Category: Chaos

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Institute for Fiscal Studies (IFS) says UK has highest tax burden since Second World War

UK taxes high!

It has been suggested Rishi Sunak and Boris Johnson have overseen biggest tax rises since the Second World War

‘Fiscal responsibility’ – code words for ‘cock-up!’

Chancellor Jeremy Hunt and Prime Minister Rishi Sunak have stressed the need for ‘fiscal responsibility’ amid still-high inflation and rising debt costs.

According to the Institute for Fiscal Studies (IFS), by the time of the next general election, taxes will likely have risen to around 37% of national income, which is the highest level since comparable records began in the 1950’s. 

The IFS said that this is equivalent to around £3,500 more per household, but it will not be shared equally across income group.

Health and Welfare massive tax burden

The IFS also said that this is not a direct consequence of the pandemic, but rather a result of decisions to increase government spending on health and welfare, and some unwinding of austerity. They predicted that this parliament would mark a decisive and permanent shift to a higher-tax economy.

Other think tanks, such as the Nuffield Foundation, have echoed this view and said that there will be strong pressure in future parliaments to raise taxes further to meet growing demand for public services.

Dissatisfied

Some Conservative MPs have expressed their dissatisfaction with the lack of tax cuts from the government, as they believe that reducing taxes is a key part of the party’s philosophy. Chancellor Jeremy Hunt and Prime Minister Rishi Sunak have stressed the need for fiscal responsibility amid still-high inflation and rising debt costs.

Lurching from one problem to the next

We saw this type of response under George Osborne during the ‘austerity’ period after the financial crisis of 2008. And now again, after Brexit and the pandemic. They were all Conservative governments.

Hunt has reportedly said it would be virtually impossible to cut taxes at the moment – no surprise there then!

Labour has criticised the government for clobbering the general public with tax rises and failing to deliver growth and wages.

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Good news is bad news, and now bad news is bad news too

Stock market jitters

The stock market can’t get a break

It’s frustrating!

The stock market can be very volatile and unpredictable, especially in times of uncertainty and crisis. It seems like investors are reacting to every piece of news, whether it’s good or bad, with fear and panic.

According to some analysts, the main factors that are driving the market turmoil are the rising bond yields, the slowing global growth, the ongoing trade tensions, and the potential fiscal risks. These issues have created a lot of uncertainty and anxiety among market participants, who are looking for signs of stability and direction.

Long-term investing makes sense

Some experts suggest that the best way to deal with the market volatility is to have a long-term perspective, diversify your portfolio, and avoid emotional decisions. They also advise to stay informed, but not to overreact to every headline or rumour.

Remember that the market has gone through many ups and downs in the past and has always recovered over time.

Make sure as always… do your research!

RESEARCH! RESEARCH! RESEARCH!

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Polluting car and climate push back

Climate target push back

New car show room

Climate target push back
”I’d like to buy a new car please’. ‘Yes, of course… do you want a… gas, coal, wood, petrol, diesel, vegetable oil, virgin oil, hydrogen, electric, hybrid, pedal, jet, or rice powered one?” ‘Umm, I think I’ll leave it for now thank you’.

We just don’t have the funds, do we?

UK Prime Minister Rishi Sunak is reportedly planning to water down some of Britain’s climate commitments, saying the country must fight climate change without penalising workers and consumers.

Sunak issued a statement Tuesday in response to a BBC report saying the prime minister is considering extending deadlines for bans on new petrol and diesel cars – currently due in 2030 —- and on new natural-gas home heating.

The news drew dismay from environmental groups, opposition parties and some members of Sunak’s Conservative Party. It broke as senior politicians from the U.K. and around the world gather at the United Nations General Assembly in New York, where Biden and Yellen have placed climate high on the agenda.

Senior Tories who have championed net zero policies are reportedly furious at Sunak’s plans to delay or water down green measures. They warn that the decision will cost the U.K. jobs, inward investment and future economic growth that could have been theirs by committing to the industries of the future.

We won’t save the UK by bankrupting its people – Braverman

Home Secretary Suella Braverman says she backs Rishi Sunak’s expected shift on how the UK gets to net zero carbon emissions.

‘We’re not going to save the country by bankrupting the British people,’ she told BBC Breakfast.

It must be true, I’ve just seen it on the news. Is the UK broke? Is this the real reason for the climate roll-back?

‘We’re not going to save the country by bankrupting the British people’.

I for one am very confused??

Does the UK have the money? Is it a too big-a-burden for the UK tax payer? Can the UK generate enough ‘POWER’ from renewables? The UK needs fossil fuels?

Most of the world still needs fossil fuels!

Are we really ready to switch yet? Renewables and fossil fuels will have to work hand-in-hand for some time yet.

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NHS Strike action again, with nearly 8 million waiting in the queue

Consultants and doctors joint strike

British Medical Association-organised strike

Consultants and junior doctors in England are holding their first joint strike in the history of the NHS.

Waiting list

The latest data from NHS England, states the number of people waiting to start routine hospital treatment is at a record high of 7.68 million at the end of July 2023. This is up from 7.57 million in June 2023 and the highest since records began in August 2007. 

The waiting list has increased by more than 3 million since February 2020, the last full month before the start of the pandemic. The NHS is facing many different challenges due to the impact of Covid-19 on its services, staff and resources. This data suggests that the waiting list was already at 4 million even before the pandemic hit.

The latest strike action is a major factor now contributing to the NHS waiting list. Some reports suggest that over 850,000 routine operations and procedures have been cancelled so far this year, 2023 due to strike action alone.

Factors that may have contributed to the historical rise in the waiting list

  • The suspension or reduction of non-urgent care during the peak of the pandemic to free up capacity for Covid-19 patients.
  • The ongoing infection prevention and control measures that limit the number of patients that can be treated safely in hospitals.
NHS Strike action again, with nearly 8 million waiting in the queue
  • The staff shortages and burnout that affect the availability and productivity of the workforce.
  • The increased demand for health services as people seek help for conditions that were delayed or worsened by the pandemic.
  • Strike action.

The NHS is working hard to tackle the backlog and improve access to care for patients

  • Increasing funding and capacity for elcare, such as by opening more operating theatres, expanding community services and using the independent sector.
  • Implementing new models of care, such as virtual consultations, digital triage and shared decision making, to reduce unnecessary referrals and appointments.
  • Prioritising patients based on clinical urgency and need, rather than waiting time alone, to ensure that those who would benefit most from treatment are seen first.
  • Supporting staff wellbeing and retention, such as by offering flexible working, training and development opportunities and mental health support.

What about health education?

Government action

The government has also pledged to invest an extra £36 billion over the next three years to help the NHS recover from the pandemic and reform social care. However, some experts have warned that this may not be enough to address the underlying issues that affect the NHS performance and quality, such as workforce planning, public health funding and health inequalities.

How did it get so bad?

Lack of money or management failures? It has to one of these two. Throwing funds at an already badly managed ‘business’ will just amplify the problem allowing even more waste. And as the ‘system’ tackles the problem, more and more people will needlessly continue to suffer.

Fix our health service by fixing the people first!

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Gatwick cancels flights due to air traffic control staff shortages

'Suckers!'

Flights at Gatwick Airport were cancelled, delayed or diverted at short notice on Thursday 14th September 2023 due to a shortage of air traffic controllers.

Gatwick confirmed some cancellations, while the website FlightRadar24 said hundreds of flights in and out of the airport were delayed.

The National Air Traffic Services (Nats) apologised for its staffing shortages.

Gatwick Airport said it expected a normal service on Friday, 15th September 2023.

The disruption comes just over two weeks after a technical issue at Nats that led to 2,000 flights being cancelled across the UK.

EasyJet expressed frustration at Thursday’s delays and cancellations, while Ryanair boss Michael O’Leary called on Nats’ boss to resign.

Mr O’Leary reportedly said: ‘It is unacceptable that more flights and hundreds of passengers are suffering delays to/from Gatwick Airport due to Nats CEO, Martin Rolfe’s blatant failure to adequately staff UK ATC’.

‘Airlines are paying millions of pounds to Nats each and every year and should not have to see their passengers suffer avoidable delays due to UK ATC staff shortages’.

Update

Gatwick Airport said it was ‘operating as normal’ on Friday after a shortage of air traffic controllers caused disruption to flights overnight on Thursday, 14th September 2023.

'Suckers!'
‘Frequent flyers… suckers!’
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‘What’s the point of HS2 if there is no one to run it?’ ‘Beats me… guess we’re stuck with it!’

Train strikes

‘Is this the end of the line’?

Yet more strike action continues to create chaos for travellers

Much of the UK will have no train services on Friday 1st Septemebr 2023 as the latest major strike action takes place.

Members of Aslef, the train drivers’ union, who work at more than a dozen train companies, have walked out and have refused to work.

Up to 20,000 RMT union members at 14 operators will also strike on Saturday in a long-running dispute

Meanwhile, a consultation closing most ticket offices in England ends.

Ticket office closures

Unions and disability groups have also taken action against other proposed working practices in the industry, such as ticket office closures.

Currently, nearly 300 stations in England run by train companies with Department for Transport contracts have a full-time staffed ticket office – 708 are staffed part-time. Under the proposals, most would close.

Train strikes
‘What’s the point in HS2 if there is no one to run it’? ‘Beats me… guess we’re stuck with it!’

Ongoing dispute

The UK train strikes are part of an ongoing dispute between the rail unions and the train operators over pay and conditions.

  • ASLEF members at 16 rail operators will strike again on Friday, 1st September 2023 and Saturday, 2nd September 2023.
Strike action
‘What year is it? Strike action continues to hold inflation higher. Been here too many times before’.
  • RMT members at 14 train companies will strike again on 2nd September 2023. This will severely affect the timetables.

Pay dispute and working practices

The rail unions are demanding a pay rise that reflects the rising cost of living, as well as job security and improved working conditions. The train operators say they need to make changes to the ways of working in order to save money and improve efficiency, especially after the pandemic hit their finances hard. 

The Rail Delivery Group, which represents the train operators, has offered a 5% pay rise for 2022, but the unions have rejected it as insufficient and conditional on reforms they oppose.

The train strikes have caused significant disruption and frustration for millions of passengers, especially during the peak summer holiday season. The government has urged both sides to resume talks and find a resolution

Train strikes
‘Does this train go north’?
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Bank Holiday UK Air traffic control failure creates airport travel chaos

Flight delay

An apparent ‘technical issue’ halts flights to and from UK as the UK National Air Traffic Services control system (NATS) goes offline!

Holidaymakers are stuck all over the UK and abroad, with the National Air Traffic Services (NATS) saying it had applied restrictions to traffic flow. Passengers have been advised to check if their flight has been affected on one of the biggest UK travel days of the year.

National Air Traffic System

NATS reportedly apologised for the fault just after midday on bank holiday Monday 28th August 2023, before it announced at 15:15 BST that it had identified and remedied the issue that was affecting its ‘ability to automatically process flight plans’. We don’t yet know what caused the failure. NATS added that engineers would be monitoring the system’s performance as it returns to normal.

NATS had earlier stressed that ‘UK airspace was not closed, we have had to apply air traffic flow restrictions which ensures we can maintain safety’.

Several airports across the UK, and most airlines have all warned passengers of delays or cancellations to flights.

How fragile are the infrastructures systems in the UK?

Airport Stays
‘Why travel when you can stay at the airport free of charge’!?- ‘It wasn’t that long ago UK airports were brought to a standstill through strikes and border control issues. C’mon UK Plc… get your act together’!
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Bank error in your favour…?

Bank error

A technical issue that affected the Bank of Ireland’s online banking services allowed some customers to withdraw or transfer more money than they had in their accounts.

The glitch reportedly also added €1,000 to some accounts without explanation. This led to large crowds forming at ATMs across the country, hoping to take advantage of the error.

Some reports suggest that the police were called to calm some situations as some ATMs ran out of cash. The bank has since fixed the problem and warned customers that any excess money they withdrew or transferred will be debited from their accounts.

The bank also apologized for the disruption and urged customers who may face financial difficulties due to overdrawing on their accounts to contact them.

Questions remain – how or even why did this happen?

Bank error
‘Bank error allowed people to withdraw money from their accounts they didn’t have’.
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Bank of England says inflation rate 5% by Christmas 2023?

Bank Governor

That’s still 3% above the target of 2%

The Bank of England’s forecasting, which has a major impact on the UK economy, is being reviewed and has been criticised.

After the Bank raised interest rates for a 14th time in a row in an effort to slow price rises in Augts 2023, officials have predicted inflation to fall from the current rate of 7.9%, to ‘around 5%‘ by the end of the year. The Bank puts rates up when they are concerned that too much spending will send prices spiralling.

So, in light of its estimating techniques being challenged, how much faith should we put in ‘5% by Christmas’?

For the last two years, the Bank of England has been underestimating the likely rate of inflation in the short term. MPs have been critical of the Bank’s forecast, and its officials have acknowledged they have got some judgements wrong in their forecasting.

The Central Bank has also announced a review into how it makes forecasts.

This was one of the questions put to the Bank of England governor

Mr Baron: Good morning, everyone. In looking at the bank rate going forward, some of us, it is fair to say, have long believed that central banks, including the Bank of England, have been well behind the curve with regard to inflation. As the Chair has said, forecasting has been awry. The Bank of England is one among others that has been too slow in raising interest rates, allowing inflation to mushroom well above the 2% target.

I have put it as strongly as suggesting that it has been a woeful neglect of duty. It is causing real pain out there for people and businesses. We should always remember, as we sit in our, sometimes, white ivory towers, having these debates, that we are talking about people’s lives and businesses that are having to grapple with double-digit inflation and interest rates perhaps going up too quickly. I think that you get it, but it is useful to remind ourselves of that.

Why should the public have confidence in your ability to get it right going forward? What lessons do you think that you have learned? What are you going to do differently? I am not hearing a satisfactory answer to that...

See the full report here – be prepared, it’s an acquired taste and a long read…

More wrong than right

However, some critics have argued that the BoE’s forecasts are often too optimistic or pessimistic, and that they fail to capture the impact of major shocks or structural changes in the economy. For example, the BoE was widely criticised for underestimating the severity of the 2008 financial crisis and overestimating the negative effects of Brexit on the economy. Some have also questioned the usefulness of the BoE’s forecasts for guiding monetary policy decisions, as they may be influenced by political or psychological factors.

Therefore, it may be wise to take the BoE’s forecasts with a grain of salt, and not to rely on them too much for making economic or financial decisions. The BoE’s forecasts are not useless, but they are not infallible either. They are one of many sources of information and analysis that can help us understand the state and prospects of the UK economy, but they should not be treated as gospel truth.

The Bank of England has been wrong with too many forecasts, so why bother? Target 2%, actual above 10%!

I rest my case.

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Bank of England raises interest rate by 0.25% to 5.25% – highest in the G7

Bank of England

15 year high… and counting

The Bank of England (BoE) announced another increase in its base rate, from 5% to 5.25%, the highest level in over 15 years as of 3rd August 2023. This is the 14th consecutive rise since December 2021, when the BoE started to tighten monetary policy in response to rising inflation.

The Bank said that inflation, which fell to 7.9% in June, remained well above its 2% target and that further action was needed to bring it down. It also cited the risks posed by the global economic situation, especially the conflict in Ukraine and the slowdown in China.

Affect on borrowers

The rate hike will affect millions of borrowers and savers across the UK. Fixed-rate mortgages will not change until the end of their term, but new deals will be hit borrowers hard. Savers may see some benefit from higher interest rates, but only if banks and building societies pass on the increase, which they are slow to do.

Bear in mind that for the past 15 years many have benefitted from ultra low interest rates and cheap money, this is not the ‘norm’. And now, as more ‘normal’ interest rates return it will initially disrupt financial stability for some, and it will be difficult for many for a time. But money has been cheap and mortgages have always been the cheapest way to borrow long term and that is still the case – even if it doesn’t feel like it right now.

Expected

The Bank of England’s decision was widely expected by market analysts, but some have warned that further rate rises could damage the UK economy, which is already showing signs of weakness. House prices are falling, manufacturing activity is contracting and consumer confidence is low.

The prime minister, Rishi Sunak, said he was disappointed that inflation was not falling faster, but claimed that he was making progress and that there was ‘light at the end of the tunnel‘.

And a train too if he isn’t careful!

UK has the highest interest rate in the G7

Interest rates have been increasing across the world in recent months.

The Bank of England’s latest rate hike means the UK now has the highest rates in the G7 – a group of the world’s seven largest so-called ‘advanced’ economies.

That’s higher than France, Germany, Italy, Japan, Canada and the U.S.

If you think the UK’s got it bad, spare a thought for these countries where interest rates are rampant

  • Zimbabwe: 95%
  • Argentina: 97%
  • Ghana: 30%
  • Malawi: 24%
  • Iran: 23%
  • Turkey: 10.50%

Let’s not talk about inflation, just yet…

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‘Everything is fine, nothing to see here!’

Downing Street No.10
Downing Street No.10
‘Everything is fine, nothing to see here!’

Dream or reality – did this really happen?

The party-gate scandal lead to SERVING members of the UK government being fined, including the then prime minster (since sacked by the party) – and the then chancellor of the exchequer (now our serving prime minister).

You really can’t make this stuff up.

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Greed or need?

British Gas owner Centrica and Shell see profits soar as bills rise. 

Profit for the six months ending in June 2023 for British Gas owner Centrica rose to around £1.34bn from £262m a year earlier. The rise in profits came from the company’s nuclear and oil and gas business, rather than from the British Gas energy supply business which performed much worse. The average annual British Gas profit has been £584m in recent years.

Profit increase down to Ofgem ‘tweak’

However, the profit boom is surprisingly down to a ‘tweak’ to the regulator Ofgem’s energy price cap that allows the supplier to recover elements of the costs of supplying its 10 million customers during the energy crisis. 

The supplier’s current profit highs are likely to upset consumer groups that have campaigned against the supplier’s treatment of vulnerable energy customers as record energy market prices forced millions into fuel poverty. Some have called the profit making ‘legalised robbery’, and demanded to bring energy into public ownership.

Dividend plans

Centrica plans to raise its interim dividend by around a third but remarks that its underlying profitability will ease significantly in the second half of the year. Energy firms saw their profit margins hit last year when wholesale prices surged in the wake of Russia’s invasion of Ukraine. Wholesale prices also jumped as th UK emerged from the dark cloud Covid as markets undicated that the UK was ill prepared for the enconomic recovery. Brexit blues didn’t help either.

The energy price cap remains £1,000 above its pre-pandemic average, despite oil and natural gas costs easing significantly. It is predicted by industry ‘experts’ to remain around the £2,000 a year average for the coming winter months, maintaining excessive pressure on household budgets.

Some ‘windfall’ tax recovery, over the years will apparently go back to ‘society’, British Gas says.

Centrica chief executive reportedly said that a lot of the firm’s profits were ‘going back into society’.

‘I know it’s difficult to see the word profits, or dividends, or similar words when people are having a tough time. I’m very conscious of this,’ he reportedly said.

Windfall

‘Bear in mind, over the next couple of years we are expecting to pay a windfall tax of ‘probably‘ well over £600m on our UK gas business off the back of the profits that we’re seeing, so a lot of this is going back into society.’

A contentious thought

A business needs to make profits otherwise there is no business. It exits to make a profit and to supply a service or product – but it is about how that business makes its profit, isn’t it?

Token windfall tax temporarily slapped on by the UK government is only payable on UK profits. Oil and gas recovery companies will only pay a tax windfall on UK related profits not on overseas returns!

Profits from fossil fuel recovery invested in greener energy for the future – that’s a topic for another article.

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Inflation in the UK is proving stubborn

Central Banks are struggling to catch-up with inflation

UK inflation rate remains high at 8.7% in May 2023

The UK inflation rate remained at 8.7% in the year to May 2023, according to the latest official figures from the Office for National Statistics (ONS). This is the same rate that was recorded in April, but down from the 10.1% level seen in March.

The ONS said that rising prices for air travel, recreational and cultural goods and services, and second-hand cars resulted in the largest upward contributions to the annual inflation rate. However, these were offset by falling prices for motor fuel and food and non-alcoholic beverages.

The ONS also reported that core inflation, which excludes energy, food, alcohol and tobacco, rose to 7.1% in May, up from 6.8% in April, and the highest rate since March 1992.

‘I’m just taking this calculator thingy to my boss, I thought it might help’. ‘Well, good idea, guess it can’t make it any worse’.

High inflation is the fault of everyone else other than the central bank

The inflation rate is measured by the Consumer Prices Index (CPI), which tracks the changes in the cost of a basket of goods and services that are typically purchased by households. The CPIH, which includes owner occupiers’ housing costs, rose by 7.9% in the year to May, up from 7.8% in April.

The high inflation rate has been driven by a combination of factors, including supply chain disruptions, labour shortages, higher energy costs, and strong consumer demand as the economy recovers from the coronavirus pandemic.

The Bank of England has a target to keep inflation at 2%, but it has said that it expects inflation to rise further in the coming months before falling back next year. The Bank has also signalled that it may raise interest rates sooner than expected to curb inflationary pressures.

However, June’s inflation reading came in below economists expectations at 7.3% A small but welcome reversal of high UK inflation. UK inflation is higher than the EU and U.S.

Are central banks doing a good job at controlling inflation? Bear in mind the inflation target is 2%…