Labour's Budget Black Hole SOLVED! But Austerity is STILL Coming

Right, so Labour’s upcoming budget, still just over a month away but it is causing a lot of worry not least because Starmer and Rachel Reeves cannot stop harping on about tough decisions still to come, when we’ve already seen what passes for their tough decisions, chief amongst them has been the fallout over their refusal to lift children out of poverty by scrapping the cruel two child benefit cap and also the stripping of the winter fuel allowance from some 10m pensioners.
The cruelty of these measures is only matched by the lack of necessity to do this when measured against the £22bn black hole Labour are still claiming they didn’t know about, yet clearly did, when it was pointed out to them and us by the likes of the OBR and the IFS.
To scrap that two child benefit cap would cost just £3.6bn and the saving from the winter fuel allowance axe coming down is just £1.5bn, so the impact against their purported £22bn black hole, which they conspicuously won’t publicise a breakdown of, making it all the more suspect, is pretty negligible but if I now said to you these cuts could be reversed and Labour’s £22bn black hole could still be plugged with more cash left over, you’d be interested right? How about them ignoring that and carrying on with the austerity they’re clearly dead set on meting out in the budget – that is now completely unnecessary - actually causing more damage instead and still they plan on ploughing on with it? Labour’s incompetence is only exceeded by their cruelty. Two months in and we clearly have a sociopathic government, see if you think different as I explain all of this.
Right, so buyer’s remorse is now at record breaking levels as two months of Starmer and Reeves ruining the country in pretty much exactly the same manner as the Tories did before them has seen record breaking levels of polling collapse.
By-elections are showing Labour’s vote dropping in double digits, 6 by-election defences as I covered in a video the other day showing a collective vote collapse of nearly 20 points as an average across them all and in an Opinium poll today, Starmer’s Labour government, just two months in has, by a 30 point margin, been regarded as a failure already. YouGov have polled that buyers remorse and discovered 1 in every 7 people who voted Labour in July now regret doing so and over the same time period, Opinium have also discovered Starmer’s own approval ratings have fallen by 45 points, is now lower than Rishi Sunak’s, and we still have the budget yet to come, still just over a month away as that is.
Perhaps that is half of the problem though? Labour have been saying how awful the budget will have to be because of how the Tories left the public finances, won’t detail that but just fill us with a sense of impending dread and having already left kids in poverty to remain there and having stripped 10m pensioners of their winter fuel allowance meaning many more will likely die this winter from the cold completely unnecessarily, you wonder about just how much worse Labour are set to make things. It's no wonder therefore that their polling is in freefall.
But how much worse would things get for Labour if I now told you the national finances had shifted to the point none of this was necessary at all? Where Labour keep bleating about their £22bn black hole justification for even more austerity, they are very quiet about the fact they no longer need to worry about it, because the cash has come in to fill it. Why so quiet about such things when it would do your polling and alleviate the concerns of so much of the country if you were just honest about it, or is it a worry that you’d give the Tories an economic credibility boost if you did? I’d like to think the public were right about dumping the Tories for 14 years of nastiness, it’s turning to Labour under Starmer to fix that, that was the mistake it seems.
So where has all this money Labour now has but refuses to mention come from then Damo? Well, if we’re going to look at this from perspectives of incompetence and cruelty, let’s start with the cruelty, by which I mean where has the money to fill the black hole allegedly left by the Tories in the nations finances that apparently Labour knew nothing about, but which they won’t fully explain either and why is this not changing anything regarding the cuts already meted out and those we’re expecting to come at the budget?
Well firstly the economy has actually been growing this year. Rishi Sunak during the general election campaign you might recall was very fond of cherry-picking economic growth of 0.6%, not that seems much to crow about, but given the Tories had flatlined the economy for years pretty much, it was anything he could grab onto, no straw grasped too much, but this stat actually got revised upwards late into the election campaign period, end of June, to 0.7%. Since then the second quarter growth figures have come out, last month as it happens and these were almost as strong as the first quarter, 0.6%. Now I say strong, it’s a relative term, but we’re also a big economy and both figures taken together when converted into monetary terms come out as an additional £29bn for the government. Theoretically, that’s enough cash to fill Labour’s alleged £22bn black hole, but then I suppose when they can find money to keep giving to Ukraine and not address poverty or pensioners making the choice between heating or eating if indeed they will still be able to do either, political choice is exposed for the grim reality of the situation as it is. But this isn’t all.
UK gilts have matured this year on Labour’s watch too, handing the Treasury and unexpected windfall of £10bn.
Government gilts, or bonds are how government borrows these days and the ones in question here relate to quantitative easing dating back to the pandemic, when the government borrowed a lot to supposedly keep the country running, but you wonder how much made it into crony pockets, Tory VIP lanes, eat out to help out and all of that. Bonds get floated on the stock market, get bought and sold, but because the Bank of England has to underwrite all of these, the government underwriting it’s own debts in effect, they have to be honoured. Well they’ve been selling at a loss on the stock exchange, which means the Treasury, which of course owns the Bank of England even if it is notionally independent has been losing money having to honour these debts. The Bank of England therefore has simply stopped at this moment in time, selling these particular bonds. Expected losses from these will therefore not now happen at this moment in time, not until such time as they are put up for sale again, which has handed Starmer and Co an estimated £10bn windfall of cash they now won’t lose. That in itself means they could now cancel the two child benefit cap and keep the winter fuel allowance universal, which whether you agree with that or not, saves wasting money on massive administrative costs that always comes with means testing something. The cruelty in all of this however is obvious – there is absolutely no sign, or intent on rowing back or deviating from planned austerity in October, when Reeves announces yet more cuts instead that will also be considered unnecessary by these unexpected gains, which leads into the Labour Party incompetence here.
You see where the first two quarters of this year saw growth, consumer confidence, expecting that bad news next month, means Labour have choked growth off stone dead. In fact consumer confidence is something that actually gets indexed, it gets measured, because when consumer confidence in how the country is being run is high, people spend more and this is good for the economy, yet when it is bad, as would happen when say, a new government comes in and doom mongers about what they have found despite promising change from the last 14 years and now going back on that to instead deliver more of the same, and doing as we know now at a point it is proving to be completely unnecessary, people won’t spend. Well the Consumer Confidence Index has plunged 7 points to -20 currently and to put that in perspective, that is lowest consumer confidence has been for 48 years. Labour under Starmer and Reeves have done this in 2 months and all because of a budget that they say will be painful, keep saying will be painful, yet we’re still over a month away from. They have scared people quite understandably and as such other factors in the index fell as well. Expectations for the general economy over the next 12 months fell by 12 points to -27 and the forecast for personal finances is down 9 points to -3. The major purchase index, the measure of buying expensive items like cars for example is down 10 points to -23.
Consumer confidence matters because despite the media and the government going over and above to avoid talking about what really makes the economy grow and promote a healthy economy being dependent upon people being prepared to spend, for it is spending that makes money work after all, Labour under Starmer have in just two months damaged that to a point not seen since the 1970’s.
This is all on the back of, as we’ve seen, minimal fair enough, but noticeable growth. Just from their rhetoric alone, Starmer’s Labour have done this, have killed that off already and as we know from when George Osborne meted out austerity from 2010, it doesn’t work, you can’t cut your way to growth, people need cash in their pockets to spend and be confident that they can do so and yet Labour seem determined to repeat that Cameron era Tory mistake. And people say they aren’t Tories! Well more and more people are rapidly realising they didn’t get the Tories out, they just changed the empty suits – donor bought in this case – and not the politics. The Tories are still running the country, they’re just red ones this time instead of the usual blue ones. Despite claims of standing for the contrary, nothing under Keir Starmer has changed. And nothing will either.
If you wont another example of people waking up to the realisation another bunch of right wing wrong’uns in it for the rich only have clawed their way into power though, just take a look at these by election results from just the other day and the scale of losses Labour have just faced, losing half the seats they were defending, it’s hardly a good sign just two months into government to be losing seats, but on the scale of this? Well if Labour’s budget next month is as bad as so many fear, next May’s local elections, taking place as they will be after what looks set to be an awful winter for so many, could be historically bad for Labour and they’ll have deserved every bit of it. Check out that story in this video recommendation here as your suggested next watch and I’ll hopefully catch you on the next vid. Cheers folks.