I have posted this thread on Twitter this morning:
Susanna Reid interviewed Boris Johnson on ITV yesterday morning. He had no answers to her questions on the recession we are now facing, but there are plenty available. A thread….
The most telling question Reid asked was about what he would do to help a pensioner whose fuel bills appeared to have increased fivefold, swamping any increase in pension she had received many times over.
Already living on less than £200 a week, this pensioner had almost no chance of covering her additional costs of living and had resorted to travelling on buses all day to be warm and avoid having to heat her own home.
Johnson had no answer to this question. He blustered about the £150 council tax rebate and the bizarre £200 energy loan scheme. He then, falsely, claimed credit for introducing free pensioner bus passes.
After that he could only claim that it was essential people accept hardship so the government balances its books whilst having to pay £83bn of interest a year, which as a matter of fact it is not doing, because most of this is down to dubious accounting and may never be paid.
This failure by Johnson was telling. Reid was angry about it. Twitter was furious. And as everyone agreed, Johnson utterly failed to address an issue that it was obvious he would be asked about.
So what could be done for this pensioner, presuming we care, which Johnson clearly does not?
The £20 a week Johnson took away from so many people when Covid was claimed to be over would help. This could be restored now for pensioners and those on Universal Credit.
Benefits including pensions could and should also be uprated now by the full current inflation rate, not the much lower rate of last autumn.
VAT on domestic energy could be reduced to nothing. Fuel duty on diesel and petrol could also be reduced temporarily to keep both within a price cap to cut inflation. That cap would reduce price pressure on many other products, including food.
The government's national insurance increases could be removed and then reversed for those on lower pay. This is already an unfair tax. Increasing it for the lower paid was always a mistake.
Interest rate rises should be cancelled, and those that have already happened should be reversed. After all, interest rate rises put up the price of money, and that's inflationary, so increasing them has to be the wrong policy now.
Government investment in new jobs and green energy should increase. We are going to need those jobs very badly as a recession develops, as it is right now.
We could, and should, have a windfall tax on energy company profits because there is nothing remotely moral about profiteering from the poverty that is being imposed on others and these companies can already borrow all the funds they need for investment.
Then there should be tax increases on wealth and high incomes - because those who enjoy both are the people really driving inflation, and both have also been undertaxed for far too long – which is why we have such an unequal society, as this crisis is showing.
Finally, the government should be willing to borrow or use quantitative easing to tackle this crisis, just as it used QE to tackle Covid. Borrowing is cheap. People want to lend to the government.
What's more, there's no pressure on future generations as a result, because young people are not going to thank us for growing up in poverty with the high risk of joblessness they now face as result of the gov'ts approach. It's wrong to say cuts help next generations as a result
Johnson had no answers for Susanna Reid. But as I show, there are many available. It's time we heard about all of them from politicians, and then saw them in use.
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On “the bizarre £200 energy loan scheme”, I shall pass over the foolish claim by the Chancellor that a loan is not a loan (how can someone so obtuse occupy the office of Chancellor of the Exchequer?), the worst aspect of this appalling policy seems to be virtually unnoticed; it has introduced a new precedent of Government policy for future use and extension (income tax began that way, as a temporary ‘one-off’) – the compulsory loan. Think that one through. This is monstrous.
Force everyone to accept a Government loan, whether or not it is wanted; for example applying to those who (for example) cannot – as a matter of fact – manage their budget well or cope with financial planning, to accept a Government loan. Notice the Government is free to determine the terms and timing of repayment, and hence has the capacity to take control of everyone’s future cashflows. The Government are, of course free to introduce severe penalties for transgression over repayments. This is a very easy, and subtle way to control and even terrorise people.
The whole Government is unfit for office.
It is the definition of a mortgage – the grip of death
Reading between the lines here, it sounds to me that the Tories have actually managed to turn the Treasury into ‘Her Majesty’s Loan Shark’.
That’s how it sounds to me.
And underpinning all of this is this view that Johnson seems to have that all the money in the world already exists and that it simply a question of divvying up what is already there.
Treating the money supply as a closed loop once again. It is this lack of curiosity or simple willful ignorance that leads me to ask time and time how they ever got where they are in the first place.
I would say however that banks and building societies do not have the power to make compulsory loans; yet.
It is remarkable that it is the neoliberal political parties and politicians, the emoters of the facile sentiments of ‘personal freedom’, who are invariably the first to transgress individual freedom, by the free use the prerogative powers of absolute government: simply to control people.
The new Road to Tory Serfdom.
Richard, can you remind us the true figure of interest on the National debt, please?
The interest on the QE goes straight to the Treasury I know.
https://www.taxresearch.org.uk/Blog/2022/04/27/the-ons-claims-that-the-national-debt-in-march-2022-was-2344-billion-but-that-is-not-remotely-true-the-real-number-was-986-billion-so-why-are-they-publishing-false-accounts/
Thanks
It was an absolute car crash of an interview. Just when you think he can’t get any worse and plunge the office of Prime Minister even further down the level of incompetence, guess what – he does.
He’d have to massively improve to be considered an absolute disgrace.
Craig
Why are you introducing the notion of borrowing when you know the government, as the monopoly issuer of its own sovereign currency, has no need to borrow? It can confuse the issue and blunt the impact of the point being made.
Read what I wrote, please
Larry
The Government can choose to take other peoples’ money and invest it in services if it wants – this action (is it called ‘open market operations?’) can soak up money in the economy which can otherwise cause inflation (or end up in the Tory party’s pockets!!) and can also be used to stimulate the economy as well as help control it. It’s a good way to get people with wealth to invest in the country if you ask me. It’s also patriotic, democratic and brings together public and private.
As Richard has consistently said, it is about political choices. This is a choice Johnson could make.
The Government offers good terms on this sort of debt issuance and just asks for the money plus interest to be printed off by the BoE/Treasury apparatus when the term of the debt ends – The Government has never I believe not been unable to pay on any of its bonds/gilts/savings (whatever) and that your money if so invested is very safe indeed – some I believe has never been fully redeemed because its that safe and steady as an investment. The Government is its own bank – and it can take deposits as well as give it out.
The reason why Richard mentions this is because this is one of the many positive Government powers that are just not being used by the Tories. They want to portray the State as weak and unhelpful instead.
However, this debt is often wrongly added to the so-called public debt when it is just large amounts of money being stored with the Government by mutually beneficial agreement. It’s not actually public money at all. Another lie.
The question to ask is – why is this sort of thing denied in the first place?
Now that is a very productive line of enquiry indeed.
John Warren
The following is not point scoring – it ‘s a genuine point. It’ s a point about the nuanced power of Government and how it REALLY works.
Our institutions don’t need to be granted formal powers to do anything through Parliament: rather the Government creates conditions for things to change without going through Parliament. It is using (or rather abusing) its Executive power.
An example is the planning system. The Tories have simply continued to up housing need (created centrally by them – not the local authority) for all areas in the country and heaped this on local authorities thus creating an artificial crisis.
And what happens as a result?
Planners are now accept that EXISTING rules are now to be bent in favour of housing development. This has been achieved without going through Parliament.
It’s back door policy making John – the planning system has been bent and maybe broken on purpose to avoid all the scrutiny this unprincipled Government wants to avoid at the House of Commons and House of Lords. They’ve done it – and I know because I’ve just got PP through on one my schemes on that basis as housing need was part of the decision. This will also affect stuff like bio-diversity, assessments on drainage and utility capacity, open public space, green space – all these are under threat now as secondary considerations to building.
And the same goes for compulsory loans without asking.
Already the chancellor has given us money to help with the COLC which he will be asking to be returned at some point – which I believe is called ‘a loan’ because you have to pay it back. Did anyone have a choice did they?
We can differ about the small details as much as you like John, but it is the broader principles I’m talking about.
A Government does not need formal law to do anything – and no one knows this more than this Tory party – this mob of wreckers – who have broken every gentleman’s rule that ever existed concerning our so-called democracy .
All this behaviour is very sinister indeed and setting some very unpalatable precedents – none of which – and I say again – have to be formalised at all if they don’t want to – just like Hitler did not formalise his party’s final solution for the Jews to the German people.
That is essentially the point I am making. This is how unaccountable power works and that is what we are dealing with here. They are shifting the world beneath our feet without many of us realising it.
I am not sure how you are using the word “formal”, but Prerogative powers are not necessarily ‘formal’ in a strict sense, or are noticed by the public or aired in the media. They do not require legislation and may cover anything from signing international treaties, through the use of Orders in Council and a wide range of seldom addressed or discussed, other powers; and give wide scope to the PM (in theory the Crown, in reality whomsoever controls a majority in Parlaiment), to ensure the Government can act with considerable freedom, often using surviving common law powers far beyond those accessible to anyone else. Prerogative powers may have remarkable subtlety, flexibility and depth depending, rather on the ingenuity with which powers formed for an earlier age, and still accessible, may be used adroitly.
Dicey, still to a significant degree regarded as establishing an authoritative view of how the Constitution functions memorably wrote this about the actual operation of the Constitution that I think implicitly recognises the practical reliance of Government on prerogative power in this quotation from ‘England’s case against Home Rule’ (1886 – the case was against Irish Home Rule):
“The sovereignty of Parliament is like the sovereignty of the Czar. It is like all sovereignty at bottom, nothing else but unlimited power; and, unlike some other forms of sovereignty, can be at once put in force by the ordinary means of law. This is the one great advantage of our constitution over that of the United States. In America, every ordinary authority throughout the Union is hampered by constitutional restrictions; legislation must be slow, because the change of any constitutional rule is impeded by endless difficulties.”
This would not work if Government power depended on legislation and statute alone.
Here’s an odd thing. I got an email from Halifax 2 days ago telling me that the Bank of England base rate had changed and telling me how I could work out the impact this might have on my mortgage. But then I got another email retracting the first one. And now, low and behold, two days later, the BoE announce an interest rate rise. It’s almost as if Halifax were in the know before the BoE committee had even met …
It was very widely forecast