Ancient whips, merry movers and a cost of cake crisis

Top of the Charts

Afternoon all,

It’s basically impossible to keep up these days. If you still know which party was which you’ve got your specialist subject sorted for a serious Mastermind run. Meanwhile British politics, maybe worried its self-respect was in danger of recovering, is now debating whether or not a cake was in attendance. Which maybe explains why we’ve got the top sleuths from the Met involved to salvage their own reputation crack the mystery.

Anyway, if Tory MPs decide they don’t mind the rule breaking/lying enough to get rid of the PM, then the main impact of this whole national humiliation may be that the Treasury is at risk of losing its National Insurance (NI) rise. The big danger of this happening (whatever you think about the NI rise in principle) is if delaying it is the Government’s answer to April’s cost of living catastrophe. As Chart of the Week shows, doing something about energy bills for low- and middle-income households is the absolute priority.

Have a good weekend all and remember if you can find a cake, eat it (legally).

Torsten Bell,
Chief Executive
Resolution Foundation

Whose inflation? Jack Monroe’s questioning of whether inflation data reflects the lived experience of the poorest households has kicked off a big debate. In response the ONS (who deserve credit for pre-pandemic progress on measuring price pressures facing different groups) restarted publishing inflation rates for different parts of the household income distribution this morning. They show higher and lower income households facing similar inflation rates recently (transport costs have hit the top and housing related ones the bottom). Does this mean Jack’s points are wrong? Nope. First, it’s harder for lower income households to cope with similar inflation. Second, they will see higher inflation in future because energy bills are such a large part of what they consume. And third, her argument is really about the very poorest and whether they have less access to cheap food than in the past (e.g. as supermarkets cut back on their value ranges). That wouldn’t show up in our inflation figures but could matter a lot for some in real need.

Historical whipping. For some context to the recent debates about blackmail whipping, read a blog on the history of parliamentary whips. Lots of great nuggets of history. Apparently the practice of whipping was a civil war innovation (as was the habit of unimaginative parliamentarians quoting Cromwell), with Walter Long dubbed the “Parliament driver” for bullying supporters to remain in the chamber until a vote was taken. Later, the Earl of Danby got us properly into the corruption game, using pensions and expenses to win loyalty. Which is nice.

Self-improvement. TOTCs often covers the challenges facing economics, but how did some of the big improvements the field has seen actually happen? A new blog digs into why the paradigm shift that saw applied, empirically-driven approaches move centre stage took place. The most interesting argument is that an academic field finds it easier to change when outsiders engage positively with a new approach. Who was the outsider hero for economics? The policy world, whose interest in better, causal evidence on which policies worked helped empirical methods take hold.

Long Covid. With ‘Plan B’ measures dropped yesterday it’s tempting to think this pandemic thing is over, crack open a suitcase of wine and celebrate. But a new Warwick University paper reminds us that high levels of Covid admissions will continue to impact non-Covid care, as A&E waiting times climb and diagnostic tests are delayed. The authors estimate that every 30 Covid-19 related deaths led to at least one non-Covid-19 related excess death (e.g. more of those who had a heart attack died), amounting to almost 4,000 excess deaths in total. The long-term impact will be with us for some time, with over 32,000 fewer cancer patients receiving treatment than expected. This in part explains why the Government is (or at least was) right to think that tax rises to pay for more health spending are likely to be a feature of the 2020s.

Merry mobility. Everyone loves a bit of psychology chat, and we’re particularly keen when it relates to major economic phenomena. A recent paper asks what happens to a society’s culture when people stop moving. Despite the nonsense you hear about everyone moving more than ever, the US has seen huge falls in mobility (it’s halved since the 1970s) and on a smaller scale Brits have become less likely to move home (particular for renters and over the past decade). Staying put isn’t that great is the answer: the number of Americans who feel trapped in their area has doubled. We might like the fact that declining mobility has made people less individualistic, but not that it’s made them unhappier, less-risk taking, and more pessimistic. So moving isn’t just something economists like to perk up our labour market, maybe it’s how we perk ourselves up too

Chart of the Week

We’ve got hyper-inflation when it comes to birthday cakes. Pre-pandemic a Colin the Caterpillar cost a couple of quid. Now it involves multiple £60 fixed penalty notices and possibly up to £12 billion of lost tax revenue if the PM scraps the National Insurance rise to keep his job.

But this NI debate is confused, partly because of very different motivations among Labour and the Tory right in opposing it. Labour is wrong to claim the tax rise is regressive, but right to say it’s not fair that only workers have to contribute (lucky landlords and pensioners don’t cough up). The right are wrong to claim we can have more health and social care spending without tax rises, although correct that the timing is sub-optimal given falling real earnings. But politics means this may be a now or never tax rise, given tax rises famously don’t get easier as you approach an election.

And more importantly, as Chart of the Week shows, the top priority for any cash HMT is ready to splash on the coming cost of living catastrophe is support for lower income households with their energy bills. Scrapping/delaying the NI rise would save the poorest half of households an average of £150 – less than a quarter of the expected average £650 hit from the energy cap rise (those with below average bills or fixed term tariffs won’t be affected as much or as swiftly respectively). Over half the gains would go to the richest fifth of households, who are best able to deal with surging energy prices. Politics is about priorities, and only an idiot can’t see where those should lie right now.