Michael Meacher MP

A compass survey has found that Britain tofay has the highest levels of personal debt in the world – a staggering £1,460bn, equal to the entire economic worth of all the products and services that Britain produces in a year.    But the levels of indebtedness become so high that debtors accept, or are forced into, any deal with private loan sharks that will roll over their debts for a few weeks or months, even though this will only make things much worse within a very short time.   When the Bank of England base rate is at the rock-bottom rate of 0.5%, loan and credit companies have been found exploiting victims with rates as high as 2500%!   So what should be done? (more…)

The chances of a double-dip recession are growing every day, and are now more than 50-50 likely.   The ONS has just announced that the 2008-9 meltdown drained £22bn out of the economy, forced up unemployment by hundreds of thousands, and with a 6.4% slump in UK output was far worse than 5.3% in the Eurozone and 3.8% in the US.   The 2.6% pre-budget growth forecast for 2011 was cut post-budget by the OBR to 2.3%, and now has been lowered further still by the IMF to just 2.1%.   The faltering rise in UK output in the spring seems to have halted, and the rise in house prices has petered out or even fallen.   The key engines of growth – household spending (even before the rise in VAT) and exports – are both down.   So what is Osborne’s response? (more…)

Two big structural changes in the 1980s launched by its Tory predecessor are now coming back to haunt this Tory government.   Thatcher thought that the abolition of exchange controls in 1979 together with screwing down the trade unions in the vice of anti-union legislation throughout the 1980s would consolidate the market capitalism she so much cherished as well as crushing any working class threat to her own class dominance.   For a time they did have such an effect.   But now their long-term effects look very different and are undermining the very system she fought so hard to protect. (more…)

Last week it was £6.5bn cuts announced by Danny Alexander (the former PR chief for the Cairngorms), yesterday another tranche of £1.5bn cuts from him, pepped up by Michael Gove’s scrapping 715 new school-building schemes (including 8 in my own constituency) in order to make way for his so-called ‘free schools’ and academies.    This is just one tiny part of the additional Tory public spending cuts of £32bn a year by 2014-5 which will be brought about by slashing Government departmental budgets by a zany 25%. (more…)

What a crisis!   Bank profits + 20%, public spending – 25% (might it be – 40%?).   The nation (or at least the government) seems to have forgotten about ‘moral hazard’ – that if people aren’t punished or properly brought to book for their bad bahaviour, they may draw the lesson that they can do it again with impunity.   The City of London is certainly an immoral place, but we should hardly encourage it – yet that’s exactly what the government’s doing.   And it’s not just an abuse of morality, it’s hard-headed economics that is being abused, in two clear ways. (more…)

We have now just been told by the Treasury, with typical PR chutzpah, that government departments should prepare cuts, not just of 25% which is itself unprecedented, but of 40% which would be insane.   No doubt this is, in the way politicians usually manipulate bad news ahead of the event, to make people think, when the final tally comes out rather less, that the cuts were not really as bad as all that.   It’s also of course to open up a broader range of options for cuts – just in case the opportunity offers.

Worst of all, it’s keeping up the propaganda blitz driving us down the track of cuts inevitability.   Whilst Blair in 1997 had a once-in-a-century chance of radical reform to change the face of Britain – and blew it – the Tories in 2010 have a once-in-a-century chance of turning Britain back to its conservative past, and are grabbing it with both hands.   So who will now stand up for the real Britain? (more…)

Nobody emerges well from the heated exchanges at PMQ yesterday in the Commons.   The Guardian that morning had argued the Treasury estimated that the Budget would cost 1.3m jobs.   In the ensuing mele’e Cameron responded to Harriet Harman’s taunt in two ways by claiming that (a) “unemployment will be falling during this Parliament” (words that he may well come to rue) and (b) the rise in unemployment would have been worse under Labour.   He is vulnerable on both counts. (more…)

The G20 was a pretty listless affair (unlike the concurrent Bloomfontein debacle), with world leaders opting to go their own way, the deficit hawks in the ascendant, and no significant change agreed at all.   International settlement of the world’s most pressing problems is becoming ever weaker – nothing relevant decided at Copenhagen on climate change, nor on the Doha round of trade talks, nor at Basel III on capital reserves for the banks.   Now   Toronto adds to the vacuous list of politicos’ photo opportunities.

The obvious reason of course is self-interest.   The US where recovery is stalling is cautious about belt-tightening, Europe and especially UK  and Germany emphasise the risk of sovereign debt crisis more than a double-dip recession, while Asia whose banks were more resilient carp at paying any  bank levy because other countries’ banks were reckless.   But there is another aspect to this too which is more disturbing. (more…)

The latest study of the impact of the Budget by the Fabian Society, published today, using a plausible quantitative model of the effects of public service cuts, confirms what we suspected, namely that the poorest tenth in the population will be hit much harder – 6 times harder – than the richest tenth.   This is in no way a fair Budget and we’re not all in it together.

But that’s not the only bit of the Budget that’s being ripped up – as well as Nick Clegg’s reputation over the VAT increase.   The whole narrative of the Budget is falling apart: (more…)

This is a Budget full of untruths, half-truths and misleading statements.   It is not true, as Osborne repeatedly said, that it was unavoidable – the better option of deficit-cutting economic growth was discarded.   It is not true that the balance between spending cuts and tax increases had to be 80-20 (or more precisely 77-23%) – it could easily and better have been 60-40 or even 50-50 provided the tax increases were focused on the very rich.

Nor is it true that this is a ‘fair Budget’ as Osborne keeps strenuously asserting since the VAT increase to 20% is a regressive tax which will really hurt poor households, while the new impositions on the rich – the very modest increase in CGT to only 28% (not 40%) and the bank levy raising £2bn – are just peanuts for the super-rich.   Whereas hundreds of thousands of public sector workers, the victims of the financial crash, will lose both their jobs and their incomes, the bankers and the hyper-rich who were the architects of the financial crash will lose neither their jobs nor their incomes nor their wealth.   Is this what Cameron/Osborne mean by our being all in it together? (more…)

This is one of those watershed budgets where the governing party tries, not simply to make budgetary adjustments to the nation’s finances, but to change profoundly the ideological underpinnings of the State itself.   But the whole project is built on a string of fundamental myths which give an almost surrealistic atmosphere to today’s proceedings.   Here are the main myths.

1  The financial crash and economic downturn have been caused by Big Government, not by the markets,

2  The budget deficit is out of control, and if not brought rapidly under control it will lead to disaster like the Greek collapse,

3  Excessive public spending is the central cause of the problem, and needs to be drastically cut back,

4  If the public sector is cut back to a much smaller size, the suppressed private sector will emerge to fill the space as the engine of sustainable expansion,

5  Balanced budgets are the right way to run the economy, like balanced household budgets, and the only way to produce stable prices,

6  The precedent of other countries, like Canada, show that harsh cuts, however painful, are the quickest and most effective way to generate strong growth thereafter.

These ideas have been insidiously and relentlessly imprinted on the nation’s consciousness over the last weeks and months to lay the foundations for today’s measures.   Yet every one of these prescriptions is utterly wrong.   This is why. (more…)

There are 3 key criteria for judging tomorrow’s Budget.   One is the composition of measures for reducing the £155bn deficit.   The emphasis of pre-Budget leaking has been heavily on public spending cuts, much more moderately (20% as opposed to 80%) on tax increases, and no reference at all to economic growth.   You wouldn’t guess it from the PR softening-up process, but the latter is actually the most important of the three options.   Here’s why. (more…)

As the Budget approaches, the first evidence of the approaching cataclysm has already been delivered deadpan by a struggling Danny Alexander in the Commons 3 days ago.   But the scale of it has not sunk in.   Twelve projects were chopped with a total lifetime cost of £1.9bn, plus a further dozen suspended with a total lifetime cost of £8.5bn.

Two cutbacks in physical assets stand out.   One is the chopping of the Sheffield Forgemasters International in order to save £80m, but at the cost of having to import foreign plant and equipment to build the new nuclear reactors on which the Government (with the Liberals again conceding) has set its heart.   The other is shutting a hospital in the North-East at Hartlepool in order to save £450m.   (more…)

The prophets of doom are now lining up.   The OECD, the Governor of the Bank of England and the G20 are now all  cheerleading the drive for fiscal conservatism.   Sir Alan Budd, the Head of the new Office of Budget Responsibility, is today announcing that UK economic growth is expected to be much less than Alistair Darling’s estimate of 3-3.5% in his last Budget, perhaps 2%, hence the greater need for big and immediate spending cuts.   The idea that the most drastic public expenditure cuts for a generation are now necessary and inevitable has become the conventional wisdom.   And it is wrong, wrong, wrong, as history demonstrates unmistakeably. (more…)

The economic skies have rarely looked darker.   The determination of the coalition government to press ahead with major spending cuts this year (assuming that the appointment of the inexperienced Danny Alexander as Chief Secretary doesn’t change the direction of policy) looks more dangerous by the day, given how the international economic environment is steadily worsening.

The growing contagion in the Eurozone directly threatens the UK recovery even though (thankfully) we are not members of it.   Some 60% of UK exports go to the EU, including 50% to the Eurozone.   If the Eurozone breaks up – an increasing likelihood – the Tory Little Englanders won’t get the economic common market of their dreams, but a collapsing system of debt default, competitive devaluations, and widespread stagnation.   A significant loss of UK export markets would undermine bond-holders’ confidence that the UK, locked in recession, could soon escape the vicious spiral when caught between rising debt charges and deepening recession. (more…)