CHANCELLOR Rachel Reeves has ordered 5 per cent cuts across government departments in an “efficiency drive” that resembles austerity.
Announcing the spending review, Ms Reeves said: “I have no doubt that we can find efficiency savings within government spending of 5 per cent and I’m determined to do so.”
She said the cuts would be secured by cracking down on waste and focusing on the five “milestone” policies Prime Minister Sir Keir Starmer outlined in his government relaunch last week.
Those were boosting living standards, building more homes, cutting NHS waiting lists, ensuring children are ready for school and raising military spending to 2.5 per cent of gross domestic product.
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The 5 per cent reductions are to be achieved over three years, the Treasury said, adding that the Chancellor will “work with departments to prioritise spending that supports the milestones to deliver the plan,” indicating that areas not a “milestone,” such as welfare, will be squeezed.
Ms Reeves denied that her move replicated a similar announcement by her predecessor George Osborne at the height of Tory austerity.
Green Party co-leader Adrian Ramsay said: “Labour call their 5 per cent cuts across government departments ‘efficiency savings.’ We call it what it is: cuts to services.
“This amounts to the continuation of the same damaging, unpopular and unnecessary policy that has so devastated our country over many years.”
Stocks of food at the Trussell Trust Brent Foodbank, Neasden, London
A COALITION of 120 children’s charities today called for the complete eradication of child poverty in 20 years, increasing pressure for government to scrap the two-child benefit cap.
The End Child Poverty Coalition set out eight tests it said should be met by the government’s taskforce strategy if it is to succeed in tackling and ending child poverty.
Among them was that government must ultimately aim to halve child poverty in the next 10 years, and completely eradicate it in the next 20.
The coalition also said the two-child limit to benefit payments must be scrapped, estimating this could immediately lift around 300,000 children out of poverty, and that “further fundamental reform” to the social security system is needed.
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End Child Poverty Coalition chair Joseph Howes said: “Child poverty is a blight on our society and is also completely avoidable.
“If the government is serious about tackling and ultimately eradicating child poverty in this country, it needs to be bold and ambitious in its investments, including immediately scrapping the two-child limit to benefit payments.
Keir Starmer and the chancellor, Rachel Reeves, who has promised an extra £22bn to help cut NHS waiting times, at University Hospital Coventry and Warwickshire on 31 October. Photograph: Darren Staples/AP
NHS bosses are said to be privately concerned about Keir Starmer’s ambitious targets to cut waiting lists for routine operations, set to be announced later this week, which will also include specific targets on living standards and housebuilding.
The prime minister is expected on Thursday to set a target for 92% of routine operations and appointments in England to be carried out within 18 weeks by March 2029 – a goal that has not been achieved in almost a decade – the Times has reported.
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Most NHS trust bosses doubt the health service can restore key waiting times by 2029. A recent survey by the hospitals body NHS Providers found that 71% of the leaders overall, and 100% of those who run acute and ambulance trusts, thought it unlikely that they could make such progress that quickly.
The Society for Acute Medicine (SAM), which represents hospital doctors, said Starmer’s desire for a return to 92% of patients waiting a maximum of 18 weeks, four months before the end of this parliament, was “doomed” unless overstretched NHS urgent and emergency care services, such as A&E and ambulance services, were dramatically improved.
Keir Starmer and Rachel Reeves hosting an investment roundtable discussion with BlackRock CEO Larry Fink and members of the BlackRock executive board at 10 Downing Street | Frank Augstein – WPA Pool/Getty Images
Jonathan Reynolds told the investment bank that he looked forward to working together to “change the face of our UK”
Senior executives from BlackRock, one of the world’s most controversial companies, last week sat down opposite Keir Starmer and chancellor Rachel Reeves in Downing Street.
The government’s laser-focus on private investment as the key means of driving economic growth has inevitably led to a reliance on the world’s big money machines, such as BlackRock. But this is a relationship that Labour initially developed in opposition – and which has only become cosier since the party entered government.
The meeting on Thursday between Starmer, Reeves, investment minister Poppy Gustafsson and several members of BlackRock’s board was not the first time that senior figures from the world’s largest asset manager have met with ministers in recent months.
BlackRock CEO Larry Fink also made a star turn at Labour’s investment summit in October and posed for pictures with the prime minister when he visited New York in September. Senior BlackRock figures also attended a summer reception for business leaders at No 10, as openDemocracy revealed previously.
‘On a personal note’
As Starmer’s cabinet ministers were appointed in July, hundreds of companies contacted them to offer their congratulations, pitch their value to the government, and request meetings. Inevitably, some had more success than others in obtaining access to their targets. BlackRock was one of them.
With around $10tn (yes, trillion) under its management, BlackRock is among the most powerful financial institutions on the planet. To many, it is also among the most “evil”, because it continues to pump billions into fossil fuels and arms companies, and its reach extends into almost every aspect of the economy and society.
At 5pm on Monday 8 July, a managing director at the investment giant emailed Jonathan Reynolds, who’d been appointed the UK’s new secretary of state for business and trade just a few days earlier.
“Dear Secretary of State,” the executive wrote, “on behalf of all of us here at BlackRock, please find attached a formal letter of congratulations from myself and our UK Chair, Sandra Boss.
“And may I add, on a personal note, it is a pleasure after all these years to address you as such!”
The BlackRock executive was Anthony Manchester, a former senior civil servant who held roles across various government departments between 2001 and 2015, including the Treasury and Cabinet Office.
The attached letter began with the same pleasantries and congratulations expressed by Manchester, before highlighting BlackRock’s broad range of clientele and the scale of their footprint across the breadth of the UK economy, name-dropping British Airways, Rolls Royce and AstraZeneca as investments.
Next came the key point:
“As you know, we also share the government’s view that infrastructure investment can play a critical role in improving economic growth and productivity. We believe infrastructure is poised to become one of the fastest-growing segments in private markets globally.
“As our Chairman and CEO Larry Fink has recently written, private capital market financing, combined with policy pragmatism, are necessary to meet countries’ infrastructure needs and thereby enhance economic growth and productivity.
“We would welcome the opportunity to meet with you to discuss our work on funding the projects and enterprises that drive the economy and building the UK’s case as an investment destination. We will work with your team to get this meeting in the diary.
“Until then, congratulations once again on your appointment.”
Cutting through the corporate glaze, we can roughly understand the point being made here. In effect, BlackRock is highlighting that Labour’s entire political project rests on the willingness of companies like BlackRock to plough private capital into the foundational components of our society (and extracting massive profits in the process).
Reynolds’ reply to BlackRock, when it eventually came in August, gushed with praise for the firm and the wider financial services sector.
“Partnership with the Financial Services sector will be critical to developing and delivering on our industrial strategy and supporting small businesses. The sector underpins UK investment and trade, and its continued success is critical to lay the strong foundations for economic growth that this country needs.”
Reynolds added: “I would like to thank you for your long-standing investment in the UK, and partnership in driving growth, jobs and innovation. Blackrock has an impressive reach driving investment into the UK across sectors of our economy and your work is vital to economic growth. Funding our priority projects and investment in infrastructure is an important part of this…”
“We do not underestimate the importance of the UK’s Financial Services sector to the wider economy, or its potential to help deliver social value and the clean energy transition. To succeed we need everyone to play their part. I am looking forward to working with you in this common endeavour of national renewal.
“Together, we will change the face of our United Kingdom for the better.
“Thank you for your kind offer to meet. I would be delighted to accept this invitation. My Private Office will be in touch with you to arrange a suitable time. Thank you once again for writing and I look forward to working with you.”
‘Getting BlackRock to rebuild Britain’
In the asset management space, BlackRock has historically been a fairly hands-off investor, the bulk of its holdings being significant but typically not controlling shares in many of the world’s biggest companies – generally between 5-10% – according to Brett Christopher’s survey of the industry, Our Lives in Their Portfolios: Why Asset Managers Rule the World.
Think of an industry, then think of the top companies within it, and there’s a fairly good chance that BlackRock has shares in it. Christophers notes that, as a proportion of its overall holdings, investments placed in infrastructure – things like the electricity grid, water systems, and toll roads – were relatively small.
But in January this year, the firm announced it would purchase Global Infrastructure Partners, which controls around $170bn worth of assets worldwide, including Gatwick Airport and Hornsea 1, a project to build the world’s largest offshore windfarm in the North Sea. This purchase, which was completed last month, reportedly makes BlackRock the second largest asset manager in the infrastructure space, after ‘the vampire kangaroo’, Macquarie.
Critics will argue that when asset managers own significant chunks of infrastructure, their priority is their investors (including sovereign wealth funds and pension funds), rather than society, or even the planet. The primary purpose of infrastructure, the argument goes, becomes the generation of profit, rather than providing a working, reliable service. In practice, this might mean cutting investment while raising prices.
BlackRock and its ilk buying up the UK’s infrastructure would be controversial enough, but the way in which Labour is seeking to encourage this process is even worse. Writing in The Guardian ahead of the general election, economist Daniela Gabor said Labour’s plan for getting back into government amounted to: “get BlackRock to rebuild Britain”.
She wrote: “Labour’s strategy raises a bigger set of questions about the type of state we want. Starmer’s vision for government-by-BlackRock reduces the question of state capacity to ‘how do I get BlackRock to invest in infrastructure assets?’ This model involves the state in effect subsidising the privatisation of everyday life.”
In simple terms, the government’s plans to use public funds to ‘derisk’ private investment means that the taxpayer takes on much of the risk involved, while the private sector stands to reap most of the benefits. This is particularly true of essential infrastructure, which the government cannot let fail and so must step in to cover losses in the event that something goes wrong.
Gabor continues: “This doesn’t only make it harder to bring public goods back into public ownership; it also allows big finance to tighten the grip on the social contract with citizens, and to become the ultimate arbiter of climate, energy and welfare politics, which will have profound distributional, structural and political consequences.”
Immediately after the Downing Street meeting yesterday, Starmer took to social media to trumpet his sitdown with BlackRock. His message echoes the tone and substance of BlackRock’s letter to Reynolds months prior.
He wrote that the government’s mission, to “deliver growth, create wealth and put more money in people’s pockets” can “only be achieved by working in close partnership with businesses and investors”.
The prime minister continued: “BlackRock has a big footprint in the UK, and supports thousands of jobs across the country. Their insight on how we can put the UK on the world’s stage as a top investment destination and turbocharge growth is invaluable. Delighted to welcome them to Downing Street today to continue my government’s partnership with leading businesses.”
Exactly which people’s pockets are about to be filled with more money remains unclear.
Keir Starmer, Angela Rayner and Rachel Reeves wear the uniform of the rich and powerful. They have all had clothes bought for them by multi-millionaire Labour donor Lord Alli. CORRECTION: It appears that Rachel Reeves clothing was provided by Juliet Rosenfeld.
Prime Minister Keir Starmer during a bilateral meeting with Kristalina Georgieva, Managing Director of the International Monetary Fund, at the Cop29 climate summit in Baku, Azerbaijan, November 12, 2024
IF KEIR STARMER were serious about treating people who receive social security payments with “dignity and respect,” he would not have announced his crackdown in the Mail on Sunday, or used it to rail against “criminals” who “game the system.”
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The presumption of guilt is built into the successive wars on “benefit cheats.” It grossly exaggerates the scale of benefit fraud, feeding hostility to the social security system itself. It encourages suspicion of anyone claiming, and was certainly linked to the steady rise in hate crimes against disabled people recorded over 14 years of Tory government.
The assault on disabled and chronically ill people was among the cruellest policies of those governments.
The DWP admitted in 2015 that thousands of people passed as “fit for work” died within months; there were even cases where people starved to death after their benefits were cut, like Errol Graham, whose body was only discovered by the bailiffs sent to evict him.
Labour should be rejecting a Tory inheritance that persecutes some of Britain’s most vulnerable.
But it shows little sign of doing so, with Rachel Reeves pledging to continue Tory amendments to the work capability assessment that narrow eligibility criteria and are likely to cost disabled people hundreds of pounds a month.
