OVER the past two years, £186.4 billion of public money has been paid to the wealthiest in society via interest on government gilts. All of this money is unearned. No-one is working for it. It is only paid to people who have enough spare cash to invest. These are the people earning from government benefits.

With every passing month, the new Labour administration in London finds more Tory clothes to wear. Last week, Sir Keir Starmer met BlackRock boss Larry Fink in Downing Street. Starmer took this opportunity to explain that we can only have growth (and therefore a worthwhile existence) with the help of BlackRock. His fawning to capital was sickening. But expected.

This week we saw Labour take on the “sick-note culture” as they explained why we must “Get Britain Working Again”. Starmer stated that he had “zero tolerance for benefit cheats”. Work and Pensions Secretary Liz Kendall said that young people who repeatedly refuse to take up jobs or training would lose their benefits. This rhetoric will culminate in a reduction of benefits paid to the poorest section of the population. In other words, fiscal austerity.

(Image: Stefan Rousseau) There are significant issues affecting those who are not in employment. Too few jobs are being offered to those with appropriate skills. Many jobs are low-paid, do not come with any working benefits and are precarious. This ensures that taking a job for many people ensures they take home less pay than the meagre benefits they get from the government.

There are also a significant number of people with serious long-term health problems, including mental health and physical health issues. According to research at the start of 2024, more than 100,000 people are out of the workforce owing to long Covid alone. There are perhaps two million people who are unable, not unwilling to re-enter the workforce.

And finally, by keeping the interest rate so high, the Bank of England is forcing people to become unemployed. The Government is creating the conditions for unemployment and then blaming people for being unemployed!

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No serious politician can argue that Labour do not have as strong an austerity agenda as the Conservative Party. There is no place to hide for any Labour politician now. Not even in Scotland where supposedly these austerity policies would be reversed with a Labour Party in power at Holyrood. So the playground bully in Westminster punches us in the face and the Labour Party in Scotland takes our dinner money to pay for a plaster: that’s their plan?

As our regular readers are aware, we are not suggesting that the significant sums paid to the already wealthy have depleted the Government's ability to fund other expenditures. The UK Government is fully capable of paying this interest and increasing support for the poorest in society, as sourcing the funds is never the issue. At present, however, they are choosing not to do so, using the “fiscal framework” as a convenient justification.

Working within the UK’s fiscal framework ensures that paying interest to this degree on government debt is a decision to increase inequality and reward those with considerable wealth while punishing those with much less financial and real wealth. This is fiscal austerity plain and simple. It is undeniable. It is ideological. It is dogmatic. And it should deeply concern every person who voted for this administration. Let’s put that £186 billion figure in context. It is only £30bn less than the entire GDP of Scotland. It is three times the total amount that the Scottish Government spends in Scotland each year. It is a staggering amount of money.

This is the benefit you get when you have enough money to invest in government bonds.

(Image: NNS)

Often when I discuss interest paid on government bonds, people rightly highlight that it is not only wealthy investors who own government gilts and some of this interest is paid to the public via private pensions.

But here are two very interesting facts. Firstly, according to Bloomberg, just over 20 years ago 65% of all gilts were owned by pension schemes and insurers; today, that has fallen to 24%. So it may still be true that these gilts top up your private pension but it is significantly less true than it used to be. Secondly, more than seven million people over the age of 50 have no private pension at all. And the irony is that many of these people will see their benefits cut to enable this gravy train to continue.

Often the already wealthy want to shield what they earn in benefits from the Government by including “the public” in this as a stakeholder, just like them, but gilts are becoming the exclusive domain of wealthy individuals. And yet we continue to plough billions of pounds every month into the hands of the wealthiest in society.

Let’s avoid the blame game though. If you were awash with cash you would do the same thing. The UK Government can never go bust. It is the safest of liquid assets. If you are wealthy, you would be a mug not to have government bonds. So, this is a classic case of ensuring we blame the system and those in charge, and not the individuals who take advantage of the benefits.

There are clear benefits to being wealthy in the UK and interest on your savings is one huge additional benefit on top of all the benefits that wealth brings.

On the other side of society, we have those who rely on benefits from the Government to survive.

It is shameful that Labour, as Diane Abbott said last week, have continued Conservative policies that harm the poorest in society, all the while rewarding the already wealthy. The Labour Party under Starmer is a true establishment administration. It is on the side of the minority of people across the UK.