I have just finished a live broadcast on LBC Radio with Matthew Wright, discussing whether we should worry about the UK's national debt approaching £3 trillion.
An Institute for Fiscal Studies representative said yes, we should, and the debt should be cut, or the time would come when there was a crisis and we would be out of credit, which, with respect, shows a fundamental lack of economic knowledge.
Matthew made clear he knew I would offer a differing opinion and gave me as much time as he could.
I explained:
- The national debt is just money spent into the economy not taxed back.
- This so-called debt is just savings deposited with the government.
- Repaying it will cut private wealth.
- It will require taxes in excess of spending, and that will create a recession.
- We have no financial constraint; the government makes our money.
- If we want to cut interest costs, tell the Bank of England to cut the base rate.
- And cut interest on central bank reserve accounts.
There was probably more – time flies when you are on air.
Matthew said we could talk for longer.
The producer assured me I would be back.
The playback is, I am sure, on the web, but I need to get ready for a morning of birdwatching.
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Well done!
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Let us imagine a time when the UK is out of credit. What that means is that no investor wants to buy new issues of gilts.
So why not call their bluff and refuse to issue new gilts for a while. See for the banks and insurance companies and pension providers react. How are they going to hedge their sterling exposures without sterling instruments?
Double down and buy back gilts trading at a discount to their nominal value (which could well be the case if their yield is greater than the coupon they bear).
If you really feel the need, use QE. The government does not need to issue gilts to continue to put cash into the economy or to take it out.
You have sent me down a rabbit hole on mark-to-market accounting for the national debt.
Expect an article.
Well done Richard. Enjoy the bird watching. This time Matthew was really good and he let you talk without interruption and was very respectful. On occasions I felt he let his sympathies come to the fore and I found myself cheering in agreement. He touched upon a very important point i.e. we have been receiving the same message for decades from the current political economic establishment (debt is out of control and we must make cuts) and have nothing to show for it. I also felt that the contributor from the IFS sounded like she was also beginning to doubt her own Institute’s approach. Are we starting to see the tide turn I wonder?
This piece was, I k wow organised to get me on.
I was asked to do this at 7, but that is peak publishing time for me. I declined. They changed it to 8 to get me. I could not say no then.
I felt almost sorry for the IFS guest. Like the Red Queen in Lewis Carroll, she was being asked to believe six impossible things before breakfast. I did wonder whether she believed them….
Enjoy the birds!
I did.
Message from the birds
We are looking forward to seeing you
🙂
Fantastic, boy we need this!
Meanwhile on R4 around 7.20 am Anna Foster gave lots of air time to George Eustace former UK environment secretary – who when asked about mass profiteering of water companies in England, stated companies were constrained by their ‘asset management plan’, decided around every 5 years between Ofwat and each company, companies ‘were willing and ready to invest more but the regulator was in someways holding them back’ ‘because governments were conscious of the impacts on household bills so I don’t think you can completely blame the water companies’ said Eustace.
Eustace further defended the water companies – explaining the leaks are caused by drought, but no connection made with the decades of under investment, profiteering, and egregious shitification of English nature.
Eustace effectively ran down the clock to 7.30 Sport, repeating ‘the reality here is the regulator has constrained’ the water companies ‘ability to invest’ due to governments being conscious of the impact on customer bills. Foster thanked him and the University of Reading Hydrologist (who had a little bit of airtime at the start).
George Eustace is a multi-millionaire; former PR executive; hSecretary of State for Environment, Food and Rural Affairs 2020-2023.
Brexiteer, former UKIP member, then later joined the Conservative Party, in 2023 as environment secretary took a consultancy role in a waste management firm that had to pay £36,000 after an Environment Agency (EA) investigation found contamination of groundwater at a site.
Co-owner of his family farm restaurant subject to customer complaints such as bullying staff.
Neoliberal ideologue and guest speaker on R4 Today programme who is seemingly blind to England’s water companies industrial scale corruption, shitification of English rivers and beaches, public harms, and that better alternatives to his neoliberal ideology.
Why choose Eustace, not Feargal Sharkey?
On Radio 4 Today we had ten minutes of Lord O’Neil 8.10 to 8.20 Introduced as being in favour of ‘realism’ in spending. The discussion included the question of a wealth wax. He was not in favour -need more ‘genuine’ risking taking. Sensible welfare reform. Problems caused by an increase in Government spending. Levy on the banks? Doesn’t address underlying issues.
Never a different view. They probably have a list of who not to invite and R, Murphy Esq is probably on it.
I have not been on Today for years. I have been, but not now.
I call it the Toaday program, all acolytes of Neoliberalism very welcome.
The Ministry of Truths job is to pump out TINA as fast as raw sewage is pumped into our rivers
Prof it’s a badge of honour not to be invited, and thanks for moderating my longer post yesterday
I haven’t lived in England since 2004 but remember hearing complaints that 25% all drinking water was lost to leaks before then.
Matthew Wright clearly gets it. Encouraging.
He does.
You were good on LBC, Richard. Well done. Interestingly, quite a few callers after the news picked it up and ran with it. And Matthew Wright defo got it.
Thanks – I did not listen to the follow-up.
Matthew does get it.
I went to listen to the recording, I searched on catchup LBC, and went to Globalplayer, made an account, found the show, and moved forward around an hour into the show to when Richard talks. Hope that helps.
Thanks
Richard, I would love to hear what you make of the following views by “Lord” O’Neill, as reported in the Daily Mail:
‘The underlying dynamics between why our deficit is as it is and debt has risen so much is that we have just boosted government spending dramatically in recent years and – as many people talk about and I am among them – sooner or later, if the country wants to sustain a better longer term growth performance, we have to deal with those things,’ Lord O’Neill, who served during former PM David Cameron‘s second term, told the BBC today.
‘I include the triple lock as well as a more realistic and sensible approach to welfare spending under genuine welfare reform.
‘I am a supporter of a lot more sensible approach to government spending and taxation,’ he added.
He also confirmed he was not in favour of so-called wealth taxes which many have forecast Mr Burnham will increase to fund government spending rather than tackling the astronomical welfare bill instead.
‘I am not a fan of further increases in these kinds of taxes particularly as it relates to capital gains for genuine risk taking things like venture capital,’ said Lord O’Neill.
‘We need more genuine risk taking and more entrepreneurs and then we need to boost the green shoots of growth – some of which have emerged from the previous government.
‘The last thing we should do is try and discourage genuine risk taking so again that’s a choice for the government but I would not be in favour of that at all,’ he told Radio 4’s Today programme.
First, apologies for the delay. I have been over-socialising.
Now to your comment.
Lord Jim O’Neill begins with the assumption that the government deficit and national debt are problems requiring correction. But he never explains why. A government deficit is also, by accounting identity, a financial surplus for the non-government sectors. And debt denominated in sterling does not mean the UK has somehow lived beyond its financial means.
More importantly, cutting government spending does not create growth. Cutting pensions and social security removes spending power from people who are particularly likely to spend their incomes. That can reduce demand and undermine growth.
The real question is whether government spending makes productive use of available resources. Britain desperately needs investment in infrastructure, housing, education, health, social care and the green transition. That spending can increase productive capacity and wellbeing. Calling it a problem because it creates a deficit gets the economics backwards.
I also reject describing social security as an “astronomical welfare bill”. People become old, sick, disabled or unemployed. A civilised society provides support when they need it.
I agree that we need genuine entrepreneurial investment. But that does not justify preferential taxation of capital gains. Much supposed “risk taking” is speculation in existing assets and creates little productive value.
O’Neill is asking the wrong question. The objective of economic policy should not be reducing the deficit. It should be enabling people to survive and thrive while maintaining and developing the country’s human, social, physical and natural capital. On that basis, his prescription looks remarkably like another demand for austerity.
How is the film being screened similar to or different from the two Richard Murphy items already found on YouTube?
Online unless you can get to this event.
Just back to the blog after a month in hospital, I found this most encouraging. Could it be that the tide is beginning to turn?
Sorry to hear you have been unwell. Go well now, as I am inclined to say.
We have curt through with one LBC presenter….
James O’Brien would be useful
Richard’s contribution is at 1:13:30 into the programme.
Thank you
Pity you get to say the same on programmes such as Newsnight. Are you blacklisted?
I suspect so. I last did it in about 2014. With Paxman.