [Farage] who was hanging on the coat-tails of Donald Trump. He turns up at Scunthorpe saying he wants to save British Steel at the same time as his mate in the White House is slapping tariffs on steel and could cost jobs across Britain’s manufacturing base.

“In industrial communities there is a lot of cynicism about politics and whether it can make a difference. But it can make a tangible difference to people’s lives who is in Downing Street.”

Our politics are a mess of our own making. The electoral system was designed to benefit the two main parties who have ceased to represent the electorate.

Labour, under Starmer, have ceased to deliver what they campaign for. In “Personality Crisis” I wrote that Stamer was “confused by what he is and what he believes”. When he campaigned to be Labour leader his policies were more traditional Labour, in government he’s more traditional Tory.

He has 4-yrs to deliver something to the electorate, and to improve his party’s messaging. If not you can see Reform being at least part of government. Perhaps they deserve to be.

Perhaps the best summary was the following after yesterday’s (25-06) PMQs: “Conservative Shadow Chancellor Mel Stride, whose party raised taxes to record levels and presided over a surge in welfare costs, accuses the government of planning to raise taxes and increase welfare costs.”

 

 

“Buy them up and shut them down

Then repeat in every town every”

 

 

‘Today’s editorial is taken from an article by Bernie Sanders, which  I have amended to make it UK-centric. The full article can be found at:

https://www.theguardian.com/commentisfree/2025/jun/25/democrats-learn-zohran-mamdani-victory?CMP=share_btn_url

“The Labour party is at a crossroads.

“It can continue to push policies that maintain a broken and rigged economic and political system and ignore the pain of the [60]% of Britons who live paycheck to paycheck. It can turn its back on the dreams of a younger generation which, if we don’t change that system, will likely be worse off than their parents.

“It can continue to depend upon billionaire donors and out-of-touch campaign consultants and spend huge amounts of money on dumb 30-second ads that fewer and fewer people respond to.

“It can ignore the tragic reality that tens of millions of Britons are giving up on democracy because they don’t see their government understanding their struggles and the realities of their lives or doing anything about it.”

Lyrically we start with “Piss Factory” by Patti Smith, and end with “Five Corporations” by Fugazi.

Much to think about

Philip.’

 

@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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