Now that we know there isn’t going to be a deal we can at least narrow down some of the possibilities of what post-Brexit Britain looks like.
In the first year or so we are going to lose a lot of manufacturing. Virtually all JIT export manufacturing will fold inside a year. Initially we will see food prices plummet but this won’t last. Domestic agriculture won’t be able to compete and we’ll see a gradual decline of UK production. UK meats will be premium produce and no longer affordable to most.
Once food importers have crushed all UK competition they will gradually raise their prices, simply because they can. Meanwhile wages will stay depressed and because of the collapse of disposable income and availability of staff, we can probably expect the service sector to take a big hit thus eliminating all the jobs that might provide a supplementary income.
Across the board we will see prices rising. There will be some serendipitous benefits but nothing that offsets the mass job losses. We will see a lot of foreign investment dry up and banking services will move to the EU. Dublin and Frankfurt. I expect that house prices will start to fall, but that’s not going to do anyone any favours in the short to mid term.
Since a lot of freight will no longer be able to go through Calais we can expect a lot more use of the port at Hull so we may see an expansion in distribution centres in the North.
All in all we are looking at serious austerity as it will take a few years at least to rebuild our trade relations with third countries. If we go down the path of unilateral trade liberalisation then we will probably find it hard to strike new deals.
Meanwhile, since tax receipts will be way down we can expect major cuts to the forces and a number of Army redundancies. I expect to see RAF capability cut by a third. Soon enough it will become apparent that cuts to defence cannot go further so we can expect another round of cuts to council services. They will probably raise council tax to cope with it.
After years of the left bleating about austerity they are about to find out what it actually means. Britain is about to become a much more expensive pace to live. It will cause a spike in crime.
Interesting though will be how rapidly people adapt to it and habits will change, thus so will the culture. I expect cheap consumables from China will stay at low prices and they manage to circumvent the taxes and import controls anyway.
What I do expect to happen is a lot of engineering jobs to be axed since a lot of them are dependent on defence spending. It will kill off a number of parasitic resourcing firms and public sector suppliers. Basically it will wipe out the cosseted lower middle class and remind them that they are just as dispensable as the rest of us.
We can the expect to see a major rationalisation of the NHS and what functions it will perform. It will be more of a skeleton service than ever. I expect they will have trouble staffing it. Economic conditions more than any immigration control will bring numbers down to a trickle.
In every area of policy a lot of zombie projects will be culled and the things that survive on very slender justifications will fall. We can also expect banks to pull the plug in under-performing businesses. Unemployment will be back to where it was in the 80’s.
The London economy will also change. Initially we will see an exodus back to the regions until rental prices normalise to the new conditions. Anyone who considers themselves “Just about managing” right now will look upon this time as carefree prosperity. There are going to be a lot of very pissed off people.
This will see a revival of local politics and national politics will become a lot more animated. I expect the Tories will be wiped out and we will have to put up with a Corbyn government for a while, but they will be tasked with making all the major cuts. We’ll soon see how far their “compassion” really goes. Even if Corbs does manage to borrow, it won’t go very far. It won’t plug the hole.
Eventually things will settle down and we will get used to the new order of things. My gut instinct tells me that culturally it will be a vast improvement on the status quo. There will be more reasons to cooperate and more need to congregate. I expect to see a cultural revolution where young people actually start doing surprising and reckless things again rather than becoming tedious hipsters drinking energy drinks in pop-up cereal bar book shops or whatever it is they do these days. We’ll be back to the days when students had to be frugal and from their resourcefulness manage to produce interesting things and events.
A few years in and we will then have started to rebuild EU relations, probably plugging back into Euratom, Erasmus, and a large part of the single market. It will take some time to plug back into the EU aviation market. The EU will be very cautious about what it lets us back in on.
Effectively we are looking at a ten year recession. Nothing ever experienced by those under 50. Admittedly this is not the Brexit I was gunning for. I wanted a negotiated settlement to maintain the single market so that we did not have to be substantially poorer, but, in a lot of ways I actually prefer this to the prospect of maintaining the 2015 status quo with ever degraded politics with increasingly less connection to each other.
I’m of the view that in recent years people have become increasingly spoiled and self-indulgent, inventing psychological problems for themselves in the absence of any real challenges or imperatives to grow as people. I have always primarily thought Brexit would be a reboot on British politics and culture. In a lot of ways it will bring back much of what is missing. A little austerity might very well make us less frivolous.
What I do know is that the banking crisis of 2008 set in motion a series of events whereby much of the corrective potential of it was dissipated with debt and spending, largely to preserve the political order. The disruptive potential of it was barely felt in the UK. Ever since we have stagnated and though the numbers on screen may tell a story of marginal growth, I just don’t see it reflected in the world around me. I still see the regions dying out and London sucking the life and vitality out of every city, including Bristol. It reminds me that the wealth of a city is its people, not its contribution to GDP.
Ahead lies challenging times. It will not be easy. Those who expected things to improve will be disappointed. But then I have a clear conscience in this. I never made any big Brexit promises. I never said there would be sunlit uplands. I did not predict that the government would make this much of a pigs ear of it, or that we would be looking at the WTO option. I expected parliament would step in to prevent that. That it hasn’t tells you a good deal about the state of modern politics.
And so with that in mind, as much as I would have had it go a different way, I think, given the opportunity to vote again I would still vote to leave. Eventually it gets to a point where any change will do. I prefer an uncertain future to the certainty I was looking at.
This is what Mr North wrote the next day (10 Oct) following the attention his post received in the Graun and elsewhere:
“explaining yesterday’s post which seems to have cause something of a stir. The short version is that I do see quite a lot of potential in Brexit to reboot British politics, not least because a trashed economy would finally settle this stagnant politics of ours. It would be the final big push to wean the British off the state.
“I suspect the reason the post went viral is because it’s probably the first time Grauniad hacks have seen honest Brexit motives out in the open. I see Brexit as taking toys away from spoiled toddlers – and if we can’t stop a hard Brexit then there is still a lot to be said for going the full monty rather than preserving the dismal status quo of retail politics. I can see how it will culturally reinvent Britain.”
America’s Department of Commerce has made a preliminary finding that the Canadian company Bombardier had received unfair state subsidies and sold below cost.
It has now imposed a 219.63% countervailing duty on Bombardier’s new commercial jets, putting thousands of jobs at risk. Bombardier, the largest employer in Northern Ireland with a workforce of 4,100, describes the contract as “critical” to its operations.
The US International Trade Commission will now consider the case ahead of a final ruling in February.
The dispute centres on the sale of 125 C-Series airliners, the wings for which are made in Northern Ireland.
Boeing alleges that the subsidies Bombardier receives from the UK and Canadian governments mean it is launching its new C series jets below cost in the US, and so the US trade authorities should impose tariffs.
Boeing had accused its much smaller rival of “price dumping” to win a lucrative contract from the American carrier Delta. The US aerospace giant claimed each jet cost $33m (£25m) to produce, but that Bombardier had sold them for $20m (£15m) each.
Bombardier also disputes claims that support it had received from governments – £75m from the UK and $1bn (£745m) from Quebec was illegal.
Bombardier says Boeing’s position is hypocritical and absurd – hypocritical because Boeing prices its new planes very cheaply at launch, and because Boeing has received huge subsidies from the US government over the years; and absurd because Boeing is claiming to be damaged by Bombardier’s sales even though Boeing does not sell any competing planes of a similar size and has not done so for a decade.
Canadian Prime Minister Justin Trudeau has now said the Canadian air force will not buy Boeing’s Super Hornet jets from “a company that’s busy trying to sue us and put our aerospace workers out of business.” Theresa May, in turn, has said she will raise the issue with the famously protectionist Donald Trump when she grovels to him later this week at the UN.
This case provides a classic demonstration of the stupidity of those (on both left and right), who try to make out that the EU is the major obstacle that a British government faces (or would face) if it tried to give state aid to particular industries. Both supporters of Theresa May’s “industrial strategy” and of Jeremy Corbyn’s interventionist industrial policy have suggested that, when the UK leaves the EU, it will have greater freedom to apply state aid. But in a capitalist world, state aid may still come into conflict with new trade deals if one side or the other decides that such government intervention provides a legitimate reason to impose tariffs.
Some sectors of the economy (of which aerospace is just one) have very significant government involvement almost by their nature. In such cases it may be very difficult to treat trade disputes as “purely commercial” matters. As things stand, it will be the US trade authorities that decide on the Boeing-Bombardier dispute.
In any future US-UK trade deal, would we want US and UK courts deciding these matters, or would some joint arbitration body be a better way to adjudicate? This issue places May and the Tory anti-EU fanatics in a very difficult position, given their hostility to the ECJ and (presumably) any other supranational court with national jurisdiction.
Maybe post-Brexit the little-Britainers of left and right will stop complaining about “Brussels” interfering with national governments and start complaining about “Washington”, “Geneva” … and, indeed “the rest of the world”?
JD acknowledges the use of information from a piece by Andrew Lilico at City A.M. in the preparation of this post.
Boris Johnson today sets out a grand vision of Britain’s “glorious” post-Brexit future as a low-tax, low regulation economy paying nothing to the EU for access to the single market.
In a 4,000-word article for the Telegraph, the Foreign Secretary restates the key demand of the Leave campaign – that £350m a week currently sent to Brussels should be redirected to fund the NHS.
He says that Britain should not continue to make payments to the EU after Brexit and that ongoing membership of the European single market and customs union would make a “complete mockery” of the referendum.
The crown jewel of Johnson’s fantasies is the lie that we will take back £350 million a week from the EU, a lot of which can be spent on the NHS. This is untrue not just because we never send the EU so much money, although this is what makes the statement a bare-faced lie. It’s not even because around half of what we actually send to the EU comes back to be spent in Britain or is counted towards our international aid target. It’s such a big lie because Brexit will knock the economy so badly that we’ll have less money to spend on our priorities not more.
What about the rest of Johnson’s vision? He wants to tackle the housing crisis, improve our infrastructure, fix our schools, become a tech powerhouse, boost scientific research and build on the strength of our universities.
Some of these ambitions, such as paying for homes, schools, infrastructure and research, will cost money, which we’ll have less of if we quit the EU. Others will be directly undermined by Brexit. Our universities are already suffering a brain drain as EU citizens no longer feel welcome. And does the foreign secretary seriously think that cutting ourselves off from the EU’s digital single market is the way to spawn tech giants?
What’s more, to pretend that EU membership prevents us from investing in homes, schools or infrastructure is outrageous scapegoating. The blame belongs with successive British governments, especially Johnson’s Conservatives.
The foreign secretary tells us airily that there are “obvious ways” in which Brexit will help tackle the housing crisis. It’s a shame that none made its way into his article. He merely notes that “there may be” ways to simplify planning and floats the idea of taxing foreign buyers before dismissing it as a bad policy. Is this really all he’s got?
Johnson says leaving the EU will mean we won’t be able to pin the blame for our own failings on Brussels. But this is not an argument for Brexit. It’s an argument to stop scapegoating the EU, a practice on which the foreign secretary has built his career.
Johnson has also identified a new scapegoat: “Young people with the 12 stars lipsticked on their faces”, who are “beginning to have genuinely split allegiances”. This phrase has a nasty history. The slur that Catholics’ true allegiance lay with Rome was used to exclude them from British politics.
The foreign secretary knows perfectly well that a person can have more than one allegiance without being any the less patriotic. He himself did not give up his American passport until 2016. The young people marching against Brexit are doing so because they do not want to see Britain weakened by this disastrous mistake. This is the most patriotic motive of all.
…and his overall “analysis” (if you can dignify his self-serving lies and bombast with that description) is taken apart in a superb editorial in today’s Observer:
Boris Johnson’s analysis of Britain’s ills is wretched nonsense. The Tories, not the EU, are to blame
Yesterday, the foreign secretary, Boris Johnson, published an extraordinary 4,000-word article setting out his vision of a glorious British future outside the “trusses” and regulations of Brussels. It was wrong on every count, yet was a fascinating window into the contemporary conservative mind living in a parallel universe only fleetingly in touch with reality, but which is leading the country to perdition and division. It cannot be allowed to pass uncontested and unchallenged.
Mr Johnson succeeds in blaming almost every British ill – from uninspiring training to our dilapidated infrastructure – all or in part on the failing efforts of a Brussels elite to create a federal superstate. Incredibly, he writes that once free of the EU, Britain will be able to organise, plan, build the homes and infrastructure we need, give our children skills and – bingo! – we will become glorious and rich. None of this is allegedly possible as an EU member. The new alchemy will be simplifying regulations and cutting taxes, doing trade deals as “Global Britain”, alongside boosting wages and productivity.
This, in the language of those gilded Etonians Johnson and Jacob Rees-Mogg, is bilge and balderdash. It is true, as Johnson observes, that Britain is failing on many fronts, but to lay the blame, extending even to low wages, on unnamed EU regulations is fantastical. The blame needs to be firmly pinned on the policy framework – weak regulation, low taxation, minimal public intervention and unwillingness to invest in public infrastructure and services – which he champions.
The EU, with its readiness to offer protections for temporary workers and parents, insistence on high-quality environmental legislation, its ambitious cross-country research and development programmes and expenditure on regional development, has instead partially alleviated the great British disaster that Johnson and his Thatcherite cabal have provoked. The EU is a far more reliable deliverer of the aims to which Johnson now lays claim, but which his policy framework and philosophy cannot produce.
Thus, it is not Brussels regulations that have caused low wages, the growth of insecure freelance and gig work and the accompanying plunge in productivity growth. British labour law was enacted in Britain by politicians Johnson lionises and seeks to emulate. The increase in desperate poverty, with widespread growth of food banks, is because Conservative politicians, with Johnson as cheerleader-in-chief, have so attacked Britain’s social contract that it is mean and full of gaps. It is not Brussels regulations that have caused England to have eight of the 10 poorest regions in northern Europe. Britain’s incapacity to develop policies that spread income, work and opportunity around the country is once again minted at home.
The thought processes that lead Johnson and his ilk to blame Britain’s house-building record, dismal track record on skills and low expenditure on science on Brussels can only be wondered at. Equally, the notion that Britain is going to embrace free trade by leaving the single largest free trading bloc in the world is bewildering. There are no easy free trade deals to be done with the US, China and India that can compensate for what will be lost with Europe, which is, in any case, looking to protect its interests and salivating at the prospect of negotiating with Brexiters who have as little grasp of economic reality as Johnson. Nor is the Commonwealth going to be a soft touch. All hope to scalp a country that has chosen to isolate itself from its neighbours and friends.
In one respect, Johnson has done the country a service by his effusions, timed as much to put a marker down on his leadership ambitions while undermining his lame duck leader as making a contribution to public debate. He has at least recognised the scale of the economic and social reconstruction that has to be done, while simultaneously demonstrating that the philosophy, policy framework and upside-down vision of the “global Britain” he champions is the wrong means of achieving it.
Britain does need a wholesale refashioning of its economic and social model. Our capitalism needs to be repurposed. Rather than the shibboleth of ever lower taxation, we must think in terms of what skills, infrastructure and public services we need and then levy the taxes required. We have to declare firmly that the country is open and internationalist by remaining a member of the largest free trade area in the world. Above all, we need to restate our values. Britain is a tolerant, rule-of-law society that vigilantly ensures its economy and social structures work for all. Those are the values of the European Union, with whom we should be making common cause, not heading off for an imagined Thatcherite utopia, the cause of so much of what has gone wrong in contemporary Britain. British Thatcherites, not the EU, are the cause of our current ills.
“The cost of a BMW or the price tag of an imported fridge would suddenly drop and our resources would shift from manufacturing to services — raising living standards for all of us” – Patrick Minford in The Sun 15 March 2016
In yet another example of its craven grovelling to Brexiteers and right wing populism, the BBC gave prominence over the weekend, to pro-Brexit economists’ claim that leaving the EU without a trade deal would bring a “£135bn annual boost” to the economy. The article, which was the main news story on the BBC website on Sunday morning, failed to mention dodgy previous economic forecasts also made by Professor Patrick Minford, the leader of the group Economists for Free Trade
According to economics professors from the London School of Economics, Professor Minford’s earlier Brexit forecasts were “really far-fetched” and “crazy”. He “misunderstands the nature of regulations and product standards”, they added. Economist Monique Ebell from the National Institute of Social and Economic Research told the BBC that Professor Minford “ignores decades of evidence on how trade actually works”. The assumptions of Minford’s Economists for Brexit group – now rebranded as Economists for Free Trade – were previously criticised as grossly unrealistic on other grounds, including ignoring the fact that countries tend to do more trade with countries that are geographically closer, by economic modellers from the London School of Economics (LSE).
It’s no wonder, then, that the Sun and Sun on Sunday adulate Minford. But shouldn’t the pro-hard Brexit idiot-left be just a little worried at finding themselves on the same side as this thoroughgoing reactionary?
Ten years ago, the worst global financial crisis financial crisis since the 1930’s began. Major companies went bankrupt, people lost their homes on both side of the Atlantic, and the banks that were too big to fail, did fail – only to be rescued with taxpayers’ money.
Governments and their financial regulators were completely wrong-footed and found themselves lacking the regulatory framework to mitigate the crisis and to prevent it from spreading.
Martin Thomas surveys the path, the causes and the sequels of the crisis.
The story started in finance. In June 2005 mortgage interest rates in the USA started rising sharply. They levelled off and declined after July 2006, but in the meantime house prices had reversed their giddy rise of previous years. House prices would continue to fall until January 2012, when they would be on average 33% down on their May 2006 peak. From mid-2006 the proportion of deliquent mortgagees (those with payments seriously overdue) rose, and it would keep rising until early 2010.
By late 2015 around six million households would have their homes foreclosed (CoreLogic 2015). Unlike, for example, the UK house-price crash of 1989-92 (in which about 188,000 homes were repossessed), the US mortgage crash fed into a financial, industrial, and international crash. It revealed that “the bond bubble [had been] by no means limited to mortgages. It was ubiquitous”. Building on the mortgage bubble, “risk spreads were irrationally small”, i.e. small extra revenues had been needed to attract buyers to risky securities, and so once financiers realised those securities were risky, their prices were likely to drop sharply. (Blinder 2013, p.45-6, 90-1).
On 9 August 2007, a French bank, BNP, told holders of stakes in three of its investment funds that they could not have their money back. The bank held mortgage-backed securities — bits of paper which entitled holders to a slice of the income from payments on mortgages made in the USA — and now, as one financier put it, those “securities… simply [could]n’t be priced because there [was] no trading in them. There [were] no bids for them. Asset-backed securities, mortgage loans, especially subprime loans, [did]n’t have any buyers” (Bloomberg 2007). The freezing of credit flows between banks escalated.
On 14 September 2007 queues of people fearing collapse and wanting to get their money out formed at the branches of a British bank, Northern Rock; the British government nationalised the bank in February 2008. Read the rest of this entry »
Above: Labour shouldn’t back this Tory obsession (cartoon: Steve Bell, The Guardian)
Watching the Tories tear themselves apart over Brexit is excellent spectator sport, but some on our side seem determined to follow them into the right wing, nationalist mire. Unfortunately Jeremy Corbyn has been showing signs of revisiting his anti-EU past, apparently committing Labour to hard Brexit, and capitulating to the anti-immigration camp. Since then, John McDonnell has softened the position, suggesting that Britain could stay in the single market under some circumstances.
It’s becoming clear that the Labour leadership and PLP are almost as split on this as the Tories, though the rank and file membership (including those who identify as Corbynites) are overwhelmingly anti-Brexit. It may not be an accident that just lately, the delusion of a “left exit” (or “Lexit”) from the EU has been canvassed in left of centre publications (here and here) and expertly demolished here.
But as well as the rank and file of the party, another powerful constituency has been horrified by Corbyn’s apparent capitulation to the ideas of a hard Brexit: the unions. The TUC remains committed to staying in the single market and customs union (even if it uses some dodgy arguments) as does the biggest pro- Corbyn’s union, Unite.
But the most outspoken (and perhaps, surprising) union attack on “Lexit” so far has come from Manuel Cortes, general secretary of the TSSA, a union that supports both Corbyn and Momentum. In an article on the New Statesman website, Cortes tears into the “Lexit delusion” and concludes by raising the possibility of Labour coming out against any kind of Brixit – soft or hard – and campaigning to stay in the EU:
“We don’t know yet what Brexit will look like. By the time the deal – or no deal – is finalised, almost three years will have passed since the vote to leave was made. That’s a lot longer than the Tory 2015 majority lasted. Let’s treat the voters as grown-ups not ideologues. If what’s on the table damages our livelihoods and/or is a simply a free trade deal in which the EU makes all the rules, why can’t we can’t change our minds?
“Voters want reality and honesty over delusion. That’s why it’s important that Labour keeps all options on the table. If as I suspect, staying within the EU is the best deal on offer in 2019, we should not deny voters the possibility of taking it. Jeremy’s past Euroscepticism, his vote against both the Maastricht and Lisbon Treaties, actually makes him the best person to renegotiate a new future for Britain in the EU, not a Brexit deal which will harm the implementation of our manifesto and our vision of a People’s Europe.”
Cortes is to be congratulated for posing the issues so plainly, and for breaking an emerging taboo within the labour movement: the idea that we might just campaign to overturn the referendum result.
(NB: and before anyone mentions it, none of this changes Shiraz‘s past criticisms of Cortes and the way he runs the TSSA)
Acknowledgements and thanks to Peter Ryley for an excellent piece that gave me some ideas for this post.
A worthwhile (and generally leftist) critique from the Sheffield Political Economy Research Institute (SPERI):
Corbyn’s success in building an alliance that extends from Greens to UKIP voters only postpones the moment of Labour’s reckoning with Brexit
By Matt Bolton, Doctoral Researcher, University of Roehampton
The trickle of mea culpas from the rapidly diminishing band of Corbyn-sceptics following the election result has now turned into a flood, and not without cause. Once widely-held truisms – Corbynism is a ‘movement’ more clicktivist than canvasser, Corbyn himself is electorally toxic, Labour face a 1931-style demolition and the collapse of its Parliamentary presence – have been shown to be categorically wrong. Corbyn ran an energetic, positive, smart campaign, founded on an unashamedly tax-and-spend manifesto. The quick-witted air war was backed up online and through unprecedented numbers of volunteers taking to the streets to engage potential Labour voters and getting them to turn out on polling day. Such mass activism had long been promised by Corbyn’s most vocal supporters, but aside from his own leadership campaigns, had been in sparse evidence on the ground. But there is no doubt that when it came to the crunch, Corbynism cashed its activist cheques. This level of enthusiastic political engagement would simply not have taken place with another leader – although the suspicion persists that a lot of the urgency was the product of retrospective regret on behalf of younger Remainers that they had not done the same (or perhaps even voted) during the EU referendum.
The election result also clearly demonstrates that Corbynism has not destroyed the party’s parliamentary presence. Labour has made some promising gains, particularly in England, and as Paul Mason notes, seem to have somehow picked up votes both from the liberal and green metropolitan left, and a decent sized portion of the former UKIP vote. This was undoubtedly a remarkable and wholly unexpected achievement, one which few in the top echelons of either party thought possible up until the moment of the exit poll. But while Labour are rightly still celebrating a welcome electoral step forward, not to mention capitalising on the total collapse of Theresa May’s authority as Prime Minister, unpicking the reasons why Corbyn was able to bring this unlikely electoral coalition together reveals that many of the criticisms levelled at the Corbyn project continue to hold. Indeed, in some ways this election has merely postponed a true reckoning with the contradictions and regressive tendencies that run through the Corbynist worldview. In particular, Corbyn’s success postpones once again the moment of reckoning at which the left finally recognises that the acceptance of Brexit and the end of free movement constitutes a fundamental, generational defeat, one for which gains in the House of Commons, however welcome, are scant recompense. With this in mind, then, this article is not yet another mea culpa. It is rather an attempt to take stock of what has changed and what has not, in the form of some first thoughts on how this election result – and in particular Corbyn’s Green-UKIP alliance – was possible.
This was the first post-deficit election
Direct comparisons with previous elections (whether on seats or vote share) are misleading. Each election takes place in an entirely different context, which shapes what can and cannot be said within the campaign, and what is regarded (rightly or wrongly) as ‘credible’. Much of the day to day grind of politics consists of the battle to shape that context (as can be seen with the struggle over the ‘hard’ or ‘soft’ interpretation of the referendum result, a battle which until Thursday night at least, May seemed to have comprehensively won). The 2015 election was dominated by discussion of the deficit and debt. The endless repetitions of how the Tories were still ‘clearing up Labour’s mess’ trapped Ed Miliband in political-economic territory from which he could never win – every word from his mouth was framed by the context of how Labour’s supposed overspending had led to the crash and the ‘deficit’. This frame has, incredibly, now virtually disappeared. Labour were careful to cost their manifesto nonetheless – demonstrating that the difference between their position and Miliband’s cannot be explained by mere hard left ‘will power’ – and the Tories failure to bother doing the same, lazily assuming the line from 2015 still held sway, left any attacks they made on Labour’s spending plans seem hollow and hypocritical. But it was the combination of austerity finally starting to bite the lower middle classes in a way it hadn’t in 2015 (school cuts and the NHS winter crisis cut through in a huge way) and Brexit that really wiped the economic slate clean. The Leave promises of an extra £350m a week for the NHS, regardless of their veracity, put public spending for services back on the ‘credible’ electoral playing field in a way that we have not seen since 2005. Add in May’s own desire to boost infrastructure spending, and Corbyn and McDonnell had the space to make spending commitments that were just not available to Miliband. They made the most of it.
The left’s instinctive trust in Corbyn allows him to successfully triangulate
The idea that Corbyn is a truly authentic man who has stuck to his principles through thick and thin is prevalent even amongst his fiercest critics. It is also his greatest weapon when it comes to keeping the left (and the youth vote) onside while in reality triangulating as ably – if not more so – as any Blairite. Labour’s policy on immigration in this election was well to the right of the 2015 manifesto. Miliband was pilloried by the left for proposing ‘controls on immigration’, which slogans on mugs aside, amounted to a two year ban on EU migrants receiving benefits. Corbyn’s manifesto went even further than May herself by pledging to end free movement of people from the EU come what may in the Brexit negotiations. While the effect of this was to almost entirely drain the ‘immigration debate’ from the election in a way unimaginable even six months ago, this was only due to the total capitulation of both Corbyn and the broader left on the issue. The immigration policy in Labour’s 2017 manifesto was more extreme in concrete terms than what most of the Leave side were proposing in the referendum - in essence assuring full withdrawal from the single market, whatever the consequences - and yet Corbyn’s supporters on the left accepted it because they refuse to believe that Corbyn himself, as a man of principle, can really mean it. While every word Miliband (or indeed virtually anyone else who is not Corbyn) is treated with suspicion, despite the pro-single market arguments of the contemporary Blair being inherently far less punitive on immigration than Corbyn’s position, Corbyn is given the benefit of the doubt every time, even when the policy is written down in black and white. This is triangulation of the highest order, enabling Labour to appeal to hardline anti-migrant UKIP voters while also keeping the trust of the ‘cosmopolitan’ urban left. It is doubtful any other Labour leader would have been capable of achieving this. Yet the faith in Corbyn’s supposedly unshakeable core beliefs is such that his party’s policies on immigration barely register amongst people who would be incandescent with rage if another Labour leader even vaguely gestured towards them. Read the rest of this entry »
Martin Thomas looks at the modest reality of Labour’s manifesto (full text here).
The output (value-added) of the UK economy these days is around £1900 billion a year. Of that, about £360 billion is goods and services bought by central and local government, about £320 billion is capital investment, and about £1,130 billion is stuff bought by households. The sub-totals do not add up to the overall total because of other categories, and the figures are rough, based on the last available official figures, for 2014.
The UK government produces many useful statistics on the distribution of household income, but not for the percentage of household income taken by the rich, the top 5%, and the fairly well-off, the top 20%. To get an idea, let’s borrow the US figures — 20%-plus of the total for the top 5%, 50%-plus for the top 20%. Historically, US income inequality has been greater than the UK’s, but the gap has decreased, and inequality between top and bottom incomes has been rising in a way that makes official figures, always produced after a delay, usually underestimates.
Household income and household consumption can diverge, especially for very high-income people who save a lot of their income, but the US figures will give us a ballpark estimate. A dozen complications make the figures inexact; but an inexact estimate of the shape of the forest can teach us lessons not visible from more precise statistics about the trees. If we subtract 20% from the employed-workforce total of 32 million for bosses and their high-paid associates, some 26 million workers turn out about £74,000 each in products and services.
Of each £74,000:
• about £22,000 returns as wage, benefit, and pension income to the lower 80%, mostly working-class households
• about £9,000 goes in household income to the top 5%
• about £12,000 to expanding capital, from which they benefit most
• about £13,000 in household income to the well-off-but-not-rich 15%
• about £14,000 in government purchases of goods and services, be that medicines for the NHS and books for schools, or Trident missile replacements.
Let’s say half to two-thirds of that £14,000 is health, education, and similar spending which should be counted as part of the social wage. That leaves over £40,000 of the average worker’s value-added going to the rich or well-off, to the expansion of capital controlled by the rich, and to the expansion of the power and pomp of the state. Or over £1,000 billion a year in total.
The figure is rough. But it gives a measure of the mendacity of the Tory propagandists who denounce Labour’s manifesto as made of “wild, uncosted spending commitments”.
To pay for:
• More than £6 billion extra per year for the NHS
• £8 billion extra for social care
• Reversal of the Tory school cuts
• Reversal of the Tory benefit cuts, including the bedroom tax and cuts to disability benefits
• Restoring student grants, and scrapping university tuition fees
• Ending the 1% freeze on pay rises for health and education workers
the Labour manifesto promises to:
• increase income tax for the top 5%
• reverse the Tories’ cuts in corporation tax.
It promises to take some tens of billions of pounds — John McDonnell estimates £50-odd billion — out of the £1,000 billion a year which currently goes to the rich and the very well-off, or to enterprises under their control.
Many other economic measures in the manifesto require little extra public spending. The government can readily borrow to build new council housing, and then by law council housing accounts are “ring-fenced”. Tenants’ rents cover the costs. In fact, more than that, since in recent years councils have been sneakily raiding their housing accounts by artificially increasing “service charges” paid from them to other departments. Abolishing tuition fees will cost little in current government spending. After tuition fees were raised, the Institute of Fiscal Studies reported “ the average total taxpayer contribution has not fallen very much”, since the government pays about as much on student loans for fees, and their administration, as it previously paid direct to universities.
Increasing the minimum wage to £10 an hour will force bosses to limit their profits and the amount they pay themselves, but that is all. The Picturehouse strikers have reported that the boss of Cineworld (which owns Picturehouse) could pay Picturehouse workers the Living Wage out of his own personal take, and still pocket £1 million. Repealing the punitive Trade Union Act, abolishing zero-hours contracts, and saying workers have “employee” rights by default (putting the burden on the boss to prove that they are not employees) will not tap public funds, but will help workers reduce inequality. Renationalising the railways, and launching publicly-owned energy companies, will limit privatised operators’ loot, but not cost taxpayers.
The moral and political content of the manifesto is the reduction of inequality. It is not to be counted in a few pounds here and a few pounds there. It is about changing towards a society of solidarity and cooperation from one where a rich few lord it over a majority who have to scrape and scrabble to find food and shelter, education and health care, or even to get a few hours’ work each week — where each one jabs their elbow in their neighbour’s face to get out of the mire and on to the high lands. It is about reversing the trends of the last near-forty years, since Thatcher.
When Thatcher took office in 1979, the ratio of incomes at the bottom of the top 10% to those at the top of the bottom 10%, the 90:10 decile ratio, was about 3. By the time she quit, in 1990, it was up to 4.5. Since then, and until now, Thatcher’s “neoliberal” mode of economic policy has dominated, with only slight inflections this way or that. Inequality has steadily drifted up to 5.3 now. Under the Blair and Brown Labour goverments, measures like the minimum wage and tax credits improved things for some of the very poorest, but inequality still rose, because the rich increased their loot much faster.
Under Thatcher, the very richest gained — individually, though not in terms of the society they were living in — and also a large group of upper-middle-income people. That has changed since the crash of 2008. The very richest quickly recovered their losses. The conservative Sunday Times headlined its report on its annual Rich List for 2017: “In a year of uncertainty, one thing was without doubt — Britain’s richest were getting richer… the total wealth of Britain’s 1,000 richest individuals and families soared to £658bn — a 14% rise on last year”.
Since 2008 both the worse-off and also middling-income people have seen at best stagnation. Real wages increased a bit, on average, in 2014-5 and 2015-6, thanks to some recovery in the world economy, but are still well behind pre-crash levels. Almost certainly they are already decreasing, and set to decrease further. No-one yet knows what the eventual Brexit deal will be like. But only the most fanatical ultra-market economists believed that Brexit could actually improve Britain’s overall income.
Their recipe is to slash all social and environmental regulations and protections, so that Britain becomes a high-profit, low-wage, high-insecurity, low-welfare platform for global capital, conveniently close to Europe. viable The main Tory leaders do not think that is viable. They know that, by diminishing and hindering trade, they will diminish economic life, to a yet-unknown extent. What justifies that, for them, is their mean-minded obsession with excluding migrants. Which will further diminish economic life, since those migrants are mostly young, keen, taxpaying workers, essential to many public services. The Tory future is grim.
That is why Theresa May has gone for an election now, and why she refuses to offer any substantial prospectus other than “strong and stable leadership”. It is why she refuses to rule out tax rises. The Resolution Foundation think-tank, analysing known wage trends and already-programmed benefit cuts, has predicted a rise in the 90:10 inequality ratio from 5.3 now to 6 in 2020, a faster rise even than under Thatcher. That is without taking into account effects from Brexit.
The choice at this election is between a “strong and stable” drive to make inequality even more hurtful, and an attempt to reduce inequality and institute some social solidarity and cooperation.
Explaining the Labour manifesto to workers who have been beaten down by years of Thatcher, Blair, and Cameron into believing that no plan for improvement can ever be true is a first step. It is not all. We need an active, mobilised, and lively labour movement to sustain the message, and to sustain and push a Labour government if we win one on 8 June.
The proposed clawback from the rich is moderate. In simple arithmetic, they could afford it easily — some tens of billions out of hundreds of billions of value which they siphon away each year. But the rich do not get rich, in a capitalist society, by being generous and easy. They get rich by being the people most ruthless in pursuit of greed, exploitation, trampling down and squeezing the working class.
What they say now, while they are still confident of a Tory victory, about Labour’s policies being “wild”, “ruinous”, “disastrous”, and “illegal”, is a pale anticipation of how they will react if Labour wins. They have a hundred levers of sabotage of an elected government — from “strikes” of capital, through top officials, to the Labour right — and they will use them.
In Solidarity’s view, even the moderate rebalancing proposed by Labour’s manifesto can be implemented thoroughly and securely only by a labour movement ready and willing to take economic power out of the hands of the ultra-rich, by workers’ control and social ownership across industry. The movement will become strong enough to do that only by uniting, now, to create and organisation in every workplace and working-class street capable of winning a majority for the manifesto and fighting the battles needed to implement it.
This article also appears in the present issue of Solidarity and at the Workers Liberty website
Shiraz Socialist doesn’t necessarily agree with everything in this Open Letter – not least the defeatist acceptance that Brexit is inevitable. Nonetheless, it contains a clear warning that the isolationism and racism inherent in Brexit is a threat to science, and human progress in general:
Wellcome’s Chair, Eliza Manningham-Buller, and Director, Jeremy Farrar, have written to the leaders of all UK political parties with MPs in Westminster ahead of the upcoming general election on 8 June.
This includes the Conservatives, Labour, Liberal Democrats, the Green Party, and parties in Scotland, Wales and Northern Ireland.
The letter sets out three areas the next government should prioritise to sustain Britain’s role as world leader in science and research, through exit from the EU and beyond:
strong investment in research, ideally at the same level as other innovative countries who spend comparably more than the UK
a commitment to securing associate membership of EU science schemes such as Horizon 2020, which encourages collaboration across borders
a migration system that is straightforward and welcoming to researchers, technicians, innovators, and their families, at all career stages and from all over the world.
Full text of the letter
The government that is elected on June 8 will determine the direction that the UK will take through exit from the European Union and beyond. Among the issues at stake are Britain’s future positioning on the global stage, and its historic role as a world-leading centre for outstanding scientific discovery that transforms life and health.
As the world’s second highest-spending charitable foundation, committed to supporting science and improving health, Wellcome is proud to invest the majority of our £1bn annual spending in the UK. This letter sets out the conditions that we believe are necessary to sustain the scientific excellence that allows us to invest here so confidently, and which advances health and economic prosperity.
Wellcome’s mission has long been enhanced by a shared understanding with UK governments of all political complexions that research and innovation accomplish more when nations and their scientists collaborate across borders. We believe that the next UK government will face an important choice. It can continue this understanding, looking outward as an open nation and committing to global partnerships and institutions. This is critical to taking on fundamental scientific questions, and challenges such as pandemics, drug-resistant infections, climate change and mental health, which no single nation can address alone. Or it can allow the UK’s focus to drift inward, by commission or omission, which would close doors to international collaboration and talent.
The cross-party commitment to spending 0.7% of GDP on Official Development Assistance is a clear expression of this country’s intent to be a constructive international partner. If the next government wishes to sustain Britain’s global posture and scientific excellence it will also have to take the right decisions in three other areas.
First, we know that science and innovation are reliable drivers of economic growth and sustainable employment when the right conditions are in place. These conditions include strong investment, which would be secure if the UK met the international benchmark of spending 3% of GDP on R&D across the public and private sectors. They include the UK’s unique dual system of flexible support through both research grants and wider infrastructure funding, which has given the UK four of the world’s top ten universities, and regulation that promotes innovation, builds public confidence, and facilitates access to wider markets. And they include access to capital that is patient enough to allow small companies founded on scientific ingenuity to grow into large ones.
Next, we know that science thrives when funding incentives encourage collaboration across borders. This makes sharp minds sharper, and drives up standards everywhere. The EU’s Framework Programme funding does this exceptionally well, stimulating excellence and partnership where many schemes with similar intent have failed. It would be a mistake to walk away from a system that the UK has worked so hard to get right over many years, and from which we could continue to receive more funding than we contribute, or to replace it with purely domestic funding that does not promote collaboration as effectively. The next government should commit to securing associate membership of EU science schemes, as it builds on their success to forge similar global partnerships.
Finally, we know that great science is built on great talent – wherever it is from. As the UK’s migration system changes, it must be straightforward and truly welcoming to researchers, technicians, innovators, and their families, at all career stages and from all over the world. We must be open to talent not because there is a shortage of home-grown scientists – but because the arrival of people with new ideas and fresh thinking lifts standards and gets better results. Such openness is entirely compatible with achieving greater control over total migrant numbers. It could be achieved if the next government were to work with the academic institutions and high-tech businesses that it will rely on for growth to design the migration system that can enable this to happen, including sponsoring appropriate candidates for visas.
The world is watching how the UK faces this crucial moment in its history, and the tone and substance of the approach you choose will help determine the UK’s place in the world for generations to come. We urge you to grasp the opportunity for the UK to grow as a constructive, enthusiastic international partner, for science, research and health in Europe and around the world.
I hate to admit this, but Hammond’s proposed increase in national insurance contributions (NICS) for the self employed wasn’t such a bad idea.
It would have been a modest, progressive increase in the national insurance contributions paid by the better-off self-employed while abolishing the £2.85 per week flat-rate contribution paid by those earning less than £16,250.
It would have raised a much-needed £2 billion in a relatively fair way, recognising that structure of NICs is a major driver in the growth of self-employment. An employer who can persuade a worker to become a self-employed contractor immediately saves paying 13.8% national insurance, while the newly self-employed contractors’ payments fall from 12% to 9%.
Hammond’s enforced (by May) U-turn now leaves a £2 billion hole in public finances, with no obvious means of plugging it.
But for the hard-right Brexiteers and their baying press, Hammond’s plan was a betrayal not only of their beloved “white van man”, but also of the low-tax, low public spending, de-regulated post-Brexit economy they crave. Their shrill and sustained public opposition, reflected in the screaming headlines and outraged editorials of the pro-Brexit press, ensured a swift and ignominious climb-down.
Polly Toynbee (not always a favourite here at Shiraz), writing in the Guardian before this fiasco, noted that for all her supposedly intransigent posturing, “Theresa May … never knowingly opposes the will of the Mail … indeed it might save a lot of time if she simply asked Paul Dacre and Rupert Murdoch what if any compromises they will stomach to get a deal, and do what they say.”
Toynbee was writing about the Brexit negotiations, but her comments evidently apply to all aspects of the present government’s policies.
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Shiraz Socialist 