Ross Clark

After reneging on its manifesto pledge to not raise National Insurance, Labour is starting to struggle with another promise: to cut energy bills by £300 a year. This morning Ofgem has announced that its Energy Price Cap will rise in January so the average household will be paying £21 a year more. Together with the £149 rise in the price cap in October it means that average bills will soon be £170 higher than they were when Labour came to power.  Together with the loss of Winter Fuel Payment – either £200 or £300 depending on your age – it means that pensioners will be worse off to the tune of well over £300 a year since election day.

Imagine what the government could do with an extra £9.1 billion a month. It could build HS2 in its entirety within the space of a year. Or better still, it could double the defence budget and still have some money left over to build the 40 new hospitals which the Conservatives promised – as well as a few schools, too.  That sum – £9.1 billion – is what the government paid in debt interest in October alone, according to the figures on public finances released by the Office for National Statistics this morning. Overall, it was forced to borrow £17.4 billion over the course of the month – only just shy of the £18.2 billion in had to borrow in October 2020, in the depths of the pandemic.

The comments by Stephen Moore, Donald Trump’s economic adviser, should not really be controversial. ‘I’ve always said that Britain has to decide,’ he said from Florida, where he is preparing the new administration’s economic policy. ‘Do you want to go towards the European socialist model or do you want to go towards the US free market? Lately it seems like they [Britain] are shifting more in a European model and so if that’s the case I think we’d be less interested in a free trade deal.’ He is right. Britain absolutely does have to decide whether it wants to be closer to the US economic model or to carry on down the route of becoming just another brand of European social democracy. And never has the decision stared us so firmly in the face.

Rachel Reeves is beginning to look awfully like Gordon Brown. Study the actions of this government so far and you would hardly say that deregulation was its big idea. True, Keir Starmer did claim at his investment summit last month that he was going to slash red tape. Angela Rayner wants planning laws relaxed to allow new homes on the green belt and Ed Miliband wants wind farms, solar farms and pylons just about everywhere – without the locals being given much of a say.

Keir Starmer said he was travelling to Cop 29 in Baku intending to “lead the world on climate change”. But it must surely be obvious that he is, instead, barking at a world that is heading in the opposite direction. Last year’s grand talk about “phasing down” fossil fuels at Cop 28 notwithstanding, today’s Global Carbon Budget Report forecasts that global carbon emissions will hit another record high in 2024, reaching 41.6 billion tonnes, up from 40.6 billion tonnes in 2023. The report calls this “marginal”, but it’s actually a 2.5 per cent increase, including all carbon emissions from industry and land use, as well as fossil fuel burning. How much longer can Starmer claim that he’s setting an example?

With an urgency not always noted in plumbers, Charlie Mullins announced earlier this year that he was leaving the country, before even waiting for the Budget fallout. He put his £12 million penthouse on the market and is busy buying up properties in Spain and Dubai, between which he will now spend his time. Inheritance tax, he said, was his main bugbear. He has already cashed out of his business, Pimlico Plumbers, which he sold for £145 million three years ago. Wealth managers are enjoying boom times like never before He didn’t even wait for the budget, but now it has been delivered has the real exodus begun? To judge by the headlines, Mullins is just one in an exodus of multi-millionaires who are evacuating the country in their (now more taxed) private jets.

Six days on from the Budget, and things don’t look any better for Rachel Reeves’s claim that her Budget won’t negatively affect working people. Today and tomorrow, it is the turn of the Commons Treasury Select Committee to pick through the wreckage. What have we learned so far? David Miles from the Office for Budget Responsibility (OBR) doubled down on the effect of the rise in employers’ National Insurance (NI). The OBR has already estimated that three-quarters of the effect will be on wages – thereby contradicting Reeves’s claim that working people will not suffer from the rise. Miles went further, saying that many economists would argue that 100 per cent of the effect of higher employers’ NI will eventually be borne by employees.

It was the absence of the Office for Budget Responsibility’s judgment that was blamed for the bond market crisis after Liz Truss’s mini-Budget. Truss and her chancellor Kwasi Kwarteng had rushed to enact their vision for a fast-growing economy without waiting for the wisdom of the government’s official fiscal watchdog. For Truss, the OBR is just another part of the establishment that was out to get her. But then, can the OBR be entirely trusted anyway? It seems that it has created a black hole of its own making – by overstating Public Sector Net Financial Liabilities (PSNFL). PSNFL is the measure that Rachel Reeves has chosen to use for her new fiscal rules – preferring it to the measure previously used because it flatters, slightly, the government’s balance sheet.