Most budgets end in tears for Chancellors within days of being delivered.

The trouble is that even if Chancellors understand economics, and few do, they do not understand the real-world consequences of what they propose. I think, based on what we know already, that the backlash on this one will be on employer's NIC increases.

A 2% increase, as expected, will hit all employers, and especially small ones, really hard.

Keir Starmer will say the NHS must "reform or die" today. What he is really saying is that to balance Rachel Reeves' books, you might die because he's not willing to raise the funds to deliver the NHS this country needs. How does it feel to be a human sacrifice to austerity? That, I think, summarises what Starmer will really be saying today.

He's refusing to provide the new money the NHS requires even though he knows, and will say, the Tories underfunded it.

Would the UK economy really have collapsed as Labour is saying if it had not cut the winter fuel allowance for most pensioners within days of coming into office, whilst announcing more more ‘pain’ to come? Of course it wouldn’t have done. A thread….. Lucy Powell MP, Leader of the House of Commons, made the absurd claim that cutting winter fuel allowance saved the economy from collapse when taking on television on Sunday morning.

There is literally no need at all for Labour to deliver a painful budget in October. There is a massive capacity to increase taxes on wealth. If Labour wanted to borrow they could. And there are people who want good work. So, the ‘pain’ is all about Starmer & Reeves’ choice to deliver hardcore neoliberal dogma and not meet people’s needs.

Rachel Reeves told Laura Kuenssberg this morning that the pensions industry had failed the people of this country. Some obvious questions follow as a result. A short thread... Why, if the pension industry has failed so badly, does she want to force people to pay more it in pension contributions, as seems to be her plan?

The most useful thing I think I can do this morning is suggest questions to ask politicians in this election. A thread. The following list builds on work referenced on my blog, and most especially the Taxing Wealth Report that I published recently. taxingwealth.uk

Rishi Sunak is standing outside Downing Street saying that the newly chosen MP for Rochdale, elected yesterday, is the reason why he must crush our democratic freedoms. In the process he appeals to theocracy whilst totally undermining the democracy he claims to support. The reality is that if there are extremists in the country it is those members of his party who want to create divisions in this country for their own small minded gains.

Quite extraordinarily, leading politicians, including Kier Starmer and Rachel Reeves have in the last few days returned to talking about the country maxing out its credit card, just as David Cameron did in 2015. This is utterly absurd. A thread… [This is a long thread. If it appears to stop part way through, push the button to ‘see more replies’ and the rest should appear.]

Labour says it cannot now afford to spend £28 billion a year to deliver the investment in the climate transition that we all know we need. Let’s leave the politics and even the climate bit aside. Let me just look at the affordability bit. A thread…. Labour announced its green investment plan in 2021. And nothing much has changed since then, to be candid. For example, by the time it gets to office inflation will have been and gone.

There is justifiable outrage right now about the fact that the Post Office has been able to prosecute sub-postmasters itself based on data it generated. I get that anger, but we should remember that HM Revenue and Customs do this every day to thousands of people…. [This is a long thread. If it appears to stop part way please press the ‘See more replies’ option below the tweet where it appears to run out and the rest should appear]

War, of some sort, has begun in the Red Sea and Yemen. The UK is involved. It is likely that there will be action for a while. Ignoring the ethics of the engagement, for now, what are the economic consequences? A thread…… Because this war is going to make passage of the Red Sea more, rather than less, dangerous for the time being it is inevitable that for an unknown period the cost of shipping goods and raw materials from the Far and Middle East will rise. Suez is going to be out of action.

Without wishing to oversimplify things, there is a binary choice in politics. You can either emphasise the needs of the individual or of society. For the first time in more than a century, the UK's two leading political parties are emphasising the individual and not society. No wonder so many are disenchanted with politics. Only those who are willing to turn a blind eye to the needs of others are now represented by the mainstream choices presented to us. Anyone who cares about society has no one to represent them.

Sir Howard Davies, chair of NatWest, claimed on Radio 4 today that UK interest rates were low for a decade because there was a glut of savings and a shortage of investors to lend that money to. Should a man who doesn’t know how banking works be in charge of a bank? A thread… Since 2014 the Bank of England has acknowledged that when a bank makes a loan it does not use saver’s funds. Instead, new money is created by the exchange of promises to pay between the bank and the borrower. As it noted, that is how all commercial bank money is created.

The Telegraph is saying the Tories are going to change the UK's fiscal rules to catch Labour out in the run-up to the general election. This is because they think that we're all terrified of the national debt. We shouldn't be, and what they're proposing is bonkers. A thread... First of all, although the government claims that the national debt is nearly £2.7 trillion, it isn't. It's actually only a bit over £1.6 trillion. The rest is created by what I think to be false accounting. I explain why and what this means here. taxresearch.org.uk/Blog/2023/12/2…

Of all the taxes in the UK that Jeremy Hunt could cut, inheritance tax is easily the most stupid right now. Doing so would save millions for a few already relatively rich people, do nothing for the economy, and increase inequality. A thread…. Inheritance tax is paid by about 27,000 estates of people who have died each year, according to the latest data. That means just 1 out of every 25 estates are subject to an inheritance tax charge.

The Government has apparently drawn up plans to broaden the definition of extremism to include anyone who “undermines” the country’s institutions and its values.

I do that.

Should I be worried? A thread.... [Please note this is quite a long thread. If it appears to run out, just click the button offering to show you more replies]

The Bank of England has kept interest rates on hold at 5.25%.

It says it may still need to raise rates if the war in Israel / Gaza impacts prices.

It claims this is not the time to cut rates.

And each of those decisions and claims is wrong. A thread.... The Bank of England says interest rates need to be high to cut inflation.

Inflation is falling though, but not because of high interest rates.

For example, next month, inflation will fall because gas prices have fallen recently.

There appears to be a collective sigh of relief around the economy because the Bank of England has held its base rate at 5.25% today. But let me assure you that the insanity of their interest rate policy is continuing. A short thread.... I would love it to be the case that the Bank of England had at last begun to see sense on interest rates and that it had begun to end its ruinous decision-making that has as its one simple goal the driving of the UK into recession, but it really has not.

When I started publishing the Taxing Wealth Report I suggested that the increase in wealth is undertaxed by £170 billion a year in the UK. In response tax lawyer @DanNeidle has said this is nonsense. It’s a pity he did not read what I said before commenting. A thread… This is the tweet Dan Neidle published:

https://twitter.com/DanNeidle/status/1700405941055762813

Everywhere you look there is reason for the UK government to spend more money. Health, schools, water, transport, housing and energy. But the government and Labour say there is no money left. That, I suggest, is simply not true. A thread….. The case for more government spending is obvious. The money to pay for it comes from three sources: borrowing, money creation (or QE) and taxation. If inflation is to be controlled, tax has to be in that mix.

Will Hutton has an article in The Observer this morning saying that Britain is bust.

It isn’t. The UK has total wealth of more than £15 trillion.

A short thread.... The problem is not that the UK is bust. The problem is that the UK will not share its wealth in a way that produces well-being for everyone.