Closed: while lockdowns bit into small traders’ funds, government help has been restricted only to those that meet arbitrary criteria – meaning many are going hungry, along with their children.
This is the reality of Covid-19 for millions of self-employed people across the UK.
The government trumpeted huge amounts of funding for scheme to keep businesses open – but failed to mention the small print that means some businesses don’t qualify.
It’s as though the pandemic was being used for political reasons – to clamp down on small enterprises and their owners. Isn’t it?
Jo Hill, of Cardiff, was denied any support because her business had only two years of profit on its books.
She had to rely on food banks and borrowed money to survive.
The money I have earned I have had to use for food for myself and my daughter. She’s growing like a bean pole, I couldn’t afford to buy her shoes over lockdown. At times we were so skint food was rationed, I’ve had to be really careful.
When the Chancellor announced [support for self-employed businesses] I breathed a massive sigh of relief. I was applying and it would say I’m not entitled, I was quite bewildered. The money should have gone to everybody.
“I’m too scared to spend any money at all since I don’t know what will happen in the future and how long that money will last. There have been times I couldn’t afford a food shop, I don’t know if my budget is going to last two weeks, three weeks.
The Welsh government has announced business support worth £1.7 billion to firms across the country.
And a fat lot of good it will do to single traders like Ms Hill if they don’t qualify because of arcane eligibility standards.
Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.
School meal: this image is from before the coronavirus lockdown. Now parents are saying they’ve had no substitute for school meals with which to feed their children, despite an(other) empty promise from the Tory government.
You think coronavirus is a deadly contagion but the Tories seem to think it’s a money-making opportunity.
Here’s what’s happening, according to The Guardian. I’ll lay out what it means below:
Millions of British people are already struggling to get the food they need and are falling into debt because of the coronavirus pandemic, a survey carried out this week suggests.
More than 1.5 million adults in Britain say they cannot obtain enough food. Half of the YouGov poll sample reported that they were self-isolating, and 53% of NHS workers were worried about getting food.
Half of parents on low incomes with children eligible for free school meals said they had not yet received any substitute meals to keep their children fed, despite government promises to provide food vouchers or parcels. Around 830,000 children are therefore likely to be going without daily sustenance.
On 21 March the government instructed people at greater risk of Covid-19 to stay in their homes and self-isolate for 12 weeks. It said it would contact 1.5 million people in this category and set up a system with local authorities, voluntary organisations and business to deliver food parcels to the homes of those who lacked family support.
Military planners have been assigned to work with councils, but the Guardian understands that the scheme is not yet running and will take a few weeks to scale up to supplying food to 400,000 people. The Food Foundation has calculated that more than twice that number – 860,000 people who fall into the medically vulnerable category – were suffering from food insecurity even before the crisis.
The government of the United Kingdom could put the systems in place to get food to people within minutes if it so desired.
So we have to ask why this has not been done.
The obvious answer is: money.
People in debt end up not only owing the amount of the debt but interest on it as well. They become long-term sources of income to their creditors.
And what’s the easiest way to make people borrow? Simple: depriving them of food.
Why do you think the Tories are so keen for so many people to claim Universal Credit? It’s a debt-creation machine; the five-week wait for payments means you have to borrow money.
It’s the “zombie economy” but using private money instead of national funds.
And by attacking the poor and vulnerable, it’s practically a guarantee that these people will never be able to pay it off.
Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.
Why do commentators like The Guardian think George Osborne’s plans will make life hard for his political opponents, when they are specifically designed to increase inequality and reduce prosperity across the UK?
You’d have to be an economic imbecile not to understand that his plan for permanent budget surpluses will shrink the national economy, while his tax breaks for the very rich and corporations mean the money that remains will float upwards to the very few people favoured by those changes.
If you don’t understand, think of it this way: Governments create money – they have to, otherwise you wouldn’t have any to spend or pay in taxes. The pound in your pocket had to come from somewhere, and while it may originally have been supported by precious metals or minerals of equivalent value, those days are far behind us.
So, governments create money and invest it in the national economy. If all goes to plan, the money circulates, gaining value on the way through, until it is reclaimed by the government as tax revenue. Even if the amount of tax claimed back was as much as the original value of the money, the economy should still have grown by however much extra value the money has accrued during its journey (the ‘multiplier’ effect).
Osborne wants to take back more money than his government releases. This means somebody will have to lose out – and the system of tax breaks and permitted tax avoidance for the rich (Tory Party donors) means it is going to be the people who do the actual work, who are searching for work, or who are unable to work because of illness, who will be unfairly penalised by this plan.
He can’t claim any of the credit for it, either – it was all worked out back in the 1970s by Margaret Thatcher, Keith Joseph and Nicholas Ridley. Their plan was to create insecurity among those who have to work for a living in order to increase the gap between the amount they earned and the amount their bosses earned. Thatcher lied about this, right up to her very last day as Prime Minister.
The Guardian‘s article on Osborne’s Mansion House speech says that he will challenge the Labour Party “to decide whether it wants to back the proposal that tax revenues should cover spending on both infrastructure and the day-to-day running of government”.
Why? Labour does not have to accept the premise of the question. Important conditions are omitted from it.
For example, if Labour was asked to back the proposal, along with plans to ensure that minimum wages would always be able to cover the cost of living – without the government subsidising employers in tax credits, landlords in housing benefit or lenders in subsidies to the City of London, that would be a far more enticing proposition. But Osborne isn’t offering that.
If Labour was asked to back the proposal on the condition that the extra money necessary to reduce the deficit and debt came from those who could most easily afford it – the corporations and shareholders who are currently reaping the benefits of five years of Conservative economic mismanagement, that would be far more interesting. But Osborne isn’t offering that.
Furthermore, Osborne can only dictate what his government will do. He can’t tell Labour what to do if Labour wins the next election because no government can bind the next. Any claim that he can do otherwise is a lie.
But then, we have already been shown that he has been lying. He will say: “The result of this recent British election – and the comprehensive rejection of those who argued for more borrowing and more spending – gives our nation the chance to entrench a new settlement.”
This is a jab at Labour’s plan to run a surplus on day-to-day spending, but to borrow for investment projects. This is not “more borrowing and more spending”, as Osborne describes it, but investment with a view to see profits in the future. That business principle has been around since commerce began – it’s how most Tory donors operate. Osborne is a hypocrite to scorn it.
But then, Osborne has borrowed more money in five years than every Labour Chancellor put together. That’s hypocrisy on a grand scale!
The Guardian article continues: “During the election, Labour struggled to cope with the accusation that it had spent and borrowed too much in the years leading up to the financial crisis. Some of the contenders to replace Ed Miliband as opposition leader have said subsequently the public finances should have been in a healthy state in the last years of a 15-year period of economic expansion lasting from 1992 to 2007.”
This indicates confusion on the part of the article’s author. Labour did not borrow and spend too much in the run-up to the financial crisis; the nation’s finances were in a much healthier state than at any time under Conservative control in the previous 40 years – and let’s not forget that the Conservatives supported Labour’s spending plans throughout this period.
Furthermore, the crisis was caused by bankers who were too loosely regulated, granting loans irresponsibly to people who could not pay them back. At the time, the Conservative Party was pushing Labour to deregulate banks even further.
So we know that the financial crisis would have been much, much worse if the Conservatives had been in office at the time. Osborne’s criticism of Labour is in extremely poor taste.
Talking of extremely poor taste, here’s more of Osborne’s speech. It seems he wants “a settlement where it is accepted across the political spectrum that without sound public finances, there is no economic security for working people; that the people who suffer when governments run unsustainable deficits are not the richest but the poorest; and that therefore, in normal times, governments of the left as well as the right should run a budget surplus to bear down on debt and prepare for an uncertain future.”
Like all clever lies, this contains a few truths. He’s right that without sound public finances, there’s no security for working people. Osborne’s plan for the public finances is particularly unsound – and targets people who have to work for a living with particular hardship.
But it is not necessarily true that the poorest suffer most when governments run unsustainable deficits. This government has singled out the poorest for suffering because it wants to ensure rich Tory donors can continue enriching the Tory party – we are living in extremely corrupt times.
His final claim – that all governments should cut debt to prepare for “an uncertain future” would have more weight if Conservative governments had not created much of that uncertainty themselves, by dismantling the UK’s industrial base and relying instead on the financial sector that let us all down so badly.
Osborne is full of hot air – but his plan won’t fly.
Cameron is clearly trying to steal the “Road to Ruin” label that was applied to a now-infamous Tory campaign poster and throw it back at Labour. His problem is that he has dud ammunition.
Mr Murphy writes: “It’s very hard to see how one man can get as much wrong as David Cameron can in the repeated sentiment he has to offer to the UK.
“But the evidence is clear: every single word of what he has to say is deeply misleading because it is so wrong.
“After five years in office all he has learned is that keeping repeating the misinformation is the only policy he can find that he still thinks worth pursuing. And, unfortunately, some still believe him.”
Mr Murphy points out that:
In five years the Coalition has borrowed more than Labour did in 13, by a considerable margin.
And there wasn’t an unforeseen banking crisis on the Coalition’s watch.
We have no gilt crisis.
We have no affordability crisis.
And we have a lost opportunity to invest at rates lower than we have almost ever known, which lost opportunity is why we have an economic crisis.
Read his article on Tax Research UK– and throw Cameron’s Guardian comments in the bin.
“Our long-term economic plan is working!” says Cameron – and the debt keeps rising.
It’s more accurate to say he’ll do nothing right.
David Cameron is warning that another global financial crash is on the way. It’s an accurate warning – others have been forecasting it for a while but, seeing him saying it, didn’t you ask yourself who he’ll be blaming this time?
It can’t be Labour’s fault – Labour has been out of office for a few years and besides, Labour policies were sorting out the fallout left by the last right-wing-precipitated global financial catastrophe until the Tories lied their way into office and then twiddled their thumbs for four long years.
He reckons emerging markets that sustained the recovery (what recovery?) are slowing down but the British economy is growing and needs to be insulated from any crash. He says employment is up massively and new businesses are proliferating – but if you scratch the surface of that claim you’ll see that the number of hours worked is no higher than in 2010 and new businesses are being ‘run’ by people who are claiming tax credits as self-employed because then they won’t be hassled by the DWP while claiming JSA. There are new businesses, of course, but not nearly as many as Cameron wants you to believe.
“When we faced similar problems in recent years, too many politicians offered easy answers, thinking we could spend, borrow and tax our way to prosperity,” he writes. Which politicians? Gordon Brown is the only Chancellor in recent history to manage a surplus, rather than a deficit; his policies brought the UK unexpected prosperity (which, unfortunately, led to the EU surcharge that has so badly embarrassed George Osborne); and his successor Alistair Darling introduced policies that knocked £38 billion off the deficit created by the right-wing bankers’ gambling binge.
Cameron must be referring to Conservative politicians in his own government.
Yes, look, here’s a bit where he writes: “It is more important than ever that we send a clear message to the world that Britain is not going to waver on dealing with its debts.” He could have cut that sentence down to read: “Britain is not dealing with its debts.” The national debt has more than doubled since the Conservatives started running the economy – from around £800 billion to £1.8 trillion by 2015, meaning George Osborne’s pitiful attempts to tackle the national deficit by cutting public services and selling off the country’s assets have achieved less than nothing.
“This stability is vital in attracting the business and international investment that delivers growth and jobs, and which keeps long-term interest rates low.” You couldn’t make this up. Interest rates are low because lenders know the UK has its own sovereign currency and will always be able to pay its debts, one way or another, even if it means printing more money (quantitative easing, anyone?) – remember when the UK’s triple-A credit rating went downriver despite all Osborne’s efforts to keep it? He claimed this meant the cost of borrowing would leap, but the effect has gone unnoticed.
For a more informed opinion, let’s go to Richard Murphy of Tax Research UK, pausing for a moment to wish him well in his recovery from recent surgery.
“His focus is instead on highlighting problems in Europe and on signing TTIP – the trade treaty that will require the privatisation of the NHS whatever he says now,” writes Mr Murphy – possibly from the recovery ward.
“This is a man who can see a crisis coming and who must know that his austerity programme can only make it worse (anyone but a fool can see taking money out of a failing economy, as he plans to do, is bound to make it worse) but who is resolutely refusing to recognise the issues that will cause this next wave of economic collapse.
“The wrong people have the money… The people who spend least of their incomes have had the biggest pay rises and are the only ones to enjoy effective tax decreases over the last few years. These people are the highest income earners in the UK.
“At the same time, cutting benefits for the poorest and increasing VAT (which together with deliberately enforced wage cuts have reduced the net disposable income of most people) and cutting taxes for the wealthiest, this has been the inevitable outcome. And we know this outcome has not happened by chance: this is deliberate.
“When there’s a shortage of spending in the economy to let the wealthiest get wealthier, [it] simply means that the imbalances within it get worse. And it’s imbalances that cause crises.
“Corporation tax cuts and reforms to our corporation tax system that means that multinational corporations based in the UK can, since 2010, find it much easier to make effective use of tax havens to cut their UK tax bills have also made the problem worse. I reckon these cuts are costing at least £10 billion a year. What these cuts do is transfer money that would have belonged to the state to companies in the hope that they will be encouraged to invest it as a result. But they aren’t doing any such thing.
“Companies are taking the tax cuts and banking them. They aren’t even giving them back to their owners. They’re just hoarding it. Like the wealthy (perhaps, unsurprisingly) large companies are simply sitting on their cash.
“The tax gap is another indication of this. What really belongs to the government is in the hands of crooks and cheats, with massive economic consequences.
“What can be done? I’ve always pointed out that there are only four drivers of the economy: consumer spending, investment, net foreign flows and government spending.
“Investment is not happening; business will not do it: that’s why they havecash.
“Net foreign flows are broadly neutral: the trade deficit is dire but hot money still comes to the UK, although we cannot rely on that.
“Consumer spending is poor and may get worse: most people do not have the money.
“And that leaves the government to put matters right. It has to generate new economic activity.”
Mr Murphy proposes more quantitative easing – printing money and then investing it in a new, sustainable infrastructive (not the kind that Cameron is pushing); rebalancing tax by increasing taxes for those who can pay; and closing the tax gap.
You won’t see any of those under a Conservative government!
Get ready to batten down the hatches for another round of financial catastrophe, and this time, be prepared to put the blame where it really belongs – on Conservative politicians whose supposed reputation for financial competence is a myth and who should never have been allowed near the national economy.
And remember where the blame lies when you vote next May.
Everybody seems to have had fun with yesterday’s analysis of the Coalition Agreement and its provisions on ‘Jobs and Welfare’ – so let’s have a look at another part of it:
The banking crisis, coupled with incessant propaganda from the Conservative Party and the right-wing press, brought down the Labour government in the 2010 general election. The incoming Coalition government promised reform – but did it deliver?
In recent years, we have seen a massive financial meltdown due to over-lending, over-borrowing and poor regulation [Conservatives were lobbying for less regulation, right until the crash happened]. The Government believes that the current system of financial regulation is fundamentally flawed and needs to be replaced with a framework that promotes responsible and sustainable banking, where regulators have greater powers to curb unsustainable lending practices and we take action to promote more competition in the banking sector. In addition, we recognise that much more needs to be done to protect taxpayers from financial malpractice and to help the public manage their own debts.
We will reform the banking system to avoid a repeat of the financial crisis, to promote a competitive economy, to sustain the recovery and to protect and sustain jobs [flannel – but it is just an introduction; setting out the stall, if you like].
We will introduce a banking levy and seek a detailed agreement on implementation [The levy, as eventually imposed, was effectively a tax break for the banks, whose share prices actually rose when it was announced].
We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk [The Coalition’s bank levy was devised to raise no more than £2.5 billion per year, while bonuses for the year of its introduction were believed to total around £7 billion. No effective effort has been made to curb excessive bonus payments in banks].
We want the banking system to serve business, not the other way round. We will bring forward detailed proposals to foster diversity in financial services [diversity has fallen off], promote mutuals [these plans were criticised as having ‘no legs’] and create a more competitive banking industry [no sign of this yet].
We will develop effective proposals to ensure the flow of credit to viable SMEs [by the end of 2013, more than 70 per cent of small business owners said they believed the government had produced little or no effect in this regard]. This will include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks.
We will take steps to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way; while recognising that this will take time to get right, the commission will be given an initial time frame of one year to report [current situation: banks have until January 2015 – nearly the end of the Coalition’s term in government – to detail how they propose to manage this separation].
We will reform the regulatory system to avoid a repeat of the financial crisis. We will bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation [some reform appears to have taken place but have not yet been tested].
We rule out joining or preparing to join the European Single Currency for the duration of this agreement.
We will work with the Bank of England to investigate how the process of including housing costs in the CPI measure of inflation can be accelerated [this has not happened].
We will create Britain’s first free national financial advice service, which will be funded in full from a new social responsibility levy on the financial services sector.
Conclusion: Where the Coalition has made decisions, they have been weak, meaning banks have enjoyed business as usual for the last four+ years instead of enduring the promised crackdown. Many measures – like the separation of retail and investment banking that we were told was absolutely vital to protect our savings – have not happened at all.
What the Conservatives offer: This was described on Facebook as the most awkward photo of the Tory conference – rightly. Not only is she obscuring this year’s slogan in an embarrassing way, but she is doing it with what appears to be a fascist salute.
More information on the lies being told at the Tory conference comes from Kitty S Jones. Vox Political had intended to run a detailed piece but Yr Obdt Srvt had to deal with a slight emergency (being a carer, these things do happen) and now we’ll just quote the salient points:
“The deficit reduction programme takes precedence over any of the other measures in this agreement” – stated in the Coalition Agreement. Of course the truth is that this whole process of prolonged austerity is NOT about deficit-cutting. It’s just the cover for Tory ideology. It is actually about shrinking the State and squeezing the public sector until it becomes marginal, then non-existent, in an entirely market-driven society. The bank crisis-generated deficit has been a gift to the Tories in enabling them to launch the scuttlebutt that public expenditure has to be massively cut back, which they would never have been able to get away with, without the deficit-reduction excuse in the first place.
I am still seeing the “inherited debt” LIES that the Tories are still telling, despite official rebuke from the Office for Budget Responsibility (OBR) chief Robert Chote, and this is same Tory-led government lost our triple A Moody and Fitch credit rating, and that borrowed more in 3 years than Labour did in 13. Figures from the Office for National Statistics (ONS) showed that the coalition had borrowed £430.072 billion in just 3 short years, whereas the last Labour government managed to borrow just £429.975 billion in 13 years, and unlike the Tories, Labour invested most of what they borrowed in public services.
The much bandied-about 2010 deficit of “over 11%” is false. This is the Public Sector Net Borrowing (PSNB – total borrowings) and not the actual budget deficit which was 7.7%. (See OBR Economic and Fiscal Outlook March 2012 page 19, table 1.2.)
In 1997 Labour inherited a deficit of 3.9% of GDP (not a balanced budget) and by 2008 it had fallen to 2.1% – a reduction of a near 50% – now that’s impressive. It is implausible and ludicrous to claim there was overspending.
In cash terms a millionaire’s debt would be greater than that of most people. Therefore the UK would have a higher debt and deficit than most countries because we are the sixth largest economy. Therefore it is laughable to compare UK’s debt and deficit with Tuvalu’s where GDP/Income is £24 million whilst the UK’s income is £1.7 trillion.
In 1997, Labour inherited a debt of 42% of GDP. By the start of the global banking crises 2008 the debt had fallen to 35% – almost a 22% reduction (page 6 ONS). Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling….lordy me.
The deficit was then exacerbated by the global banking crises after 2008. (See HM Treasury archives). The IMF have also concluded the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It’s basic economics: when output falls the deficit increases.
The large loss in output occurred because the UK, like the US, has the biggest financial centres and as this was a global banking crisis we suffered the most – not as a result of overspending prior to and after 2008, as the International Money Fund (IMF) concurs.
The UK national debt is the total amount of money the British government owes to the private sector and other purchasers of UK gilts. The national debt now stands at£1.5 TRILLION (and rising), so a further saving of £3 Billion in benefits, as proposed by Osborne, will clear the debt in, say, a mere 500 YEARS.
Those readers who are determined to paint Vox Political as a Labour Party apologist site may be surprised to see this blog publicising an article by alittleecon which lambasts the Shadow Chancellor of the Exchequer for his apparent capitulation to the Coalition’s economic viewpoints.
In it, Alex Little compares words spoken by Ed Balls at the Labour Party conference last week with those he spoke in what has become known as his ‘Bloomberg’ speech of 2010 – unfavourably.
You can visit the site to compare the speech excerpts yourself, but Mr Little’s conclusions bear quoting here. He writes: “It seems he thinks he haslost the argument and far from standing outside the consensus, he’s now lining up alongside George Osborne to see who can outbid each other on the consensus (but bogus) concept of fiscal responsibility.
“He has totally given up on trying to win the argument and is now quite prepared to pretend the earth is flat, believing that enough voters actually do think the earth is flat to benefit him politically. It’s an incredibly cowardly and cynical point of view, and one that takes us all for fools. Whether he is right about the electorate being fools remains to be seen.”
The consensus concept of fiscal responsibility is that the government needs to “balance the books”, as Mr Balls described it last week – using policies of austerity, which means cuts in government spending and services.
We know from the last four and a half years that this policy is absolute and utter rubbish; it is a tool of neoliberals, intended to create a sense of emergency in the general public in order to make people more likely to accept the strictures being placed on them – for a lie.
Fiscal austerity can never “balance the books”.
Fiscal austerity removes money from the national economy, meaning the government takes less tax every year. This means it becomes increasingly difficult to fund public services – the government must either borrow more money or reduce its spending still further by cutting services or selling them off to the private sector.
The process has been accelerated in some countries (including the UK) by the practice of cutting income taxes for the obscenely rich and corporation tax charged to large and international firms, diminishing the tax take even further.
Fiscal austerity is not about being able to “balance the books” – it is about grossly enriching those who already have too much via the further impoverishment of those who are already poor.
We have Michael Meacher’s letter in The Guardian, republished here, to remind us of the failure of fiscal austerity to do what George Osborne said it would do. There is no reason to believe that Ed Balls will be more successful in pursuing what we all now know to be a pointless cover story for what the police describe as a distraction theft.
It is the latest development in a crime that has been inflicted on the British people since the late 1970s, when Margaret Thatcher’s neoliberals devised their plan to reverse the progress of the years since Labour’s historic 1945 election victory. They believed, according to The Impact of Thatcherism on Health and Well-Being in Britain that undermining the working classes “would require, not simply the disengagement of the state from industry, but the substantial destruction of Britain’s remaining industrial base. The full employment that had been sustained across most of the post-war period was seen, together with the broader security offered by the welfare state, to be at the root of an unprecedented self-confidence among working-class communities. Very large-scale unemployment would end the ‘cycle of rising expectations,’ [and] permit the historic defeat of the trade union movement.”
What we need, then, is a reversal of the neoliberalism that has allowed David Cameron to sell the UK off to anybody with a penny in their pocket. Perhaps economists reading this will correct the following if it goes astray, but it seems that, more than anything, we need:
Expansionary budgets that will put money in the hands of people who actually spend it, building up the national economy towards full employment and boosting the tax take.
Tight re-regulation of our industries – particularly finance – to ensure that the money goes where it is needed, and not into the pockets of tax cheats.
Investment in our manufacturing, service and new industries, to repair the damage caused by right-wing neoliberals – including the possible renationalisation of those that have been most seriously mismanaged.
That will do as a start. If Ed Balls can’t commit to any of it, then he needs to make way for somebody who can. This is a job for someone willing to roll up their sleeves and get their hands dirty – not some namby-pamby neoliberal apologist.
“There is an alternative” – and it doesn’t have to cost more than we’re spending now.
It seems some people are upset that Labour has announced it does not intend to increase public spending, if elected into office after next year’s general election.
This is a perfectly reasonable reaction, depending on the amount of information available to the person holding that opinion.
In other words, if you don’t know why Labour has made this decision, it is perfectly reasonable to assume that the former Party of The Left has turned Tory-lite.
That’s why we’re hearing that Labour will simply continue Tory policies; that the main three parties are “all in it together” (to overuse a hackneyed and devalued phrase).
But evidence is available to suggest that this is a big mistake.
To finance extra spending, Labour would have to borrow more money – but this would push up interest rates and create a potential disaster for people with mortgages and loans to pay off.
According to Modern Monetary Theory – an economic method that seems to have earned credence with all the main parties – government borrowing is not undertaken to finance its spending, but to maintain a target interest rate.
In times of recession, businesses borrow more and households find it hard to save money for a rainy day (as the saying goes). We have spent most of the last decade either in recession or in the slowest recovery in British history and the private sector simply doesn’t have the spare cash to pay higher interest demanded on loans in the wake of higher government borrowing.
Labour wants to safeguard those businesses; Labour wants to safeguard your homes.
The alternative would cost any government much more in the long run.
It’s as simple as that.
So Labour has set a spending target that is the same as the Conservatives’, ensuring that interest rates can be kept under control.
This doesn’t mean it will continue with Conservative-led spending plans. That would be a betrayal of Labour’s core voters.
Instead, it seems more likely that Labour will seek to stimulate the economy by taking funding away from wasteful areas – this blog would certainly wish to see less public money given to private contractors who pocket half of it as profit – and investing it in economic growth.
With more money flowing through the system and coming back to the Treasury in taxation, it will then become easier to relax restrictions on interest rates, which will help the government with its debt issue (this has to do with the way governments borrow money, issuing bonds at fixed rates of interest, and is a story for another day).
If Labour’s plan works, it will mean humiliation for the Conservatives and the Liberal Democrats, as Labour will have spent exactly the same amount doing it as those other parties have been spending for the previous five years – to little effect.
Do not misunderstand; it is perfectly possible that Labour’s spending plans could be entirely wrong-headed! Labour spent most of the last 20 years experimenting disastrously with neoliberal thinking that, continued and concentrated by the Coalition government, has led us to the current pretty pass.
In this case, it seems the Devil really is in the detail.
But the overarching strategy is sound and Labour should not be criticised for it.
How long has it been since Labour was deemed the party with no policies and no direction? Now it seems the Conservatives have taken up this undesirable label and applied it to themselves (excuse the choice of words) liberally.
Labour’s stand on energy prices sent the Tories scurrying away to find an answer, after they finally realised that baldly claiming nothing could be done was not going to cut any ice.
When they finally came up with something, their answer was to “Cut the green crap” and reduce the environmental levy on energy firms – a u-turn within a u-turn for the party that once proclaimed to the nation, “Vote Blue – Go Green”.
This week they have also u-turned on cigarette packaging – for a second time within a matter of months. Before the summer, the Conservative vision was to safeguard children from smoking by removing packaging for cigarette packets. Then – after coincidentally hiring fag-company lobbyist Lynton Crosby to run their campaigns for them – they decided that the packaging could stay. Now – in the face of a possibly Lords rebellion – they are reversing their position yet again.
This is the context in which Boy Chancellor George Osborne will make his Autumn Statement – and he has already put himself on a sticky wicket before going in to bat.
Remember David Cameron’s massive error of judgement at the Lord Mayor’s banquet a few weeks ago, when he stood behind a gold-plated lectern that could easily be sold off or melted down to help pay of the interest on his government’s ever-increasing borrowing burden, and said austerity was here to stay?
It seems Gideon was eager to follow in his master’s footsteps, stumping up £10.2 MILLION (including VAT at the 20 per cent level that he imposed on us all in 2010) on new furnishings for his Whitehall HQ, from exclusive designers Panik, Ferrious and Senator. One Treasury insider, according to the Daily Mirror, wondered “why we couldn’t have just bought new furniture from Ikea”.
Good question! It is also one that is especially pertinent after it was revealed that Osborne has been calling for last-minute spending cuts from the Home Office and the departments of Justice, Defence, Business and Work and Pensions (yet again), because he will not be able to fund the £2 billion of giveaways announced during the conference season without them.
These include scrapping a rise in petrol duty of almost 2p per litre, free school meals for pupils aged five-to-seven and rewarding marriage in the tax system.
It seems clear that these measures were all unfunded when they were announced, putting the lie to Conservative claims that they have any kind of plan – and ruining their claim that Osborne’s schoolboy-economist austerity idiocy has done anything to improve the UK economy.
Hutton went on to state that Osborne decided to “borrow from the Keynesian economic locker… never admitting the scale of the philosophic shift, and then claimed victory”. In other words, Osborne is the biggest hypocrite in Westminster (and that’s a huge achievement, considering the state of them all)!
Result: “The public is misinformed – told that austerity worked and, as importantly, the philosophy behind it works too… Thus the Conservative party can be protected from the awful truth that Thatcherism fails.”
Labour MP Michael Meacher is much more scathing (if such a thing is possible). In a Parliamentary debate, quoted in his blog, he told us: “We do have a recovery of sorts, but one that has been generated in exactly the wrong way. It has been generated by consumer borrowing and an incipient bubble, and it is not — I repeat, not — a real, sustainable recovery.”
In other words, the – as Hutton describes it – “eclectic and spatchcocked Keynesianism” employed by Osborne, while superficially useful in the short-term, will cause immense damage over a longer period because he doesn’t understand it and only used it in desperation.
Both Hutton and Meacher agree that a sustainable recovery can only come from what Meacher describes as “rising investment, increasing productivity, growing wages and healthy exports”, none of which are supported by Osborne’s current behaviour.
And yet, according to the Daily Telegraph, Osborne will fulfil another of this blog’s long-standing prophecies on Thursday by telling us all that “Britain can no longer afford the welfare state”.
From a member of the most profligate snout-in-trough overspenders ever to worm their way into public office and then inflict a harm-the-defenceless agenda on the nation, that will be the biggest lie of all.
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