Labours first budget in fourteen years and I couldn't be more depressed

 Yesterday we had the first Labour budget in fourteen years. What is the good news? Well at least we know what Labour's priorities are. I had high hopes for Rachel Reeve, as she is an economist by trade. I have now concluded that she went into politics because she clearly wasn't much good at her former job and realised that as most politicians are completely economically illiterate, she'd most likely bag a top job. 

This may sound harsh, but there are two things that are indisputable. The first is that the UK's finances are in a complete mess. The second is that the only realistic fix for this is growth and increased prodictivity. Logic would say that any budget should have made this a priority. The fact that there was virtually no mention of measures to spur growth and improve productivity says to me that she is not up to the job and doesn't understand economics as well as we were lead to believe.

Of course the £22 billion extra funding for the NHS is a good thing. However, as someone who has seen far too much of the NHS over the last fourteen years, I can say without a doubt in my mind that the NHS needs massive reform and although it needs more money, a plan to reform it and invest the money sensibly is needed more. The organisation is clearly too bureaucratic. Once you are diagnosed with something like cancer, you get excellent care. However, you also get very frustrated at times because many things that should be simple end up being very complicated. I will give one example. Last March, I got an appointment to review my MRI results. This was all well and good, but they booked the MRI for June. Luckily, I spotted this, but it would have wasted both mine and the consultants time. It toom my five phone calls to rectify the problem and there was little interest from the receptionists in sorting it out. 

Another worrying thing for me, was that my appointment with the Royal Free oncology department for a follow up consultation took three months to arrive and actually arrived a month after I'd had the operation to resolve the problem. With cancer, time is of the essence. With cancer, the sooner you catch it, the easier and cheaper it is to fix. Sorting the mess out that is NHS bureacracy would save billions that could be reoinvested in better treatments. I'd like to see far more spent on preventative medicine, as this would also be an investment with a huge reward. I did some work on IT systems used by the NHS a couple of decades ago. Anyone who worked on those projects. will testify that the way IT developments are done in the NHS is extremely badly managed. Sadly, no one in NHS senior management or government had the skills to even understand the issues. I saw a similar thing with Police systems in the early 1980's. My old company provided a command and control system for Northumbria Police. Every police authority paid to develop their own system from scratch, meaning hundreds of millions of pounds were spent duplicating functionality. The Greater Manchester police system was so bad that the Home Office eventually forced them to take the Northumbria Police system, which was properly designed and built. 

I also worked on a system called The Post Office Cardholder Account system, that was developed in 2004 to pay benefits (this was seperate from Horizon I must add). This project was the only major government project of the decade that was delivered on time and on budget. Why? Because they bought a proven, off the shelf system that was already widely used in the USA and did minimal modifications. My advice would always be to find something that has been developed and is best in class. If you need to develop something from scratch, then choose people with a strong track record of delivering on time and on budget. It sounds simple but rarely happens. What seems to happen in the UK is that public sector authorities choose suppliers that have a record of bad delivery and high add on costs (regular readers will be familiar with what happened in Barnet Council with outsourcing).

Having looked at the NHS investment and how it should be managed, even more important is private sector investment and productivity. Unlike most MP's, I've run a successful business for four and a half decades, building it from nothing. We work in the music sector. That is worth £5 billion a year to the UK. For some perspective, that is three times larger than the UK Railfreight industry. It brings a huge amount of money into the UK. 

Between 2020 and 2023, my company made a huge loss on trading due to the pandemic. We were kept alive by grants from the government during the pandemic. We ran up huge debts to our landlords (which luckily for me are my family). As we re now making a small profit, we are paying those debts back. It will take five years. We also did alost no repairs and upgrades during that time. This means that we also have a huge backlog of maintenance and equipment upgrades, which is gobbling up what little profits we earn. I am paying myself half the minimum wage for my time. The business employs ten staff, mostly students etc, on shifts, who like a part time job, where much of the time they can do coursework. Historically, we've always paid above the minimum wage. This gives us the opportunity to attract the best staff. The massive increases in this over the last 20 years have meant that it is almost impossible to do this. Whereas we paid 30-50% more when the minimum wage was introduced, now we can pay around 20p an hour more. With the massive rise in April, it will turn our business from profit to loss unless we rise prices. On top of that, the changes to employers NI will have a huge effect. I've not managed to calculate exactly how much, yet, but cutting the threshold where Employers NI kicks in means that many of our part time staff, who previously didn't atrract employers NI will now cost us money.  What we will probably have to do is cut down the number of shifts staff do and have more staff doing shorter shifts. It will increase our admin, but will save us money we don't have. The chancellor will not get the money she's expecting as every such change makes us review our staffing patterns. Every business does the same thing. If an employee cannot generate a profit, then their job goes and the Chancellor pays more social security. As we have less money in the pot, we have to put off refurbishment and replacement of equipment. This has a knock on with tradesmen and suppliers. It dampens economic activity. This is happening across the economy at every level.

Our sector, the music industry gets no support. There are no schemes for musicians to support them. The pandemic and the changes to tax rules for touring bands following Brexit have clobbered the sector. Now we have to put our prices up for these hard pressed musicians. Less will come. The balance between charging enough to keep the show on the road and still being affordable is almost impossible to balance. In 2016, we had to increase our prices following a long period of stability. We lost 20% of our customers overnight, on the back of a 10% rise in costs. Luckily, most eventually came back as our competetors, who didn't bite the bullet and hike their prices went bust or shut down. What it did was make me very aware of the brittle nature of our customer base and their finances. 

Rachel Reeve has completely failed to explain how businesses that are still recovering from a global disaster in the pandemic are supposed to fund a 10% pay rise for staff. She has failed to explain how companies will grow and improve productivity, when they have to divert cash earmarked for investment in the business into simply paying higher wages and Tax. She has failed to explain how the UK's woeful productivity will improve if we have no cash to develop more efficient working practices.

My main studio competetor in the UK has a business model where they have no staff on site. You simply get an online access code. All bookings are done via a website and any problems in the room require a telephone call to someone who is on call and may turn up if they can get there in time. Some of our customers do use them occasionally, often until something goes wrong and they have to abandon their rehearsal. From a financial point of view, I can see the attractions of it. However I got into the music industry because I wanted to provide a good service for musicians. The current climate in society is to get rid of staff. Shops force you to use unmanned tills, then wonder why they are plagued with shoplifting. If you have a problem with your insurance or bank, it is almost impossible to talk to anyone. Why? Because the government has made it uneconomical to emply people. As a result, we have a society where nothing works. Ask yourself this. Does this budget make that situation better or worse?

Seven budget measures I urge Rachel Reeve to adopt

 I have to admit I'm disappointed with Rachel Reeve, the Chancellor of the Exchequer. I had high hopes. She is an economist by trade, so I assumed she'd understand the need to bring the tax system into the 21st Century to address the challenges that we are facing today, rather than sticking with something designed for a very different world. 

1. Add extra council tax bands for mansions etc, to bring in more dosh for local authorities. The top band is band H for properties worth over 320,000 in 1991. Barnet is full of properties that were worth ten or twenty times that at the time. They pay the same as someone just in a normal large house. Someone in a £50 million pad in Bishops avenue pays only around three times what someone in a flat in Burnt oak pays. Gotta be wrong.

2. Triple Council tax on dwellings left empty for over six months, unless going through probate or undergoing major renovations.

3. Charge business rates on people operting businesses at home. Online retailers with no address are clobbering small shops.

4. Allow anyone to sell craft beers from specialist breweries without having to apply for a license, to encourage small breweries

5. Cut employers NI rate for all SME's by 50% on employees under 30  to encourage small businesses to take on more staff

6. Charge council tax on all land that has received planning permission for housing, but has not been developed after 2 years, to discourage land banking by developers. This would help address the housing crisis as there would be a cost to developers for not building.

7. Set up a national infrastructure fund, to pay to bring the UK's infrastructure up to standard. Zero rate all investments in this fund for inheritance tax, so long as the investment has been inthe fund for a minimum of seven years. If a person dies, allow the relatives to leave the cash in the fund for teh seven year period to avoid the charge. This would give the UK a huge amount of cash for projects. Give a garnateed return at the rate of inflation. 

What Rachel Reeve should have said to Jeremy Hunt in response to the Budget

 I have to admit that I am very impressed by the Shadow Chancellor Rachel Reeve. She is most definitely a grown up politician, who knows her brief. Responding to a budget is a thankless task. You have little preparation for what is coming, the Chancellor does not share that in advance. You have to listen to someone speak for an hour or so, make notes, then stand up and give a coherant response. If you've done your homework, you probably can guess some of it, but there are always a few rabbits pulled out of the hat. 

I well recall Reeve's look of incredulity at the Kwarteng budget. She was clearly blindsided by a Tory throwing all of the rules of good governence out of the window. I suspect that even she hadn't realised what a car crash it was when she rose to her feet. I suspect that she was slightly less scathing than she should have been (and she was pretty scathing), as she hadn't realised the back of a fag packet nature of the whole mess. The idea that a Chancellor would make up a budget without actually working out the consequences is something no one could have anticipated. 

A couple of months later, she faced Jeremy Hunt. This time she knew she was facing a grown up a politician who understood the magnitude of what he was doing. Reeve was also aware that if Hunt 'did a Kwarteng' it would do untold and possibly irreversable damage to the economy. I doubt she expected a repeat car crash. Sooner or later, I am sure she is expecting to have to undo some of the damage herself, so she'd probably not want another complete balls up, just a politically bad one. 

As for Jeremy Hunt, he had what was in some ways a simple task. Everyone knows the news is bad on the economy. As someone who was not part of the Boris or Truss years, he was to some degree blameless for the mess. His main task was simply to present a budget that didn't spook the markets and cause a mortgae rate hike. So long as he did that, he could to some degree claim a victory. But his boss, Rish! Sunak also clearly imposed three other conditions on Hunt. The first was to not upset the pensioners. That is where the core of the Tory vote is and it would be political suicide to upset them. There was never any doubt in my mind that the 'Triple Lock' would be maintained. The second was to not upset the rich bankers, many of whom keep the Tory party afloat financially. By placing clear blue water between themselves and Labour, they have given the bankers good reason to dig deep into their pockets to bolster the Tory party funds. Make no mistake, this is a massive consideration for the party. The old adage when trying to unravel seemingly untenable behaviour is to "follow the money". If giving the Tory party a million quid saves you ten million in taxes, it is a very sound investment. The final brief Sunak gave Hunt was "Don't upset the missus". We all know of the Tax arrangements of the Prime Ministers wife. Her and her family are big beneficiaries of the non dom tax rules. Mrs Sunak would clearly not be too chuffed if she was shafted. Given her families wealth, she may well ask "What is the point of being married to a Prime Minister if he doesn't look after the family?".

So that was the brief. Sod the rest of us. I will be fair to Mr Hunt. He has not really pandered to the real headbangers in his party. I was pleased that he stuck to his guns on important infrastructure projects, such as HS2 and Northern Rail. His appointment of Patricia Hewett (formerly a senior Labour politician) to assist with reforms in the NHS is clearly sensible and politically astute. My biggest disappointment was that there was nothing in there for small business or the creative sector. When will Conservtaive politicians wake up to the importance to the economy of small businesses. When will they realise that the arts sector brings billions into the economy, delivers huge soft power and makes all of our lives better? They have presided over 12 years where school arts has been cut to the bone, where funding for world leading organisations such as the ENO has been clobbered and the BBC has been forced to cut platforms back for aspiring artists, such as BBC Introducing. What they totally miss is that this is the best investment they could make. One of the strange things that I've noticed in 43 years of running a studio is just how many people who have run bands and left the music industry go on to be very successful in business. What other passtime for 16-21 year olds skills you up in managing people, negotiating contracts, marketing and finacial management. Most make a hash of it, but learn the lessons and take these into life. It was no surprise to me that the most electorally successful PM of modern times, Tony Blair, had been in a band. But these skills are simply not on the radar for this government. 

When Rachel Reeve stood up, the eyes of the world were on her. I thought Hunt presented his budget extremely professionally. Whatever you may think of him or his politics, he's a smooth operator. In Reeve's position, you don't know the micro impacts of the decisions that have been annouinced. That comes out in th wash over a few days. All you can do is critique the general direction of travel that the budget has set. Reeve did a good job of pointing out that this budget was all about undoing the mess her party had imposed on us. But I couldnt help byt wonder if it would have been more effective if she'd stood up and simply said "Congratulations Jeremy. You've done what your boss wanted, you've kept the bankers happy so they will keep funding the Tories, you've kept Mrs Sunak and her family happy by keeping the Non Doms happy, you've unravelled the mess that your party inflicted on the country two months ago to some degree and you've shafted the rest of the country to appease the markets that your own party spooked only two months ago". 

That is the truth of the budget, summed up in less than a hundred words. Despite Hunt's promise that he had a plan to sort the nation out, he has nothing of the sort. All he's done is patched up the door after the horse bolted.

Where the cuts should start at Barnet Council

The press is full of talk of cuts to the public sector. All we hear is how the cuts will hurt. I have no doubt they will, but I don't believe that they should. There is also plenty of talk of how the Tories are going to cut Labour waste. Don't believe a word of it. Look at Barnet where the Tories have been in charge since 2002. When they took over, the CEO, Leo Boland earned £114,000. What does the current CEO, Nick Walkley get - £200,000 not only that but his two deputies get £180,000 each. So we now pay approx five times as much. Are we getting five times better services?

Look at Brian Coleman. He's a councillor for Totteridge and a member of the GLA. As he's Boris Johnsons mate he's also the chair of the LFEPA. How much wealth does Mr Coleman generate being a value for money Tory? How has Mr Coleman improved your life? How much do you think he gets for these roles? Over £100,000 per annum. Not bad for a few part time jobs which generate no wealth.

Barnet Council seem to believe that their role in life is to facilitate big profits for property developers. The Brent Cross scheme has no local support (apart from the people standing to make millions from it), but our Tory Councillors are queueing up to endorse it. Why? Once the development is built and the Borough grinds to a halt in traffic gridlock, they will be long gone, consigned to the dustbin of history. Too late for the rest of us. As the social problems stack up, a future generation will be left to deal with the mess.

So where should the cuts start at Barnet Council? Well lets start at the top. There is layer upon layer of senior managers who add nothing. It is a massively top heavy organisation. Once this layer has been savagely pruned, sack all of the consultants who supply them with endless reports. Slim down non core functions such as the PR department. Stop wasting money on Council run blogs, facebook sites, twitter sites etc. If councillors want this, do what I do, get a free one. Our beloved MP, Jacuzzi king Matthew Offord once told me that between five and fifteen percent of Barnet Staff did nothing useful. My guess is that they are probably the top five to fifteen percent of earners.

Ironic isn't it. A swivel eyed Trotskyite telling a Conservative Council Leader, Lynne Hillan how to save money.