Making Great Britain Great Again
Making Great Britain Great Again
A little more than half the US population thinks Donald Trump can do very little wrong, or at least willing to give him the benefit of the doubt. A solid minority detest everything about him and the rest are put off by his personality and the bullying manner in which he deals with historic allies.
Objectively, there are some of the policies he espouses that make sense. Cutting government waste is a good thing. Gaining more favourable trade terms is a good thing. Reducing the burden of regulation is a good thing, particularly when it removes roadblocks to growth potential.
Obviously, public sector workers are upset at the prospect of both losing their jobs and being seen as the reason for the country’s poor fiscal condition. However, having more people working, who do not depend on the government for a wage, is how you increase tax revenue.
The UK, under the Labour Party, has a significant opportunity to enact enduring change. Labour unions don’t generally strike when their own party is in power. However, it takes strong leadership to force unions to acquiesce for the public good.
That’s been the big outstanding question since the UK election. Does Keir Starmer’s administration have the force of will to embrace reform?
The most recent signs are positive. After the high minded talk of building 1 million new dwellings and another runway at Heathrow failed to inspire the bond markets, the more basic work of addressing waste and regulation is beginning.
The biggest challenge for the UK administration has been the trend of governance through focus group which has prevailed for at least the last twenty years.
It can be summarised as the committee about committees about committees, way of governing. By the time decisions are made it is questionable whether they are relevant or resemble the aim of the original policy. The more important point is it is very difficult to figure out who is responsible for decisions. That lack of accountability has created the sense that politicians don’t care and the government is at odds with people’s priorities.
In October 2024, the Labour Party unveiled its Employment Rights Bill which granted much stronger rights to workers. It was welcomed by unions as a step in the right direction which generally means it is negative for businesses.
If the Employment Rights Bill was the carrot, are we now going to see the stick? The announcement over the weekend that the government is going to slash the number of regulators and force more people back into the workforce suggests they are getting serious about meeting the fiscal rule.
The message is clear enough. They have made the work environment more pleasant so everyone should be working. The additional announcement last week that duplication of bureaucracy in the NHS will be phased out over the next two years is a step in the right direction too.
The long lead time is also a cautionary tale for those in the USA who think it is straightforward to fire union workers in the public sector.
The UK is now beginning to live within its means. That should help to contain the upward trend in Gilt yields. The uncertainty is in the time it takes to enact these policies and whether the government has the staying power to persist once they have some positive results to show for their efforts.
Reform of the planning process of new home construction, limiting the sanctity of greenbelts and streamlining decision making are all essential to getting more homes built.