Tag Archives: investment spending

Tax to invest, or cut taxes to neglect?

The weekend media have been full again of Rishi Sunak’s promise to return to tax cuts before the next election: cutting income tax and VAT further to win over – as Conservatives hope – wavering voters. But is it possible that the majority of voters would now prefer good public services, and targeted spending on long-term projects, to tax cuts that will squeeze public services further?

Martin Wolf in the Financial Times the other week argued that ‘we have to accept higher taxes to fund health and social care’, pointing out that the UK is still a modest spender on health compared to similar states. But it’s not just health that needs investment. The ‘Levelling Up’ agenda implies a generational commitment to higher investment in education, infrastructure, and economic innovation in the UK’s poorer regions. ‘Red wall’ seats the Conservatives won in 2019 will be lost again if all that happens is a trickle of money for specific local projects.

The contradiction between Sunak’s fiscal austerity and Johnson’s and Gove’s grand ideas about levelling up is becoming the deepest fault-line within the Conservative government, and a major threat to its credibility. November’s announcement of cutbacks in investment for northern rail was greeted across the region as a betrayal of promises to promote economic revival.

Posted in Op-eds | Also tagged | 57 Comments

Same old Economic Orthodoxy

In 1997, the Labour Party inherited a balanced budget from the Tories and for well over ten years we had Gordon Brown telling us that he had got rid of the boom and bust cycle. By 2009 the deficit had ballooned to £171 billion, higher than during the recessions of the 1980s, the 1990s and even when the Labour party went to the IMF, cap in hand, in 1976 (another fine mess they got us into) put together.

Economic orthodoxy maintained by Labour and and the Tories for the last forty years or so ensures the same economic models: over reliance …

Posted in Op-eds | Also tagged | 55 Comments

Can the long-term decline in government investment spending be reversed?

Investment spending vs social security spendingIf actual government investment spending bore any relation to the amount of time politicians spent talking about it, Britain would surely have one of the highest rates of government investment in the world. In fact, for all the talk there are few signs of a reversal in one half of the most notable trend in Britain’s public finances over the last half century: the decline of government investment.

I say one half because there is another part of the trend, and it is the flip side of the same coin: the general trend of increasing spending on social security.

Posted in Op-eds | Also tagged | 25 Comments
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