Financial markets vs neoliberalism? As economic fallout from the ‘mini-budget’ continues and a chaotic Conservative party conference concludes, Onward’s Will Tanner writes “The party of free markets has been clobbered by the invisible hand.” This week the Chancellor Kwasi Kwarteng attempted to calm financial markets by bringing forward publication of his plan for how the government will pay for their planned tax cuts (see our analysis of the mini-budget here). The Bank of England’s Deputy Governor, Sir Jon Cunliffe, has written to the Treasury Select Committee to clarify the mini-budgets' direct impact on undermining the price of long-term government gilts, which triggered panic among pension funds who were highly exposed to falls in gilt prices, in turn prompting a significant intervention from the Bank to sure up gilt prices.
Free-market zealots in the driver’s seat. Commentary has shone a light on the influence of free-market ideologues over the government’s new economic strategy. The Spectator’s Fraser Nelson notes that Liz Truss’s “premiership has so far been distinguished by major decisions being taken by a tiny number of advisers, very much excluding her cabinet.” Those advisors include many alumni of free market think tanks. The IEA’s director, Mark Littlewood’s praised the Chancellor’s “revolutionary new economic playbook” after the mini-budget was announced, arguing it “could be seen as merely the first move in a much wider and most intrepid game of economic chess”.
Will they drive the Conservative’s electoral fortunes off a cliff? While the market reaction to the mini-budget may have been dramatic, it is the seismic shift in the polls that will really have Conservatives worried, with current numbers suggesting a landslide win for Labour at the next election. Boris Johnson’s former Director of Communications Lee Cain suggests that Liz Truss’ reputation may never recover because: “Beginning her tenure with a flurry of unpopular policies without considering how they would land as a package has allowed her opponents to frame her government as being in favour of the uber-wealthy, at the expense of those on lower incomes.” Cain also notes that “This will be exacerbated if the government drops the existing pledge to raise benefits in line with inflation.“
Poverty in Scotland. The Joseph Rowntree Foundation (JRF) has published its annual Poverty in Scotland report which “paints a bleak picture of a society in crisis” with nearly one in five households on low incomes in Scotland having already “gone hungry and cold this year, even before we enter the winter months”. JRF recommends that the UK Government immediately uprates all means-tested benefits by the current rate of inflation and that the Scottish Government provide a one-off payment of £260 to all Scottish Child Payment recipients and all Council Tax Reduction recipients as soon as possible.
“How did the fat cats get so fat?”. The huge gap between CEO pay and that of ordinary workers “is a particular feature of Anglosphere capitalism”, argues the Chair of the London Child Poverty Alliance and founder of the High Pay Centre, Deborah Hargreaves in the cover story of the latest issue of Prospect magazine. Hargreaves proposes “radical interventions” including higher taxes on the very rich, caps on executive pay and scrapping all financial bonuses and incentive plans unless made available company-wide, “enabling the whole workforce to share in corporate success”.
Westminster City Council and the ‘war on dirty money’. Westminster City Council, one of the UK’s richest councils, has announced that it is launching a campaign against dirty money to “combat the capital’s reputation as the European centre for money laundering”. Westminster council’s action comes in response to a Fair Tax Action campaign run by Tax Justice UK and the Fair Tax Foundation.
Disabled workers. One-in-seven workers in Britain have a disability according to data from the Resolution Foundation’s latest Labour Market Outlook paper. It finds that the number of workers with a disability has increased by 1.9 million over the last decade, with the biggest growth seen among those reporting mental health problems. However, the Resolution Foundation states that it is difficult to understand whether this increase reflects “a genuine removal of barriers to work for disabled people” or a “rise in self-reported disability among workers”, concluding that “there is an increased need to refocus political energy on supporting disabled people in the workforce”.
The retained EU law bill. The Retained EU Law (Revocation and Reform) Bill 2022, which is concerned with the body of EU law that was preserved in the UK statute book when the UK exited the EU, “lays the foundations for a major programme of deregulation”, according to the IPPR’s Marley Morris. Morris says that EU-derived workers’ rights are at "risk”, with working time regulations particularly vulnerable to changes from the government.
Will renters benefit from a housing crash? The New Statesman’s Emma Haslett explores whether falling house prices could bring a “silver lining for the UK’s beleaguered renters”. Katrina Hill, of the estate agent Chestertons, explains how decreasing mortgage affordability could lead to more homeowners renting out their houses when they need to move, instead of selling their homes at lower prices. This would, she argues, create more rental stock and provide a solution to “one of the rental market’s most inflationary problems”. However, Haslett argues that instead, landlords are more likely to pass on higher mortgage rates in the form of increased rents meaning that it is “unlikely” that renters will benefit from falling house prices.
Who benefits from Stamp Duty cuts? The Government’s new policy to raise the threshold at which homebuyers pay stamp duty “will do nothing to resolve the fundamental problem in our broken housing system: the lack of social and genuinely affordable housing”, argues NEF’s Alex Diner. Diner argues that it is the wealthiest, and predominantly those in London and the South East, who will benefit from the cut in SDLT since most “first time buyers outside of London buy their first home for under £300,000” and will therefore receive no additional savings from the new scheme.
Scottish rent freeze. The Scottish government has introduced legislation which will freeze most rents until the end of March 2023 and put a six month ban on evictions. However, exceptions apply to situations in which a landlord faces increased property costs, mortgage interest payments or some insurance costs leading the Scotland tenants’ union, Living Rent, to say that the legislation is not comprehensive enough.
Shell suggests a windfall tax. The chief executive of Shell, Ben van Beurden, has said that governments may need to tax energy companies in order to protect “the poorest”. Van Beurden said that a discussion around how to tax energy companies was “inevitable”, saying that measures could be introduced “smartly and not so smartly”.
Rees-Mogg attempts to evade fracking scrutiny. An email leaked to the Guardian suggests that BEIS staff have been instructed to explore ways to avoid judicial review of policies and public consultation, an idea raised by the Business Secretary, Jacob Rees-Mogg. Suggestions for evading scrutiny include a proposal to “streamline” requirements from the Health and Safety Executive and ways to “maximise the approach to deregulation”.
Designing feminist energy systems. Feminism and energy planning can be combined to provide a unique analysis of how ‘power’ works and design a more equitable system, according to The Maypole Energy Transition Collective, in a piece written for Autonomy. “A feminist approach to energy systems… would put care and dependency relations at the center of energy redistribution schemes, aiming to provide sufficient energy for well-being rather than according to the dictates of profit or productivity”, they argue.
