Monday, 1 March 2021

The Budget: two suggestions

 

 Speculation about the contents of Wednesday's budget for once seems to concentrate on its  macroeconomic effect (how to keep the whole economy going) rather then self absorbed introspection as to how the already comfortable will be made even more comfortably off and  the marginalised left much the same or even worse off so as to induce them to try harder

There seems to be general agreement that, although government will have to pay off its debt sometime, "now is not the time."  

The Chancellor seems to agree but offers dark hints that that payback time is in the offing and he and the Tories are the ones to  act "responsibly" rather than spendthrift Labour, who simply cannot be trusted with the newly discovered "magic money tree."

This is a popularly held view and will in the next few days be pushed hard by the right-wing press.

The facts state otherwise.

At the end on the Second World War in 1945 the newly elected Labour government  under Clement Attlee inherited a public debt which was two and a half times the size of Britain's national Income.

 Undeterred by the debt the Attlee government went ahead with massive improvements to the then modest welfare state  and   introduced free secondary education for all, raised the school leaving age from 14 to 15, established the NHS, greatly improved the social security safety network, and much else besides.

This website:


https://www.ukpublicspending.co.uk/uk_national_deficit_analysis

drawn to my attention by a commenter on the previous post, makes interesting reading.

In spite of the huge pubic expenditure involved the Labour government also began tackling the public debt and by 1947, current public finances were brought into into surplus which, by 1950, reached 6.3% of GDP.

So both can be done.

Hence there's absolutely no logical excuse for regarding the present public debt, by comparison a mere 100% of GDP,  as an excuse for further cutting expenditure on our crumbling public services.  

 Rather we need to increase expenditure to make them fit for purpose.

 While personally not seeing any great urgency about bringing down the public debt, if back bench Tories are determined to fabricate a sense of urgency,  I offer them this advice:

When considering the necessary tax rises:

1.    1.Tax “bads” (eg pollution, use of finite resources) rather than “goods” (eg jobs, most consumer t expenditure).

2.    2. Tax those thing which impact least on current production and expenditure.  There’s plenty of choice: taxes on wealth, excess profits, land , financial transactions, capital gains, inheritances . . .

 

To these we could add a determined effort to force the international giants to pay their fair share towards the maintenance of the societies which enable then to operate, along with a determined attack on tax evasion and tax avoidance.

 

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