Is Rachel Reeves becoming the new Liz Truss?

[Spartacus]

In 2022, Liz Truss and Kwasi Kwarteng delivered what was seen as a disastrous budget by the markets and it is claimed they crashed the economy. 

Rachel Reeves appears to be going after farmers, Pensioners, pension pots and increasing NI for employers, which whilst not taxing "working people" will see prices going up to cover the costs for already squeezed businesses, all this whilst changing how the government fiscal rules work.

The change of administration in the States may impact our exports to them (potential tarrifs) which also may see growth stall slightly. 

Will her gamble work or will we as individuals and a nation see stagnation in growth as businesses reduce investment whilst prices go up. 

With the farmers protest planned on Tuesday 19th, it is starting to feel like the bad old days of the winter of discontent (1978/79) again. 

Whilst investment is needed to help the country grow, are we in danger of not supporting the businesses and people who normally are responsible for growth? 

Discuss. 

[teddyboy23]

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Edited November 14, 2024 by teddyboy23

[Jenijenjen]

4 hours ago, Spartacus said:

, it is starting to feel like the bad old days of the winter of discontent (1978/79) again. 

Deliberate scaremongering

[malumbu]

A silly title, Truss set such a high bar I doubt whether anyone can ever match her level of incompetence and level of delusion.

Paul Johnson spoke on inheritance tax on one of the political programmes.  Any inheritance tax is controversial, and he considered farmers should not be an expectation

I was underwhelmed and incredibly disappointed that there was no increase in fuel duty; Labour chickened out and I will be telling Rachel's sister this view.

Paul Johnson has written a good article on his analysis and that the budget was not at all revolutionary

https://ifs.org.uk/articles/budget-was-non-event-and-kicked-big-decisions-down-road

If you want something to worry about look over the Pond

Reality check - pound crashed against the dollar and other major currencies following Brexit vote - 1.70 to 1.20, and has never recovered

Truss's mini budget sent it to almost an all time low 1.08, from around 1.20 the week before

Reeves budget it lost a cent, and fared worse since Trump won the election.

Edited November 14, 2024 by malumbu

[Spartacus]

45 minutes ago, Jenijenjen said:

Deliberate scaremongering

Is it? Let's see 

31 minutes ago, malumbu said:

Paul Johnson spoke on inheritance tax on one of the political programmes.  Any inheritance tax is controversial, and he considered farmers should not be an expectation

Farming is a tough gig with increasingly lower returns, if farms have to sell off land to pay inheritance tax it will reduce their ability to survive. Which in real terms could mean more farm land lost and more reliance on imported food which sees money flowing out, not in to the country. 

But I guess as long as you get cheap food that doesn't concern you 😉 

35 minutes ago, malumbu said:

I was underwhelmed and incredibly disappointed that there was no increase in fuel duty; Labour chickened out and I will be telling Rachel's sister this view.

Lol "what about the cars"  again Mal... like a broken record.... 

Governments know that squeezing car drivers for more fuel duty will drive down income from taxes as people switch to electric, which would leave them with a black hole in income. Guess the fuel duty is a fine balancing act tiĺl enough electric cars have been sold to raise tax revenue from their use. 

[malumbu]

People are switching to electric cars irrespective of fuel prices.  100s of millions that could be spent on hospitals and schools for example have been lost due to fuel duty freezes and a supposedly temporary reduction.  Fuel is relatively cheap at the moment.  With a stonking majority when is it time to rightly take on motorists?

Farming, I simply referred to Paul Johnson of the IFS who knows more about the economy that you, I and Truss will ever know.

Food?  Au contraire.  It's too cheap, too poor quality and our farmers are squeezed by the supermarkets and unnatural desire to keep it cheap.  A lot less takeaways and more home cooking with decent often home produced, food should benefit most in our society.

Be honest, you simply don't like Labour. 

Edited November 14, 2024 by malumbu

[Spartacus]

Oh @malumbu so many incorrect assumptions in your last post 

Without knowing me you make assumptions about my financial experience, politics and yet again you cry "what about the motorists" 

Where will all that tax you say could be spent on hospitals and schools come from if everyone cycled? 

[HeadNun]

Labour was right not to increase fuel duty - it's not just motorists it affects, but goods transport. Fuel goes up, inflation goes up. Inflation will go up now anyway, and growth will stagnate, because businesses will pass the employee NIC hikes onto customers. 

I think farms should be exempt from the 20% IHT. I don't know any rich famers, only ones who work their fingers to the bone. But it's in their blood and taking that, often multi-generation, legacy out of the family is heart-breaking. Many work to such low yields, and yet they'll often still bring a lamb to the vet, even if the fees are more than the lamb's life (or death) is worth.

Food security should be made a top priority in this country. And, even tho the tax is only for farms over £1m, that's probably not much when you add it all up. I think every incentive should be given to young people who want to take up the mantle. 

[Earl Aelfheah]

On 14/11/2024 at 10:53, Spartacus said:

Rachel Reeves appears to be going after farmers, Pensioners, pension pots and increasing NI for employers, which whilst not taxing "working people" will see prices going up to cover the costs for already squeezed businesses, all this whilst changing how the government fiscal rules work.

Money has to be raised in order to slow the almost terminal decline of public services bought on through years of neglect under the last government. There is no way to raise taxes that does not have some negative impacts / trade offs. But if we want public services and infrastructure that work then raise taxes we must. 

Personally I'm glad that she is has gone some way to narrowing the inheritance loop hole which was being used by rich individuals (who are not farmers) to avoid tax. She's slightly rebalanced the burden away from the young, putting it more on wealthier pensioners (who let's face it, have been disproportionately protected for many, many years). And the NICs increase, whilst undoubtedly inflationary, won't be directly passed on (some will, some will likely be absorbed by companies); it's better than raising it on employees, which would have done more to depress growth.

Overall, I think she's sailed a prudent course through very choppy waters. The electorate needs to get serious... you can't have European style services and US levels of tax.

Borrowing for tax cuts, Truss style, it is is not.

Of course the elephant in the room (growing ever larger now Trump is in office and threatening tariffs) is our relationship with the EU. If we want better growth, we need a closer relationship with our nearest and largest trading block.

1 hour ago, HeadNun said:

Labour was right not to increase fuel duty - it's not just motorists it affects, but goods transport. Fuel goes up, inflation goes up.

We will at some point have to review tax on transport more radically (as we see greater up take of electric vehicles). The most economically rational system would be one of dynamic road pricing. But politically, very difficult to do

Edited November 15, 2024 by Earl Aelfheah

[malumbu]

If you are against the increase in fuel duty then you are surly against fuel duty full stop.  It has not kept up with inflation, I'm talking about getting it back on track.  Ultimately road user charging is the solution.

Labour will probably compromise on agricultural land inheritance by raising the cap so it generally catches the Clarksons of the world who are not bothered about profits from land beyond, in his case, income from a highly successful TV series and the great publicity for the farm shop and pub

Edited November 15, 2024 by malumbu

[HeadNun]

54 minutes ago, malumbu said:

If you are against the increase in fuel duty then you are surly against fuel duty full stop.  It has not kept up with inflation, I'm talking about getting it back on track.  Ultimately road user charging is the solution.

Labour will probably compromise on agricultural land inheritance by raising the cap so it generally catches the Clarksons of the world who are not bothered about profits from land beyond, in his case, income from a highly successful TV series and the great publicity for the farm shop and pub

I'm certainly not surly - it's Friday, so I'm in a delightful mood. 

As Earl Aelfheah said, the money has to come from somewhere. But Labour new that hiking fuel as well as employee NIC in would be a step too far - for businesses and consumers. It was the right decision for this moment in time.

Suggesting that someone who's against fuel duty increase on this occasion is against and fuel duty full stop is quite a leap. Why do you demonise everyone who doesn't think that owning a car is a cardinal sin? 

I'm not sure using Clarkson as an example of your average farmer holds much weight as an argument, but you know that already, Mal. 

[Rockets]

Labour seems to be taxing the many to get to the few in so many policies they have implemented.

Look at the farmer situation: yes there are some rich farmers but the vast majority are not and they are, in my mind, the very definition of a working person - the very people this country relies upon. Most are family businesses. They were re-running some of the Simon Reeves programmes on the Lake District and it was filmed just after Covid but they featured an 18 year old farmer who was took over his parents farm after they both died of cancer within months of each other. He and his school friends were mucking in to keep the farm going and continue the family business. Today, he would have been hit by a big tax bill too.

The challenge is Rachel Reeves' budget desperately needs growth and with the news today that the economy barely grew on, ostensibly, fears of what the budget was going to hit people with and the fact post budget many businesses are saying costs will have to go up due to the increases in employee NI but at the same time saying wage growth, and even jobs, will be impacted we may be heading towards a very nasty perfect storm.

Public services desperately need reform not just more money. Wes Streeting said that reform was needed in the NHS and he was talking in a manner more akin to a Tory health secretary than a Labour one!

[vladi]

I look to the future and clearly see that the law of unintended consequences will apply with a vengeance and come 2029 Labour will voted out of office.

As someone once said 'The trouble with socialism is that eventually you run out of other people's money'. 

[Rockets]

And I worry this Labour government with all of it's own goals and the tax increases is playing into Farage's hands. With Trump winning in the US, his BFF Farage is likely to benefit from strained relations between the US administration and the UK one. As Alastair Campbell said on a recent episode of The Rest is Politics who would not have wanted to be a fly on the wall of the first call between Angela Rayner and JD Vance....those two really are oil and water.

Scary, scary times right now and there seems to be a lack of leadership and political nous within the government at a time when we really need it - there aren't many in the cabinet who you think will play well on the global stage.

[malumbu]

If you read my post I expect a compromise with the raising of the cap on agricultural property so that far less 'ordinary' farmers do not get caught 

Clarkson is simply a high profile land owner who is not in the business as a conventional farmer.  Here's a nice article that seems to explain things well 

https://www.sustainweb.org/blogs/nov24-farming-budget-inheritance-tax-apr/

It's too early to speculate on 2029.  I expect that most of us who were pleased that Labour got in were not expecting anything radical.

Whilst floating the idea of hitting those looking to minimise inheritance tax, including gifting, like fuel duty they also chickened put.

I'm surprised that anyone could start touting for the Tories after 14 years of financial mismanagement and general incompetence. Surly not.  A very low bar for Labour but they must be well aware that there doesn't need to be much of a swing form Reform to overturn Labour's artificially large majority.  But even with a generally rabid right wing press, now was the opportunity to be much braver.

[HeadNun]

Labour was damned, no matter what it did, when it came to the budget. It loves go on about the black hole, but if Labour had had its way, we'd have been in lockdown for longer and the black hole would be even bigger. 

Am I only the one who thinks it's time the NHS became revenue-generating? Not private, but charging small fees for GP appts, x-rays etc? People who don't turn up for GP and out-patient appointments should definitely be charged a cancellation fee. When I lived in Norway I got incredible medical treatment, including follow up appointments, drugs, x-rays, all for £200. I was more than happy to pay it and could afford to. For fairness, make it somehow means-tested. 

I am sure there's a model in there somewhere that would be fair to everyone. It's time we stopped fetishising something that no longer works for patient or doctor. 

As for major growth, it's a thing of the past, no matter where in the world you live, unless it's China. Or unless you want a Truss-style, totally de-regulated economy and love capitalism with a large C. 

Edited November 15, 2024 by HeadNun

[malumbu]

Labour talks about, and hopefully will do something about, the determinants of poor health.  They're picked up the early Sunak policy on smoking and vapes.  Let's see how far they tackle obesity and inactivity. I'd rather the money was spent on these any other interventions eg mental health, social care and SEN, rather than seeing the NHS as income generating.

Edited November 15, 2024 by malumbu

[Rockets]

1 hour ago, HeadNun said:

Am I only the one who thinks it's time the NHS became revenue-generating?

No and Wes Streeting is heading in this direction because he knows the NHS is broken and was never built to cope with the demands currently being placed on it. A paid-for approach in some shape or form, and massive reforms, is the only way the NHS can survive - neither of which the left or unions will be pleased about.

 

[Spartacus]

This is an interesting analysis of why the economy just about grew by 0.1% over the past 3 months 

BBC News - UK economy barely grew between July and September - BBC News
https://www.bbc.co.uk/news/articles/cwygw982e3xo

It was potentially a by effect of the doom mongering talk before the budget.

[jazzer]

The problem is Starmer can't shut up about his dad being a tool maker, they made Keir,  a right prize tool. Reeves continually blames the previous Govt, but correct me if I'm wrong but inflation was decreasing, unemployment was stagnant, with decreases and the occasional increase, things were beginning to stabalise overall. 

 

Then we had the election 4 July when Starmer and co swept to power, three months on things are worse than they were before, yet Reeves continues to blame the former Govt. The national debt doubled overnight with public sectors all getting a wage increase and now the budget that penalises business with the increase in Employers national insurance. The result of which will be increased prices in the shops, increased inflation, increased numbers of redundancies, increased unemployment and increased pressures on the DWP to fund this   

Future growth will go backwards and become negative, farmers will no longer farm in protest against the Govt, more people will become poorer and unable to pay their bills, things will spiral out of control and we'll have a repeat of the General Strike until this bunch of inept politicians resign and Kemi and co prevent the ship from hitting the iceberg and sinking.  

Edited November 16, 2024 by jazzer

[HeadNun]

5 hours ago, Spartacus said:

This is an interesting analysis of why the economy just about grew by 0.1% over the past 3 months 

BBC News - UK economy barely grew between July and September - BBC News
https://www.bbc.co.uk/news/articles/cwygw982e3xo

It was potentially a by effect of the doom mongering talk before the budget.

There is no doubt that Labour's doom mongering when it came into office spooked the markets. Plenty of analysts and businesses said so pre-budget. And why the budget was leaked so much before its announcement, I do not know. Honestly, whoever is in charge of comms really needs to get the boot. 

I am so sick of hearing them bang on about 14 years of Tory decay - Labour repeatedly pressed the Tories for longer, more astringent lockdowns. It's largely thanks to the furlough scheme that we're in so much debt. I was such a staunch lockdown supporter at the time and now, looking back, it seems draconian. We're still paying the price in so many ways. 

[Rockets]

48 minutes ago, HeadNun said:

Honestly, whoever is in charge of comms really needs to get the boot. 

Their comms has been diabolical. The "son of a toolmaker" and "working people" soundbites may have placated an electorate before an election but they will come back to haunt you after it and will bite you hard if things don't go well. 

If they don't improve things soon it is going to be a long parliament for them and there are no signs things are getting better. Amazing as they had 14 years to prepare for this but being in opposition is far, far easier than running a country.

 

[HeadNun]

6 minutes ago, Rockets said:

Their comms has been diabolical. The "son of a toolmaker" and "working people" soundbites may have placated an electorate before an election but they will come back to haunt you after it and will bite you hard if things don't go well. 

If they don't improve things soon it is going to be a long parliament for them and there are no signs things are getting better. Amazing as they had 14 years to prepare for this but being in opposition is far, far easier than running a country.

 

What would you have done differently, Rockets? I cannot, for the life of me, think of a financial strategy that would have satisfied 'working people' and businesses and driven growth and reduced the deficit. But I'm no economist.

On another note, since we're bashing Labour, one thing that really got my goat was Labour's reaction to  Kemi Badenoch being elected leader of the opposition. When our own dear Ellie Reeves was asked for her reaction to KB's election, the first thing she said was "I'm proud that she's the first black woman to lead a political party, but..."

Congratulating someone for being black (she's Nigerian FFS, not 'black') and female is such an insult. You'd be forgiven for thinking that that's all Labour sees... and it completely detracts from her achievements as a politician. It's almost as if they were implying that she'd done well in spite of her race and sex. If that's not racist...

I think Kemi is an absolute nut job. People in her own party have said she'd start a brawl in an empty room and would cross the street to bite your ankle. But that kind of makes me like her. And if anyone can hold Labour's feet to the fire, she can. 

(Ex labour party member here, who voted Keir for leader of the party, BTW, in case anyone wants to start a pile-on and call me a Tory lover). 

[Sephiroth]

Right.  Already too many people saying “labour pushed for longer and more stringent lockdowns” which if nothing else, does seem to give credence the notion that yes people can be brainwashed 

 

Nothing ...  Nothing Labour pushed for was about longer lockdowns.  Explicitly, and very clearly they said “lock down early OR we will be locking down for longer “

 

ie they were trying to prevent the longer lockdowns we had   But “positive thinking” and “nothing to see here” from Johnson led to bigger problems 

 

as for the hand-wavery about the economic inheritance and markets being spooked by labour budget - look - things did get really really and under last government and they tried to hide it.  So when someone tries to address it, no one is going to be happy.  But pretending all was tickety boo is a child’s response 

[ianr]

9 hours ago, jazzer said:

The national debt doubled overnight with public sectors all getting a wage increase