One simple but sometimes useful model for judging a person’s actions and the consequences is the idea of linear thinking versus systems thinking.
Professor Google explains that “Linear thinkers view a problem as a process with a set starting point that follows a sequence of connected series, ultimately leading to a solution”.
Systems thinking, which has nothing to do with computer systems, is defined as “a way of making sense of the complexity of the world by looking at it in terms of wholes and relationships rather than by splitting it down into its parts”.
So what? Well let’s take a couple of basic examples from Rachel Reeves’s first budget:
Example 1: Putting VAT on fee-paying schools
A linear thinker would probably start with the fact that there are around 2,600 independent schools in the U.K., which educate around 615,000 children, some 7% of all British school-age children, and these schools earn about £10.2 billion in fees. So, if the Government slaps 20% VAT on these schools, the Government can expect to rake in about £2 billion a year. Though, as some parents might have to withdraw their children, it’s likely the tax take will be slightly less than £2 billion – probably nearer £1.8 billion.
A systems thinker would take the same set of basic numbers, but then would think through the consequences of imposing VAT at 20%. For example, the Office for Budget Responsibility estimates that about 35,000 children will be taken out of private education and moved to state schools as their parents can’t afford the fee increases due to the 20% VAT. So that would cut the Government’s tax take by about 6%. Additionally, local authorities have a legal duty to find school places for these 35,000 children. So there is the £7,690 annual cost of each of these 35,000 children moving to state schools – about £300 million. Plus some of these children may be in special needs schools, so the cost of moving them to state schools will be much higher than the £7,690 average cost per pupil in a state school.
Then there are other costs. For example, a child will get free school transport if he is aged eight to 11, goes to his nearest school and it’s at least two miles away, or if he is aged 11 to 16 and goes to a school two to six miles away – provided it’s one of his three nearest suitable schools. This transport may be school buses or even a daily taxi. More than £25 million was spent on school taxis by Cambridgeshire County Council in the last 12 months – an increase of almost £8 million in the space of only two years. And in Greater Manchester the council is spending more than half a million pounds every week on taxis to take children to and from school. Many schools are already full, so we can expect to have to pay for transport for some of the 35,000 extra children moving from fee-paying to state schools. That’s probably many tens of millions more in costs for the Government.
Another cost, if I understand the situation correctly, is that with schools being VAT registered, they will be able to claim back any VAT paid on capital improvements – upgrading buildings, new buildings, sports facilities and so on – done during the last 10 years. I don’t think anyone has yet worked out how much the Government will lose because of this, but it could be in the hundreds of millions of pounds.
So a systems thinking approach would suggest that Reeves’s VAT on fee-paying schools won’t give her anything near the revenue she expects.
Example 2: Changes in National Insurance
Now let’s look at a rather more weighty part of the budget.
In 2022-23 the Government raised about £177 billion from National Insurance. In the Reeves budget the employers’ rate was increased from 13.8% to 15%. That’s 1.2 percentage points – an 8.7% increase. In addition there were other significant changes such as lowering the earnings threshold at which companies pay from £9,100 to £5,000.
A linear thinker would do a simple calculation, taking the amount of National Insurance paid by employers, work out what the 8.7% increase on employer contributions and the lowered threshold would give and expect the Government’s tax take to rise by about that amount. Figures I’ve seen from the Chartered Institute of Taxation and various other reliable sources such as the Guardian newspaper and the BBC show that the Government expects an increase of between £24 billion and £26 billion from all the Budget’s changes to national insurance.
But a systems thinker would understand that many employers would not be able to afford the increase in National Insurance and would stop hiring, start shedding staff or even collapse altogether. Furthermore, many businesses might get the impression that the Government was hostile to business and just wanted to milk businesses in order to shower money on those fortunate enough to be employed in our ever-increasing, ever more costly public sector. So these businesses might become discouraged from investing in the U.K. and some might even shrink or close their U.K. operations. For example, Sir Jim Ratcliffe’s Ineos says U.K. is too “negative” as the chemicals group opts to pump $3 billion into Trump’s U.S. instead of expanding in the U.K.
Should businesses shun the U.K., this would launch the U.K. into a doom loop where the Government has made massive spending commitments and awarded generous salary increases for public sector employees but tax revenues fail to meet expectations. So the Government has to raise taxes even more. But this leads to further job losses and more companies abandoning Britain. Tax revenues decline even further while Government expenditure increases due to rising unemployment and so the doom loop of economic destruction continues. More taxes to pay for increased spending leads to less tax revenue leads to greater budget shortfall leads to more taxes dampening the economy and thus falling tax revenue and so on till the country is bankrupt and has to go to the IMF for an emergency bailout loan.
I haven’t studied Reeves’s Budget from hell in much detail. And I’m not a highly-trained economist and chess champion like Rachel from Accounts. But from the little I have seen, I get the impression that Reeves’s budget is largely based on a simplistic linear thinking approach by Rachel and her brilliant advisers at the Treasury. However, I believe that a systems thinker would have seen that the Reeves Budget was always going to be a disaster for Britain by sending the economy into a doom loop of recession and decline.
David Craig is the author of There is No Climate Crisis, available as an e-book or paperback from Amazon.
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“other reliable sources such as the Guardian newspaper and the BBC”
At this point I stopped reading. You are ‘avin’ a laugh!
I hoped it was written with “tongue firmly in cheek.”
It was sarcasm old chap.
In the picture, at the top of the article, they are.
It would appear there has been very little thinking applied at all. They thought of a number they would like to increase tax revenue by, and then chose targets braindead Socialists love to target, with absolutely no thought or care for the consequences.
At best.
Or else a deliberate attempt to destroy some important reservoirs of Englishness.
Precisely.
She is undoubtedly nowhere near as smart as she thinks she is.
And the rolls Royce minds in the treasury have revealed themselves to be no better.
It has been recognised for years that the treasury’s economic models are hopelessly unfit for purpose.
What a shambles.
I hear that those that did work alongside her in the complaints department labelled her ‘fucking useless’ – which does seem to have been quite accurate. Already the Mail says that odds on her being sacked in the New Year are shortening rapidly. It might take until we are officially in recession – the fastest ever caused by a Labour government – and the Two Tier Never Here Kier passes through the country to notice.
The “thinking” seems to me more oriented towards destroying our country while temporarily keeping onside people on benefits, the “green” lobby, the woketards and public sector workers – their main constituencies.
There is no doubt in my mind that Kneel’s government are under orders to destroy this country. I do not accept that there is enough intelligence in the Cabinet to pull off what is clearly a well thought through campaign of fiscal destruction so clearly this is a team planted by the Davos Deviants.
As the Blackbelt Barrister pointed out on YouTube yesterday Rachel Thieves claims to be able to account for every penny spent by this government but to date she has failed to elucidate on the contents of the mythical twenty two billion black hole, or is it holes, one or two, I’m losing count?
A succession of tax raising measures which will actually cost the country billions suggests not just abacus-style planning but actually well thought through and costed impoverishment measures. Everything this government lays its hands on has negative consequences. To suggest this is not by design is pushing the definition of gullibility beyond extremes.
I tend to agree – I am sure what they are doing is not driven by any genuine desire to improve the economy.
https://youtu.be/gBXzRTDiQ2M?si=DWJ6Du_zrNakuTe9
blackbeltbarrister
BlackbeltBarrister is getting angrier and more outspoken all the time. He used to play his cards fairly close to his chest but the events of the last few years have clearly pushed him over the edge. Good to have people like him on our side.
Someone like him is in an awkward position that he has a good job earning good money but he is going to be clobbered by these changes.
However the nature of his work as a barrister it isn’t transferable abroad and I don’t see how he could work remotely.
A sharp mind is valued in many places, but not in the current cabinet: they don’t even know what it means.
Clearly they (ALL politicians / ALL the MSM pressitues / and members of the unelected administrative [“Deep”] state) are hell bent on the destruction of western civilization. They are all guilty of treason (that unfortunately no longer carries the death penalty).
Starmer and his cohort despise the nation state. They will do anything to undermine it, including impoverishing citizens.
This is true, but the slo-mo destruction has been well underway, courtesy of the Uniparty,for some time now, and this is without even mentioning the human rights abuses ( and economic disaster ) of epic proportions that was the ‘Scamdemic’ years. Yes, just another man running the country and effing it up on a massive scale, complete with maximum shafting of the British public.
Still waiting on some sort of supporting evidence….Anytime this decade will do
;
Meanwhile, how is that ”Women are to blame for the destruction of the Western World” hypothesis coming along, misogynists?
”What Boris Johnson and the Tories did on mass immigration.
Never forget it. Total betrayal.”
https://x.com/GoodwinMJ/status/1870587276226650147
“slo-mo destruction has been well underway, courtesy of the Uniparty,for some time now”
Absolutely Mogs and it kicked off big time with the traitor’s traitor Bliar in 1997 and has continued unabated ever since. What many have not yet realised is that the catalyst was Brexit and Trump in 2016. The Davos Deviants realised the tide was turning away from them and decided that Agenda 21 would become a completed Agenda 2030 by erm… 2030. And so the real war was launched in 2020 starting with the Scamdemic and off they went.
And yes Johnson can rightly stand alongside Bliar as a traitor because he is and we can add Cameron, May, Fishy and the rest of the various supporting casts too numerous to mention.
Agreed. It has been done deliberately.
Never rule out Occam’s Razor and that the obvious answer is often the correct one. Our Student Union government are just complete morons.
We’ve all made cock-ups at work and thought ‘God, what have I done?’. Do you think Rachel from accounts has had similar thoughts since the doom loop budget? She looks a bit haunted to me lately so maybe what she lacks in understanding of the economy she makes up with self awareness. Nah, I don’t think so either.
I think her appearance at the CBI Conference and that they just sat there after her speech instead of jumping up and down and whooping for joy truly stunned this ignorant and stupid woman.
Presumably the “thinking” has been done by “her brilliant advisers at the Treasury.” Perhaps they are taking the opportunity to try their ideas on as a financial experiment.
She is trying to beat Ed in the Incompetence Competition.
Socialists are never happier then when they destroy their own country.
China will be happy.
‘Simplistic Thinking’?
Rubbish.
It’s an orchestrated campaign to empoverish, disempower and humiliate those the Labour Party hate.
They know what to do, how to do it and possess a massive majority for the next 5 years.
“More taxes to pay for increased spending leads to less tax revenue leads to greater budget shortfall leads to more taxes dampening the economy and thus falling tax revenue and so on till the country is bankrupt and has to go to the IMF for an emergency bailout loan.”
A loan from the IMF. I believe I have been making this point for many, many months although I have moved on somewhat. The collapse will be so great that it won’t be a bailout loan we’ll just be sold off lock, stock and barrel to the highest bidders.
We certainly won’t have the money, or the skills, to build our desperately needed reliable, power stations.
Will we even have anyone that knows what, in principle, needs to be done, like repeal the 2008 Climate Change Act and all its associated legislation?
You really don’t need to be a genius, or even an economist, to recognise that Rachel-from-Complaints budget was going to crash the economy and create Stagflation
Since it’s so blindingly obvious, I think it must have been done deliberately ….. Agenda 2030 and levelling down in action.
might I add that in terms of the Private school VAT tax, not only is it going to cost more as pointed out in the article, but also Parents who sent their child privately they still had to contribute through taxes the sums allocated to state education, for a place not taken, thus giving extra money to the education system for children in state schools. Now that tax will be utilised by the ex private school children, thus reducing the “spare pupil” money that was available.
However you look at the imposition of VAT on Private schools it was done out of Spite, and frankly nastiness. If it were to be equitable ALL Private educational activities would be now subject to VAT, including University, extra curricular lessons, swimming lessons, gym, tennis, music I could go on. The very fact that one section of education has been singled out demonstrates this is just a callous attack by a communist, unethical group of people.
I seem to recall hearing all those other educational activities you listed, will have vat applied as well?
It was also said, that the EU specifically doesn’t charge VAT on education, so 2TK is out of step here
Labour governments have always bankrupted Britain its in their nature they can’t help themselves like a child with turrets.
“Thick” might be a less complicated way of explaining her thinking.
Socialist thinking. If it’s a Socialist it thinks like a Socialist and the outcome is a foregone conclusion – economic collapse… see USSR.
Socialism is not thinking, it is doctrine and dogma.