Is the high level of Government debt a justification for austerity?

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In the piece posted below, Henry Stewart exposes Osborne’s sleight of hand by using the high level of government debt to justify his cuts – the debt that has grown under Osborne’s stewardship from £960 billion in April 2010, just before the coalition government was elected, to £1.5 trillion five years later.  Nevertheless…

UK government interest payments at lowest since war

By Henry Stewart : @happyhenry

Government debt was, in 2010 and 2015, a key element in the general election. The high level of debt is the justification for austerity. Politicians on the right and left have explained that the high cost of servicing the debt prevent spending on health, education and other areas.

The natural assumption is that this has been such a key issue in 2010 and 2015 because the cost of interest payments on the debts were particular high in those years. An analysis of government statistics reveals that the opposite is the case. The cost of interest payments were, proportionately, at their lowest levels since the war in the years 2010 and 2015.

UK Interest Payments lowest as % of government spending

There are two ways of comparing the cost of interest payments: as a percentage of overall government spending or a percentage of UK GDP. Interest payments were 4.3% of government spending in 2010 and 4.9% in 2015. As the graph below shows, the level was higher in all other post-war years. At the end of the previous Conservative government, in 1997, interest payments represented 9.7% of government spending.

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UK Interest payments lowest as % of GDP

UK interest payments are also at their lowest in terms of proportion of GDP. In 2010 the figure was a post-war low of 1.7%. In 2015 the figure was 1.8%, equal lowest with the years 2003 and 2004. In this case the figure at the end of the last Conservative government in 1997 was 3.3%

A key reason for the low cost of interest payments is clearly the low interest rates at which money can currently be borrowed. However, as many economists have pointed out, the low interest rates make this the best time since the war to invest in the public infrastructure rather than cut back.

And if the main problem with debt is the cost of servicing it, why has this only become an issue when that cost is at a post-war low?

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These figures are taken directly from the PSF (Public Sector Finances) aggregates databank: http://budgetresponsibility.independent.gov.uk/data/

Contact Details Henry Stewart can be contacted on henry@happy.co.uk,

or on Twitter: @happyhenry

Editor’s note:

William Keegan wrote in the Guardian, October 2015:

‘George Osborne is what is known in the trade as a “chancer”. Chancers often get found out. William Hill has made the chancellor hot favourite to succeed David Cameron. We shall see. The wider implications of his unnecessary policy of austerity are gradually being brought home to the middle classes and all those middle-England voters whom the new leaders of the Labour party are accused of ignoring. The “cuts” are affecting surgeons, GP surgeries, local authority social services for the old and the infirm, and reaching into many other corners of everyday life.’

 

 

John McDonnell at The Peoples Assembly Against Austerity

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Targets should be to tackle homelessness, food banks, joblessness, withdrawal of social care, climate change not GDP which just measures how much wealth has moved to the top.

 

John McDonnell MP Shadow Chancellor The Peoples Assembly Against Austerity 05 12 15

A party divided by ?

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What exactly is it that the 4.5% MPs* disagree with Jeremy Corbyn about?   I mean which of his domestic policies?   I have to say that for all their daily media attacks, I’m still none the wiser but I defy them to disagree in principal with Jeremy Corbyn’s speech… otherwise, why on earth did they join the LP and not the Conservatives?

 

Liverpool July 2015

(What’s more Jeremy Corbyn is the sort of human being who’ll retweet about a missing cat)

4.5% MPs refers to those MPs who supported Liz Kendall’s candidature for the leadership – 4.5% is the % of the membership who voted for her.

Doesn’t anyone remember ‘The Power of Nightmares’?

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The Power of Nightmares, subtitled The Rise of the Politics of Fear, written and produced by Adam Curtis, was a BBC documentary film series broadcast in 2004.

The films compare the rise of the American Neo-Conservative movement and the radical Islamist movement, making comparisons on their origins and noting strong similarities between the two. More controversially, it argues that the threat of radical Islamism as a massive, sinister organised force of destruction, specifically in the form of al-Qaeda, is in fact a myth perpetrated by politicians in many countries—and particularly American Neo-Conservatives—in an attempt to unite and inspire their people following the failure of earlier, more utopian ideologies.

Nafeez Mosaddeq Ahmed charts the similar processes operating in the current instalment of the so-called ‘War on Terror’ – the threat of ISIS.  His article (16.11.15), posted on openDemocracy, is an extremely important read given the UK Government’s determination to get involved in the bombing.   As Nafeez warns of the intention behind the latest spate of atrocities which culminated in Paris:

The goal, of course, is to inflict trauma, fear, paranoia, suspicion, panic and terror – but there is a particularly twisted logic as part of this continuum of violence, which is to draw the western world into an apocalyptic civilizational Armageddon with ‘Islam.’

Below, I copy and paste Nafeez’ conclusion to ‘ISIS want to destroy the ‘grey zone’.  Here’s how we defend it’, but I recommend that you read the piece in its entirety:

All this calls for a complete re-think of our approach to terrorism. We require, urgently, an international public inquiry into the colossal failure of the strategies deployed in the ‘war on terror.’

How has over $5 trillion succeeded only in permitting an extremist terror-state, to conquer a third of Iraq and Syria, while carrying out a series of assaults on cities across the region and in the heart of Europe?

The re-assessment must accompany concrete measures, now.

First and foremost, our alliances with terror-sponsoring dictatorships across the Muslim world must end. All the talk of making difficult decisions is meaningless if we would rather sacrifice civil liberties instead of sacrificing profit-oriented investments in brutal autocracies like Saudi Arabia, which have exploited western dependence on its oil resources to export Islamist extremism around the world.

Addressing those alliances means taking decisive action to enforce punitive measures in terms of the financing of Islamist militants, the facilitation of black-market ISIS oil sales, and the export of narrow extremist ideologies. Without this, military experts can give as much lip-service to ‘draining the swamp’ as they like – it means nothing if we think draining it means using a few buckets to fling out the mud while our allies pour gallons back in.

Secondly, in Syria, efforts to find a political resolution to the conflict must ramp up. So far, neither the US nor Russia, driven by their own narrow geopolitical concerns, have done very much to destroy ISIS strongholds. The gung-ho entry of Russia into the conflict has only served to unify the most extreme jihadists and vindicate ISIS’s victim-bating claim to be a ‘David’ fighting the ‘Goliath’ of a homogenous “kafir” (infidel) crusader-axis.

Every military escalation has been followed by a further escalation, because ISIS itself was incubated in the militarized nightmare of occupied Iraq and Assad-bombed Syria.

Thirdly, and relatedly, all military support to all actors in the Syria conflict must end. Western powers can pressurise their Gulf and Turkish state allies to end support to rebel groups, which is now so out of control that there is no longer any prospect of preventing such support from being diverted to ISIS; while Russia and Iran can withdraw their aid to Assad’s bankrupt regime. If Russia and France genuinely wish to avoid further blowback against their own citizens, they would throw their weight behind such measures with a view to force regional actors to come to the negotiating table.

Fourthly, it must be recognized that contrary to the exhortations of fanatics like Douglas Murray, talk of ‘solidarity’ is not merely empty sloganeering. The imperative now is for citizens around the world to work together to safeguard what ISIS calls the “grey zone” – the arena of co-existence where people of all faith and none remain unified on the simple principles of our common humanity. Despite the protestations of extremists, the reality is that the vast majority of secular humanists and religious believers accept and embrace this heritage of mutual acceptance.

But safeguarding the “grey zone” means more than bandying about the word ‘solidarity’ – it means enacting citizen-solidarity by firmly rejecting efforts by both ISIS and the far-right to exploit terrorism as a way to transform our societies into militarized police-states where dissent is demonized, the Other is feared, and mutual paranoia is the name of the game. That, in turn, means working together to advance and innovate the institutions, checks and balances, and accountability necessary to maintain and improve the framework of free, open and diverse societies.

It is not just ISIS that would benefit from a dangerous shift to the contrary.

Incumbent political elites keen to avoid accountability for a decade and a half of failure will use heightened public anxiety to push through more of the same. They will seek to avoid hard questions about past failures, while casting suspicion everywhere except the state itself, with a view to continue business-as-usual. And in similar vein, the military-industrial complex, whose profits have come to depend symbiotically on perpetual war, wants to avoid awkward questions about lack of transparency and corrupt relationships with governments. They would much rather keep the trillion-dollar gravy train flowing out of the public purse.

Milan Kundera — ‘The struggle of man against power is the struggle of memory against forgetting’

Let’s not forget that we were swept into the invasion of Iraq on false pretences, with disastrous results for the peoples of the region.  Let’s fight even harder to stop the political elites in their gung-ho desire to bomb.  Let’s argue for the alternatives suggested by Nafeez Ahmed.  Jeremy Corbyn is certainly on board… but it seems that some of the Parliamentary Labour Party, like Mike Gapes and John Woodcock, are minded to vote with David Cameron and the Conservatives.  It is up to the LP membership and all right-minded people to challenge their decision, and so block Cameron’s futile plan to bomb a solution on the Middle East.

 

Further recommended:

Welcome to the 21st century – The Crisis of Civilisation Nafeez Ahmed’s 2011 “Crisis of civilization” film  (80 minutes)

The Power of Nightmares  Adam Curtice’s three part BBC documentary