I referred to the resignation of the government's commissioner for education catch up yesterday.
I suggested that the government really does not care about children. Nor, come to that, does it really have a 'levelling up' agenda. And nor does it have a long term vision, which is what this policy required.
And all that is, I suggest, is for one reason. And that is that the 'Treasury view' of the economy is beginning to take hold in the government. Tom Newton-Dunn, once of The Sun and now of Times Radio (and so close to the government, even if not a journalists I much like) had this to say on Twitter and I think it very revealing:
In effect, the message being sent out to him from the Treasury could not be clearer. They think that austerity is now required. The days of spending, come what may, are over. The debt paranoia is coming to the forefront again. And the maxim that government spending must be matched by tax revenue is to be promoted once more. What is more, they believe that the debt is £2.2 trillion. They are still pretending that £800 billion of quantitative easing has not happened.
The result is that come the autumn spending review the government is going to be saying that choices have to be made in the interests of securing a balanced budget. People, it will say, can still have health care, but at cost to education. And greening the economy will come with a price tag of cuts to social care attached. And the reason will be that the cost of servicing - and repaying - government debt must now have precedence.
The claim is that because of the risk of increasing interest rates there will be a need to cut borrowing. The trade-off, it will be claimed is direct. And that, we know is wrong.
As I showed yesterday, in real terms the government borrowed less than £20bn last year. That is staggeringly low when total spend was more than £1.1 trillion.
And regarding QE funding, this cancels the interest charge on the government debt that the government repurchases. So 40% of the claimed cost is simply returned to the Treasury, straight away.
What is more, there is literally no requirement at all for any interest to be paid on the balances the UK's banks hold with the government as a result. I will blog on this last point again, later today.
And with regard to the remaining gilt interest costs, our borrowing is fixed rate and on average for 14 years: there will be almost no impact on government interest costs if rates do rise as a result.
And interest rates are, in any case, entirely under the government's control,. The pretence that the Bank of England sets them is just a charade: they have to do what the Treasury wants at the end of the day or the Chancellor has the power to overrule them.
So what is going on here? It's dogma, of course. There is no debt issue. There is no interest cost issue. There is no reason to cut the size of the government. There is just a desire to do so.
Sunak wants to claim he is the grown-up in the room. It may be more appropriate to call him the economic sadist in the room, because that is what this is going to look like. It will look as if the Tories are going to punish people for Covid. And that is unforgivable.
If you want to know more about why, I suggest 'Money for nothing and my Tweets for free', which is my new ebook.
The book can be downloaded, free, from here.
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For anyone who believes the Treasury clap trap ask ‘Who does the Government owe the money to and who is setting the interest rate?’.
Start there.
Meanwhile I understand there are increased numbers of children being hospitalised by Covid. In broader context, incidentally I begin to wonder whether we actually bother to do journalism any more in Britain. The ‘Gold Standard’ countries which have best responded to the pandemic crisis throughout the world, like Taiwan, the east Asian countries (mostly islands – but notably excluding Britain, with its high death rate), are now facing significant problems in the wake of the new easily transmitted Delta variant. Until a few weeks ago Taiwan had very few cases, and only 9 deaths. It is now seeing a sharp increase in cases, and suddenly has 149 deaths. Some commentators have suggested the Taiwan increase has been caused by ‘complacency’; following a long period of success. I am informed through friends there is now a new lockdown in Melbourne.
I have noticed very little media coverage of these important events in the UK; but of course Britain is not just geographically an island, but ideologically an island. Our neoliberal media priorities are free-market activity (subvented by the State), pubs and foreign holidays, which are being marshalled to induce us to set aside pandemic priorities, for the rigours of a mere calendar, arbitrary deadlines, our summer entertainment, and of course – corporate profit.
Thanks for the pointer on Taiwan, John. They have gone from just over 1,000 cases to approaching 10,000 cases in about three weeks, and 7 deaths during most of last year to 149 now. https://www.worldometers.info/coronavirus/country/taiwan/
That aligns with the experience from Australia, that the new variants are really very much more infectious. But they don’t seem to have had such a spike so far, thank goodness.
https://www.worldometers.info/coronavirus/country/australia//
But it puts the UK experience into context, as we have had many many single days with more deaths than the whole of their last 16 months so far (every day in April and May 2020, and the whole period of four months from the beginning of November 2020 to the end of February 2021) .
Is Sunak actually economically illiterate and therefore totally unsuited to the position of Chancellor? His ludicrous statements certainly indicate this is so.
Much to agree with. Which leaves the open question – raised in other postings: how to turn a number of technical facts into a narrative that resonates with the populace:
“read all about it: Sunak pays bankers rather than pays to educate our kids – champagne for bankers, nothing for kids” – style of. Simplistic – but something like this is needed. But I doubt if Liebore will come up with anything.
I agree
That is what I am doing on twitter