UK economy and Tory leaders in an awful Limbo.

Rishi Sunak became prime minister of UK on 24 October 2022. This
doesn’t mean that he will be the prime minister of UK till next general
election. Gavin Williamson already resigned over bullying allegations. The
political turmoil in UK started with former prime minister Boris Johnson’s
resignation on 7 July this year.



Boris Johnson was forced to resign due to Chris Pincher
scandal and the party gate. Boris Johnson was facing criticism from within the
conservative party and from the opposition for breaking COVID laws and
gathering in Downing Street during lockdown. Then came the Chris Pincher Scandal,
where Boris Johnson appointed Chris Pincher as deputy chief whip, despite
allegations against him for sexual misconduct.



Resignation of cabinet ministers and parliamentary private secretaries
led to Boris Johnson’s resignation. It started with former chancellor of
exchequer (finance minister), Rishi Sunak and health and Social care secretary,
Sajid Javed’s resignation on 5 July 2022. Since then, the entire episode of election
for new prime minister, the campaign, and everything that took place in UK
politics looks like orchestrated.



Internet user from India, Pakistan and UK were quick to react;
Rishi Sunak is from Indian origin, he is not fit for the top job in UK, a proud
moment for Indians, etc. Rishi Sunak was 
born and raised in UK. His education was from Oxford and Stanford University.
He is an achiever. His parent’s Indian origin is not the right yardstick to
measure his ability to lead UK. Indian media said that UK is not ready for
Rishi, when Liz Truss won election against Sunak. Now it’s time to ask; Is
India ready to accept a person for the top job, whose ancestors are from a foreign
country? Couple of years ago, India wasn’t ready to accept Congress president Sonia
Gandhi as prime minister, which made her appoint Manmohan Singh.



The election campaign following Boris Johnson’s resignation
went for over six weeks. It created a political awakening in UK. The election
campaign by Liz Truss and Rishi Sunak was full of promises and reassurance to
the public. It worked like an image makeover for the Tory party.



Issues concerning NHS, reducing the cost of living, reducing
energy bills, energy supply and economic growth were the promises made by Rishi
Sunak and Liz Truss. Both Rishi Sunak and Liz Truss had different views,
opinion and solutions for the pressing problems of UK. This farcical election
to choose a new prime minister was in the midst of a global crisis. But
conservative party is used to such change in leadership during crisis.



Most of the present day problems of UK are the result of what
subsequent governments in UK did in the last two decades. Pandemic and the war
in Ukraine was unexpected, and UK was not prepared for both. UK and Europe was
dependent on Russia for energy.



Liz Truss went with a magical solution which didn’t  go as expected. Or, her victory in election
and she becoming prime minister was to try a magical solution, where her
masters had a plan to bring back Boris Johnson, if she fails in her attempt. In
his farewell speech, Boris Johnson hinted it where he compared himself to Cincinnatus,
who was recalled from his farm by ancient Rome to repel an invasion.



Liz Truss said
that she will open a new era of growth by shaking up Britain’s economy. It was a
great opportunity for Liz Truss to lead her party into victory by finding a
practical solution for the crisis. Truss promised economic reforms through tax
cut. Slashing tax for small business owners and for large scale investments in
renewable energy and manufacturing sector to create job. It could be a solution
for UK’s long term energy needs. But offering tax cut for large corporations
who made millions even during pandemic is a crime. Tax cut for top 25% rich
will widen the gap between rich and poor.  



On 23
September, treasury chief Kwasi Kwarteng unveiled the Truss government’s vision
for growth called mini budget. 45 billion pounds worth tax cut which the
government said will create jobs and improve living standards. But the
government didn’t have any plan to pay for the tax cut, other than extra
borrowing.



This led to
investors worry that public borrowing will balloon out of control. The immediate
reaction of market was devastating. The pound plunged to a record low against
US dollar, the cost of borrowing soared, and the bank of England was forced to
step in to buy government bonds to avert a bigger financial crisis. It became a
global embarrassment for Truss and Kwarteng when IMF used blunt language to
tell them to rethink.



She learnt
that what treasury is doing with tax and spending ( Fiscal policy) cannot be at
odds with what the bank of England is doing with interest rates (monetary
policy). On October 14, Liz Truss fired Kwarteng and went on a course
correction only to resign soon.



A faction of
conservative leaders liked immature decisions of Liz Truss. They thought that
it will be an opportunity for Boris Johnson’s comeback. A poll published by YouGov
on 18 October suggested that 32% of conservative party members wanted Boris
Johnson back, if Liz Truss resigned. Rishi Sunak was the next popular option at
23%.



Investment in
renewable energy like wind and solar power is a solution for the climate goals,
long term energy supply and will create jobs. But this cannot reduce the
raising cost of living in UK. Price rise and inflation is a global problem due
to pandemic and the ongoing war in Ukraine. Rishi Sunak was of the opinion that
the tax cut will increase the interest rate, which is true. At the same time,
increasing the minimum wage also will increase the production cost. So, there
isn’t any quick fix for the present economic crisis. But reducing the cost of
fuel will reduce the price of all goods and services. Tax waiver on fuel and electricity
will help to control inflation. Chancellor Jeremy hunt plans to hike the
windfall tax on oil and gas from 25% to 35%. It will not do any good. Reducing
the fuel price in UK will be an effective measure to control inflation.



It is a
shared responsibility of every nation to protect and preserve this planet for
the next generation. It also means avoiding devastating natural calamities and
health hazards for the present generation. It is with this aim, leaders from
across the globe met in Glasgow from 31 October to 13 November 2021. This year
the UN  climate change conference (Cop27)
is being held from 6 till 18 November 2022 in Sharm El-Sheikh, Egypt to pursue
the climate goals.



A major coal-fired
power plant in France was restarted in October 2022, after ten months of
shutdown. The power plant was shut to achieve climate goals. Now France is left
with no other choice than to reopen it. Greece and Germany are planning to keep
the coal based power plant running for longer than previously planned.
Netherlands removed cap on the amount of power it generates from coal plants.
In Austria, authorities are converting a gas fired power plant into one that
runs on coal. Import of thermal coal used for power generation from Australia,
South Africa and Indonesia were up by more than eleven folds in the four months
after Russia invading Ukraine. This is a serious threat to our global climate goals.



Liz Truss
said repeatedly that she will reduce the soaring energy bills and will deal with
long term energy supply. These statements made us wonder as what she can do
better than Boris Johnson? Now, it is time to ask; what Rishi Sunak can do
better than Boris Johnson? Boris Johnson was not asked to resign due to his
incompetence. He was asked to step down for employing someone with bad repute and
for partying during lockdown. He is one of the most courageous leader in the
world. He flew to Ukraine and addressed Ukraine parliament on 03 March 2022,
when Russian troops were shelling Ukraine.



When Russia
stopped gas supply to Europe through Nord Stream-1,  European leaders were talking about capping
the price for Russian gas and oil. And this is not hypocrisy. What they didn’t
say is that they were of the opinion that either they can help Ukraine to defeat
Russia, or a prolonged war will weaken Russian economy. Thus Russia will be
left with no other choice than to sell oil and gas to Europe for a price
decided by Europe. But these two hypothetical situations are very unlikely. Russia
has close ties with China and India. Russia and China declared no limits
partnership on 4 February 2022. Russia is a reliable partner of India from
several decades.



From March
this year, combined oil imports of China and India from Russia overtook those
from the 27 European union members. Sri Lanka is benefiting from discounted
Russian oil. Myanmar also is planning to import oil from Russia. Recently,
China asked its state owned gas importers to stop reselling to Europe. Europe
is against Russian invasion of Ukraine, but they still need Russian gas and are
willing to purchase as much as they could.  



Russian oil is already cheaper than the market
price. Moscow said that they will stop supply to countries who try to impose
price caps. OPEC members and Russia together are trying to raise oil price with
big supply cut. OPEC plus members know that Russia agreeing to supply oil at
capped price will effect their market and margin significantly. Recently, Saudi
Arabia slammed Biden for releasing fuel from Strategic petroleum reserve,
because they look at it as manipulation.



What Liz
Truss should have done as prime minister of UK:



Liz Truss
became prime minister of United Kingdom on 5 September 2022. Nord Stream
pipelines were sabotaged on 26 September 2022. Russia blamed UK navy for the
blast. Liz Truss could have used her experience as foreign secretary to work
with Germany and United States to end war in Ukraine. She negotiating with
United States and making Germany negotiate with Russia to end war could have been
a clever move. A negotiation which could have helped Europe to buy Russian oil and
gas without price capping, if Russia agrees to pay war reparation to rebuild
Ukraine. It could have been a solution for short term energy needs of UK and
Europe. Liz Truss could have been a global leader, if she were successful in
ending war in Ukraine. But there wasn’t any such attempt from her. Now united
states is in talks with Russia. Few days ago, US urged Ukraine to engage in
talks with Russia to end war, as it is taking a toll on world economy.

During his
election campaign against Liz Truss, Rishi Sunak spoke about penalising those
who miss NHS appointments. People can miss appointments due to a variety of reason.
Penalising for missed appointment is not at all acceptable, unless there is a
mechanism to avoid it.



A simple
voice response unit, integrated with an android and apple app will be effective
for booking, cancelling and rescheduling NHS appointments. An interface which
show the slots available to see doctors on a real time basis. It won’t be
expensive to build and maintain. Those who are comfortable with smart phones
can use app and those who are old can call the automated system and follow
voice prompts. It helps to avoid missed appointments. People who can’t meet
doctor as planned can cancel or reschedule appointment.



The
controversial £360 million NHS England Data Platform deal to Palantir will be finalised
by the government in the coming weeks. Palantir is a software giant run by a
billionaire who backs republicans (Trump) in USA. It is a NHS project to
collect and store personal and medical records of millions on a biggest health
data platform in the world. Name, address, date of birth, health condition,
medications, medical notes are some of the personal information that are going
to be stored on the data platform. These information will be collected from
everyone without their consent and will be stored on the platform.



The world is
moving towards more advanced data collection for medical research and analysis
using automation, where the records will be de-identified. Companies as big as
Google is into this business. It will reduce waiting time, speed up diagnosis
and will help people get home quicker.



Palantir’s
credibility is challenged, because it has worked with boarder forces, spies and
police. The credibility of Palantir who will collect and process the data
should be scrutinized further. In other words, it should be discussed in the
parliament. The contract notice for the project is awaiting health secretary,
Steve Barclays signature. And the undue haste in awarding the contract is not
explained.



Finalising India-UK
free trade pact will help to end shortage of nurses and dentists at the
earliest.

There is a
difference between administration when it is business as usual and crisis
management. Any crisis is an opportunity for someone to exhibit his extraordinary
leadership qualities. A good leader will take extreme measures to overcome a
crisis. United Kingdom is a paradise for super-rich, because of the tax leeway
they enjoy. This is acceptable when it is business as usual. Now it is time to
take harsh measures to make the super-rich contribute more to the country. Chancellor Jeremy hunt’s 45% tax to country’s top earners
which will kick in at £125,000 is good news, if implemented as planned. Conservatives
should let go their reputation of low tax party to save economy. Perhaps, Rishi
Sunak will also loose a small portion of his family wealth, if he takes harsh decisions
along with what Jeremy hunt has planned.



An expert
committee should be formed to find more ways to improve government revenue. Finding
ways to increase revenue for government could mean taxing heavily on luxuries enjoyed
by superrich like private jets, yatch, super cars, etc. It makes more sense, if
UK were to consider its commitment to global climate goals. The government will
be mean to only ten percent of country’s population. But it helps to win next
general election, which is just two years away. When opposition leader Keir Starmer
asked Rishi Sunak about taxing the super-rich, he spoke about compassionate
conservative approach. A straight forward question was answered in a diplomatic
way. Such approach will make people in UK suffer more. Increasing the tax on
large corporations while providing incentives to start ups and small businesses
who struggle for survival should be the approach.



Economic
slowdown caused by pandemic and the ongoing war in Ukraine is a global crisis. Rising
energy bills and cost of living crisis can lead to recession in several
countries. A solution for the same should include best practices from across
the globe and an attempt to stop the war.



The UK
government can consider plans similar to bipartisan infrastructure bill, Inflation
reduction act which lowers prescription drug prices and student loan waiver to
provide relief from increased cost of living. The government in UK should cap
the price for essential drugs like insulin, medicines for high blood pressure,
cancer, cardiac problems, etc. The price of life saving drugs which needs to be
consumed till death should be capped. If necessary, the government should give
subsidy. Australian government declared subsidy for wearable insulin pumps for
those living with type-1 diabetes. Such welfare schemes will help thousands of
households in UK and they will thank conservatives on the next election day.

The
government in United Kingdom, headed by Rishi Sunak can come up with stimulus
package to pay for tax leeway for those have maxed out their credit limit on
credit cards for an year or two. Similarly tax leeway can be extended to people,
whose mortgage and car loan repayment is more than 50% of their monthly income.
Restructuring mortgages by writing off the interest and any penalty applied
during pandemic will be great initiative. It is no loss for banks, because more
default loans will make banks write off much more than just interest and
penalties. Due to the increased cost of living, those who live on social
insurance will not be able to pay their bills. They lack purchasing power. The
government should come up with a plan to give additional financial aid to those
living on social insurance. A plan for economic revival should include job
creation, economic growth and supporting the vulnerable. It should be aimed to stop
inflation pushing more into poverty.



Liz Truss was
quick to announce her mini-budget, just 18 days after becoming the prime
minister of UK. Rishi Sunak do not want to jump the guns and is about to reveal
his economic plan on 17 November 2022. We are yet to see what is in it to save
Britain from plunging into recession.



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