RACHEL Reeves believes in fiscal rectitude a la Thatcher and pretends she must manage the UK economy like a household budget, ignoring the fact that the UK, being a currency issuer, can never run out of funds.
She wants to rein in public spending and to increase taxes to bring down the budget deficit.
What is she aiming for – a balance between spending and revenue, or even a surplus?
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The media and financial commentators persistently ignore the other side of the deficit issue. If public spending exceeds government revenue, there must be a surplus somewhere. There is – in the private non-government sector, ie businesses, commercial banks, even you and me. In principle, and practice, is this not a good thing? Perhaps Ms Reeves and her associates could explain why this is not so.
In the US, Bill Clinton (below) did a Reeves between 1998-2001. He achieved budget surpluses. Great! No, the economy faltered as the private sector ran out of funds.
Of course, not all government spending is good. Billions have been wasted on political ploys (HS2), fraud, corruption and mind-blowing mismanagement (Test and Trace, PPE, Ajax project). Labour appear set to repeat the PFI fiasco, simply to reduce the appearance of government funding.
The same motivation (and the wish to help political allies and donors) is behind actions to bring more privatisation of the NHS. Little is spent to improve the wellbeing of our population, a gross failure of government.
The big question which all politicians, the Bank of England, HM Treasury and financial commentators should be addressing is not “How do we reduce the deficit?”, rather it is, given the persistent annual public deficits, and therefore, persistent annual private surpluses: “Why has the UK economy performed so poorly?”
The UK has had lowest (compared to other north-west Europe countries) wealth per head for every year this century, £5062 poorer than the average, and £15,000+ poorer than those countries with similar or smaller populations than Scotland.
Why is our infrastructure so poor, why are millions living in poverty and/or homeless?
One reason, I suggest, is that the banking sector (yes, the one that was bailed out) and most large companies are devoted to the short term. A very small portion of banks’ funds is invested in productive businesses. In addition, the already wealthy are doing very well. The private-sector surpluses are not distributed fairly across society, financial inequalities remain huge. Much wealth is extracted and siphoned off to offshore accounts.
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If Labour pursue austerity in the cause of seeking budget balance, it is unlikely that economic growth can be realised. And, unless it really addresses the economic inequities and inequalities in our society, any growth will fail to result in improved living standards across the board.
A report was published recently detailing the major economic, social and environmental challenges facing Scotland, it is well worth a read (A Mission-oriented Industrial Strategy for Scotland).
Roddie Macpherson, Avoch
“American pipe line explosion raises fears about Scottish carbon capture plans” writes Paul Dobson in the Sunday National. The North Sea is relatively shallow, and underwater storage of CO2 off the coast of north-east Scotland is being actively considered as the threat to the global oil industry intensifies.
Apart from the on-land danger of a rupture in a pipeline carrying pressurised gas to a burial site, how stable are the North Sea’s rock formations if subjected to increased pressures?
Has oil extraction already impacted on the stability of its underwater strata to any extent? Will rising sea levels and stronger ocean currents due to Arctic ice melt mean an extra weight of water is forced upon its geological structure?
My knowledge of this important subject does not extend beyond a concern for the long-term effect on our overall environment if gas bubbles are spotted rising to the surface due a fracture in the basic rocks. As we play with powers ultimately beyond our control, thank you once again, The National – this week’s Ferret production makes enlightened reading.
Iain R Thomson, Strathglass
Who thought up the idea of means-testing the Winter Fuel Payment? Reeves must have been taking ideas from G Brown. This is not new from the London Labour Party.
I can remember in the Thatcher era, when inflation went through the roof, decimating the state pension, New Labour (Brown/ Blair) made promises that they would restore the state pension to its true value if they were elected.
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But instead they made my retired parents fill in form after form to claim Pension Credit, after my father paying 50 years’ worth of taxes and National Insurance contributions, as well as putting his life on the line during his six years of national service during the war.
It’s about time the people of Scotland started to claim their rights under the democratic system to totally control our country and take our independence.
Mr B McCutcheon, via email
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