Tag: China

THE UNMENTIONABLE TAX INCREASE.

An aide to former Prime Minister David Cameron has admitted that the promise not to increase income tax, VAT or national insurance was made to fill a gap in a stream of policy announcements before the last General Election.

Nevertheless increasing income tax has become an unmentionable subject even for Jeremy Corbyn who demands instead that the planned cut in Corporation Tax be scrapped in order to cope with the mounting crisis in elderly care.

The government are not handling the problem well. It was not even mentioned in the Autumn Statement. Now we see ambulances queueing outside hospitals because elderly people can’t be discharged. That’s because there are no home care packages for them. That’s because councils can’t afford them or are running out of private providers who say Town Halls can’t give them an economic rate. That’s because of government cuts.

Now in a panic local authorities are going to be allowed to raise council tax by an extra 2% in each of the next two years, but not in 2019-20 when the Local Government Association reckon the social care gap will rise from its current figure of £1.3bn to £2.6bn. Presumably by then the whole issue will have been rethought and refunded.

But even this panic measure by the government will help the south more than the north because of its low council tax base. The top three beneficiaries are Surrey, Kent and Essex whilst Manchester and Liverpool are in the bottom ten. This presumes that the councillors will automatically levy the extra precept. They are expected to because there are no metropolitan borough elections next year. However there are mayoral contests in Liverpool and Manchester City Regions.

One wonders whether Corbyn’s Labour Party might be the first to break cover and support income tax increases to deal with the growing crisis in elderly care.

BRUTAL TRUTH IN THE MIDDLE EAST.

The policy of using western influence to remove brutal dictators in the Middle East and North Africa has long been discredited. In the rubble of Aleppo we see its nadir. Saddam Hussein in Iraq, Mubarak in Egypt and Gaddafi in Libya were all removed. As a consequence their countries are riddled with Islamic extremists even worse than them.

Assad in Syria refused to go, found an ally in Russia, and seems to be prepared bludgeon his people into submission to remain in charge.

The West has lurched from bungling interference to incompetence, certainly in respect of Syria. We encouraged moderate rebels to revolt against Assad, then didn’t back them up properly as they became infiltrated by extremists. What help we did give allows Russia to suggest we are partly backing Islamist extremists against the official government of a country in Syria whilst doing the opposite in Iraq.

All this could have a major effect on the world power balance. Russia is economically weak but has a clear, if brutal, view of its own interests. China grows more powerful and assertive in the Pacific. America is in a state of uncertainty over Trump and the European Union is in great danger of collapsing in a wave of populism.

Follow me at www.jimhancock.co.uk

FOUR MONTHS OF THIS?

As people lie in ambulances waiting for treatment, the sound of squabbling politicians rings in their ears.

If it’s not the NHS, it’s the economy. We got four or five rebuttal and counter rebuttal documents from the Conservatives and Labour on Monday about each other’s spending plans.

The electorate is already mightily disillusioned with the Westminster game. Four months of this will not just have them turning off in droves, it will make them angry.

Political reporters have already been overusing the phrase “the election campaign got under way today”, when we know that there will be multiple launches around the spring party conferences and when Parliament is dissolved. Oh for the return of the short sharp campaign. There is a view that people generally form a view two years out from an election. It is difficult to achieve significant changes in opinion amid the sound and fury of the last few weeks before polling day. To inflict this early period of claim and counter claim on a weary electorate is a mistake.

THE YEAR AHEAD FOR BUSINESS.

For business, the approaching election means the thing it hates most, uncertainty. The possibility of a change of government might mean that investment plans will be put on hold. This is compounded by the prospect that forming a new government might take weeks and involve multiple parties. Discerning what that will all mean for taxation and business incentives is very difficult, hence the Prime Minister comes up with his plea for continuity under the Conservatives.

But away from politics there are a number of other business related questions for the year ahead. How much longer are the workers going to settle for 1% pay rises and zero hours contracts? With unemployment dropping and the economy improving, are we going to see more robust demands for pay rises? These may particularly come in the private sector where there is some evidence of skills gaps developing. Public sector workers may be less likely to take part in a wage push because remorseless cuts are set to continue whoever is in power.

AN UNCERTAIN WORLD.

Uncertainty at home and uncertainty abroad. The slump in the oil price in 2014 took everyone by surprise. Whilst it provides everyone with lower costs in the short term, what it is telling us about the health of the world economy is another matter.

The American economy is surging ahead but the Euro zone’s performance continues to be an embarrassment for those of us who want it to succeed.

The Russian economy is tanking because of the oil price and sanctions, but how will Vladimir Putin react? Will he bow to the pressure or stoke up the fear that Mother Russia is under attack from the West.

A few years ago China’s rapid expansion sent raw material prices soaring. Growth has slowed. What effect will that have on China’s policy of increasingly investing in western infrastructure? Questions are being asked for instance about progress with the development of Wirral and Liverpool Waters.

A NEW MAGNA CARTA.

As we mark the 800^th anniversary of this shake up in English governance, it would be nice if we could take a fundamental look at how we are ruled from parish council to the House of Lords.

It doesn’t look as if that is going to happen. Instead we will have to concentrate on incremental change. In that respect the question for this year will be whether Leeds, Sheffield and even Liverpool will be getting the Greater Manchester devolution deal, with or without elected City Region mayors.