Thursday 17 November 2022

Stewarding the Depleted State

The Tory budget's been, and over the next few days a whole lot of household cash will go. Economically speaking, just like the first round of austerity (which never really went away), Jeremy Hunt's prescription for fixing the crisis of the Tories' own making will only compound stagnation, cause more business failure, and drag the economy further down the post-Covid, post-Brexit spiral. His protestations that growth is at the heart of everything the government does are just words. In what was probably the best performance of her career, in reply to the statement Rachel Reeves had little trouble eviscerating Hunt and his miserable prospectus.

Enough people have written about the economics, but what ultimately matters is the politics. The 10.1% increase in the state pension from April demonstrates Hunt has resisted those suicidal Tory voices seemingly bent on breaking the triple lock. And the uprating of benefits, something of a reluctant measure forced on the government by Boris Johnson's past promises and, more importantly, a change in political climate, does at least allow Hunt and Rishi Sunak to cosplay as compassionate conservatives. Even if their delayed introduction means no help now, sees pensions and social security depreciate in real terms, and subjects Universal Credit recipients to even more conditionality checks. Meanwhile, as Hunt announced an increase in the energy price cap from April the Tories went out their way to protect their real people. No, not the mass base they've long successfully suckered, but the likes of the oil companies. Despite expanding the pitiful levy on fossil fuel profits Sunak introduced early in the year, the tax breaks for investing in exploration remain. No closure of the non dom tax scheme, no proper taxation of unearned income (dividends and rents), no cap on bankers' bonuses, and, incredibly, a tax cut on bank profits.

Particularly insidious are the Tories' cuts to the public sector. Current spending will be maintained, which means real term cuts across the board - with the exception of more money for the NHS and a bit more for education. But most of what is going to happen is getting stored up for after the next general election. How unlike the Tories to put party politics before everything else. With George Osborne brought in to advise Hunt and Sunak, the ruse has his cynical fingerprints all over it. Services don't get cratered this side of the election and so any anger and opposition cuts would stoke are put on the never never. Meanwhile, the Tories can retreat to a pre-2010 austerity comfort zone, which would undoubtedly get marketed as "compassionate cuts". This wouldn't win them the election - only complete disaster can now knock Labour off course. Allied to their grotesque anti-immigration posturing, it'd be enough to cohere the base so something remains from the ashes of the coming defeat. Labour then cop the flak for "fiscally responsible" cuts and the Tories return, reinvented, at the general election after. Why not carry on as if the party's long-term decline isn't a thing?

Hunt's budget offered no political surprises. The state's capacity to do things is in crisis after 12 years of cuts and neglect. The break down in basic functions, first a consequence of Tory policy, looks increasingly like a matter of deliberate policy as the Tories work to wind in the horizon of political possibility. This statement sits entirely inside this do-nothing logic, where doing nothing means ratcheting up the misery and condemning everyone to substandard services. A declining party stewarding a depleted state. The Tories have worked toward this scenario, and this is how they would prefer things to stay.

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Duncan said...

..."and the Tories return, reinvented, at the general election after". All the more reason for Labour to introduce PR so that this scenario becomes a non-starter!

Blissex said...

«The Tory budget's been, and over the next few days a whole lot of household cash will go. Economically speaking, just like the first round of austerity»

Ah the famous hallucination of austerity, when instead millions of families have been celebrating their booming living standards since 2010, thanks to rapidly sing professional fees, finance incomes, asset profits and rents.

Perhaps the "austerity" hallucination is not always an innocent mistake, but instead often is just propaganda like Cameron's "we are all in the same boat", a cynical attempt to fool the gullible lower classes that the upper-middle and upper classes are beeing squeezed too, when instead inflating business margins and inflating asset prices and rents are surging well ahead of "inflation".

Some forecasts are that real earnings will fall be 7% and real property prices will also fall by 9%, over the next couple of years *on average*. That's an average between a large minority of "winners" and a majority of "losers", people and areas. Real property prices is probably going to crash in the "pushed behind" areas, and so will real wages in the same areas or for lower class wage earners. But "winners" will for example enjoy their foresight in putting clauses in private rent and cellphone contracts that payments increase every year by 3-4% above RPI. Ka-ching!

«Allied to their grotesque anti-immigration posturing»

And yet there has been a big surge in immigration since 2016, a flood of new tenants, buyers and job applicants. Mostly kept quiet by media and commentators.

«The break down in basic functions, first a consequence of Tory policy, looks increasingly like a matter of deliberate policy»

Why should affluent middle and upper class people fund better “basic functions” for the lower classes, when they have cars, private pensions, property, and can easily afford private health and other services?

«This statement sits entirely inside this do-nothing logic, where doing nothing»

And yet I thought that the Treasury and BoE in the past few week put into play gigantic sums to intervene in the markets to support gilts and thus makes mortgages cheaper in nominal terms and even cheaper in real terms, as well as saving pensions for tory voters and investors.

«means ratcheting up the misery and condemning everyone»

Again it is not “everyone” it is just "losers" (the lower classes). We are not “all in the same boat together”, the common policies of Conservatives, New Labour, LibDems are for massive upwards redistribution, not hallucinated "austerity".

«to substandard services.»

Many affluent voters only care about rubbish collection and street lighting, and go private for everything else, they can well afford that with their booming earnings from capital gains, rents, and professional fees. The “substandard services” are inflicted only on "losers", not “everyone”.