It’s a while ago, I accept, but this is my first article since the election and we are now facing change. The result is no surprise, and to be fair, did the Conservatives deserve another go? In the main, probably not, and so now begins the process of finding out what the new Government will do. It may do some of what it said, but most probably it will do quite a bit of what it didn’t say, and the devil is in the detail as always.

In the first week the strategy was to look competent, and I watched with interest as Rachel Reeves delivered her first speech about the end of ‘nimbyism’, going for growth and how she has ordered the treasury officials to give her a detailed report on the state of the finances so she can understand the scale of the challenge. All good stuff, you may say, and I agree, but then she claimed that she had inherited the worst set of circumstances since the second world war. This, unfortunately, is just not true.

Firstly, government books are wide open and fully transparent at all times. Everyone – you, me, and most importantly the bond markets – can see what’s going on at any given point. No lender would choose to fund the UK government debt if this was not the case.

Secondly, you don’t have to go back 79 years to find a more challenging fiscal scenario. Today’s deficit stands at around 4.5% of GDP; in 2010 the deficit was 10.3%. If the new Government does nothing, the Office for Budget Responsibility forecasts that it will fall to 1.2%. This is based on spending assumptions that are, in fairness, challenging, but many of the hard decisions regarding tax rises and tax thresholds have already been taken by the previous incumbents.

It is fair to say that the overall debt is larger now, close to 100% of GDP, mainly due to Covid-19, but let’s not forget that such spending during the pandemic was enthusiastically supported by the Labour party, which indeed called for further extensions to the furlough scheme and higher pay rises for our NHS heroes. It should be remembered that between 1997 and 2010 the debt rose from 38% of GDP to 65% under Gordon Brown without the excuse of having to put the economy into deep freeze due to Covid-19. You could make the case that Gordon Brown is much more the villain than Rishi Sunak.

So what can they do? Well, in her own words, growth is essential, and how that is achieved we will no doubt find out in due course. This growth, however, will not be helped by her colleague Mr Milliband’s recent announcement of a ban on all new drilling licences in the North Sea. If we are going to get growth then we need to lower our energy prices and not be reliant on imported oil from around the world. Remember that even if we hit out net zero goals, which seems unlikely, 50% of our energy will still come from oil in 2050 so surely it’s better to use our own and provide jobs?

This new Government has a dilemma; it is not facing a uniquely poor inheritance, but it does have to make difficult choices. Money is scarce, the population is getting older and will need more health and social care and its grand plans to improve public services and increase defence spending will need cash. If growth doesn’t happen, or is low, then what?

Despite the promises, despite what was avoided and not said, it is a fact that no Labour government since 1970 has left office with a lower tax burden than when it started. Will this one be any different? 

On a completely different note, the grass silage is all finished and back home for 2024. The combine wheels have been turning, and fingers crossed the weather decides to play ball this year. So far in 2024 it has behaved appallingly.

With school finished and Monty home, an extra pair of hands on the farm goes a long way to getting a good job jobbed.

I wish you all a very good harvest with plenty of corn to use/sell.

Until next time.   

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