No Answer Andy and the Big Top of Broken Promises.
Welcome back, dear readers, to another week beneath Westminster’s Big Top of Blunders, where No Answer Andy is settling into the ringmaster’s chair, the Cabinet contortionists are twisting themselves around their latest contradictions, and the Treasury clowns are staring hungrily at Granny’s savings.
Six weeks into the Burnham premiership and Britain’s promised new dawn is beginning to look suspiciously like the old dawn wearing a different hat. This week brought landlords leaving the rental market, warnings from business, a miserable outlook for graduates, another row over North Sea investment and the extraordinary spectacle of Labour admitting that the benefits system is broken while simultaneously struggling to persuade its own MPs to support serious reform.
And presiding over it all is Burnham, whose determinedly dressed down approach to high office has itself become a story. There is nothing wrong with a Prime Minister dressing informally, of course, but presentation matters when representing a country. Burnham appears determined to prove he is not one of those stuffy Westminster politicians by occasionally looking as though he has popped into Downing Street on his way to collect a takeaway. Perhaps this is all part of the new politics. No tie, no fuss, and, when the questions become difficult, no answer.
The rental market, meanwhile, is providing a rather more consequential demonstration of what happens when political intentions meet economic reality. New figures suggest thousands of smaller landlords have left the market as regulation and taxation have increased. Labour says stronger protections are necessary for tenants, and there are certainly bad landlords who deserve robust regulation. But if perfectly decent landlords decide the risks and costs are no longer worth it, homes disappear from the rental market and tenants are left fighting over what remains. It is an impressive circus trick, trying to make renting more secure by encouraging the people supplying rental properties to head for the exit.
Business does not sound particularly cheerful either. Asda chairman Allan Leighton has delivered a bleak assessment of the economic environment this week, warning about Labour’s cumulative burden facing employers. Businesses have been dealing with higher employment costs, weak consumer confidence and stubborn pressures on household budgets. Westminster can call these measures investment, reform or fairness, but the bloke running the supermarket still has to make the sums add up.
Young people might reasonably ask when their share of this promised economic renaissance is arriving. The graduate jobs market has reportedly deteriorated sharply, with vacancies under intense pressure. After years of being told to study hard, go to university and build a career, graduates are discovering that the first rung of the ladder appears to have been removed for maintenance. Nothing says “government of opportunity” quite like leaving university with a large student loan and discovering the vacancies board has become an avant garde minimalist installation.
Then came welfare, and this week produced perhaps the purest Labour circus act of all. Pat McFadden acknowledged that the benefits system is broken, yet meaningful reform remains politically treacherous because parts of Labour’s own parliamentary party resist tougher measures. Thus we arrive at the magnificent spectacle of a Government diagnosing the problem, prescribing the medicine, reading the label, opening the bottle and then having its own backbenchers slap it out of its hand.
Even the balloon animals are confused.
The North Sea provided another warning from outside Westminster’s echo chamber. A senior FTSE figure has attacked the investment climate created by Britain’s oil and gas tax regime, using the eye catching comparison with Venezuela. That comparison is plainly rhetorical rather than a literal equivalence between the two economies, but the underlying warning about investor confidence deserves attention. Britain needs energy, jobs, tax revenues and investment while pursuing its transition towards lower carbon energy. Making investors wonder whether Britain actually wants their money is an unusual way of achieving those things.
Which brings us neatly to Granny.
A Labour think tank proposal to alter the tax treatment of savings has triggered another political row, with Burnham under pressure over whether he would contemplate changes affecting savers. No policy should be invented from speculation alone, and Downing Street’s eventual position matters more than a think tank paper. But the political symbolism could hardly be worse. After encouraging people for decades to save responsibly, build pensions and provide for themselves, Westminster periodically spots the resulting pile of money and develops the facial expression of a clown who has just discovered the key to the sweet shop.
And behind all this sits the question Labour never quite manages to escape, how much taxation is too much?
The argument over the Laffer Curve may sound like something the circus acrobats use to launch themselves into the trapeze, but the principle is straightforward. Tax rates cannot simply rise indefinitely on the assumption that behaviour never changes. People work differently, invest differently, move money, delay transactions, relocate businesses and sometimes relocate themselves. Governments can argue endlessly about precisely where those effects become decisive, but pretending incentives do not exist is not economics. It is wishful thinking wearing a Treasury lanyard.
That, ultimately, is the theme of Week Six. Labour wants more homes available for rent while landlords leave. It wants growth while businesses complain about costs. It wants opportunity while graduates struggle for jobs. It acknowledges welfare is broken while its own MPs fight reform. It wants investment while energy executives warn that Britain is becoming less attractive. And it wants people to save while political debate once again circles their savings.
You would need the flexibility of a circus contortionist merely to explain all of that without pulling something.
No Answer Andy remains in the centre ring, sleeves rolled up, tie apparently missing, promising that the show is heading in the right direction. Around him the Cabinet clowns juggle taxes, regulation, welfare and investment, while another magnificent balloon animal marked GROWTH slowly develops a worrying hissing noise.
Six weeks down.
Same Big Top, new ringmaster.
And increasingly, the funniest thing about the circus is that the people running it still seem surprised when the audience stops laughing.
READ ALL ABOUT IT: Links to this week’s top Labour circus acts below:
