On 15July it was reported that Chancellor Rachel Reeves is planning to water down a whole collection of regulations which were introduced following the 2008 financial crisis. This was said to come after “strong lobbying by City firms, and push for more risk-taking by both businesses and consumers”. This is despite the fact that 17 years on, we are still living the disastrous co0nsequences of the 2008 crash, which came about partly because of too light a regulation of the financial sector. Reeves argued that the government is “regulating for growth”, and that “weaker regulations will ultimately have trickle-down benefits for consumers”.
Trickledown economics
Trickledown economics was a phrase first coined in the 1980s to try and explain how the economic reforms brought in by Thatcher and Reagan would somehow benefit the whole of society, not just the wealthy. The idea was that if the rich got richer, then they would consume more and so more things would sold and made by people who were less well-off and so they would also benefit. It is notable that the even these benefits were only ever seen as a ‘trickle’ and it is highly debateable whether its advocates ever really believed in what they were saying about it benefiting those at the poorer end of the street.
The effects on the North East
This, of course has serious consequences for many people here in the North East. It has been noted by the North East – based charity Feeding Families that “the Joseph Roundtree Foundation have released their #UKpoverty 2024 report last month and the future remains worrying. Latest statistics show that 25% of the North East population live below the poverty line, making us one of the worst affected regions in the UK”. It was also noted recently in North East Bylines that Sunderland and South Tyneside were on the very bottom rankings nationally in terms of take home pay, with the average resident in both local authority areas taking home just £502 a week.
Comment
By taking the advice of lobbyists from the City and putting money instead of people at the heart of the economy, Rachel Reeves is doing the opposite of what is both fair and what will help heal our nation.
I am reminded again of the woman at the meeting in Newcastle before the Brexit Referendum, who when told (rightly) that the nation’s GDP would go down if we left the EU, shouted out, “Whose bloody GDP is it anyway? While leaving the EU has undoubtedly been a mistake, this encounter does still encapsulates so much of what has been going wrong with British society and it economy since Thatcher was Prime Minister. Far too much of the wealth created has become concentrated in far too few hands and the kind of trickledown economics advocated by Reeves has been the major reason for this happening.
Surely, it would be better to redistribute wealth to the poorest, give people real hope and level up properly, rather than trickle down?
This decision by Reeves shows yet again how she is completely out of touch with the lives of ordinary people in this country. She seems to have nothing to offer except the same old, tired and failed economic ideas of the last 45 tears, which have lead us into the crisis we are in today. ‘Trickledown’ is a myth and a dangerous one as well. It has one aim; to justify the huge inequalities in society today while at the same time causing them.
One has to question how much longer Reeves can go on as Chancellor.
