7 Aug 2010

We had it so good - £4,000bn debt

I have to note I was a little in awe when I read recently that the true scale of Britain's national indebtedness according to the Office for National Statistics is almost £4 trillion, or £4,000bn - about four times higher than previously acknowledged! In this blog a wee look at that then Johann Hari and the recent letter to press with the alternative strategy to the most savage spending cuts since the 1930s.

Photo: view of Ludlow Green, Ruscombe

This calculation quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations. This is an issue Greens have long been concerned about....pensions, additional health needs of older populations, PFI, nuclear power waste and more that leaves future generations with the bills....indeed we are the only party to specifically have a policy that means any policies need to take account of impact on future generations.

In research published alongside the ONS data, the National Institute of Economic and Social Research (NIESR) said that current taxpayers ought to be paying around 30 per cent more in tax to relieve future generations of that "unfair" burden.

Many in my generation have also benefited from many phenomena that are unlikely to be enjoyed by future generations, including: free university education, including maintenance grants; mortgage interest relief at the highest marginal rate of income tax; property booms that saw a massive transfer of wealth from the young to the old; free long-term care for the elderly; the proceeds of privatisations of state assets; and the demutualisation and distribution of reserves of the the former building societies and life offices.

So where does this leave us? Well I wont repeat again the Greens approach in this blog - see my previous comments here and see here Caroline Lucas's statement re the budget and link to her report that the cuts are both unnecessary and destructive - 'Cuts: the callous con trick' - can be read at http://www.financeforthefuture.com/TaxBriefing.pdf.

Johann Hari writing in The Independent a week ago said "Cameron needs to learn from Ireland...To preach austerity as the solution to depression is the equivalent of drilling holes in your head to cure your migraine while dismissing aspirin as for wusses."

The piece is well worth a read as it shows how Cameron is rapidly 'ramping up the risk' of people loosing their jobs and homes. As Johann Hari says during the election campaign, Cameron promised that his cuts wouldn't be "swingeing" – but in power he is ordering cuts of 25 to 40 per cent in almost all departments. To give you a sense of how drastic this is: Margaret Thatcher actually increased public spending by 1.1 per cent in real terms per year. The poorest will be hit hardest (see my letter here for example re those on incapacity benefit).

In the NHS we were told frontline services would not be hit - see my letter here - now NHS bosses have drawn up plans to slash hip operations, cataract surgery, and the number of acute hospital beds.

So Cameron wants us to follow Ireland - yet the International Monetary Fund has just found that country's economic collapse "exceeds that being faced by any other advanced economy, and matches episodes of the most severe economic distress [anywhere] in post-Second World War history." As the Nobel Prize-winning economist Joseph Stiglitz explains: "If you introduce austerity measures, the amount you can raise in tax falls, and welfare payments go up – so you don't have enough money to pay your debts anyway."

How can we stop the Coalition from leading us down this path? As Johann Hari says: "None of this has to happen. The more fuss the British people make – the more we demand the axe is put away, and replaced with jump-leads for the economy – the less leeway the Government will have for self-defeating cuts. Protest needs to be focused on the Liberal Democrats in particular: they are mostly good people who do not want to be part of a Thatcher-on-mephedrone crusade. They have the power to pull the plug at any time. The more we spook them, the more likely that act of national self-preservation becomes."

Tony Benn's letter to press

Tony Benn writes with support of 73 folk including Caroline Lucas as the second name on the letter about the cuts. I enclose below as I think it mkaes some very important points...

It is time to organise a broad movement of active resistance to the Con-Dem government's budget intentions. They plan the most savage spending cuts since the 1930s, which will wreck the lives of millions by devastating our jobs, pay, pensions, NHS, education, transport, postal and other services.

The government claims the cuts are unavoidable because the welfare state has been too generous. This is nonsense. Ordinary people are being forced to pay for the bankers' profligacy.

The £11bn welfare cuts, rise in VAT to 20%, and 25% reductions across government departments target the most vulnerable – disabled people, single parents, those on housing benefit, black and other ethnic minority communities, students, migrant workers, LGBT people and pensioners.

Women are expected to bear 75% of the burden. The poorest will be hit six times harder than the richest. Internal Treasury documents estimate 1.3 million job losses in public and private sectors.

We reject this malicious vandalism and resolve to campaign for a radical alternative, with the level of determination shown by trade unionists and social movements in Greece and other European countries.

This government of millionaires says "we're all in it together" and "there is no alternative". But, for the wealthy, corporation tax is being cut, the bank levy is a pittance, and top salaries and bonuses have already been restored to pre-crash levels.

An alternative budget would place the banks under democratic control, and raise revenue by increasing tax for the rich, plugging tax loopholes, withdrawing troops from Afghanistan, abolishing the nuclear "deterrent" by cancelling the Trident replacement.

An alternative strategy could use these resources to: support welfare; develop homes, schools, and hospitals; and foster a green approach to public spending – investing in renewable energy and public transport, thereby creating a million jobs.

We commit ourselves to:

• Oppose cuts and privatisation in our workplaces, community and welfare services.

• Fight rising unemployment and support organisations of unemployed people.

• Develop and support an alternative programme for economic and social recovery.

• Oppose all proposals to "solve" the crisis through racism and other forms of scapegoating.

• Liaise closely with similar opposition movements in other countries.

• Organise information, meetings, conferences, marches and demonstrations.

• Support the development of a national co-ordinating coalition of resistance.

We urge those who support this statement to attend the Organising Conference on 27 November 2010 (10am-5pm), at Camden Centre, Town Hall, London, WC1H 9JE.


Tony Benn, Caroline Lucas MP, John McDonnell MP, Jeremy Corbyn MP, Mark Serwotka, general secretary PCS, Bob Crow, general secretary RMT and a further 67 names


Russ said...

I'm still not clear who this four trillion is owed to....
Is it rich people who carry on living is luxury because they can claim they are owed huge amounts?
Is it another country, like Japan?
Who ever it is they must be surviving ok, and unlikely to be living on the streets.

Maybe this is all global karma, having made much of the third world pay back it's huge debts for so long.

J. Wallace said...

Agree with the last comment - where on earth is all this owed - can see alot of it is in stuff like private finance pfi, mortgages etc but this number is almost too big to be scary!