Why single out taxes?

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There have been reports that UK Ministers are planning to change the planning rules around pubs in order to make it harder to close them, with developers to be required to prove that there is no reasonable prospect of keeping a pub afloat before a change of use can be considered. Talking of the causes of pub closures, the Guardian says “Pub and restaurant bosses have blamed the employer national insurance increase, the higher minimum wage and food price inflation as well as high business rates”, the BBC blames “taxes and employment costs”, whilst the Sunday Times (paywall) says the closures are “largely as a result of rising costs from the increased rate of employers’ national insurance contributions … and high VAT and business rates”.

It’s true, of course, that if the costs of a business increase, it can be harder to keep that business viable without an increase in prices. That’s just Economics 101. The corollary is that if one element of those costs could be reduced whilst leaving all other factors unchanged, then the business will become more profitable. So, if the government stopped collecting taxes on pubs, those pubs would become more profitable. But it’s equally true that those same pubs would become more profitable if the breweries stopped charging them for beer, or the wholesalers stopped charging them for food. Taxes are just one element of the costs of a business, rather than some sort of special extra cost. The bottom line isn’t that taxes are causing pubs to shut, it is that the demand for the services of those pubs at the prices required to make a profit is insufficient. And the ‘rules’ of capitalism tell us that a business which cannot sell its wares at a price which enables it to cover its costs and make a reasonable profit is a non-viable business, which should close, with the demand then concentrated on a smaller number of businesses.

I wouldn’t actually advocate that – pubs perform useful social functions particularly in rural communities and there may be good reasons for subsidies or other forms of assistance to keep them open.

The point, though, is that blaming taxes tells us more about the ideological stance of those making the claim than about the economics of the pubs sector. Successful businesses depend on a supply of suitable trained and educated workers; they depend on those workers being healthy and fit for work; they depend on the infrastructure required to get their supplies delivered and the customers to their door. What, exactly, is the argument that those are not in themselves business costs, even if indirect? And a business which cannot pay its employees a living wage has no basis for remaining open anyway.

Government is hard

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Government is hard. And the transition from opposition to government is not a smooth one. Things which it is easy to oppose from outside become more problematic from the inside. We saw it when Labour replaced the Tories as the UK Government: one obvious example is the way that all those Labour candidates who gave such fulsome support to the WASPI women when they wanted their votes found themselves in a government which has done precisely nothing to remedy the injustice. We’re seeing it in Wales too, with the news this week that the Plaid Cymru Welsh Government is facilitating and participating in the sort of arms fairs which many of its members, when in opposition, would have attended only in order to join protests outside the venue.

It may well be true, as the government’s spokesperson effectively claimed in response, that ‘arms fair’ is an over-simplistic description of an event which also showcases, for example, civilian aerospace industries which provide good well-paid jobs for people in Wales, although that didn’t seem to stop party members from describing them as arms fairs when Labour were in government. It’s also true, of course, that the defence sector provides jobs and boosts the economy in the areas where it operates, but it isn’t the only sector which does so; there are other ways of creating jobs. It’s true, again, that Wales benefits less from UK defence expenditure than many other areas of the UK, and that if the industries aren’t located in Wales, they’ll simply be located elsewhere in the UK. But demanding that UK government expenditure should benefit Wales to the same extent as other parts of the UK economy doesn’t mean that the nature of that expenditure has to be the same. It’s how much is being spent in Wales which matters not what it’s being spent on.

Plaid has never been an outright pacifist party, although pacifism has always been an important element in the thinking of many of its leading figures – and opposition to war and militarism has been an even stronger thread in its history. There must surely be at least some amongst the party’s members who are feeling at least a little uneasy about their government’s stance. Perhaps they’re even beginning to understand how it has been possible for many Labour Party members in organisations such as CND to manage their consciences over the decades as their party has enthusiastically backed upgrading the UK’s nuclear arsenal.

Wales needs to grow its economy, it needs jobs, it needs investment and it needs the government expenditure which promotes all those things. There is, though, a moral dimension to that. Do we want jobs at any price, regardless of their potential impact, or do we want to apply a filter under which not all jobs are seen as being of equal value when non-economic factors are taken into account? We won’t all draw the line in the same place, of course, but I know that I’m not alone in feeling a sense of disappointment here. Government is hard, but taking hard decisions doesn’t have to mean taking decisions which will be unpopular with the base support and seem to be in conflict with past stances even if that’s the way it is often presented. The difficulties of government aren’t much of an excuse for throwing away the compass.

Diminished, maybe - but not down and out

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Sadly, seeing Farage go down to defeat against a pretend intergalactic space warrior with a bin on his head was never more than an outside hope, but the dream was pleasant while it lasted. For Farage himself, despite all his bluster about a resounding victory, and the people having exonerated him, he’s now back exactly where he was before he resigned, with a parliamentary enquiry into his amazingly generous, completely non-political ‘gift’ of £5 million now due to restart. Apparently, he didn’t even realise that resigning and getting re-elected wouldn’t make the investigation go away. Actually, perhaps there is a difference – there are more questions being asked about the source and legality of funding for his company, Reform Ltd, now than there were before he resigned. He may yet face another by-election, this time not of his choosing and against an array of political parties rather than the only credible one being our friend with the bin.

Although it may not have achieved much from Farage’s point of view, it may not have been entirely a waste of time. It has demonstrated how little he cares for the rules and regulations by which others are expected to abide, as well as a certain lack of attention to detail. And his statement last night that he missed the count not for the reasons being claimed by his company’s spokespersons, but because, as he put it, “I’m damned if I’m going to stand on a stage … and be demeaned and humiliated by nobodies” betrays a certain arrogance towards people he considers less important than himself (a category which increasingly seems to include almost everybody else). Election rules in the UK may well turn by-elections into a bit of a circus (I’ve been there myself, although not to the extent of metre long ballot papers with 34 names on them, having fought a by-election in 1989 which was also contested by Screaming Lord Sutch and Miss Whiplash, among others), but them’s the rules, and even if democracy sometimes works in mysterious ways, effectively challenging the right of people to spend their time and money on fringe campaigns has to be better than the alternative of candidates needing to be approved by the state before they can stand.

He will, no doubt, try to claim that getting more votes than in 2024 on a reduced turnout shows that the electors of Clacton aren’t interested in what he seems to see as arcane rules about political donations. Getting 63% of the vote on a 44% turnout means that only around 28% of Clacton’s electors felt strongly enough to go out and vote for him – but it is a quirk of the UK’s parliamentary election system that 28% of the total electorate across the UK on a normal turnout with multiple other parties standing would probably be enough for a party to win a resounding overall majority. I might believe – I certainly want to believe – that the by-election and his approach to it has led to him being a somewhat diminished figure, but we should not be complacent. An electoral system which works, after a fashion, when two large parties manage to gather 80% or more of the votes between them does not work at all well with 6 or 7 parties in the mix: the danger of electing a UK government which is even more unrepresentative of the population than the current Labour government is still present. Electoral reform is desperately needed, yet Burnham seems unwilling to address the issue with anything like the speed needed.

When will they take away his hammer?

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Last week, a Guardian columnist summarised Trump’s strategy by saying that “his own modus operandi, from his early days as a New York real estate investor onwards, has always been to simply do things that everyone can see are illegal … and hope that the other side will settle out of court or just live with a fait accompli”, adding “This method … of illegality – and hope for impunity – now characterizes almost the entire administration”. It seemed like a reasonable summary. I’ve never read Trump’s Art of the Deal, and can’t imagine any circumstances in which I might want to, but even without doing so, it’s probably safe to conclude that it doesn’t elaborate this particular element of his approach. With him having been a New York property developer prone to ‘unconventional’ approaches to legality, it’s not unreasonable to suppose that he will also have had dealings, consciously or not, with the mob, known for deploying violence, or the threat of violence, in gaining compliance; it’s another feature of his ‘career’ which is unlikely to have received much attention in his book.

Whether it’s an approach which has brought him success or not is a difficult question. He’s certainly had a long string of failures in both businesses and court cases, but like an inveterate gambler, he’s won enough to convince himself that he’s ahead, despite some analyses of his financial situation suggesting that he’d have ended up richer if he’d put his inheritance into a building society and spent his time cheating at golf. Up until his second inauguration, at least – during his second term, he really does seem to have monetised the presidency in ways which are unprecedented, even if not always entirely in accordance with what many others understand the law to be. But whether it’s actually been successful or not isn’t the point: he believes that a combination of illegality and violence has worked, and that belief is enough to encourage him to carry on.

He said recently that force is the only thing that the Iranian regime understands, but – in the sense in which he uses the word ‘understand’ – it simply isn’t true. They haven’t buckled in the face of repeated bombings, and there’s no sign that they’re likely to do so. All of Trump’s history suggests to him that they must inevitably do so eventually; it’s simply a matter of applying enough force. He cannot comprehend why things don’t happen in accordance with his expectations. He’s an extreme example of the old adage that when the only tool you have is a hammer, every problem looks like a nail. There are some signs that some of those around him are starting to realise the fallacy – but little evidence than anyone is yet recognising that they need to take away his hammer.

Why the emphasis on colour?

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If you start out with the ‘right’ assumptions and definitions, then you can ‘prove’ absolutely anything, but that ‘proof’ is, at best, only ever going to be as accurate as those assumptions and definitions. Sadly, when it comes to reporting on ‘research’ papers, the point that the media often miss out is to tell us what those assumptions and definitions are. And when it comes to politicians, they far too frequently rely on the media reports rather than even bothering to read the original report, especially if the conclusions just happen to reflect their own biases and prejudices. It’s a phenomenon which we’ve seen often enough in relation to the economics of an independent Wales: whether it would be a basket-case or a land of milk and honey depends entirely on the, usually unreported, underlying assumptions.

Sometimes, it can lead those who jump onto conclusions without understanding the way they’ve been reached into effectively supporting ridiculous non sequiturs, and thus it was with Rupert Lowe last week. In a bizarre section of an interview with Nick Robinson, he found himself unable to confirm that the King of England is, in fact, a White Briton. Lowe had been using a curious report (produced by the failed Reform Ltd candidate against the victorious Green Party candidate in Gorton and Denton) in which he argued that ‘White Britons’ were destined to become a minority in the UK by 2063. But the definition of ‘White Briton’ used included a stipulation that both parents were born in the UK – a stipulation that the current monarch is unable to meet, his father having been born in Corfu. On that definition, it is very clear that Charles is not a White Briton, a conclusion which Lowe was strangely unwilling to admit.

For most of thus, such a patently absurd conclusion would be enough to cast considerable doubt on some of the report’s other assertions, let alone the definitions on which they are based. What, for instance, does it even mean to be ‘white’? The definition seems to be based on what people say when they fill in the census form, which makes it largely based on self-classification. Some might argue that asking what does ‘white’ mean is a silly question, because it’s ‘obvious’. But is it really – and how far do we need to go back?

But the bigger question is whether it matters. Lowe was seeking to present a sensational conclusion as though it is somehow civilisation-threatening, and clearly, to his intended audience, it might well appear to be so. But if the institution at the very summit of the UK state has been able to accept and absorb successive waves of foreign influence – whether Greek, German, Norman, or Dutch – without becoming less ‘British’ in the process (or maybe changing what 'British' itself means in the process), why should that be so hard for the rest of society? And why the emphasis on skin colour – why assume that a person of foreign descent who happens to look different is more of a threat than one who looks the same? There is a valid debate to be had around assimilation and cultural change, but physical appearance is an irrelevance. Except to racists and those who encourage them.

NEETs are only a symptom of a much deeper problem

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It has been suggested this week that “Primary schools in England should be required to identify children at risk of leaving education at 16 without finding a job”, with a view to putting mentoring / tutoring arrangements in place for the children thus identified. Although the review is specifically about England, the same issue exists in Wales. There is something profoundly depressing about the idea that we can and should categorise children in such a way before they are even 11 years old - or even, according to the author, for pre-school children.

It’s not a new issue, and the links between deprivation in childhood and poor opportunity in adulthood have been well understood for at least 60 years – I read the seminal study on the issue by JWB Douglas (“The Home and the School”) back in the 1960s. Six decades later and we’re still only debating how to address the symptoms – because treating the symptoms is what the proposal for mentoring and tutoring is about. That’s not to argue that we should not be trying to treat the symptoms – any help that we can give the children concerned is to be welcomed.

But really, after all that time, we shouldn’t still be debating potential corrective actions at all – we should be addressing the underlying cause. It remains the case that the social class and financial situation of the parents are the factors with the greatest influence on children’s life chances. Even if we were to accept that the situation of the parents is down to their own choices in life (although I hasten to add that I don’t accept that things are as simple as that), that is no justification for restricting the opportunities open to their children. Yet, far from seeking to make the starting point in life less unequal, recent decades have seen a continued concentration of wealth and income in fewer and fewer hands – and the gap between the richest and poorest in society has grown, not shrunk.

Gross inequality isn’t the natural order of things, and life doesn’t have to be that way. It is the result of political choices made by UK governments, both Tory and Labour, over decades. And the most depressing part of the reporting on the pending review is that it doesn’t even seem to touch on that.

What is the UK for?

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The PM returned this week to an issue which he has raised previously, namely the need for the UK to have a written constitution. In principle, he’s right: the current approach is an antiquated patchwork of law, precedent, custom and practice, leaving the UK as an outlier in the world. The motivation for his latest statement appears to be based around the need to entrench and codify the relationship between the Westminster government and the regional mayors to whom he wishes to devolve more power. I’ve long supported the idea of a formal written constitution for the UK, and even more so for the independent Wales that I still hope to see one day. But the reasons for that support are precisely why I don’t think it can or will happen, at least until it’s time to write separate constitutions for England, Wales, and Scotland. There is a whole shop’s worth of cans of worms waiting to be opened once the suggestion gets serious debate.

Firstly, as the SNP have already pointed out, a constitution which defines and codifies the relationship between Westminster and English regional mayors will also need to define and codify the relationship between the constituent nations of the union. There are basically only two options as to how the UK can define itself – it is either a single unitary state, or else it is a voluntary union of nations. The former is likely to inflame Scotland in particular, whilst the latter must, by definition, specify the terms of that voluntary union, including how it can be ended. The opposition of devout unionists to formally documenting the nature of the relationship is based on more than tradition and inertia.

Then there is the question of sovereignty and who owns it. There are monarchies in the world which have written constitutions, of course, so it’s not impossible. But would it really be politically acceptable, in the twenty-first century, to write a formal document declaring that all power stems from god via the monarch, and parliament and the courts merely act as the monarch’s agent? The alternative view – that power belongs to the citizens and is delegated by them to parliament – would be a complete undermining of centuries of precedent and custom, to say nothing of a serious constraint on the royal prerogative on which much of the government’s activity depends.

Bigger than either of those, however, is the question of purpose. Defining what the state is for is no easy matter. The US Declaration of Independence talks about the right to life, liberty and the pursuit of happiness. It’s a reasonable starting point, especially the bit about the pursuit of happiness, but it’s a bit wishy-washy: fine words which can be interpreted in different ways. A more comprehensive statement of purpose for a modern constitution might be something along the lines of ‘enabling all citizens to achieve their potential and lead fulfilling lives’. It is, though, the sort of aim which would have neoliberals (such as Andy Burnham) choking on their cornflakes.

I don’t seriously believe that a written constitution will happen under Andy Burnham or any currently conceivable successor. But we can perhaps hope that he will at least spark a discussion during which alternatives to the status quo can be seriously debated.

The issue over care should be about how it is delivered, not how it is funded

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The UK’s new PM talked a lot last week about care, and there’s no doubt that identifying what care is needed and how it is to be provided are significant issues facing us, particularly as the population ages. Sadly, though, the debate rapidly turned into one about how care is to be paid for, which is a completely different issue – and in some ways, irrelevant. The need for care is based on the aggregation of the needs of millions of individuals – whilst the level of provision might vary according to how much money is available or what budget is set, the need doesn’t change in response to the funding.

If we start from first principles rather than ideological views about money and the size of the state, the nature of the problem changes. One of the problems with neoliberal economic thinking is that it values only two things: labour and capital. The economy is seen as belonging only to those who supply either their labour or their capital – with a huge bias in favour of the latter. Everything and everyone else is then seen as a ‘burden’ on the productive economic activity of those groups, often with the implicit assumption that the living standards / purchasing power of those non-productive groups should be limited to the basics. But if we instead see the economy as a social construct, with the objective of serving all members of the society in which it operates, the picture changes completely. A successful economy needs to be able to provide a decent standard of living (leaving aside, for the purposes of the current argument, who decides what that is, and on what basis) for all its members – young, old, sick, and disabled. And, however defined, that ‘decent standard’ includes things like education, health – and care.

If ‘the economy’ is to serve all of us rather than only those supplying labour or capital, the question ceases to be about how much we tax to pay for x, y, or z, and instead becomes one of how we ensure that the level of economic activity is high enough to provide that decent standard of living – and what mechanism we use to share the benefits of that economic activity. Economic growth is important, of course, but once we accept the obvious truth that growth cannot be infinite in a world where resources are finite, we cannot use that growth – however much the politicians try to do so – as an excuse to avoid discussing the issue of distribution. But avoiding that issue, ultimately, is why the supporters of the current neoliberal capitalism reduce everything to a question of ‘how will you pay for it?’. Better – from their perspective – to turn people against each other over a question of taxation than to get to grips with the question of how wealth and income are distributed. All the debate around how care is to be funded - like the debate about the welfare bill, or the pensions triple lock – is about diverting attention away from the key question, which is about the distribution of wealth and income within society. And whose interests are served by that?

Burnham is making the problems worse by his adherence to self-imposed rules

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One of Andy Burnham’s ‘qualifications’ for the job of PM was that he was used to running a major public sector operation in the form of the mayoralty of Greater Manchester. It’s certainly a big job, and he will certainly have learned a lot from doing it, even if the degree to which he was successful is always going to be arguable, depending on one’s political perspective. There is a difference of scale, of course; but even more important is the difference in the constraints acting upon the incumbent. Manchester (like the Senedd here in Wales) has its powers and budgets circumscribed elsewhere. Westminster sets both, and the mayor (or First Minister) has no choice but to follow the statutory requirements laid down for him or her.

When it comes to running the UK from Downing Street, however, the situation is completely different. The Westminster parliament insists that it has absolute power – delegated to it by God and the Monarch – to do whatever it wants. Financially, the only real constraint is the capacity of the economy – the available resources, in short. Any other constraint is self-imposed: the so-called ‘fiscal rules’ are the invention of the government of the day which can change them at any time it wants to (and history shows that governments tinker with the rules regularly). There was no such thing before Gordon Brown invented them in 1997, and they were invented largely to ensure that the incoming Labour government followed broadly the same policies as the outgoing Tory government, in the belief that that was what ‘the markets’ wanted.

To date, Burnham has given no indication that he understands the difference – that he has moved from a situation where he has to obey rules laid down by others to one where he can make the rules. And all the neoliberal foundations and lobbyists – to say nothing of the financial ‘experts’ in the mainstream media – are only too keen to ensure that he doesn’t realise the extent to which he is imposing unnecessary constraints upon himself. There was a report today, for example, claiming that the PM “will have to raise taxes or cut spending” to meet his pledges and that “There's clearly no scope for increasing borrowing”. What they like to call ‘borrowing’, some of us prefer to call ‘accepting deposits from people looking for a safe home for their money’ – and the only limit on that is whether people have money for which they are seeking a safe home. Given the lack of worthwhile investment opportunities (which is a much bigger problem in itself), there’s no sign of any lack of deposits; and the choice posited by the first quote is solely a result of the fiscal rules.

One of the big issues which Burnham has highlighted this week is the question of social care. It’s usually presented as a shortage of money, but even if money was unlimited, there would still be a lack of qualified and willing carers, and lack of capacity is a much more important constraint than lack of money. But that lack of capacity is another self-imposed constraint – this time it’s arbitrary rules over numbers of migrants.

One point of similarity between the governments in Wales and Scotland, the mayoralty in Manchester, and the UK government is that they are all facing major issues. But only one of them is compounding the problems by using its unique position to be able to set its own rules in a way that exacerbates rather than alleviates.

Hard hats and graduate caps

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According to the PM, “From today, Britain will value the hard hat every bit as much as the graduation cap”. It’s a nice soundbite, but what does it actually mean? He’s not the first politician – or even the first UK Prime Minister – to talk about what has often been called ‘parity of esteem’: the idea that people with key technical skills should be as highly regarded as those with a degree. Few would disagree with the sentiment. And it’s certainly true that an academic degree, and the learning involved in gaining one, is not something which suits everyone, although we need to guard against the idea that making learning less academic also strips away the remaining vestiges of the notion that a well-educated populace is a good thing in itself.

But one of the other things that those who want fewer people to seek a degree are concerned about is the lack of what they call ‘graduate jobs’, which generally seems to be a euphemism for jobs which pay a higher salary, or graduate premium. There is an obvious conflict here: it is simply not rational to support the idea of there being a graduate premium whilst also demanding that other types of qualifications and learning should carry equal value. Having done a certain amount of graduate recruitment in the past myself for two different organisations, I’m not convinced that the requirement for a degree is, in many cases, much more than a filter mechanism enabling lazy employers to discard large numbers of otherwise suitable employees. There is, though, no real question that employers seeking only graduate recruits do find themselves obliged to reinforce the pretence by offering higher salaries.

Achieving real equality of value requires more than identifying which young people are more suited to a so-called ‘vocational’ route, providing the necessary places, and making airy statements about parity or equality. If I thought that Burnham was wanting to start a serious conversation about how we value and reward different occupations, his statement today would be very welcome. How do we determine the relative value of lawyers and nurses for example? Does the current difference in reward reflect that relative valuation or reverse it? I’m pretty certain, however, that that isn’t a can he proposes to open, and that what he’s talking about is more about persuading people to accept their station in life – and the level of reward which goes with that. His fine words are, in short, more spin than substance. Being better with words doesn’t change the underlying message.