Labour’s defense looks very leaky, says ALEX BRUMMER
When Lord (Mervyn) King appeared on Radio 4’s Today show one weekend to talk about his new role as president of the MCC, he was inundated with questions about the economy.
The ex-governor criticized former Bank of England colleagues for noticing the cost-of-living car crash too late and printing too much money.
There were also barbs for Chancellor Rachel Reeves and Labour. By shielding three major tax groups – income tax, national insurance and VAT – from increases in the election campaign, the government essentially forced itself into a fiscal dead end.
One of these policies, closing tax loopholes on non-domiciled taxpayers, is heading for a reversal as Britain’s wealthy overseas residents, big spenders and investors flock to Milan and Dubai.
Meanwhile, private equity barons, fearing the loss of their special tax status – known as carried interest – are moving in the same direction.
Distracting: Lord Mervyn King was critical of Reeves and Starmer after the government essentially forced itself into a fiscal dead end
The promised end to investment subsidies for the already overburdened North Sea oil discovery and extraction companies is causing job losses and despite all the hype, Great British Energy will not compensate for this.
To add to the missteps, the clumsy way in which the winter fuel surcharge was abolished is likely to generate far less revenue for the Treasury than originally anticipated, as pension credits are boosted and pensioners miss out on other means-tested benefit entitlements. .
The disappearing income and savings streams have prompted the Chancellor to plug the alleged (but not certified by the Office for Budget Responsibility) £22 billion resource gap, around half of which has been created by public sector pay deals without productivity limitations.
So how can we find the missing billions and invest in public services as promised? King suggested it was a mistake for Reeves to have approved the Tory cut to workers’ national insurance.
Instead, one of the latest leaks in Whitehall is a proposal to increase national insurance for employers – a payroll tax on jobs.
That is also not exactly rosy at a time when the green transition in the steel and energy sectors is swallowing up jobs and artificial intelligence, another threat to employment, is lurking.
Labor has focused a lot on fiscal integrity and the failure of Liz Truss’s unfunded tax cuts. However, it too threatens fiscal stability if it tries to change the way the government balance sheet is measured by formally introducing the concept of public sector net worth.
This increases the size of the economy by including assets such as public buildings and playing fields. That’s a magic trick that entails market risks.
The defenses that Keir Starmer and Reeves set up in the run-up to the elections appear to be very leaky.
Sour grapes
There is nothing friendly about News Corporation’s response to its Australian arm’s firm rejection of Rea’s £6.2 billion takeover attempt for Rightmove.
Four offers have been rejected by Andrew Fisher and the Rightmove board, demonstrating an excellent resistance to predators that is not often seen enough in British boardrooms.
Rightmove has profitably exploited the online residential property space and, with sensible investment, could expand its reach in Britain and beyond.
Robert Thomson, the CEO of News Corp, which owns 61 percent of Rea, decided to throw his toys out of the pram after the rejection.
He praised his boss Lachlan Murdoch for his “smart” investment in Rea and for the company’s “financial discipline”. He then sardonically accused the British company of failing to take the “right step.” Pathetic.
Sporty life
Mike Ashley is not a person to be trifled with. Mulberry’s failure to consult the company’s 37 percent shareholder on a proposed £11 million fundraising by the luxury leather goods group fueled Ashley’s competitive spirit.
He made an offer of £83 billion for the whole thing. The founder of Sports Direct does not want Mulberry, a supplier to his department store chain House of Fraser, to end up in administration.
Ashley and son-in-law Michael Murray have become lenders of last resort to high street, fashion brands and online retailers catering to struggling businesses. Discipline, who needs that?
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