Economics

Economic Speech

In July the Government borrowed 600m to bridge the gap between what Osborne had forecast the income would be and the outgoings, he got it wrong AGAIN.

In February 2010 he described his policy as ‘tight fiscal policy, supportive monetary policy and counter cyclical financial regulation’ All very clear and concise but as time has proved totally and completely wrong and failed.

What this adherence to a failed policy means for the Country is that we are facing the most sustained and savage attack on our standard of living in years, with the poor inevitably facing the worst. But it’s not just the poor now even the people who always thought they were comfortably off are facing the worry of how to pay the mortgage, keep the car on the road, pay the shopping bill. I have spoken to many people in Walkley particularly women who are now finding themselves in a pay neutral situation, and facing a downturn in their income in the future. 

The cost of basic food and clothing is rising and help with childcare costs and working families tax credits are being cut the vitriolic attack on our standard of living is unremitting.

A lot of attention is given to the tax cuts for the top 1% and the other end of the scale the poor. There are a huge number of people in the middle who are finding harder to manage their finances and make ends meet.

Alfred Marshall the originator of modern economic thinking said that the role of the economist is to adapt and change. It’s a pity our current chancellor is so fixated on cut cut cut with no regard to the effect on ordinary people. He and the rest of the cabinet are fire walled by their wealth from the devastation his polices are wreaking across the country. The continuing inability of the coalition partners to have any effect on the any polices of this Government shows how ill-advised their continuing in this farrago of a coalition.

In the UK today there are millions of working age people on average incomes, many are newly self-employed, many are on short term contracts in dead end or part time jobs with few prospects. A small increase in mortgage repayments or a new pair of school shoes leaves a hole in their budget that can’t be filled.

One area of our economy is growing, is that of child poverty, the Institute for Fiscal Studies estimate that by 2020 we will have 800 000 children living in poverty. In the last two years we have seen a huge growth also in payday loans, wongaitis, people borrowing money to pay for basic housing costs.

This Government isn’t only interested in cutting the deficit they are also concerned with re-engineering peoples behavior. The introduction next year of Universal Credit is designed to  get the unemployed into work, but most people who will receive it are already in work. Work that is badly paid by employers who are more interested in boosting their profits and ensuring they avoid paying tax in this country rather than paying their workers a living wage.

Osborne is planning even more draconian welfare cuts, but this like his whole economic policy doesn’t add up. If you put money into the hands of the poor and squeezed middle they spend it as they must to keep a roof over their heads and their families fed. Investing in growth and jobs increases the tax take, it boosts GDP it takes people out of benefits. That’s all good for the economy.

The answer is to invest invest invest, speculate to accumulate, unfreeze child benefit, restore the cuts in tax credits, cut the VAT rate, build homes, support jobs with prospects, make the banks invest in small and medium businesses push for growth. 

Investment in this country isn’t just about growth it’s about justice and fairness too.