Liz Truss Ex-Prime Minister
Discussion
ATG said:
The closest you can get to a single big headline "thing that's wrong" is people not being prepared to take economic risk.
What encourages risk taking?
For companies it's stuff like the expectation of government policy stability, expectation of financial stability and expectation of economic stability. And what have they actually had to face? Massive instability and no sign of the government having any kind of a plan since we voted to leave the EU 8 years ago.
For individuals it's stuff like confidence they'll be able to keep a roof over their heads, get reasonable healthcare, get their kids a good education even if they suffer an economic knock back. And what have they actually faced? For more than a decade, public services going to s
t at the same time as housing continues to be prohibitively expensive, with matters deteriorating very significantly in the last few years. And, like companies, they see no sign at all that the government has a plan or any basic competence that's going to get the country to a better place.
So most economic participants have been operating in a bunker mentality for a heck of a long time now. Decision making short term, focused on survival.
And just for good measure, the benefits system creates poverty trap crater holes that people entirely understandably and predictably chose to sit in, because if they try to crawl out of them they expose themselves to a disproportionate amount of risk for bugger all short term reward.
I really don't agree about the bunker mentality. In the UK, the tax system has been deliberately geared to encourage "investment" in land and property, rather than in business investment and technology. At the same time, and not coincidentally, availability of risk capital is too expensive and too constrained. Far too much business lending is bank-sourced, far too little comes from private investors and other businesses. When you can make 5-10% pa on land and property, at low marginal tax rates, why would you take a risk on growth?What encourages risk taking?
For companies it's stuff like the expectation of government policy stability, expectation of financial stability and expectation of economic stability. And what have they actually had to face? Massive instability and no sign of the government having any kind of a plan since we voted to leave the EU 8 years ago.
For individuals it's stuff like confidence they'll be able to keep a roof over their heads, get reasonable healthcare, get their kids a good education even if they suffer an economic knock back. And what have they actually faced? For more than a decade, public services going to s
t at the same time as housing continues to be prohibitively expensive, with matters deteriorating very significantly in the last few years. And, like companies, they see no sign at all that the government has a plan or any basic competence that's going to get the country to a better place. So most economic participants have been operating in a bunker mentality for a heck of a long time now. Decision making short term, focused on survival.
And just for good measure, the benefits system creates poverty trap crater holes that people entirely understandably and predictably chose to sit in, because if they try to crawl out of them they expose themselves to a disproportionate amount of risk for bugger all short term reward.
Until we sort out the investment environment, we've got a problem. In the short term, that probably means Government-backed loans (as common in, say, Japan). In the medium term, we need more of an enterprise culture (in the US, from memory, 70%+ of investment in businesses comes from non-bank sources; in the UK it is the reverse).
I do agree, however, that the absolute disaster of public investment has been a major problem, too. The post-GFC stimulus and recovery programme was weak; our Covid response was better, but still sub-par. Government needs to stop being afraid of investment, and needs at the same time to find a way to recruit competent people to plan and deliver investment.
And we need to stop privatising services by the back door - it is simply pushing costs up, sucking money out of the UK economy, and destroying capability. Surely a Brexit benefit is the ability to buy British?
skwdenyer said:
And we need to stop privatising services by the back door - it is simply pushing costs up, sucking money out of the UK economy, and destroying capability. Surely a Brexit benefit is the ability to buy British?
I know there is a lot else in your post but this is something that really annoys me. The vote is long enough ago now to not care who voted for which side and what they thought they were getting but surely driving a thriving internal economy that allows British manufacturing to flourish and provide British products for us and abroad to buy would be an obvious thing for us to be targeting.Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
It drives me potty. Any clothes I buy are now UK made but t's so hard so do that with other stuff.
Mark-C said:
I know there is a lot else in your post but this is something that really annoys me. The vote is long enough ago now to not care who voted for which side and what they thought they were getting but surely driving a thriving internal economy that allows British manufacturing to flourish and provide British products for us and abroad to buy would be an obvious thing for us to be targeting.
Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
Made in Britain is expensive due to overheads, and not consistently a higher quality. Why would rational people buy it preferentially?Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
skwdenyer said:
I really don't agree about the bunker mentality. In the UK, the tax system has been deliberately geared to encourage "investment" in land and property, rather than in business investment and technology. At the same time, and not coincidentally, availability of risk capital is too expensive and too constrained. Far too much business lending is bank-sourced, far too little comes from private investors and other businesses. When you can make 5-10% pa on land and property, at low marginal tax rates, why would you take a risk on growth?
I own some VCTs, which I would have thought would count as "risk capital"? Over the medium term they certainly don't offer 10%, and by the time you include changes to capital value, I'm not sure about 5%. They are tax efficient, but a poor investment.Mark-C said:
I know there is a lot else in your post but this is something that really annoys me. The vote is long enough ago now to not care who voted for which side and what they thought they were getting but surely driving a thriving internal economy that allows British manufacturing to flourish and provide British products for us and abroad to buy would be an obvious thing for us to be targeting.
Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
It drives me potty. Any clothes I buy are now UK made but t's so hard so do that with other stuff.
While I respect the sentiment there are many things we are probably better off importing as it is low value assembly work. If you are going to "buy British" better to make it something that encourages high end manufacturing, like a British built car. Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
It drives me potty. Any clothes I buy are now UK made but t's so hard so do that with other stuff.
xeny said:
Mark-C said:
I know there is a lot else in your post but this is something that really annoys me. The vote is long enough ago now to not care who voted for which side and what they thought they were getting but surely driving a thriving internal economy that allows British manufacturing to flourish and provide British products for us and abroad to buy would be an obvious thing for us to be targeting.
Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
Made in Britain is expensive due to overheads, and not consistently a higher quality. Why would rational people buy it preferentially?Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
In terms of buying British, a lot of the time we buy US, French or German made products - which aren’t low-wage, cheaper producers.
With the importance of the information economy, for instance, why are we buying services from AWS or Microsoft rather than placing domestic contracts? Why are we outsourcing data analytics to Palantir? Why are we buying foreign-built police cars, or foreign-sourced trains?
“Best value” is a wide measure, and should include the wider benefits to the economy - not to mention how hard it is to persuade export buyers to buy British when our own Government won’t! The short-termism inherent in buying a slightly cheaper overseas option is a part of how our economy ended up in a mess.
xeny said:
Mark-C said:
I know there is a lot else in your post but this is something that really annoys me. The vote is long enough ago now to not care who voted for which side and what they thought they were getting but surely driving a thriving internal economy that allows British manufacturing to flourish and provide British products for us and abroad to buy would be an obvious thing for us to be targeting.
Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
Made in Britain is expensive due to overheads, and not consistently a higher quality. Why would rational people buy it preferentially?Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
Derek Smith said:
ClaphamGT3 said:
AstonZagato said:
A low minimum wage and in-work benefits, I suspect, has led to the UK having low productivity versus some of our peers. If a company is can expand by hiring ten MW workers rather than investing £1mio in a machine that speeds the current workforce, they choose the former. We have low unemployment numbers to make politicians look good. It makes immigration a necessity if we are going to grow.
However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
I would largely agree with this. The sensible options are;However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
1) Businesses investing in higher productivity, which drives growth but reduces low paid/low skilled jobs which, in turn requires tax revenues to be channelled into skills and training - achievable with sustained economic growth
2) An acknowledgement of lower productivity and lower wages and lower standards of living for low skilled jobs. Low skilled vacancies filled by immigration if necessary
3) As above but with in-work benefits to artificially increase living standards for the lower skilled/lower paid.
At the moment we have three but one would be preferable, I personally find (2) a bit morally problematic but it would be infinitely preferable to Govt intervening with supply-side prices and incomes regulation as some have suggested - that way lies old school Socialist madness
S600BSB said:
xeny said:
Mark-C said:
I know there is a lot else in your post but this is something that really annoys me. The vote is long enough ago now to not care who voted for which side and what they thought they were getting but surely driving a thriving internal economy that allows British manufacturing to flourish and provide British products for us and abroad to buy would be an obvious thing for us to be targeting.
Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
Made in Britain is expensive due to overheads, and not consistently a higher quality. Why would rational people buy it preferentially?Neither major party seems to get this and people are all too happy buying tons of cheap tat from China that has to be shipped across half the world and provides little return in the UK apart from a bit of tax income (maybe).
xeny said:
I own some VCTs, which I would have thought would count as "risk capital"? Over the medium term they certainly don't offer 10%, and by the time you include changes to capital value, I'm not sure about 5%. They are tax efficient, but a poor investment.
But can also depend on the Fund chosen.My most recent 2 ( 12 months old ) have both returned just under 5% pa on Nett , my second longest standing one has returned an average of 10% on Nett.
Over that time my oldest ( held for 15 years or so ) in addition to dividends paid has now a NAV of circa 150% of the nett invested.
I’m not saying this makes them good investments ( EIS for me has returned far better results ) but investing just for the tax relief I would agree isn’t the only consideration.
xeny said:
skwdenyer said:
I really don't agree about the bunker mentality. In the UK, the tax system has been deliberately geared to encourage "investment" in land and property, rather than in business investment and technology. At the same time, and not coincidentally, availability of risk capital is too expensive and too constrained. Far too much business lending is bank-sourced, far too little comes from private investors and other businesses. When you can make 5-10% pa on land and property, at low marginal tax rates, why would you take a risk on growth?
I own some VCTs, which I would have thought would count as "risk capital"? Over the medium term they certainly don't offer 10%, and by the time you include changes to capital value, I'm not sure about 5%. They are tax efficient, but a poor investment.A lot of VCTs don’t *provide* risk capital, but rather risk your capital
Buying traded AIM shares, for instance, is not providing risk capital to the underlying business (even if there’s a new issue, a lot of the time a hefty chunk of the proceeds go to the promoters, massively increasing the risk).skwdenyer said:
“Best value” is a wide measure, and should include the wider benefits to the economy - not to mention how hard it is to persuade export buyers to buy British when our own Government won’t! The short-termism inherent in buying a slightly cheaper overseas option is a part of how our economy ended up in a mess.
I saw an analysis of the US armed forces on this basis - essentially tax from the companies making the weapons acts as a discount to the US Defence budget, as well as amortising development costs. The firms then sell the product overseas, generating more tax take for the US Gov't. They get decent weapons at a huge discount when all the cash flows are included.xeny said:
skwdenyer said:
“Best value” is a wide measure, and should include the wider benefits to the economy - not to mention how hard it is to persuade export buyers to buy British when our own Government won’t! The short-termism inherent in buying a slightly cheaper overseas option is a part of how our economy ended up in a mess.
I saw an analysis of the US armed forces on this basis - essentially tax from the companies making the weapons acts as a discount to the US Defence budget, as well as amortising development costs. The firms then sell the product overseas, generating more tax take for the US Gov't. They get decent weapons at a huge discount when all the cash flows are included.skwdenyer said:
xeny said:
skwdenyer said:
“Best value” is a wide measure, and should include the wider benefits to the economy - not to mention how hard it is to persuade export buyers to buy British when our own Government won’t! The short-termism inherent in buying a slightly cheaper overseas option is a part of how our economy ended up in a mess.
I saw an analysis of the US armed forces on this basis - essentially tax from the companies making the weapons acts as a discount to the US Defence budget, as well as amortising development costs. The firms then sell the product overseas, generating more tax take for the US Gov't. They get decent weapons at a huge discount when all the cash flows are included.
Kwasi Kwarteng did an interview on Leading with Alastair Campbell and Rory Stewart. Part 1 released yesterday, part 2 next week. Part 1 is about his background and beliefs and part 2 is presumably going to be about his time as Chancellor. Campbell said it is going to be uncomfortable listening for Truss, probably because he accepts blame for what happened while she blames it on Ocado and other elements of the deep state.
He fluffed it a bit when he was Chancellor but he's very intelligent and a very good communicator and I expected him to become PM at some point. He's a rare politician who comes across as being straightforward and open.
He fluffed it a bit when he was Chancellor but he's very intelligent and a very good communicator and I expected him to become PM at some point. He's a rare politician who comes across as being straightforward and open.
Mr Penguin said:
Kwasi Kwarteng did an interview on Leading with Alastair Campbell and Rory Stewart. Part 1 released yesterday, part 2 next week. Part 1 is about his background and beliefs and part 2 is presumably going to be about his time as Chancellor. Campbell said it is going to be uncomfortable listening for Truss, probably because he accepts blame for what happened while she blames it on Ocado and other elements of the deep state.
He fluffed it a bit when he was Chancellor but he's very intelligent and a very good communicator and I expected him to become PM at some point. He's a rare politician who comes across as being straightforward and open.
He was incredibly naiive.He fluffed it a bit when he was Chancellor but he's very intelligent and a very good communicator and I expected him to become PM at some point. He's a rare politician who comes across as being straightforward and open.
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