Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
That's Labour's historic role, Max - to clear up the economic mess and impose painful measures that would be unacceptable from a Conservative Government.
This is very much froth from KK imo. Lots of badda-badda-bam, but little subtlety.
The extent of the low business tax zones is interesting - "West Midlands", "Norfolk". But raising Business Rates to their appropriate level by updating property values resulted in a huge squealing in the SE like stuck pigs, so perhaps cutting them for the others is an alternative.
Driving the demand side of housing again by a crude reduction of Stamp Duty seems Krazy, compared to attempting to create a less distorted market.
That list of prioritised projects bears some examination.
Northern Powerhouse Rail is an actual impossibility at the moment, because it won't work without HS2 tracks being built to Leeds. So either they're not doing it, or they're doing something different and calling it NPR.
If it is what was announced in the IRP, then they are complicit in misleading the House because that is infeasible. Literally, it cannot be done.
Question - did Kwarteng abandon that ludicrous proposal to make all self employed or small business people submit returns four times a year? That really would be an easy, cheap win as it isn't possible anyway.
If you’re liable for VAT you have to make four returns a year anyway, but the income limit is £80k or something like that.
So what are the odds of a snap General Election, if the polls turn?
If.
Timing is against it. Nobody wants a winter GE, by March any drag because of CoL will have kicked in. And i think todays policies are designed to get votes in 2024 if we get through in good order with the gamble/theory paying off
Boris was said to like winter elections, on the basis that differential turnout in bad weather favoured the Conservatives.
Well this was certainly a bigger fiscal event than I'd expected.
Thinking it through and absorbing it, it seems across the board that everyone working for a living is going to be better off. That's extremely significant.
We've got the biggest tax rates in over 70 years and we're still short of money and not growing, so this is absolutely the right thing to do in my eyes. Plus as I've noted before, we went into this recession with a fairly balanced budget and debt to GDP going down instead of a ballooning deficit and debt to GDP going up as we did pre-2008.
Hopefully the new tax rates attract more immigration of high paid jobs which results in more taxes and more growth too.
Work should pay more for everyone now. Anyone who's not working, time to get a job.
Everyone working for a living is not going to be better off because of inflation, which is increased by government borrowing.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
Question - did Kwarteng abandon that ludicrous proposal to make all self employed or small business people submit returns four times a year? That really would be an easy, cheap win as it isn't possible anyway.
If you’re liable for VAT you have to make four returns a year anyway, but the income limit is £80k or something like that.
Yes, but they wanted to change it so everybody made four returns a year. Online. Using specialised software. Via an accountant.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
That's Labour's historic role, Max - to clear up the economic mess and impose painful measures that would be unacceptable from a Conservative Government.
It could be a once in a generation opportunity for Labour to address the balance of tax take from working people to non-working people and asset owning classes.
Ah there you are. I have a question. As I was out on my Apollo Highway (or is it Highway Apollo) this morning I pondered the 18 gears. I use three at most.
When you are proper bicycling do people use each of those for 18 different types of terrain?
In the traditional 3-at-front 6-at-back type gear setup, you aren't supposed to use them all -- combinations like outermost front with innermost rear or innermost front with outermost rear aren't good for the chain. For the rest, it depends on the terrain, but if you're anywhere hilly you will likely be wanting both the lowest and the highest gear you've got.
all my bikes have the Rohloff Speedhub gearing - 14 gears with no duplication, perfect chainline geometry and up to 10,000km between replacement of parts
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too...
Is any politician or party advocating 'doing nothing' ? The debate over this is whether the large fiscal gamble is a good one or not.
What I have not heard from either Rachel Reeves or SKS is how they think the economy is going to grow. They have various opinions on distribution and they think anyone fortunate to make a quid should be subject to a windfall tax as that is apparently not a reward for risks taken but pure avarice. But where does the growth come from?
Today's mega budget gives an answer. It may prove to be the wrong one, but it is at least an attempt at an answer.
Ah there you are. I have a question. As I was out on my Apollo Highway (or is it Highway Apollo) this morning I pondered the 18 gears. I use three at most.
When you are proper bicycling do people use each of those for 18 different types of terrain?
In the traditional 3-at-front 6-at-back type gear setup, you aren't supposed to use them all -- combinations like outermost front with innermost rear or innermost front with outermost rear aren't good for the chain. For the rest, it depends on the terrain, but if you're anywhere hilly you will likely be wanting both the lowest and the highest gear you've got.
all my bikes have the Rohloff Speedhub gearing - 14 gears with no duplication, perfect chainline geometry and up to 10,000km between replacement of parts
I just flushed/changed the oil in mine. Tbh, though, i regret buying a bike with the Rohloff hub. It’s heavy and expensive for what it is.
A classic case of German overengineering.
There are only really a few use cases where it makes sense. Round-the-world take-everything-with-you bike touring - or those cycle taxis that get used every day in London/Cambridge etc. are the only two I can think of.
Otherwise, I’d advise against the Rohloff, personally.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
That's Labour's historic role, Max - to clear up the economic mess and impose painful measures that would be unacceptable from a Conservative Government.
It could be a once in a generation opportunity for Labour to address the balance of tax take from working people to non-working people and asset owning classes.
Yes let's make young people actually benefit for once. Sort out tuition fees and housing costs.
This is very much froth from KK imo. Lots of badda-badda-bam, but little subtlety.
The extent of the low business tax zones is interesting - "West Midlands", "Norfolk". But raising Business Rates to their appropriate level by updating property values resulted in a huge squealing in the SE like stuck pigs, so perhaps cutting them for the others is an alternative.
Driving the demand side of housing again by a crude reduction of Stamp Duty seems Krazy, compared to attempting to create a less distorted market.
That list of prioritised projects bears some examination.
Northern Powerhouse Rail is an actual impossibility at the moment, because it won't work without HS2 tracks being built to Leeds. So either they're not doing it, or they're doing something different and calling it NPR.
If it is what was announced in the IRP, then they are complicit in misleading the House because that is infeasible. Literally, it cannot be done.
Haven't they now rebranded a few upgrades to the transPennine route as NPR ?
This is very much froth from KK imo. Lots of badda-badda-bam, but little subtlety.
The extent of the low business tax zones is interesting - "West Midlands", "Norfolk". But raising Business Rates to their appropriate level by updating property values resulted in a huge squealing in the SE like stuck pigs, so perhaps cutting them for the others is an alternative.
Driving the demand side of housing again by a crude reduction of Stamp Duty seems Krazy, compared to attempting to create a less distorted market.
That list of prioritised projects bears some examination.
Northern Powerhouse Rail is an actual impossibility at the moment, because it won't work without HS2 tracks being built to Leeds. So either they're not doing it, or they're doing something different and calling it NPR.
If it is what was announced in the IRP, then they are complicit in misleading the House because that is infeasible. Literally, it cannot be done.
It also lists Leeds Station improvements without saying what the purpose of the improvements will be - without knowing whether HS2E occurs it's impossible to know what improvements are needed.
Labours worst nightmare is this working and their entire MO being shot to shit. Hence the febrile response because, naturally, if it doesnt work there are big rewards for the opposition. Both all in. This is the next election's battlefield
Well this was certainly a bigger fiscal event than I'd expected.
Thinking it through and absorbing it, it seems across the board that everyone working for a living is going to be better off. That's extremely significant.
We've got the biggest tax rates in over 70 years and we're still short of money and not growing, so this is absolutely the right thing to do in my eyes. Plus as I've noted before, we went into this recession with a fairly balanced budget and debt to GDP going down instead of a ballooning deficit and debt to GDP going up as we did pre-2008.
Hopefully the new tax rates attract more immigration of high paid jobs which results in more taxes and more growth too.
Work should pay more for everyone now. Anyone who's not working, time to get a job.
Everyone working for a living is not going to be better off because of inflation, which is increased by government borrowing.
Inflation has ballooned under Rishi Sunak's policies and not Liz Truss's.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
That’s part 2 of their strategy.
Truss and Kwarteng are two of the most cynical people ever to grace British politics.
They don’t have a mandate for any of this shit.
This is clear political game playing. Create a scorched earth environment so you can force Labour to confirm it needs to raise taxes - even if it’s to “correct” these cuts it’s going to allow the Tories to roll out to old tax bombshell line.
"Tax and Spend Labour" is tried and tested. But this is 2022. People are calling out for spending because they can see services falling apart around them. A costed investment plan, with a clear "we care" message can cut straight through this.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
Contrary to expectations during the leadership vote, the biggest losers from the change in govt are the Lib Dems. Truss / Kwarteng are going hell for leather to shore up the blue wall and the more moderate stance on N Ireland will be the final nail for the LD's chances in seats like Guildford.
I have little idea how the Tories will perform in the Red Wall, intuitively far worse than Boris did. The betting question now is do Labour take enough of those seats back that they wangle a coalition / confidence & supply govt with the SNP or not. With all that entails. As I said yesterday, it feels very like the middle of the 2010-15 Parliament to me.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
The next election is one you really want to lose....
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
This will have a very modest effect on most of those juggling jobs and still claiming Universal Credit at the very bottom, and no effect at all on the many that cannot work. Your Victorian image of the deserving poor is largely just that.
This is very much froth from KK imo. Lots of badda-badda-bam, but little subtlety.
The extent of the low business tax zones is interesting - "West Midlands", "Norfolk". But raising Business Rates to their appropriate level by updating property values resulted in a huge squealing in the SE like stuck pigs, so perhaps cutting them for the others is an alternative.
Driving the demand side of housing again by a crude reduction of Stamp Duty seems Krazy, compared to attempting to create a less distorted market.
That list of prioritised projects bears some examination.
Northern Powerhouse Rail is an actual impossibility at the moment, because it won't work without HS2 tracks being built to Leeds. So either they're not doing it, or they're doing something different and calling it NPR.
If it is what was announced in the IRP, then they are complicit in misleading the House because that is infeasible. Literally, it cannot be done.
Haven't they now rebranded a few upgrades to the transPennine route as NPR ?
I very much agree with you on the rail investment.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The poorest don't pay income tax.
Everyone working full time on even the Minimum Wage pays Income Tax.
Anyone who's not working full time, can get a job.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
At least this "something" is something different than what's been tried in the recent past.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
The next election is one you really want to lose....
Well, you have to hand it to Truss, she's making every effort to!
Question - did Kwarteng abandon that ludicrous proposal to make all self employed or small business people submit returns four times a year? That really would be an easy, cheap win as it isn't possible anyway.
If you’re liable for VAT you have to make four returns a year anyway, but the income limit is £80k or something like that.
Yes, but they wanted to change it so everybody made four returns a year. Online. Using specialised software. Via an accountant.
Has that now been formally ditched?
There was a push to get all VAT backlinked directly from proprietary accounts packages, but there's a "bridging software" loophole in there.
Since all the MTD stuff has come in I've used https://www.absoluteexcelvatfiler.co.uk/ to submit returns. It's £40/year and you can do all your paperwork by inkwell and pen just putting the numbers directly into that if you want.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
That’s part 2 of their strategy.
Truss and Kwarteng are two of the most cynical people ever to grace British politics.
They don’t have a mandate for any of this shit.
This is clear political game playing. Create a scorched earth environment so you can force Labour to confirm it needs to raise taxes - even if it’s to “correct” these cuts it’s going to allow the Tories to roll out to old tax bombshell line.
"Tax and Spend Labour" is tried and tested. But this is 2022. People are calling out for spending because they can see services falling apart around them. A costed investment plan, with a clear "we care" message can cut straight through this.
There's no such thing as "investing" in day to day spending. That mantra is why we have such shite and inefficient public services. We've "invested" in people rather than capital so the fixed cost base is insanely high already and impossible to cut.
Labours worst nightmare is this working and their entire MO being shot to shit. Hence the febrile response because, naturally, if it doesnt work there are big rewards for the opposition. Both all in. This is the next election's battlefield
If it had a chance of working it would be Labour's second worst nightmare.
Their worst nightmare is the mess this is going to result in - with no extra growth, no extra tax revenue and a budget deficit that can't continue on the never never...
SNP lady just said something bonkers I had to sense-check. And its true.
We have had 7 chancellors in 6 years. Bonkers.
No it isn't. We have had five Chancellors in 6 years. Hammond, Javid, Sunak, Zahawi and Kwarteng.
Only three of whom presented budgets, I might add.
That figure is bad enough without making it worse by exaggerating it.
It's as many as there was in the previous 26 years from 1990 - Lamont, Clarke, Brown, Darling and Osborne.
Osborne was chancellor in 2016. That makes 7
Leaving aside the fact that he left office more than six years ago now, five plus one does not equal seven. Although I am not sure Kwarteng appreciates that.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The govt cannot "grow the economy" in the transitive sense of the verb to grow. Growth in income/output per head is the result of technical progress in the widest sense. So 'to grow the economy' must be understood in the intransitive sense, i.e. to create conditions for the economy to generate innovations and technical and organisational improvement, and to remove impediments to change. I haven't heard or read the speech, but it sounds as if Kwarteng and Truss have that approach. Of course it's a gamble as Fraser Nelson and James Forsythe point out, but in my view a necessary one. I think the odds of success are around evens, with a fair wind.
"One of the most unequal countries in the world" is a little OTT.
And still defending the Scot Gov's "rent freeze", when her own Scot Gov figures show that rents in Scotland - at least private rents - are down by approx 20% in real terms in a decade.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
That's Labour's historic role, Max - to clear up the economic mess and impose painful measures that would be unacceptable from a Conservative Government.
It could be a once in a generation opportunity for Labour to address the balance of tax take from working people to non-working people and asset owning classes.
Wouldn't even have to put it in the manifesto. Get elected with Starmer. Bam! Its really McDonnell with the LVT and dismantling the Lords.
Question - did Kwarteng abandon that ludicrous proposal to make all self employed or small business people submit returns four times a year? That really would be an easy, cheap win as it isn't possible anyway.
If you’re liable for VAT you have to make four returns a year anyway, but the income limit is £80k or something like that.
Yes, but they wanted to change it so everybody made four returns a year. Online. Using specialised software. Via an accountant.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Personally, I would have preferred super reliefs for investment and training over a cut in the CT rate. But we may get both. One way this government does follow on from Boris is both the having of cake and eating of cake mentality.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The poorest don't pay income tax.
Or NI mostly
Anyone working full time on minimum wage pays NI, if they're on PAYE.
NI is mainly evaded by people not on PAYE, rather than working people.
Labours worst nightmare is this working and their entire MO being shot to shit. Hence the febrile response because, naturally, if it doesnt work there are big rewards for the opposition. Both all in. This is the next election's battlefield
Well this was certainly a bigger fiscal event than I'd expected.
Thinking it through and absorbing it, it seems across the board that everyone working for a living is going to be better off. That's extremely significant.
We've got the biggest tax rates in over 70 years and we're still short of money and not growing, so this is absolutely the right thing to do in my eyes. Plus as I've noted before, we went into this recession with a fairly balanced budget and debt to GDP going down instead of a ballooning deficit and debt to GDP going up as we did pre-2008.
Hopefully the new tax rates attract more immigration of high paid jobs which results in more taxes and more growth too.
Work should pay more for everyone now. Anyone who's not working, time to get a job.
Everyone working for a living is not going to be better off because of inflation, which is increased by government borrowing.
Inflation has ballooned under Rishi Sunak's policies and not Liz Truss's.
There hasn't been very long under Truss's policies... but we've already seen the £ fall to historic lows, which means inflation up.
That's fantastic news. Legalise fracking to distract the Neanderthals on the Tory backbenches, and then allow onshore wind to go ahead to rapidly reduce the amount of gas we need to burn.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The poorest don't pay income tax.
Everyone working full time on even the Minimum Wage pays Income Tax.
Anyone who's not working full time, can get a job.
This psychology is terrifying for those who can’t work. My brother is 31 and has the mental capacity of a six month old.
In your everyone-must-work, no-welfare-state for those who haven’t paid in utopia, he’s fucked.
I’m starting to think there’s a real chance his care funding will dry up in the coming years and i’ll have to care for him, 24/7.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
The next election is one you really want to lose....
An over-used phrase, I suggest.
If Labour get in at the next election, I suspect the electorate will then back them at the election after too. Generally, the electorate seem to recognise that new Governments need some time to turn things around.
Yep! Maybe I’ll buy a watch in London this Christmas.
Panerai or GTFO.
I assume Panerais were issued to the manned torpedo suicide jockeys?
Panerai supplied watches and other instruments to the Marina Militare in WW2 although the watches all had Rolex movements in those days. Decima Flottiglia wore Panerais when they rode their underwater Vespas to blow up the previous HMS Queen Elizabeth in Alexandria.
On checking Wiki they were more successful than I had assumed. Rather grimly towards the end of the war the Decima was deployed mainly on land in anti partisan actions, including several massacres. War is shit, part 248.
They actually split in two. One bit fought with the new Italian government and the Allies against Germany - in partnership with The British frogmen units. From enemies to allies….
The other part went with the Salo regime - seemed to devolve into a particularly nasty and atrocity prone land based unit.
it is going to be very very interesting watching the Tory backbenches over the coming weeks. They have a leader they did not pick, lots of big beasts back with them and a new economic policy that poleaxes the levelling up agenda they were elected on.
If you look at the list of "special economic zones" under consideration you will see that large chunks of ex-red wall seats are covered. This is their pivot - Vote Tory, Secure that SEZ, be Better Off.
Except that a large majority of these places will be turned down - you can't have most of the populated areas in a SEZ or it loses all meaning. And the ones who "win"? Its corporate piracy as already being enacted quietly in places like Teesside. Go read the expose of the Redcar Steelworks Development and tell me that isn't the plan - an easter-european style robber baron capitalism where the corrupt state hands over assets to its mates for nothing.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The poorest don't pay income tax.
Everyone working full time on even the Minimum Wage pays Income Tax.
Anyone who's not working full time, can get a job.
Question - did Kwarteng abandon that ludicrous proposal to make all self employed or small business people submit returns four times a year? That really would be an easy, cheap win as it isn't possible anyway.
If you’re liable for VAT you have to make four returns a year anyway, but the income limit is £80k or something like that.
Not income, turnover, so it catches many more than you would think. And the Treasury has been sneakily getting rid of the fixed rate schemes which made it easier too. Since tax went digital my wife spends 3-4 times as long doing a VAT return. The idea of doing that for IT too might make me retire.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The poorest don't pay income tax.
Everyone working full time on even the Minimum Wage pays Income Tax.
Anyone who's not working full time, can get a job.
This psychology is terrifying for those who can’t work.
The psychology that you should be heavily taxing those working for Minimum Wage is even worse.
Something that occurs to me is that if it does all go tits up and we call in the IMF under Labour, they will be charged with making eyewatering cuts to the state in return for IMF help and raising taxes. It will be Keir Starmer cutting the NHS and begging to the IMF, not the Tories.
The next election is one you really want to lose....
An over-used phrase, I suggest.
If Labour get in at the next election, I suspect the electorate will then back them at the election after too. Generally, the electorate seem to recognise that new Governments need some time to turn things around.
It really depends, but I think if this all goes wrong then the Tories will be out of power for quite a long time as they will have trashed their brand quite badly.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
At least this "something" is something different than what's been tried in the recent past.
Mad right-wing, Lafferian tax cuts have been tried plenty in the recent past in other parts of the world and they never worked.
As mentioned, the social context of this will become much clearer after the next price rise.
Since there's been absolutely nothing on Universal Credit announced, by the end of the year even the friendliest media will not be able to avoid the increasingly obvious hardship and poverty, just as Truss and Kwarteng's flagship masters-of-the-universe policies roll into public view.
In 1990 the Tory party was still sufficiently diverse in intellectual outlook to understand the need for a change of course. There's no sign of that now. The government will eventually be punished for this at the polls, as it would have been in 1992.
And it will be richly deserved and just.
Income Tax and National Insurance have been cut for the poorest, so anyone poor who wants more money can work and keep more of their own income they work for. 👍
The poorest don't pay income tax.
Everyone working full time on even the Minimum Wage pays Income Tax.
Anyone who's not working full time, can get a job.
Do your children have jobs?
Plenty of work sweeping chimneys, which are very fashionable things these days.
Ah there you are. I have a question. As I was out on my Apollo Highway (or is it Highway Apollo) this morning I pondered the 18 gears. I use three at most.
When you are proper bicycling do people use each of those for 18 different types of terrain?
In the traditional 3-at-front 6-at-back type gear setup, you aren't supposed to use them all -- combinations like outermost front with innermost rear or innermost front with outermost rear aren't good for the chain. For the rest, it depends on the terrain, but if you're anywhere hilly you will likely be wanting both the lowest and the highest gear you've got.
all my bikes have the Rohloff Speedhub gearing - 14 gears with no duplication, perfect chainline geometry and up to 10,000km between replacement of parts
If this thread is on the mark, then Truss will be out before the next election if today's budget doesn't rapidly bear fruit.
https://twitter.com/patrickkmaguire/status/1573224189473226752 Mark Fullbrook, PM’s chief of staff, addressed Tory MPs at No 10 last night. Doesn’t sound quite like he won hearts and minds… One casualty of the reshuffle describes it as a “lecture from Mark Fullbrook mostly about Mark Fullbrook” “He spoke for the most part about the importance of unity, after he’d overseen the most divisive reshuffle in the party’s history.” Near-total lack of backbench goodwill for the new regime - and particularly its whipping operation - will make selling today’s measures harder...
Well this was certainly a bigger fiscal event than I'd expected.
Thinking it through and absorbing it, it seems across the board that everyone working for a living is going to be better off. That's extremely significant.
We've got the biggest tax rates in over 70 years and we're still short of money and not growing, so this is absolutely the right thing to do in my eyes. Plus as I've noted before, we went into this recession with a fairly balanced budget and debt to GDP going down instead of a ballooning deficit and debt to GDP going up as we did pre-2008.
Hopefully the new tax rates attract more immigration of high paid jobs which results in more taxes and more growth too.
Work should pay more for everyone now. Anyone who's not working, time to get a job.
Everyone working for a living is not going to be better off because of inflation, which is increased by government borrowing.
Inflation has ballooned under Rishi Sunak's policies and not Liz Truss's.
There hasn't been very long under Truss's policies... but we've already seen the £ fall to historic lows, which means inflation up.
Most major currencies are plunging against the US dollar, as you well know.
Also has the benefit of taking games outside the UEFA blackout window, enabling live streaming.
I suspect that once the change is made that they won't go back. Bit like primary school kids now going into school in PE kit on the days they have PE. They will be wondering why they never did it before.
Good, sensible measure. Actions like these multiplied up across the country in many areas will mean a noticeable reduction in energy usage.
Indeed. Given the choice of either firing up 200kW of arc lights, or starting the match early…
One assumes that the Premier League stadia have mostly switched to LED lights by now, which are much cheaper to run but require a huge capital investment.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
At least this "something" is something different than what's been tried in the recent past.
Mad right-wing, Lafferian tax cuts have been tried plenty in the recent past in other parts of the world and they never worked.
By calling it "mad", you're assuming the conclusion.
That's fantastic news. Legalise fracking to distract the Neanderthals on the Tory backbenches, and then allow onshore wind to go ahead to rapidly reduce the amount of gas we need to burn.
Onshore wind is as much a solution as fracking. It would take several years to actually getting some output. So no help in the current situation (this winter)
If you want more wind power, Dogger Bank etc is barely touched. On a timescale of years, increasing offshore wind is pretty much equal in difficulty to onshore. And the latest, most efficient turbines can’t be installed on land. Too big.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
At least this "something" is something different than what's been tried in the recent past.
Mad right-wing, Lafferian tax cuts have been tried plenty in the recent past in other parts of the world and they never worked.
As far as I'm concerned they've worked when they've been consistently tried across the board, from extremely high bases.
What doesn't work is jacking up taxes on some, to pay for tax cuts for others, or abolishing taxes that were already low. That hasn't happened here, this is consistent tax cuts for all
Question - did Kwarteng abandon that ludicrous proposal to make all self employed or small business people submit returns four times a year? That really would be an easy, cheap win as it isn't possible anyway.
If you’re liable for VAT you have to make four returns a year anyway, but the income limit is £80k or something like that.
Yes, but they wanted to change it so everybody made four returns a year. Online. Using specialised software. Via an accountant.
If this thread is on the mark, then Truss will be out before the next election if today's budget doesn't rapidly bear fruit.
https://twitter.com/patrickkmaguire/status/1573224189473226752 Mark Fullbrook, PM’s chief of staff, addressed Tory MPs at No 10 last night. Doesn’t sound quite like he won hearts and minds… One casualty of the reshuffle describes it as a “lecture from Mark Fullbrook mostly about Mark Fullbrook” “He spoke for the most part about the importance of unity, after he’d overseen the most divisive reshuffle in the party’s history.” Near-total lack of backbench goodwill for the new regime - and particularly its whipping operation - will make selling today’s measures harder...
That was posted earlier. Unsurprisingly someone who disagreed with Truss's policies is whinging anonymously.
The govt cannot "grow the economy" in the transitive sense of the verb to grow. Growth in income/output per head is the result of technical progress in the widest sense. So 'to grow the economy' must be understood in the intransitive sense, i.e. to create conditions for the economy to generate innovations and technical and organisational improvement, and to remove impediments to change. I haven't heard or read the speech, but it sounds as if Kwarteng and Truss have that approach. Of course it's a gamble as Fraser Nelson and James Forsythe point out, but in my view a necessary one. I think the odds of success are around evens, with a fair wind.
Trouble is, when did we last have a fair wind? Both parties have suffered when in Government from externalities that are outside of their control and I would suggest that is more the norm than steady sailing. I am not sure relying on a fair wind is the best policy given recent history.
Ah there you are. I have a question. As I was out on my Apollo Highway (or is it Highway Apollo) this morning I pondered the 18 gears. I use three at most.
When you are proper bicycling do people use each of those for 18 different types of terrain?
In the traditional 3-at-front 6-at-back type gear setup, you aren't supposed to use them all -- combinations like outermost front with innermost rear or innermost front with outermost rear aren't good for the chain. For the rest, it depends on the terrain, but if you're anywhere hilly you will likely be wanting both the lowest and the highest gear you've got.
all my bikes have the Rohloff Speedhub gearing - 14 gears with no duplication, perfect chainline geometry and up to 10,000km between replacement of parts
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
As my 2 year put it: "Train!! We go on train? "No, not today" "People go on the train" "Yes" "We people" Yesss... "We go on the train?"
About that point I got some insight into how difficult the next 20 years were going to be.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
At least this "something" is something different than what's been tried in the recent past.
Mad right-wing, Lafferian tax cuts have been tried plenty in the recent past in other parts of the world and they never worked.
As far as I'm concerned they've worked when they've been consistently tried across the board, from extremely high bases.
What doesn't work is jacking up taxes on some, to pay for tax cuts for others, or abolishing taxes that were already low. That hasn't happened here, this is consistent tax cuts for all
Also there is demonstrable evidence that Sunak's policies are failing. His tax increases are fetching nowhere near what was expected of them, whilst the economy tanks and inflation soars.
The Laffer curve may or may not work, but high taxes certainly do not.
That's fantastic news. Legalise fracking to distract the Neanderthals on the Tory backbenches, and then allow onshore wind to go ahead to rapidly reduce the amount of gas we need to burn.
Onshore wind is as much a solution as fracking. It would take several years to actually getting some output. So no help in the current situation (this winter)
If you want more wind power, Dogger Bank etc is barely touched. On a timescale of years, increasing offshore wind is pretty much equal in difficulty to onshore. And the latest, most efficient turbines can’t be installed on land. Too big.
Dogger Bank is the site of the current construction of the world's largest wind farm to date.
Ah there you are. I have a question. As I was out on my Apollo Highway (or is it Highway Apollo) this morning I pondered the 18 gears. I use three at most.
When you are proper bicycling do people use each of those for 18 different types of terrain?
In the traditional 3-at-front 6-at-back type gear setup, you aren't supposed to use them all -- combinations like outermost front with innermost rear or innermost front with outermost rear aren't good for the chain. For the rest, it depends on the terrain, but if you're anywhere hilly you will likely be wanting both the lowest and the highest gear you've got.
all my bikes have the Rohloff Speedhub gearing - 14 gears with no duplication, perfect chainline geometry and up to 10,000km between replacement of parts
An amazing product with around a 500% gear range iirc, and everyone I know who has one loves it. But at about £1300-1500 you need to really want one.
The hub alone weighs 1.8kg so fuck that. My whole bike weighs 6.8kg.
I'm thinking of getting one for my handcycle because as well as the wide gear range I can am not going to get stuck at an uphill junction when I've forgotten to change down.
As for the 1.8kg... I just look at my belly to see where I ought to be able to save way more than enough to compensate for that ;-)
it is going to be very very interesting watching the Tory backbenches over the coming weeks. They have a leader they did not pick, lots of big beasts back with them and a new economic policy that poleaxes the levelling up agenda they were elected on.
If you look at the list of "special economic zones" under consideration you will see that large chunks of ex-red wall seats are covered. This is their pivot - Vote Tory, Secure that SEZ, be Better Off.
Except that a large majority of these places will be turned down - you can't have most of the populated areas in a SEZ or it loses all meaning. And the ones who "win"? Its corporate piracy as already being enacted quietly in places like Teesside. Go read the expose of the Redcar Steelworks Development and tell me that isn't the plan - an eastern-european style robber baron capitalism where the corrupt state hands over assets to its mates for nothing.
The detail of this will be interesting to watch. It appears at first glance to be a far more substantial program than anything previously so branded, FWIW. I'm inclined to share your cynicism over it, but we'll see.
"One of the most unequal countries in the world" is a little OTT.
And still defending the Scot Gov's "rent freeze", when her own Scot Gov figures show that rents in Scotland - at least private rents - are down by approx 20% in real terms in a decade.
And in a totally unrelated matter, students are really struggling to find accomodation in Edinburgh, Dundee and Aberdeen. Possibly elsewhere too but these are ones I know about.
Well this was certainly a bigger fiscal event than I'd expected.
Thinking it through and absorbing it, it seems across the board that everyone working for a living is going to be better off. That's extremely significant.
We've got the biggest tax rates in over 70 years and we're still short of money and not growing, so this is absolutely the right thing to do in my eyes. Plus as I've noted before, we went into this recession with a fairly balanced budget and debt to GDP going down instead of a ballooning deficit and debt to GDP going up as we did pre-2008.
Hopefully the new tax rates attract more immigration of high paid jobs which results in more taxes and more growth too.
Work should pay more for everyone now. Anyone who's not working, time to get a job.
Everyone working for a living is not going to be better off because of inflation, which is increased by government borrowing.
Inflation has ballooned under Rishi Sunak's policies and not Liz Truss's.
There hasn't been very long under Truss's policies... but we've already seen the £ fall to historic lows, which means inflation up.
Most major currencies are plunging against the US dollar, as you well know.
$1.1026 a few minutes ago
Euro below 97¢
That 75bps Fed rise is killing pretty much every other currency this week.
Japan 259% Italy 151% US 134% France 113% Canada 112% UK 95% Germany 69%
That said, the deficits look quite different:
US -15.49% Japan -8.95% UK -7.99% Italy -7.2% France -6.5% Canada -4.71% Germany -3.70%
Those figures have calmed my fears a little bit. To some extent the game is not being too out of line with comparable countries.
The deficit numbers do worry me. I would rather have a somewhat larger debt and a smaller or non existent deficit as at least then you can start to do something about the debt.
Kwarteng has said: "Growing the economy creates growing tax revenues, which pay public services. Growing the economy creates growing tax revenues, which pay public services."
How much growth is needed to make up for the £45 billion reduction in tax revenue? OK, this is my attempt at a back of an envelope calculation. Please do correct me! Let's say tax revenue is 30% of GDP, so to make up for £45 billion, you need the economy to grow by £45B/0.3 = £250 billion. UK GDP is £2.7 trillion, so growth of £250 billion would be 9¼%.
The highest growth ever achieved since 1949 was 7.5% last year, with post-COVID bounce back. 6.5% was achieved in 1973 following Barber's dash for growth, which was followed by one of our worst recessions.
We are not going to achieve 9¼% growth. These tax cuts will not pay for themselves. Public spending will have to be slashed.
I think UK GDP is actually nearer £2.2trn, 2.7trn may be in dollars. But the bigger flaw is that you are imposing a time scale of a year on this. If the changes resulted in the UK growing 2% faster over 5 or more years then the costs of the package will gradually be offset and then the shortfall can be recovered. Its a risk, no question, but as Simon Clarke put it this morning doing nothing is a risk too. In fact, its not so much a risk as a certainty: the current level of public spending and services cannot be sustained on the current economy with low growth.
You are right! 2.7trn was $. Thanks.
OK, so £2.2trn. £250 billion growth would be 11.4% growth. Even less likely.
But, yes, you're right, growth is cumulative. So, to achieve 11.4% growth over 5 years, we need the 5th root of 1.114. That means 2.2% extra growth per year. That's more feasible, but if you amortise over 5 years, you've got this large additional debt that's built up while you wait for additional growth to catch up (plus the interest to be paid). I would also suggest 2.2% extra growth is still difficult to achieve. It certainly won't be achieved with discredited trickle down economics.
Clarke is right that doing nothing is a risk too. However, as ever, just because something needs to be done doesn't mean this something is the answer. There are clearly many, many alternatives. As per the CBI, what about investing in education and training, in encouraging R&D? What about a focus on productivity? Or what about investing in and reforming social care?
Politicians' logic:
We must do something.
This is something.
Therefore, we must do this.
Alternatively:
All cats have four legs
My dog has four legs
Therefore, my dog is a cat.
At least this "something" is something different than what's been tried in the recent past.
Mad right-wing, Lafferian tax cuts have been tried plenty in the recent past in other parts of the world and they never worked.
As far as I'm concerned they've worked when they've been consistently tried across the board, from extremely high bases.
What doesn't work is jacking up taxes on some, to pay for tax cuts for others, or abolishing taxes that were already low. That hasn't happened here, this is consistent tax cuts for all
Also there is demonstrable evidence that Sunak's policies are failing. His tax increases are fetching nowhere near what was expected of them, whilst the economy tanks and inflation soars.
The Laffer curve may or may not work, but high taxes certainly do not.
Exactly, I am curious from those who are so critical how much of a compound growth differential they're expecting from this? Literally no growth differential at all, despite everyone working for a living having more money in their pockets relative to this not happening? Or 1% per annum? 2%?
People are acting like it will have zero change at all, which is not realistic.
There's no such thing as "investing" in day to day spending. That mantra is why we have such shite and inefficient public services. We've "invested" in people rather than capital so the fixed cost base is insanely high already and impossible to cut.
It's entirely possible that the government are doing the wrong thing at the wrong time, but they do seem to have grasped that we can't tax our way to prosperity, and we won't get necessary investment and growth without making some big changes. I've no idea if what is being done will work, but I can't see how even more tax and spending would work either.
Ah there you are. I have a question. As I was out on my Apollo Highway (or is it Highway Apollo) this morning I pondered the 18 gears. I use three at most.
When you are proper bicycling do people use each of those for 18 different types of terrain?
In the traditional 3-at-front 6-at-back type gear setup, you aren't supposed to use them all -- combinations like outermost front with innermost rear or innermost front with outermost rear aren't good for the chain. For the rest, it depends on the terrain, but if you're anywhere hilly you will likely be wanting both the lowest and the highest gear you've got.
all my bikes have the Rohloff Speedhub gearing - 14 gears with no duplication, perfect chainline geometry and up to 10,000km between replacement of parts
An amazing product with around a 500% gear range iirc, and everyone I know who has one loves it. But at about £1300-1500 you need to really want one.
The hub alone weighs 1.8kg so fuck that. My whole bike weighs 6.8kg.
I'm thinking of getting one for my handcycle because as well as the wide gear range I can am not going to get stuck at an uphill junction when I've forgotten to change down.
As for the 1.8kg... I just look at my belly to see where I ought to be able to save way more than enough to compensate for that ;-)
I vaguely remember they don't like shifting under load. Whether you can shift and then pedal on the hill?
Could I just point out that the Govt haven’t remotely got an electoral mandate for all this.
Except for an ~80 seat majority.
Constitutionally you are correct - parliament is sovereign, and MPs can do whatever they like once there. However, the political norm is that MPs run on a manifesto and then don't directly act in contradiction of this.
Governments are always breaking manifesto pledges. Indeed there have been court cases brought by those disgruntled with this fact. They have always failed.
That's fantastic news. Legalise fracking to distract the Neanderthals on the Tory backbenches, and then allow onshore wind to go ahead to rapidly reduce the amount of gas we need to burn.
Personally I'm not a fan of onshore wind on farmland or countryside; we already have substantial reductions in gas usage to generate electricity by offshore wind.
Well this was certainly a bigger fiscal event than I'd expected.
Thinking it through and absorbing it, it seems across the board that everyone working for a living is going to be better off. That's extremely significant.
We've got the biggest tax rates in over 70 years and we're still short of money and not growing, so this is absolutely the right thing to do in my eyes. Plus as I've noted before, we went into this recession with a fairly balanced budget and debt to GDP going down instead of a ballooning deficit and debt to GDP going up as we did pre-2008.
Hopefully the new tax rates attract more immigration of high paid jobs which results in more taxes and more growth too.
Work should pay more for everyone now. Anyone who's not working, time to get a job.
Everyone working for a living is not going to be better off because of inflation, which is increased by government borrowing.
Inflation has ballooned under Rishi Sunak's policies and not Liz Truss's.
There hasn't been very long under Truss's policies... but we've already seen the £ fall to historic lows, which means inflation up.
Most major currencies are plunging against the US dollar, as you well know.
$1.1026 a few minutes ago
Euro below 97¢
That 75bps Fed rise is killing pretty much every other currency this week.
Also the rhetoric from the Fed I think. I still think, in the long run, this is a bigger problem for the euro than sterling, because the ECB is more limited in what it can do, but we'll see.
it is going to be very very interesting watching the Tory backbenches over the coming weeks. They have a leader they did not pick, lots of big beasts back with them and a new economic policy that poleaxes the levelling up agenda they were elected on.
If you look at the list of "special economic zones" under consideration you will see that large chunks of ex-red wall seats are covered. This is their pivot - Vote Tory, Secure that SEZ, be Better Off.
Except that a large majority of these places will be turned down - you can't have most of the populated areas in a SEZ or it loses all meaning. And the ones who "win"? Its corporate piracy as already being enacted quietly in places like Teesside. Go read the expose of the Redcar Steelworks Development and tell me that isn't the plan - an easter-european style robber baron capitalism where the corrupt state hands over assets to its mates for nothing.
Sure you can, if your objective is to make sweeping changes to the way the whole country is run, but with minimal debate and scrutiny.
"One of the most unequal countries in the world" is a little OTT.
And still defending the Scot Gov's "rent freeze", when her own Scot Gov figures show that rents in Scotland - at least private rents - are down by approx 20% in real terms in a decade.
And in a totally unrelated matter, students are really struggling to find accomodation in Edinburgh, Dundee and Aberdeen. Possibly elsewhere too but these are ones I know about.
Government-imposed rent controls lead to shortages of accommodation, really? Wow!
Is there any example, anywhere or ever, of a successful rent control scheme?
Comments
If it is what was announced in the IRP, then they are complicit in misleading the House because that is infeasible. Literally, it cannot be done.
https://www.telegraph.co.uk/football/2022/09/22/Mansfield-town-early-kick-off-floodlights-cost/
Has that now been formally ditched?
Today's mega budget gives an answer. It may prove to be the wrong one, but it is at least an attempt at an answer.
A classic case of German overengineering.
There are only really a few use cases where it makes sense. Round-the-world take-everything-with-you bike touring - or those cycle taxis that get used every day in London/Cambridge etc. are the only two I can think of.
Otherwise, I’d advise against the Rohloff, personally.
Not BUILD MORE HOUSES.
Instead, jack up prices, lovely if you already own a home.
Both all in.
This is the next election's battlefield
I have little idea how the Tories will perform in the Red Wall, intuitively far worse than Boris did. The betting question now is do Labour take enough of those seats back that they wangle a coalition / confidence & supply govt with the SNP or not. With all that entails. As I said yesterday, it feels very like the middle of the 2010-15 Parliament to me.
Why take the risk? At least continue to steer a steady hand on the economy. But to blow the whole thing up …
Anyone who's not working full time, can get a job.
Since all the MTD stuff has come in I've used https://www.absoluteexcelvatfiler.co.uk/ to submit returns. It's £40/year and you can do all your paperwork by inkwell and pen just putting the numbers directly into that if you want.
Their worst nightmare is the mess this is going to result in - with no extra growth, no extra tax revenue and a budget deficit that can't continue on the never never...
Died 'suddenly, yet peacefully' is all we know.
"One of the most unequal countries in the world" is a little OTT.
And still defending the Scot Gov's "rent freeze", when her own Scot Gov figures show that rents in Scotland - at least private rents - are down by approx 20% in real terms in a decade.
Seems only fair.
And Freeagent will solve a lot of problems painlessly.
NI is mainly evaded by people not on PAYE, rather than working people.
In your everyone-must-work, no-welfare-state for those who haven’t paid in utopia, he’s fucked.
I’m starting to think there’s a real chance his care funding will dry up in the coming years and i’ll have to care for him, 24/7.
If Labour get in at the next election, I suspect the electorate will then back them at the election after too. Generally, the electorate seem to recognise that new Governments need some time to turn things around.
The other part went with the Salo regime - seemed to devolve into a particularly nasty and atrocity prone land based unit.
Except that a large majority of these places will be turned down - you can't have most of the populated areas in a SEZ or it loses all meaning. And the ones who "win"? Its corporate piracy as already being enacted quietly in places like Teesside. Go read the expose of the Redcar Steelworks Development and tell me that isn't the plan - an easter-european style robber baron capitalism where the corrupt state hands over assets to its mates for nothing.
Under Sunak, the tories were manifestly going out of business. This way, the tories have a chance to survive.
Under Sunak, they would have been destroyed.
https://twitter.com/patrickkmaguire/status/1573224189473226752
Mark Fullbrook, PM’s chief of staff, addressed Tory MPs at No 10 last night.
Doesn’t sound quite like he won hearts and minds…
One casualty of the reshuffle describes it as a “lecture from Mark Fullbrook mostly about Mark Fullbrook”
“He spoke for the most part about the importance of unity, after he’d overseen the most divisive reshuffle in the party’s history.”
Near-total lack of backbench goodwill for the new regime - and particularly its whipping operation - will make selling today’s measures harder...
So possibly some complication thereof
One assumes that the Premier League stadia have mostly switched to LED lights by now, which are much cheaper to run but require a huge capital investment.
Fun to mock the writing style as you have done, but I did find the second book a lot easier to follow who was talking...
If you want more wind power, Dogger Bank etc is barely touched. On a timescale of years, increasing offshore wind is pretty much equal in difficulty to onshore. And the latest, most efficient turbines can’t be installed on land. Too big.
What doesn't work is jacking up taxes on some, to pay for tax cuts for others, or abolishing taxes that were already low. That hasn't happened here, this is consistent tax cuts for all
Personally I spent my £1500 on a Gruber Assist, which also weighs around 2kg, and the Bike weighs 13kg.
https://www.bikeradar.com/reviews/bikes/electric-bikes/gruber-assist-kit-review/
"No, not today"
"People go on the train"
"Yes"
"We people"
Yesss...
"We go on the train?"
About that point I got some insight into how difficult the next 20 years were going to be.
The Laffer curve may or may not work, but high taxes certainly do not.
As for the 1.8kg... I just look at my belly to see where I ought to be able to save way more than enough to compensate for that ;-)
It appears at first glance to be a far more substantial program than anything previously so branded, FWIW.
I'm inclined to share your cynicism over it, but we'll see.
Euro below 97¢
That 75bps Fed rise is killing pretty much every other currency this week.
People are acting like it will have zero change at all, which is not realistic.
The yen, too, is vulnerable.
Housing - not solved
Transport - not solved
Tuition fees - not solved
VOTE.
Is there any example, anywhere or ever, of a successful rent control scheme?