The Budget that Cannot Yet Be Written

The main political story in Britain is not Gaza, or the latest Russian victory, or the things journalists pretend to care about when they need to look serious. It is the fact that the Government cannot write a Budget. The Chancellor is two weeks from her appointed performance, and the Treasury still has no agreed numbers. This is because the arithmetic no longer works. The machine has reached the point where even its own operators cannot forge a convincing set of lies.

The reason is easily explained. The Government spends more than the country can produce. It refuses to cut spending. It cannot borrow more. It dare not print more. It therefore intends to raise taxes. But taxes are already at their highest share of national income in half a century, and are so high that the people who still generate value are either closing early, or thinking of leaving. Push further, and the pound goes, then borrowing costs rise. After that, the politicians discover that a police state can become very small when its tax base evaporates.

To repeat, there is no mystery about why the economy is in a mess. Since 1997, the British State has run a continuous experiment to see how much it can steal from the population before the population stops functioning. The answer was found years ago, but the experiment continues. A government can steal perhaps twenty per cent of GDP without slowing growth. At forty, the parasite begins to suffocate its host. But our real burden is nearer eighty once you include the so-called “green levies,” the compliance costs, the regulatory shake-downs, and the other pseudotaxes used to feed the friends and clients of the regime. If you want to know why Britain no longer grows, start there.

Any serious attempt to rebuild the country would cut spending by a third and taxes by a quarter, and then maintain a modest surplus for a decade to undo the damage done since 2008. It would abandon the fantasy that inflation can be suppressed by pretending interest rates exist to express moral approval rather than the price of loanable funds. It would reduce the State to the size required for a civilised country, not an administrative theme park.

I have read supposedly clever analyses that assure me none of this will be done. If you assume that elections determine policy, we are in a proper mess. Public opinion has shattered into uncollectable fragments. The Labour factions want high spending, and never mind the consequences. Even the Reform Party is divided into factions, most of which want continued high spending. There is no public taste for cuts to public spending. If these analyses are true, my best option, and perhaps yours too, will be to sell up and leave while the pound still has any external purchasing power.

I am, however, somewhat more optimistic. The voters do not matter. Where they put crosses every five years is of no importance. Britain is not a democracy. It is an oligarchy.

At the top is a monied interest that uses the country as a base for global rent extraction. Beneath that comes the governing class—politicians, civil servants, journalists, researchers, educational commissars. They are not bribed, or even instructed. The agenda seeps into them. They absorb it and express it, like damp through plaster. They have had a free hand to dismantle the population for thirty years because dismantling the population was consistent with the interests of the monied interest.

I say consistent: what the frontmen of the regime do to us was never dictated a word at a time. The compliance burdens, the political correctness, the Net Zero rites, the diversity audits—none of these come from the monied interest. Our actual ruling class does not wake each morning wondering how to police pronouns or decarbonise council houses. But the effects of these absurdities are wholly congenial. A politically sedated, economically over-regulated population is a harmless population. A population busy reciting approved slogans has no time to notice that it is being strip-mined. A population terrorised into obedience by environmental scaremongering will not ask why its living standards keep falling. These policies are tolerated not because they are in themselves attractive to the monied interest, but because their consequences are attractive.

The plan—if one can dignify it with the word—assumed that 1990 had been the end of history. The Chinese would remain obedient coolies. The Russians would remain a drunken parody of the Weimar Republic. Britain could be hollowed out and turned into a service colony: low skill, low industry, high surveillance, a population too divided to resist or make trouble for the ruling class. For a long time, this looked feasible.

It no longer does. Russia has stood up. China has become the workshop of the world. America is rediscovering protectionism. The world has ceased to reward those countries that replaced industry with NGOs and call centres. Britain has slipped from “minor great power” to “haunted memory of itself.”

Therefore, the secondary agenda of the ruling class has changed. Having spent thirty years atomising and bankrupting the population, it now requires a country sufficiently restored to function as host to the same parasites. The correct Roman parallel is not the Gracchi, but the Augustan settlement: a tidying-up after decades of decay, allowing the elite to rule in comfort.

Hence the disintegration of the Starmer Government. It came in with a large majority and the usual media flattery. The flattery stopped within weeks. The new ministers did not understand that the world had changed and that their instructions had changed with it. They continued with the censorship initiatives, the Net Zero posturing, the welfare indulgence, the public-sector pay bribery. This has gone on long enough. Now the Blairites are being brought back. Not because anyone admires them, but because they remember how to take orders.

This is the essential Blairite quality. They were told to dismantle the country thirty years ago, and they did so with perfect obedience. They are now being told to patch it back together—to the minimum standard required for fresh rounds of extraction—and they will do that with the same obedience.

This brings us back to the Budget. The Government is trying to produce a document that satisfies the markets without angering its electoral tribes or upsetting the people who actually run the country. It cannot. Every reversal is a confession of impotence. Every leak to the press is a notice of intended eviction. Even the Office for Budget Responsibility is being given three versions of the Budget, because no one at the Treasury knows which fantasy will be chosen.

My prediction is that the Budget chaos will be allowed to ripen into a sterling crisis. The pound will be shoved over a cliff, and the newspapers will announce the shock with the solemnity of priests who have found an unexpectedly spotty liver. A new set of ministers will be brought forward—faces of studied regret—explaining that they have inherited a national emergency and have no choice but to cut spending and then taxes. They will then set about a round of Thatcherisation: regulation pulled back, industry coaxed into life, money made expensive again. There will be riots. The less political of the economists will drone on about leftward shifts in the aggregate supply curve, then will look baffled when the aggregate supply curve moves steadily to the right. But the riots will be suppressed. The economists will be ignored. In time, the media will hail whatever corrupt non-entity oversees the liberalisation and its inevitable effects as a genius.

This will be no libertarian millennium. But it will be enough for the lights to stay on. And that, for the moment, is what matters.