Council budgets look a likely target when the Tory government seeks to balance the books and pay for its promises
Graham Watson's insight:
Richard Partington is of the view that the recent raft of new policy measures - Rwanda, increased defence spending and so on, has overlooked one key area again.. Local government, which has borne the brunt of spending cuts since 2010.
It's not sexy, it's not a vote-winner and it allows central government to highlight prominent instances of Labour-run councils going bankrupt, whilst conveniently avoiding similar Conservative-run disasters. However, irrespective whose in charge locally, it seems to result in ever-higher Council Tax bills for an ever-dwindling supply of local services.
Exclusive: Joseph Rowntree Foundation finds widening gulf between demand for tax cuts and reality for millions struggling
Graham Watson's insight:
Another Budget piece, this time it's the Joseph Rowntree Foundation highlighting the risk of a second 'lost' decade for the poorest in society and the possibility of ever-widening income inequality.
Annual poll of council leaders and top managers finds near-total collapse in confidence in their financial viability
Graham Watson's insight:
The grim state of local government finances is revealed in this Guardian piece that highlights the fact that 10% of them expect to go bust in the next year. That's not a healthy state of affairs, irrespective of your political persuasion.
Jeremy Hunt is looking at cutting billions in public spending to fund tax cuts in his Spring Budget.
Graham Watson's insight:
The 2024 Budget will see the Chancellor plot a course for the next year, and there's much discussion about the whether this will involve tax cuts, spending cuts, both or neither.
Whilst the Conservatives would see themselves as a low tax, small state party, I'd like to know where public services are going to be cut given the number of schools currently running deficits and other essential services cut to the bone.
Denied funds, local authorities are at breaking point and badly in need of reform as well as a touch of civic pride
Graham Watson's insight:
William Keegan looks at the shambles that successive governments have made of local government and the extent to which local councils can no longer discharge their responsibilities to the public. This is quantified by the news that 60% of public toilets in the UK have been shut since 2010.
It's depressing, but, alas, true, that the quantity and quality of public services has fallen and without a major rethink of how to supply them, the UK's supply-side, and its ability just to provide for its citizens is under serious threat.
Six million of the poorest people would need more than double their incomes to move out of hardship, says Joseph Rowntree Foundation
Graham Watson's insight:
If you are of the view that the poor are lazy, you can stop reading here. But if, like most humane and intelligent people you find poverty disturbing, then this article is for you.
In it, Richard Partington looks at the Joseph Rowntree Foundation's 2024 UK Poverty Report, which highlights the rather grim fact that it is now far harder to escape poverty than it was 2 decades ago.
6 million people live in deep poverty, and higher energy bills, food prices and reduced access to public services are all making the lives of the poor harder. And that's before we start contemplating things well beyond their reach such as buying a house.
Sir Keir Starmer will say in a speech there will be "huge constraints" if Labour win power.
Graham Watson's insight:
It looks like electioneering has begun, with the traditional Labour pledge not to embark on a significant uplift in government spending. However, it's interesting to note the likely tenor of the speech at the launch of a Resolution Foundation report, which is going to suggest that current economic circumstances are worse than those inherited by the Conservatives in 2010 after the global financial crisis.
National debt is higher, interest rates are higher and public services are in a far worse state than they were in 2010, and as a result Keir Starmer will argue that Labour's priority has to be economic growth to generate the revenues to finance spending.
The tax cuts in the Autumn Statement will come at the expense of public services, think tanks say.
Graham Watson's insight:
The analysis of the Autumn Statement continues apace, with the Resolution Foundation being pretty damning, noting that "£17bn would go on cutting National Insurance and other taxes...at the expense of public services" and that "households would be £1,900 poorer by the end of this parliament."
If that's what economic success looks like to you, you're entitled to agree with the Chancellor's bullish assessment of his fiscal stance.
Resolution Foundation says cuts earmarked for after election are ‘even less tenable’ now Treasury is £11.4bn better off than forecast
Graham Watson's insight:
The Resolution Foundation note that recent inflation figures mean that the Treasury is going to be £11.4bn better off than expected, largely as a result of VAT receipts, and that this should be spent on public services.
Of course, others fully expect the Chancellor, for all his talk of prudence, balancing the budget and so on, to find a way of offering some pre-election tax cuts. Well, I never.
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Labour seems spellbound by the Tories’ economically illiterate cult of austerity – but there is another way to help Britain thrive, says Kate Pickett, co-author of The Spirit Level
Graham Watson's insight:
Kate Pickett, one of the authors of "The Spirit Level", writes in today's Guardian about the fact that although fifteen years have passed since the global financial crisis, and fourteen since the publication of the book, little has changed as regards inequality.
She argues that rather than opting for continued austerity, the Labour Party needs to return to a Keynesian agenda of increased government spending to support public services and tackle poverty.
People are paying more tax but seeing public services cut, says thinktank
Graham Watson's insight:
Phillip Inman notes, with an unnecessary degree of glee, that the net result of economic stagnation and rising taxes is going to see taxes as a share of GDP reach a 70 year-high and low- and middle-income families with ever less disposable income.
And what's worse, despite paying more tax, we'll be in receipt of ever fewer public services in real terms. Happy days! Alternatively, you might have thought this sort of thing would serve as a trigger for a national conversation about plotting a way forward.
A Labour government is destined to fail unless it pledges to increase spending on public services, says James Meadway of the Progressive Economy Forum
Graham Watson's insight:
James Meadway looks at the classic Labour Party dilemma: on succeeding the Conservatives, what is it going to do as regards public spending? If it pledges to increase spending, it will get criticised for being profligate. If it matches Conservative spending plans, it won't have the money to enact substantial change.
His view is that last week's policy announcement suggests that Keir Stammer is going to opt for the former, and that this is unlikely to resolve many of the issues that face the UK.
We have all been deluding ourselves for too long – let’s admit what ails us and finally move on
Graham Watson's insight:
Will Hutton in today's Observer arguing that before the UK can make genuine economic progress, and heaven forbid return to growth, the first thing that needs to happen is for politicians to start telling the truth.
Far fetched that might be: however, he has a point. The UK isn't going to be a low tax, Singapore-on-Thames any time soon, and he lays out the reason why, starting with Brexit. The fact is that there's very much a sense that the pigeons have come home to roost, and that we're going to have to start tackling some pretty significant structural issues some time soon.
The government is preparing for the Budget which may include tax cuts but also a squeeze on spending.
Graham Watson's insight:
Ha ha. All that high quality Economics teaching gone to waste: stagnant growth, an inability to tackle structural problems, declining public services and a rising tax burden don't strike me as an economy on track after 14 years of government.
And yes, coronavirus has played a role but the extent to which there's been economic mismanagement, complacency and a lack of supply-side reform is, frankly, staggering.
Indeed, we're so on track that tomorrow's Budget will, no doubt contain a couple of pre-election sweeteners (i.e. bribes) to distract the electorate from the state of the economy.
Editorial: Westminster cannot continue to ignore the scale of social devastation caused by the chronic underfunding of council services
Graham Watson's insight:
And here's a Guardian editorial suggesting that there needs to be a long-term solution found to the chronic under-funding of local government. There needs to be more devolution and a more sensible multi-year approach to budgeting to allow local councils to plan their spending over a longer time period rather than living from year to year.
Andy Haldane, government’s top levelling-up adviser, calls for urgent rethink to prevent deeper cuts across England
Graham Watson's insight:
And here's one of the reasons why the economy isn't able to grow, public services aren't fit for purpose because of funding levels, something recognised by a government advisor working on levelling up.
As an anecdotal aside, I would say that road surfaces in the UK are now on a par with those in 1990s Colombo, Sri Lanka, and whereas there's an equilibrium level of road maintenance that implies that the optimum number of potholes isn't zero, I'd argue that we're currently well below that.
If the population is to grow on the scale predicted the UK will need the infrastructure to service a much-expanded citizenry
Graham Watson's insight:
Interesting Larry Elliott piece about the implications of higher net migration into the UK, with the population rising to 70 million by 2026 and then 73.7 million a decade later.
What are the implications of this? A larger working population and higher potential growth, but what about the implications for the nation's infrastructure and public service. And given that net inward migration is going to account for 90% of this increase are there other issues to consider?
Alternatively, should we have tighter immigration controls, and if we do, what are their implications, not least for sectors of the economy that have been reliant on migrant workers, such as care homes.
Four years after leaving, and with more self-harm in prospect, austerity is eating away at Britain. Where is the indignation?
Graham Watson's insight:
William Keegan on...yes. you guessed it.
This time there's consideration of local government debt, as a kind of bonus. However, the central arguments are the same: a mixture of austerity and Brexit are stopping the UK economy from prospering.
Jeremy Hunt’s planned cuts will mean the death of public services. The lives of Britain’s most vulnerable people are on the line, says Guardian columnist Frances Ryan
Graham Watson's insight:
Frances Ryan looks at the human cost of austerity in this Guardian piece. It's a reminder of how the UK's performance as regards inequality and poverty reduction is poor.
There's not much theory here but it might get you thinking about what austerity is and the role of public services in reducing inequality.
A Starmer government will inherit a nation with miserable productivity, emasculated public services, big debts, high tax levels and acute inequalities
Graham Watson's insight:
Andrew Rawnsley writes in today's Observer, arguing that a Labour victory at the next election would mean inheriting an economy on its knees. Low productivity, fragile public services, a sizeable national debt, high tax levels - reflected in a record tax burden, and continued inequality mean that merely generating economic growth is going to be extremely difficult.
Britain is in a low-growth bind and too many policies have political rather than economic goals
Graham Watson's insight:
Richard Partington's latest Guardian piece, presumably for tomorrow's newspaper effectively says: "You Ain't Seen Nothing Yet". But that's not a good thing.
If you think the 2010s was a lost decade in the aftermath of the global financial crisis, with low growth, austerity and rising inequality, well, the latest data suggest that the 2020s are going to be worse. An even more sustained period of stagnant growth, and little room for manoeuvre in policy terms.
Editorial: Ministers are trying to score party political points from Birmingham’s woes, but Tory councils have also been broken by the rising burden of austerity
Graham Watson's insight:
Today's Guardian editorial looks at local government finance, in the light of Europe's biggest local authority, Birmingham City Council going bankrupt. I'll keep you posted on the effects of this.
However, it looks more widely at the fate of local government post-2010, noting that councils of various political hues, including Woking and Northamptonshire, have also declared bankruptcy, and the extent to which local government funding has been squeezed, something that you wouldn't necessarily associated with a government that has also pushed devolution and the election of local mayors, suggesting that unless local government is properly funded, more of this sort of thing is inevitable.
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Shadow chancellor Rachel Reeves says extra money for public services must come from economic growth.
Graham Watson's insight:
It seems that the Labour Party is keen to court the centre ground, with the Shadow Chancellor, Rachel Reeves announcing that the party aren't intending to introduce a wealth tax should they be elected. Instead, they are relying on faster economic growth to generate the tax revenues needed to finance public services.
Tories blamed for creating economic ‘doom loop’ that fails to recognise negative impact of spending cuts
Graham Watson's insight:
Fresh from the shock of seeing my wife and son on last night's Newsnight, the TUC argues that the current wave of strikes can be blamed on 12 years of economic mismanagement, with the TUC arguing that this has cost the country nearly £400bn of growth.
This is attributed to the ill-advised decision to double down on austerity post-2010, that far from boosting long-term growth, did much to undermine it, hollowing out public services and not promoting recovery.
Equally, designing tax policy to penalise work, rather than raising taxes on wealth has not only damaged growth but also worsened income inequality.
However, to what extent is all of this true, or is there an agenda that feeds into this analysis?
Loss of employees since Covid raises fears of weaker growth and higher inflation, says Lords report
Graham Watson's insight:
The House of Lords Economic Affairs Committee have published a report looking at the state of the UK economy, noting that the loss of half a million workers from the UK economy poses an existential threat to macroeconomic stability.
This and rising economic inactivity are going to have implications for growth and for inflation going forward, as well as put increased strain on public services.
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