Comment

Britain really is broken and we can’t afford to fix it

Nothing works, everything is expensive and we’re all too busy arguing to figure out any solutions

A burst pipe caused flooding in Holloway this week while water companies imposed hosepipe bans
A burst pipe caused flooding in Holloway this week while water companies imposed hosepipe bans Credit: Jonathan Brady/PA Wire

When Jacob Rees-Mogg was recently asked to give an example of something in this country that wasn’t broken he alighted on the Test cricket team, which enjoyed a strong series against New Zealand at the start of the summer. It was a shame that the interviewer didn’t point out to Boris Johnson’s staunchest and starchiest supporter that this was largely attributed to a change in leadership after England appointed a new coach and captain. 

The exchange also demonstrated that we’ve now got to the point that it is far quicker to list the things that are going well in the UK than it is to itemise those that are going from bad to execrable. Causes for optimism have been weighed in the balance and found wanting. Welcome to modern Britain where nothing works, everything is expensive and we’re all too busy arguing about the causes of our woes to figure out any solutions.

Top of the worry list are the regularly updated estimates about the country’s energy price cap from consultancy Cornwall Insight, which are beginning to engender the kind of grim fascination usually inspired by medieval instruments of torture. Its latest forecast is that the cap will rise from £1,971 a year now to £3,582 in October and £4,266 in January. 

This will represent about 14pc of the average household’s post-tax income. With the prices of a whole host of goods and services spiking and interest rates ratcheting up, destitution beckons for many. The poorest households will simply not be able to cope with increases like this on tax cuts alone. The reversal of April’s rise in national insurance being mooted by Liz Truss would, for example, only cover about a tenth of the expected rise in energy prices for the average family. 

It would be bad enough if this was all that we had to deal with. It's not. One of the starkest images of dysfunctionality in recent days has been water companies imposing hosepipe bans while burst mains flood the streets of North London. Simultaneously, we are being told cold weather over the winter combined with gas shortages could result in several days of blackouts under the Government’s own “reasonable worst case scenario”. 

The only plus for these privatised utilities is that public services are also creaking and in some cases actively crumbling. A recent Telegraph investigation found that the police have failed to solve a single theft in more than eight out of 10 neighbourhoods in England and Wales over the past three years. The number of people on NHS waiting lists has soared from 4.4m before the Covid pandemic to 6.6m.

All this despite the tax burden having soared to a post-war high. That is a far from easy circle to square. There is always the possibility of spending public money more efficiently but if it was easy it would have been done already. In reality there are two options: increase taxes or reduce public services. Fail to pick a poison and the problems will continue to stack up. 

Meanwhile, the Bank of England is now predicting that the UK economy is heading for a painful recession, inflation will hit about 13pc later this year and won’t come down from double figures until the back end of next year. Rising interest rates may be needed to tame soaring price rises but will inevitably add to the pain in the short term.

Queues at (air)ports are growing, food prices are climbing and industrial action is spreading. After over a decade in which wages have stagnated, unions are being emboldened by rising prices and a tight labour market. Transport workers, firefighters, doctors, nurses, teachers, postal workers, civil servants, lawyers and even TV production staff are all threatening to down tools. 

Inflation is also bending the public finances out of shape in all sorts of weird ways.

Last autumn Rishi Sunak froze income tax thresholds in cash terms for four years. At the time it was calculated that this fiscal drag - a cheeky form of stealth tax pioneered by Gordon Brown - would raise £8bn. But inflation forecasts have shot up so much since then that the measure is now expected to raise £30bn - more than double the £14bn that will come from the much-debated increase in National Insurance Contributions. 

At the same time and on the flip side, the difference between the Office for Budgetary Responsibility’s deflator forecasts in March and the new estimates in August means the amount the Government will have to spend just to keep up with the planned real growth rates has shot up from £16bn over the next three years to more than £44bn. Inflation is also eroding the nation’s debt pile but increasing interest payments.

Dealing with all this would require a chancellor capable of playing three-dimensional chess. Unfortunately, the previous chancellor is busy playing a reductionist form of draughts with the foreign secretary for leadership of the Conservative party. Neither has yet presented a strategy that appears remotely close to being able to tackle the scale of the UK’s issues. 

The reasons for these predicaments are myriad. There is in fairness only a limited amount the UK government could have done about inflation which was kick-started by disruptions to supply chains because of the pandemics, exacerbated by Russia’s invasion of Ukraine and looks likely to be entrenched by a retreat of globalisation. Many rich nations are struggling with stagnant growth, ageing populations and significant shifts in geopolitical tectonics.  

However, the shortage of workers - caused by a combination of Brexit, older workers retiring early during the pandemic and an increase in the numbers of long-term sick - seems to be particularly acute in the UK and is causing a host of problems in a range of industries including retail, hospitality, farming and transport. 

Part of this issue is that as a country we are so busy arguing about the reasons for our predicaments that we’ve not really got started on trying to craft some workable solutions. Too many still blame Brexit for everything; too many seek to absolve it completely. Such divisions are accentuated by the current (some might say long-standing) leadership vacuum.

Sure, the Government clearly leans too heavily on focus groups, shiny boondoggles, social media headlines and confected rows about “wokery” in an attempt to feed voters the political equivalent of empty calories. But for a long time the lack of credible opposition has negated the need for the Conservatives to up their game and pause to consider what they actually stand for.

Something is needed to jolt our politicians into genuinely addressing this nation’s problems and making the hard choices necessary to pull the economy out of its slump. Unfortunately that something looks like being both nasty and imminent. 

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