I will be about £350 per year better off with the 1% tax cut. YAY.
But my share portfolio is worth about £3,000 less this evening than it was this morning. DOH!
Great news if you're earning £1m a year, you are going to be over £55,000 a year better off.
45% of the benefit, by value, of these cuts benefit the top 5% of earners.
Totally screwed up targeting if you ask me.
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I'm a simple person, but have you effectively just said "I earn 100k"?
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>> I'm a simple person, but have you effectively just said "I earn 100k"?
>>
I wish!
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My old house is going throught he sales procedure. The buyer will have to pay £2.5K less stamp duty. Contracts have not yet been exchanged.
D'yer think I should ask them for a grand, to share the spoils, or re-market it, as it's probably now worth more?
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The 1% cut benefits those earning up to £50,270 per year and under £150,000.
For most people the tax free allowance is £12,570, so anyone earning above £12,571 will be better off but only up to £50,270.
£50,270 minus £12,570 is £37,700.
1% of £37,700 is £377.
Last edited by: zippy on Fri 23 Sep 22 at 19:36
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I told you I was simple. My brain said there's a 1% cut, so if you were 300 a year better off, you must be paying 30k in tax, so therefore...
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I came to the conclusion there is a fundamental philosophical difference.
Conventional policy by both Labour and Tory govts has used tax largely as a means to redistribute wealth - through direct benefit payments and spending on public services (NHS etc).
The Kwarteng/Truss approach biases tax policy towards stimulating growth - increased total wealth can benefit all. If there is more to share, then (perhaps) all can benefit.
The former has been tried for 35 years post Thatcher with limited success - growth has been unremarkable (to say the least). It has not been a complete failure - but nor has it delivered.
The latter is attractive (in theory) - if the cake gets bigger then everybody can benefit. But it is a big risk to count on tax reductions now generating higher economic growth in future.
That it benefits the well off more than the poor is no surprise - it is the wealthy who pay most of the tax. Turning the debate into a "what about the needy", "lining the pockets of Tory pals", "it's a budget for millionaires" and similar totally misses the point.
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I think the fundamental complaint is that if the Govt has got £50billion odd to re-distribute, distributing it to the wealthy will allow them to buy nicer yachts of faster cars.
Distributing it to the poor will allow the poor to buy an extra pint or new shoes, which means that it will get to the rich eventually, but at least it has gone through the hands of the poor person first!
Basically supply side economics believes the Laffer Curve is always correct, but it's far too simplistic a view.
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If their theory is that people will spend their tax cuts, they should have focused on households with incomes below say 50k. They,d spend it.
Karteng thinks the million pound earners who will be 40k per year better off will invest. In what.?
The government could have invested the £150bn. It's found to do this. In useful infrastructure perhaps, or renewable electricity generation. Instead they're giving it to already well off people and hoping they do the right thing.
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Before Brexit, low taxes and minimal regulation may have been a sound way of encouraging inward investment from companies wanting a trained workforce, in an EU country, able to seamlessly export to other EU countries.
As we now have tariff and administrative barriers making cross channel trade more difficult, I am unconvinced - perhaps reduced taxes are a simple encouragement (bribe) to get any inward investment.
I don't personally have a problem with people being wealthier than me - many are. The real question is "will the policy deliver the desired outcome" and is the desired outcome in the interest of society as a whole (not sectional interests).
It is a high stakes gamble I find it difficult to support. However, playing it safe and conventional for the last 30 years has hardly been an overwhelming success.
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I see Rory Stewart had been appointed to some charity (I think) that is looking to try and eradicate world poverty by a simple change. Rather than sending billions to governments of deprived countries, send the money direct to the poorest.
Give someone who has nothing, say £1000 and they will spend it all and put it straight into the economy.
Similar to today. If the govt want to stimulate and save our economy
1. They need to do something about Brexit. Now. (But we know they won’t)
2. Channel more money to the poorest by a substantial amount as this will go straight back into economy.
3. Windfall taxes on energy firms. Putting the cost of this onto borrowing at silly rates is just crippling the country going forward.
Can you imagine the reaction if Labour was in power and announced tax cuts of this scale (even if they were targeted at the poorest). They would have been slaughtered.
And of course, the hidden cost, are you really any wealthier if you are now paying £50 less tax a month but you can’t get police response, you can’t get your doctor or hospital appointment, your bin emptying gets less frequent etc etc. These tax cuts will undoubtedly come with a cut in public services. And then when we are having to repay the debt on high rates, they will be cut even more.
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The founder of JML was on the radio this evening giving his opinion on the budget, on the whole he was in support of it and in fact seemed to want the pound to drop even further and go below the dollar so we can increase our exports.... when quizzed as to what we would export he said the UK should challenge China/Germany and start manufacturing 'stuff' and 'things', I just had to laugh.
From the interviews I've heard even some of the most loyal Tory business leaders are finding these changes very hard to promote and see how they will help the majority.
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>> and in fact seemed to want the pound to drop even further and go below the dollar so we can
>> increase our exports.... when quizzed as to what we would export he said the UK
>> should challenge China/Germany and start manufacturing 'stuff' and 'things', I just had to
>>laugh.
>>
What he means is that if the £ falls below the $, then someone paid in £ will in real terms be paid less and will be able to afford less. Welcome to the low wage economy.
Re Brexit:
I see stats almost daily on exports, it's part of my job and all of our clients must report turnover to us monthly and split that out by country. We have month by month turnover by country and for our portfolio of SMEs and large corporates (companies with turnover from £500k to £4bn).
Exports are down across the portfolio by 37%.
A small decline was noted just after the vote as European companies refused to set up long term contracts with UK suppliers because they foresaw logistical problems.
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They giveth and they taketh away...
I have just read that the tax free allowance stays frozen, so in real terms it's worth 10% less this year.
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The buyer of my old house wants to complete on 30/9. That means they will save £2.5k stamp duty and benefit the energy £400 that commences 1/10.
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And as the pound sinks slowly in the West I think Liz can kiss goodbye to her dream of a growth led recovery. Pity she never studied the effects of Barber's dash for growth in 1972. Stagflation here we come. All a bit deja-vu really.
Last edited by: CGNorwich on Mon 26 Sep 22 at 17:47
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In Luddite Land why didn’t he/they/ whoever, simply increase the tax free personal allowance.....from £12,570 to say £17,500 or more ?
The primary beneficiary’s would be lower earners....those more likely to spend their wage on bread and butter stuff
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That makes too much sense.
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>> The primary beneficiary’s would be lower earners.
....bad form to answer your own questions...
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Using the tax system redistribute wealth to those most in need is no longer the name of the game.
Tax policy is now designed to encourage more investment. Reducing delays in planning, regulation and administrative burden etc should make UK PLC a more attractive place to invest.
There may be some real benefits from this - one only need look at late and over budget major projects to realise the current system of governance is unfit for purpose - eg: Hinckley Point, HS2, Crossrail, wind turbines, house completions etc etc.
Whether the new broom will work is questionable. There would be a far better argument for more focussed support to business and investment, rather than trusting or hoping that tax reductions will be recycled in the UK.
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>> Using the tax system redistribute wealth to those most in need is no longer the
>> name of the game.
>>
>> Tax policy is now designed to encourage more investment. Reducing delays in planning, regulation and
>> administrative burden etc should make UK PLC a more attractive place to invest. By
It looks insane to me.we already have 10% inflation. The promises on the energy price capping alone will cost 60bn. In the next six months, around 5% of GDP., and we are looking at 2 years of this. It's massively inflationary and as the Bank has nowhere near the reserves that would be needed to prop up the collapsing pound the only weapon is has is interest rates. Raising rates risks recession. This government will probably stàrt interfering with the Bank next. Overnight we have leapfrogged Italy to become again the sick man of Europe.
She is driving the country into a ditch to benefit the rich, who will get more help than the poor. I'm not poor yet but a couple of years of 20% inflation and I will be.
UK is now a joke. This is very very serious and damaging, what Truss and Kwarteng have done goes against advice and they have not allowed any scrutiny. They should be in jail or straitjackets, and I'm quite serious.
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The Tory party had a choice, Sunak or Truss. Fiscal responsibility or unbridled tax cuts It must be apparent to even the dimmest of them that they made the wrong choice.
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>> The Tory party had a choice, Sunak or Truss. Fiscal responsibility or unbridled tax cuts
>> It must be apparent to even the dimmest of them that they made the wrong
>> choice.
>>
I wouldn't say that, looking on other forums where there are plenty of tory party members most seem happy with their choice.
I don't think they were pro truss, the majority were anti-sunak.
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I have said this for years , it’s so bleeding obvious , much better than tax cuts .
I’d go further and as this would encourage those unemployed to take a job, and not cry, “ it’s not worth it cause we lose ur benefits” .allow them to take a job, and keep their benefits for a year , reducing each month till after a year there are none .
There are so many people with free housing,/ council tax and all other benefits they’d have to earn 36k or more to be in the same place, where is the incentive to find work ,cause the average wage is around 24k
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>> There are so many people with free housing,/ council tax and all other benefits they’d
>> have to earn 36k or more to be in the same place, where is the
>> incentive to find work ,cause the average wage is around 24k
Where are all these people with free housing, council tax and all the other benefits?
Benefits are capped at £20k/pa. The 'bedroom tax' and Local Housing Allowance mean that for many people, even at that figure, the full rent is not included. Very few local councils pay 100% of Council Tax for anybody; even the poorest pay 15-20%.
Universal Credit has no 'cliff edges' or sweet spots for those taking work; the risk is rather that it incentivises employers to underpay. It will also help with costs of taking work like childcare.
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Part of the problem is the minimum wage. It's too low. Many people with families on it get Universal Credit, which is effectively the tax payer funding the businesses who should be paying a living wage.
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I suspect that a small business owner who has struggled through Covid and now has soaring energy bills and 10% inflation to cope with might be able to explain to you the problem in increasing wages right now.
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>> I suspect that a small business owner who has struggled through Covid and now has
>> soaring energy bills and 10% inflation to cope with might be able to explain to
>> you the problem in increasing wages right now.
I'm sure that's so, but if the business isn't viable then it shouldn't be there. If the business needs support then that's a different question and it should receive it directly.
Of course that will mean another load of fraud and money wasted.
My guess is that there are large numbers of people at or near minimum wage who are working for large, profitable businesses. Those businesses are already costing the taxpayer a fortune, and if they also manage to pay b. all tax then we are being systematically ripped off. It would be quite interesting to collate the data on this including links to Tory donors.
In-work benefits have always been problematic, and inevitably end up subsidising profits somewhere else. Ask Gordon Brown. The people who administered the Speenhamland system from 1795-1834 discovered this.
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the good news is that this has made the current iteration of the tory party unelectable for the next generation or more. It also ensures that Liz Truss has a term as short as humanly possible.
The tory party will have to change its rules so that leaders are not chosen by 150k Alzheimer ridden pensioners, spotty youths and golf club secretaries from the 4 corners of Cheltenham and Bournemouth and can inflict their half baked ideas on the rest of us.
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I think it's only in the last 20 years the membership have had any say. Before that it was all upto the party's MPs.
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>> the good news is that this has made the current iteration of the tory party
>> unelectable for the next generation or more. It also ensures that Liz Truss has a
>> term as short as humanly possible.
Well nothing's all bad is it. But a lot of damage can be done in 2 years. I have told the boss that I expect us to be 30% worse off in income terms in 2 years time, with a similar impact on our savings. When the inflation subsides, if we are still alive, we can at least sell the house that has taken us 2 years to build so we can have holidays.
There's something that should always happen with big expensive plans, especially when they go against expert advice. One is obviously detailed scrutiny, which Truss has deliberately avoided - a criminal misuse of public funds on a galactic scale - the other is what I would call a simple sense check. When success depends on several assumptions, look at them individually and make a best guess at the probability that each assumption will be met. Then multiply them together to get a sense of the odds that they will all be correct.
Truss and Kwarteng have bet the future prosperity of all of us on what amounts to a series of outside bets making a very long odds accumulator. Much of the £60bn (borrowed, of course) to be strewn about in the next 6 months will go to energy producers and quite how it might end up increasing UK investment depends it seems to me on blind faith. Will the smart people invest in UK? The markets think the country is a basket case. They are as likely to bet on a lower pound and put their money into global equities, dollar denominated assets and commodities I would guess.
Monetary policy is one thing and we can argue about that, but of fiscal responsibility there is no hint whatsoever. Hence the bypassing of the OBR, rejection of Treasury advice and avoidance of proper scrutiny.
Crooks. Or idiots.
It's barely credible. And yet I hear and read of Tory voters who whilst they are unhappy with Truss's plan say Labour would be worse! How? Labour above all knows it must propose fiscally valid policies to address the myth that only the Tories can manage the economy.
This could be very, very bad indeed.
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The minimum wage is too blooming high. There's loads of incompetent idiots loading up on it. Take anyone on less than say 25k out of income tax altogether. Not only would they spend it they would HAVE to spend it. Raise IT rates for middle earners and re-instate the 45p rate. We don't pay even 40% but would happily pay say another grand a year if we could see a quack or a copper now and again. Another £20.00 a week isn't going to hurt us.
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A degree of sanity might be forced on Truss after all.
www.bbc.co.uk/news/business-63049044
"Kwasi Kwarteng faces U-turn on tax or spending cuts" - BBC
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>> "Kwasi Kwarteng faces U-turn on tax or spending cuts" - BBC
A recognition that he may struggle to get it past the Commons?
If it's a fiscal event rather than a budget is it a GE triggering vote?
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There seems to have been a complete reversal of Tory and Labour philosophies.
Kier now claims that Labour is the party of fiscal responsibility. This used to be a Tory strength. By popular acclaim reputations now seem reversed.
Labour in 2019 were portrayed as profligate fantasists - nationalise everything in sight (energy, rail, water, etc). This justified a huge increase in borrowing in the interests of the consumer ensuring profits did not fund the wealthy through dividends and excessive salaries.
The Tories are now doing the same - justifying tax cuts and huge borrowing on the grounds of encouraging investment, job creation and growth.
Whether you believe either, both or neither of these claims seems based on preconceived beliefs rather than rational analysis.
What is clear is that Kier seems to have grasped the importance of marketing over substance, albeit without presentational talent. Truss has ditched public opinion in favour of imposing her view of reality. A curse on both their houses.
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You know the Tories have screwed it when you long for the days of Blair and Brown.
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I bet there's a lot of folk wishing Boris was still here.
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Even Corbyn doesn't seem potty now.
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>> Even Corbyn doesn't seem potty now.
>>
Steady on...
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>> Even Corbyn doesn't seem potty now.
Not sure he really did but he looks moderate and sensible c/p Truss.
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>> I bet there's a lot of folk wishing Boris was still here.
No doubt he'll still be blamed for something.
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>> >> I bet there's a lot of folk wishing Boris was still here.
>>
>> No doubt he'll still be blamed for something.
Well as he is the root cause for all this agro, going back to the Brexit campaign, yes it is ALL his fault, I prophesied on here that he would screw everything up.
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>> I bet there's a lot of folk wishing Boris was still here.
>>
Two wrongs don't make a right.
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>> You know the Tories have screwed it when you long for the days of Blair
>> and Brown.
In the light of history it was a very good period. By any standard
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What Z says.
If Boris had followed his EU instincts instead of self interest by becoming the liar in chief as an advocate of Brexit UK PLC would now be in a very different place.
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I know this is normally the chancellor's area but I would have expected to have seen something from the pm in the last 3 days or so. Where is she?
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>> I know this is normally the chancellor's area but I would have expected to have
>> seen something from the pm in the last 3 days or so. Where is she?
Although Kwarteng has seen bankers today he's keeping out of public view.
Truss also seems to be hiding.
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The shortest serving prime minister (duration not height) was Sir Alec Douglas-Home who managed a year and a day.
It is looking like Truss may comfortably break the record.
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There have been some letters to the 1922 already from disgruntled backbenchers.
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I read earlier (on the Beeb?) a denial that Truss and Kwarteng were overheard having a very heated conversation.
Must be so then... :-)
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This how much of a cook up the current government have made
www.bbc.co.uk/news/business-63065415
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The appalling thing is that they are unlikely to back down, even in the face of the evidence from the markets and from experts and specialists, just cos they don't want to lose face.
Must admit I've had it with the Tories for a bit, I won't vote Labour either but something has to change.
As has been previously predicted here, I can see some civil unrest over this government before too long.
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From that I assume you are a traditional Tory voter.
Why would you not vote Labour now?
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I don't mind being seen as a traditional Tory voter but I've not always voted for them, in quite a few elections.
I generally (think I) prefer more centrist/right policies rather than those of the left. But given the latest shenanigans, particularly Boris and now Truss but also Cameron to some extent, your question prompts me that maybe I should have another think before the next vote, whenever that is. However I still find the current Labour party less than impressive (along with the Tories too). Doesn't leave me with much does it? I don't like not voting.
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I don’t like extremists in any shape or form. I can’t see me ever voting for Truss and Co. and certainly did not vote for Corbyn or Johnson. Starmer is not perfect by any means but at the moment looks like the best bet for moderation and intelligence. We shall see.
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>>I still find the current Labour party less than impressive
What would impressive look like? What do you want to see/hear?
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>>Must admit I've had it with the Tories for a bit, I won't vote Labour either but something has to change.
Isn't the logical thing to do to vote for the candidate most likely to beat the Conservative?
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She reckons she has done the right thing to get the economy moving. Didn’t say which way.
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FTSE down nearly 2% this morning.
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>> FTSE down nearly 2% this morning.
This I would guess is consequent on
- Truss explaining that the tax cuts for the rich are going to be so good for the economy that she will now have to cut public services to pay for them.
- the hope that Truss/Kwarteng would reel in the profligacy following the disapprobation of nearly all commentators, the IMF, Tory MPs, and the OBR.
Once it became apparent that the are sticking with it the hope for any reversal receded.
I think a line has been crossed here. Despite the lacklustre performance of the UK economy, the markets have always reflected the belief that there is at least a policy to manage the deficit and control borrowing. That confidence was hard won, is now lost, and might never return. Government borrowing is now about 1% dearer than it was, almost overnight.
You might have seen some reports that only the BoE intervention prevented 65bn. worth of pension funds becoming 'insolvent'. I think that was possibly exaggerated, but it has certainly been serious. Most big funds now use a lot of LDI (liability driven investment) involving hedging with inflation and interest rate swaps. The collateral calls have been huge and some funds have run out of liquid assets with which to meet them so have had to reduce hedging. This is big, and serious. I have no doubt there have been some very angry conversations. Kwarteng in particular has been dismissive saying there is more to come. I don't think he is seen now as trusted and he might not last long.
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>> >>Must admit I've had it with the Tories for a bit, I won't vote Labour
>> either but something has to change.
>>
>> Isn't the logical thing to do to vote for the candidate most likely to beat
>> the Conservative?
>>
This. You'll never find a political party where you agree with their policies 100%, so you have to vote what is most likely to get the best result overall and with the least compromises to your wishes (unless you have a local MP who is particularly good, regardless of their party). Where we live, Labour don't have a chance of winning so if you want to vote the Conservatives out, you are best voting Lib Dem (who control the local council).
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Well put Boxsterboy, exactly sums up my thinking.
John Deadwood is our local MP and I feel he's unlikely to be unseated, though the local council did go LibDem last time around, having been Conservative for years (AFAIR). There was an unsubstantiated rumour at the time of the last general election that he was to be de-selected by the local Tories but somehow "bribed" his way back in.
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You really have a Tory MP called Deadwood?
Nominative determinism at work.
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Haha... Sir John Redwood really... :-)
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Isn't he the man for whom the phrase "swivel eyed loon" was created.
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>> Isn't he the man for whom the phrase "swivel eyed loon" was created.
I thought that and attributed the phrase to John Major when challenged by Redwood for the leadership of the Tories in 1975. The key word there may have been bar stewards.
Google attributes it to David Cameron and s description of members of local conservative associations which, he alleged, drove members of his party to vote for an amendment to the 2013 Queen's Speech regarding an EU referendum:
www.theguardian.com/politics/2013/may/18/david-cameron-ally-activists-loons
Redwood though is definitely swivel eyed....
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>>1975
1995 perchance?
:-D
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Labour 33 points ahead of Tories in latest opinion poll.
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"Labour 33 points ahead of Tories in latest opinion poll."
Just noticed that and for some reason found it deeply worrying. Before her appointment, Truss's economic illiteracy/innumeracy were fully on display. I really thought that somehow someone sensible would manage to fudge her idiocy, but despite reports of arguments between her and Kwarteng, it seems that the UK has been thrown into financial turmoil.
Only a miracle will reverse the situation unless some u-turns are made, but the chances of cancelling that 33-point deficit before the next general election seem pretty remote to me. Truss has nailed her colours to the mast, so whether she fails utterly, or just avoids total disaster after modifying her policies, she is toast and so are the Tories.
I just don't believe in the miracle that she has got it right. Until she was PM I thought Labour would be a poor alternative.
Last edited by: James Loveless on Thu 29 Sep 22 at 20:16
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I'd say she's done for. Kwarteng too. Effectively one week in post, quite a record.
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Harold Wilson (he of the Gannex mac) - "a week is a long time in politics"
The next election is two years away.
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"The next election is two years away."
Unlikely I think.
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>> "The next election is two years away."
>>
>> Unlikely I think.
The back benchers won't want to go into an election with Truss, the letters are already going in. But they shouldn't be allowed to push another dud onto us. There needs to be an election. Hard to see how it can be done but that's what should happen.
The number of swivel-eyed loons who actually voted her in over Sunak was nearer 81,326.
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>>The number of swivel-eyed loons who actually voted her in over Sunak was nearer 81,326.
I didn't mind the frownie, but the frowner might recall that "[mad] swivel eyed loons" was a phrase first used within the Conservative party in reference the the local associations, i.e. the 150,000 or so members of which 81,326 voted for Truss.
I wouldn't think of using it to refer e.g. to my Conservative-leaning friends here:) so please don't be offended.
(unless you are a member of course, in which case please take it up with David Cameron whose opinion it was said to reflect).
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So how is it likely to work? No confidence vote in the Government?
She has shown spectacularly poor judgement at a rather early stage!
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James, considering what the Tories have done over the last 12 years, and especially from Brexit onwards, why would you feel it worrying that they are falling by the wayside??
Remember, by their own admission, they have screwed the country.
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To me, it's worrying because I have no faith in the Labour Party. In the last twelve years there seems to have been turmoil, from the veer to the left under Corbyn, the veer back to the centre(-ish) and very little in the way of clear policies on anything (Brexit, anyone?). And Starmer, with his permanently furrowed brow, seems tentative and uninspiring.
I find it hard to accept they were ever capable of running the country and it's a shock to realise that, on the whim of a few thousand members of the Tory Party, we have a PM who is so bad she makes the Labour Party look good.
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The Tories have an overwhelming majority. The probability of them endorsing a no confidence vote put forward by Labour is close to zero.
More likely - they may choose to dump her with another leadership contest. A rule change could avoid allowing final selection by party members who have so profoundly messed up.
They will wait at least until the OBR publish their independent forecasts for the Truss/Kwarteng plan - if there is one! It would be another judgement error to act in haste, only to find the OBR are reasonably comfortable with the strategy.
Last edited by: Terry on Fri 30 Sep 22 at 01:55
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I find it staggering that people still worry about what Labour could do or could have done when they can compare to what Tories actually HAVE done.
Brexit
PPE contracts
Running down NHS
Lying to queen to prorogue Parliament
Getting into bed with the far right Brexiteers/ think tanks
Meeting ex KGB
Losing all integrity for the job
Killing the economy
Etc etc etc I could go on but I have my morning Wordle to do.
And folk fear Labour? Jeez.
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>>And folk fear Labour? Jeez.
Hear hear.
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It's hardly surprising that some folks worry about Labour when instead of addressing the actual reasons, Labour supporters always resort to name calling and abuse.
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>> It's hardly surprising that some folks worry about Labour when instead of addressing the actual
>> reasons, Labour supporters always resort to name calling and abuse.
Always?
Really?
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> Always?
Thanks, exaggeration getting the better of me again. Let's say 'frequently' eh?
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>>To me, it's worrying because I have no faith in the Labour Party.
I look back very fondly now on the Blair and Brown years and I suspect many others do too.
Actually I doubt if even Corbyn would have done much "damage" in the end. Certainly not on the scale that the Brexit hijack and the latest debacle (both widely predicted and sod all to do with world recessions or Covid).
I think neither Truss nor Kwarteng are very wise - intelligent maybe, but not wise and completely lacking in empathy. Truss successfully played her ultra right wing tunes for the benefit of the swivel-eyes and got herself elected contrary to the wishes of her colleagues, but has now made the terrible error of following through presumably under the illusion that it will win her an election.
And yet...the worst you can say about Starmer is basically that he has a furrowed brow and lacks pizzazz. And Kevin says Labour supporters always resort to name calling. Well, they don't, but those who believe in failrness are understandably very angry.
Truss is now trying to rescue the situation not by reversing the tax cuts but by cutting spending. So that's alright then. The Mail is speculating that benefits will not be uprated for inflation as expected. Once again, as with austerity, the Conservatives will punish the poorest as if it is their fault. Their 'logic' doesn't even make any sense - Kwarteng says he has prevented a consumer spending collapse. I can assure him that if he gives the money to the poorest they will spend every penny, but no he chooses the people who will likely hoard it for fear of how much worse things could get.
This is not the sort of country I want to live in, so the sooner they are wiped out an an election the better.
I am sick and tired of hearing Conservative voters saying Labour is "worse", with no basis at all for that statement.
Very angry indeed in fact. And I do blame deluded Conservative voters. Many of them are good people, and friends, not deserving of being insulted. Note the use of the word 'deluded'. If you depend on earned income or pensions, and especially savings, the Conservatives are not your friends. Not this kind of Conservative, anyway.
Last edited by: Manatee on Fri 30 Sep 22 at 13:25
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Tory MP on the prospect of another leadership election.
“ you can have as many elections as you like but the nutter will always win”
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@ Manatee.
I agree. And as if the high end tax cuts/scrapping cap on bankers' bonus wasn't bad enough, they're now going to reduce benefits. Inequality knows no bounds!
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>I look back very fondly now on the Blair and Brown years..
Ah, the good old days when income tax was a max of 40%.
> And Kevin says Labour supporters always resort to name calling. Well, they don't,..
Why did the Labour Party go through the rigmarole of identifying and threatening to expel thousands of members for online abuse, frequently against their own MPs? It hasn't gone away.
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>> 1995 perchance?
>>
>> :-D
Indeed.
Finger trouble.
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And now refusing to publish the OBR forecasts, which can only mean one thing
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Either the OBR should publish and be damned or the relevant select committee should order the publication. IIRC the DWP select committee did that when Dr Coffey was stonewalling over publishing.
My guess is there will be a 'leak'.
Last edited by: Bromptonaut on Fri 30 Sep 22 at 16:36
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>> Either the OBR should publish and be damned
Disagree there, ministers decide that sort thing. Irrelevant if they agree or disagree.
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>> >> Either the OBR should publish and be damned
>>
>> Disagree there, ministers decide that sort thing. Irrelevant if they agree or disagree.
Why disagree? They exist to hold ministers to account, not a political tool
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I might be wrong but, although it's their call to create the report, I think it's a ministers/gov call to give the ok to publish it.
Like I said I might be wrong.
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It's pretty clear that the OBR's intended purpose is oversight. Ultimately Kwarteng/Truss are answerable to parliament which is answerable to us.
They are following Johnson's example and changing or ignoring laws, checks and controls they don't like, such as changing the ministerial code of conduct.
They are I think in a hole, and still digging.
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I don't think any rules have been broken or ignored, convention yes. But's that's a different thing.
To make it clear I think the Kwarteng should have asked the OBR to create a report, however it's within his remit to ask for it or not and when to publish any report.
My reply was to Bromptonaut's comment of publish and be damned. If anyone is ignoring laws etc it would be anyone that went down that road. As it happens there is no report to publish any road.
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Useless factoid. my b-i-l was one of the top three of the OBR when it was first formed.
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The OBR has as point 1 in its memorandum the following:
"The Budget Responsibility & National Audit Act 2011 (‘the Act’) establishes the Office for
Budget Responsibility (‘the OBR’), giving it a statutory duty “to examine and report on the
sustainability of the public finances” and requiring government departments to provide it
with the information and assistance necessary to carry out that duty".
Legally neither the Chancellor nor the PM can modify, delay or deny the OBR report publication without a change in law. Given the views of many Tory colleagues, an attempt to get it through Parliament would likely fail - it would be so obviously a complete abuse of power.
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>> I don't think any rules have been broken or ignored, convention yes. But's that's a
>> different thing.
>>
>> To make it clear I think the Kwarteng should have asked the OBR to create
>> a report, however it's within his remit to ask for it or not and when
>> to publish any report.
The OBR looks like (at least) an Arm's Length Body; Quango if you like.
The point of the 'autonomous' in QuAngo is that they report without ministerial veto.
When I worked in one Ministers would have the opportunity to comment but what was published was tabled in Parliament as OUR report.
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Was it a deliberate snub? If the relationship was cordial I would have expected Truss and Kwarteng to welcome the OBR's two-penn'orth before making a decision.
Unless the OBR have been overstepping the mark.
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More likely a mixture of "want to show the world we have started" and simple arrogant self-belief that they had it right anyway.
Irrespective of the merits or otherwise of their actions, it was politically inept.
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>> The OBR looks like (at least) an Arm's Length Body; Quango if you like.
>>
>> The point of the 'autonomous' in QuAngo is that they report without ministerial veto.
>>
>> When I worked in one Ministers would have the opportunity to comment but what was
>> published was tabled in Parliament as OUR report.
>>
The head of the OBR says it's up to the chancellor to commission the report and its his decision when to publish it.
I think that's fairly conclusive.
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Now we can look forward to the "supply side reforms", a euphemism for stripping employment rights.
Can you see what they are yet?
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>> Now we can look forward to the "supply side reforms", a euphemism for stripping employment
>> rights.
No No No, we are not stripping employment rights, we are slashing red tape.
Oh and while we are about it you are not allowed to say " cutting social services & support" It is "reducing the unnecessary fiscal burden on business to enable increased investment"
Got it?
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What nauseating specimens they are. It's our fault for making a fuss about the higher rate tax cut, not their fault for doing it.
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This lady is not for turning, willing to be unpopular. She says
www.bbc.co.uk/news/live/uk-politics-63114183
Ooooppps, look at that face.....
Last edited by: Zero on Mon 3 Oct 22 at 12:25
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...can we get back the substantial amount that Crispin Odey (coincidentally Kwasi's old boss) has just made from shorting the pound, or is that destined to be another big donation to the Tory party?....
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Nadine puts the boot in.
Call an election if you want to change course, Nadine Dorries tells Liz Truss www.bbc.co.uk/news/uk-politics-63110543
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Not sure why the odious harridan wants a hung parliament or Labour government, but then again intelligence was never her forte.
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Minister Penny Mordaunt now in open revolt over Truss benefits increases policy.
“I've always supported, whether it's pensions, whether it's our welfare system, keeping pace with inflation. We are not trying to help people with one hand and take away with another," she said.
Surely Truss is not going to survive long.
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They are so bent. And they treat us as if we are stupid, when in fact they are completely disconnected from the realities faced by ordinary people.
'The Treasury' tweeted this on 29th September - I somehow don't think a civil servant took the initiative with this.
“Thanks to the Growth Plan, a typical first-time buyer in London moving into a representative terraced house will save £11,250 on stamp duty & £1,050 on the household's energy bills—and if they earn £30,000 almost an additional £400 on tax. This is around £12,700 in total.”
The Treasury explained that the assumed typical house cost £543,000. Some first house, even in London. Quite how a "typical" first time buyer earning £30,000 would find the deposit or the mortgage to buy this house is left to the imagination. To get the mortgage they would need a £350,000 deposit. Perhaps the Treasury should have included a bit about the buyer's banker parent giving them the deposit from his increased bonus.
Martin Lewis has been accused of being "political" for pointing this out. And the Treasury has removed the tweet. So there was nothing wrong with it, but they've pulled it.
Peston has explained why they reversed the 45% cut. Donor's instructions. 'We don't need the money, and it's just making us look bad'. Perhaps he was being droll.
Last edited by: Manatee on Tue 4 Oct 22 at 09:18
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I see the rumours are afoot that pension age going up to 68 from 2035.
The year before I am currently due to retire.
These muppets in charge need removed.
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>> I see the rumours are afoot that pension age going up to 68 from 2035.
>>
....not be long before it's higher than life-expectancy at birth. ;-)
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I was caught with the age change from 65 to 66 - I was a literally a couple of months too old and so didn't get my pension till 66 (which I still am).
Didn't stop me retiring at 59 though :-). You have a few years to plan for it...
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I was just caught by a few months in the change from 65 to 66.
As I retired at 55 It seemed churlish to complain.
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>>Didn't stop me retiring at 59 though :-)
20 years layder than me :o)
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...yeah, but he didn't do it "at Her Majesty's pleasure".....
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I drove past Princetown recently on my way to Ashburton, always give 'em a hoot and a wave :)
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>> Didn't stop me retiring at 59 though :-). You have a few years to plan
>> for it...
>>
My plan is to spend every penny I get...been getting the State Pension now for 12 months, blow it every month on social trips out with similar aged friends using our bus passes.
And dirt cheap Ryanair flights, one of the benefits of being flexible with dates now retired.
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>> I see the rumours are afoot that pension age going up to 68 from 2035.
>>
>> The year before I am currently due to retire.
>>
>> These muppets in charge need removed.
To be fair, Increased life expectancy and better older age fitness really make this a sensible move.
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>> To be fair, Increased life expectancy and better older age fitness really make this a
>> sensible move.
Yes and yes but. It was more or less assumed that people could and would continue in employment for longer but that always looked optimistic. Those with certain manual jobs can find them harder and harder to do, some people are just burnt out or have failing health and ability.
I assume the rise was in the pipeline based on past improvements in mortality. However that seems to have gone into reverse slightly. Long term, pension funds are still prudently assuming improvements but trends have actually been fairly flat for several years - broadly, higher socio economic groups have continued improvement, the more deprived have got worse.
A concern for many is how they will support themselves between the end of their 'career' occupations and starting to get the state pension. I outlasted most of my peers before being chucked out of my job at 59. Not being a complete fool I hadn't assumed I would reach my scheme NRA (normal retirement age) of 65, so I took some money from my SIPP for 3 years and supplemented it with a bit of self-employment for a few years. But for many it is a hard gap to bridge and there are a lot of economically inactive people between 55-65, let alone 68.
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>> bridge and there are a lot of economically inactive people between 55-65, let alone 68.
over three million workers aged over 55 have disappeared from the labour pool since covid. Its the major cause of the labour shortage, and they haven't moved on benefits.
Back in the day, if you were 65 you were more or less incapable of work. Not the case these days. However, increased life span has and will lead to a rise in fit but gaga old duffers who need social support.
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and they'll all be welcome here of course :-)
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>..lead to a rise in fit but gaga old duffers who need social support.
How dare you call me 'old'?
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>> Increased life expectancy [ok, I'll give you that]
>>and better older age fitness [noooo.... more years of ill health!]
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Just had a very interesting webinar on the implications for pension schemes of the almost unprecedented rise in gilt yields in the last week in September.
Pension trustees and fund managers are very busy reviewing their investments and many if not most are, or will be, making significant changes to their holdings as a result.
The rapid sell down wasn't just sentiment, it was fuelled in part by the immediate necessity for pension schemes to sell gilts in order to meet their obligations.
Many schemes use leveraged liability driven investment (LDI) to enable them to hedge interest rate and inflation effects while making reasonable returns. As a result of the turmoil, they have faced much larger collateral calls than they might reasonably have foreseen and, whilst they hold liquid assets for this purpose, in some cases these have run out and the hedging has had to be reduced. In other cases less immediately liquid assets (investments) are now being sold down to provide liquid collateral in case of future calls.
Ironically the effect on investment will be negative. As everyone knows, pension schemes are big investors and funds held by schemes commonly invest in long term illiquid assets. The desire for these illiquid investments is now reduced.
Kwarteng has in effect scored a hat trick of own goals. The view from the City is that the market turmoil was exacerbated by the failure to use the OBR and the sacking of the permanent secretary to the Treasury on day one.
The effects are not over. LDI leverage is likely to settle lower, as are hedging ratios unless schemes accept lower returns which would create bigger deficits.
I would think the effect on perceptions of Kwarteng's and Truss's competence (the belief is she told him to do it) will be long lasting.
www.reuters.com/markets/europe/what-is-ldi-liability-driven-investment-strategy-explained-2022-10-04/
The Bank BTW hasn't actually spent £65bn buying gilts. They have reportedly bought about £5bn worth. Their pledge of £65bn to support gilt prices has so far been enough to reassure potential sellers and/or deter short sellers. But BoE might have to renew its support pledge after 14 October.
What a mess.
Last edited by: Manatee on Thu 6 Oct 22 at 14:47
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I assume the value of long dated gilts falls as interest rates rise.
The capacity of a pension fund to meet its future obligations depends on income and capital. Whist income is unaffected by interest rate changes, the value of the holding will decline.
I assume that when the actuaries review pension fund projections - assets, income, anticipated growth rates, pension obligations etc - they suddenly look underfunded unless income projections are increased to compensate.
This would be a risky strategy - particularly for remaining final salary schemes - their obligations stretch out several decades, and interest rates and inflation must be critical to fund valuation.
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>> I assume the value of long dated gilts falls as interest rates rise.
Yes. But if your gilts are matched to your liabilities and you are holding to redemption, it doesn't matter, all else equal. That would more likely be the case in a fully funded, de-risked, scheme.
>>
>> The capacity of a pension fund to meet its future obligations depends on income and
>> capital. Whist income is unaffected by interest rate changes, the value of the holding will
>> decline.
Interest rate increases, other things being equal, will reduce the balance sheet value of liabilities and therefore deficits. But they also reduce the assets. Note that they don't actually change the liabilities, just the calculation of the present value.
>>
>> I assume that when the actuaries review pension fund projections - assets, income, anticipated growth
>> rates, pension obligations etc - they suddenly look underfunded unless income projections are increased to
>> compensate.
The issue is risk around the size of the deficit. You can have a £100m. deficit on £500m of liabilities, and changes in financial conditions can cause that to balloon to £200m (or reduce to zero if you are lucky). Schemes reduce that potential swing and downside risk for the company on the hook by hedging.
The problem with hedging is that it reduces returns. You can get more bang for the buck with leverage which is where the collateral comes in.
>>
>> This would be a risky strategy - particularly for remaining final salary schemes - their
>> obligations stretch out several decades, and interest rates and inflation must be critical to fund
>> valuation.
>>
Correct. But you can't just assume better returns. Your projected returns have to match your investment strategy. It isn't an exact science but actuaries if they are doing their job will build some prudence into the "discount rate".
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>> KK now to publish fiscal strategy and OBR report on 31-10-22:
>>
>> www.theguardian.com/politics/2022/oct/10/kwasi-kwarteng-debt-cutting-plan-31-october-obr-forecasts
Gives him time to consult Tufton Street.
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They've appointed a new Permanent Secretary (ie Head of Civil Servants) to the Treasury:
www.theguardian.com/politics/2022/oct/10/liz-truss-appoints-james-bowler-treasury-permanent-secretary
The appointee has come from another department but is an 'old hand' at the Treasury having worked there for 20 years. It was reported last week that the job was offered to Antonia Romeo from the MoJ who had worked with Truss in one of her previous Cabinet roles. Romeo is reported to be an 'outsider' with no previous Treasury experience and not a career long Civil Servant.
Worry that such an appointment might further 'spook' the markets.
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I see from his photograph that he does indeed have a bowler head. No hat required, just needs to get a brim fitted.
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If Kwasi or Liz had Cornflakes for breakfast rather than their usual Ready Brek there would be reports of panic in the markets.
If the appointee has experience outside the public sector, I would regard that as positive. The UK civil service has many excellent qualities - but set against that is an aversion to risk and change.
Whether KK and Lt have the right solution (or the talent) to initiate change is a different question.
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An aversion to risk is fine by me.
Of course you need people with ideas and readiness to change and adapt but there's probably a reason why humans have evolved such that most have a status quo bias.
The Permanent Secretary they sacked on day one, Sir Thomas Scholar IIRC, had great Treasury experience and was highly regarded as an adviser. I think we can assume he did not approve of the plan for the economy.
Truss has sidelined most within the parliamentary party who did not support her (that's most of them). Not good to be surrounded by yes wo/men.
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>> news.sky.com/story/chancellor-reverses-almost-all-tax-cuts-of-mini-budget-and-says-energy-bills-support-scheme-will-be-scaled-back-12722880
>>
>> Looks we are back to where we were a couple of weeks ago. Give or
>> take.
>>
Give or take hammered share prices, rocketing interest rates and £billions spent on bailing out bonds.
Incompetent fools.
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I meant policywise, I take your point though. It's been chaotic.
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>> Give or take hammered share prices, rocketing interest rates and £billions spent on bailing out
>> bonds.
>>
>> Incompetent fools.
4 things I can think of
1. There will be significant losses on pension schemes that have had to liquidate gilts in a falling market. This should not be forgotten.
2. Also, as Gerald Ratner discovered, reputations take years to establish and seconds to destroy. Financing new debt and rollovers could cost billions more every year unless and until full confidence in UK's creditworthiness can be restored.
3. A light needs to be shone more publicly on (in shorthand) 55 Tufton Street. On the day of Kwarteng's sacking, the BBC correspondent waiting outside no. 10 interviewed live on air a representative of the Institute for Economic Affairs. Oh good, I thought, they're going to ask them what they think of the results of their policies being implemented and the fact that they are now thoroughly discredited. But no, they were interviewed as if the IEA was some kind of independent body qualified to give expert analysis.
The IEA is financed by [nobody knows, they won't say, but tobacco companies have been mentioned, as well as big oil, gambling companies, and individual wealthy donors]. Along with the Taxpayers Alliance, Adam Smith Institute, and other right wing so-called think-tanks they are actually lobbyists for low taxes, minimal regulation, a flexible labour force (no employment rights) etc. etc. despite being registered as charities. Collectively they are where Brexit came from - the policies they advocate are very difficult to implement within the EU so they were always massively 'Eurosceptic'. The Leave campaign was also run from Tufton Street. The IEA et al have been grooming supporting and influencing Truss, Kwarteng and others for a decade or more and what we have just seen was a result of that.
The IEA has accepted funding from tobacco and gambling firms and created a free magazine for A-Level students promoting NHS privatisation and denying climate change science. OpenDemocracy also uncovered funding from US-based fossil fuel companies and climate change deniers to the IEA and similar ‘charities’.
The IEA itself boasted that more than a dozen members of Boris Johnson’s Cabinet – including Kwasi Kwarteng, Liz Truss and Priti Patel – are “alumni of IEA initiatives”.
bylinetimes.com/2022/09/12/tufton-street-to-downing-street-the-opaque-charities-at-the-heart-of-power/
The BBC can't plead ignorance here, They know very well what the IEA is and in fact released a programme/podcast on the subject on the very same day
www.bbc.co.uk/sounds/play/p0d6sjk7
4. Brexit. Sorry. It is more or less taboo in both main parties to blame Brexit for anything, although it is thought to have cost us around £400 billion so far mainly in economic damage. The time has surely come to allow some objectivity here instead of the "we must make Brexit work" line. Political considerations and the sunk cost fallacy are IMO responsible for the refusal seriously to consider UK's long term prospects here and the option at least to rejoin the single market for goods. It is probably the easiest and one of the largest opportunities for growth in the economy.
I am actually afraid that the Conservatives will rehabilitate themselves over the next two years. Voters have short memories. That Truss is still there is incomprehensible. Everything she stood on has been binned, and Hunt is clearly in charge as she can't possibly sack him. She lives in a fantasy in which "the markets" are to blame for the carnage, and that she can overcome this trivial setback.
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>>
>> >>
>>
>>
>> I am actually afraid that the Conservatives will rehabilitate themselves over the next two years. Voters have short memories.
>>
I very much doubt it. Even a relatively successful government like Blairs has a finite lifespan as the accumulation of scandals and errors catches up with them. Staying clean enough to win a fifth term is next to impossible in normal times as the voters simply get fed up with you, winning one after you've become some sort of sick joke is actually impossible.
Rember the Tories are only in power now because of Labour's spectacular own goal with Corbyn.
Last edited by: Robin O'Reliant on Mon 17 Oct 22 at 14:31
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Thanks Robin, I'm certainly in need of some reassurance - nothing seems impossible now.
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The institute of Economic Affairs has an annual income of £2.3m and 20 staff, and lobby generally on right wing policies. They are a side show, albeit with high level access.
As it happens, I dis-agree with much of what they lobby, but Voltaire had it right - "I disapprove of what you say, but defend to the death your right to say it"
That "lobby groups" promote and influence policies of all parties is undeniable. The Labour party still receive much of its income from the trade unions, who frequently threaten its withdrawal if party policy does not align with their objectives.
There is no real difference between left and right in this regard - both groups seek to influence political decisions through lobbying and provision of funds. That you or I may feel more comfortable with one rather than the other does not make the opposition wrong.
I do find it completely unacceptable that Liz Truss seems to lack the moral fibre to actually turn up in the HoC to answer questions. As I type, Penny Morduant is doing an excellent job in her absence - the next PM??
Whether Labour will triumph with a working majority at the next election is debatable. There is over two years to go - a lot can happen, and the electorate have short and selective memories.
By December 2024 unemployment may still be low, inflation well below 5%, energy costs back to "normal" as the war in Ukraine is over, economic outlook may be good to positive. Your guess is as good as mine!
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>> The institute of Economic Affairs has an annual income of £2.3m and 20 staff, and
>> lobby generally on right wing policies. They are a side show, albeit with high level
>> access.
I think you should take them more seriously. They and the other 'lobbyists' under the same roof have been incredibly successful at framing the agenda and providing off the peg policies for the hard right, which as you may have noticed now includes a large chunk of the Conservative party which almost certainly share some donors with them.
The IEA and the others have been frequent and regular participants on QT, and I don't recall them ever being introduced as paid right wing lobbyists. They always pose and behave as if they are some sort of official and or objective expert body.
There is no equivalent on the left. If there was, at least there would be some balance. No doubt some on the left are jealous of their success and would emulate it if they could, but to pretend that their work is in any way comparable with unions pushing their agenda is either naive or disingenuous. The unions do not purport to be anything other than part of, the spring of, the labour movement.
I hope we are going to hear and understand much more about Tufton Street in the future, now that we have seen the results some of their policies. That the BBC should actually ask them for expert analysis on the very day Kwarteng got the boot for putting their policies into practice is almost unbelievable.
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>The IEA and the others have been frequent and regular participants on QT,..
I don't know why you're letting it wind you up. Do you think the BBC are any more trustworthy than any of the other media outlets?
>There is no equivalent on the left. If there was, at least there would be some balance...
Right wing pressure groups presented as subject matter experts and the poverty-stricken and overworked 'NHS worker' who turns out to be a Corbynista union activist? Two sides of the same coin.
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>> >The IEA and the others have been frequent and regular participants on QT,..
>>
>> I don't know why you're letting it wind you up.
Not least because they authored the policy that Truss implemented.
Do you think the BBC
>> are any more trustworthy than any of the other media outlets?
In the matter of news, yes. Although I also credit Channel 4 News similarly. All news of course is subject to at least indirect bias from selection of what gets reported.
We would be far worse off without the BBC IMO. They are at least some sort of benchmark. The fact that both the Conservatives and Labour when in office think they are biased is quite reassuring.
>>
>> >There is no equivalent on the left. If there was, at least there would be
>> some balance...
>>
>> Right wing pressure groups presented as subject matter experts and the poverty-stricken and overworked 'NHS
>> worker' who turns out to be a Corbynista union activist? Two sides of the same
>> coin.
Not the same coin at all, a completely false equivalent with effects on a totally different scale.
Last edited by: Manatee on Mon 17 Oct 22 at 20:18
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>Not least because they authored the policy that Truss implemented.
Did they? The Beeb never reported that!
>In the matter of news, yes. Although I also credit Channel 4 News
>similarly. All news of course is subject to at least indirect bias from
>selection of what gets reported.
Which is it? Trustworthy and balanced or indirect bias? What the BBC reports is essentially factual but they are just as guilty of selective reporting and ommission of facts as the others. There isn't a single media outlet I trust without question. It just means I have to get my news from different sources before I form an opinion.
>Not the same coin at all, a completely false equivalent with effects on a totally different scale.
Presenting someone with a hidden agenda as an unbiased 'expert' is exactly the same no matter which side of the political fence they come from.
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The Budget - Crankcase
