It has been a hundred long days and short nights (I don’t sleep well) since the Labor Party came to power with a landslide majority. And while I rarely rant and rave (friends tell me I internalize too much), this government worries me like no other in more than 30 years of reporting on monetary issues. It scares me a lot.
Everything Sir Keir Starmer’s tribe has done since July 5 has not impressed me at all.
Whether pandering to public sector unions on wages and pensions, pursuing a fervent (and expensive) green energy agenda, tying companies up for trouble and costs over improving workers’ rights, or forcing landlords to abandon the game due to improved tenants’ rights. The Labor Party is piling up problems – big problems – for the economy.
The unions, strengthened by what the Labor Party has already given them in the form of generous pay rises, will continue to demand pay rises that reduce inflation.
The enthusiastic pursuit of a green energy agenda will send bills soaring and leave the country vulnerable to intermittent power outages as demand for electricity soars to absorb the shift away from gas and in the process overwhelms the National Grid.
The Institute for Fiscal Studies has warned that Chancellor Rachel Reeves could need £25bn in tax rises to meet her public spending commitments and avoid austerity.
The new Employment Rights Bill (the brainchild of serial raver and deputy prime minister Angela Rayner) will increase costs for many businesses. Some small businesses will surely respond by reducing their workforce.
Rayner’s tenants’ rights bill will also put more private landlords out of business because the financial numbers will no longer make sense. Put all these negatives into a giant pot and you have a recipe for economic disaster, not the new economic dawn that Starmer says will soon appear on the horizon. The economy will paralyze.
A few days ago, the Institute for Fiscal Studies warned that Chancellor Rachel Reeves may need £25bn in tax rises to meet her public spending commitments and avoid austerity. That’s a lot of tax increases.
Financial markets, which finally ended Liz Truss’s brief stint as Prime Minister because they failed to approve her unfunded tax cuts, are increasingly nervous about the Labor Party.
Bond yields are rising, which could portend higher mortgage costs. The only positive is that the UK stock market hasn’t spooked yet, but don’t rule it out.
Specific tax increases that will affect our personal wealth will be detailed in the Chancellor’s Budget on 30 October.
As a result of the promises made in Labour’s manifesto, we already know that income tax rates will not increase (good), nor will the VAT rate (gooder).
Additionally, National Insurance Contribution (NIC) rates for workers will not increase (triple good).
But now that Labor has stopped taxing non-dominants and private equity investors to the hilt (for fear of losing the wealth creation they generate), it is an infallible certainty that it will be the people of Middle England (the readers of The Mail on Sunday and Daily Mail) who will take most of the fiscal hit.
So prepare for higher taxes on capital gains (made from investments, second homes and buy-to-let portfolios) and a more draconian inheritance tax regime (with a clampdown on the rules governing exempt gifts of taxes made to their loved ones).
And, of course, our pensions will not be saved. Although employers may suffer the biggest hit by being forced for the first time to pay NICs for the top-up payments they make to workers’ pension funds, there is every chance that our right to tax-free cash will be hit. severely limited.
Currently, most savers can access 25 per cent of their pension tax-free once they turn 55. But the amount in pounds is capped at £268,275. The Chancellor could well reduce this amount to £100.00 in her quest for additional tax revenue.
It is not a pretty picture (sorry if I have spoiled your Sunday) and I am sure that some of you will not share my pessimism.
But 100 days of this Labor government is 100 days too long. Five years of financial pain lie ahead. It’s time to batten down the hatches and invest as much money as possible into tax-exempt vehicles such as Individual Savings Accounts (ISAs) and pensions (despite the expected crackdown on tax-free cash).
Shame at the coldness towards protesters over fuel payments
It was heartening six days ago to attend a demonstration outside Parliament against Labour’s decision to trial winter fuel payment arrangements.
Although the event was hijacked by the Unite union with its phalanx of red balloons, banners and a booming megaphone, 350 members of the National Pensioners Convention rallied, many of them lobbying MPs in the House of Commons.
While I do not agree with the NPC and Unite’s position that the cuts to the winter fuel payment (worth up to £300) should be reversed, it is obvious to all government ministers across the bar that the way that have been implemented is unfair.
This is because too many pensioners living in poverty will miss out on payments as a result of the eligibility criteria for continuing payments being too onerous. Only those who receive pension credit – and some other benefits – will continue to receive payment.
A banner at the demonstration in London outside Parliament against Labour’s decision to means-test winter fuel payments.
As a report by the charity Age UK confirms, four in five pensioners living below (or just above) the poverty line will now miss out on the payment.
The charity’s Caroline Abrahams says: “Unless ministers change course, and quickly, millions of older people on low and modest incomes could face disaster as the climate cools.”
Against a backdrop of repeated chants – ‘Keir Starmer, don’t be cruel… give us back our fuel for the winter’ – I interviewed pensioners at the rally, including Sharon and John Baker from Woking in Surrey.
Although they can afford to lose their payment, they were flying the flag for relatives who are in a much poorer financial situation and who will be denied the money.
Former electrical engineer John, 74, said: “Labour has picked on pensioners when surely there are other areas of public spending that deserve further cuts.” So true.
Meg McDonald, a struggling 81-year-old former teacher from west London, also lost her fuel payment. Sporting a sign that read “Cold Houses Kill Us,” he said he would “fight” to keep his basement warm in the coming months. How sad.
It is now obvious that Labor will not consider how the payment reduction could be applied more sensitively.
The result is a spiteful attack on some of the country’s most vulnerable pensioners that will only put a dent in overall government spending. Shameful.
Some building societies are taking wokeness to the extreme. The latest is Nottingham, which has decided to do without Robin Hood, the legendary Hero of Sherwood Forest: for its logo.
Nottingham, which has more than 30 branches, says the makeover is “to reflect society as it is today”. He adds: “For us, that means championing inclusion and celebrating financial diversity.”
Oh dear. Surely Nottingham Building Society (as it will now be called) has much more important things it could do with its members’ money. For starters, increasing your savings rates would be enough.
If you are a member of Nottingham (sorry, Nottingham Building Society) and have an opinion on the society’s eradication of Robin Hood, please email: jeff.prestridge@mailonsunday.co.uk.
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