Hatch Blog

WTF?! Is Money

Tue, 31 Mar 2026 18:37:14 GMT

If I were to say...

“Almost all the money in the economy was created out of thin air - and that’s not a bug, it’s how the system works”

What does that make you think? Conspiracy, people pulling strings from behind the veil? Well, it’s not the conspirators, but what money actually means is a complex subject. One that I will tackle in this blog.

WTF is money?

Money is best understood as a ledger system for tracking value and not an actual thing itself. Historically, money has existed only as accounting entries before the coin was even introduced. It is similar to a darts scoreboard; is the scoreboard valuable? No, but the board tracks performance, and enables the game to function.

This is all well and good, but to fully understand money we need to go back and revisit when money was first introduced. Some theories dictate that there was a bartering system, but trading a cow for two chickens becomes difficult when you throw a 3 ^rd person into the mix. You need to value these items to make sure of a fair deal. Would you trade a shiny Charizard for a Slowpoke? If you don’t understand the items on the trade, you won’t understand the value. You need a universal language or a universal scoreboard. (FYI if you didn’t get that analogy then you were not brought up in the 90s and therefore understand the need for a universal scoreboard!)

History of money

That scoreboard back in 3000BC was the silver value. Mesopotamia used Silver as a scoreboard of value. Your cow is worth 1 piece of silver, therefore you could trade that cow with any other person, regardless of if they actually wanted the cow. Interestingly, they have found drawings which show debts recorded on clay tablets from 3000 years ago. Temples and palaces actually served as modern-day banks. Not sure if they resemble anything of the sorts these days...

It wasn’t until around 600BC that a place called Lydia (now known as Turkey) first minted coins. These coins did not start 'money', all it did was enable trust as the state stamp guaranteed weight and purity, and the coin did in fact resemble the weight of actual silver.

Governments implemented taxes to create demand for currency in that statedom. It wasn’t until 1 ^st AD the Roman Empire did something known as “currency debasement”, which means they took out the silver from the silver coin, relying solely on the convertibility of the currency by the state. This meant that now a coin is like a government-issued token saying, “We accept this back in taxes”. Handy when you need people in a state to work, why would they work? – To pay their taxes of course.

Around the 7 ^th Century, China enters the mix with paper-based currency, and around the 17 ^th Century Goldsmiths issue receipts for stored gold. Which leads nicely to the birth of banking. And here's where things really start to kick off!

When the first banks started to emerge, they realised that not everyone withdraws gold at once, so they begin lending more money than they actually had stored - known as 'Fractional Server Banking'. This in turn, kick started the financial revolution in terms of humanity growth.

A simple example is this - you deposit £1k int the bank, the bank lends out £900. The monetary system now has £1,900. So overnight wealth, and by extension, productivity, has increased by £900.

This leads to “bank runs” which decimate banks and in 1944 - the famous Bretton Woods Agreement was introduced, which pegged USD currency to gold and all other currencies pegged to the USD. But… 30 years later in 1971, Nixon changes the USD to a fiat currency – or, in basic terms, he removes the ability for USD to be converted into gold therefore unpegging it from the gold reserve. This is the final evolution of the standard money in today’s society. It is not really anything; you can’t convert it, but you can spend it with the trust that the state will accept it in taxes.

Now the history of money has been explored, let’s backtrack to the creation of money. Banks do not print money, but what they do is give out loans. When they do this, they effectively print money but in the form of a debit and credit on a electronic banking system. The nearest to this that any of us will see with significant value is mortgages. The bank creates the debt, lends us the money so we can buy our house. The bank may not “have” this money... they don’t need to.

Interestingly 95% of all money created is by bank loans. The other 5% is done via the Central Bank and (thank god!) we are not part of the Euro, we still have the ability to create GBP when we want. Post 2009, and even 2020, the Bank of England did QE (Quantitative Easing) which when explained, sounds mad! They basically print a s**t load of money and then buy their own government bonds. This injects some serious cash into the economy in the hopes of kick-starting economic growth or from 2009 and 2020 to recover from a serious free fall.

So, being a sovereign currency issuer means the 'power to create our own money'. Which leads onto the most asked question of all time - why not just print more money?!

Well, we have the power to print money, but when we do this it increases the quantity of cash in the economy, and supply and demand dictates the more money in the economy, the less demand and therefore, less valuable. That is why the UK will always meet its debt. However, the pain of meeting such debt is passed onto the people as their savings and wealth are devalued by the Government printing more and more money. Thankfully, we have not got there yet and this is why inflation target rate is 2%. Meaning we can print what we like but we aim to get inflation to a healthy 2%.

So I have touched on a few concepts about money, but another very popular question is: if every country is in debt, then who owns that debt? Well, surprisingly the answer to a degree of 80% of all worldwide debt is owned by us. Or more specifically. anyone that has a pension. If you think about it, it makes sense. Pension companies make very long commitments, they'll say "yes, pay money in and we will pay out in 50 years' time" so they need reliable investments that will hold for 50 years. In then comes the Government gilts. Basically, it's an IOU between the investor and the Government. So, pension companies naturally buy these up in droves.

Summary

So in summary, WTF?! Is money, well - it is not really a thing. It is not pegged to a physical material and most of the money in the world is actually debt and has never been printed. This has had a great impact on humanity by increasing productivity by robbing future growth and paying it out today in debt. I hear you all saying “But Lloyd, WTF?! Is Money”, the answer to your question WTF?! Is money, it is this; just a shared illusion we all agree to take very seriously.

WTF are Quangos?!

Fri, 27 Feb 2026 10:57:49 GMT

Quasi-Autonomous Non-Governmental Organisations (better known as 'Quangos') sit in an unusual position within the UK state. They operate at arm’s length from ministers, yet spend public money and exercise public authority.

Over time, they have become responsible for a wide range of functions; healthcare regulation, environmental oversight, infrastructure planning, cultural funding and more. Supporters see them as expert, stable and insulated from political turbulence. Critics view them as expensive, unaccountable and symptomatic of a state that has grown increasingly fragmented.

It is worth stepping back to examine what quangos were designed to achieve - and why, in practice, they are now attracting growing concern.

What Are Quangos?

Quangos are publicly funded organisations that carry out government functions but are not directly controlled by elected ministers. They commonly fall into one of four categories:

Non-Departmental Public Bodies (NDPBs)
Executive Agencies
Public Corporations
Advisory Bodies

Their structures vary, but they share three consistent features:

They spend taxpayers’ money
They exercise public power
They operate at arm’s length from direct democratic control

There are hundreds of these bodies across the UK. Collectively, they employ tens of thousands of people and manage budgets running into many billions of pounds.

The Intended Value of Quangos

1. Technical Expertise

One of the strongest arguments in favour of quangos is expertise. Areas such as nuclear safety, financial regulation or medicines approval require deep technical knowledge. Ministers are generalists and political office can be short-lived. Quangos, in theory, provide continuity and specialist capability.

The logic is straightforward:

Better-informed decisions
Greater long-term consistency
Institutional memory beyond electoral cycles

In principle, that makes sense.

2. Political Independence

Quangos are also designed to keep certain decisions away from day-to-day political pressure. This applies particularly to:

Safety and regulatory standards
Official statistics
Grant-making in science and the arts

The intention is to protect objectivity and maintain public confidence. Decisions should be evidence-led, not politically convenient.

3. Administrative flexibility

A further justification is operational freedom. Compared with government departments, Quangos often have:

Greater autonomy over recruitment and pay
Faster internal decision-making processes
A more focused operational remit

The expectation is that this flexibility improves delivery and reduces cost.

That is the theory.

Where the model breaks down...

Over time, however, structural weaknesses have become more visible.

The Democratic Deficit

1. Accountability in name only

Quangos exercise real authority, yet their leadership is appointed rather than elected. Board members and senior executives are typically drawn from professional, political or regulatory circles, and removal after poor performance can be difficult.

When failure occurs, responsibility becomes blurred:

Ministers point to operational independence
Quangos point to ministerial constraints

The result is a gap in accountability. Power is exercised, but democratic control is diluted. That weakens public trust.

Cost, duplication and bureaucratic expansion

2. Rarely abolished, often expanded

Quangos have a tendency to persist. Once established, they are seldom dismantled. Instead, they:

Acquire additional responsibilities
Increase staffing levels
Develop further layers of governance and compliance

Even when policy priorities shift, institutions remain in place. In many cases, functions overlap with those already performed by central departments or local authorities. Oversight structures are then required to supervise the quango itself, eroding any efficiency gains.

Senior executive pay can also exceed comparable civil service roles. When combined with administrative growth, this can make arm’s-length delivery more expensive rather than less.

Policy drift and technocratic influence

3. Influence without mandate

Although quangos are not elected, they frequently shape policy through guidance, frameworks and recommendations that ministers are reluctant to reject. Over time, this can shift practical decision-making towards technocrats rather than elected representatives. Expertise is essential, but governance without a mandate carries risk:

Risk-averse policy shaped by institutional caution
Priorities reflecting organisational incentives rather than voter concerns
Reduced clarity over who is ultimately responsible

The distinction between advising and deciding can become blurred.

Cultural concentration and institutional capture

4. A Closed Ecosystem

Senior roles across quangos, the civil service, consultancy firms and advisory networks often intersect. While experience is valuable, a relatively closed network can develop.

That can encourage:

Groupthink
Resistance to structural reform
Limited external challenge

Rather than acting as independent checks, some bodies risk becoming part of a managerial consensus that is difficult to scrutinise or change.

The wider impact on the state

Taken together, the growth of quangos contributes to:

Fragmented governance
Diffuse responsibility
Higher long-term operating costs
Reduced democratic clarity

From a business perspective, this matters. Complexity increases compliance burdens. Overlapping authorities create uncertainty. Slow, layered decision-making affects investment and planning. When accountability is unclear, reform becomes harder.

Conclusion: Reform, not removal

Quangos are not inherently problematic. In clearly defined technical roles, particularly where impartial regulation is essential, they can serve a useful purpose. The issue is scale and oversight. Without stronger democratic accountability, clearer sunset provisions and a willingness to reintegrate certain functions into directly answerable institutions, the system risks entrenching a permanent layer of governance that sits beyond effective scrutiny.

The question is not whether quangos should exist at all. It is whether the current balance serves taxpayers, businesses and voters as well as it should.

Summary and New Clients!

In principle, Quangos were created to deliver expertise and stability. In practice, their expansion has created cost, complexity and blurred accountability. Like many areas of public administration, what begins as sensible reform can become structural overgrowth if not regularly reviewed.

For business owners, understanding how these bodies operate - and how regulation is formed - is increasingly important. Governance structures affect compliance costs, funding decisions and long-term planning.

If you would like support navigating regulatory change, improving financial resilience, or simply gaining clearer oversight of your own business structure, we are always happy to help.

Lloyd

The Finance Guy

A new year, a new beginning... maybe?

Fri, 23 Jan 2026 16:23:00 GMT

A new year always feels like a reset button. Clean slate. Fresh start. New momentum.

And yet, if you look at the latest monthly economic figures, they don’t exactly scream boom time. But equally, they don’t back up the loudest doom-mongers shouting 'recession' from the rooftops.

So where are we?

Somewhere in the middle. Not doom. Not boom.

But vibes matter, probably more than we like to admit. And there is one chart doing the rounds in government circles that explains a lot about where the UK economy is heading… and arguably where UK politics is heading, too. The chart in question tracks consumer confidence.

These surveys are effectively the UK lying back on an economic psychiatrist’s couch and answering questions like:

How do you feel about the economy?
How are your personal finances?
Are you likely to buy something big?

The most widely used measure is the GfK Consumer Confidence Barometer, which has been running for decades. It’s not perfect, but it’s consistent, optimism minus pessimism gives you a net confidence score.

What’s interesting, and genuinely quite striking, is when you split consumer confidence by age group.

For decades, the pattern was simple:

Younger people are more optimistic
That optimism fades with age
Everyone broadly reacts the same way to big events

Brexit? Everyone dips. Pandemic? Everyone dips harder.

Ukraine war and energy prices? Another sharp drop across the board.

Even the Liz Truss mini-budget in 2022 shows up very clearly. Confidence collapsing across all age groups. A brutal 45 days.

And up until late 2024, all age groups move together.

Then something changes. From late 2024 onwards, confidence diverges sharply.

Under-50s start to feel more positive
Under-30s soar to confidence levels not seen since before Brexit

But look at the other side:

Over-50s confidence drops hard
Over-60s slide back toward Truss-era lows

So what on earth is going on?

One possible explanation (and this is where it gets uncomfortable) is that the usual relationship has flipped.

Historically, how you felt about your finances influenced how you voted. Now, how you voted influences how you feel about the economy.

That divergence happened around the 2024 General Election.

Younger voters, broadly more liberal and more likely to have voted for the current government suddenly feel more optimistic. After years of Brexit, Covid, energy shocks and political chaos, they feel relief. Maybe even hope.

Older voters, many of whom backed Conservatives or Reform, feel the opposite. For them, the country feels like it’s fooked, Confidence collapses, even if the numbers don’t fully justify it.

Correlation isn’t causation… but it’s hard to ignore.

Another factor? Social media - my favourite topic. Algorithms love outrage. Doom sells better than stability.

If your feed is constantly telling you the UK is finished, broken, unrecognisable — eventually that seeps into how you feel about your finances, regardless of reality.

There’s evidence of this elsewhere too.

In the US, during the switch from Trump to Biden:

Democrat voters’ economic confidence surged
Republican voters’ confidence collapsed

Same economy. Different politics. The Biden team even coined a term for it: “the Vibecession” ('bad vibes, decent data').

There’s also a very real economic reason for the age split. This rebound in younger confidence lines up with when the Bank of England started cutting interest rates.

Rate cuts: Help first-time buyers, Help jobseekers, Help people with big mortgages, But they hurt savers.

And who holds most of the savings? Older generations. That might explain another oddity in the data…

The UK savings rate is still unusually high, almost pandemic-like.

That drags on GDP, even though, Wages are rising, Inflation is falling, employment remains strong. In simple terms: the people with the money aren’t confident enough to part with it.

Businesses don’t look as gloomy. Interestingly, this confidence split shows up in company results too.

Despite plenty of noise about tax rises and National Insurance:, Many retailers are trading well, Sales and profits are holding up, Pub groups are a good example:

Mitchells & Butlers saw like-for-like growth of 7.7% over Christmas
Fullers reported an “outstanding” festive period, up 8% on last year

Hardly the apocalypse. Yes, prices are still high. But inflation is coming back toward 2%.

Regulated price rises are being restrained. Rate cuts are filtering through slowly.

And a mortgage price war may not be far off.

So… doom or opportunity?

The government will be desperate to draw a line under recent chaos and push the narrative toward: investment, infrastructure, stability.

Heathrow expansion. Northern rail projects. Long-term planning (finally).

On paper, there’s a platform to defy the doom.

The real question is this: If economic confidence has become politically charged, driven more by how people feel than by what the numbers say, does that become a brake on recovery?

Because confidence, like spending, is contagious. And right now, Britain is split.

Lots to digest.

As ever, if you want to talk through what this actually means for you or your business, give me a call.

Lloyd

The Finance Guy

Budget 2025

Thu, 27 Nov 2025 11:05:53 GMT

Here we go... the highlight of my year squeezed into a 6:30am eastern time wakeup, Starbucks coffee from the capitalism capital that is America. I did the only thing one would choose to do. Login to BBC player, stream live the budget sit back and take it all in - here’s how it went.

(Please note these are my own interpretations of the UK budget 2025 as seen on TV and should not be acted on without discussing first with Hatch Accountancy)

The beginning

Racheal Reeves, the juggernaut of the current government, the thing 2 to thing 1 that is Starmer. She played the same tactics that Trump does. It is either Joe Biden or Chinas fault; Racheal does the same by blaming Tories or the EU. Good to feel that politics is the same wherever you are. Blame the predecessor or something that was out of your control.

As she goes into the discussions of what she has done, something struck me as odd - let's see if anyone can spot it, remember these are the things she is super happy to have achieved to date - she says:

Reformed the planning system
New Trade deals with America
Change of VISA system
Overhauled the fiscal rules
Stability on public finances

Now, I do follow UK politics and economic policy extremely closely, as it is a passion of mine but also involved my job, and potentially then this is super obvious to me and maybe not others so let me just breakdown what her opening speech really says:

Reformed the planning system - Not been actioned or changed but may do in the future. This could help building, but probably not as people will still hold onto land to grow the value and not build out the houses.

New Trade deals with America - USA put a tariff on us, don't worry guys we got it down to 10%. So, it’s basically a win, and I will call it a trade deal - when it is not.

Change of VISA system - Pretty sure Borris Johnson overhauled the system, but we will tweak it and call it a really big change

Overhauled the fiscal rules - Rishi Sunak was the one to put into place the guardrails and today’s incarnation is a take on his fiscal rules

Stability on public finances - the house of commons laughed when she said this, that is all you need to know.

The same convoluted truth hidden in lies, but somewhere there might be truth in their lies.

As every year, they breakdown the GDP to debt ratio. This year, they decided to use the PSNFL, a new way of looking at public debt to ratio. The benefit of this... it's not near 100%, it’s nearer to 84%. So basically, that’s our new %. There was a lot of chiming about how the debt is reducing. By 2% in 5 years. Bringing it down to 82% by 2030 from 84%. I am just thrilled by this news, but then she must ruin it and speak

“There will be a surplus in 2030”

No, no there will not. There has not been a surplus since 2000-2001. And whatever your fancy excel spreadsheet says, I as an economist/accountant/excel expert can tell you, in 2030 we will not have a surplus unless you redistribute. Which there is no policy of that.

She continued to talk up Entrepreneurs, the bank bone of the economy – spoiler alert, she does not really do much to help them. So more of a “thank you” at the beginning of the budget. Aww that’s nice.

And then the numbers. A staggering 1.5% growth on average each year over this parliament. Okay that’s good, positive. Let’s just do the simple math here.

Base rate – What we pay interest on, around 4%. So if growth + inflation is above the base rate all good. Inflation is 2% + 1.5% gets to 3.5%. Emm Oh. That’s fine, surely the ex-chequer for the United Kingdom of Great Britain and Northan Ireland can spot this mathematical issue and put our minds at ease.

Nothing.

So, we are effectively losing 0.5% in cash terms. I would only imagine that the plan here is to wait, get base rate down to 2% and keep growth up. Else interest payments will be higher than growth and that actual growth won’t be growth. So currently we are in a declining economy, but don’t worry Racheal knows how to talk this up, so smoke and mirrors will win over the financial markets. She adopted the age-old trick of “oops” the report was leaked 20 mins before my speech! I’m shocked. Markets are happy – yes? – Okay, will read Speech 1 not speech 2, let’s ask for an investigation so to point the blame away from us.

The BIG changes

So rather than chronological order, Rachel this year made my note taking job a litter harder. So, I will breakdown the big changes which actually matter , the headliners:

Tax Threshold Freeze to 2031. Okay, so hopefully by now most people get fiscal drag, but if not. Then basically locking in the thresholds you pay certain taxes, means over time more people pay more taxes as wages increase but thresholds stay the same. For every year, 1% of GDP is saved or around £30bn. Yes £30 BILLION. You will see later on (in the section - not so big) that they talk up big investment, but it is like £100 million. So where is all these savings going freezing threshold to 2031 that’s like 6 years of £30bn – it’s paying debt.

Salary Sacrifice will be capped at £2k per employee. This is to stop people from avoiding their Employers national insurance. When they put it up last year, they did not foresee a huge explosion of salary sacrifice. But if you ask them, its to level the playing field. Which is odd, because I thought they wanted pension contributions?

EVs taxed per mileage at around 3p per mile. So for 10,000 miles you will pay around £300. This would be seen as fair to most people, but maybe ill-timed when they are trying to phase out petrol. Presumably they wanted to wait but had no choice but to bring in sooner for the cash.

Two Child Benefit cap has been removed and the rape clause. I won’t go into these too much, but suffice to say they are sensible and logical steps to take. Given that 440k children from this move will be pulled from poverty. The only policy I would agree with in this entire budget.

2% increase in dividend tax , minor but will impact most of my clients.

Triple lock has remained. I will keep writing this, as it is my belief that a government not too soon in the future will be left with that hot potato and will need to reform the triple lock. Who will it be? If you don’t know the triple lock is the state pension increase. They get much higher increase than minimum wage historically and so some economists and bloggers – such as myself – would argue that the money is being taken from the younger generation and given to the older – who no longer work but have worked. It’s a impossible philosophical question I will not be answering today – mainly because I cannot.

Remote gambling tax % have increased hugely, 21% to 40%. But in house gambling has remained the same – presumably as they are the last things on the Highstreet. That and the odd tanning shop.

Alcohol, vaping and nicotine all increased as well. All of which is good, but by taxing the very thing you wish to eliminate, buts the government at odds, presumably they don’t want everyone to stop gambling or smoking, else where would they get the tax money from? Also, it disproportionately affects lower earning individuals as the £5 they might gamble as a % of earnings is far more than a higher worth individual. So, one could argue a further taxes on the working people. But that would be against their policies, no?

The small things - but given a lot of attention!

So pretty standard tactic here, talk up the small things like they are big deals.

Let’s take the one closest to my heart - the wealth tax. Did they take high net worth individuals an asset tax? – No. Is the tax of any significant value. No. Right…

So homes over £2.5m and £5m will pay £2.5k and £7.5k increase in council tax. How much is this worth to the UK finances. £5 million. Yup. Great work guys. I could get more by asking for donations on KickerStarter.

Landlord National insurance increase. This is under small things as most landlords have their property in limited companies to avoid the future messing of the government and therefore, they won’t be affected. But if you own your rentals personally, this will increase your burden by 2% and probably lead to you selling your assets.

Motability came under fire, BMWs and Mercedes are premium cars and not allowed under the disability moto rules. Personally, I don’t think people with disabilities are that bothered about the type of car, more the modifications so they can use the car. Seems a very odd thing for labour to make a big deal. It is probably to talk to the right wing politics of what they are doing to “appease” the benefit scroungers – which these people are not. They just want a modified car to travel with to increase social mobility. Being disabled they cannot afford the modified car and ask the government for help. I don’t think they ask for a C63 Mercedes with room for a wheelchair.

Under 25s will have apprenticeships for free! – This is minor, because there are various incarnations of this policy around the UK depending on what sector. So this really will not have a huge impact on small business owners too much but could be a little win for us.

Face to face disability assessments being rolled back, again making a big deal about this, but honestly it was temporary from Covid. They are “looking into” youth inactivity. Great I will wait for that report in 2030 - add to my calendar now.

The government will also “guarantee” yes guarantee that youths will have either school, college or work. Odd thing to say when it is illegal for under 18s to not be doing one of those. So, the government is promising to uphold its own laws? Interesting.

£80m to improve all playgrounds - see what I mean, £80m won’t go far and they have saved £30 BILLION from the freezes. Good idea, probs needs more cash though.

Inheritance tax exemption for blood scandal payments. Which if they paid out in good time would not be a requirement, but as they are taking so long. Inheritance tax is now being asked about the payments, as some people have died before receiving the compensation. Probably be the same for the post office In a few years.

£20k Cash allowance being reduced to £12k and £8k being investments. The government wants everyone to risk their own money on the economy rather than a risk-free bank account - seems a bit off coming from a labour government. This has 'Tory policy' written all over it.

What they should have done

People always ask me, "so Lloyd - you write these blogs and tell us the government is making the wrong move, what is it that you would do?" Pretty simple, fix inequality like the Nordic states have done. Adequately fund public services so tax payers don’t mind paying the tax.

Policies like, simplification of income tax and national insurance. Merging capital gains within income rates. Introducing wealth tax for £20m or more.

Carbon tax to make imports and exports equal playing field. Government should procure everything from itself does not outsource to cheaper labour economies.

The list goes on, one day I will write a book and send a copy to the ex-chequer. Easier said than done though, right?

Summary

And that’s it. Another budget gone by. In all honestly, it’s not that bad. It’s standard tweaks. The biggest thing is the huge increase in taxes via the fiscal drag going into 6 years in the future. That’s unheard of. Most people reading this blog will be paying 40% in 6 years just through the time value of money and inflationary effects.

The money being saved is going towards the increase in public sector pay and investment – which is needed, and loan interest on loans we took out at ultra low rates and are now 4%.

Hopefully an exchequer will be bolder and brighter in the future to really tackle the issues at hand, rising inequality, hoarding and transfer of assets outside of the country, selling off of government assets and the decline of middle class wealth. But that hope is on another day now.

All the best.

Lloyd

The Finance Guy