No. 184 - A Ringside Seat for you James as the Final Bill Lands on the Mat.
Dear James,
Another dramatic week among many. And you certainly had a ringside seat as our nation’s massive economic crisis was officially announced on Wednesday. As PPS to the Chancellor, you will have watched – and perhaps even participated in - the deliberations that led to Mr Sunak’s Spending Review. It must have been quite a roller coaster!
On Wednesday, with the serene self-confidence of a multi-millionaire, the Chancellor declared our nation to be in the greatest economic slump since 1709. Britain’s ‘PM-in-waiting’, told us that the UK economy will shrink by 11.3% this year and that we will have to borrow a staggering £394bn compared with last year’s £55bn to see our way through the current Coronavirus pandemic. This is the biggest single annual increase in borrowing since 1944. This sum will be added to the already vast total debt of £2tn thus bringing our GDP to Debt ratio to above 100% for years to come. At the same time, our unemployment rate will increase from 4.6% currently to 7.5% by next spring. 2.6 million people will be out of work, the worst figures since the early 1980s. The last time our country had such a huge debt in 1945, it took us over thirty years to pay it off. The hit will be massive and, as usual, it will be the poor who suffer most.
Such decisions would have had to been made no matter which government was in power but this was definitely a Tory prescription. It smacked of concessions to the ‘little Englanders’ and Tory ‘backwoodsmen’ and their associated ideological baggage.
Firstly, Rishi and his team, which includes your own good self James, has slashed the overseas aid budget from 0.7% of GDP to 0.5%. This is shocking to those who believe that the sixth largest economy in the world should be generous to the poorer nations despite our own current difficulties. What about their difficulties James? They too have had to battle Covid-19 on a much smaller resource base than our own. Mr Sunak has shown weakness under Boris and his supporters in the Tory shires and in so doing has squandered the soft power which has given us so much credibility in the world until now. Yes, you can point to the fact even at 0.5% we give more per capita than most other developed nations but the extra 0.2% was the jewel in our crown. That crown is now dented. Mr Sunak claimed it is only ’temporary’ measure but who will believe that from a member of a Tory Party whose main tool under Boris has been ‘boosterism’?
Secondly, you have decided to freeze the wages of 1.3 million public sector workers claiming that private sector incomes have fallen in the last year while public sectors equivalents have remained the same. This is the Tory party ideological baggage speaking. Private is always better. It certainly is for the Tory ‘chumocracy’. In 2020, Pestfix, a company with 16 staff, and cash assets of £16,000 and specialising in anti-pigeon roosting devices, landed a PPE contract worth £313m. Another company Ayanda Capital, a company based in Mauritius and specialising in ‘currency trading’ and ‘off-shore property’ won a face mask contract for £252m. What links these two companies? Both were connected to a ‘high priority channel’ reserved for suppliers with ‘favourable political connections’. Private is certainly better for your chums James. It will be interesting to see your apologia in your next round robin.
But the third decision made by Mr Sunak this week was to fail to make any mention of the Brexit negotiations that are currently nearing their denouement. Is it really possible that a nation facing the biggest slump in its history for three centuries, an unemployment rate of 4.6 % and the biggest debt since the second world war, is about to throw itself into the biggest act of self harm with at best a ‘thin deal’ with the EU and at worst a ‘no deal’? But not a word! The OBR says that a no-deal could mean that output is reduced by a further 1.5% by 2025. The Governor of the Bank of England says the long-term impact of a no- deal could exceed that of the virus.
This week we got a glimpse of how things really are. A leaked Cabinet Office briefing warns of a “notable risk” that in the coming months the country may face a perfect storm of simultaneous disasters. Yesterday, Boris with his usual bravado claimed that If there is no deal, “Britain, will prosper mightily.” Again bluster over facts. Hope over actuality. Exaggeration instead of sober reality.
James, as you sat at that table in No.11 this week, did you not see that it will be the ‘chums’ rather than the ‘bums’ who will ‘prosper mightily’? Of course not. For the few, the future is always bright! But it was not a good week for the rest of us!
Kind regards,
BH - Your Concerned Constituent