Newspaper Reader: + Jonathan Rutherford’s book review of ‘The Five Rebels’! & Kate Andrews of The Spectator. (Be patient with me Reader)
Editor: Reader recall Mr. Eaton’s essay from October 30, 2024:
Headline: Morning Call: The Macbeth Budget
Sub-headline :Why Rachel Reeves has decided that tax rises are best done quickly.
Good morning, George here.
Rachel Reeves will today deliver the first Labour Budget for 14 years and the first-ever by a female chancellor. It’s a major moment in the UK’s history – even before Reeves has uttered a word. Below I explore what will define her statement.
During the general election campaign, Rachel Reeves appeared trapped in a straitjacket of her own making. By pledging not to raise income tax, National Insurance, VAT and corporation tax, she had ruled out deploying the taxes that account for more than two-thirds of government revenue.
Reeves had also bound herself to fiscal rules that radically limited the scope for investment. In order to meet her promise to reduce government debt as a share of GDP, Labour’s manifesto offered just £4.7bn of extra capital spending. Economists scoffed at its fiscal modesty: call this a growth plan?
But today, in an act of political escapology, Reeves will break free of these constraints. First, she will increase employers’ National Insurance as part of what some predict will be the biggest tax-raising Budget in history (the current record was set by Norman Lamont in 1993). Mindful that this may be her moment of maximum political leverage, Reeves has moved swiftly. Call it the Macbeth Budget: “If it were done when ’tis done, then ’twere well it were done quickly” (as is said of the murder of King Duncan).
The charge that Reeves faces is that she has killed one of Labour’s manifesto pledges. Party aides reject this claim, recalling that the Tories challenged them during the election to rule out an increase in employers’ NI (they didn’t). But what Reeves can’t deny is that this is a tax on business and, indirectly, “working people” – the criticism that she made of Rishi Sunak’s NI increase back in 2022. Expect the Chancellor to argue that the Conservatives’ profligacy left her with no choice. The facts have changed, so she has changed her mind.
Reeves’s second escape act is over borrowing. As first trailed a month ago in her Labour conference speech, the Chancellor will revise her debt rule to create more room for investment. Reeves is set to adopt a measure known as public sector net financial liabilities (PSNFL), which takes into account government assets – such as the student loan book and company shares. This would free up £50bn for investment, but Reeves is expected to settle for around £20bn to reassure the markets. She will also vow not to borrow for day-to-day spending (something that could necessitate future tax rises).
The Chancellor hopes that her extensive pitch-rolling will prevent anything resembling a Truss-style backlash. But more than Sunak’s Budget response – his last major act as leader of the opposition – eyes will be fixed on UK gilt yields (already at a post-election high).
Reeves’s wager is that the short-term pain of tax rises will be offset by the long-term gain of improved public services. This, polls suggest, is what voters expect from a Labour government. The nightmare for Reeves will come if the Conservatives can credibly argue that voters are “paying more for less”. That’s one reason the debate over public sector spending – and reform – is only just beginning.
Editor: Mr. Eaton’s essay from October 31, 2024:
Morning Call: Stagnation nation
Can Labour escape the economic doom loop?
Good morning, George here. Rachel Reeves’ tax-and-spend Budget represents an unambiguous break with the Conservative years. But while there are a lot of big numbers in the Red Book, they don’t appear in the growth column. That’s the problem I explore below.
This Budget was the one that Labour always promised to deliver – if you listened closely enough. As I wrote before the election, Keir Starmer and Rachel Reeves’ pledge to “prevent austerity” was only achievable through larger tax rises. These, I suggested, would be imposed after Reeves discovered “the books are worse than thought”. That’s exactly what has happened.
The £41.5bn of tax rises announced by Reeves put the UK within touching distance of the western European norm (a tax take of 38.2 per cent of GDP will leave us level with the Netherlands and not far off Germany). Combine this with a new industrial strategy, stronger workers’ rights and the highest public investment since Harold Wilson and a distinctively social-democratic model emerges.
Economic growth is critical to this approach – improved public services and higher living standards for workers depend on it. The problem for Labour is how little of it is predicted. GDP growth is forecast by the Office for Budget Responsibility to average just 1.66 per cent across the five-year period (after a temporary rise to 2 per cent next year). And remember, despite its gloomy reputation, the OBR has generally been overly optimistic in the past.
The outlook for living standards is even grimmer: they are projected to rise by just 0.5 per cent a year on average across the parliament, only slightly higher than growth during the previous Conservative term (0.3 per cent). This, the Resolution Foundation notes, would be the worst performance under a Labour government, lower than the 0.8 per cent growth recorded in the 2005-10 parliament.
Are there any glimmers of hope for Reeves? Labour aides point out that the OBR hasn’t accounted for the potential boost to growth from the government’s planning reforms (as they have yet to be finalised). But these alone won’t have the transformative effect that the Chancellor seeks.
Reeves insists that she doesn’t want a return to either austerity or ever-higher taxes – yet that is the unpalatable choice she faces. Spending on unprotected government departments is currently due to fall by 1.1 per cent a year in real terms after 2025-26. In common with her Conservative predecessors, Reeves has deferred rather than cancelled cuts.
Higher economic growth would help ease her dilemma. That’s one reason we can expect an increasingly animated debate about how to achieve it. Looming over the Budget was Brexit – a word mentioned just once by Reeves (“their Brexit deal harmed British businesses”, she noted of the Conservatives). The OBR’s judgement is as unambiguous as ever: it expects Brexit to “reduce the overall trade intensity of the UK economy by 15 per cent in the long term”.
I’ve long noted the irony that, far from becoming “Singapore-on-Thames”, Britain has embraced a more European model since Brexit: higher taxes, higher spending, more regulation. That is more the case than ever under Labour.
But what still separates the UK from its European peers? It isn’t a member of the single market. As the debate over Labour’s next manifesto begins, this inconsistency will become increasingly apparent.
The New Statesman proclaimes itself to represent:
New Times,
New Thinking.
The once Sidney and Beatrice Webb, George Bernard Shaw, John Maynard Keynes magazine is no more. Jonathan Rutherford represents that ‘New Times, New Thinking’?
Headline : How the Corbynite left hit self-destruct
Sub-headline: Andy Beckett’s The Searchers charts the rise and fall of Tony Benn’s heirs, but fails to confront the obstinacy and intolerance that undid them.
7 May 2024
By Jonathan Rutherford
This is a story about four left-wing Labour politicians – John McDonnell, Jeremy Corbyn, Ken Livingstone and Diane Abbott – and how they carried forward the cultural revolution of 1968. Inspired and guided by the older Tony Benn, the fifth “searcher” of the title, they single-mindedly enlivened a moribund London Labour politics and transformed the political culture of the capital as it emerged from its postwar decline. In their comradely, disputatious and occasionally angry relationships with one another they shared a political heritage in Benn’s democratic socialism.
In 1981 his bid for the deputy leadership had bitterly divided the Labour Party. He narrowly lost and, unforgiven, suffered the political death of internal exile. A similar fate of banishment awaited three of those he inspired. In 2015, when Corbyn won the leadership of the Labour Party, they took their London politics of economic radicalism and social liberalism on to the national stage. Like all stories of hope and human desire, it ended in tragedy.
Andy Beckett has written a sympathetic and absorbing political history of the main actors of the hard-left Socialist Campaign Group. McDonnell is the intense and thoughtful one, the strategist whom Beckett describes as influenced by the Italian communist theorist Antonio Gramsci. McDonnell will prove to be the most adept in the tactical pursuit of power. Corbyn is the believer who likes people. He wants them to like him, and generally when they meet him they do. Some will come to revere him. Livingstone is the great political talent, and like Corbyn a political obsessive. His cheeky-chappy patter disguises his dark political arts. Abbott stands a little apart and slightly aloof, more guarded in public. She has had to force a trail through racism, insults and ignorance to become the first black female Labour MP. They have all had a tough fight to make their way in Labour politics, but Abbott has had the hardest. It never got easier.
The 1960s was a brief period of social change and upward social mobility. These four individuals – the working-class Abbott, McDonnell and Livingstone, and the middle-class Corbyn – were able to establish themselves as activist leaders of a new metropolitan middle class that eventually came to dominate Labour politics. They pursued their ideal of socialism with tenacity and no little courage, earning themselves both love and hate – the latter at sometimes shocking intensity. And as Beckett makes plain in his title they won “many enemies”.
Of whom I was probably one. There is a brief mention of my role in Labour Together, the organisation that set itself the task of “winning the philosophical, intellectual and policy arguments within Labour”. The purpose was to “build the organisational capacity and political leadership to carry out this project”. That was the idea. Not unlike the project of these four politicians, then. Like them, the 1968 cultural revolution inspired my teenage years. Like them, although I was younger, my politics was formed in the late 1970s and 1980s with the rise of a humanist brand of Marxism and identity politics. But in the end I opposed their political ascendancy in the party.
…
By 2015 Tony Benn had died – the year before, aged 88 – and Livingstone was no longer mayor. McDonnell, Corbyn and Abbott, all now in their sixties, were marginal if troublesome figures in the Labour Party. As Beckett writes, it felt like the Labour left “was passing into history”. But the cooling embers were about to burst into flame. Labour lost the May general election, Ed Miliband resigned, and there was a contest for a new leader.
Should Corbyn carry the torch of the left into the leadership contest? As the deadline for nominations approached he ummed and ahhed. Finally, he agreed. Abbott immediately tweeted out the news before he could change his mind. A short while later McDonnell and his wife were at the Globe Theatre on the South Bank. McDonnell got a call from Seb Corbyn, Corbyn’s middle son, who was working on his father’s campaign. He said: “Dad’s worried about running. He’s worried that he might win”.
He did. In an astonishing populist revivalism, Corbyn united a coalition of the “defeated idealists of the 1970s and 1980s” and the “discontented of the early 21st century”. His election in September 2015 stupefied the political class. And then, a year later, it was knocked sideways by Brexit. The old rules of the game had been torn up. The polarising politics of friends and enemies was back in force.
The centrists and moderates who dominated the Parliamentary Labour Party had no conception of how to respond to the Corbyn leadership. He had attracted a huge influx of new members and created a plebiscite that underwrote his leadership. MPs opposed to Corbyn found themselves under increasing pressure in their constituency Labour parties. In an attempt to unseat him, 20 shadow ministers resigned. They tried a second time to remove him in a leadership contest in 2016. The problem was they had no political alternative to offer. Corbyn increased his vote. They bided their time until the next general election. With Corbyn as leader Labour would suffer a catastrophic defeat.
The 2017 election confounded them again. Labour, after an energetic campaign that was picking up support, lost but increased its vote. A few more weeks of campaigning would have seen it victorious. This was the high point for the four remaining searchers, a “victory” that was actually a defeat. And then the past and their allegiances began to catch up with them. Corbyn’s dramatic elevation into national politics brutally exposed his shortcomings. His naivety in dealing with foreign relations culminated in his questioning Moscow’s involvement in the Novichok poisoning of the former Russian spy Sergei Skripal in March 2018. His support, along with Livingstone and McDonnell, for Irish republicanism and anti-Zionism provided the right-wing press with a rich supply of stories about his meetings with extremists, conspiracy theorists and anti-Semites. Did Corbyn like the country he wanted to lead? His sympathies lay with the historical victims of British imperialism. Its enemies were his friends.
His desire to please everyone and to avoid difficult decisions created a leaderless party. Without political authority, intolerance, intimidation, mob persecutions on Twitter and the booing of journalists became regular features of Labour’s politics. A sanctimonious, cult-like politics grew up around him that identified his enemies and mobilised against them. Beckett makes elaborate efforts to distance Corbyn from the anti-Semitism that took hold and grew in this environment. In doing so, he more or less denies its existence, and cannot admit the paradox that the left too can be a source of evil as well as good.
Livingstone was the first to fall. In 2016 he was suspended for suggesting Hitler supported Zionism. He formally resigned in 2018. The following year Labour suffered a fourth, crushing election defeat. In 2020, under the new leader, Keir Starmer, Corbyn was suspended for stubbornly refusing to accept the scale of anti-Semitism in the party following the investigation by the Equalities and Human Rights Commission. The banishment was completed in March 2023 when the National Executive Committee (NEC), Labour’s ruling body, vetoed Corbyn standing as a Labour MP. The final act came a month later in April 2023 when the Observer published a letter from Abbott in which she argued that Jews, Irish people and traveller communities experience prejudice but not racism. It was sufficient excuse to suspend her from the party. Only McDonnell remained, leading a diminishing and marginalised hard-left faction. The influx of new members under Corbyn went into reverse. By summer 2023, the NEC reported a fall of nearly 170,000 from the peak of 564,000.
Each of Beckett’s five politicians confirmed Enoch Powell’s observation that all political lives end in failure because that is the nature of politics and of human affairs. What were they searching for? They came to represent a politics in search of redemption. The dogmatism and attacks on those perceived to be its enemies did not come from a searching, so much as the belief in a true path from which there can be no deviation. Politics came to stand for a religious quest for the puritan ideal of the city on the hill. That way lies the road to hell, paved with good intentions.
Beckett ends his book in 2023 with a visit to a talk by Bernie Sanders at the Royal Festival Hall. Looking around at the packed audience, Beckett recognises its similarity to Corbyn’s mass meetings. He reflects that it does not look like a Britain whose political time had gone for good. This may be true, but for the searchers of this book and their particular brand of London socialist politics, it has.
The Searchers: ‘, Their Dream of a Different Britain, and Their Many Enemies
Andy Beckett
Allen Lane, 560pp, £30
Editor: Should The Reader give any creedence to a publication that trades in Anti-Left propaganda, that could have been published in The Telegraph? There can be no doubt that the ghosts of the ‘Fives Rebels’ still haunt the Blairite New Labour, a pastisch, if that’s the right descriptor, of Mrs. Thatcher, but none the less toxic!
Editor: A portion of The Spetator’s Kate Andrews offers what George Eaton cannot!
Can Rachel Reeves calm the markets?
31 October 2024, 5:02pm
https://www.spectator.co.uk/article/can-rachel-reeves-calm-the-markets
…
Part of the problem will be the massive increase in spending on services like the NHS. With more than £22 billion worth of additional day-to-day spending going to the health service (without any reform attached), already public policy circles are doubting that tax and borrowing will stick at the levels announced in yesterday’s Budget. Paul Johnson at the Institute for Fiscal Studies notes how ‘incredibly front loaded’ the borrowing and spending is; ‘day-to-day public service spending, after inflation and the additional cost to public sector employers of rising NI, is set to rise by 4.3 per cent this year and 2.6 per cent next year, but then by just 1.3 per cent each year thereafter.’ Similar to the Tories’ pledge to cut spending dramatically in the years to come, it’s hard to believe Labour really intends to reduce its spending plans so substantially, especially in the run-up to an election. This suggests yesterday’s announcements are the start of what’s to come. Far from giving markets confidence, it’s uncertainty that has come to characterise the government’s borrowing strategy.
It should be said that Reeves is still far off breaking her own borrowing rules. And unlike the aftermath of the mini-Budget, the story of borrowing costs is being told over days, not hours. But costs are still moving in a more expensive direction, which will cause the Treasury plenty of problems, even if no policy undergoes a U-turn. The OBR forecasts that both interest rates and government borrowing costs will be roughly a quarter of a percentage point higher due to Reeves’s plans – but if headline figures settle higher than expected, that will add billions of pounds on to the government’s bills.
Winning over the markets was one of the biggest challenges in Reeves’s first Budget – and borrowing more was always going to be tricky, with the era of low interest rates long gone. So far they don’t seem convinced that this is an agenda for growth, which is why investors want a bigger pay-off for the risk they’re taking. Don’t be surprised if the goalposts shift: the hope for the government now is not that markets celebrate this Budget, but that they come to tolerate it.
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