Beginning to See the Light; Mind the Gap

 

‘Ooh, a storm is threatening

My very life today

If I don’t get some shelter

Ooh yeah I’m gonna fade away’

 
As I wrote in ‘Trading Places’, Johnson elevation to party leader and PM is just another example of the Conservative’s cynical manipulation of the electorate. They knew he was a clown, but they gritted their collective teeth because they thought he could deliver an election victory.

Because of their never-ending pursuit of power, the party’s problems go much deeper than just Johnson, or MPs simply worrying about their majorities.  If, as I expect, there is to be a new Tory leader it should be followed immediately by a general election, allowing the electorate decides on who gets to govern.

Levelling-up will again be a hot topic. Recent crises, such as the GFC and Covid, have benefitted the uber-rich. The richest 1,000 people saw their fortunes double in the first seven years after the financial crash.

During Covid Britain produced a record number of new billionaires, whilst their US counterparts enjoyed almost a two-thirds jump in their wealth during the first 18 months of the crisis.

At $4.8tn, the combined fortunes of US billionaires are almost equivalent to the size of the entire Japanese economy.
 

‘During Covid Britain produced a record number of new billionaires, whilst their US counterparts enjoyed almost a two-thirds jump in their wealth’

 
As I wrote in last weeks ‘It’s harder to speak out than keep quiet’, the wealth gap grew in the 1980s aided by the decline in progressive taxation, the deregulation of finance, the shattered power of trade unions, diluted antitrust legislation, and the rise of large quasi-monopolistic businesses such as Facebook and Amazon.

More recently it has been the no-strings government help for businesses and QE that drove up asset prices rather than work ethic or entrepreneurial skills that has led to billionaires’ wealth multiplying. The work of the masses has benefitted a select few.

QE and ultra-low interest rates weren’t supposed to last, the consensus was that near-zero interest rates were an extraordinary measure that would be soon reversed as the economy recovered.

However, there were some dissenters such as Gary Stevenson, formerly a trader at   Citibank. ⁽¹⁾

He believed that the continued economic weaknesses post-2008 would keep rates low. His rationale was simple; when ordinary people receive money, they spend it, stimulating the economy, whereas the wealthy tend to save it.

In addition, he understood the underlying economic inequality prevalent in several economies, based on the concentration of wealth among a select few.
 
‘If working-class people don’t have the money to spend, they won’t; and as they’re plunged into debt simply to cover their families’ cost of living, consumer demand is sucked out of an economy based upon it’.
 
Whereas the super-rich tend not to invest much of their wealth into productive parts of the economy, preferring assets such as property, and art.

Here we have the subtle difference between saving and investing. As the chartered accountant Richard Murphy says;
 
‘Investment is the creation of new capacity to undertake economic activity, which is almost universally funded by new bank loans. It’s very rarely funded by share capital, except generally with very small microbusinesses.’ ⁽²⁾
 
As a result of this burgeoning inequality, many people are now advocating a wealth tax.

Whilst, fundamentally, I agree with this, I fear the transitory nature of the super-rich will simply see them move to a location that is more favourable. For something like this to work it needs to have global reach. Living in London or New York is great whilst it’s ‘efficient’, but as we saw in the 1970s people were quick to become tax exiles. The shops, restaurants, and other requirements of the super-rich are equally transitory.

One of the ways the super-rich use their money to benefit themselves is by making political donations, thus ‘ensuring’ they have governments that are ‘friendly’, The leaked ‘Pandora Papers’ showed the extent of the in British politics.

The following link shows examples of people making very sizeable donations to the Tory party:

https://www.theguardian.com/commentisfree/2022/jan/17/party-donations-british-politics-funding-pandora-amendments-elections-bill

There is also accusation that the new Tory chairman, ‘Bonanza’ Ben Elliot, has promised the wealthy access to Tory politicians in exchange for donations.

The ‘Leave’ campaign was the beneficiary of multimillion-pound loans from Arron Banks’s Isle of Man-based firm, Rock Holdings. Whilst the National Crime Agency eventually dropped its investigation the Electoral Commission was so worried by the agency’s conclusion that it warned the outcome raised concerns about the ‘apparent weakness’ in the law that risks allowing ‘overseas funds into UK politics’.

As a result of this a cross-party group of MPs has tabled the ‘Pandora amendments’ to ensure that party donations come from profits made in the UK, and to establish a new call-in regime that allows the Electoral Commission to investigate suspicious donations on national security grounds.

Last month, the Chatham House thinktank warned that ‘Westminster, and the Conservative parliamentary party in particular, may be open to influence from wealthy donors who originate from post-Soviet kleptocracies, and who may retain fealty to these regimes’. Parliament’s intelligence select committee has said, ‘If it [the Electoral Commission] is to tackle foreign interference, then it must be given the necessary legislative powers’.

From one side of the wealth divide we move to the other; a report entitled ‘State of the North 2021’, produced by IPPR North, the northern branch of the Institute for Public Policy Research thinktank, compares levels of public investment in London and the south-east with that in the north. The report found that, in the 5-years to 2019/20, London received the equivalent of £12,147 per person, in the north the figure was only £8,125. Treasury data shows that increasing funding to the north to match London would have cost an additional £61bn over the 5-years.
 

‘London received the equivalent of £12,147 per person, in the north the figure was only £8,125’

 
This shows how pointless the £4.8bn offered by Rishi Sunak is. As the report states in Germany successive governments have spent an average of €70bn a year reducing regional divides since reunification in 1990.

The SE has one-third of the UK population but accounts for 45% of its economy and 42% of its wealth.

The report follows on the heels of the decision to scrap the eastern leg of HS2 from Birmingham to Leeds, whilst a proposed high-speed line between Manchester and Leeds was downgraded. As the chair of the Northern Research Group of Tory MPs, Jake Berry, said, were ‘voters in the north right to take the prime minister at his word’.

Whilst a lack of activity is the issue in the North, the issue in some leafy parts of the SE is too much activity. Villages, such as Tudeley, near Tonbridge, Kent, are threatened with the development of a nearby ‘garden village’, more specifically, a mile-long estate of 6,500 houses.
 

‘The proposed housing developments on greenfield sites are likely to provoke a backlash from Tory heartland voters’

 
The government is planning a series of garden villages and towns on greenfield sites and protected areas of outstanding natural beauty (AONB) across Kent, often referred to as the garden of England.

There are at least seven more garden developments proposed. If the housebuilders get their way, Otterpool Park near Folkestone, will have 10,000 homes, Highstead Park near Sittingbourne will have 9,250, five schools and a health centre, and Borough Green near Tonbridge, will have 3,000 homes built on green belt land and an AONB.

Garden developments attract special funding from the government, so developers often attach the label to projects.

Protest groups have sprung up across the county. Save Kent’s Green Spaces, which organised a ‘day of action’ on 28 November last year, when the activists marched and rallied.

There are 17 MPs in Kent, 16 Conservative and Labour’s Rosie Duffield in Canterbury. The proposed housing developments on greenfield sites are likely to provoke a backlash from Tory heartland voters.

As a guide, last June in the Chesham and Amersham byelection, the LibDem overturned a 16,000 majority in a what had previously been Tory stronghold, with a 25.2% swing, largely on the back of local opposition to HS2 and housing development. If this was replicated, all 16 of Kent’s Tory MPs would be looking for new jobs.

Tom Tugendhat, Tory MP for Tonbridge and Malling, says that developments such as Tunbridge Wells Garden village undermine some of the most important policies of the government.
 
‘Of course we need new homes for young people in our community and to give people somewhere for their families. But the government’s climate change commitments make some of these decisions pretty strange. We can’t go around bulldozing fields when we need to maintain our green spaces to meet our climate commitments.’
 
Vicky Castle, content editor for news site Kent Live, says the issue is turning previously quiescent people into activists.
 
‘These are angry, knowledgeable people and they’re quite loud,’ she explains. ‘The local Tory MPs are saying, ‘We don’t want this’. And central government turns around and says, ‘Tough, you’re having it’. It’s radicalising local people because they care about these things. You drive around the county for one day and it looks completely different to how it did five years ago. People notice that and they’re worried.’
 
We finish with rising energy bills, something the government continually refuse to acknowledge at its peril

The Joseph Rowntree Foundation (JRF) said that while households across the board faced bill increases of 40% to 47% from April, there would be vast differences in the ability of families to cope.
 

• Energy bills would amount to 6% of the average income of a middle-income family
• Rising to 18% for a low-income family, and
• 25% for lone parents and couples without children,
• Single-adult households on low incomes could be forced to spend 54% of their income on gas and electricity

 
‘Rising energy prices will affect us all but our analysis shows they have the potential to devastate the budgets of families on the lowest incomes. The government cannot stand by and allow the rising cost of living to knock people off their feet,’ said Katie Schmuecker, the deputy director of policy and partnerships at the JRF.

The warning came as one of the UK’s most respected financial advisers, Martin Lewis, said:
 
‘We absolutely know we need a substantial increase in the billions of pounds funding to vulnerable people, and people on low incomes, or it is not an exaggeration to say some will have to choose between heating or eating, and that is not appropriate in one of the world’s richest economies and a civilised nation,’
 
‘What we can’t get away from is we are going to need to put money into the system or we are going to have an absolute, not a relative, an absolute poverty crisis in this country, with people really being unable to eat or dying because of the cold.’
 
JRF said the impact of energy costs would be especially harsh on families that have been trapped in ‘deep poverty’ in recent years. About one in five children were in families classed as being on low incomes for three of the four years between 2016 and 2019, meaning for many, poverty was ‘all they have ever known’.

‘Broadly speaking, there seems little prospect of reversing the trends since around 2012/13 of rising child poverty (which rose by four percentage points to almost a third of children by 2019/20) and rising pensioner poverty (which has risen by five percentage points to almost a fifth of pensioners by 2019/20),’ the JRF report said.

If the fact that in 2022 we have rising child and pensioner poverty doesn’t shame this government then nothing will. The Average Tory MP will just shrug their shoulders and think of their majority. Once they realise that those worst impacted don’t vote for them, they can move on.

Sad isn’t it.
 

‘In my life

Why do I give valuable time

To people who don’t care if I live or die?’

 
Notes:

1. https://www.newstatesman.com/encounter/2021/11/gary-stevenson-i-knew-the-markets-were-wrong
2. https://www.taxresearch.org.uk/Blog/richard-murphy/

 
Normal service is restored after this week’s ‘Studio 54 Booze-up Special’ as Philip looks at the wealth gap, and how since the 1980s consistent right of centre governments have benefitted the few – ‘even the Blair / Brown years saw Labour take the centre ground as a route to power, and consequently leaving their traditional policies behind.’

Levelling up is a well-trodden path as Philip says: ‘Whether Johnson was ever serious about levelling-up we will never know. But then, is he serious about anything. To paraphrase my post-election article, why on earth did the turkey’s vote for Christmas.’

The level of wealth inequality is obscene, and the pandemic has made things immeasurably worse; as inflation hits a 30 year high, NI contributions are hiked, and there is the potential for fuel bills to soar by 50% there is the very real prospect of the poor having to choose between heating and eating. In one of the wealthiest countries in the world it is a disgrace that children and the elderly are being forced into poverty, and many may die.

In France, majority state-owned EDF has pegged its prices at one-fifth of the current market price; on this side of La Manche, Rishi Sunak is proposing a one-off payment of £500 which will barely touch the sides for the very poorest paying the highest tarrif on pre-pay keys.

‘As the red wall returns to being red, the question is what colour will the blue wall turn as government house building policies further exacerbate the damage done by Brexit and the Culture Wars in its homelands?’

With massive development planned across Kent, the Tories could live to regret its decision to duke it out with ‘The Disgusteds’ of Tunbridge Wells; council leader David Jukes has said that he would never vote Conservative again all the time Boris remains in No10.

Sixteen out of the seventeen MPs in Kent pack down with the Tories, but a swing of the magnitude of the one in Chesham and Amersham would see them packing their Iron Mountains; however, no-one could accuse Kent MPs of rabble rousing in protection of their county – they know that to gainsay Tory HQ is to hand in your resignation – but if they do not stand up to protect the Garden of England from the desecration of the green belt and AONB it would be a reasonable question to ask what they are for.

Tonbridge and Malling MP Tom Tugendhat opposes this unpopular development due in no small part to the damage to the environment of concreting over green fied sites. However, his constituency, and that of neighbour Greg Clark in TW face an environmental disaster as in the face of a climate emergency, Gatwick airport plans to add hundreds of thousands of flights a year under the fundamentally flawed ‘Making Best Use’ policy, creating what CAA describes as ‘noise sewers’ and spewing out millions of tonnes of GHGs.

As might be expected, local residents are incandescent; MPs less so. It is government policy to ‘modernise airspace’ – sat nav for planes, purely to cram in more flights – but hardly a peep as the proposal replaces the shared burden of amenity with the pesecution of a minority.

I’m sure Philip would point out that a minority cannot unseat an MP, but have we really fallen so far into moral bankruptcy?

Government noise body ICCAN said that aviation noise, particularly concentrated aviation noise, and particularly at night shortens lives; pretty unequivocal – so Grant Shapps disbanded it.

The emerging cost-of-living crisis is truly terrifying and as caps to energy tarrifs start to be removed, it could be carnage; if Boris enjoyed a honeymoon period, those on the stump whenever the next general election comes around can expect short shrift from the ‘No Longer Managing’. Or possibly, in the North, the ‘Fook Right Offs’.

Lyrically, we start with the ‘Stones and “Gimme Shelter”, which might be quite apt soon! We finish with the Smiths and “Heaven Knows I’m Miserable Now” – says it all really.

And as I joined 95,786 others to test positive – now that Boris’ bosses have told him the pandemic is over – we learned of the sad demise of the larger than life Mr Loaf.

I’ve indulged myself with I’d Do Anything For Love (But I Won’t Do That) – is there anything Boris won’t do to cling on in there? Enjoy!
 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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