17th January, 2009.
This was posted on the Compass site on the 16th January.
I am shortlisted for the North West Durham Parliamentary Selection. A less likely candidate you would be hard pressed to find. I am not a local big wig and did not grow up in the constituency. I don’t have the backing of big hitters – either in the party, or in the unions. Nor am I a youthful 25-year-old, ambitious for power. No, I am far more ambitious than that.
I want the people (especially the young people) of North West Durham to have a sound and stable future. I want Britain to learn from the catastrophic debacle of the financial crisis, and ensure it never happens again. The hopes, aspirations, health, jobs, businesses and climate of Britain must not be sacrificed to pay for economic failure engineered by a small elite in the City of London.
That’s David Cameron’s plan: to deflect the terrain of political debate from the City and focus it instead on the public sector finances. Under this plan public services are targeted as the cause of the crisis; ‘balancing the budget’ the solution; and those least responsible expected to bear the long-term costs.
While the Liberal Democrats and some Labour Ministers have been lured on to this terrain, the British people as a whole are proving less gullible and malleable.
Cameron’s ‘austerity’ strategy has backfired – thanks to the intelligence and common sense of British voters.
That’s why I am standing, because British voters are looking for a resolution to this crisis that does not victimise, but compensates taxpayers; tames the perpetrators, and ensures that the crisis is not repeated.
I am standing too because I am ambitious for an effective, democratic local and national Labour campaign – using all the modern media – that encourages Labour’s core voters to join the party again. That mobilises disillusioned voters from the trade union movement, the Green movement, the NGOs and the faith organisations. A campaign that ensures that a Labour government and Labour MPs speak for, and represent the people that elected them – not the finance sector.
Then I want to help ensure that a new Labour government provides the resources and industrial framework needed to de-carbonise our economy and make our country more energy efficient. I want the people of North West Durham and their children and grandchildren to have a sound and steady economy, and a stable climate in which to live and thrive.
To achieve those ambitions we must support Gordon Brown’s determination to cut government borrowing.
Contrary to economic ‘groupthink’ cutting government borrowing is best achieved by investing in jobs, generating tax revenues, and cutting spending on unemployment benefits.
In other words by spending away the debt.
Of course that does not make sense to the economically illiterate Tories, and its anathema to many orthodox economists. But it makes sense to anyone on a first year course in economics, who understands the ‘multiplier’. To evidence my point see this chart – with data provided by the Treasury (Public finances databank, Table A10) and with thanks to my colleagues in the Green New Deal group.
This is a chart of Britain’s public debt as a share of GDP – from 1858 until 2002. (Please note the difference between the debt and deficit. The annual deficit is not a measure of the scale of government spending. It’s a measure of the annual outcome of that spending. The deficit (but not the debt) could rise because e.g. the Treasury cuts public investment, has to pay out more in benefit payments and loses tax revenues.)
Note that Britain’s debt today – as a proportion of the national cake or GDP – is about 55% and rising. It was twice that in 1858 – about 100% of GDP.
Government debt is expected to hit 70% soon. That’s largely because of the City of London bail-out which cost the government a massive £150 billion between 2007 and 2009.
In 1946 Britain’s debt was roughly 5 times what it is today – a staggering 250% of GDP.
At that point an extraordinary thing happened.
The heavily indebted Labour government began to spend – as soon as legislation was agreed by Parliament.
Labour invested in a bold and visionary project: – a publicly funded health service free at the point of use – the NHS. There was a slum clearance and housing programme. They revived the ancient universities, provided pensions and welfare to the poor. They trained ex-soldiers to become teachers.
To revive the economy, to protect the vulnerable, and to prepare the country for the threat posed by climate change – a Labour government must do the same again: invest in a Green New Deal.
What happened to the public debt in the 40s and 50s, you might ask, as a result of Clem Attlee and Hugh Dalton’s apparent extravagance and flouting of the economic orthodoxy? Did the deficit balloon, the bond markets blackmail the government, and did capitalism as we know it, go into free fall?
No. On the contrary. Look at the chart. What Lord John Maynard Keynes advised would happen, did happen. Government investment kick-started private economic activity. Tax revenues rose, expenditure on unemployment benefits fell, and government cut its borrowing, which fell dramatically as a share of GDP.
And the economy thrived.
Indeed 1945- 1971 is known in economics as ‘the Golden Age’.
The spending paid down the debt.
There was not much leakage, because ‘offshore capitalism’ – the kind of capitalism that dodges regulation and taxation – was not well established then. People in Britain were getting jobs and paying taxes in Britain – and so were employers, and businesses in which they spent their earnings.
Can a Labour government repeat this achievement, given globalisation?
I believe we can.
Labour will have to rein in the ‘offshore capitalists’ and bring them onshore. The government is already doing that, tackling abuse in its tax havens, restricting generous allowances for the wealthiest, and raising the tax rate to 50% for bank bonuses.
Next Labour must build on existing investment in infrastructure projects and mobilise a ‘carbon army’ of ‘green-collar’ jobs that cannot be outsourced. Gordon Brown’s announcement of a new round of licences to support the growing offshore wind industry was a first step in that direction.
These actions will ensure a future for the people of North West Durham, and for the British Isles as a whole. Indeed with ambition, Labour could recreate ‘the golden age’. This time based on a steady-state economy. That’s my ambition, and why I have put myself forward for the candidacy of North West Durham.