The government says there's a “black hole” in the public finances — but the black hole is really in our hospitals, schools, and local councils, not the Treasury. The UK can never run out of money. What we've run out of is political courage.
Austerity was not fiscal responsibility. It was economic vandalism.
Britain is not broke. It's been broken by design.
This is the audio version:
This is the transcript:
The British economy has a hole at its heart, created by years of austerity and political denial.
Public services are crumbling. Investment is missing, and living standards have stagnated. Yet the government insists that the problem is a lack of money, when in fact it's a lack of courage. The so-called 'black hole' in the public finances is a myth used to justify failure.
The black hole is not in the Treasury's accounts but is to be seen in our hospitals, schools, and local councils. Underinvestment has left the country poorer, sicker, and less secure. The black hole is in our social fabric and not in the Treasury spreadsheets. Decades of cuts have created scarcity where there should be abundance.
Governments that issue their own currency cannot run out of money; that's the fact that the Treasury ignores every time that they claim there's a black hole. We cannot have a black hole in the UK because there is always enough money for us to pay our bills, so long as Parliament has approved that payment in advance.
The constraint that exists within our economy is about real resources: people, physical resources, ability, and not cash in the bank. When politicians claim there is no money left, they are lying or ignorant. Those are the only two choices we have to make about what they're saying. Fiscal fear, though, is used to silence public ambition.
This narrative was created deliberately. Austerity was sold as responsibility, but in fact, it is plain, straightforward economic vandalism. The media has echoed the Treasury's household budget analogy, parrot fashion, day in, day out, talking about maxed-out credit cards and other utterly meaningless things .
The result of that moral failing is that the nation is poorer than it needs to be, and that's what our media should be talking about.
What the black hole hides is the fact that the wealth of the few is still growing, but that wealth growth is hiding the insecurity of most people in this country. This myth disguises choice as necessity, pretending that injustice is inevitable. And at the same time, the myth shifts the blame from the government to the governed. It keeps power in the hands of those who benefit from scarcity, and it punishes everyone else.
But there is a fix that's available. The government could find the money to invest, and I've shown how to in my Taxing Wealth Report, amongst many other articles that I have written. The government could find hundreds of billions of pounds by redirecting savings into constructive capital or by taxing the wealthy more. And although it doesn't need that money to spend, it does need to balance the consequences of that spending, and that's why the programmes I suggest are important. And with the money that it could raise to balance the consequences of that spending, it could invest in people, it could invest in care and housing and green infrastructure, and education. In other words, all the things that we need to really grow in ways that aren't just about increasing the wealth of the wealthy, but about increasing the well-being of everyone.
We could use fiscal capacity to rebuild public services and social trust.
We could tax the wealthy to control inflation and rebalance the economy.
We could end the pretence that the national debt is a moral problem when it is anything but that, because it's just a savings account.
This is what a courageous government would do.
Courage means telling the truth. The truth about the government creating money when it spends, and it would mean admitting that austerity was always a choice and not a necessity. In other words, saying the government got it wrong in the past. That is what courage looks like. Admitting mistakes is something that only the courageous do.
And the courageous would use fiscal power to serve the public good and not private wealth, which is what is happening now. And that would mean the end of the politics of fear that is actually keeping Britain small.
The real black hole in our economy and in our politics is the same. It's the void where political honesty should be. Britain is not broke. It's been broken by design. We can fill the black hole in our politics and in our economy with truth, courage, and care. The money is there. The money is there for whatever it is that we can do. What's missing is the will to use it well.
Taking further action
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here.
One word of warning, though: please ensure you have the correct MP. ChatGPT can get it wrong.
Comments
When commenting, please take note of this blog's comment policy, which is available here. Contravening this policy will result in comments being deleted before or after initial publication at the editor's sole discretion and without explanation being required or offered.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
If I was in charge I would simply clear the real part of the national debt and then there’d be no black hole to worry about. We’d also end that 3k per household interest bill which could go to the government instead.
And we would have no money supply, or the foundation of private pensions, or a stable banking systen, or the economic stimulus deficits supply. Be careful what you ask for.
Why do you always wear a black shirt in your videos?
It’s easy – and another thing not to think about.
Hear, hear!
This is what happens when politicians ignore their macro economic powers because they essentially allow Margaret Thatcher to rewrite the truth about money for them with her ignorance. Isn’t conviction a wonderful thing?
Think about it; the rich are getting richer. That means that they are grabbing more of the money in circulation and taking it for themselves and are taxed less. So what is left? The low wage, highly leveraged over taxed common person in the street is left to carry can for ‘growth’. Whoever told Reeves that she could get so much growth from so little investment needs to be got rid of.
The micro economy needs a top up – more base money (in the right places) and that can only come really from macro activity by government – investment. OK, you can let the banks supply money as credit, but that too is risky and inflationary and comes at a cost to the user.
Well said Richard.
In the context of synthetic “more austerity/tax rises” sme chickens may be coming home to roost:
https://www.theguardian.com/commentisfree/2025/nov/07/gen-x-internet-radicalisation-populist
Extract: “A few days ago I was in Aldi, making the usual small talk at the checkout. When the cashier said she was exhausted from working extra shifts to make some money for Christmas, the man behind me chipped in that it would be worse once “she takes all our money” (in case Rachel Reeves was wondering, her budget pitch-rolling is definitely cutting through)………. he went on to add that she and the rest of the government needed taking out, and that there were plenty of ex-military men around who should know what to do, before continuing in more graphic fashion until the queue fell quiet and feet began shuffling. But the strangest thing was that he said it all quite calmly, as if political assassination was just another acceptable subject for casual conversation with strangers, such as football or how long the roadworks have gone on……….. this was a Facebook conversation come to life. He was saying out loud, and in public, the kind of thing people say casually all the time on the internet, apparently without recognising that in the real world it’s still shocking – at least for now”
My advice to Reeves & the other imbeciles – wake up – there is a level of hatred outside of Wezzie for LINO, the Tories, “gov’ as usual” & wezzie that would surprise Wezzieites. Me? I’d level Wezzie to the ground (including the treasury & all the fancy buildings built during empire) and ship the pack that pretends to run the country to Scunthorpe & into temporary accomodation (unheated Nissan huts). Focus minds……….change is needed asap, the current crew are functionally incapable of undertaking anything – but as the G’ article suggests, some people are very unhappy.
I’ve heard other ex-serviceman speak the same – considering how they have been treated since they’ve come back with PTSD etc., I don’t blame them.
The biggest black hole is between Reeve’s ears maybe? Not because she is a woman but because she is a post-political politician.
That is, having ‘accepted the world as she finds it’, her job is to ossify the world, not improve it. This was the risk that Chantal Mouffe identified with Anthony Giddens’ ‘Third Way’. Reeves’ job is to sustain a society as a level playing field for markets to exploit. Markets rule.
So, the politics of adversarialism – a competition for an ideas – is essentially dead. So, all this bullshit we’ve taught by modern capitalism about competition being good is precisely that. Bullshit.
They don’t want competition, they want monopoly. They always have; they always will.
Modern capitalism, modern politics is delivering that monopoly.
Much to agree with
No Steer and Rachel Robot have absolutely no clue. They slavishly follow the economic dogma “we can’t afford it”.
The UK can afford it. Stop paying the massive subsidies to the financial industry, there’s £30bn immediately.
Instead Rachel Robot is committed to favouring the markets and to hell with the majority of the UK population.
I was once teaching a class about compound interest and looking at the national debt, a student asked what would happen if every tax payer paid £100 to have it paid off. I didn’t know what the answer was though from your comments about debt being more like a savings account, i’m guessing it wouldn’t necessarily be a good thing.
It would not.
The debt is not dangerous.
The misunderstanding of the so-called debt is what is dangerous.
As I understand it, the debt includes all our savings including private pensions.
No, it doesn’t. It only includes savings with the government. Not all savings are in government funds by any means.
Thanks for that excellent post. It can’t be said enough and this post says it well. I particularly like your comment that austerity is not fiscal responsibility, it’s economic vandalism. 🙂
We are in almost complete agreement but we do diverge and I think this is potentially important. You say, “although [the government] doesn’t need that money to spend, it does need to balance the consequences of that spending”, which of course is necessary; the government does have to manage the economy. But I think you imply, though you don’t say so, that the consequences could be inflation. Following that through, it seems to me, it implies the way to avoid inflation is through taxing the wealthy, in ways you suggest in your excellent taxing wealth report. And I very much agree that the government should tax wealth to reduce inequality. And I know you have said that tax doesn’t fund spending. But I really doubt that taxing wealth significantly reduces the risk of inflation.
Balancing the consequences means, to me, that the government must avoid placing excessive demands on the real resources of the economy. And I don’t think that taxing the wealthy does that. Take, for example, reducing tax relief on pension contributions, which is primarily tax relief for the wealthy. That money was not going to be spent in the real economy. It would be spent on shares, pushing up their value. If more tax is taken, via less tax relief, it won’t reduce spending in the real economy. It will only reduce share price inflation.
Taxing the poor would reduce real demand on the economy, but that would be a dreadful thing to do. But taxing wealth is unlikely to have the same effect. Not all tax is equivalent. Tax is not fungible.
Yes, we do need to tax wealth, but this is not primarily for inflation control. Implying it is necessary to reduce the risk of inflation, to me, gives unwarranted credence to the notion that tax funds spending.
Thanks, Tim
Well said Richard. It is time for all of us to advocate forcefully for Modern Monetary Truisms (I prefer the word “truism” because it seems to me more appropriate). Do you think that there is any possibility that Zack Polanski could be persuaded to deliver an “alternative budget” shortly after Reeves sits down in the HoC on 26th November and that alternative budget could be based on MMT and your excellent report.
Go off now and enjoys some peace and quiet birdwatching. You deserve it.
The one inescapable conclusion that I have come to since retiring at 68 this year is that it is necessary to pace myself otherwise I get tired out easily.
Thanks Martin
I have already seen a marsh harrier and female sparrowhawk, plus lapwing and I’ll be in the reed bed soon.
I admit that usually tiredness is not an issue for me – but I can work myself to exhaustion and, as John Christensen could relate, have always done so. He used to reckon I always ran flat out for eight weeks and then collapsed.
Cley looks beautiful this morning. As soon as coffee is done I am out there. Travel time to holiday – 90 minutes.
What a great idea for Zack to prepare an alternative budget. Hopefully someone can give him a nudge….
Very obviously the country is in the grip of extortionists. A huge amount of government created money is being used to top up inadequate wages and incomes. Nothing will change until a majority of voters recognise that life in all its forms relies on balancing out self and other caring:-
https://api.mountainscholar.org/server/api/core/bitstreams/c08c4ee8-632e-4735-8239-4ac0c73d270b/content
In the United States left progressives have a name for cooperation with rich extortionists it’s called Starmerism!
https://moneyontheleft.org/2025/09/18/the-case-for-fiscal-insurgency/
What I don’t understand is when the very/extremely/uber wealthy travel around the country, why don’t they see the shambolic, crumbling infrastructure they’ve contributed to? Why are they willing to live in the UK? Surely, they would feel better about things if everywhere looked better cared for? Would that not make their wealth even more valuable? Clearly, they think about the world differently.
I don’t think that the wealthy ‘travel around the country’ in the way that you imagine…. their experience of our society is extraordinarily siloed.
Teresa May said ‘there is no magic money tree’, then magically produced £1bn for NI to get the DUP on side.
Other govts magically find £bns for war.
They do seem to know what you talk about, they just keep repeating the lie so people eventually believe it.
Theresa May knows there are a great many lazy voters in the UK she can lie to and get away with it. Just check out the anti-MMT comments in this Guardian article today:-
https://www.theguardian.com/commentisfree/2025/nov/07/labour-rachel-reeves-budget-choices-increase-tax#comment-173019632
Brexit was of the same pattern economically illiterate voters pretending they weren’t!
Why has a budget been set for November? Didn’t we, used to have it in March?
What’s with the leaking of the increase in taxes? Personally I would suggest a leaky government actually isn’t governing!
I’ve been self employed as a general building and maintenance person for 20 years and I’ve never seen a crises such as this. It’s a crises because people are worried about spending because of the November budget on top of Christmas. It’s a crises because people borrowed in lock down and the biggest crises is that of what our government seems to portray.
Investment is a need in any society at all levels. That’s why I believe this washing machine is not fucked until it’s broken! . However I’ve wholeheartedly given up on Labour and of anything, of its good will?
The loss of hope is now TransAtlantic. . Be strong!
.
The November budget replaced the Spring budget, except it is usually in October, but Reeves is so frit she has delayed it. Chaos ensues . .
Maybe there is also a black hole in the intelligence, ability, integrity and honesty of a significant number of politicians in this country.
Craig
P.S. I was very impressed with Zak Polanksi on The Last Leg last night. Not afraid to answer questions and also say what needed to be said.
Hi. New reader, found my way here via a recent interest in degrowth economics. I’m hoping someone here can clarify something that’s puzzling me.
Richard has consistently said that the government can simply create money, seemingly with no real restrictions, and just use it immediately for public services etc. But aren’t there laws in place preventing that? As I understood it the government currently has to issue bonds to be bought by private buyers (IE the debt everyone worries about) in order to obtain money. It can then if it wishes buy those bonds back with money created by the boe (QE) which effectively means it owes money to itself.
I guess my question is, is my understanding wrong, or is it just considered irrelevant because the government is still basically creating that money, it’s just a bit of a roundabout way to do it (which conveniently enriches the already wealthy, but we’ll leave that for another time!)
I am writing a blog post in response to this question.
[…] reader here asked this question […]
My question is how a government that understood MMT and spent more on socially useful things could reassure the electorate etc. that its management of the economy was sound.
Richard’s arguments are very powerful and convincing. The government should be focusing on using all resources effectively, not trying to tie itself to a 2% inflation target through the Bank of England or the fiscal balance projected by the OBR for 2029.
Tory prime ministers (most recently Sunak) routinely ignored these “rules”, e.g. by inventing absurd spreadsheet scenarios to allow tax cuts before the last election. Labour instead seems like a naïve newcomer clinging to what it mistakenly perceives as economic virtue, and in so doing ensures its own collapse in support and the growth of the far right.
However, to the moderately informed outsider, the rules seem to be a means by which the electorate can judge whether or not the government is causing inflation or other problems. They seem analogous to the annual profit and loss statement of a company, even though, as Richard clearly demonstrates, they aren’t.
My question is: suppose there were a government committed to growth, equality, public services etc that understood MMT. Could they create a small number of metrics that could reassure the electorate that the economy was not out of control? In Keynesian times the imperative was assumed to be maintaining full employment. Is this still appropriate or sufficiently measurable? Or is there a better way?
The answer is yes. See alternatives to GDP. GDP is in the glossary.
Thank you for your prompt reply.
However, my question is mainly about the politics. The vast majority of the public say in surveys that they don’t trust what any politicians say and believe they put personal and party advantage ahead of the common good.
As you argue so convincingly, inflation and fiscal balance are inappropriate measures of economic health. However, these figures can be produced quite quickly by agencies not directly under government control. As such they fit in well with the media and political cycle and appear to be objective.
The glossary item mentions Genuine Progress Indicator (GPI), Human Development Index (HDI), and Wellbeing frameworks as alternatives to GDP. These measure what really matters. However, they are heavily retrospective and hence of limited use for day-to-day decisions.
How can we produce a small number of timely and valid metrics to reassure the public? Could an upgraded Office of National Statistics collect data on actual resource use sufficiently quickly to warn the government and public promptly of possible overheating? For example employment (broken down by location and skill), skill shortages, unfilled vacancies, supply chain issues?
Is this a topic for a future blog?
No inxex matters if you don’t trust the politician.
Sure we can crtaete indices – I can.
But we need to be rid of the curse of neoliberalism first or they count for nothing. That’s what people are rejectng.
“Sure we can crtaete indices – I can.
But we need to be rid of the curse of neoliberalism first or they count for nothing. That’s what people are rejectng.”
I can’t seem to reply directly to this but I’d argue this is completely the wrong way around. You don’t start measuring after you’ve fixed everything, how can you prove that what you did was responsible for the changes? Measure how shit everything is now, make the case for change, then measure the improvements as a result.
If you put in place fabricated measures without commitment to deliver you get nowhere.
The commitment has to be there first.
I think we might be looking at this from different positions. As I see it, you can’t get politicians to commit to new ideas unless you will be able to give them some sort of proof that they worked. Politicians need something concrete to point to at elections – ‘look, wellbeing improved by X%, inequality fell by Y%. If you don’t start measuring until after you made the change then you don’t capture that improvement.
Feel like I must be missing something obvious here but can’t for the life of me think what it is!
I know a lot about measuring things. Much of my professional life has been about it. Sure we can design measures, but we will not get change until politicians want it. Measures change little by themselves: in the politcal sphere they only confirm what politcians want to know and they only support change because those politicians already want it. That is how then world works.
Ok, thanks for the replies. I still have the urge to disagree – it sounds quite defeatist and reliant on politicians spontaneously deciding they want change rather than being pushed by evidence and pressure. But you’re infinitely more experienced in this arena than I am so I’ll defer to your better judgment.
I am in the art of persuasion.
I think Adam Harding has a point. In management, what you measure tends to be what you get because it provides a focus for effort and accountability. The problem is often when the people in charge realise that what they asked for wasn’t actually what they wanted.
Government measures need to be valid, i.e. they measure what is really important and there are not too many unintended consequences. They need to be reliable and robust, not constantly fluctuating like the OBR forecasts for the fiscal balance in 2029. They need to be available quickly enough to inform countercyclical government policies. They also need to be seen to be independent of pressure from politicians, who few people currently trust.
This will take a lot of work and thought and cannot be left until we have a government that believes in MMT. When governments come to power they look around for ideas whose practical implication has been thoroughly worked through – they cannot afford to get it wrong first time and start again. That is why people like Richard Murphy are so important in helping prepare for a hopefully future enlightened government.
My point is – we won’t get the measures until politicians are persuaded they are important. Getting the politics right is at least as important as finessing measures right now, is what I am saying: no measure will be used unless politicss demands it.