Politics is about people, about our different views and our understandings about people – about what motivates them, why they behave in the way they do, and what will most help or hinder them. In the spring of 2016 I published a short book titled: ‘A Better Politics: How Government Can Make Us Happier’ which is also free to read on-line.

I argued that in our current era we have policies for those that believe that poor people are lazy and that this harms us all. The reality is we’re all very much the same, driven by the same physiological and emotional needs. But that we start at different points, and a few people are more selfish and greedy than others. A larger group can become hardened and more indifferent to the suffering when we live in a society as divided as the UK has become.

The last six years have been a rollercoaster. David Cameron introduced his happiness index in 2016. The measures that contribute to that index were rising then. There was growing hope, despite the huge divisions cause by the Brexit referendum result. The proportion of people in the UK who said that life was worthwhile, that they were not too anxious, that their life satisfaction and happiness was good, all climbed, peaking with the outcome and in the aftermath of the 2017 general election.

However all four of these measures worsened rapidly around the time of the 2019 general election. Two thirds of the fall in happiness occurred between the third and fourth quarter of 2019, as did three quarters of the rise in anxiety. The pandemic made this worse, but the current plunge to greater levels of despair began before it.

Politics is also about power and winning that. For the conservative establishment, maintaining, not reducing, inequalities is seen as essential. In the past it was almost exclusively under Conservative governments that inequalities in income were increased. They may be about to do that again. There is a fight back taking place, but as yet it is mainly confined to ad-hoc protests, strikes, and suggestions of a few think tanks.

We need a better politics than this, one which will require confronting head on the central deception about our current state and likely future.

Resigned

On 7th July 2022, when Boris Johnson resigned, he said that if we stayed close to his chosen path then soon: “… we will be the most prosperous in Europe.” We clearly would not. He ended his speech promising that “… even if things can sometimes seem dark now, our future together is golden.” Talk of sun-lit uplands is wearing thin. The future now looks cold, not golden. There is no guarantee that the fuel bail-out will avert actual shortages of gas this winter, and we already know that overall higher bills will cause rising hunger.

Britain today competes with Bulgaria to be the most economically unequal country by income in Europe. Those surviving on the least in Britain now have living standards lower than their equivalents in some parts of Eastern Europe. Most of the poorest are in work, but work pays so badly that almost half of all UK adults are not tax payers. The UK has low unemployment because people will take any job they can. Often several jobs.

In comparison to average wages, the UK had the lowest unemployment benefit for single people in all of Europe. Other social security payments have continued to fall in generosity as a share of average wages. This fall continued even during the last 14 years when average wages also fell when compared to prices. The British state pension remains amongst the lowest in Western Europe, despite being protected from rising inflation. The average UK pensioner saw their real terms weekly income (after housing costs) rise by only £12 between 2010 and 2020, to £331 a week. That is an extra £1.71 a day. Pensioners are the demographic group that did better than others in that decade. The reason why their income hardly rose at all, during the years when the state pension was protected by the triple lock, was that other social security payments that pensioners received and relied upon to ensure they could cope were reduced in real terms. Those with disabilities have suffered particularly badly.

Hard work

The current government’s response is to tell people to work harder. In the first quarter of 2022 there were almost 50,000 sanctions for not trying hard enough to find work, almost three times the number made in the last quarter before the pandemic began in early 2020. Sanctions are the removal of up to all benefit income. This is most often for ‘failure to attend or participate in a Work-Focused Interview’.

However, many of the people being sanctioned have attended and participated in these interviews, but in the view of their ‘Work Coach’, have not done sufficient work search or other activities. This is how people are pushed into taking any work at all, no matter how bad it is. The researcher who released these figures explained: ‘The latest reported rate of sanctioning would produce 593,000 sanctions on all benefits in a full year. This would be the highest number since 2014, and higher than in any year under the previous Labour government, as far back as statistics are available in their present form.’

The average length that a sanction lasts is a month, but it can last much longer – deliberately causing severe immiseration. Conservatives have tried many different policies to preserve the high inequality they worked hard for and won. A large part of the reason they did not scrap Labour’s minimum wage, and later rebranded it as the National Living Wage – one which many find that they cannot afford to live on – was to not to have to address inequalities more widely. In 2022 the Trades Union Congress called for the minimum wage to be raised to £15 an hour from the current rate of £9.50 for workers over 23 years old and just £6.83 for those aged 18 to 20, and £4.81 for 16- and 17-year-olds. These are too low.

Social security

Labour needs to promise to raise social security support, at least to the more generous standards of most other European nations as compared to average incomes. It needs to agree to minimum wages rising and benefit sanctions being rapidly reduced. But it also needs policies that will curtail rising costs, otherwise no one will be better off. In September 2022 the Scottish government announced that ‘emergency legislation will be introduced to bring in a freeze on rent increases and ban evictions in the private and social rented sector in response to the cost of living’.(

How can Labour address the coming emergency and keep its promise to ‘not spend day-to-day more than we tax’? There is only one way, and that is to increase taxes on those who currently take the most. It is through higher taxes on incomes, but also sometimes on wealth, that other European countries ensure their societies are more fair, have higher long term social mobility, lower poverty and are not beginning to fall apart in the way that the UK is starting to fail. You can be coy about it, and pretend you will not do it – or you can choose to be honest – and also point out what is now falling apart more trenchantly. Labour need not increase the overall tax level by very much to bring public spending up to normal European levels; but it must alter the balance of who pays most tax. Between 1979 and 1990, the basic rate of income tax was reduced from 33% to 25%, and the top rate from 83% to 40%. At the same time there were increases in both VAT, from 8% to 15%, and National Insurance. The overall tax level was 30% in both 1978-79 and the same in 1990- 91.

Taxation does not necessarily ‘raise money’. What it does is alter the distribution of which people can spend the most. If taxes are not increased when public spending is increased, then prices will rise faster, especially for services where the number of people providing that service is limited. Without raising taxes on the better-off, you do not redistribute consumption. Top rate tax increases are also more effective than any cap on banker’s pay at reducing inequality, unfairness, and dangerous gambling by the financial sector.

Inedible growth

People cannot eat growth. They cannot believe promises that economic growth will be their salvation because they have heard those promises so many times. Johnson’s promise (as quoted above) was almost identical to one given by George Osborne seven years earlier. It does not matter who makes these promises, they are simply not believable, not least because sustainable growth that benefits the majority never occurs in societies as unequal as the UK has become.

You can argue that in a more equal society growth is more sustained, because that is what happens in those countries that are more equal. You can argue that this growth tends to be in areas which are more beneficial to society, less polluting and less wasteful, because that is also the case. You can argue that if you do not address the emergency we are in, then we should not expect much growth in the future, especially not much green growth, but you cannot tell people to wait for growth, or that you will somehow increase growth without first addressing the emergency.

You can have long term plans for a far better future. You can, if you wish, talk about how we could in time have a far less bureaucratic welfare state, even of how universal basic incomes are becoming a possibility. However, none of that is believable if you are not publicly willing and have the strength of will to be able to say that you will address the immediate crises that so many people face – head on. Our future together may well not be golden even with the best of policies. But it could soon be even worse than it is today. In the short term the pound is falling in value, stoking up even higher inflation; many people have exhausted the wellbeing and capacity of family and friends to help to keep them afloat; debt levels are terrible; our health is being damaged – not just mental health but we are also rapidly falling down the ranks in terms of measures of physical health. Evictions are rising. Precarity is becoming the norm.

Call out the myth of sun-lit uplands for what it is – a lie told by people who can afford to go on numerous holidays in the sun to those who they hope will swallow the lie, or who can be convinced that things are not getting better because other people are not working hard enough. Don’t try to promise the same lie, hoping that you can tell it a little more convincingly because you really would like things to quickly get better. Instead be honest, say that the current situation is terrible, worse than we have experienced in many decades. Tap into what so many people know to be true. Explain that the UK remains a very rich country, and that the very worse outcomes of current disastrous policy can be tackled immediately. Be clear that we have the resources to do that. Don’t exaggerate. Be clear that in the longer term recovery will take time because there is such a distance to go.

Bulgaria

Currently Bulgaria is moving faster in that direction than Britain is. Inequality has been falling in Bulgaria; but is still rising in Britain. People on average wages will require pay rises this coming year which are higher than those of people earning twice average wages. All of these increases will actually be falls in real income. That is made more bearable if, at the very least, you know that the society you live in is becoming more fair.

During the 1920s, and 1930s, inequalities in income in the UK fell during a series of crises not dissimilar to today. There was little celebration at the time, but had this not happened then the great achievements of the late 1940s, 1950s and 1960s would have been far harder to secure. Today we have both the benefit of hindsight and know that other countries in Europe are currently achieving this. Offer hope, honesty and fairness in response to a government that is promising only growth and fairy tales.

Please don’t mimic. Instead tell it as it is. And please don’t rely too much on the promise of growth. People cannot eat growth.

First published at Labour Tribune MPs.

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When Tony Blair was campaigning to win the 2001 general election he had to ignore the fact that the best-off 1% had increased their take to 12.7% of all income. The difference from before, just 0.8%, might not sound like very much, but in 2001 it was the same as the entire average annual salary of someone not in the best-off 10% of British society; with another fifth of their annual income added on for good measure. Imagine that you were one of the best-off 1% of people where you worked and in just five years your annual salary had been raised by the entire annual wage of someone doing a normal job in your workplace! And an extra fifth more ‘to boot’.

The rise in inequality was well deserved, you might say (if you were Jacob). The ‘little people’ should just work harder if they wanted more. If you were in Jacob’s group you were being awarded – each year – 19 times as much money (before tax) as someone outside of the top 10%. You might, understandably, conclude that you were worth at least 19 times as much as those people. After all, why else would you be paid that much money if you were not worth that much? You might resent the taxes you were forced to pay. Jacob was just 32 years old in 2001. He took time off from his fund managing job to campaign to become an MP again, on a platform of reducing his taxes. He lost again.

When Tony Blair was campaigning to win the 2005 general election mutterings of dissent were growing louder amongst his own supporters. However these mostly concerned his war with Iraq. What few people noticed back then was that the 1% had increased their take yet again under New Labour, now to 14.3% of all UK income, to each receive – on average – 22 times as much as the average person in the bottom 90%; the people who most solidly usually voted Labour. The increase in the income of the top 1% between 2000 and 2005 equated to three entire annual salaries of averagely paid people! Inequality between the very top and the rest grew by the most in Tony Blair’s second term as Prime Minister.

New Labour reduced childhood poverty, they quietly installed double glazing into tens of thousands of council houses, they had ensured that a minimum wage became firmly established, they increased education and health funding; but they also allowed the rich to become ever richer and with that resentment grew. The resentment grew as most people found it harder and harder to afford a home. Resentment grew as people were led to believe that it was becoming harder to access health treatment due to immigrants, that the children of immigrants were taking the ‘better’ school places.

Few noticed that as the 1% took more and more they could buy more homes for themselves and to rent most of them out privately. Homes that had previously been social housing or cheaper owner-occupied dwellings (Tony Blair and his wife bought many such homes). Few noticed that as the 1% took more, they could afford to use private health care more and more easily, more often, and so were not concerned that the UK spent less on public health care than almost any other European state. Few noticed that the while the ‘little people’ were squabbling about school places – almost all of the ‘bottom 90%’ who entirely rely on state education – the 1% were almost all educating their children entirely separately and dramatically increasing the amount they spent on their children’s education through ‘rising school fees’.

Jacob Rees-Mogg left his fund manager job in 2007 to form a hedge fund (Somerset Capital Management). Having worked in the City of London for so many years, he may have had a sense that something was up and that the coming year would not be good for conventional bankers and fund managers. The banks crashed in 2008. Gordon Brown later became Prime Minister. He lost the 2010 general election, and for a brief moment, the top 1% saw their share of national income fall to 12.6% in the aftermath of financial chaos, briefly reversing some of the gains they had made between 2001 and 2005 under Blair. Jacob was elected as MP for North East Somerset in 2010 and a coalition government between his party (the Conservatives) and the Liberals was formed.

New Labour did do many good things between 1997 and 2010, but nevertheless income and wealth inequality rose under the stewardship of Blair and Brown. The brief fall that did occur was due to the financial crisis and not government policy. New Labour also, perhaps partly unwittingly, sowed the seeds for greater inequality to come, allowing more of the NHS to be privatized, introducing £1000 a year and then £3000 a year university tuition fees, and introducing academy schools out of local authority control.

By not curbing the growth of inequality, as all previous Labour administrations had done after 1945, 1964, 1966 and 1974, New Labour left office with a majority of the British people, some 90%, having to get by on around 60% of the national income. Contrast that with the rise to 67.7% when the 1945 government left office or, the 71.1% and then 71.2% that Wilson’s governments had left the 90% with, or the 71.6% that the ‘bottom 90%’ received when Labour had last left office in 1979. Without exception, all previous Labour administrations had left Britain a more equal place than when they had taken power. New Labour left it more divided.

When the 2015 election came, the take of the 1% had grown again, to 16.6% or 27 times the average income of average adult in the ‘bottom 90%’. People like Jacob Rees-Mogg and Tony Blair, those with incomes in the top 1%, had seen their take rise by an average addition of 6.5 salaries of those in the bottom 90%! The coalition government had presided over a rapid rise in inequality. Labour elected a different kind of leader that year, Jeremy Corbyn, and radically changed its policy towards no longer tolerating inequality. In the 2017 general election, Labour received an unprecedented upwards swing of support, denying the Conservatives a majority.

Today Jacob is now the Leader of the House of Commons and Lord President of the Council, presiding over meetings of the Privy Council. Inequality has risen, just as he wished and fought so hard to achieve over all those long years. The battle to come is between those who have taken the most. And the rest. For inspiration, Labour will need to look back to what it last achieved in the 1940s, 1960s and 1970s. Labour can also look to what almost all other European countries currently achieve. No other EU-OECD country is as unequal as the UK is today.

The choice today is between becoming more unequal, or more normal. It is as simple as that. New Labour facilitated the rise in inequality. Jacob Rees-Mogg’s type of Conservative aims to accelerate that rise. He and they will do anything they can to prevent inequality falling.

All the sources to the data used in this blog can be found in this book. The fully updated new edition of Inequality and the 1% is out on 17th September 2019.

Photo credit: Flickr/Michael Coghlan.

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1. Spending on education in the UK, which includes private school education and university fees, fell by more than spending in any other category other than ‘miscellaneous’. Fewer households can afford private education and there has probably been a slight reduction in the uptake of the offers of places at UK universities. State school education spending has fallen, per child.

2. Business investment in the UK fell sharply in the fourth quarter of 2019 to become as low as it had last been relative to GDP during the great financial crash of 2008. There were especially large falls in transport investment, down from £7.0bn a year around June 2016 to reach below £4.0bn in 2019.

3. By the fourth quarter of 2018, and for the first time in any quarter since at least 2016, productive output in the UK economy fell in all main production areas. This contrasts with overall slow growth before 2016. Recovery from the Great Recession of 2008 had been underway; but the 2010 coalition choice to pursue austerity meant that the recovery was the slowest and shallowest ever recorded. Clearly, the UK is no longer even in mild recovery.

4. The ONS also reported “the fourth consecutive quarter-on-quarter fall in business investment… the first time this has happened since the economic downturn of 2008 to 2009”.

5. On the UK balance of payments, the situation is now awful: “The UK current account deficit widened by £0.7 billion to £23.7 billion in Quarter 4 (Oct to Dec) 2018, or 4.4% of gross domestic product (GDP), the largest deficit recorded since Quarter 3 (July to Sept) 2016 in both value and percentage of GDP terms.” This particular ONS report went on to highlight the fact that: “UK investors have disinvested in overseas equity securities in the portfolio account throughout 2018, resulting in an overall disinvestment of £174.2 billion in 2018 – the largest on record.” Overseas ‘investment’ was at a maximum during the height of the British Empire.

6. On the economy as a whole: “Real UK gross domestic product (GDP) increased by an unrevised 0.2% in Quarter 4 (Oct to Dec) 2018, while the 1.4% increase in 2018 is the weakest annual growth rate since the financial crisis.” This very small growth was only made possible by the UK borrowing more from the rest of the world. The employment rate rose again to a record high of 76.1% with the “unemployment rate falling to 3.9% – its lowest level since January 1975”. The economic woes of the UK are not caused by too few people working. Rather, the work being done is unproductive, the wages being paid are too low, and investment in the UK is drying up – so we depend yet more from the kindness of strangers and borrow.

7. The statistics released on March 29^th 2019 revealed “an unprecedented ninth consecutive quarter of households being net borrowers, although their net borrowing decreased to 0.8% of GDP from 1.4% in the previous quarter”. The ability of UK households to borrow yet more to make ends meet is drying up. Furthermore, in this release it was revealed that: “Financial corporations experienced an unprecedented sustained fall in net acquisitions of shares issued by the rest of the world in all four quarters of 2018, resulting in the largest annual fall since records began in 1987.” Since the third quarter of 2016 – since the Brexit referendum result – every sector of the economy has been in deficit.

Households in the UK managed to maintain their spending levels during 2017 and throughout 2018 through resorting to unsecured loans in both of these years. The UK is now entering uncharted economic territory.

8. The ONS announced on 29 March 2019 that they will be making “confidential assessments of government and devolved administration policy proposals (as explained in our classification process); we do not announce or discuss such policy proposal assessments as a matter of course in order to afford policy-makers the space to develop policy”. If you do not know what that means – well, you are not supposed to know, and you will not be told what they are doing if you are interested. In that same document the ONS confirmed that they had completed their work on estimating the income the UK government now receives from making visa charges to people travelling to the UK from overseas. These charges have increased substantially in recent years.

9. The income, capital and financial account and balance sheet data for monetary corporations, other intermediaries, auxiliaries, insurance corporations and pension funds were released on March 29^th. The seasonally adjusted data show the following levels of gross operating surplus for such UK businesses in the last five quarters (a fall from over £16bn to under £14bn in 15 months). 

Gross operating surpluses (selected UK financial businesses)

Source: UK Economic Accounts: sector – financial corporations, ONS. 29/3/2019

10. On 28 March the ONS reported on housing price falls and explained that “The total value of residential property transactions (unadjusted for inflation) decreased most in London in the year ending September 2018.” The UK housing market is in a slump. Transaction levels have collapsed. The price falls are still led by London, where the vast majority of UK housing equity resides. As of 2017, UK banks rely on the value of the homes they have lent on to meet their Basel III stability requirements for minimal capital adequacy.

11. On 27 March the ONS reported that: “Since 2012 to 2014, there have been statistically significant increases in the inequality in Life Expectancy in England for males and females at birth and at age 65 years; the inequality in female Life Expectancy at birth had the largest growth, rising by 0.5 years. In England, the growth in the female inequality came from a statistically significant reduction in Life Expectancy at birth of almost 100 days among females living in the most deprived areas between 2012 to 2014 and 2015 to 2017, together with an increase of 84 days in the least deprived areas.”

12. A day earlier, on 26 March, the ONS released a report showing that a quarter of children aged 11 to 16 (in England, in 2017) with parents “struggling to get on” were living with a mental disorder, as were just under a fifth (19%) of all those children aged 5 to 10. The ONS reported the recent findings of the Children’s Society to help explain this: “Reductions in family income, including benefit cuts, are likely to have wide-ranging negative effects on children’s mental health.” The situation will have worsened during 2018 as reductions to these family incomes continued. We have no idea how the children of the UK will, as a whole, be effected by the events reported above. There is little reason to be optimistic. But, as I write (April 1^st), there is still time to avert a hard Brexit.

This piece was originally published in Public Sector Focus here. Photo credit: Flickr / Luc Mercelis.

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All imperial countries and their leaders have problems when their empires disappear, and they no longer have the forced tribute or inequitable trade deals they have depended on. Even when previously colonised people come to work for their former masters and build up the ‘mother country’, they may find a distinct lack of hospitality and even face deportation in their old age. So, as the sad tragedy known as Brexit moves into its assumed final stages, it is time to revisit the British Empire and its ending – Brexit being perhaps the last gasp of this empire.

Brexit is a gasp of rancour which seems to have brought to the surface much resentment, hatred, and ill-informed debate. Even Theresa May could not possibly have envisaged a situation where, faced with headlines such as “Officials warn of putrefying piles of waste after no-deal Brexit”, and the current UKIP leader writing to the Queen telling her she had committed treason by signing the Maastricht Treaty, she (May, not yet the Queen) is forced to return to the EU in late February, to try to renegotiate that infamous withdrawal treaty that in January Parliament had rejected and the EU had said it would not renegotiate.

May will not be helped by her international trade secretary announcing (to a Conservative think-tank) that EU countries would now be keen to negotiate due to weaknesses in their economies. Nor will she be helped by what was quickly labelled as the ‘Malthouse compromise’ on the backstop, after a junior minister (Kit) who claims (in Who’s Who) that his hobbies are baking bread and watching others dance and play.

This article is cross-posted from the LSE British Politics and Policy blog. To read the full piece, click here. 

Photo credit from previous page: Flickr / Giles Turnbull

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John Weeks: “austerity in real time”.

Every three months the Office for National Statistics (ONS) reports data on the main sectors of our economy, providing numbers on economic activity as a whole, the major sectors (manufacturing, construction and services), and categories of expenditure (by government, business, exports and imports).

The media and politicians invariably transform this rather bland non-event into a ritual of economic assessment, with the prime focus on “growth”, the aggregate measure of national economic activity as indicated by gross national product.  The commentary on this near-magic number, “percentage change in GDP” should carry a health warning, because special interests rush forward to provide their self-serving interpretation without explaining to the public what is being measured and why that measure enlightens our understanding.

Earlier this morning the ONS initiated the seasonal ritual with the announcement that “UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.4% between Quarter 1 (Jan to Mar) 2018 and Quarter 2 (Apr to June) 2018.”  Many of those who read this statement, or found it in second hand reports, might conclude that our national production had increased, albeit by a very modest annual rate of 1.3% compared to a year before.

This conclusion would be false.  Delving further down in the ONS announcement, the reader discovers that activity in the “production” category – manufacturing, electricity and water, mining and agriculture – declined by 0.8% quarter-to-quarter, its sharpest quarterly fall since the end of 2012.

The production of goods declined, and businesses and households used less power and water – how could GDP increase?  Services and construction rose, counteracting the decline in production sectors (numerically, if not substantively).  To compensate for less domestic production our balance on international trade dropped deeper into the red (trade balance declined from £6.8 billion to 9 billion).

To put it simply, the increase in GDP from 0.2% in the first quarter to 0.4% in the second brought us an economy with less production and more imports.  This unpalatable combination results from the feckless continuation of Tory austerity policies that depress domestic demand (household consumption rose by a meagre 0.3%).

A few may hail this dismal outcome as a harbinger of good things to come.  I expect the many to take a more jaundiced view, because, to quote from section 6 of the report, compensation of employees “slowed to 0.6% in Quarter 2, which was the weakest growth since Quarter 4 (Oct to Dec) 2016.”

Slow expansion of our economy, depressed productive activity, and stagnation of earnings, austerity in real time.

Johnna Montgomerie: “people going into debt is how the UK economy putters on”.

Growth figures released today say the UK economy grew by 0.4%, compared to 0.2% last quarter. There is nothing to celebrate in yet another fraction of a percent of GDP growth. It is clear the UK economy is in the doldrums without any prospect of the winds picking up. The UK is at the bottom of the G7, the ‘sick man’ of the advanced economies around the world.

The biggest problem is that even this meagre performance is heavily reliant on record levels of consumer credit. People going into more and more debt is how the UK economy stays on life support; neither thriving or in recession, it putters on. UK households have seen their outgoings surpass their income for the first time in nearly 30 years. Economic stagnation has taken hold because wage growth is so slow it cannot stimulate economic activity or, increasingly, just manage current outstanding debts. This is why GDP growth isn’t translating into people’s pay packets.

Let us not celebrate mediocrity, and face the fact that the UK economy is a sinking ship. Without a bold and credible plan to chart a new course, expect more of the same in the months and years to come.

Danny Dorling: “the contraction of the financial sector takes place very quietly”.

Hidden in the detail of these figures was the news that Britain’s finance and insurance industries had shrunk, albeit only by a tenth of one percent. While the rest of the UK economy was growing, very slightly and slowly – more slowly than in recent years – growth in finance and insurance activity was negative.

The size of the contraction in these industries in the last quarter was roughly half of that in public administration, which has continued to be squeezed by public spending cuts. Most recently, it was reported that Northamptonshire County council will be making future cuts of up to £70 million. When the cuts in public sector spending were announced, the BBC reported one protestor as saying: “When people die this winter, because they will die this winter, the blood will be on your hands.” Contraction often occurs through a thousand small cuts.

In April 2018, the European Banking Authority (EBA) announced that that the salaries of the highest earning bankers in Europe had begun to fall. Almost all of the highest earning bankers are based in London. The EBA is currently based in London, but will be moving to Paris soon.

Unlike public sector cuts, which have immediate and obvious effects and result in protests reported by the BBC, the contraction of the finance and insurance industries in the UK takes place very quietly. It is not in the interest of the banks to point out who among their staff is moving to Paris or Frankfurt or Amsterdam and whether it is the younger bankers and lawyers without families who are moving first. And it is not in their interest to point out that they are now paying themselves less, as most people still understand that the highest paid bankers have been paid far too much. But hidden in today’s ONS report is yet more evidence of the contraction of what had been the UK’s most successful industry.

Richard Murphy: “nothing of any substance to celebrate here”.

The UK’s growth figure for the second quarter of 2018 has just been reported to be 0.4%. Compared to the 0.2% reported in the first quarter this sounds like an improvement. And in purely statistical terms it is, of course. That is the only indisputable thing about it.

Standing back this data remains deeply unexciting. And if it is understood that the first quarter may simply have been depressed by poor weather, which meant consumers deferred some spending simply because they could not, or would not, get out, then the bounce (if it can be called that) might well be little more than a correction.

And let’s also be candid; when the figures are so small, and the boundaries for reporting are so wide in proportion to them, the margins for error in this reporting are very high. No wonder the pound is still falling – they’re treating the change as no sign of a significant difference in the overall economic environment.

So my point is that we should go back to fundamentals. This growth rate is still very low. There is, despite what the Bank of England is forecasting, little sign that it is flowing through to wage rates. There are signs that it is private debt that continues to fund consumption growth. And there is massive uncertainty for the UK ahead, which is one reason why we remain so weak in comparison to other economies.

There is nothing of any substance to celebrate here. But there is ample reason to think there may be more trouble ahead.

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How might we control the rich, live better alongside each other in Europe, elect our politicians, police ourselves, deal with terrorists, with unemployment, and with our current obsession with the market?

Look back a century and you see the year of the worst flu pandemic the world has ever known, back to a world at war. Now imagine looking forward from then to the present day, to 2018. In the turmoil of 1918, it would have been hard to envisage the magnitude of the social progress that would manifest over the coming hundred years.

In a similar way, our current levels of inequality actually harm the imagination. Otherwise we, in Britain, would more easily see what we need to do. We are currently the most economically unequal country in Europe. That will very likely end soon.

Once we imagine what could be, then it becomes easier to know what we should be dreaming of and aspiring to. The future will be very different, even though we find it far easier to keep on imagining more of the same.

In a progressive economy, house prices would reflect how much it costs to build a home, including the costs of the material that each home is built from, but not the hyper-inflated land value. The costs of renting will relate to the cost to the landlord of maintaining the fabric of a home and the landlord’s actual time and effort, and not to the power imbalance that comes with sharp inequalities of wealth. Rents would be regulated, hidden charges banned.

In a progressive economy, school funding would be at least raised to normal Western European levels, and state schools would not be privatized (‘academized’) and turned into businesses with scant oversight of their financial behaviour.

If you think none of this is possible please remember that the beating of children was only outlawed in UK state schools after someone like me left school, in 1986, and in private schools only a dozen or so years later! Teachers used to beat children!

So, given all that, we should be asking ourselves the following question: what is happening now that we might regard as abhorrent in future? This constant asking, demanding and then winning, is what it means to be progressive.

A progressive economic outlook alters how we view key issues such as immigration and ageing. Our current obsession with immigration is partly driven by a fear that there is not enough work to go around. However, work in the near future will be very different. Our obsession with aging is due to a fear that the old will be a burden on the young; but our economy in the future will be so very different to today. The majority of the largest firms in the UK in 1918 were no longer in existence by 2018, and the few that did survive were no longer at all large.

Today the largest UK firms are involved in oil, banking, supermarkets, mobile phones, chemicals, pharmaceuticals and making weapons. Almost all of these did not exist a hundred years earlier (or were tiny then), and many will be much diminished in size in much less than a hundred years’ time. Not only will work change, but what work needs to be done will fundamentally alter, as it has been doing for some time.

With respect to health, our current health crises are temporary aberrations. Across Europe there is a continuum from Finland and Norway, where life expectancy continues to increase at a rate of one additional year in every three or four, down to countries like the UK, where improvements in life expectancy have now stalled, largely thanks to inadequate public spending on vital care and other cuts – such that austerity has been linked to 120,000 excess deaths. In a progressive economy, we will shudder when we remember what we accepted today.

The extreme inequality, the continuous crisis, and the awful austerity that we experience today will soon be history.

When change truly happens it at first strikes seasoned commentators as frankly impossible – a pipe-dream; then undesirable and full of negative consequences; then ‘just about possible’ once the clamour for change becomes overwhelming.

Finally, change happens and the memories of the commentators change with it. They will say that they believed in the change as desirable all along; they somehow saw it coming and so, too, were on the right side of history.

Next, we all forget that just a few years ago they had so vehemently opposed the change, had justified the status quo, were so very scornful, and ultimately wrong. That matters little. It is just history.

What matters is ensuring that we are now at the peak and starting on our way down. It’s a long way down.

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