Brexit may well cause the next financial crisis

On Thursday, the Office for National Statistics released data which showed that, for the first time since 1988, householders have become a net borrower. This is worrying, especially since a financial crisis occurred without this level of borrowing – albeit due to sub-prime and Alt-A mortgages. The most worrying element of it is that, quite clearly, Sterling’s fall in value has hit people’s pockets and they are taking to consumer credit to make ends meet. The report makes clear that a rise in short-term credit is on the rise, which further supports my argument.

Inflation is rising, and people are taking to credit to make ends meet because wages are not keeping up with inflation.

Back in January, I read an article which caused me some concern. Spending was back at pre-crisis levels, because consumers had shrugged off the potential impact of Brexit. The last time spending was higher was in 2005-06, when expenditure reached £557 a week, adjusted for inflation. The Resolution Foundation said at the time: “These figures confirm that families largely shrugged off any immediate post-EU referendum jitters and went spending. This extra spending outpaced the extra level of income available to households, who turned instead to their savings and credit cards.

“More recently, rising prices and squeezed incomes have put the brakes on Britain’s big-spending households.”

90% Of new cars are bought on personal finance, mortgages are at a record high and property value nationwide is falling. This gives rise to concern in and of itself: Car finance is available without deposit, and at incredibly low rates, with a span of 5-7 years.

We are now reaching the point at which it is becoming increasingly likely – and indeed probable – that we may leave the European Union without a deal. This would leave Britain in the very unique and awkward position of being the only country in the entire world not to have a Free Trade Agreement with any other country. To put that into perspective, it would mean tariffs applied on exports (and indeed imports), with exporting businesses facing increasing costs.

This has happened because there is a group within the Conservative Party called the European Research Group who would rather possess this intangible concept (which we already have) called “sovereignty” at the price of seemingly anybody. To quote Anna Soubry, “Nobody voted to be poorer and nobody voted leave on the basis that somebody with a gold-plated pension and inherited wealth will take their job away from them.” I couldn’t have put this better myself.

The group is led by Jacob Rees-Mogg, a former hedge fund manager and a co-owner of a current one which has already moved its offices to Dublin in the event of a no deal scenario. These are people who are either misguided, mindless fanatics “faith, family and country” Conservatives such as Nadine Dorries, or, in the case of Rees-Mogg, and I have no doubt in the case of others within the ERG, people who personally stand to gain financially from a no deal scenario.

We are aware that the Government is stock-piling food and medicines in the event of such a catastrophe, so jobs would be the first thing to go. And so a financial crisis looms as a result of mass defaults on secured (a credit boom in car loans) and unsecured loans, mortgages, credit cards and payday loans.

In addition to this, the financial sector has received precious little support or ideas from the Government as to what happens to their own security within the Square Mile. I know that nobody particularly likes bankers – and I’m not fond of them either – but Emmanuel Macron, a former banker, has been making plays for banks to relocate to Paris. I don’t blame him; bankers earn a lot of money, which stimulates a country’s economy.

Returning to the statistics, the fact that we are now net borrowers should be concerning to a humble GCSE economics student.

With Barnier rejecting the Chequers deal, that is now dead. He has instead offered the idea of a Customs Union, which has already been rejected by Parliament – and more specifically, the ERG to whom Mrs May capitulated. Mrs May is now taking personal control of Brexit, and we all know what happened the last time she took personal control of a massive effort.

What is certain is that Britain cannot afford a post-Brexit recession in addition to a post-Brexit financial crisis. Parliament cannot solve this mess.

It is time to give us a People’s Vote.

With corrections and comments: A response on mental health services from the DoH

Dear Mr Rhodes,

Thank you for your correspondence of 23 June to Jeremy Hunt about improving mental health services. I have been asked to reply.

I was sorry to read of your relative’s mental ill health …[redacted for privacy and respect], and I appreciate your concerns about the funding and staffing of mental health services.

I would like to assure you that the Government continues to take mental health as seriously as physical health and hold the NHS to account for achieving the objectives set out in the last NHS England mandate, ensuring that mental and physical health conditions are given equal priority. The Government has legislated for parity of esteem between mental and physical health through the Health and Social Care Act 2012.

The letter states, as I stated in my letter to Jeremy Hunt, precisely that which it has failed to deliver on: Parity of esteem between mental and physical health conditions. It has failed to do so now for four years.

The Government increased spending on mental health to £11.6billion in 2016/17, with a further investment of £1billion every year by 2020/21, so that it can ensure that clinically appropriate mental health services continue to be provided to those who need them.

What does “clinically appropriate” mean? Does this mean throwing more money solely into psychiatry and into IAPT…

The Government has invested over £120million to introduce waiting time standards for mental health services. Over the last Spending Review, it also invested over £400million in the Improving Access to Psychological Therapies programme to ensure access to talking therapies for those who need them, and this has contributed to achieving very real improvements in the lives of people with anxiety and depression.

And so it does – without evidence – which is precisely the problem with mental health provisions in this country, as outlined in my original post, in which I stated: “You may recall that recruitment to IAPT was paused by the Conservative-Lib Dem coalition government in 2010. There was a reason for this: its outcomes weren’t great at the time, the choices were limited, and there was an assumption that it may perhaps be a good idea to get counsellors back into GP surgeries again, or to at least provide that as an option. The latest IAPT outcomes make for good reading, but they don’t address issues enough.

It is fantastic that people can self-refer to counselling services and address the issues, but what isn’t great is that people wait two weeks between sessions. What’s also not great is that 49.3% move to recovery at the end. This is because the number of sessions is capped. The idea that you can present in front of a counsellor knowing that your sessions are limited – and at the start of each session, measuring inter-treatment outcomes – is unhelpful to patients. Put yourself in the shoes of someone with an anxiety condition: They already know that their time is limited with that person with whom they will share intimate details of their life before their counselling has begun.”

Spending is tracked by clinical commissioning groups (CCGs). The Mental Health Investment Standard (MHIS), previously known as parity of esteem, is the requirement for CCGs to increase investment in mental health services in line with their overall increase in allocation each year. The NHS planning guidance for 2018/19 states that all CCGs will be required to meet the MHIS, and this will be subject to confirmation by their auditors.

Again, we return to where the money will be allocated. Will it be delivered to third sector organisations which can prevent unnecessary referrals to the NHS, or will they continue to cut funding in favour of what will undoubtedly be a top-down approach.

Funding alone is not enough, which is why there is greater transparency in mental health provision through the NHS England Dashboard, first published in October 2016. The Dashboard increases the visibility of how each CCG is progressing the recommendations of the independent Mental Health Taskforce and includes data on waiting times and funding. The Dashboard can be viewed on NHS England’s website, www.england.nhs.uk, by searching for ‘mental health dashboard’.

Transparency is indeed a wonderful thing, and I look forward – in hope – to reading that the NHS commissions alternative providers and unproven solutions other than IAPT to treat ongoing conditions. CBT is a sticking plaster for both depression and anxiety; that is all.

The Government has also announced plans to recruit 21,000 new people to the mental health workforce, who will be able to treat an extra million patients each year.

How many of the 21,000 new people be administrative staff? Again, who will they be treating and why? What conditions will get the most exposure and which will remain largely ignored?

The Government will continue to invest in new and better services across the whole spectrum of mental health conditions. In particular, it will make further improvements in early intervention, investing in community services and expanding access to round-the-clock crisis care support both in the community and in A&E.

By “early intervention”, this response largely means IAPT. It works for many, but not all. Community services is a fantastic buzzword unless you can back it up without cutting funding to those community services that already exist.

I do at least welcome the crisis care and A&E investments.

I hope this reply is helpful.

Yours sincerely,

[Name redacted]

1 Comment

July 19, 2018

by : l_rhodes Politics

Hypocrisy, Brexiteers and the law

So we found out officially today that the Leave campaign broke the law. It has been fined and its crimes – specifically colluding with another campaign – and the founder of BeLeave alongside the Agent for Vote Leave have rightly been referred to the Police for investigation.

We have been hearing for several years now about the importance of Parliamentary sovereignty and Britain being able to “make its own rules” (despite any trade agreement with the EU meaning that we will have to be rule-takers, and the Great Repeal Act enshrining all of their laws into ours).

The reaction in Parliament and on social media from those who backed Leave has been quite the sight. They’re crying foul, suggesting that the Cameron administration should be held equally accountable for a leaflet which also gave Leave its say. It’s almost as though they’re suggesting that Cameron actually broke any rules, or that their own voters are dense enough not to be able to read an entire booklet.

They also have been suggesting that exactly the same tactics were employed by Remain and that the Electoral Commission – the independent body responsible for looking after our democratic laws – are in some way bent.

In essence, they are blaming everyone but their own campaign.

What this breaking of the law has shown is that the Leave campaign couldn’t even properly run its own books. We are apparently supposed to trust the proponents of these people with the future of our country. Personally, I can’t square that.

But here’s the rub: Sovereignty and the rule of law go hand-in-hand. If Leave campaigners and voters truly believe in what they wanted, then they must accept that their campaign undermined the very principles of democracy. Democracy – or, more precisely, overspending, possible Russian interference and Cambridge Analytica – is what they hide behind when they say that the referendum result was clear and fair.

We now know that it was neither.

Parliamentarians tonight defending the actions of Leave or trying to deflect their own campaign’s disgraceful acts onto the Remain campaign are not fond of democracy or the rule of law. They’re fond of getting their way.

Where does this lead? With the Government sweeping by on Labour votes and having lost one vote in the Commons tonight on medicines, is it time that we finally admit that, at the end of all of this mess, we give the people the final say?

That would be the ultimate acid test as to whether Brexiteers really do believe in fair and free democracy.

Month: July 2018