inequality‘And if I only couldI’d make a deal with GodAnd I’d get Him to swap our placesI’d be runnin’ up that roadBe runnin’ up that hillWith no problems’

 
Sir Keir Starmer, Mr. Brightside, has started at sprinters pace, even though he a marathon to run, if he is to fix 14-yrs of Tory mis-government, and 45-yrs of failed economic policy. Starmer clearly doesn’t underestimate the size of the task as  ministers have been told that they had ‘a huge amount of work to do’. 

There has been somewhat of a whirlwind of activity, including speed-dating tour to see the leaders of the devolved governments in Edinburgh, Cardiff and Belfast, followed by a Downing Street breakfast with all of England’s metro mayors. 

The Nato summit in Washington provided a fortuitous opportunity to take the Starmer show on to the world stage. The newly elected PM stood out as being one the of the few with a clear political future when compared to Messrs Macron and Biden! 

Both David Lammy, the foreign secretary, and John Healey, the defence secretary, have been building up their airmiles, the latter meeting his Ukrainian opposite number and renew the vows to assist the struggle to resist brutal Russian aggression.  

 

Brexit, whilst not likely to be reversed, is being treated in a grown-up fashion, with the first steps towards forging closer trading links with the EU being taken. 

The new business secretary, Jonathan Reynolds, has said that the new UK government wants to foster a ‘closer, more mature relationship with our friends in the EU‘. 

At a meeting of G7 meeting of trade ministers in Reggio Calabria, Italy, Reynolds added: ‘We are seeking a closer, more mature, more level-headed relationship with our friends in the European Union – our nearest and largest trading partner, and we also intend to forge better trading relationships with countries around the world.’ 

In its election manifesto Labour committed to building stronger trade and investment links with the EU, including through a veterinary agreement, support for touring artists, and mutual recognition deals for professional qualifications. 
 

‘The newly elected PM stood out as being one the of the few with a clear political future when compared to Messrs Macron and Biden!’ 

 
The EU accounted for 41% of UK exports of goods and services and 52% of imports in 2023. Business leaders have urged Starmer to forge closer links with Brussels given the importance of the EU market to UK companies, while also calling for looser migration rules to give them more access to EU workers. 

Policywise, the Rwanda scheme is already ‘dead and buried‘, the Tory ban on building more onshore wind turbines has been revoked and compulsory housebuilding targets are coming back. 

Underpinning all of this activity is a clear message, that the long years of Conservative rule are firmly lodged in the public mind, with ministers highlighting the mess they have inherited. For example, we have heard that ‘our prisons are broken‘. We’ve been told the same about the health service. Wes Streeting, the health secretary, has announced a ‘warts and all‘ inquiry into the condition of the NHS. The chancellor, Rachel Reeves, looking to underline what she calls ‘the legacy of 14 years of chaos and economic irresponsibility‘, has instructed Treasury officials to conduct an urgent review of the state of the national finances and will present its findings to the Commons before the summer recess. 

The clear rationale here is to buy time to solve the problems, as one said; ‘It’s crucial to buy us time. If we don’t explain the scale of the problems, people will get frustrated with us.’ 

Without wishing to be too simplistic, or repetitive, much of our problems stem from inequality, which, in large part was driven by reducing taxes and shrinking the state.  
 

‘the long years of Conservative rule are firmly lodged in the public mind, with ministers highlighting the mess they have inherited’

 
Politically, this rising inequality came about with the elections of Ronald Reagan and Margaret Thatcher and their reliance on free markets. As a result, these became the key drivers of economic policy from 1980 onwards in both the UK and US. Interestingly, whilst the US economy is far more robust than that of the UK, a situation that might be explained by Brexit, both have a ‘left behind’ grouping that has become cannon fodder for populist politicians. 

What we have had is a 44-yrs experiment with neoliberalism, monetarism, supply-side economics, call it what you will. The premise was drive growth from the top-down by shrinking the state, and cutting taxes to encourage entrepreneurialism. This in-turn would create a ‘trickle-down’ effect allow everyone to benefit. Unfortunately, the value stayed at the top. 

Prior to 1980 economic thinking was based in the redistribution of wealth, and, as a result, inequality fell in most countries. 

One of the problems with inequality is that it becomes a self-fulfilling prophecy; children born into poverty rarely escape it, creating an escalating problem. 
 

  • In the UK 4.3 million children, 30%, were in poverty’ in 2022/23, ‘up from 3.6 million in 2010/11’. 
  • 69% of poor children lived in working families.  
  • 46% of children in families with three or more children were in poverty, up from 36% in 2011/12. 

 
Source: https://lordslibrary.parliament.uk/child-poverty-statistics-causes-and-the-uks-policy-response/#:~:text=It%20added%20that%20this%20meant,from%2036%25%20in%202011%2F12 

The knock-on effect of this is in these children’s education.  

According to the Education Policy Institute (EPI) thinktank, with the exception of London, the attainment gap between 16-year-olds from low-income families and their wealthier classmates has grown across all regions of England since before the pandemic. 
 

‘children born into poverty rarely escape it, creating an escalating problem’

 
Disadvantaged pupils are now more than 19 months behind their peers by the time they sit their GCSEs, with the gap having increased at every stage of their schooling aged five, 11 and 16,  

Across England, those described as persistently disadvantaged – pupils eligible for free school meals for at least 80% of their time in school – are even further behind their wealthier peers with a gap of two years by the age 16. 

At primary and secondary level, the gap has grown by a month. The disadvantage gap for 16- to 19-year-olds is unchanged compared with 2019, leaving disadvantaged students still more than three grades behind their peers. 

While the attainment gap among older pupils with special educational needs and disabilities (Send) has narrowed since 2019, it has grown among reception-age pupils to its widest on record for children in need of support and those with the additional protection of education, health and care plans. 

Separately, a YouGov survey for Unicef UK found that 87% of parents with children under five said they were worried about their children’s life chances. 
 

‘87% of parents with children under five said they were worried about their children’s life chances’

 
Education minister Catherine McKinnell said: ‘It is this government’s mission to break down these barriers to opportunity so we can improve the life chances of all children. 

‘We will deliver real change by providing access to specialist mental health professionals in every secondary school, introducing free breakfast clubs in every primary, as well as developing an ambitious strategy to reduce child poverty so that families feel supported, and children are able to learn.’ 

Over in la-la land the Tories are still in denial, especially the party members. 

Reading about a recent meeting of The Bruges Group gives a good indication of the direction the party could take, with comments such as ‘its 14 years in office, it’s not been a Conservative government at all. It’s been a big state party‘; ‘One Nation took over the party‘, ‘Sunak never had the interest of the country‘. 

Needless to say, Farage was the elephant in the room, with one saying, ‘My head said Conservative but my heart said Nigel!’ Others called for rebuilding the future around ‘Nigel’s principles‘.  

Policy wise they were aligned with Farage; ending net zero, cutting taxes, quitting the European convention on human rights, shrinking the state, stamping out ‘wokery‘ and, of course, ‘maximising the benefits of Brexit 

It was suggested that Liz Truss’s Popular Conservatives met last week with the former MP Jacob Rees-Mogg and Suella Braverman urging a merger with Farage’s party ‘to unite the Conservative family‘. 
 

‘Liz Truss’s Popular Conservatives met last week with the former MP Jacob Rees-Mogg and Suella Braverman urging a merger with Farage’s party ‘to unite the Conservative family

 
What is interesting is how they are failing to learn from the successful populist parties in Europe. Whilst they are all social and cultural conservatives, especially on immigration, European populists, including those in Hungary, the Netherlands, France and Italy, have all moved left on the economy, the size of the state, pensions and public services. This demonstrates that to succeed as populists you need popular policies. Both Farage and right-wing Tories are so enamoured with their principles of free markets, a small state, and cuts to taxes and public-sector spending, it is hard to envisage such a seismic change. 

Aside from Farage economic right-wing orthodoxy of private insurance for the NHS, £50bn tax and spending cuts, cutting corporation tax, his support for Donald Trump is shared by just 20% of the British (67% dislike the US presidential candidate).  

Immigration does matter greatly: every government needs to control its borders. But it’s a top priority for surprisingly few voters: 60% of Reform voters put it top, but only 2% of Labour voters. 

Of course, we can’t not mention Trump. The failed assassination attempt looks to have pushed his popularity to new highs. Economists might think his sums don’t add up, but the great unwashed appear oblivious. 
 

‘The failed assassination attempt looks to have pushed his popularity to new highs’

 
According to the Republican National Committee’s official policy platform, released last week, a second Trump administration would ‘defeat inflation, tackle the cost-of-living crisis, improve fiscal sanity, restore price stability and quickly bring down prices‘. 

Owen Zidar, professor of economics and public affairs at Princeton University, said; ‘If you follow through on the tax promises, this just isn’t going to add up. There’s a difference between reducing prices and reducing inflation,’  

The Republican policy platform, included a commitment to introduce ‘baseline’ tariffs, with imported goods would face a levy of 10%. Tariffs are part of an effort to build America into ‘the manufacturing superpower of the world‘. Trump made similar pledges in 2016 with suboptimal results. 

Bernard Yaros, lead US economist at Oxford Economics, said this would ‘hurt the economy, if we do get across-the-board tariffs, that’s going to add to inflation immediately‘. 

Michael R Strain, director of economic policy studies at American Enterprise Institute, a conservative thinktank, said Trumps tax cuts ‘will cost trillions of dollars at a time when the budget deficit is growing, and the national debt is on an unsustainable trajectory‘. 

https://www.theguardian.com/business/article/2024/jul/16/world-needs-economic-stability-after-a-tough-few-years-but-if-trump-wins-were-unlikely-to-get-it?CMP=share_btn_url 

https://www.theguardian.com/politics/article/2024/jul/17/what-bills-are-included-in-the-kings-speech-and-what-will-they-do 

 

‘Running up the hill’ 

 
 
https://blog.gigsandtours.com/2020/04/30-songs-for-hope-inspiration-and-a-better-world/ 
 

‘Reach out and touchSomebody’s handMake this world a better placeIf you can’

 

‘This week we look at the early activity from the new government.

Taken at face value there is much to like, but, as always, the proof will be in the eating. We can only wait and hope.

What I find pleasing is the early displays of grown-up behaviour and statesmanship, most noticeably towards Europe. Whilst we clearly won’t be rejoining the EU anytime soon, there are signs of cooperation rather than conflict.

The Tories are still in la-la land, although selecting their next leader hasn’t started. Who succeeds and the direction the party takes seem largely dependent on process and how much say party members have. If the membership has the final say, then expect more along the lines of Truss, perhaps even a merger with Reform.

Former leaders such as Johnson and Trump seem to feel that cosying up to Trump and his Republican party is a way to resurrect their careers, although no one there is paying them much attention.

Farage is, of course, buddying up to Trump with renewed vigour, making him all the more dangerous.

And then there is Donald…..who’s bandage seems to be getting bigger.

Violence clearly has no place in politics, but when news of the assassination attempt broke I couldn’t help thinking back to Georg Elser’s failed attempt in 1939 to assassinate Hitler.

Lyrically, we pick-up the theme of the article, with the scale of Labour’s task with Kate Bush and “Running up the Hill”. We finish by spreading some love with Diana Ross and “Reach out and Touch Somebody”. Enjoy!

@coldwarsteve
 


 

Philip Gilbert 2Philip 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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