I was 18 years old when we last experienced such political turmoil in this country.
We began 1974 with Ted Heath leading a Conservative government. In February the first election was held since the UK had joined the European Community and it was a harbinger of things to come. The Scottish Nationalists doubled their share of the vote and went from 1 MP to 7. Plaid Cymru got their first members into Parliament and the Liberals took 6 million votes yet captured just 14 seats.
Harold Wilson’s Labour Party won a few more seats than Ted Heath, but Heath thought he could convince the Ulster Unionists to support him and keep the Tories in power. Unlike Theresa May, he could not broker a deal. He even discussed a coalition with Jeremy Thorpe but would not give enough ground on electoral reform. So Heath resigned and Wilson was back in Number 10. The hung Parliament lasted until October when a second election within 9 months gave Wilson a majority of just 3 seats.
Fast forward 45 years and the remaining weeks of 2019 seem impossible to predict. Will Boris pull a new deal out of the hat? Will he ignore the new law and leave with no deal? Surely the most likely outcome now is a general election? And, given the public’s exasperation with the Tory handling of Brexit, will they decide to give someone else a go?
When political commentators talk about the risks of a Labour government, they tend to focus on Jeremy Corbyn. They are looking in the wrong place. The danger lies with the honourable member for Hays and Harlington, shadow chancellor John McDonnell. He would be the most left-wing politician ever to occupy 11 Downing Street, and makes no attempt to water down the extent of his Marxist ambitions.
In his cartoon version of capitalism, the bad guys are landlords and big business. Especially the City and the financial services industry. In a recent interview with the FT, he talked about the founder of the Welfare State, Clement Atlee – “We all admire what Atlee did – but I think we will go beyond it’. What that means is driving taxes up to the highest level they would ever have reached in peace time, followed by a massive increase in government spending with no thought to how it might be sustained.
Clearly in his sights are the remuneration levels of City folk, especially the size of their bonusses. He talks of a complete ban on bonusses if the financial industry doesn’t voluntarily fall on its sword. There’s also a plan to make CEO pay be no more than 20 times the salary of the lowest paid employee. White van man is clearly not going to riot on the streets in defence of fat cat banker bonusses, so this is a soft target that will likely produce a short tern victory for McDonnell. Until the brightest and best move abroad and the City becomes a shadow of its current self as companies realise what I’ve said all along – Labour is a much bigger threat to the UK’s future than Brexit…
Corporation tax hikes are inevitable, while larger companies will be forced to give up equity to ‘worker shareholders’ as well as seats on the board.
Perhaps the darkest, most sinister policy has been reserved for the Tories’ favourite target – private landlords. Ask any foreigner who invests in the UK why they are attracted here and very near the top of the list will be the property rights enshrined in British law for centuries. McDonnell plans to ride roughshod over these traditions by offering the Right To Buy to private tenants. It’s not just that you, the landlord, could be forced to sell a property that you intended to supplement your retirement income for years to come. Guess who will decide the price at which you must sell? Not Mr Market – that would be far too laissez-faire for Karl Marx reincarnate. Naturally, the all-powerful communist state will determine the price. If it happens to be insufficient to pay off the mortgage, that will teach you for being a greedy capitalist. And I thought rent controls were the only pain left to inflict on the ravaged Buy-To-Let sector…
There’s a grim satisfaction in watching events unfold exactly as I predicted 18 months or more ago. But anyone who cares about this country’s future must be as worried as I am today. While the Tories implode, Corbyn and McDonnell have gone from pantomime politicians to statesmen in waiting. I would say there’s now a stronger than 50% chance that they could be in power by Christmas. Which means there’s very little time to get your affairs in order.
You should start by being in the room for our next live event on 26th September. Money Week editor John Stepek will explain why we need to become sceptical investors, while I will share some practical strategies on how to structure your portfolio to survive the Halloween Horror Show. Click here to grab one of the last remaining seats.
Until next time
P.S. We are literally down to the last handful of seats so click here now and start getting ready for the roller coaster ride into 2020