I know some with object just because it's the Guardian but it's a well credential, academic economist writing so a) somebody who actually knows what he's talking about and b) most papers will just publish ignorant propaganda from right wing hacks.
I remain cautious. Reeves needs to be brave and do the right thing. The fiscal rules she constructed are defensive (against the usual nonsense thrown at Labour about the economy) and they could be her undoing...
Just one thing to emphasise. Some critics are complaining about the public sector pay rises but Reeves knows not funding them would be a lot more expensive.
AFZ
It was obvious they would cave in and make me cold this winter
"And here Reeves has given mixed messages. The repeated refrain, “If we cannot afford it, we cannot do it” is an almost precise, and deeply dangerous, inversion of Keynes’ famous phrase: “Anything we can actually do, we can afford.” It was the anti-Keynes mentality that gave us austerity in 2010, and ended up costing us far more, economically, financially and socially, than it saved"
I think Reeves knows exactly what she's saying here, and that plus her invocation of "households" in her earlier does not fill with any kind of confidence that a change is in the offing.
Furthermore her faction of the Labour party have *always* been keen on means testing as an 'one weird trick' to bring down the welfare budget. Here she is back in 2014: https://tinyurl.com/d3kk733h
"And here Reeves has given mixed messages. The repeated refrain, “If we cannot afford it, we cannot do it” is an almost precise, and deeply dangerous, inversion of Keynes’ famous phrase: “Anything we can actually do, we can afford.” It was the anti-Keynes mentality that gave us austerity in 2010, and ended up costing us far more, economically, financially and socially, than it saved"
I think Reeves knows exactly what she's saying here, and that plus her invocation of "households" in her earlier does not fill with any kind of confidence that a change is in the offing.
Furthermore her faction of the Labour party have *always* been keen on means testing as an 'one weird trick' to bring down the welfare budget. Here she is back in 2014: https://tinyurl.com/d3kk733h
Furthermore her faction of the Labour party have *always* been keen on means testing as an 'one weird trick' to bring down the welfare budget. Here she is back in 2014: https://tinyurl.com/d3kk733h
Means testing generates two things.
The first is a significant amount of bureaucracy in order to implement and enforce this means testing.
The second is a set of bizarre distortions in the effective marginal rate of income tax. The withdrawal of means-tested benefits is typically at a fairly rapid rate, and is functionally equivalent to a very high marginal rate of income tax. That's economic stupidity.
So you generate both excess wasteful costs, and excess stupidity, in order to pander to the economically illiterate.
Universal benefits, paid for out of general taxation, are always the way. Negligible bureaucratic costs, minimized economic distortion. Give the elderly a few hundred quid in winter fuel benefit, and recover the cost from general taxation. The net result is that the people who need the extra cash get the extra cash, and the retired millionaires see their extra benefit largely removed by extra tax.
Furthermore her faction of the Labour party have *always* been keen on means testing as an 'one weird trick' to bring down the welfare budget. Here she is back in 2014: https://tinyurl.com/d3kk733h
Means testing generates two things.
The first is a significant amount of bureaucracy in order to implement and enforce this means testing.
The second is a set of bizarre distortions in the effective marginal rate of income tax. The withdrawal of means-tested benefits is typically at a fairly rapid rate, and is functionally equivalent to a very high marginal rate of income tax. That's economic stupidity.
So you generate both excess wasteful costs, and excess stupidity, in order to pander to the economically illiterate.
Universal benefits, paid for out of general taxation, are always the way. Negligible bureaucratic costs, minimized economic distortion. Give the elderly a few hundred quid in winter fuel benefit, and recover the cost from general taxation. The net result is that the people who need the extra cash get the extra cash, and the retired millionaires see their extra benefit largely removed by extra tax.
The whole lot - tax, allowances, pensions - needs to be re-thought and simplified; apart from anything else, the more complicated a tax system the easier it is to evade tax and the more it costs to administer and police.
I have never understood why there is no relation between the minimum wage, the basic tax allowance, and a single person's pension. Logic tells me the three amounts should be the same.
It appears that the OBR also thinks the situation is worse than they were told, and the chancellor is not entirely inventing the idea. The audit document is available online.
It appears that the OBR also thinks the situation is worse than they were told, and the chancellor is not entirely inventing the idea. The audit document is available online.
Which raises all sorts of questions. We know that one half of the problem has been removed from office, but what about the other - the senior civil servants who must be praying there’s a paper trail showing all the times they said ‘hang on’ (as is their duty) and were overruled.
There simply aren’t enough Tories who were in government or special advisers for this to have been all on them alone…
It appears that the OBR also thinks the situation is worse than they were told, and the chancellor is not entirely inventing the idea. The audit document is available online.
So the independent OBR is stating that there is a £21.9Bn problem because they were given unrealistic figures by HM Treasury previously.
Now, those paying attention very carefully might have noticed there were hints at this pre-election as the OBR noted a lack of transparency on spending figures.
But a plain text reading here is that the previous government hid how bad things are pre election and Reeves version of events is factually accurate.
Of course there is political spin. Reeves would have known there was a problem. I bet she had a good guess as to the size of the problem too. However she is strictly correct that she didn't know this until now.
The Tory critique here (massively amplified by the usual suspects) is utter utter bollocks.
@betjemaniac well, there has been a lot of Tory complaint about the civil service putting up barriers to their plans. Presumably some of that maybe have been to do with being told that projects x, y, z were not affordable.
Reeves is not being dishonest in the way the Tories mean but I fear she is not being radical enough.
To be fair to Ms Reeves she has to do the economics right and the politics right. That is often challenging but at this point in the election cycle she has the most political freedom she will ever have. The budget in the autumn is critical. More so now.
It may be that the strategy is tough now to allow more wiggle room later this year. We shall see.
Rachel Reeves needs to move from patching up the holes to fixing the foundations... higher taxes – and, equally important, reform and restructuring of the UK tax system so as to raise revenue and make it more growth friendly, for instance by introducing a proper land or property tax to replace the inefficient and regressive council tax.
from @alienfromzog's link. It's called Geoism, a rebranding of Georgism. As some may recall. Addressing the sine qua non of social injustice. As Jeremy Corbyn would have done. The theft that is property.
Rachel Reeves needs to move from patching up the holes to fixing the foundations... higher taxes – and, equally important, reform and restructuring of the UK tax system so as to raise revenue and make it more growth friendly, for instance by introducing a proper land or property tax to replace the inefficient and regressive council tax.
from @alienfromzog's link. It's called Geoism, a rebranding of Georgism. As some may recall. Addressing the sine qua non of social injustice. As Jeremy Corbyn would have done. The theft that is property.
Ummm... what's your point?
That's an economic perspective from an expert commentator. It is not government policy.
I may well be of the view that it should be but that's beside the point!
The winter fuel payment cut is a hard blow. The income you need to get pension credit is very low and such a strict means test will hit people very hard, especially with the short notice. There are obviously some wealthy pensioners who won't feel it (but they could just be taxed) but a lot of pensioners on modest incomes will be caught out.
That's an important point. Have you seen proper analysis of this anywhere?
Is there a problem middle? How many are affected and how badly? These are the key questions.
The short answer is that a third of pensioners who are eligible for Pension Credit don't receive it, and about a million pensioners are just above the poverty line - and would no longer receive WFP.
Rachel Reeves needs to move from patching up the holes to fixing the foundations... higher taxes – and, equally important, reform and restructuring of the UK tax system so as to raise revenue and make it more growth friendly, for instance by introducing a proper land or property tax to replace the inefficient and regressive council tax.
from @alienfromzog's link. It's called Geoism, a rebranding of Georgism. As some may recall. Addressing the sine qua non of social injustice. As Jeremy Corbyn would have done. The theft that is property.
Ummm... what's your point?
That's an economic perspective from an expert commentator. It is not government policy.
I may well be of the view that it should be but that's beside the point!
AFZ
Glad to hear it, with regard to your view, sorry that's beside the point for you.
My wife volunteers at the Food Bank. Plenty of people in the past have donated the payment to them. It is to be hoped that this continues as food donations shrink and the number of customers grows.
As an aside I have been enjoying Hunts faux outrage enormously.
Three thoughts after listening to "Today" on Radio 4.
1. Jeremy Hunt said that the public service pay-rises were way above inflation. True on a one-year basis, but not if one includes the many years when they were frozen.
2. He also said that the pay awards are not linked to increased productivity. What does he expect? - teachers to talk faster, surgeons to cut more quickly?
3. There was also someone from an Age charity, saying that the take-up of Pension Credit is only about 60-65% as it is so complicated to apply for, also related benefits such as Attendance Allowance. Hence many who should get the Winter Fuel Allowance won't.
There is something in the audit document saying they want to join up the administration of housing benefit and pension credit some more people who are eligible receive it.
There is something in the audit document saying they want to join up the administration of housing benefit and pension credit some more people who are eligible receive it.
My preference would be ideally to do that first, rather than have it as an aspiration for sometime after introducing a hard qualification boundary. With the best will in the world, they're simply not going to do that before this winter, and people will suffer.
It was described on the radio last night as historically sitting in the bracket of easier and cheaper to give it to everyone over 65 rather than trying to sort people into one pile or the other, and leaving deserving cases the wrong side of the line.
However, cutting it as they have has the benefit of reducing a chunk of outgoings at once, *and* the unspoken bit, the benefit to the government of cutting even deeper than it should because of the significant lack of uptake amongst people who are eligible, of the thing they should be accessing that will be the passport to the winter fuel payment.
I think this is where Private Eye would say 'trebles all round' - unless you're a pensioner either just above the line of eligibility or below it but with no idea about claiming. It's breathtaking in its cynicism tbh.
And all because - and it really probably is all because - they've painted themselves into a corner where they can't/won't reverse the cuts to NI which would fill the entire hole. Because they said they wouldn't in the election campaign. So now we've got the unedifying sight of the government scrabbling around punching downwards to try and balance the books.*
*lots of pensioners won't miss it, because it was blunt and paid regardless of need. Now lots of pensioners will miss it because it's being bluntly means tested. I'm with Age UK on this one.
At least one poster has expressed the fear that they will be cold this winter, which is, for many, a very real fear.
One problem seems to me to be the shortfall in the number of people applying for pension credit, no doubt for various reasons, but I don't offhand see any easy way of solving this issue. Many older people are not all that happy with filling in forms, whether on paper or online, and not everyone has family or friends to help them.
It also seems to me that people with a state pension and a pension from their previous employment (which may or may not allow them to afford fuel in addition to food) may at least find it worthwhile investigating whether they might be eligible for pension credit, or some other benefit.
Either way, I can see the rationale behind restricting the winter fuel payment, but surely there are better ways of organising it? Perhaps the *wiggle room* between now and October's budget (as referred to by @alienfromzog) may allow the government to come up with something to allay the worst fears of those groups involved in helping the poorer pensioners...
Well, £200 is a worthwhile sum, but I'm lucky enough to be able to absorb the loss, having a state pension, and two work pensions (I changed career entirely in my early 40s). Obviously, not everyone is so fortunate.
My main pension comes from my 25 years in local government, the smaller one from 20 years working for the NHS.
I was sorry to see that the reopening of defunct railways, or the restoration of withdrawn passenger train services, has been put on the back burner, apart from schemes currently under way. Rebuilding a closed railway line is a very expensive business...but I note that a number of *heritage* railways have, in recent years, managed to join up again with the national system.
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
Given what happened with Truss’s mini-budget - assuming you think the pay award needed to be settled to reduce agency and industrial action costs long term and thereby improve service delivery - what do you think they should have done now (as opposed to what they might do in the full budget in October) ?
Let's be very clear here, Truss' budget wasn't bad because it might have led to more public debt, but because it was inflationary. There's a longer explanation here from Dan Davies - who was also a 'Bank of England Economist' (but doesn't like referring to himself that way given it was a long time ago):
That meant it was inflationary – the tax cuts would put more money into the UK economy, nothing was taking that money out, and so the eventual recipients were bound to go out and try to buy more goods and services than the economy was actually capable of producing. The predictable effect of that would be to put prices up, hence the bond market priced in higher interest rates. It is really important to understand that this could have happened at any level of debt or of the debt/GDP ratio, including zero.
So how does paying millions of people more money, not put more money into the economy ?
It does, but it's bad in both cases because it's inflationary, not because it's unfunded:
The problem is that in order to continue with those projects, she would need to raise taxes. Not necessarily in a “how are you going to pay for it?” sort of way, but in the sense of “the overall contribution of the government sector to demand has to be neutralised to avoid making the budget inflationary” sense.
OK - but does that not still mean - in order for it to not be overall inflationary you either have to raise taxes or cut something. And if the market thinks you are doing neither of those things bad stuff happens ?
OK - but does that not still mean - in order for it to not be overall inflationary you either have to raise taxes or cut something. And if the market thinks you are doing neither of those things bad stuff happens ?
Yes, if the economy is close to capacity (as the UK's is now) then you have to cut output somewhere so that the overall effect of investment isn't inflationary, and that if you don't markets will start acting on the expectation that interest rates will rise.
The argument of the piece and of the others posted upthread is that those investments are still both needed and good investments, and Reeves has artificially constrained herself by refusing to raise taxes.
So what you are saying is that she should have announced the pay deal and immediately put up taxes. I don’t think that is politically viable, though raising taxes maybe further down the line and I would have thought that any tax rise is likely to be either be regressive (everybody pays it, so it’s a smaller portion of your wealth the richer you are) or effectively means tested. So why is that better than means testing pension credit ?
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
The majority of people getting public sector payrises are in (or will enter) tax bands that are not rising for the next few years.
This means that a junior doctor at the start of training currently earning around 40K will see a 19% rise in take home pay based on a 22% gross rise, while a doctor at the end of training earning around 70K will see a 17% rise in take home pay based on the same 22% gross rise.
The difference goes back to HMRC.
For many people now, a gross rise at the rate of inflation is going to lead to a lower rise in take home pay and the tax take is effectively rising significantly year on year for the next few years.
With fiscal drag, there probably isn’t much room for higher rates of income tax in the middle. CGT and inheritance taxes are different and those are on the way…
So what you are saying is that she should have announced the pay deal and immediately put up taxes.
Rather there's no need to cancel infrastructure investment immediately, announce a review and punt the decision to budget announcement time, at which point you roll out taxes and announce the investment will go ahead.
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
Have you read the audit document I linked to ?
Not yet. Have you heard that in May the Bank of England admitted that two thirds of the issues that bought down Liz Truss were caused by them ?
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
Ah. Not the Bank of England then. Only people who didn’t like what the Bank of England did saying that the Bank of England had admitted it was at fault.
Ah. Not the Bank of England then. Only people who didn’t like what the Bank of England did saying that the Bank of England had admitted it was at fault.
Just watch the news in the next few days and you will see it for yourself
…Have you heard that in May the Bank of England admitted that two thirds of the issues that bought down Liz Truss were caused by them?…
No, this is a story from April, based on an excerpt from Ms Truss’ book, as reported in the Financial Times at the time. It is not unknown for incompetent leaders to look for a scapegoat, and it seems Ms Truss is no exception.
…Have you heard that in May the Bank of England admitted that two thirds of the issues that bought down Liz Truss were caused by them?…
No, this is a story from April, based on an excerpt from Ms Truss’ book, as reported in the Financial Times at the time. It is not unknown for incompetent leaders to look for a scapegoat, and it seems Ms Truss is no exception.
I have not found any denial from the bank of England
So what you are saying is that she should have announced the pay deal and immediately put up taxes.
Rather there's no need to cancel infrastructure investment immediately, announce a review and punt the decision to budget announcement time, at which point you roll out taxes and announce the investment will go ahead.
…Have you heard that in May the Bank of England admitted that two thirds of the issues that bought down Liz Truss were caused by them?…
No, this is a story from April, based on an excerpt from Ms Truss’ book, as reported in the Financial Times at the time. It is not unknown for incompetent leaders to look for a scapegoat, and it seems Ms Truss is no exception.
Indeed.
Truss's book should be entitled Why it's all someone else's fault. The notion that the acute shock to the UK economy was not Truss's fault is being pushed by a small collection of Right Wing voices. However, if you read any actual economist, it's quite clear where the blame lies and what actually happened.
It is logical to suggest that Reeves is extra cautious not to damage confidence in the UK government as a consequence. This is doubly true for a Labour Chancellor who has to exist in a hostile media environment that is always pushing the narrative that Labour can't be trusted on the economy.
Again, serious economic analysis would suggest she's over-calling this in a way that's likely to be counterproductive.
…Have you heard that in May the Bank of England admitted that two thirds of the issues that bought down Liz Truss were caused by them?…
No, this is a story from April, based on an excerpt from Ms Truss’ book, as reported in the Financial Times at the time. It is not unknown for incompetent leaders to look for a scapegoat, and it seems Ms Truss is no exception.
Archive version of that FT article, not behind paywall. Which basically boils down to a claim by Truss that the BoE (and other parts of the "deep state", the OBR and Treasury officials) refused to do what they were told by the PM.
So instead of taxing the rich a bit more they are effectively taxing pensioners. Removing the payment may not be an actual tax but really what is the practical difference?
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
"Green Agenda" - you mean trying to stop climate change spiralling and causing massive problems in the near future? What's your proposal? Just let it happen?
Complaining about above inflation pay rises might hold a little more water had the pay in question not been falling behind inflation for years.
Comments
It was obvious they would cave in and make me cold this winter
I'll pick up one thing from that article:
"And here Reeves has given mixed messages. The repeated refrain, “If we cannot afford it, we cannot do it” is an almost precise, and deeply dangerous, inversion of Keynes’ famous phrase: “Anything we can actually do, we can afford.” It was the anti-Keynes mentality that gave us austerity in 2010, and ended up costing us far more, economically, financially and socially, than it saved"
I think Reeves knows exactly what she's saying here, and that plus her invocation of "households" in her earlier does not fill with any kind of confidence that a change is in the offing.
Furthermore her faction of the Labour party have *always* been keen on means testing as an 'one weird trick' to bring down the welfare budget. Here she is back in 2014: https://tinyurl.com/d3kk733h
Yes. I am concerned.
Means testing generates two things.
The first is a significant amount of bureaucracy in order to implement and enforce this means testing.
The second is a set of bizarre distortions in the effective marginal rate of income tax. The withdrawal of means-tested benefits is typically at a fairly rapid rate, and is functionally equivalent to a very high marginal rate of income tax. That's economic stupidity.
So you generate both excess wasteful costs, and excess stupidity, in order to pander to the economically illiterate.
Universal benefits, paid for out of general taxation, are always the way. Negligible bureaucratic costs, minimized economic distortion. Give the elderly a few hundred quid in winter fuel benefit, and recover the cost from general taxation. The net result is that the people who need the extra cash get the extra cash, and the retired millionaires see their extra benefit largely removed by extra tax.
The whole lot - tax, allowances, pensions - needs to be re-thought and simplified; apart from anything else, the more complicated a tax system the easier it is to evade tax and the more it costs to administer and police.
I have never understood why there is no relation between the minimum wage, the basic tax allowance, and a single person's pension. Logic tells me the three amounts should be the same.
Which raises all sorts of questions. We know that one half of the problem has been removed from office, but what about the other - the senior civil servants who must be praying there’s a paper trail showing all the times they said ‘hang on’ (as is their duty) and were overruled.
There simply aren’t enough Tories who were in government or special advisers for this to have been all on them alone…
So the independent OBR is stating that there is a £21.9Bn problem because they were given unrealistic figures by HM Treasury previously.
Now, those paying attention very carefully might have noticed there were hints at this pre-election as the OBR noted a lack of transparency on spending figures.
But a plain text reading here is that the previous government hid how bad things are pre election and Reeves version of events is factually accurate.
Of course there is political spin. Reeves would have known there was a problem. I bet she had a good guess as to the size of the problem too. However she is strictly correct that she didn't know this until now.
The Tory critique here (massively amplified by the usual suspects) is utter utter bollocks.
AFZ
Another expert view.
Reeves is not being dishonest in the way the Tories mean but I fear she is not being radical enough.
To be fair to Ms Reeves she has to do the economics right and the politics right. That is often challenging but at this point in the election cycle she has the most political freedom she will ever have. The budget in the autumn is critical. More so now.
It may be that the strategy is tough now to allow more wiggle room later this year. We shall see.
AFZ
Ummm... what's your point?
That's an economic perspective from an expert commentator. It is not government policy.
I may well be of the view that it should be but that's beside the point!
AFZ
AgeUK have tweeted out a statement: https://threadreaderapp.com/thread/1817958741029044323.html
The short answer is that a third of pensioners who are eligible for Pension Credit don't receive it, and about a million pensioners are just above the poverty line - and would no longer receive WFP.
Glad to hear it, with regard to your view, sorry that's beside the point for you.
As an aside I have been enjoying Hunts faux outrage enormously.
1. Jeremy Hunt said that the public service pay-rises were way above inflation. True on a one-year basis, but not if one includes the many years when they were frozen.
2. He also said that the pay awards are not linked to increased productivity. What does he expect? - teachers to talk faster, surgeons to cut more quickly?
3. There was also someone from an Age charity, saying that the take-up of Pension Credit is only about 60-65% as it is so complicated to apply for, also related benefits such as Attendance Allowance. Hence many who should get the Winter Fuel Allowance won't.
My preference would be ideally to do that first, rather than have it as an aspiration for sometime after introducing a hard qualification boundary. With the best will in the world, they're simply not going to do that before this winter, and people will suffer.
It was described on the radio last night as historically sitting in the bracket of easier and cheaper to give it to everyone over 65 rather than trying to sort people into one pile or the other, and leaving deserving cases the wrong side of the line.
However, cutting it as they have has the benefit of reducing a chunk of outgoings at once, *and* the unspoken bit, the benefit to the government of cutting even deeper than it should because of the significant lack of uptake amongst people who are eligible, of the thing they should be accessing that will be the passport to the winter fuel payment.
I think this is where Private Eye would say 'trebles all round' - unless you're a pensioner either just above the line of eligibility or below it but with no idea about claiming. It's breathtaking in its cynicism tbh.
And all because - and it really probably is all because - they've painted themselves into a corner where they can't/won't reverse the cuts to NI which would fill the entire hole. Because they said they wouldn't in the election campaign. So now we've got the unedifying sight of the government scrabbling around punching downwards to try and balance the books.*
*lots of pensioners won't miss it, because it was blunt and paid regardless of need. Now lots of pensioners will miss it because it's being bluntly means tested. I'm with Age UK on this one.
One problem seems to me to be the shortfall in the number of people applying for pension credit, no doubt for various reasons, but I don't offhand see any easy way of solving this issue. Many older people are not all that happy with filling in forms, whether on paper or online, and not everyone has family or friends to help them.
It also seems to me that people with a state pension and a pension from their previous employment (which may or may not allow them to afford fuel in addition to food) may at least find it worthwhile investigating whether they might be eligible for pension credit, or some other benefit.
Either way, I can see the rationale behind restricting the winter fuel payment, but surely there are better ways of organising it? Perhaps the *wiggle room* between now and October's budget (as referred to by @alienfromzog) may allow the government to come up with something to allay the worst fears of those groups involved in helping the poorer pensioners...
My main pension comes from my 25 years in local government, the smaller one from 20 years working for the NHS.
I was sorry to see that the reopening of defunct railways, or the restoration of withdrawn passenger train services, has been put on the back burner, apart from schemes currently under way. Rebuilding a closed railway line is a very expensive business...but I note that a number of *heritage* railways have, in recent years, managed to join up again with the national system.
To make things worse it is certain that Labour knew about this gap before the election. Some groups who told them have come forward to say that.
Let's be very clear here, Truss' budget wasn't bad because it might have led to more public debt, but because it was inflationary. There's a longer explanation here from Dan Davies - who was also a 'Bank of England Economist' (but doesn't like referring to himself that way given it was a long time ago):
https://backofmind.substack.com/p/the-present-tense-of-a-dangerous
As he says:
Yeah, and that's not really what happened.
It does, but it's bad in both cases because it's inflationary, not because it's unfunded:
Yes, if the economy is close to capacity (as the UK's is now) then you have to cut output somewhere so that the overall effect of investment isn't inflationary, and that if you don't markets will start acting on the expectation that interest rates will rise.
The argument of the piece and of the others posted upthread is that those investments are still both needed and good investments, and Reeves has artificially constrained herself by refusing to raise taxes.
A lot of this £20 billion 'black hole' is a political choice. Money being spent on above inflation pay rises and on the green agenda
The majority of people getting public sector payrises are in (or will enter) tax bands that are not rising for the next few years.
This means that a junior doctor at the start of training currently earning around 40K will see a 19% rise in take home pay based on a 22% gross rise, while a doctor at the end of training earning around 70K will see a 17% rise in take home pay based on the same 22% gross rise.
The difference goes back to HMRC.
For many people now, a gross rise at the rate of inflation is going to lead to a lower rise in take home pay and the tax take is effectively rising significantly year on year for the next few years.
With fiscal drag, there probably isn’t much room for higher rates of income tax in the middle. CGT and inheritance taxes are different and those are on the way…
Rather there's no need to cancel infrastructure investment immediately, announce a review and punt the decision to budget announcement time, at which point you roll out taxes and announce the investment will go ahead.
Yeah, this is fractally wrong.
Have you read the audit document I linked to ?
Not yet. Have you heard that in May the Bank of England admitted that two thirds of the issues that bought down Liz Truss were caused by them ?
Please explain.
Source?
RAOTFLMAO!
Just watch the news in the next few days and you will see it for yourself
No, this is a story from April, based on an excerpt from Ms Truss’ book, as reported in the Financial Times at the time. It is not unknown for incompetent leaders to look for a scapegoat, and it seems Ms Truss is no exception.
I have not found any denial from the bank of England
They are trailing tax rises.
Indeed.
Truss's book should be entitled Why it's all someone else's fault. The notion that the acute shock to the UK economy was not Truss's fault is being pushed by a small collection of Right Wing voices. However, if you read any actual economist, it's quite clear where the blame lies and what actually happened.
It is logical to suggest that Reeves is extra cautious not to damage confidence in the UK government as a consequence. This is doubly true for a Labour Chancellor who has to exist in a hostile media environment that is always pushing the narrative that Labour can't be trusted on the economy.
Again, serious economic analysis would suggest she's over-calling this in a way that's likely to be counterproductive.
AFZ
"Green Agenda" - you mean trying to stop climate change spiralling and causing massive problems in the near future? What's your proposal? Just let it happen?
Complaining about above inflation pay rises might hold a little more water had the pay in question not been falling behind inflation for years.