What’s going on with Labour’s policy making? We are waiting for an NPF meeting, but that doesn’t seem to inhibit the front bench? This is a note on Reeves, her rules and macroeconomics.

This page was made in June 2023. I added to it since then, possibly moving away from the economics, in particular with respect to immigration. I have tracked her and Starmer’s speeches and over the spring 0f 2024, the focus returned to economics.

Bhattacharya’s Summary | Mais Lecture | Summer 23 | The fiscal rules | Energy and Keynesianism 02/24 | End Notes …

I found this critique of a further speech on Economics by Aveek Bhattacharya, who is interim director of the Social Market Foundation think tank. The article codifies and simplifies the strategy, it will plan for an industrial strategy, investment, cheap energy, a New Deal and planning will boost growth, but there will be less focus on education, skills, immigration, & even trade.

Mais Lecture 2024

I made some notes on her delivery of the Mais Lecture, 21/3/2024,

The video of the speech
Here is the text from which many chose to report.

I found an article from the times which I find lightweight and rude; some may find it funny. Also an article by Richard Murphy,

where he argues that all supply side reforms are bad; I am not sure that Reeves plans the sort of deregulatory reforms that Murphy fears.

Meadway posts a twitter thread, which argues that times have changed and that she retains room (although not much because of the fiscal rules) to co-fund investment. He nods towards modern supply side, which I am not certain is a choherent macro-economic theory.

Leftie Stats 06/23

Leftie Stats posts this,

I had noticed the Tuition Fees back slide, and the undermining of the green new deal money was quite noisy and contested.

The UK’s first green chancellor, looks like we’ll have to wait, her last stand up performance was the Securonomics speech, delivered in the USA and boosted in the UK by Labour Together and reported in the FT. Most of the commentators I follow, felt that this could be lived with and that it was a return to Labour’s social democratic roots; this cannot be so if monetarist rules and a hand dealt by the Bank of England and the bond markets are allowed to push the need for public expenditure off the railtracks.

Here are some links,

What are the rules?

This Why has Labour U-turned on its green investment pledge? from the BBC gives us a clue, here’s what I think the rule is,

  • To reduce the deficit (excluding investment) as a proportion of GDP; I remain unclear if this is a per annum rule (Miliband/Balls), or per parliament (Osborn & McDonnell) or a per trade cycle (Brown)?

I say the inverse is the key, the only way to reduce the deficit is to grow the economy, and that requires public expenditure, in investment, in current account services, and in public sector pay, so that public servants can afford to buy the new goods that the investment creates.

I am also concerned that throughout the education expenditure debate, no-one is arguing that education is an investment and that if one has a golden rule that permits borrowing to invest, then education should be considered part of this investment. This also shows the strange permeability of the distinction between investment and consumption. For instance, seed potatoes are an investment, a poke of chips is not.

Barry Gardiner writes on the rules in Labour List.

I reflect on Mish Raman’s understanding of the rules, in this article on the 2023 NPF on this wiki.

Feb 2024 – Energy and Keynesianism

And finally the £28bn p.a. on Climate Justice and Investment is buried. The Guardian reportsLabour announced the £28bn spending plan in 2021, as Reeves promised to be the UK’s “first green chancellor”. She said at the time the money would be spent on battery manufacturing, hydrogen power, offshore wind, tree planting, flood defences and home insulation.” but will now cut this to £14.7bn, with the bulk of the cuts being in the home insulation programme, that which most immediately impacts the poorest and their energy bills. Ed Miliband remains on board,

I comment, “It’s a retreat from Keynesianism, Climate Justice is just collateral damage. And deficit funded expenditure is funded by the private sector, through their bond purchases.” If you read the political background in the Guardian article, you can see the fear in Labour HQ’s hearts that even borrowing to invest is politically toxic. Another point I would make, and have made before, is that if our hopes are in giga-batteries, and windmills then they’ve already gone and the opportunity to invest in clean steel has also probably gone down the toilet.

Over the next week, Starmer says that his government will not settle the dispute with the public sector workers, nor repeal the two child cap on benefits. FFS. 😠 This backtracking observed on Politico.eu by EMILIO CASALICCHIO who catalogs the front benchers cowardly supporting the Starmer/Reeves line. Starmer repeats the pledge, or is it an unpledge, at the Tony Blair institute summit, by saying that Labour will need to make hard choices; I like and agree with the Meadway point, the choice is between starving children and taxing the better off.

More intellectually, Richard Murphy critiques/destroys the ONS/OBR analysis of public debt. (I need to read with more care what he says about the BoE assets, but this is pretty spot-on.

Robert Shrimsley, of all people examines the politics of triangulation in the FT (£|(-)), amongst many good points, he says,

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https://www.ft.com/content/c70a0522-aa06-4c47-81ee-95d01ab332f7

Starmer has clamped down on spending promises, recently refusing to guarantee to roll back a welfare cut he once called a “vast social injustice”. He says existing tax levels are too high and, like the Tories, talks up public service reforms to fund improvements.

Shrimsley, FT.

More from twitter

The day after posting these notes, I came across this, in June 23, reneging on the promise to introduce rent controls. I also decided to record the URLs of two more tweets,

And

And now we have the benefits/sanctions row


As we count down to the election, I collect some notes from Richard Murphy, who has just published a report called Taxing Wealth 2024, I have note three articles from his blog,

  • On Public Debt, he says, it is a response to the drivel being put out by the Tories on wrong-footing Labour on the national debt, which neither party seems to understand. 
  • Wealth Tax, where he argues that there’s more to be raised by tuning a bunch of taxes rather than inventing a new one, including reforming pension investment tax relief which would raise £35bn.
  • Student Loans, it’s an inequitable graduate tax, and should go

From Taxing Wealth front page, he says,

This project has turned out to be a much bigger one than I expected when I started on it last summer. It makes substantially larger suggestions as to tax revenues that might be raised than I ever expected even whilst sticking strictly within the self-imposed remit that all reforms proposed should be adjustments to existing taxes that make them fair in the sense that horizontal and vertical tax equity are enhanced. The glossary explains both these terms.

Richard Murphy – Taxing Wealth … an update

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