Tag Archives: austerity

ICYMI: Lord Roberts demands more for those made homeless

It was a busy week last week, with local elections and all, but in the midst of the flurry of leaflet delivery and canvassing, Lord Roberts was busy in Parliament questioning the Government on homelessness.

This has been a big issue in North Devon, as it is across the country, with austerity having gone too far and people not able to afford a roof over their heads.

Lord Robert posited:

To ask Her Majesty’s Government what assessment they have made of the decrease in local authority spending since 2009 on homelessness and the number of deaths of homeless people.

You can read the entire debate here and watch the video here.

Lord Robert’s office kindly sent over a piece on Rough Sleeping written by his researcher Shany Mizrai. We missed out on publishing it last week, but I think it deserves a read:

The House of Commons Committee of Public Accounts has described the extent of homelessness across England as a ‘national crisis’. Appallingly, at any one time, there are as many as 9,100 people sleeping rough on the streets. In 2017 alone, 597 people died while homeless – a third of them, of treatable illnesses. Unfortunately, facts now suggest that homelessness in England has risen 165% higher than it was in 2010.

Importantly, the National Audit Office highlights that there is a high prevalence of mental illness, alcohol and drug dependency among rough sleepers: of the 70% of rough sleepers who had a support-needs assessment recorded, 47% had mental health support needs, 44% had alcohol support needs and 35% had drug support needs. The question is: what is the government doing to help rough sleepers deal with these dependencies?

Posted in Parliament | Also tagged and | 2 Comments

On Policies, Perceptions and Potentials

In theory, theory and practice are the same. In practice, they are not. (Anon.)

“Lack of social mobility” and “austerity” confront us. Perhaps much of what we might, and might not do, depends upon information, perceptions and attitudes?

In 2019 our public spending is about 38% of GDP, with the USA at about 36%, Germany at 42%, France 56% and Italy 36%.

In 2010 our national debt to GDP ratio was 53%. In 2018 it was 87%. Equivalent 2017 figures are: France – 98.5%; Germany – 64.1%; Japan – 222.3%; USA – 103.8%.

Since 2010, more than £30 billion has been cut from welfare payments, housing subsidies and social services. About 66% of “poor” children are in families with at least one parent working. Between 2012 and 2019, the number of children fed from food banks has more than tripled. Since 2010 homelessness has increased by 169%. The slowdown ln UK life expectancy is one of the highest in the G20 countries.

The above data, our own experience of people begging and living on our streets, and reliable reports that needed, skilled workers (such as nurses) use foodbanks, indicate that “austerity” has done great social harm.

Ten years on, the “deficit” is far from being removed, £billions of welfare budget cuts are planned and “austerity” has resulted in the slowest UK economic recovery in a century.

Perhaps we now need to campaign for its cessation and, if possible, its rectification? (The Institute for Fiscal Studies estimates that “rectification” needs expenditure of at least £12.4 bn above current budgetary projections.)

Posted in Op-eds | Also tagged , , and | 60 Comments

On austerity: Some questions and comments

“The person who proves me wrong is my friend”.

Austerity seems to involve a set of theories and practices whereby the financial and economic matters which resulted in the “crisis” of 2008 are addressed. This seems to involve reducing governmental expenditure on infrastructures so that such expenditure matches or approaches the taxation income. Any difference between infrastructure expenditure and tax revenue seems to be met by governmental borrowing. This facet of Economics seems to be based upon the premises and assumptions of current Economics theory and practice.

The precipitating factors in the crisis are to be found in the USA with its housing boom and the growth in Collateralised Debt obligations and Credit Default Swaps . The three biggest rating agencies gave erroneously optimistic assessments and lots of them. Some financial corporations went bankrupt, some were taken over by the government and some were bailed out. The global financial system became paralysed. Layoffs and foreclosures continued with unemployment rising to 10%. During this financial bubble, the financiers frittered money on the high life and when it burst the personal fortunes of the financial bosses remained intact.

We were affected by this because of our close connections with the USA and our similar circumstances of inappropriate financial regulation, banks being excessively concerned with prioritising profit and income above national economic welfare, weak corporate media analysis, and general public ignorance of economics made worse by the “misinformation spread by the economics profession”. We too have had a “leverage bubble that drove asset prices skyward whilst starving British industry of development capital. We do also have an excessive Private Debt to GDP ratio which is a foundation of the crisis – 70% in 1939: c.160%  in 2017. 

 Alas, Austerity has a net negative effect on the economy and underperformed in deficit reduction. In 2010 it was stated that the deficit would be eliminated by 2015. In 2017/18 the deficit was £40.7 billion, wages had the biggest collapse on record and the mega-rich have doubled their wealth. Might this affect the demand for support infrastructures and reduce tax returns?

Posted in Op-eds | Also tagged and | 27 Comments

If we want to win elections we have to denounce austerity

Part 1

“Never point out your own mistakes” seems like a good political maxim, so why should we ignore it on this occasion?

Of course, not everyone agrees that austerity was a mistake at all, and some say we should embrace our coalition record. That would be a monumental mistake. Trying to embrace austerity would be like Labour trying to embrace the Iraq war, it would be untenable.

Many people point out that all the major political parties were pushing austerity at the time: during the coalition Labour boasted that the government had, more or less, kept austerity to the levels Labour suggested. Clearly this wasn’t something the Liberal Democrats were solely responsible for. That doesn’t mean it wasn’t a mistake though or that no one knew it was a mistake at the time. While it’s true that many economists working for large banks were very clear that government debt was definitely the problem (and noticeably not the banks themselves!) academic economists took a rather different tack- their warnings were clear and broadly, as it turned out, correct. Even the IMF famously chided the coalition for being too reckless with austerity.

Estimates of GDP per household lost due to austerity in the UK vary with from some at £4000 per household and the Oxford economist Simon Wren-Lewis’ guess being more like £10,000 per household. There is no suggestion it did anything positive. (Simon Wren-Lewis’ book ‘The Lies We Were Told’ chronicles this beautifully. Also worth seeing is the recent report from the NEF featured in Bloomberg estimating the cost at £100 billion.) The famous academic paper (by Reinhart and Rogoff) that was used as political cover for austerity in 2010 turned out to be based on a simple maths error and was ultimately disgraced. Traditional macroeconomics won out- if interest rates go to zero, which they did, governments must either increase spending or hold back their own economies- we chose to hold back our economy.

It’s estimated that around 50,000 UK citizens died unnecessarily due to austerity during the coalition with more afterwards. Which is why it sticks in the throat a little when we’re told, and I’ve heard this a few times from more coalition supporting Lib Dems, that the coalition was “the best government since 1945!” I would gently point out that that the post-1945 era includes the Attlee government, which took on the ideas of Keynes and Beverage, both Liberal party members.

Posted in Op-eds | Also tagged , and | 73 Comments

Theresa May – Austerity is Over

Austerity wasn’t because of economic necessity but a political choice. The economic argument was that if you save your money/reduce your spend, you can clear your debt otherwise we were told we would end up like Greece. This view was accepted by Osborne resulting in this long period of austerity. It should be noted that in 2012 a report by IMF said that austerity had been a mistake. A better approach would have been to reflate the economy which would have left it in a better place to pay off the deficit. The report also said that the UK couldn’t end up like Greece because the debt was in its currency. The UK could raise loans through UK bonds (the problem with Greece is that they are in the Eurozone and share their currency with a number of countries, but there isn’t a euro bond. Each of the Eurozone countries still uses their own market to raise loans from bonds. External institutions who want to buy eurozone currency bonds are attracted to countries like Germany (although the interest rates are very low) while Greece has to significantly increase their interest rates to attract investors to buy their bonds, although it’s for the same currency.  The consequence of this is that Greece has youth unemployment near 50 per cent and Germany has youth unemployment close to 3 per cent because the bonds have to be serviced and interest paid on them).

This has been the most prolonged period of austerity post-war. The UK’s deficit peaked at 10% of GDP and Osborne in 2010 unveiled cuts of  £110 billions of fiscal cuts – public service cuts and tax increases (VAT). It wasn’t wholly a success as growth stagnated and unemployment rose. The Bank of England couldn’t reduce interest rates any further to stimulate the economy. Austerity measures did what austerity does, it contracted the economy, and this was the choice accepted by Osborne.

Posted in News and Op-eds | 54 Comments

Austerity and Napoleon

There is an old joke: Income tax was introduced (by Pitt the Younger) to pay for the Napoleonic wars and now that those wars are over, surely it must be time to get rid of Income tax.

As a Liberal I believe in the individual and to build a society that will support and nurture that individual’s potential. If you look at examples in history, in almost every case it’s the individual who has made a difference so it makes sense to support creative/driven individuals to enable them to realise their vision.

However, society is made up of groups and communities with individuals of different capabilities. The predicament is to have a tax system that not only encourages investment and reward but one that ensures society is also equally served.

Posted in Op-eds | Also tagged and | 18 Comments

LibLink: David Laws – UK reaches socially acceptable limits of austerity

David Laws has written an article in the Financial Times, but you have to be a subscriber to read it.  We will give you a flavour of the piece here so you can decide whether to subscribe (the trial version is £1 for 4 weeks).

In May 2010, as the chief secretary in the UK’s coalition government, I warned that the choices available to us in Britain’s biggest postwar spending squeeze lay between the unpalatable and the disastrous, and that we were moving from an age of plenty to an age of austerity.

It has not been a bad prediction, by political standards.

At that time, public sector austerity was both necessary and deliverable. Necessary, because our budget deficit was an eye-watering £163bn, in excess of 10 per cent of gross domestic product. Deliverable, because the UK had only just ended an unprecedented expansion of public spending under the Blair and Brown governments.

Posted in LibLink | Also tagged | 23 Comments

Is austerity working? And do all debts have to be paid?

 

These questions invite binary “Yes” or “No” responses. More considered approaches exist. We need to consider the economic consequences of debt repayment, structural and attitudinal causes and contributions, responsibility for debts both particular and general, beneficiaries and losers, and, how they may be prevented in the future. Also, can such enormous debts be paid?

This requires analysis and accurate, accessible language. In Economics and Finance, that which has different labels is sometimes not significantly different and that which is under one label has significant differences. For example, money consists mainly of credit creation since loans create deposits and loans are debts.

Debt is a form of relationship: financial activity connects and affects people.

Posted in Op-eds | Also tagged | 35 Comments

Austerity economics, Brexit and the Government’s deficit from a Keynesian perspective. What are the choices?

 

Brexit or no Brexit, we have to improve and stimulate our flagging economy. We cannot blame Brexit for everything. We haven’t even started to leave the EU yet. Nothing has really changed. If there are problems we need to look at the effects of past years of austerity economics first.

The usual charge made against those of us who are of a more Keynesian inclination and who argue against austerity economics is that we are far too ready to let the Government’s deficit increase. In other words, that our policies will involve too much public borrowing, which will only add to high levels of public debt.

This is not necessarily true. But, we do need to understand what the government’s deficit is, how it originates, and why it was so difficult for George Osborne to make good his election pledges of reducing it, let alone turning it into a surplus. We can perhaps expect Philip Hammond to have the same problem. Tories seem very slow learners at times.

Posted in Op-eds | Also tagged and | 11 Comments

George Osborne’s decisions are coming back to haunt him

Commenting on George Osborne’s planned spending cuts, Liberal Democrat Treasury Spokesperson Susan Kramer has said:

Posted in News | Also tagged | 16 Comments

Was Vince Cable proved right on austerity?

When the histories of the coalition government come to be written, those chapters focussing on the role of Vince Cable will be some of the most fascinating. Vince’s fierce intelligence combined with a (perhaps deliberate) flair for the enigmatic meant he was involved in some of the most interesting of the coalition’s key moments.

One area of particular significance is likely to be the analysis of his views on austerity. Throughout the coalition Vince was often portrayed in the media — and by some Liberal Democrats — as a brave warrior fighting an axe-wielding Tory-Lib-Dem cabal of ideological austerians. Yet this seems to me to be precisely wrong.

Posted in Op-eds | Also tagged , and | 20 Comments

Ed Miliband’s speech: 5 thoughts on what it means for Labour, Tories, Lib Dems and the 2015 election

Ed MilibandI listened to, rather than watched, Ed Miliband’s speech to the Labour party conference yesterday. On the up-side that meant I missed the three hammy mid-speech standing ovations (shades of IDS c.2003); on the down-side it accentuated the peculiar whooping of some of the more excitable delegates (calm down, it’s just a politician talking). In its own terms — getting noticed for its content rather than simply as an impressive no-notes memory feat — it was an undoubted success. Matthew Parris in The Times rather brilliantly captures the flavour:

Crikey

Posted in News and Op-eds | Also tagged , , , , , , and | 26 Comments

Blair misses the point on the pre-crisis deficit

Tony BlairWriting in this month’s centenary issue of the New Statesman, former prime minister Tony Blair writes:

Labour should be very robust in knocking down the notion that it “created” the crisis. In 2007/2008 the cyclically adjusted current Budget balance was under 1 per cent of GDP. Public debt was significantly below 1997. Over the whole 13 years, the debt-to-GDP ratio was better than the Conservative record from 1979-97. Of course there is a case for saying a tightening around 2005 would have been more prudent. But the effect of this

Posted in Op-eds | Also tagged | 52 Comments

Opinion: Why austerity is the wrong answer to debt

Austerity policy continues to be embraced by the UK coalition government as well as by governments across the world. This is causing predictable political unrest with large demonstrations and riots in Spain and Greece. The pain to UK households is substantial and set to increase. This is clearly socially undesirable, but more importantly is based on a technically incorrect analysis of the current economic crisis.

It is fashionable and great sport to blame bankers for the crisis, to say that the developed world has ‘lived beyond its means’ and that we ‘cannot afford’ economic growth and therefore must cut our economic output …

Posted in Op-eds | Also tagged | 32 Comments

Opinion: Liberal Democrats must not apologise for cuts

Occasionally Nick Clegg, or his speechwriters create a phrase which deserves to live on in the political lexicon long after the rest of the speech has been confined to the political dustbin. The pre-2010 General Election debates were transformed by Nick referring to the “two old parties” and asking voters to “do something different this time”.

While the phrases were memorable, they were hardly that effective. Voters did what they did the last time they faced a Labour government mired in staggering incompetence and a Tory party leadership tacking to the centre while the grassroots howled. That was in the 1970’s when voters gave Labour a kicking and the Tories the mandate of largest party in parliament but no overall majority. In 2010 the outcome was the same with Labour weakened and the Tories becoming the largest party, except that on this occasion, the Liberal Democrats, from MPs to ordinary members, voted by a huge majority for a coalition. But while the phrases used in the debates were clever and eye catching, it was another of Nick’s phrases which should help set the tone for the party in the future. Nick said there would be “savage cuts”, while Vince Cable joined his Tory and Labour colleagues in saying that post-election there would, under a Liberal Democrat government, be “cuts faster and deeper than Thatcher”.

Posted in Op-eds | Also tagged , , , , and | 38 Comments

Opinion: You can’t have ‘growth’ without ‘austerity’

Amid the current maelstrom of gossip, speculation and forecasting concerning the British economy, a number of myths have developed.

Principal among them is that the coalition’s economic plans for this parliament contained ‘only’ cuts, with no concern for achieving growth.

The issue of whether fiscal consolidation itself can be a driver of growth is one I aim to address further below, but first I want to debunk that myth.

The economic plans, outlined by the coalition in 2010, made clear that the first half of the parliament would contain the bulk of the …

Posted in Op-eds | Also tagged and | 38 Comments

Opinion: Austerity and defying the Laws of gravity

“It’s ideology, stupid.” – a subtext to the Queen’s Speech

On Five Live a bond trader says that austerity isn’t working and the government should be more expansionary. In Wake Up to Money a fund manger says that austerity has been overdone and it’s time for countries like Germany and Britain to borrow more.

Yet on Tuesday’s Today programme, David Laws continued to advocate austerity.

It is more and more apparent that ‘economics’ is being used to serve the ideology of a smaller State, damning the idea that the State should have different responsibilities at different times, especially when the private sector is …

Posted in Op-eds | Also tagged , , and | 31 Comments
Advert



Recent Comments

  • User AvatarTonyH 20th Jul - 11:32pm
    Here is the poll. I total agree with Paul - it's nice to see us so far ahead but this is very far from over....
  • User AvatarPaul Barker 20th Jul - 11:25pm
    The Poll is great news but it will allow The Tories to use the classic "Wasted Vote" argument against The Brexit Party; this is along...
  • User AvatarYeovil Yokel 20th Jul - 11:22pm
    Joseph, I don't share your heady enthusiasm for manned space travel, particularly when self-interested private corporations become involved. As for the New World, it wasn't...
  • User AvatarGaryE 20th Jul - 10:10pm
    An Opinion Poll tonight puts Jane 15% ahead of the Conservatives...
  • User Avatarinnocent Bystander 20th Jul - 9:01pm
    Joe, Many thanks again for your efforts and I downloaded, and read through tear stained eyes, as much of the 5MB as I could stand....
  • User AvatarJames Pugh 20th Jul - 7:18pm
    @John Marriott """"I vividly remember the problems we had on our local District Council with a paper candidate, who got elected, and who struggled, because...