flamingos

From the BBC:

* Includes Speaker

Turnout: 60% (-7.6% from 2019)

Currently waiting on South Basildon and East Thurrock (Should be out later) and Inverness, Skye and West Ross-shire (delayed to Saturday). Will update when they're out.

The 2024 Labour manifesto may be titled ‘Change’, but it underscores the paucity of ambition in the economic plans of the government-in-waiting. Consisting of a few minuscule tweaks to tax provisions and loopholes and some pocket change in terms of additional expenditure — around £10bn annually, or just 0.4 per cent of Gross Domestic Product (GDP) — the economic programme they have laid out is modest in the extreme.

[…] [Labour argues] that, because the Tories have so damaged the economy, resources aren’t available immediately to do all the things that are needed — that the country can’t afford a transformative programme, and that public spending increases will have to wait for (and be predicated on) future increases in economic growth. Hence the straitjacket into which they have willingly placed themselves with their ‘fiscal rules.’

This argument is economically illiterate and historically obtuse. Britain is the sixth richest country in the world today — and one of the wealthiest societies in all of human history. Despite the dire state of the country, the problem is not a shortage of resources, but rather that plentiful resources are hoarded at the top. After more than four decades of neoliberalism, the situation is one of vast private affluence amidst widespread public squalor. That Britain does not feel affluent is a result of the extremes of growing inequality and the diversion of wealth and productive capacity away from public goods and services to elite private accumulation and consumption.

[…] Even if had Labour maintained their now-abandoned £28 billion-per-year green investment pledge, that would have represented only 1.3 per cent of GDP, or — as has been pointed out — around half of the annual increase in wealth of the top 200 families in Britain since the start of COVID-19 pandemic.

It is not only the scale of Labour’s economic programme that falls short, but also the underlying approach to economics it represents. We are told that we lack sufficient resources to make the public investments that are required, and that we must therefore avoid frightening the horses with taxation or nationalisation and instead create the stability business craves, delivering an economic strategy that will encourage increased private sector investment and result in growth (‘wealth creation’) that will benefit all.

Everything about this approach is wrong — especially the backwards causal relationship between public investment and growth — and its name is ‘trickle-down economics.’

But it gets worse. In the absence of public investment, Labour is betting the house on attracting more expensive private capital. What meagre additional public funds are to be made available will largely go to ‘de-risking’ (whereby the public agrees to absorb the greater part of any risk of losses on highly favourable terms for private capital), which will supposedly help fill the public investment gap through forms of public-private partnership — a model we have seen in the past in the form of the Private Finance Initiative (PFI) under the Blair/Brown era New Labour governments. At the heart of all this will be the financial sector — whom both Starmer and Reeves have encouraged, publicly and privately, to get their ‘fingerprints’ all over Labour’s economic policy.

Starmer’s Labour, we are told, is ‘set to land billions in new investment from banks and international firms within months, as part of a plan to use private finance’ for infrastructure investment and the green transition — PFI on steroids! One of the journalists who broke this story described Labour’s plan as being akin to ‘getting BlackRock to rebuild Britain.’

Here we find the most momentous of Labour’s economic policy commitments, a pledge to privatise and mortgage the future through handing over infrastructure investment and the green transition to private finance so they can monopolise, profit, and extract from the next economy as well as our present one. This is the polar opposite of the Green New Deal. It’s not new, it’s a terrible deal, and the danger is that, in elevating financial returns over environmental ones, it won’t be green either.

The real term for the Starmer/Reeves approach, properly situated in the recent history of Britain’s political-economic development, is ‘financialisation’. Financialisation (to borrow a definition from economists Michael Hudson, Dirk Bezemer and Howard Reed) is the diversion of financial flows away from the real economy of production and consumption and towards asset markets in pursuit of capital gains.

Financialisation is a complex phenomenon, but has enormous explanatory power as to the causes of Britain’s highly unequal and dysfunctional economy of growing poverty in the midst of plenty. Far from boosting productivity and increasing efficiency in the non-financial economy, the growth of the financial sector functions as a subtraction from the real economy, as ‘financial flows are diverted to unproductive uses and… the resulting revenue flows benefit a minority. As financialisation gathers pace, rising wealth and debt detract from income for the majority.’

In such an economy, what is counted as ‘growth’ matters a great deal. Every financial asset is at one and the same time someone else’s financial liability — and as the holdings of the financial sector have increased, so too has the debt held by households and businesses in the non-financial economy. This process helps explain the squeeze-play of recent years, whereby nominal economic growth has in reality been experienced as reduced income through increased extraction and indebtedness.
[…]
The financial sector, then, is extractive from the real economy. And given that all income groups are paying ever more into the finance sector in fees and interest charges and for underlying assets while the payouts from the sector are even more concentrated than those of the economy as a whole, the finance sector has also become the locus of the production of increased inequality in the UK economy.

This, then, is the economic engine that Labour has installed at the heart of its economics — a machine that lowers not increases growth, and concentrates the returns amongst the wealthiest asset owners, driving inequality and indebtedness.

The plan now is to deploy this machine for financial extraction increasingly in public services, including the NHS, and in energy markets and infrastructure to supposedly drive the green transition. It will be a veritable bonanza for finance capital — and a very costly exercise for the rest of us. Astonishingly, Starmer and Reeves have effectively doubled down on one of the principal causes of Britain’s poor, uneven, and unequal economic development and rebadged it as the solution.

[…] As a British Bangladeshi, I saw my phone light up the moment Starmer publicly singled out the country as a source of illegal migrants, saying in an event hosted by The Sun that they were not being “removed” from the UK in sufficient numbers.
[…]
Starmer’s choice to single out Bangladesh was odd for a number of reasons. Bangladesh is not among the top five countries for asylum claims to the UK. Nor does it feature in data from Oxford University’s Migration Observatory on the top 10 nationalities of those who cross the channel in small boats.

The comments caused such a backlash that British Bangladeshi Labour candidates reached out to me to express dismay that their party leader had done this. One sitting member of Labour’s National Executive Committee described it as “dog whistle stuff”; the deputy leader of Tower Hamlets council, home to Britain’s largest Bangladeshi community, quit the party in protest.
[…]
We covered the story at ITV News, and asked Starmer if he was aware of the hurt that had resulted from his words. His answer, on camera, was fairly clear. He did not mean to cause any worry, concern or offence. He praised the contribution of the British Bangladeshi community. He mentioned that he had visited the country as an MP, and that he was simply highlighting that the UK has a new returns agreement with Bangladesh that it had signed earlier this year.

This explanation may satisfy some — but it is notable that Starmer did not say he was sorry. One senior community leader in the British Bangladeshi community was far from impressed with it. “It is always one excuse or another,” they told me, “just like the time he never meant any offence when he called the Black Lives Matter movement ‘a moment’ and never apologised.”

The problem for Labour is that this feeds into a narrative that it has a worsening relationship with the British Muslim community. Since the escalation of the conflict in Gaza, the situation has been fraught; as I have travelled around Britain both before and during the election campaign, I have heard from countless British Muslims who feel ignored and let down by the party’s failure to call for an immediate and permanent ceasefire. Data analysis carried out for ITV News found that Labour had lost 33 percentage points of vote share in areas that are majority Muslim, suggesting that the rift has had an impact at the ballot box.
[…]
Ultimately, the Labour party is a long way ahead in the opinion polls, and the upset over Starmer’s remarks on Monday night is unlikely to have any impact on a national level. What it does, however, is exacerbate a problem that has been building for quite some time.

Starmer and his team are aware that governing is very different from being in opposition. Theoretical ideas become life-changing policies. All governments seek to unite the country and all parties believe their policies can do that, but leaving one community potentially feeling alienated and ignored can undermine this, which in turn can ultimately erode trust among the wider population.

The Forde report, an independent inquiry into Labour’s culture that was published in July 2022, found that the party was an “unwelcoming place for people of colour” and had a “toxic” culture of factional disputes between the party’s right and left.

In March 2023, Mr Forde gave an interview to Al Jazeera in which he said that no one from Labour had been willing to discuss the recommendations further and highlighted concerns raised by ethnic minority politicians within Labour about racism in the party.

In response, it has now emerged that the Labour Party sent Mr Forde a robust legal letter, seen by The Independent, accusing him of acting against the party’s interests and advising him that it was “considering all of its options”.

Lawyers accused Mr Forde of having made “extensive negative and highly prejudicial comments” and questioned his professional conduct.

Speaking to The Independent this week, the respected barrister said: “I don’t know if it was an attempt to silence me. I mean, they’ve couched it carefully along the lines of ‘We’re reminding you of your professional duties,’ which I found mildly irritating because I am a regulatory lawyer, and I don’t like my professionalism or ethics being questioned ... but I felt it was more.

He continued: “I’m a private individual; they can’t silence me. I fundamentally object to people saying to me, ‘You don’t know how to behave as a professional.’ I’m afraid that Black professionals get it all the time.”

This week, in yet another setback to Rishi Sunak‘s efforts to showcase how the Conservatives have created – over a decade and a half – a robust economy, the Office for National Statistics (ONS) reported that monthly growth in April in the UK had flatlined.

The British economy was said to be struggling with a faltering retail sector, a decline in manufacturing, and a reduction in construction output, after a 0.4% rise in March. The City’s pundits appeared to blame the weather and not the cost-of-living crisis for the lack of growth. The consequences of Brexit, as it seems to be so increasingly, was absent from the finger-pointing.

But this news of the parlous state of the British economy comes amidst more of the same. The UK’s labour productivity had increased by just 0.4% annually over the 12 years following the financial crisis – half the average growth rate seen in the 25 wealthiest OECD countries – and has resulted in a cumulative loss of £10,700 in wage growth for the average worker’s annual salary.

Middle-income individuals in the UK are now 20% poorer than their counterparts in Germany and 9% worse off than those in France.

[…] [T]he UK’s parlous goods exports would be far worse if you did not include the UK’s ‘empty calorie’ trading of global gold. If you took out such high frequency precious metals trading, it would mean that the UK’s goods exports are down some £44 billion since 2018. And that the UK’s goods exports are down, the UK’s service exports are up.

[…] The one silver lining in this dire economic news is that service exports are buoying up the UK economy. Indeed, last year the UK ranked second in the world for such exports – including ICT (Information and communication technology), education, culture, and finance.

The leading nation the UK exports such services to is the United States, where the $129.7 billion of services provided equates to over a quarter of the UK’s entire service export economy (27.6%).
[…]
The Lawyer has noted a 41% year on year increase in revenue by the top 50 US law firms in Britain since 2018: a jump from $5.7bn to $8.1bn. Even factoring in inflation, the rise is 13%. According to The Lawyer in 2021, the top American law firm in the UK was Kirkland & Ellis, and whilst their UK company house listings might not capture all of their UK earnings, it shows a 70% declared rise in profits last year.
[…]
Last month, it was reported that another American law firm, Quinn Emanuel, was offering its newly qualified lawyers in London an eye-watering £180,000 a year, an 18% hike from the year before. Those five years out of qualification will see salaries of £290,000. […] To put this all into context, the London Mayor, Sadiq Khan, earns £160,976. And the London Living Wage is currently set at £13.15 or, roughly, £27,352 a year.
[…]
The income per person in the UK’s richest local authority – Kensington and Chelsea (£52,500) – now stands at 4.5 times that of the poorest – Nottingham (£11,700).
[…]
Last year, hundreds of homeless families were permanently displaced from London by local councils, with little notice, or choice. The escalating rents in the capital, which have surpassed the local housing allowance (LHA) – the amount private tenants on housing benefits are entitled to for rent, varying by local authority – have driven these forced relocations.

The campaign group Housing Action Southwark and Lambeth (HASL) reported in 2023 that 319 households accepted private tenancies outside London. These families were frequently given 24-hour ultimatums by council officials to accept homes outside the capital or risk being classified as “intentionally homeless” for refusing the offer.

Archive/No Paywall

A Labour manifesto that brings the railways into public ownership, strengthens workers’ rights and removes tax exemptions for private schools (all policies from 2017 and 2019 manifestos) should be universally welcomed.

But what lies beneath is far more sinister. The 2024 Labour manifesto bakes in austerity for our public services. By ruling out redistributive taxation, it de facto accepts existing spending plans that the Institute for Fiscal Studies (IFS) says mean cuts to unprotected departments of between 1.9 per cent and 3.5 per cent per year. Austerity baked in.
[…]
The IFS has said there is a “conspiracy of silence” between the two major parties about the scale of cuts that is baked into the current economic plans. The Resolution Foundation estimates that implies upwards of £19bn of cuts in non-protected departments.

Nothing in Labour’s manifesto changes that analysis. The tax changes Labour has announced (mostly reforming non-dom status and removing tax breaks for private schools) amount to around £7bn in extra revenue – and that has already been earmarked […]

Across the public sector, from nursing to care workers, from teachers to junior doctors, there is a recruitment and retention crisis. Unless you restore public sector pay, you will not solve those staffing shortages, or tackle the NHS backlogs. It’s also not clear from the manifesto where any additional funding would come from to fund the private sector operations that shadow Health Secretary Wes Streeting has promised, leaving the worrying conclusion that they may come out of existing NHS budgets.

[…] Both councils and universities need an injection of cash, or we will all lose out. The courts have massive backlogs and child poverty has risen to 4.3 million due to decades of benefit cuts – none of which are being reversed by Labour’s new manifesto.
[…]
But as Labour has become ever more reliant on wealthy and corporate donors, so it seems their tax policy has been diluted. He who pays the piper calls the tune.

If you want a snappy summary of Keir Starmer’s “changed Labour Party”, it was pithily provided by Kay Burley earlier this year: “Labour’s happy to cap child benefit, but not bankers’ bonuses”.

When Britain’s prime minister, Rishi Sunak, stood in the pouring rain last week to announce a general election, there could hardly have been a less auspicious beginning to the Conservative Party’s campaign. In the space of a few days, it has gone downhill from there.

Eighty-five Tory MPs have shown their confidence in their party’s ability to win another term by declaring their retirement. These include the former PM Theresa May, long-serving minister Michael Gove, and erstwhile Tory leadership contender Andrea Leadsom. Twenty-two of these MPs have served in the Commons for fewer than ten years, and ten of them were only elected in 2019.
[…]
They are right to be worried. What is happening to the Tories is the culmination of the long-term decline and decomposition of their vote, which was accelerated by Brexit, Boris Johnson, the Truss debacle, and Sunak’s time in office. As I have argued in detail elsewhere, during the 2010s, the party became increasingly dependent on a coalition of propertied interests, with its core mass base provided by elderly voters.

These layers of the electorate were shielded from the direct consequences of the 2010–15 Conservative–Liberal Democrat coalition government through protection of pensioners’ incomes via the “triple lock” — a guarantee the state pension would rise in tandem with average earnings, inflation, or a baseline figure of 2.5 percent (whichever is the highest).

Deft manoeuvring around the “need” for cuts and judicious scapegoating helped ensure the Tories then escaped the political consequences of systematic cuts to public services, especially the National Health Service, that this demographic cohort depends on. But there was more to this loyalty than the consequences of Tory policy from 2010 onward.

First of all, there is the social location of being a pensioner. Because the incomes of pensioners tend to be fixed and cannot be made good in an emergency by reentering employment, their experience is analogous to that of the petty bourgeoisie. As many Marxists have observed, dependence on one’s own modest capital and ability to labo[u]r produces a political disposition toward stability and a hostility to real and imagined threats.
[…]
The second factor, which you might call the “strong force,” comes from [pensioner's] tendency to acquire property over time. […] This has had two significant political consequences. For the elderly property owner, it has strengthened the tendency to right-wing, authoritarian politics that was already latent in the social location of pensioners. In contrast, for younger people — today’s under-fifties — the housing shortage has severed the link between aging and the propensity to vote for the Right which, in the British case, means the Conservatives.
[…]
Sunak’s election campaign is the last gasp of a historically exhausted party. The task of trying to turn the situation around by appealing to working-age people is difficult, because his own political outlook (and that of the Tories in general) seeks to undercut any demands made on the state.

Steps to addressing the housing shortage would cut against the interest that the existing Tory coalition has in keeping property values high and maintaining the private rental sector. A move away from a politics of scapegoating would deprive the Tories of a tried-and-tested method of binding their supporters together.

As a result of Johnson’s stupidity, Truss’s recklessness, and Sunak’s do-nothing attitude, the age at which someone is more likely to vote Tory has more than doubled since 2019, from thirty-nine to seventy. To prevent complete disintegration at this hour, all the Tories can do is double down and hope there will be a viable enough rump left from which to fight back after the election. Even such a limited measure of success could well prove to be out of their reach.