Davey: Sunak asleep at the wheel

Listening to Rishi Sunak speak today, you wouldn’t think that the country is in the grip of economic turmoil and crisis in the NHS. You don’t have to go far to read of NHS trusts and boards calling major incidents, or London Ambulance saying they will only wait 45 minutes before leaving patients in hospital corridors. Everywhere there are accounts of traumatised, stressed nurses, doctors and patients in A and E departments up and down the country.

It is all very grim.

Sunak’s five priorities would fail the SMART objective test on any work training day.

He could claim he had done them without alleviating much suffering. I mean what does “NHS waiting lists will fall” actually mean for someone who has been told that they can have an appointment for their hernia in mid 2024? What does “the economy will grow” mean? A tiny decimal point which makes no measurable difference? Reduce national debt – to what, how and what will that mean for public services? And a piece of red meat for the xenophobic right about getting rid of asylum seekers. The one specific pledge, to halve inflation, seems to be going to happen anyway according to the Bank of England forecasts.

It’s all very cynical.

Ed Davey was unimpressed, saying:

People will be dismayed that Rishi Sunak still doesn’t have a proper plan to deal with the crisis raging in the NHS. He is asleep at the wheel while patients are treated in hospital corridors and the health service is stretched to breaking point.

Families up and down the country are facing personal tragedies every day and this Conservative Government either doesn’t understand or doesn’t care.

Ministers should have been working to tackle this crisis for months, instead they spent most of 2022 indulging in a Conservative Party psychodrama. Now the whole country is paying the price.

 

 

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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14 Comments

  • Mel Borthwaite 5th Jan '23 - 8:43am

    The pledge to reduce National Debt was particularly vague, no doubt deliberately. It sounds a strong statement of intent for those concerned by the level of National Debt, but he has not made clear whether he means an absolute reduction in the level of National Debt in cash terms, or a reduction in National Debt as a proportion of GDP. I assume he did not mean an absolute reduction in National Debt in cash terms as this would require there to be a Public Sector Surplus rather than annual deficits. Indeed, the UK has not had a Surplus in its public finances since Gordon Brown was Chancellor and Tory Blair was PM.

  • Peter Martin 5th Jan '23 - 10:03am

    “The pledge to reduce National Debt was particularly vague, no doubt deliberately.”

    Yes. This is because Rishi Sunak knows his economics. It’s not difficult. He knows that Government creates and spends the currency into existence and it gets some of it back in taxation. But it can’t expect to get back more than it has created in the first place. The difference in any one year is the deficit and the sum of all the annual deficits is the total debt.

    The UK isn’t widely out of line with other similar economies. We’re on about 97% of GDP. France is on 113%. The USA is at 137%. Even Singapore has a Government Debt level of 160% and rising quite quickly! I doubt the Singaporeans are losing any sleep over it.

    https://tradingeconomics.com/country-list/government-debt-to-gdp

  • George Thomas 5th Jan '23 - 10:34am

    We don’t have a presidential system but if you’re going to be a leader where details are not your strong point, where you’re reliant on a good team around you to get things done, it’s probably best if you’re a) more motivational than a dry flannel and b) are able to bring in a good team around you.

    Rishi Sunak is about as strong a personality as Gordon Brown, as good on details as Boris Johnson and the wider Tory party is bereft of the talent to make things work. It’s the opposite of what we need right now.

  • Chris Moore 5th Jan '23 - 1:32pm

    @Peter Martin:

    The Government certainly CAN get back more than it creates in any one year….. Indeed in any two years, three years and so on.

    What it is unlikely to do is tax all money out of existence.

  • Joseph Gerald Bourke 5th Jan '23 - 2:46pm

    Singapore is a good example of borrowing to invest, not to spend. Singapore remains a net creditor https://commodity.com/data/singapore/debt-clock/
    “The Singapore government does not borrow to fund running the country. Instead, it borrows for specific infrastructure projects. Once those projects are completed, they result in assets that have value. Thus, the debts that the Singaporean government carries are matched by assets of equal or greater value.
    Both Singapore’s constitution and the Government Securities Act prevent the government from spending any funds raised through debt securities. The money cannot be used to subsidize the annual budget. Instead it must be invested in capital projects that have sufficient profit projects to service the debt that funded them.”
    Singapore owns much of its land and the great majority of its population live in properties leased from the state. Receipts from land fund much of Singapore’s budget.

  • David Garlick 5th Jan '23 - 3:49pm

    The basic problem is that the UK is living beyond its means.

    The only thing that keeps this broken world system going is debt. Accepted by both debtors and creditors and softened by inflation. if anyone breaks with the acceptance then chaos follows.

  • David Garlick,

    this Guardian piece The world economy faces a huge stress test in 2023 discusses the point you raise.

  • Peter Martin 6th Jan '23 - 10:01am

    @ Chris Moore,

    Yes you’re right. Except that I didn’t say what you’re implying.

    The point is that the Government can’t get back more ££ than it creates *in total*. This is an important point to understand. It explains why National Debts are quite normal in the economies of the developed countries. Japan has a National Debt of 225% of GDP, for example.

  • Peter Martin 6th Jan '23 - 10:22am

    @ Joseph,

    Singapore runs a current account surplus of 18% of GDP so it is hardly surprising that it can make this kind of claim. There is some smoke and mirrors involved here. It has yet to be explained how everyone running a huge trading surplus can be an “example” for the R.O.W. to follow.

    At the same time Singapore has a National Debt of 129% of GDP. So if it isn’t borrowing to “fund the running of the country” why does it need a much larger National Debt than our own?

    The answer lies in definitions of what is meant by borrowing and what is meant by debt. There’s lot of scope to present the statistics in a misleading way.

  • One of the key reasons that Singapore decided to raise debt was to encourage the creation of a debt market in the country. This market enabled Singapore to develop as an international finance hub and enhance the country’s attraction to international banks.
    Is it fiscally sustainable for Singapore to have such a high level of debt? According to the Singapore Government, the answer is ‘Yes’. This situation is fiscally sustainable. This is because International comparison reports only look at gross debt. Taking into account assets, Singapore has in fact no net debt https://www.gov.sg/article/is-it-fiscally-sustainable-for-singapore-to-have-such-a-high-level-of-debt
    National prosperity is not simply an issue of the resources available within a country. It is largely about trade. Central planning of resource allocation failed dismally in the Soviet Union and Communist China. Eastern Europe could see how West Germany had recovered from WW2 and how capitalist economies had a standard of living far greater than the Soviet bloc enjoyed. Mao’s China saw Japan rise from the ashes to become the 2nd largest economy in the world and bring South Korea, Taiwan, Hong Kong and Singapore along with them.

  • Peter Martin 6th Jan '23 - 2:40pm

    @ Joe,

    So you’re saying it’s no problem for Singapore to have a National Debt level of 129% of GDP because Singapore can offset its assets against this and also it is because of the need to issue debt to a market which would like to own it? However the UK’s National Debt of around 100% of GDP shows we are borrowing too much, we don’t have a debt market to satisfy and we don’t have any assets to offset the debt?

    OK maybe you didn’t say exactly this, but politicians of all parties want to give the impression that the National Debt is a millstone around all our necks even though it is relatively low by international standards. The last thing they want to do is explain why all countries need to have a National Debt. They want to be able to say that we are all living beyond our means, and that the ND needs to be cut as a justification for the next round of economic austerity.

  • The UK government needs to be able to borrow in capital markets for debt rollover, investment and/or fiscal stimulus as and when it needs to at competitive rates without raising concerns in financial markets over sterling devaluation and/or elevated inflation that can give rise to onerous interest rates. That requires maintaining a reasonably healthy balance sheet and cash flow position.
    Maintaining a reasonably healthy balance requires prioritising deficit spending for infrastructure spending that improves the economy. Examples include the development of transport infrastructure, such as motorways and railways; Investment in universities to create more educational institutions or create centers of excellence from existing establishments. Improvements in communication infrastructure, such as a fibre optic backbone to expand the nation’s internet bandwidth availability and speed; renewable energy as a means of import substitution; public housing, schools and hospitals in urban centres.
    Maintaining a healthy cash flow position requires funding of day to day spending principally from tax receipts over the course of a business cycle; generating economic growth from a judicious combination of public and private investment spending and being able to rollover debt on comparable terms to that of other advanced economies.
    Since the 2008 financial crisis we have seen massive quantitative easing, relatively stagnant real wage growth and growing inequality in the UK. A big part of the reason for that is the lack of prioritisation of deficit financing in productive investment capacity.
    The bottom line is our national income/standard of living is what we produce. The tax and benefit system is a key element in how that income is distributed across society. The era of ultra low interest rates and quantitative easing has seen a massive redistribution of economic resources to the asset owning classes away from wage earners. That needs to be reversed.

  • Peter Martin 7th Jan '23 - 11:26am

    On the point of the level of National Debt: it should be pointed out that some £700 bn or so is owed to the Bank of England. There is an argument, promoted by some including John Redwood on the right of politics and Prof. Richard Murphy on the left, that this is money owed to itself and therefore shouldn’t be counted. This would then bring down the National Debt level to something like 55% of GDP.

    I don’t believe this is correct but it is certainly a point worth thinking about. Theoretically, if this were true, the BoE could reduce the National Debt to whatever low number it liked by buying back bonds in the secondary market. Lowering longer term interest rates would be the only real effect and so would be the only reason to do this. Neither the Government nor the BoE want them to be as low as they were at the moment so this is unlikely to happen.

  • Chris Perry 8th Jan '23 - 10:15am

    Putting more money into social care specifically to free-up hospital beds, as the Prime Minister implied today, is putting more money into the first aid camp at the bottom of the cliff instead of building a fence at the top. It is a short-term component level response to a whole systems problem which will soon be overtaken by demand,

    The Government needs to invest in social work, social care, pensions and preventative health care in order to reduce demand upon both hospitals and long term care. And undertake radical reform of the NHS and social services based upon a whole systems review.

    The earlier articles of mine, on the reform of health and social care, are still of relevance. Boris Johnson did not sort out social care, BREXIT is not done until a solution is found to the Irish Border, and the jury is still out on the response to the pandemic. Not to mention the cost of living crisis, rising income inequality and energy prices,

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