It’s the Ergonomy[1], Stupid!

Part I—The Problem

“We are facing the worst few years in our financial history.” 

—Paul Johnson, IFS Director

Now we know the low-tax mantra preached by Truss & Kwartang has been thrown on the bonfire of vanities and Chancellor Hunt has pulled on a fiscal hair shirt of which Gordon Brown might have been proud. Few people have pointed out that both Hunt and Sunak have been long-time members of the Cabinet and so share more blame than most for getting Britain into this mess in the first place.

But where exactly is this place Britain is now supposed to be in?

Listen to any of the last four Chancellors—or even Rachel Reeves—and you will hear the same shibboleth of “growth” cited. After two decades of easy growth under both Tories and Labour, the fat years came to an end in the financial crash of 2008. Since then, UK GDP growth of 2% average has lagged behind all other G7 countries. That was before Covid. When Covid hit, UK went deeper into recession and is emerging more slowly than the rest. The UK is the only G7 country whose GDP is forecast to shrink next year.

An IFS forecast of a 7% decline in UK real wages—worse than anything since WW2—is causing real worry. Government blames Covid, the Ukraine war and soaring gas prices for inflation over 11%. What they do not mention is a 15% fall in trade, or the 3% hit to GDP that the IFS assigns to Brexit, a wilfully forgotten factor. They are also quiet on the wizard trade deals Brexit was to enable—perhaps because none have materialised. Denial is never a good look when worn with a hair shirt.

Whether this is deckchairs on the Titanic or putting out fires with gasoline, this bickering in Westminster is not getting near the answer because they have yet to formulate the right question.

Britain suffers from believing a 19th century country can prosper in a 21st century world. Its global profile has shrunk to a medium financial centre, plus antique nostalgia. This not to ignore global leaders like Rolls Royce or London’s fintech. While smaller countries can prosper on a couple of winners: Denmark from Lego and wind turbines; Netherlands from bulbs and ocean towing, Britain can’t. Our 67 million spendthrift consumers who now Import most of what they used to make/grow can’t live this high on the hog on nostalgia.

The problem is that Britain (and particularly its Conservative government) still believe Britain is a big cheese in the world, who can “punch above our weight”. Reality is the UK us schizophrenic; it consists of a dynamic country centred on London, driven by fintech and tourism where 20 million live prosperously, and the remaining post-industrial shadowlands where the other 47 million live resentfully. The contrast compares with Lombardia vs the Mezzogiorno. The idea of some chummy “levelling up” of the two while such a cultural schism exists is delusional.

That we built an empire together, saw off the Kaiser and the Nazis is history of which all can be proud. But it IS history, and has been since Suez, after which our sense of cultural unity and patriotism has been eroding. Over the same time, many neighbours—Swedes; Dutch; Germans; Irish—have all developed a modern common purpose, a sense of where they are going together. 

As an example, after centuries of fragmentation, a German fetich for order and discipline has found positive outlet in engineering and efficient systems. Their transport systems are fast and efficient because bottlenecks like buying and checking tickets are eliminated. Everyone believes the system benefits them, so they comply in the common interest.

Britain’s schizophrenia is neither fish nor fowl. The dynamic Southeast wants rollicking meritocracy, combining American freedoms with modernised robber-baronry. But the provinces look with envy to Scandinavian social programmes. What started as war between classes continues as a war between social geographies. Problems affecting one or the other are seen as “theirs”, not “ours”. Such antagonism fragments further to smaller levels: Unions and government blame each other; parents and teachers blame each other.

In their attempt to stay in power, Conservatives have muddied political waters by stealing Labour’s clothes—embracing the welfare state; increasing minimum wage; pushing equality rights. But this means social programmes are under-funded via an American-style low-tax mantra. That circle does not square. The result is unprecedented borrowing, leading to a national debt over £2 trillion, which now costs over £100 billion to service annually. No wonder the £UK is has slid below $1.20.

It was Maggie who started the rot. Gifted a North Sea oil bonanza, instead of banking it like the Norwegians, she used the profits to offset taxes. Then Major followed with the fire sale of national assets from British Rail to National Power, water companies, Royal Mail, prisons, etc. All of it went on paying for a welfare state and global ambitions that taxes did not cover. Eventually, the cupboard was bare. Brexit, Covid and Putin did not create Britain’s predicament. They simply blew away the government obfuscating smokescreen. November 17th’s Autumn Statement sounded radical, but it was really a box of Elastoplasts applied to a brain hemorrhage. Part II suggests some serious operational remedies.

“We’ll be spending more on debt interest than on any individual public service,..we’re discovering rather painfully that borrowing isn’t a free lunch… so I’d be surprised if the tax burden gets back down to the pre-Covid the next several decades”

—Paul Johnson, IFS Director

#1054—958 words

[1] Ergonomics: “The science of workplace, tools, and equipment designed to reduce worker discomfort, strain, and fatigue and to prevent work-related injuries.” The use of “Ergonomy” in the title should become clearer in Part II.

About davidsberry

Local ex-councillor, tour guide and database designer. Keen on wildlife, history, boats and music. Retired in 2017.
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