I posted this video on YouTube this morning. In it I argue that Labour says there is no money to invest in schools, hospitals, transport, and energy infrastructure. But hundreds of billions of savings lie idle in bank accounts. Suppose they were saved with the government to fund investment in these projects. Those savings could provide all the money needed to transform our economy. So why is no political party offering to do this?
The transcript is:
Would you put your savings into a fund that financed the NHS?
Now I think that's a really important question, because there is no technical reason why you shouldn't be able to do that.
You do, after all, have the opportunity to save with the government already. It runs a savings bank, National Savings and Investments it was once called, and now it's called NS& I, and you'll probably know some of its products. The premium bond is the most famous, but it also provides a range of savings accounts of all sorts for people who wish to save in the most secure place that they can put their money in the whole country, and that is with the government.
The government also offers another form of saving, which is by issuing government bonds. For all the nonsense that they talk about this being the national debt, it isn't. It's just a savings mechanism and the people who use it are pension funds, life assurance companies, banks, overseas governments, overseas companies who want to hold sterling. So those are just savings deposits accounts of a very particular form as well, perhaps more suited to larger organizations than you - maybe not - but probably you want something more simple, like something that NS& I offers to you.
Suppose National Savings and Investments offered you the opportunity to have an ISA where you would know that the money that you saved was going to be used, of course combined with that of other people, to be the capital to fund new hospitals. Capital - I mean the money that is literally used to do the construction work on new hospitals.
Or, you could choose to put it into an ISA which was to be used to fund energy efficiency.
Or to build new schools, or whatever you wished.
Or maybe you could put it into a fund for Scotland, or Wales, or East Anglia, or wherever you happen to live.
My point is that the government is terrified of the national debt, and that's wrong.
The government - whichever government we have by the way, because there's no difference here between the Tories and Labour - should instead be embracing the idea that people want to save with it, to raise money to put into investment in this country. They shouldn't be begging private business to do this.
They should be begging you to do this.
Because you have the money.
Ultimately, you get the benefit from these investments.
And you will get the investment return.
What's the investment return? Interest. You'll be paid a fair going rate of interest guaranteed by the government. And let's face it, all interest payments are, to most people, guaranteed by the government because they guarantee deposits in all bank accounts up to £85,000 and most people don't put more than £85,000 in any bank account.
So they will guarantee the payment to you. It will be completely safe and secure, but your money wouldn't be going to a bank where you'd have no idea what they did or didn't do with it. You would know that it was put to social use.
Wouldn't you prefer that?
Wouldn't you prefer to know that your local new hospital was funded with your money that you had saved to assist them for that purpose?
Or your local school was being assisted in the same way?
And of course you could get your money back. Don't worry about that aspect, because for every person who wants to take their money out, there'll be somebody who wants to put more money in. In fact, in existing ISA arrangements, and we've had these for over 20 years now, we know that almost every year, year in, year out, more money goes in than comes out in aggregate, i.e. in total. So everybody who wants their money get back can get it whenever they wish, because there's always new savers coming along wanting to put money in.
This arrangement could provide the money to rebuild our economy if you wanted it.
And if you do want it, why not write to your MP and tell them that that's what you'd like?
And if you're writing before the general election, which is upcoming, write to the candidates and ask them, why won't you let me save to fund the investment in this economy that it really needs?
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The reason governments don’t do this is fear of the ‘national debt’ – but what lies behind this fear? Is it nothing more than (neoliberal) ideology?
Yes, with enthusiasm, if not huge sums.
But, I want a simple system for secure saving where I would get the right rate of interest. And, please could I save more or withdraw funds without need to consult a financial advisor.
Our Government owns the NatWest Bank, but who now owns the Post Office that used to provide universally available savings accounts for my generation’s childhood pounds, shillings and pence?
What does it cost society to have a multiplicity of providers offering similar services? Martin Lewis, the money saving expert, is certainly entertaining when he encourages people to repeatedly change their arrangements to secure small financial advantages … while banks and others make life ever more complicated. And though Martin seems reliable and convincing, he has sold his organisation for many millions. Is it wrong to feel uneasy about that?
Joe
Please could you define the ‘right rate of interest’?
No, Cyndy, I could not define the ‘right rate of interest’ It was an ill-considered throwback to my Quaker history.
Quakers ‘preached equality’. They refused to swear oaths on the basis that there could not be two standards of truth. This inspired trust which helped some Quaker bankers to be successful. Quaker Meetings required members who were shopkeepers to put the price on their goods at which they intended to sell them. This was in contrast to the prevailing custom of haggling over prices. It was an ethical approach and many Quaker-owned businesses prospered – such as chocolate companies Cadbury, Rowntree, Fry, Terry. (In supermarkets, I get bewildered or give up.)
Quakers are asked to consider, “Do you maintain strict integrity in your business transactions and in your relations with individuals and organisations? Are you personally scrupulous and responsible in the use of money entrusted to you, and are you careful not to defraud the public revenue?” [Richard makes a point of this with regard to the payment of taxes.]
Because of their belief in equal worth, women played an important role in Quaker affairs from the outset. In Edward Cadbury’s day, women’s departments were managed by women to ensure that they had a fair share of managerial posts. I have no doubt that the firm gained greatly from the belief that everyone working there had something of value to offer the enterprise. [Most of this is from a speech by Sir Adrian Cadbury http://www.leveson.org.uk/stmarys/resources/cadbury0503.htm May 2003]
For me, around 1980, I worked in the London office of an organisation with at Californian HQ – 8 hours time difference. We sent messages with what was subsequently called email. I was ahead. Now, alone at 84, I’m behind. I get confused. I want life to be simpler. I don’t want to be pestered or tricked.
I don’t think you’re alone in wanting life to be simpler, Joe
100% I would not..
No one would expect a troll to do so
The things those savings would be spent upon would not provide a financial return, having been spent. Thus we would be consuming capital in order to finance current spending – eating the seedcorn.
It’s entirely possible to change this. To make health care, the energy infrastructure, things that throw off cash to investors. That means privatising them, pricing them properly and producing profits which is that payment to investors for the use of their money. Do so and folk would invest.
Housing, energy, indusyria investment, transport and so much ore do not provide an economic return? What planet do yu live on?
And, incidentally, roads, flood defences, and a great deal more do not do so now. Are you saying we should not do them, with the return paid out of taxation? Why?
@james
That makes very little sense, if any.
Firstly, you seem to be confused about revenue and capital funding, how state funding works for public services, and how NHS bonds might work.
Generally annual expenditures which don’t have an impact outside the 12mt accounting period are considered as revenue. Now most health expenditure, as does education, creates benefits, (some measurable in financial terms and some not) that have a longer lasting impact and it has always been problematic in how these are ascribed. Several economists have argued for the revenue/capital criterion to be recalibrated.
Secondly, public services and infrastructure are mostly monopoly services and do not produce a marketable product with clear competitive capacity.
The 2012 Lansley NHS reforms, that tried to create efficient internal markets in England were so poor even the Tories were forced to dump them.
You are seeking to promote the very worst form of monopoly capitalism in order to try to create some artificial market(s) for public goods, merely to generate a profit.
Adam Smith would really hate you, as his loathing of monopoly is well documented.
“Pricing them properly” ? .. Now how could that possibly work effectively when there is no competitive market ?
What you really mean is guaranteeing a profit margin for private enterprise when there is zero risk. Do take a look at how well PPP are working, if you think that is anything but a funding dead end.
Nor has it worked in the English Water companies, who are failing dismally to deliver the service for which they were constituted, and are simply extracting value.
Incidentally you refer to energy infrastructure. This is already in corporate hands, and strategically is pretty poor in delivery.
If you want to make an argument, at least try to get your facts right.
The USA spends roughly double the UK % of GDP on health yet delivers considerably worse outcomes. Hardly an efficient or effective use of resources.
Your whole supposed free market utopia is a chimera.
Well there’s 3 million customers have money with the Co-operative bank. (OK, I know it’s ‘currently’ owned by equity funds who probably only bought it when it was in trouble to sell later at a profit) BUT when most of those customers signed up I expect many did so because of it’s commitment to ethical banking. I have an account there and while it may not be at the top of this weeks ‘best rate’ on Martin Lewis’s site I’ve never noticed it to be particularly worse than the average of other banks. So I guess the answer to your original question is quite likely.
I would love to have access to NS&I investments like this, especially if they were index-linked to inflation. Even paying us the Bank of England Base Rate would be an offer worth thinking about, given the pathetic rates available from high street banks.
On a separate note: thank you for providing transcripts for your video posts. I’m deafblind and your videos would be completely inaccessible to me without the transcripts.
Thanks
And that’s why we do them