Should we clap, Labour keep telling us that they costed a budget!!?

John McDonnell, the Labour Party politician and Shadow Chancellor of the Exchequer, leads the pack in looking smug when he says that Labour had their budget costed at the last Election. Most of the rest of the Shadow Cabinet also laud this fact with great self-satisfaction.

Why?

As any business person and civil servant knows, business plans are not gospel. They are a point in time perspective on a business and a set of financials. They are generally inaccurate. Companies that repeatedly deliver what they forecast are rare. The idea that Labour have suddenly created a financial bible that will deliver exactly what they say, at the price they say, is ridiculous.

The Labour party numbers are dripping in caveats and abstract concepts. There is no certainty in them at all. No-one should believe for one moment that their policies are comprehensively costed. And this is not a party political message, I have no more faith in any of the other parties being able to budget their manifestos accurately.

But it is fair to say that many of the Labour policies are still un-costed including breaking down the cost of nationalising each industry, or putting a price tag on other major capital projects such as extending HS2 to Scotland.

In addition their plan is based on certain assumptions that are unlikely to happen, if history is any form of precedent:

  • For example they will not make Corporation tax deliver another £19.4bn by raising the headline rate to 21% from 2018-19, 24% from 2019-20 and £26% from 2020-21. It never does. In fact the correlation works the other way.
  • They have no actual plan to deliver the £6.5bn that they reference from tax avoidance.
  • They assume that they can raise another £6.4bn of income tax from increasing tax on the top 5% of earners, but quite often the very rich get mobile and avoid the tax.
  • Estimates that an “excessive pay levy” would raise £1.3bn or that introducing a new financial transactions tax would bring in £5.6bn are again speculative at best.

The really scary thing, is that in today’s politics, the idea that a major political party has a “costed” budget, is even news. Of course political parties should forecast what they are going to spend to achieve their aims. It is also scary that so many people believe their figures are the gospel truth. If anything what it demonstrates is how big a gap there is between most politicians and most business people. Let’s hope that the reality doesn’t end up being a big shock for everyone, if their budget is every tested properly in government.

10 principles for a 21st Century UK government

It’s no surprise that the 2017 UK General Election is dominated by Brexit and the associated debate. But the danger is that too much of the rhetoric is based on 20th Century thinking; on a country with an established place in the world and the recent history that defined it. Intolerance in all forms is increasing within society, and this also acts as a catalyst to use existing or outdated modes of thinking. It is exactly at a time like this when political leaders need to consider the future more holistically and cast aside some of their old fashioned assumptions about how the country should be governed. Accordingly now is a good time to lay down some core principles for a new government, for a government that is resetting the agenda for the 21st Century and not living by 20th Century rules.

My top 10 principles for future UK governments are as follows:

  1. Free trade. Now that the UK’s relationship with Europe is changing, it must look to establish comprehensive free trade principles across all parts of the world. The UK cannot afford to be half in and half out of Europe; to be neither fish nor fowl. If it is leaving then it needs to set out a new trade philosophy for the world and stick to it. Whatever the result, the UK should be fighting for minimal trade barriers and pushing to reduce the subsidies that artificially inflate prices for consumers.
  2. Freedom of civil rights. It is easy to forget that over the last few centuries many people gave up their lives to win civil liberties for future generations. This was hard fought. We must remain vigilant at keeping these. Although terrorist threats are real and frightening, we should not sacrifice these freedoms in the face of terrorist threats. After all we have faced worse before, without giving in. This means that we should not give away online civil liberties too easily just because we can.
  3. Technology leadership. Technology is at the heart of every aspect of society. We now need to be the masters of own technology destiny. We need to invest in every aspect of technology across industries and in educating all our citizens. We should aim to be at the forefront of technology innovation and see it as a source of future wealth and prosperity rather than as a threat.
  4. Personal responsibility. There is a growing tension between those people who believe that the state should guarantee ever more benefits to its people, without expecting them to take on more personal responsibility, and those who think that society cannot extend its arms ever further. We need to enable and expect people to take on more individual responsibility and be happy to support the minority that cannot, but that minority cannot become the majority. We need to push personal responsibility onto people, as part of our evolving society.
  5. Reinvention. We should be prepared to challenge existing assumptions around every aspect of government. The pace of change continues to increase and societies cannot survive unless they evolve with that change. We must be prepared to reinvent aspects of society and government more frequently. This includes challenging assumptions around healthcare, education, finance, housing and defence. For example  why should the richest members of society have endless access to free healthcare, when the system is struggling to provide free care for the poorest?
  6. Cradle to grave entrepreneurship. We need to help people at every age to work and be self-employed, and not be dependent on an ever smaller group of large employers and the state. This should not be just focused on teaching the youth to code. It is important to help people create new enterprises though into old age – in other words cradle to grave entrepreneurship.
  7. Lifetime education. The most enlightened and richest employers are encouraging their employees to live in an endless cycle of re-education. Given the pace of change, we need to ensure that all society can live in this way. We need to ensure that there is educational capacity to do this across people’s entire lives.
  8. Financial planning. We need to think much more creatively about how we can afford all the aspects of our society. This includes thinking about how we pay for education for children and care for the elderly. We need to facilitate different ways for people’s work to pay for the choices that they want in their life, whether homes, or pensions or care.
  9. Global integration. Whether everyone likes it or not, our world is getting ever more interconnected. We need to debate and define a system that will work for the next 100 years and not just for today. We need to ensure that we engage with other countries and with the most skilled workers that we need, whilst being able to protect our own citizens. At the moment every government of the last 10 years has failed to debate, define or implement anything sustainable. The people do not believe anything that any government tells them about migration.
  10. Sovereign Fund. We need to build our own sovereign fund to enable the country to take a more long-term strategic view on investments.

These principles need to be woven into any future government’s plans. It is likely that this 2017 Election will be unusually short of policy commitments outside of Brexit, but we cannot allow our governments to just focus on the here and now, and not to take key strategic decisions for our future.