I posted this thread on Twitter this morning:
Labour says it cannot now afford to spend £28 billion a year to deliver the investment in the climate transition that we all know we need. Let's leave the politics and even the climate bit aside. Let me just look at the affordability bit. A thread….
Labour announced its green investment plan in 2021. And nothing much has changed since then, to be candid. For example, by the time it gets to office inflation will have been and gone.
Growth will also be non-existent then, as it was in 2021. Borrowing will be high, as it was back then. But government borrowing costs will be tumbling this year. They may not be at 2021 levels. But they really won't be an obstacle to spending.
The suggestion that Labour can't find £28 billion now because the Tories have done so badly since 2021 doesn't stack with the facts in that case, because they are essentially the same. Except, that is, for one essential thing.
What has changed since 2021 is Labour. Starmer has abandoned all the commitments he made to become Leader. He's lost a lot of his membership. He's expelled a pile of MPs. And all because of his desperate desire to adopt Tory policies in the hope of winning office.
He's promised not to increase just about any tax, especially for the better off. And he's promised to cut borrowing as a percentage of GDP, which is an utterly meaningless ratio and so target. But in combination that leaves him with no new funds available to spend.
Unless, that is, he can grow the economy. But if he won't spend to do that then he has to beg and implore businesses to do it instead given that he's ruled out consumer spending growth because he opposes pay rises for just about anyone, it seems.
This has made him think like a Tory, even though the reality is they don't have any more of a clue about what business really wants than Starmer does. But, he thinks cutting taxes and debt is what business want, so that is what he'll deliver.
The fact that, as business knows, this also means that he has no real chance of delivering growth is something he can't comprehend. That's because he doesn't understand that government spending becomes someone else's income. And they pay tax on it.
And then the recipient of that government spending spend most of the rest of what they got. Which becomes someone else's income. And they pay tax on it. And so on, and on. And this happens most often when the government spends on investment, which is exactly what he's cutting.
In other words, what Starmer's doing is the worst thing possible, which is to cut the pump-priming investment funds from government that get the growth cycle he's desperate for underway, and which pays for itself with extra taxes paid in the end.
But, if he insisted it had to be ‘fully-costed' (a meaningless term) now, what could he do to raise extra funds in ways that would be fair and help him achieve his goal? I've been writing about this in what I call the Taxing Wealth Report 2024.
In that Report I have identified £92 billion of possible tax increases on the wealthy, plus £105 billion of extra ways the rules on tax incentivised savings in pensions and ISAs could deliver more money than any government could spend on climate change.
For example, Starmer could charge the same rate of tax on capital gains as is charged on income, which would make the tax system a lot fairer. That would raise £12 billion a year.
Alternatively, he could restrict tax relief on pension contributions so everyone gets relief at the same tax rate, whatever their income, which would make the tax system a lot fairer. That would raise £14.5 billion a year.
In addition, he could create the equivalent of a national insurance charge on investment income in the UK that would mean that it would not be taxed much more lightly than income from work, which would be very fair. That would raise £18 billion a year.
And he could charge VAT on financial services, which are almost entirely bought by the wealthy, and which don't suffer this tax charge at present. That could raise £8.7 billion a year.
In addition, removing the national insurance cap, which means those earning over £50,270 a year only pay national insurance at 2%, could raise more than £12 billion a year.
That lot comes to £65 billion. Starmer could pick which ones he wants, and in every single case make UK taxation a lot fairer as a result. I suspect that would be very popular.
In addition, if he required that in exchange for their tax free status all ISA accounts had to be saved in ways that funded new green investment that would release £70 billion a year for that purpose.
Doing the same for just a quarter of all new pension contributions would release another £35 billion a year, at least, for green or social investment purposes.
How much money does Starmer want? The point I am making is that it really would not be hard to find almost any figure he thought of. It's all out there waiting to be used. Everything he needs to know is in the links in this thread.
But what if he won't spend to save the planet and our children's futures despite the money required to do so being available? If that's the case the real question is about what his priorities really are. Only he can answer that. What I am saying is he has the freedom to decide.
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Renewables: utility scale or domestic – have a business case & thus fundable by any org that can raise money. Gov vould do that via printing.
Energy efficiency/insulation: longer term pay back – tricky but doable – fundable by any org that can raise money. Gov vould do that via printing. (theme developing here).
Taxes have little to do with this (oh dear we have to balance the books first etc). At worst, use taxes to suck inflation out of the economy if gov investment casues “overheating” (fat chance of that at the moment). Given the above have a business case, then there is also payback – which means that gov has invested in performing assets (good enough for companies, good enough for govs? one would think so)..
Networks: given the levels needed – gov should own – & the investment will payback both in direct terms (networks have a business case) and through the economic multiplier effect
all of the above would lead to an increase in the tax base/tax revs. The only “golden rule” (wren Lewis was warbling on about this recently) is
a) does it have a business case – yes? then gov could invest,
b) does it have an economic multiplier – yes? the gov could/should invest.
I notice LINO never discusses specifics, just generalities & the journos never ever probe (they know far too little to do so in any case).
In fariness to the whole pack of em’ they would not recognise a business case if they tripped over one,
All fair comment
The illusion is that in any crisis, especially an economic crisis, private capital leads the recovery. It isn’t true, it never, ever was true.
At the first sight of a crisis, capital flees the battlefield (never clearer than when it left 3% War Loan to blow in the wind, in 1914; but it has become even easier for capital to run away, in a global economy – gone in a nanosecond). Capital only returns to the fray when the battle is over; and when public money has taken the risks, invested in people and led the recovery. Capital works by taking the minimum risk, but ensuring it offers a deceptive image of being prepared to take risks, in order to profit most from the efforts of public funding.
Then there is Laura Trott MP, the Conservative Treasury Minister you have never heard of, who cannot even read or understand a graph ………..
And what was this Trott car crash interview with Evan Davies about? The National Debt – the key Fiscal Rule that dictates everything the Conservatives do. Reduce the National Debt is THE central Conservative economic Biblical Commandment; the First Principle. Everything else flows from that Fiscal Rule. Don’t borrow – but then, of course you “borrow”. Here is just how incoherent this has become. The Conservatives are reducing the National Debt – by raising it over the next five years; using their own, favourite (and highly distorting) Debt-to-GDP ratio. This is a five year plan – to guarantee failure. Remember, this takes five years; which will not turn out as they expect. So expect them to fail even more spectacularly, because quite clearly they do not know what they are doing. They are raising it because they have no alternative. Bt, being Conservative they are doing it badly. The investment will be wasted; spent irresponsibly, through their thoroughly bad, irresponsible and wasteful management. Bad management and waste is all they do well. This is what Sunak actually means by “having a plan”; reducing thee national debt, by raising it.
Rachel Reeves can’t wait to adopt the Conservative failure, confusion and ignorance as the Labour “plan”.
The Conservatives do the opposite of what they claim; but are so deeply confused
“The Conservatives do the opposite of what they claim; but are so deeply confused they can’t even fake it without failing”.
Conservative thinking is one long typo.
This will not work without reforming the current process of green washing that occurs due to greed.
What if they just cut ISA allowances 20k per annum is more than a lot of people earn and so much more than average income workers can easily save. How much will be added to tax collected?
You really are missing the purpose of the suggested reform.
I suggest you read it in detail: the links are all there.
You have a warped view of “Fairness”
Removing higher rate tax relief removes any hope from higher income yet hardly wealthy people from ever achieving a decent income in retirement. Particularly those who missed out on the asset bubble that came before them. Sure it makes them more equal with those who have less, but that’s hardly inspirational…
People of high income are already bashed up against either the annual cap or the lifetime cap so they’re not really going to be massively affected here anyway.
It needs to be considered that fairness needs to transcend generations and work for entire lifetimes
Tim
Tell me why the average higher rate taxpayer should get more in pension support than the average person on benfits does?
Please explain the social justice in that.
Please also tell me why subsidising those who would save anyway is a good use of government money?
I look forward to a detailed reasoning, not unsupprted claims of the sort you have posted.
Richard
Lets raise the income tax brackets to where they should be in line with inflation before talking your form of social justice. At that point it probably makes more sense to consider only giving relief at the lower rate. But it actually requires first steps towards actually having a progressive taxation system the rewards hard work yet doesnt overly benefit those who disproportionately extract wealth from others and can shield themselves from inheritance tax, income tax and have a true meritocracy rather than a nepotistic wasteland before we start doing the usual “well reasoned” raid on the easy victims the middle classes. Those that may initially seem wealthy yet still can’t afford decent yet modest housing….
Pension cannot be guaranteed to be provided by the state and in any case provides no such comfort. If we can all receive a private pension of decent value then maybe the state can redirect funds to those who were not as lucky to be able to fund their own pension. Pension income is taxed too…
If you are going to comment here please read what I have written first. You haven’t
On the Guardian website this morning I was warmed by someone who – with loads of links to the legislation (Audit & Credit Act, BoE Act) – said that this ‘lack of money’ was all rubbish. I only found that comment because the Guardian had put up a similar comment without the links but basically saying the same thing.
You’d think the Guardian might want to do something with the facts wouldn’t you and do a ‘Big/Deep Read’ section about it?
I wonder what sells more advertising space however?
Hope or unyielding hopelessness?
The Guardian needs to stop colluding in my view.
This post has gone to various Guardian commentators
Thank you, PSR.
Since a debt for equity swap in 2008, the Guardian has been owned by a consortium of (creditor) banks by way of an investment fund domiciled in the, ahem, tax efficient, Caymans. Donations from readers and the likes of Bill Gates go through a charity based in, ahem, tax efficient Delaware.
Reeves joined HBOS as an economist in its retail banking arm in 2006. This arm was responsible for the mortgages of dubious quality that were securitised and sold to investors. The economics team was also involved with stress testing the portfolio and coming up with scenarios for portfolio, divisional and groupwide testing. Her links with the Bank of England (and IMF) would also have, ahem, facilitated discussions with regulators. The rest is history.
Many of the leading lights at the Grauniad are Tory or have Tory connections, including Boris Johnson’s sister in law and a nephew of Nigel Lawson, who married into his family.
The above may help answer your questions.
The Bank of Scotland, independent since 1695, was swallowed in the Big Bang, 1986; when Margaret Thatcher replaced a system that had served Scotland generally very well for over three hundred years; and with a reputation for reliability and stability, hard won and worth protecting; and the result of Big Bang was the irresponsible mayhem that ensued. It effectively destroyed Scottish banking; and while grievous errors were made by them, once Big Bang took effect, instead of long established cross-holdings and market separation that provided standards in Scotland; the Scottish Banks were left with two choices; predator or prey, in the City bear-pit. All-Hell broke loose; and it ended finally in the GFC; and goes on today, protected by Government, immune to failure, and completely unrepentant; ever watchful for a new risk to take.
Hmm, interesting Col. Smithers – indebted I’m sure.
Thank goodness for Byline Times.
The £28 billion pledge has become an albatross. This sort of thing is better framed as an aspiration rather than a promise – we want to do this, rather than we will do this. If they went all out to spend £28 billion each year from year one I fear there would be lots of spending on every plan available just to hit the target rather than on the projects with the greatest impact.
It is simultaneously a lot of money – about four times the annual revenues from inheritance tax, or more than capital gains tax, or more than stamp duty, but about the same as fuel duties (and that gives a possible framing – we will aim to spend the same amount raised from fuel duties on climate change mitigation) – but also a small sum compared to the problem and a tiny fraction of UK public spending or the UK economy as a whole.
Given we have already reached 1.5 degrees of warming last year, with little sign of turning things around, we are into catastrophe territory, and it is simply a question of how bad things get. To have any hope of cutting carbon emissions to the lowest possible amount, we have to go much further and much faster.
Has anyone calculated the cost of doing too little? I bet it is significantly greater than £28 billion per year. Doing more, earlier, is almost certainly cheaper in the long run than letting the problem fester and then trying to catch up when it is worse.
The CCC has looked at this. The costs are ugly.
The £28bn is so much more than just a cost, which is how it is presented. It’s about creating many new jobs and kicking starting a green industry sector that has been stuttering. Saving energy and reducing the need for new sources. There’s more along with what will come back in taxes.
But someone trained as an orthodox economist and conditioned in the Bank of England madrassa will struggle to understand that bigger picture. Labour see Reeves as an asset, presenting that conservative financial image that will go down well with the City and Treasury. In practice she is a dead-weight, an albatross round their necks, holding them back from what they need to do. And what the country desperately needs.
It is thought this will cut 40,000 green jobs
The phrase ‘maxing out on the credit card’ is back. Cameron used it. Now Starmer.
Economic illiteracy rules.
I wonder do university economists challenge this narrative?
Almost none…
Sticking your head above the parapet is not encouraged by universities
Challenge it?
Many universities actively promote it this drivel.
Our universities are part of the problem I can tell you.
Oh yes, no doubt they do but change has to start somewhere. It happened in 1940s. I know the obstacles are huge but as the failures of eno-liberalism become apparent, new voices might get listened to. Richard is now followed by a lot of people. We live in hope that one day alternative ideas might be listened to. I guess I just don’t want to surrender to despair.
Thomas Kuhn some 60 years ago said new paradigms come into being as the ‘Old Guard’ retires or dies. Maybe these guys ? Thomas Picketty, the MMT people? or these The Post Crash Society. https://www.ft.com/content/0dc9b416-8573-11e6-8897-2359a58ac7a5
My impression is that over the years our tax system has morphed from being progressive to regressive. Indirect tax (like VAT) cannot be avoided, therefore it falls disproportionately on people with little disposable income. Add to that the bulk of tax being PAYE (and freeze allowances) and far too many people of modest mean pay quite a lot. Then think about the accepted adages for those with investment based income like “if you pay tax you need a better accountant” and we have a truly distorted system. Look at the number of people chasing benefit fraud and compare it to tax inspectors (a per capita saved measure would expose this nonsense).
There is no wonder that under these circumstances it’s easy to get most people behind the idea of no tax increases (or even cuts) and perpetuate the myth that we have too much tax. It feels to me like the whole system is breaking down and the entire debate is missing the point.
I find more allies in groups like Compass, and MVM and have given up on LINO
I like your relentless way of making the case by pointing out all the practical ways money can be raised (and you are great source of facts for arguments about we cant afford it) but sometimes I think we need the big picture narrative to tells the story. I wish I knew how to get it across better.
Agree with Mike. He put the case more elequently. I would have simply suggested “plundering” the Treasury.
Reeves this morning burblng on about Tories maxing out ‘the credit card’ .
But even away from the financial illiteracy, and the fact that some potential private investors have condemned the downgrading of public investment which might ‘crowd in’ private investment, when talking about what the money would be spent on – it was
Carbon Capture – ( technically and financially unfeasible but beloved by Oil companies),
Nuclear (financially and technically unfeasible)
Tidal – (decades?)
She did mentionl uprating the electricy grid – but again a massive top down publicly funded infrastructure , but no ideas like distributed and potentially locally owned wind and solar
Whilst big tidal projects linked to barrages take years, smaller ones would be much quicker. I believe Woodbridge Tidal Mill has been working successfully for a few centuries now!
A few thousand 1KW mills has the same output as one MW mill. It also spreads the timing of peak generation, so helps with base load better. We’re still too much in love with single big plant solutions, wise for coalfired power, but for renewables dispersed generation has advantages.
In other words, Starmer and Reeves need to learn some basic economic theories such as the methods of money creation by the government and the multiplier effect of increased spending and investment. They are so obsessed with what they think can gain votes whilst they are doing the opposite as the general public twigs what’s going on in their little heads.
Great blog again, Richard. What really gets me so angry is why Labour seem to so ignorant of the facts you set put. Why are they so unprepared to listen?! Surely someone in the senior team reads your stuff and can digest what’s being proposed!?
I wish I knew
I wouldn’t even tell the world I was talking to them
We are all familiar with the One Party State. Britain has become the first Two Party, One Party State. The One Party uses two titles ‘Conservative’ and ‘Labour’; but both are subsidiaries of a single Party: the Neoliberal Party.
There is no alternative; even if you bring your ID card to the election.
Once again, an acutely accurate statement Mr Warren.
Thank you, John.
What did Julius Nyerere say about typical American extravagance.
Labour List today are asking for votes and comments on Labour’s backtracking on this issue, so I’ve just put some brief notes from this blog – attributed, obviously. You never quite know what might make a difference, do you?
Thanks
I woke up this morning to discover that the river that runs through the local nature reserve park near me had flooded over again after overnight rain. Having lived in this area for ten years now, I have noticed that a) whereas in the past it might take two to three nights of rain to do this, now it usually floods after one. b) Areas that have not seen flooding in the past, are now seeing flooding. c) I don’t think the current flood defences are good enough. d) Tory claims that they are spending more on flood defences, well clearly it is not enough, and anyway, I don’t trust anything the Tories say. e) Labour, fiscal rules… need I say more.
Climate change doesn’t care about fiscal rules and putting off today until some time in the future, well that depends on whether we have a future doesn’t it? It could cost a lot more in the future if we neglect it now, and it will reach a point where it doesn’t matter how much money is made available, it could be too late by then. Also, passing it on to future generations to deal with is just disgusting, when the fact is we can do something now – the means are there to do it – the political will is not. Shame on them.
You are right
But that won’t deliver flood defences, I know
Hi Richard Very interesting read and as non-economist (engineer) makes much sense in an area I have always found difficult to understand. Putting to one side your explanation of how they could easily raise any amount for green infrastructure via changes to taxes and thinking of their unnecessary obsession with reducing debt as percentage of gdp (even if debt is spent on infrastructure): What I cannot figure out is why Rachel Reeves does not understand this concept too. She appears bright and Wikipedia says she studied as LSE and was economist for BoE. Could it be that politicians have been so completely captured and constrained by the fantasy narrative of equating the gov economy to household budgets? ie that this narrative has been fed to the public so much and for so long by them all that they now fear saying the opposite is actually true will loose them votes (I note Starmer often accuses Tories of “maxing out the government credit card” – is it now beyond him to admit there is no such thing?). If so, what an appalling way to write policy….pushing a narrative you know is not true at all just to get votes. Any alternative thoughts on why they do this?
The household budget analogy is entirely to blame here and even if they know it is wrong it seems that almost every politician is captured by it
“Maxing out the credit card” is an interesting metaphor. Clearly politicians think it is something worth saying and repeating. It is simple. It is relatable. People understand that when they reach their own credit card limit then they can spend no more. A person faces choices about what to buy, within that limit.
So who issues the government’s credit card? The Bank of England? Which is wholly owned by the government? The Treasury? Which is also the government. So the government itself issues its metaphorical credit card.
And who sets the credit limit? Again, the government itself. Who else?
So there you have it. Even accepting the false analogy on its own terms, the so-called limits and constraints are self-imposed. When a government says it cannot afford something, while the physical and human resources are available, it simply means that the government does not *want* to do it. This failure to act is a choice.
Thank you
Spot on
It seems to me Richard that labour are like a general fighting the battles of the last war rather than the current one. They are obsessed by the result of the 2019 election are therefore believe they have to ‘fiscally responsible’ , void mentioning Brexit, and ferociously attack any left wingers in their party whilst grovelling to the right wing propaganda rags and to tory/floating voters.
But, just like the French in 1940 who were totally outmanouvered by the new German tactic of blitzkrieg, labour haven’t noticed political conditions have totally changed since 2019. Brexit has, is and will continue to be the disaster informed people knew it would be, and a majority of leave voters now realise they were mistaken – there is a majority belief we should rejoin the EU.
Similarly, 4 years of Johnson, Truss and Sunak (lying, incompetence etc on an epic scale) has made the tories toxic to many of the people daft enough to vote for them in 2019. The continued collapse in public services has made people realise they’d rather have a functioning public realm than more tax cuts or austerity, and polls show this.
People are seeing and feeling the effects of the climate disaster more and more and want action and investment in green technology. Finally, the circulations of the increasingly extreme, dishonest and stupid right wing propaganda rags are (deservedly) declining along with the fortunes of the tory party itself, so labour needs to stop taking any notice of either of them and state how it is going to sort out the mess they’ve caused.
And yet, here we are with labour continually dancing to the tories’ tune even as the tories disintegrate. And what is the point of enclessly reacting to the nonsense your opponents come up with, when it doesn’t matter what labour do because the right will just attack them anyway. Appeasment didn’t work with the nazis, and it won’t against the English political right. Is it really that difficult to understand this?
I am totally disgusted by Starmer’s latest callus U-Turn on a major policy green investment pledge, but I cannot say I am particularly surprised. It is really important right now to demonstrate that the public overwhelmingly disapprove of his latest lurch to the right. Greenpeace is asking people to sign up to a Climate Pledge; “Help get the message out there and share the Climate Voter pledge. You can paste this link into group chats, social posts and anywhere else you like:
https://act.gp/41w3HSp ”
I have also tried to lend my support to Green Party candidate, Cllr Lorraine Francis, in the upcoming Kingswood by-election by supporting her Crowdfunding page: Kingswood By Election. If we had another Green Party MP in Parliament, following Starmer’s latest disastrous decision, it would be a real embarrassment for him plus it might force the BBC to finally pay attention to the ‘Invisible Party’ (Greens) with their pro-environment and strong Socialist agenda. I know it’s a real long shot, but even a really significant Green challenge would cause Labour alarm.
As an aside, I am a higher rate taxpayer (just). At 72 I am perfectly happy that my ‘hard-earned cash’ goes towards ensuring my 6 grandchildren do not die horrible deaths from heat, storms, starvation etc. The decision is that easy.
Agreed
I have started telling friends and so on that the credit card analogy is utter fiction because unlike a family governments can create money.
Then ask where do you think funding for Covid furlough and so on came from?
Tell them and ask did you hear the government say that there was no more money at the time?
When understood it’s a light bulb moment.
Richard says above that he wishes that he knew why Labour does not seem to listen.
I’m not sure if what I offer comes across as a conspiracy theory or not but I think we have alluded to the causes of Labour Party deafness and I think that problem lies with party funding – quite simply.
Party Politics I think is now nothing but a system of fealty to the rich – headed btw by our King – ill or not.
Thatcher and every Tory PM since her (and maybe one or two previously) knows that money talks and – like Bastiat noted – once you get a largish group of people with the same interests at heart and using the same means to get there (financial leverage shall we say or back door ownership/theft of assets?) together, they will recognise self-interest and seek to retain and maximise that interest.
What Bastiat was recognising was not government tax officers but the first neo-liberals really because this is what neo-liberals do. It’s their way of rejecting the world, its ethics and morality and ‘terror-forming'(sic) – making their own world with their rules.
What neo-liberals also tend to do is turn the tables on society and accuse others of exactly the same tactics they actually use. Getting your repudiation in first is always a neo-liberal trick. It is aso a fascist principle. Read Mirowski.
So – as an example – why not accuse the state of being a ‘deep state’ (unaccountable, malign, unrepresentative, shady, conniving) even though you’ve had lots of little chats, meetings and emails that will never see the light of day with (usually) politicians and make sure that the think tank you give to refuses to tell society where it gets its money from.
I saw an article in the Guardian the other day talking about the first trillionaires being on their way. If anything can tell you what state our democracy is in then let that stand as a warning and as evidence about what is happening here.
It is not just Labour who has been intensely laid back about people getting rich. It is society at large getting sucked into the housing market, through the keyhole documentaries showing us the lives of the rich; the allocation and worship of the rich as being wise and all knowing. And using wealth as the only measure of success and happiness.
We have entered a new era of Capital which have been boosted by the firesale of public assets and financial engineering and a huge dose of capital from central banks everywhere from 2008. This sealed the loop and the ongoing deal between wealth and politics and porn, gambling, cute cat videos, fake news, identity politics and sport did the rest to help us forget about it.
All I see Labour doing now is basically accepting this status quo.
Ask yourself this – if the rules gave each political party £1 million and no more to run a general election, what do you think that level playing field would result in?
So – if you accept that, we can see how we have the world we have now. It is a rich person’s world – a very rich person’s world using money-power for their own benefit.
Robin Williams once said that he thought that American politicians should be like racing car drivers — that they should wear patches on their clothes denoting who their sponsors were. It was funny, but the audience clapped in agreement.
But that will never happen. We will never know who spoke to who. Because the whole system is based on secrecy; because there is a deep state and it is between the rich and our elected representatives and that’s how they both like it.
And when you think about it – for them – how else could it be?
And then there’s the question of tax. It’s not actually about the direct effects of bringing down the rich’s earnings to reduce income gaps or because they can afford it etc. It’s about what they do with their money and how that affects our supposed democracy. The rich simply cannot be trusted to do the right thing, because excessive wealth distorts their humanity. They are not one of us but are imbued with immense power over us and elected officials.
That is unacceptable. Everything the rich fund – AI, lying about economics – is designed to maintain and develop their position.
Labour get that. And if they don’t, they’ll just end up getting stabbed in the back like they did in 2008.
That is why they do not listen to us. In a very cold accepting way, they know who their Daddy is.
It’s Sugar Daddy – of course.
So, thinking caps on – how do we deal with that?
Demand electoral reform
We need electoral reform, but the proportional system used for local councils in Scotland (STV); and not the system used for Holyrood (AMS).
Why? Because here is what happens. Today, Donald Cameron Conservative MSP becomes Lord Cameron, House of Lords, Minister in the Scottish Office (a redundant department, save for purely political party, stunt manufacturing advantage in Scotland). He will automatically be replace in Holyrood by the Additional Member, drawn from a Conservative Party list; which is precisely why the big political parties forced through AMS for Holyrood, and not STV.
What does STV do that Westminster parties loathe? It takes the Party List and tears it up. The selection of a replacement for Cameron under STV would have taken power from self-interested Party and determined the MSP from the votes in the last election given to 2nd, 3rd or 4th choice votes selected – by the electorate. The point is tht Westminster, with FPTP is determined that Party runs politics and calls ALL the shots, not the voter.
One of your best PSR. Sums up this country in one post.
Many thanks for you and your BTL posters on enlightening this layman on economics,especially about debt and the household budget nonsense.
Is it valid also to point out to those who feel the economy is like a household budget that many households have often had a huge debt,ie a mortgage ?
I am now mortgage free and possess a
financial asset. Bit like infrastructure ?
You get it.
Apply to be Chancellor now.
And Wilshare, you’d be a **** sight better at it than Jeremy ‘cockney rhyming slang’ or Rachel ‘I love bankers’ Reeves!
You have Victorian railways and Victorian sewers. What more do you want? Is there no end to your irresponsible demands? The infrastructure is only 150-200 years old; almost new, and bits of it are even still in the right place even if the growing population!, eh – isn’t For the rest, it is perfectly good enough to build houses on a flood plain*, but surely you are not suggesting building railway lines, water supplies and sewage on flood plains?
* ‘Housing developments on functional flood plains’ (House of lords Library, 21 June, 2021).
“Around 5.2 million properties in England are at risk from flooding. The Environment Agency has said that if current planning outcomes continue, this number could double in the next 50 years. The Government has recently consulted on proposals to change England’s planning policies to better respond to flood risks. The House of Commons environment committee and the Royal Institute of British Architects have raised concerns over the Government’s current planning framework.”.
It really is that obvious.
Then you had Cameron/Osborne going on about fixing the roof when the sun was shining. When in practice they have let the house fall into ruin.
Roof? We had a roof?!
I have started a little debate on a email list by posting about the Labour u-turn and the recent banks create money blog posting that quotes various central banks.
I need to follow up with some further details…is this basically correct :
“As the Bank of England BoE and Treasury know how money is made from thin air, they effectively duped Truss and Kwarteng as to the ramifications of their budget…indeed the BoE were engaged in QT Quantitative Tightening buying back bonds to reduce the so called deficit giving the opposite price signal to the bond marketsof the proposed budget The market reacted to the confusion by demanding higher yields/interest rates…thus the next week to stabilise and reduce interest rates the BoE reverted effectively to QE Quantitative Easing increasing bank reserves. Note the BoE manipulates interest rates on a daily basis to achieve the interest rate they want by issuing or buying back reserves/bonds in the reserves (the account between the BoE and private banks). It is in reality a bit more complicated with various bonds/gilts being issued with various timespans.
We can speculate that Treasury and BoE knew the consequence but thought it a good to keep up the pretense that deficits are a problem and to put the kibosh on printing money for any future government, because the current situation suits the rich (and bankers business …they sell debt) just fine, as over time in a debt based free market wealth accumulates with the very rich. It is also in step with their ideological neoliberal economic training that believes that markets, small government and individual freedom are the most efficient way to manage an economy. Either that or they are incompetent (probably a bit of both).
We now know that the amount and choice of spending is a political decision and that provided we do not run short of resources (materials or people) creating inflation or reach physical limits of the planet eg CO2 emissions we can fund what we need. The consequence for exchange rates is null if everyone does it like in 2008 GFC Great Financial Crisis or it will make your exports more competitive due to some devaluation of your currency. Unfortunately the UK has decimated its industrial base and encouraged the parasitical finance sector which actually adds very little to real GDP… it is a cost to doing business. Indeed much business is not about making things these days but financial shenanigans such as share buyback enriching management and shareholders, asset stripping viable companies, etc. etc.
Note the US rebuilding their industrial base is one good thing Trump started, and infrastructure (particularly GND projects) with Biden’s Inflation Reduction Act of 2022 should be a lesson for Labour.
Thus funding a Green New Deal https://greennewdealgroup.org/about-the-group/ , funding properly the NHS, etc. is possible. We can also reduce some of the inequalities by taxing wealth properly using existing taxes and incentives, see Richard Murphy’s Taxing Wealth Report 2024 https://taxingwealth.uk/ and/or other means such as a Debt Jubilee.
The unfortunate thing is that probably the next government, Labour won’t change much and have gone along with the neoliberal economic framing. ”
In advance thanks for your collective thoughts.
That’s fine