My Green New Deal Group and Finance for the Future colleague, Colin Hines, has this letter in the Guardian this morning:
Your editorial (9 June) is correct to call Rachel Reeves' retreat from her £28bn annual commitment on green investment an example of the renewal of a failed economic consensus. This has seen Labour aping Jeremy Hunt's ludicrous emphasis on reducing the national debt. Instead, Labour must become leader of a pack of opposition parties all demanding a massive increase in expenditure on social and green infrastructure, and on the wages and conditions of those working in these areas. One recent estimate suggeststhat to achieve this, the next government will need to invest £220bn per year.
All opposition parties should promise the next parliament will use its powers to provide the money needed to fix broken Britain. This can come from three sources. First, the estimated £55bn a year of tax breaks for pension savers must be redesigned to support employment-creating investment with social and environmental goals, as should some of the £70bn a year saved tax-free in Isas – a much-needed exercise in intergenerational solidarity.
Second, increased revenue from a fairer taxation system, where the wealthier contribute far more. Finally, as a backstop for any funding shortfalls, quantitative easing should be restarted. What Labour and indeed all the opposition parties have got to grasp is that you can't have the necessary equivalent of Roosevelt's New Deal without a massive increase in new debt. The £28bn is a mere down payment.
Colin Hines
Convener, UK Green New Deal Group
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The failure by the British public, including all its political parties and mainstream media, to link two phenomena together is resulting in disastrous effects on the economy. The phenomena are uncertainty and using a monetary system to smooth transactions with others. John Maynard Keynes did his best to make us link the two together by telling us because of uncertainty liquidity is here today and gone tomorrow but it simply washed over most people’s heads! If it hadn’t there’d be the realisation the state has to act as the back stop for liquidity.
Once that role of the state is understood then it becomes obvious the state is able to create its own money to invest in public goods and services given the availability of real resources just as the private sector invests in goods and services. Even more the state can leverage the real resources available just as it does in times of war. This means, for example, it has the power to fight a war on climate change as and when it wants and no politician can argue otherwise. The same applies to other pressing national needs.
Vested interests ensure that the public aren’t educated to understand this linkage. There can, however, be no holding of a moral ground until the logic of this linkage is understood. I repeat no moral ground whatsoever!
For further information on the ins and outs of liquidity I recommend “The New Lombard Street” by Perry Mehrling.
Unfortunate error in your title – should be “HOW to …” not “Hope to …” (as in the Guardian) !
Corrected now
Thank you
Too much haste….
As much as I support Mr Hine’s letter (totally BTW), I must say that I am extremely disappointed to see the ‘broken Britain’ trope in his text.
How often have the public been told this?
And by who?
I remember as a 14-year old reading the Daily Mail banging on about ‘broken Britain’ before the 1979 election to help Thatcher get in.
It’s like a stuck record and quite frankly – it’s fascist in nature. Not only that, it’s been over-used and I don’t think people are listening anymore and if they are, they think (for example) that immigrants broke it.
So – can we stop using the language of the Extreme Right please, and find some language of our own to bring people together and provide hope and sell a better future?
Yes – know it’s easier to be a critic than a doer. Hands up. But I felt this had to be said.
I have used it here
We have been broken by neoliberalism
Isn’t that a fact?
“Broken Britain”, “Neoliberalism”, “Neoconservatism”, and Market Fundamentalism” are all labels or terms we use somewhat inaccurately to describe the real cause of the disfunction we experience which is the massive ignorance I describe above.
The country is on the ropes Richard, for the reasons you say, but do you think that this is the worst it will get?
We have not hit rock bottom yet because out here – as I have seen with my own eyes – decent people are still trying to make things work and somehow succeeding . I’ve no idea how long that will last for. Hopefully to the next election. But these people doing this – they’re not going let things break. Our awful government has not broken everyone – yet.
‘Breaking’ – but not broken.
Colin’s letter was aimed for MSM publication – I don’t think he should have used that trope. It is just so easy to fall into the use of this sort of language. Otherwise what are we/Colin offering? ‘Broken Britain’ is a poisoned chalice. Let’s melt it down in the fire of progressive ideas.
I hope that you know how I feel about your work. We can disagree sometimes – whether on this matter or something like Corbyn, or steam locomotive design. It does not alter anything for me.
Best wishes,
PSR
Let’s agree to differ PSR
Richard
i enjoy the freedom neoliberalism has offered me. I do not want to live in the GDR and i do not want to be told where i have to put my savings.
It takes some stupidity to make a comment like that.
Good letter – much to agree with. £220 bn/year a significant lump of money but as the figures suggest, doable. And there is Liebore wriggling about investing £28bn (1/10th) per year. Not serious. As for the tax-breaks and ISAs – once you accept that what is needed is investment – then channeling tax-breaks and ISAs into green (or social) investments (with a return) is 100% reasonable.
On a related note I can commend to readers this G’ article by Hariss – excoriating wrt Liebore (relevant given the letter, & now natch buried on the G’ web site – can’t have the dear leader slated can we?).
https://www.theguardian.com/commentisfree/2023/jun/11/labour-opposition-power-keir-starmer-party
Harris article very good
Harris’ article is quite depressing and I’ve just seen Richard’s tweet about Labour’s childcare funding – or lack of.
‘Have just heard on R4 that more interest rate rises are coming too. If the Tories are trying to break Britain, then it looks as though Labour might finish the job.
Having said that, my next door neighbour loaded up another van yesterday morning to drive to the Ukraine with clothes and other stuff – this is why I say we are not broken yet with people like that about.
Those who rule however – or want to – not only do they break rules they want to break us and take us backwards.
It’s as if we are being prepared for war. That’s what it feels like to me.
In my mind stopping the war in Ukraine has to be the top political priority. If we do not achieve that, the scope for disaster is enormous.
We were broken after the second world war and still managed to create the NHS and a society that helped the poor. We built council housing and new communities.
Why can’t we do it again?
We don’t do it now because everything that was created in the post war period was blamed for our troubles because someone somewhere in politics decided that:
(1) the cheap oil we had negotiated with Muslim Arab countries in order to support Israel was worth sacrificing Western economic stability for and would create a convenient crisis.
(2) The crises could then be blamed on the progressive gains of the post war period – for example we were no longer going to have full employment (a founding principle of the ‘Welfare’ state) – and that instead we would create a reserve of labour (the unemployed) to control the cost of labour. All those houses we built and the benefits systems we created were going to be blamed for it too because – apparently – it created ‘serfdom’.
(3) investment would then be by private debt/finance instead of government which needed far more looser rules to operate.
So, although the private ‘investment’ was just loans for acquisitions, privatisations etc., initially looked like injections of cash and made GDP figures look good, all it did was enable asset stripping on a huge scale over time. It was not more resources – it was a Trojan Horse, a cuckoo – whatever – and that all of this was done in plain sight.
And that is still the situation today, and what is in store for NHS and most of what is left of public services and your government – whether Tory or Labour or whatever will facilitate this gladly.
This is how the rich will stay rich and maintain the value of their wealth and claw back everything they think they have lost before WW1 and also feel entitled to have your family’s wealth too because apparently they are superior to you, more productive and more deserving than you and me.
Revolution any one?
I think we will see that revolution. No reason not to have one now.
I saw on the news today something about the RNLI saving over 100 people in the Channel, and saying that they would carry on as that was their job. I never expected that from them.
Doctors and rail still on strikes, still getting public support.
Jails are full, so where will all these new law-breakers go? Courts full, too. Loads of people on Facebook say they will vote Green now.
I struggle to see how you can be left of centre – from a social democrat onwards – and vote Labour now.
I would be grateful if anyone could answer a question for me. I read recently in the Daily Mail that a previous Labour government abolished some tax relief for private pensions, and that this had a very bad outcome because it discouraged investment. Was the DM correct?
I have no doubt that overall the tax relief system should be massively overhauled. At present something like £80 billion per annum (ballpark figure) is lost to various tax relief mechanisms with about half of that £80 B going to the richest 10% of the population.
I admit I am nit sure what this is referring to
Most likely it is to a change in corporation tax laws in about 2000 which meant pension funds could no longer reclaim a tax credit on dividends
The fall in investment marked the end of the dot.com boom, not the pension change
Thanks Richard, that was it.