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Telegraph
5 days ago
- Business
- Telegraph
Labour's colossal failure shows Britain is heading for disaster
Few events are as powerfully symbolic of Britain's paralysing inability to get anything done than the failure last week of Labour's welfare reform bill. If a government with an overwhelming majority cannot even get a relatively minor adjustment to a plainly unsustainable welfare budget through its backbenches, what hope for anything more substantive? Dysfunctional and powerless before the growing mass of discontents, the country seems to be slipping into a state of abject anarchy in which meaningful change and progress becomes virtually impossible to achieve. Backbench MPs have come riding to the rescue of Britain's love affair with welfarism, but they'll get no thanks for it from an ever more angry and disenchanted electorate. That the country is going to the dogs is now taken as read. The roots of this malaise are deep, many faceted and by no means restricted to Britain. Many of the same observations can be directed at Western democracy as a whole, from Europe to the United States. After more than a decade of near stagnation in living standards, Western governments are failing to deliver as rarely before. In Britain, it was hoped that Brexit would provide answers by galvanising change and national rebirth. But in practice it has had the reverse effect: more red tape, more taxes, less growth, higher levels of immigration, and still greater loss of self-esteem. It is hard to recall a time of greater pessimism, or indeed a wider sense of despair among Western democracies in general. Small wonder, given the litany of broken promises. For precedents, one might cite the 1970s, but politically and socially turbulent though that decade was, it did at least witness substantial growth in real incomes. We see none of that today, with meaningful economic progress ground to a halt. For more exact parallels, we perhaps need to go further back in history to the interwar years, when similar levels of collective pessimism gripped Europe and America. There's nothing new under the sun, and all those books and treatises we see today about the decline of the West are mere echoes of the great outpouring of similar thinking we saw back then. The most prominent example is perhaps that of Oswald Spengler's Der Untergang des Abendlandes, literally translated as 'The Going-Under of the Evening Lands', but generally known as simply The Decline of the West. Published shortly after the devastation of the First World War, there was a particular reason for Spengler's declinism – Germany's humiliating defeat. Some of his theories about the rise and fall of civilisations are moreover pretty suspect, and largely irrelevant in today's world. None the less, he was prophetic in foreseeing the collapse of money in Weimar Germany and the subsequent rise of fascism, the latter of which he viewed as a solution to the decay and moral decrepitude of democracy. That the rise of what he called 'Caesarism' didn't work out so well either, and was later eclipsed by the rebirth of democracy, is another matter. At the time, he tapped into a deep vein of collective pessimism, the supposed solutions to which in nationalism and utopian thinking were later brilliantly chronicled by the historian Fritz Stern in The Politics of Cultural Despair. The backdrop to today's pessimism is admittedly different, but what the interwar years and other precedents do tell us is that disillusionment with democratic norms are cyclical and strongly rooted in political and economic failure. For a thought-provoking dive into these issues it is hard to do better than a recently published book by Lord Howell of Guildford, one of the last surviving members of Margaret Thatcher's first cabinet, and now in his ninth decade still going strong. Avoiding the Coming Anarchy: A Short Book for Optimists in Dangerous Times is, as its name implies, intended as an antidote to today's overpowering sense of decline, but it is hard to avoid the impression that Howell thinks the battle is already essentially lost. Amid the gloom, there are always optimists, and in the long run it is generally their view that prevails. One of the most striking from the interwar years was the economist John Maynard Keynes. In an essay published in 1930, Economic Possibilities for our Grandchildren, he dismissed the prevailing mood of economic pessimism as wildly mistaken. 'It is common to hear people say that the epoch of enormous economic progress which characterised the 19th century is over,' he wrote; 'that the rapid improvement in the standard of life is now going to slow down ... that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us'. Instead, he suggested that economies were suffering not from the rheumatics of old age, 'but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption'. It is testament to the timeless quality of much of his writing that Keynes might have been talking about our own age. In any case, he was substantially right, and his long-run forecast that technological advancement would lead to vastly increased wealth and living standards, if anything, somewhat underestimated the extent of the progress subsequently made. But he could not have been more wrong about the immediate future, where a decade of economic depression and political turmoil was to culminate in the calamity of the Second World War. The prevailing pessimism of 1930 proved wholly justified. No one knows the future, and it is by no means written in stone that today's paralysis will similarly end in some kind of apocalypse. But the risks are obvious. It is no accident that some of the world's richest tech tycoons are preparing for Armageddon, oblivious to – or perhaps in recognition of – the key role their own technologies are playing in the atomisation of politics and society that might bring it about. Economic pessimism tends ironically to go hand in hand with the disruption of rapid technological change, with established forms of employment trashed and much of the wealth it creates initially concentrated in relatively few hands. It's only later that the benefits are more widely diffused. Sadly, we are still in the very early stages of today's so-called 'fourth industrial revolution'. The moment of maximum danger still lies ahead. Democracy was reborn after the Second World War in new and reinvigorated form, supported by a rules-based order enforced through strong international organisations. But it has been wasting away for the best part of three decades now, and its institutions have become decadent, paralysed and despised. Labour's inability to carry out even the most basic of fiscal reforms points to a broken system heading ever more unavoidably towards disaster. When the rioting starts, a penny to a pound the state will be woefully unprepared for it. The failure is colossal, and they don't even know it.
Telegraph
21-05-2025
- Business
- Telegraph
Starmer has made tax rises inevitable
Sir Keir Starmer is no stranger to U-turns. In his time as Labour leader, the Prime Minister has reversed course on nationalisations and tuition fees, among other policies, to howls of outrage from some in his party. Each time, he has emerged with his authority consolidated. His latest reversal is different. Sir Keir's attempt to cut winter fuel payments has ended in the face of a threatened rebellion from the Left, leaving a hole in his budget, and his authority in tatters. The substance of the U-turn – with details still to be announced – matters less than the symbolism. Having forced their leader to back down once, backbench MPs will smell blood in the water. What was already shaping up to be a formidable row over benefits reform now has the potential to become unmanageable. The Government is currently planning to impose £4.8 billion in welfare cuts by tightening the rules on disability benefits, and freezing the rates of payment. That this move is necessary is indisputable. Spending on the Personal Independence Payment has reached £29 billion. On current trends, the bill for working-age people on this benefit will surpass this figure by the end of the decade. But a move being necessary does not mean that the Government will make it. The cut to the winter fuel payment was a small measure expected to save around £1.5 billion each year. Faced with anger from the backbenches, however, Sir Keir found that, despite his majority, he lacked either the stomach for the fight or the means to win it. If the Government cannot make even this small change to the welfare system, what chance is there of it making the sweeping changes we so desperately need? Implementing the reforms of the welfare state required to bring people back into work and cut spending on benefits is one of the most important challenges facing Britain. The Conservatives made gestures in this direction but in the end proved too scared to follow through. Now it appears that Sir Keir, too, is on the run from the welfare lobby, finding it easier to let spending rise than make hard cuts. The long-run implications are grim. If Britain cannot cut spending, it will need to raise revenue. The idea that Labour's first Budget would be a 'one and done' cash grab was always for the birds, and, indeed, Sir Keir yesterday failed to rule out further tax rises later this year. Angela Rayner's dream list of tax rises now stands a strong possibility of becoming Britain's waking nightmare.
