Category Archives: Public Expenditue

LABOUR AND THE ECONOMY – IT’S A WORRY

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“We used to think you could spend your way out of recession and increase employment by boosting government spending. I can tell you that option no longer exists. And so far as it ever did exist, it only worked on each occasion by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”  Jim Callaghan – Labour Prime Minister 1976-1979

Yes, these are the words of a Labour Prime Minister but the party and a large section of the media don’t seem to rate Jim Callaghan’s words of wisdom. In fact if the recent track record of the Labour Party is taken as a benchmark, it doesn’t bode well for a future Miliband/Balls government’s impact on the British economy, living standards and mandatory austerity.

1964-1970 Harold Wilson’s Labour government – Sterling collapses, International Monetary Fund called in – pre-election promises jettisoned and emergency austerity measures inflicted on the electorate.

1974-1979 Wilson then Jim Callaghan’s Labour government – Treasury predicts black hole in public finances, International Monetary Fund called in – pre-election promises jettisoned and emergency austerity measures inflicted on the electorate.

1997-2010 Blair and Brown Labour government – after announcing “no more boom and bust”, the government went on to cripple the country’s finances and to create a record breaking budget deficit (comment from the departing Treasury Secretary after Labour lost the election – “I’m afraid to tell you there’s no money left”), followed by, you guessed it, more austerity measures.

On recent form, it looks like a general election win by labour would be a vote winner for austerity.

FOREIGN AID – GIVE NOW…PAY LATER

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“There’s still a long way to go. We’re borrowing £100 billion a year – and paying half that money a year in interest just to service our debts. We’ve got to make more cuts” George Osborne, Chancellor of the Exchequer.

The government is adamant that its intention to continue spending around £12 billion a year on foreign aid is justified. David Cameron says “to those who are sceptical, I would say it is not only a moral obligation that the better-off countries have to tackle poverty in our world … but it’s also in our interests that we build a more prosperous world”. John Howell, Tory MP for Henley reckons in a newsletter, “international development is in our national interest and is both the right thing and the smart thing to do … by investing in jobs, opportunities and peace we have moved one step closer to ending aid dependency and creating the world we strive for”.

All highly laudable but hard to reconcile with the experience to-date. Over the last fifty years, the west has “invested” well over a thousand billion dollars in Africa for example, but from various accounts the bulk of its nations are now in a worse financial state (measured in terms of GDP per capita). In fact the counter view is that far from fulfilling its objectives, “aid is more likely to subvert good government, enrich corrupt tyrants and subsidise warlords” (Civitas reporting on Jonathan Foreman’s book: Aiding and Abetting).

However, the real issue is: should the UK be borrowing £12 billion plus a year for such largesse when the country’s structural deficit is so high? Does an ever mounting national debt make us “better-off” ? As recently announced by George Osborne, further public savings in the order of £25 billion need to be achieved by 2017/2018 with the bulk of this coming from further cuts to government departments and welfare. Well here is a good starting point for making those savings. And at a time of increasing geopolitical tension with the consequent serious threat to British security, some of this money would be much better employed in bolstering the armed forces and  security services.

“Those who support the increase of taxpayer-supported UK aid need to ask themselves how much of the well-being of the weakest and the most vulnerable people in the UK they are willing to sacrifice for that end.” Jonathan Foreman

The British people are amongst the most generous voluntary donors to charity in the world. Making compulsory donations from borrowed money to finance overseas projects of uncertain benefit to either the intended beneficiaries or UK interests is definitely not a vote winner.

EUROPEAN UNION – A JEAN-CLAUDE JUNCKET

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“Sir – We are often told by Europhiles that the reason Britain must stay in the European Union is that, if we left, we would have no influence; the naming of Jean-Claude Juncker as president of the European Commission shows we have none anyway. We might just as well leave at the earliest opportunity and pocket the £50 million-plus-per-day it costs us to be ignored.”  Ian Goddard, Letters to the Daily Telegraph Editor, June 2014.

After Junker’s appointment as the new president of the EU, Ed Miliband said David Cameron had suffered a “humiliation” – a word of which he seems to have had no comprehension when in government. So, the Brussels circus has chosen a new ringmaster. None of the main performers wanted him but allegedly, the main German press (with whom Juncker has co-operated in the recent past) decided he was the man for the job, so common sense didn’t prevail. Bad news for the countries in the southern Eurozone – good news for the bars of Brussels, according to some reports.

Also, good news for Britain. Apparently, there’s an EFTA style deal on the table and we should start negotiations with the EU immediately and seek to exit before the UK’s interests are further marginalised. The British people are totally over taking instructions (EU directives) from a disparate group of overseas based career politicians – Juncker in charge of Europe conjures up thoughts of putting a sommelier on the bridge of the Titanic. The reality is that the people of Germany, Scandinavia and Holland know and accept the economic facts of life but from France down and elsewhere, national finances are a disaster and a break-up of the currency union is the only sensible answer.

The UK does not need to be involved in this impending gravy-train crash. An uncomplicated trade deal instead of full EU membership would change nothing in terms of our relations with the EU, other then returning government accountability to Westminster and driving a major lift to our economy by giving us greater flexibility to trade freely throughout the world. Exit from the EU linked to a trade deal would be a vote and election winner.

EUROPEAN ELECTIONS – VOTE UKIP FOR FREE TRADE

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“The UK is still the sixth biggest economy in the world, larger than Russia or India.” Roger Bootle, Managing Director,Capital Economics

So, the political class and mainstream media started by ignoring public opinion as reflected in UKIP’s stance on Europe. When that didn’t work and safe constituency voters started jumping ship, the next step was to adopt the never-fail ridicule and smear tactic. And still UKIP is gaining support.

Why? Because the escalating power grab by Brussels is unacceptable to the British people. The Europe Britain joined was a free trade association made up of nations with similar income per capita – the electorate was never asked to agree to becoming part of the United States of Europe incorporating a growing number of low income countries and a bloated expensive administration. It costs Britain billions to be a member of this disparate Eurozone driven club which increasingly controls our lives.

Why not just trade with it like the rest of the world does? A landslide victory for UKIP in the European Parliament elections would give traction to the prospect of an orderly and planned exit from the European Union. Britain as an unencumbered global free trade country would be able to accelerate growth in GDP and despite illogical scaremongering to the contrary, would be in a position  to increase employment significantly – definitely a vote winner.