Excellent clarity with just the right amount of snark, than you Ian. What I’m confused by is why the government needs to use taxpayer funds to subsidise winter fuel for pensioners. Can’t they just force the energy companies to set a lower tariff for the over 65s at source? Or cap it for everyone which would help keep inflation lower? The companies make massive profits and we pay to subsidise them!
Thanks Ian. Very helpful piece, because although I believe in them, it’s a bit hard to see the bigger picture without such explainers.
I just wish they had either held back with the WFP cuts until the budget, or announced a wider set of cuts early so that WFP wasn’t sat there like a malevolent festering mass for the Tories to whip up hate with. That seems like a bit of an own goal to me. It’s currently just sat there in isolation which hasn’t done them any good.
I know. But by making the announcement as a stand-alone it just gave their enemies fuel to build a screaming fire out of. Just saying there’s more to come hasn’t cut through.
The optics of it seem badly managed as far as damage limitation goes.
This is a valuable aid to understanding what the hell is happening. Sadly things are as bad as I feared but at least I mostly understand it. Thank you.
Having just enjoyed your recent Origin Story analysis of Macron, do you think Starmer is attempting to chart a similar vein of centrism? Obviously Starmer does not appear to possess Macron’s alacrity or audaciousness but do they have a similar vision do you think?
Thanks Ian - good to get into the weeds of things.
Read an interesting piece on New Zealand and how they undertake their national bookkeeping to best reflect national wealth - an idea Ken Clarke toyed with in the early 90s but couldn’t find any traction for.
Great analysis. Fundamental problem imo is that Net Zero investments are no investments at all. They simply replace stable low cost energy with unstable high cost energy.
Borrowing money and increasing taxes to invest in unproductive assets with no tangible net benefit to the economy is simply an economic cost that ultimately, inevitably devalues the currency and leaves all citizens less well off.
(and considering that the whole basis for Net Zero remains hypothesis poorly supported by real evidence, making it a central pillar of policy is baffling and irrational.)
A good summary, thanks. Hopefully the current will-they-won't-they will get fixed in the budget, because industry has zero trust in the Treasury to deliver what it says it will do. And lack of trust costs money. Early decisions, stuck to and not fiddled with because of short term issues, are the only thing that will win that trust back and reduce costs.
And yet, we see HMT now looking again at the Transpennine Upgrade, a scheme I was working on over a decade ago and which still hasn't been delivered, to see how it can penny pinch. Plus ça change.
I'm going to commit the twin sins of being very boring and talking about things in which I am absolutely not an expert. That said:
"The Conservatives pencilled in a one per cent increase in departmental funding. This is below inflation and therefore a real terms cut. Some departments are protected - health, education, defence and all that. But most are not. "
I'm not sure this is quite right: I think the Conservatives pencilled in a one per cent increase in departmental funding in real terms i.e. after inflation. I think the reason why this implies some heavy cuts is because of the protected departments: that is, we would expect the protected spending commitments to cause an increase in funding of (much) more than one percent, and therefore the unprotected departments implicitly make up the difference by having their funding cut. I think projected increases in population would also effectively result in further cuts per capita.
Excellent clarity with just the right amount of snark, than you Ian. What I’m confused by is why the government needs to use taxpayer funds to subsidise winter fuel for pensioners. Can’t they just force the energy companies to set a lower tariff for the over 65s at source? Or cap it for everyone which would help keep inflation lower? The companies make massive profits and we pay to subsidise them!
Price controls never work. More efficient to subsidise/top-up post-hoc imo
Thanks Ian. Very helpful piece, because although I believe in them, it’s a bit hard to see the bigger picture without such explainers.
I just wish they had either held back with the WFP cuts until the budget, or announced a wider set of cuts early so that WFP wasn’t sat there like a malevolent festering mass for the Tories to whip up hate with. That seems like a bit of an own goal to me. It’s currently just sat there in isolation which hasn’t done them any good.
It would have been too late to announce WFP at the budget on 30tg Oct (letters normally start going out in Oct saying what your entitlement is).
I know. But by making the announcement as a stand-alone it just gave their enemies fuel to build a screaming fire out of. Just saying there’s more to come hasn’t cut through.
The optics of it seem badly managed as far as damage limitation goes.
This is a valuable aid to understanding what the hell is happening. Sadly things are as bad as I feared but at least I mostly understand it. Thank you.
Helpful and interesting, thank you
Having just enjoyed your recent Origin Story analysis of Macron, do you think Starmer is attempting to chart a similar vein of centrism? Obviously Starmer does not appear to possess Macron’s alacrity or audaciousness but do they have a similar vision do you think?
Really helpful as usual.. thanks Ian
Thanks Ian - good to get into the weeds of things.
Read an interesting piece on New Zealand and how they undertake their national bookkeeping to best reflect national wealth - an idea Ken Clarke toyed with in the early 90s but couldn’t find any traction for.
Great analysis. Fundamental problem imo is that Net Zero investments are no investments at all. They simply replace stable low cost energy with unstable high cost energy.
Borrowing money and increasing taxes to invest in unproductive assets with no tangible net benefit to the economy is simply an economic cost that ultimately, inevitably devalues the currency and leaves all citizens less well off.
(and considering that the whole basis for Net Zero remains hypothesis poorly supported by real evidence, making it a central pillar of policy is baffling and irrational.)
A good summary, thanks. Hopefully the current will-they-won't-they will get fixed in the budget, because industry has zero trust in the Treasury to deliver what it says it will do. And lack of trust costs money. Early decisions, stuck to and not fiddled with because of short term issues, are the only thing that will win that trust back and reduce costs.
And yet, we see HMT now looking again at the Transpennine Upgrade, a scheme I was working on over a decade ago and which still hasn't been delivered, to see how it can penny pinch. Plus ça change.
I'm going to commit the twin sins of being very boring and talking about things in which I am absolutely not an expert. That said:
"The Conservatives pencilled in a one per cent increase in departmental funding. This is below inflation and therefore a real terms cut. Some departments are protected - health, education, defence and all that. But most are not. "
I'm not sure this is quite right: I think the Conservatives pencilled in a one per cent increase in departmental funding in real terms i.e. after inflation. I think the reason why this implies some heavy cuts is because of the protected departments: that is, we would expect the protected spending commitments to cause an increase in funding of (much) more than one percent, and therefore the unprotected departments implicitly make up the difference by having their funding cut. I think projected increases in population would also effectively result in further cuts per capita.
Excellent analysis and fits with the mood music played out of over the last three months.
Thank you. A big plus for me is the growing sense we are not suffering ‘government by 24 hour news cycle’ at the moment. Refreshingly pragmatic.
Unfortunately, Reeves believes in the kind of fantasy economics taught by academia. You need to refer to prof. Steve Keen: https://open.substack.com/pub/profstevekeen/p/britain-cant-afford-rachel-reeves?utm_source=share&utm_medium=android&r=1w1c61
Fascinating and entertaining post, thank you!
Thanks for this. Very helpful as always.
I don't like coffee though. I'm sure tea will do just as well.
Do agree. I needed this! Excellent, as always. Thank you.