According to the Guardian:
John McDonnell is demanding that Philip Hammond finds more than £1bn from within the government's emergency budget plan to rescue Britain's ailing social care system.
The shadow chancellor says the money could come from the “fiscal headroom” left by the chancellor in the autumn budget. The money has been put aside in case of a financial emergency caused by Brexit, reports have claimed.
The reports are based on a letter, not verbal comment, and so it seems likely that they are a fair reflection of what John McDonnell has said. In that case I have to say I am disappointed, for three reasons.
That's because of course there is a contingency in the budget; there always is, but it is unusual to think of a contingency as being the solution to a long term. Contingencies are solutions to short term crises and the social care problem is, according to most reports, bigger than £1 billion and is systemic in its nature.
I would entirely accept that McDonnell is up against a government that is vastly more intent on dogmatically devolving problems to local authorities and then claiming because some authorities in largely wealthy areas are able to cope when the funding formula virtually guarantees this will be the case that is the fault of inefficiencies in those authorities who are not coping, when in practice they have substantially different funding made available to them to usually address much higher levels of need, that we now have a care crisis. This claim is cynical manipulation of the truth at cost to people in need, and McDonnell should be saying it time and again, but even if he did the onus is on him to offer a better alternative than to raid the contingency budget.
We have a care crisis in this country because we have decided that those in need do not matter. So we will use tax revenues to fund capital projects when we could use People's QE instead.
And we subsidise the wealthy by maybe £80 billion a year rather than address need.
As we will spend money on Trident and useless aircraft carriers rather than on people in need.
Suggesting the solution is in a bit of book-keeping is to deny the scale of the problem we face and to pretend that this is not about real choices that a government that really cared would have to make. And that's what annoys me about McDonnell's approach. Surely a radical shadow chancellor should be able to do better than suggest raiding the petty cash to solve the social care crisis?
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In the ‘post-truth’ world, it seems that being ‘radical’ in Government means to do nothing these days and the opposition must do the same.
And here we have the opposition just upholding what is after all a symptom of ‘secular stagnation’ – truth if ever that were needed that Labour are still even now wedded to orthodox crappy economic thinking.
And in that case they actually have ceased to be an opposition as far as I am concerned.
Where is the big new narrative from Labour? Why even now are they still cowed by the received wisdom amongst the electorate that they caused the 2008 crash?
We do not need cowards in opposition when we have to live with this lot of Tory economic and social nihilists until 2020 and beyond.
Labour: Sod ’em.
Coming to this late Pilgrim, but respectfully agree with everything you say. I had a long rant about what ‘a (relaunched! oh dear, oh dear) Leftwing populist’ might say but on reflection it comes to this:-
‘There IS a magic money tree…George Osborne found it! He must have because he picked about a trillion quid off it and gave it to his mates…who expect you and me to pay it back because we’re all in it together. So-I’m going to ask George where it is and I’m going to pick another trillion off it and give it to the old, the undeserving poor, their children, the sick (fill in the rest of the list). I’m going to pay off all student loans and PFI (fill in list with ‘vision’ stuff like housebuilding, universal wage, bringing back the death penalty for badger culling and tax avoidance, re-nationalising the railways,gas, lecky, water, prisons etc) and then I’m gong to get George’s mates to pay it all back’.
Will this do for starters?
I like it….
You really ought to cut John some slack. There are no better possible shadow chancellors in the House of Commons.
You are discounting the political need to keep this a story about the Tories failings on social care. John is right to concentrate on this which is both a long term disaster and a short term crisis. The Tories would love to turn it into a story about funding or about Trident.
We are still “outriders” with the theories about how money is created, much the same as right wing philosophers are outriders championing privatisation of the NHS while Tory politicians cannot say what they really feel.
Right wing Labour is always vulnerable to Tory demands of “what would you cut instead?” Your suggestions would simply lead to a childish debate about a “magic money tree” with the needs of the elderly forgotten.
I disagree
He’s just playing in a right wing Overton Window without a clue how to shift it
And when he’s already floundering that makes no sense
Sorry: but it’s time for him to get a grip and he isn’t
Lions
There is nothing childish about Labour ( or God help us) any opposition launching a grown up debate about how an effective State is funded to look after those who contribute to its success – its people.
McDonnell’s ‘strategy’ (huh!) is that he is just focussing on the consequences whilst ignoring the revised fiscal fundamentals that could actually solve these problems.
All he is doing is skirting around the real issue so that when push comes to shove he will have no real answers which leads us straight back to the inertia that is crippling economic and social policy.
And why does he do this? Because he is a member of a party that no longer believes in itself and nor does it believe in people. It does not seem to want to invest any time at all in winning people over.
The latter is really important because rather than trying to explain an alternative to the British people, Labour chooses to accept that the argument has been won and people will not listen. It is cowardice. We know that Labour had from the last election until 2020 to put the record straight. It has not bothered. It (and we) are running out of time.
A Nazi once said something a long the lines of that if you repeat a lie often enough people will see it as the truth. We what happens if someone tells the truth often enough in response? Both approaches benefit from time. The important thing is to try is it not?
Labour isn’t even trying at all in my view. However they are certainly trying my patience.
And nor is this just about the elderly. It is about everyone.
I agree with Richard. It is not that hard to explain that everything the government spends comes back in tax unless people choose to save (or avoid taxation).
Do the maths, a 20% tax an every exchange means that after 40 exchanges 99.99% of the money is back with the government (to be used again). It’s not magic, it maths!
Shut down all the tax havens and remove all the schemes for tax avoidance and lets having a civilised country that cares!
Precisely
Hi Lions
A fair view. With a universally hostile press one can hear the sneering.
Yes, we are outriders. Labour has failed to educate and lead opinion for decades now. It will never seem like a good time to start, but I really think this is it.
We are several years ahead of an election. Contempt for the press seems widespread these days. As the world economic situation gets more desperate, and I really don’t see things improving, being despised by the press could become an even bigger bonus than it is at present.
Labour should look to the achievements of the 1946 government which came to power with a national debt to gdp ratio of Japanese proportions. This is not a time to be timid. In fact it is essential to be more radical than the fascists.
John Mcdonnell does need to bite the bullet. There is a large amount of money flowing around ‘out there’. That £80billion tax subsidy to the rich and better off needs to be addressed. Wealth tax directly focusing on funding SOCIAL CARE AND NHS should be a mainstay policy. The Well Being of the nation should be mainstay policy. If Labour is to offer a ‘Social’-ist alternative it MUST address where the money is -with the wealthy- and tax IT ( the weath)
To turn-around an existing mind-set is an awesome task – ask any marketing guru. However, it can be done with a focussed plan and appropriate resources. Think how public attitudes to smoking have changed in the past 50 years. OK, we don’t have 50 years nor that level of government subsidy, but the march of a thousand kilometers must start sometime or else the destination can never be reached.
Maybe the Labour Party, in collaboration with all the other left-of-centre minority parties, should establish an ‘independent’ stand-alone public education unit with a single remit of explaining how a modern monetary system works. Basically that’s how the right-wing Republicans initially instilled neo-liberal junk economics into the hearts and minds of the public at large, starting in the universities & colleges.
There’s an old advertising saying that the vacuum left by a cut in budget should be filled by creativity. The heterodox academic argument has been well articulated for several decades, so they’re not starting from scratch. Naturally, at the vanguard would be a body of ‘media friendly’ economists*** capable of explaining the message – “YES there is an alternative” – to the outside world and fearlessly countering a hostile media. I’m sure the LP could co-opt the services of any number of really creative individuals to help ‘design’ the campaign. The UK is a marketing world-leader.
I understand it’s a daunting task but until the nettle is grasped it can only be more rearranging of deck-chairs while the nation is slowly sinking. The hope had been that McDonnell and Corbyn were going to do something vaguely along these lines with their consultative team of outside advisers but that came to nothing. The reality is that until both JC and JM retir from the front-line, nobody will believe an alternative message simply because they don’t project the requisite authority. It’s a serious & complex long-term ‘social’ marketing task which neither of them is qualified to lead. I have little knowledge of the LP but surely there must be some strong, competant individuals within its extensive ranks.
Hope springs eternal.
Just a thought.
*** Such as Mark Blyth – https://www.youtube.com/watch?v=9HgDxLtXt_M
A good thought
Charles Adams “Do the maths, a 20% tax an every exchange means that after 40 exchanges 99.99% of the money is back with the government (to be used again). It’s not magic, it maths!”
Whilst agreeing that John McDonnell needs to be much more radical (there’s nothing to lose) I wonder if he gets this – because I don’t! We are presumably talking about 20% VAT here which except for exports, it is ulimately raised on the margin. After one transaction, that could be anything from a loss to 3 or 4 times the original amount of the government spending so I don’t see how you can get to any precise figure for the number of transactions for the government to get its money back?
Mostly its income tax – paying wages counts as an exchange too. Government pays public sector worker, takes back about 20%, worker spends other 80% which provides income to other workers who pay back the government too. Even the pounds that go overseas come back. You cannot spend pounds in China, so the Chinese buy property, football teams and university degrees, and the money comes back into government spend and tax circuit. The only way it cannot come back to the government is if people hoard the money or engage in economic activity where tax is avoided. Saving is simply postponed spending so not too bad but avoidance is a real leak in the circuit.
The trouble with cutting social care provision is that it encourages people to save more (in the medium term) because they are worried about their old age – saving is a hedge against uncertainty, governments need to create certainty to allow the economy to function at full capacity. If people save more, tax receipts are reduced and the deficit grows, so the cuts are counter-productive to the economy as a whole.
I realise all this is not a soundbite which is why I went for – it’s not magic it’s maths.
Ah I see. Thank you.
If we could afford a welfare state when the country was on its knees postwar, why can’t we afford it now?
From Corbyn’s letter to the PM yesterday:
“After £4.6 billion of cuts to social care budgets since 2010, more than a million elderly people are not getting the care they need. Social care is in a crisis which threatens the wellbeing, dignity and lives of hundreds of thousands of older people.
The failure of your government, and that of your predecessor, properly to fund our social care system, has meant the burden has increasingly fallen on local authorities, which have themselves suffered heavy and continuous cuts.
“Relying on the council tax to plug the shortfall will lead to a postcode lottery and shift the cost on to hard-pressed council taxpayers. The government must take responsibility.
“In the sixth richest country in the world, it is a national disgrace that elderly and disabled people are being denied the dignity and care they so desperately need.
“This is a question of priorities. Your government has chosen to cut corporation tax while over a million of Britain’s disabled and older people are being denied the care they deserve.”
I would have thought we could rally behind that.
I agree that Keynes and an understanding of how money is created are important but this can’t be put across in a soundbite, and it is not furthered by attacking the current Labour leadership. We don’t want to go back to Chris Leslie explaining that he would cut just as much but somehow make it kinder. Labour needs to skewer the Government on social care and win what extra funds it can now.
But that is not what John McDonnell said, as I pointed out