Dear Philip Hammond, Chancellor of the Exchequer

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A letter to the Chancellor of the Exchequer from Prue Plumridge

I feel I must write to you in response to your speech at the Conservative Conference in which you referred to the medium-term challenge of dealing with the public finances so as not to burden future generations.

Aside from the fact that your government has been promising to deal with the public finances for the past seven years whilst regularly moving the goal posts for achieving it, failed Tory promises show astonishing ignorance about how the state finances work in practice.

Or, is it, perhaps, that you do know but prefer to keep the public in the dark with fake messages about household budgets, living within our financial means, paying down our debts and saving for a rainy day.

You (and George Osborne before you) have abused the trust of the public with your myths and lies about maxing out the credit card and going broke.  Neither of which can happen in a sovereign currency issuing state.  I’m sure you know that really.  In truth, this has suited the pernicious ideology of the Tory government which claimed that Labour overspent and austerity was unavoidable.  Neither was true.  But, as a result, seven years of cuts to public spending have led to rising poverty and inequality through the redrawing of welfare provision and the decimation of public services not to mention the on-going attacks on employment rights and the rise of insecure working and the gig economy.

And, all the time, while you tell us that there is no money for those services upon which we all depend from the NHS, to public infrastructure and services and local government we are witnessing the ongoing transfer of wealth into ever fewer hands and public money being poured into corporate pockets.

Admit it, Chancellor, this exercise has never been about necessity.  It has always been about ideology which can be best expressed in the words of the former head of John Lewis who said recently ‘the only way to provide good public services is to ensure a vibrant business economy’ …… which is not only neoliberal bunkum trading on the lie of discredited ‘trickle down’ but shows how this false narrative dominates the mainstream and infects public understanding.  To quote Richard Murphy from Tax Research on the NHS  (and whilst he doesn’t mention it, public services too)

there is no reason why we should not have health care in thirty years’ time, whatever that care might be…… All we have to do is decide we want it. Then we can pay for it. It will not be a matter of not affording it. It’s just a matter of setting priorities. “

Moving on to your claim that borrowing takes money from the pockets of future tax payers is plain wrong to put it bluntly.

As the economist Professor Bill Mitchell notes “Each generation chooses its own tax rates and that means that the mix of public and private sector involvement in the economy is a political choice”

In this case yours.  Government spending in the form of deficits (assuming of course a government that takes seriously its responsibility for the well-being of the nation) can work on behalf of citizens to create a healthy economy and a fairer distribution of wealth.  This not only helps today’s citizens but also creates investment in public education, public health and other infrastructure which benefits both current and future generations.  Or, of course, it can, as in the case of the Tories and already noted, represent wealth transfer to the already rich and public money leaching into private corporate pockets.  And just to be clear as I can hear you whispering but what about the printing presses, inflation and Zimbabwe I am not suggesting that deficits don’t matter – they do but not in the way you tell us they do.  The fact is that whilst governments are never revenue constrained spending will always be limited by available productive capacity and resources.  And that is what has to be managed.  It should never be about balanced budgets rather it should be about creating a balanced economy.

So, Chancellor, in conclusion, I will finish by saying that a time is coming when you will no longer be able to fool the public into believing your household budget version of the state finances which has claimed that we can’t afford public services, the NHS and the welfare safety net.  They will then understand that you made a choice to deny them the public infrastructure that ensures a healthy economy and the well-being of their families.  They will understand that you played with their lives and their survival.

It is to be hoped that in the near future you will indeed have plenty of time as a shadow minister in her majesty’s government to reflect on where the Tory party went wrong but then again you probably won’t.

Regards

Prue Plumridge

Brighton Fringe – #MMT with the one and only Prof. Bill Mitchell #Lab17

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Many of us now realise that the scares about deficits and debt are nothing more than useful devices to justify cuts and sell-offs of our public services.  Austerity is a political choice.  There was/is nothing necessary about the last 7y of Tory asset-stripping.  If you’re in Brighton for LP conference (or any other reason) come and hear Professor Bill Mitchell explain how the economy really operates.  You don’t need to be a LP member and it doesn’t cost you anything to be informed by a world class economist.

Monday 25th September, 2pm until 5pm at the Brighthelm Centre (just a few steps down from Brighton station).

What do unions think of Labour’s manifesto?

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http://www.union-news.co.uk/breaking-unions-welcome-labours-manifesto/

Unions have welcomed Labour’s election manifesto, praising it as “impressive”, a “chance for real change” and “a real opportunity to build a better Britain”.

ASLEF general secretary Mick Whelan said: “This is an exciting and progressive platform on which Labour can fight the next election. It offers people a real opportunity to help build a better Britain.

“Jeremy understands how ordinary hardworking men and women are suffering in the Conservative Age of Austerity. David Cameron, George Osborne, Theresa May and Philip Hammond have pulled off the trick of redistributing wealth from the poor to the rich – the reverse of Robin Hood! – to bail out the fat cats and bankers who caused the economic crisis of 2008.

“In contrast Jeremy wants to rebuild Britain to create a fairer, more modern society, with a more productive economy, that delivers for all the people, not just the few, and is fit for the 21st century.

“We especially welcome the promise to bring Britain’s railways back into public ownership – a policy on which ASLEF has campaigned passionately ever since John Major’s ill-starred privatisation of British Rail in 1994 – and freeze passenger fares across the network.

“This is an exciting, and sensible, socialist platform on which any of the great Labour Party leaders of the past – Keir Hardie, Clement Attlee, and Harold Wilson – would have been happy to stand. That’s why I urge people to vote Labour on 8 June and help return a Labour government to build a better Britain.”

PCS general secretary Mark Serwotka said: “Labour’s pledges to end the public sector pay cap, improve collective bargaining, repeal anti-trade union legislation and strengthen employment rights stand in stark contrast to the Conservatives’ bogus claims on workers’ rights.

“Labour’s manifesto sets out a clear commitment to many long-standing PCS industrial issues and demands, including an end to the privatisation of public services, renationalisation of public utilities and raising the pay of civil and public service workers.

“Tax reforms we have long campaigned for – including the ‘Robin Hood tax’ – offer the opportunity to ensure that those with the greatest wealth contribute more. Coupled with much-needed investment in HMRC to go after those who evade and avoid tax, these reforms will provide essential and much-needed investment in our public services.

“Plans to reform social security, including scrapping the hated Bedroom Tax, ending benefit sanctions and reinstating housing benefit for those under 21, are most welcome and signal a shift away from the policy of demonising claimants doggedly pursued by the Tories.

“Jeremy Corbyn and John McDonnell have always shown great support for PCS campaigns and our members, and their pledges are in stark contrast to what the Tories have to offer. We have been clear that our message to our members is that another Tory government would be the worst possible outcome.”

TSSA general secretary Manuel Cortes said: “This is an exciting, ambitious vision for a big-hearted, inclusive Britain that will build better lives for the many not the few. What’s not to like? Of course, as the head of transport union which has long campaigned to see rail brought back into public ownership I am delighted on behalf of TSSA members to welcome Labour’s commitment to taking back control of rail from corporate franchise holders who for too long have been able to get away with extracting profit out of our rail system without having to plough back into it in investment.

“Great news that the construction of HS2 is to be extended into Scotland as is that HS3 and Crossrail 2 will also be built. Good quality rail links are at the heart of a modern economy and today we have been not just been given the plan but the commitment to bringing every area of Britain onto 21st century track.

“This manifesto will transform Britain’s rail industry and help underpin the expansion of a high speed, high-tech economy. Our members too will be delighted at the commitment to a £10 living wage which will lift so many of their fellow workers and family members off the bread line. The commitment to house building, an industrial strategy, NHS and public services shows Labour is putting people back at the heart of British economy, committing to giving the many a wage rise. This manifesto show working people are definitely better off with Labour. Bring on June 8.”

FBU general secretary Matt Wrack said: “There are clear dividing lines for who to vote for in this election. Labour will invest in firefighters in order to keep people safe, whereas the Tories will continue to cut and decimate our service, putting public safety at risk.

“Having 3,000 more firefighters on the frontline is a promising start, and we welcome their commitment to review staffing levels across the service as a whole.

“Fire deaths have risen for the first time in 20 years since the Tories came to power, and response times to emergencies are getting slower. The service is in crisis and the Tories don’t have a plan to save it. Labour are the safe pair of hands who will deliver a properly resourced fire service to protect public safety.”

Unite general secretary Len McCluskey said: “What Labour is doing today is what Labour does best – offering real change for the many in this country. Labour will invest in our people and build a Britain that we can all be proud of.

“For those who want to see our children given a chance, to see that work really pays, that our elderly and vulnerable are no longer degraded by government policy, then the answer is to vote Labour.

“For too long, working people have been at the sharp end of Conservative cuts and disastrous economic mismanagement – and they will be again if that party takes power on 8 June. The reality of Conservative rule is that for those not protected by power and wealth, life gets tougher.

“In every aspect of life – from an affordable home to a safe NHS, from a decent education for all our kids to a living wage and a decent job – the story of the Tory party is that our communities suffer. The Labour party will put a halt to this. Under Labour, working people and their communities will stand tall again.”

UNISON general secretary Dave Prentis said: “Labour has produced a manifesto that delivers for public services. Ending the pay cap will make a huge difference for hard-pressed public sector employees. Proper investment in the NHS and social care will have a huge impact on patients and staff too.

“When the other parties unveil their manifestos later this week, they would do well to take a leaf out of Labour’s book – and stand up for public services and those who work in them.”

GMB general secretary Tim Roache said: “Labour’s manifesto is one that would practically change millions of lives. From social care, to housing, to Sure Start and our NHS – it’s a manifesto that makes sense for working people.

“It’s a manifesto about fairness and about helping real people to get by and get on in life. It’s not paying lip service to the issues people face, it’s taking them head on. The country is crying out for change. This is a manifesto that can deliver it. People need to get out there and vote for it.”

Usdaw general secretary John Hannett said: “Universal Credit will plunge far more working families into poverty, which will be almost impossible to work their way out of. We supported the initial intentions of Universal Credit, to simplify benefits and improve incentives to work.  However, severe cost cutting has turned Universal Credit into a real threat to the incomes of low-paid working families,

“Although we won the argument on the proposed massive cuts to tax credits, forcing a u-turn from the Government; those cuts are still being applied to Universal Credit and will hit millions of working families over the next 3 years. This is a ticking time bomb that will leave many working families thousands of pounds worse-off when they are transferred onto Universal Credit.

“We are looking to a Labour Government to restore the original purpose of Universal Credit, to encourage entry to and progression in work. The low work allowance and high clawback of net earnings are particular disincentives to work. There needs to be a fresh look at what Universal Credit means in practice for low and middle income earners and get this troubled project back on track to support not penalise working families.

“Whilst the Prime Minister has talked about supporting families struggling to make ends meet, only Labour has the policies to provide crucial support to help make working family incomes meet the cost of living.”

TUC general secretary Frances O’Grady said: “This is an impressive set of pledges from the Labour Party. Their commitments to improve workers’ rights and drive up wages would make a real difference to millions of workers.

“There’s clearly a growing political consensus to address issues affecting working people. Decent jobs and fair pay must top of the list for the new government.

“Nobody voted for Brexit to lose their hard-won protections at work. That is why Labour is right to protect existing rights at work, and pledge to at least match future EU rights. British workers shouldn’t miss out on rights enjoyed by other European workers.

“With one in ten workers now in insecure jobs, it’s good to see a real attempt to improve workplace rights. Banning zero-hours contracts would give nearly a million workers the certainty and security they deserve. And abolishing employment tribunal fees would make it easier for people to defend their rights at work.

“Labour rightly recognises that Britain still needs a pay rise. Wages still haven’t recovered from the financial crash, and far too many working people struggle to pay the bills.

“Increasing the minimum wage, and expanding collective bargaining coverage, are proven and effective ways to drive up stagnating pay.

“And ending artificial pay restrictions in the public sector will stop the real pay cuts for public servants after seven long years. Hard-working nurses shouldn’t be forced to turn to food banks.”

RMT general secretary Mick Cash said: “Labour’s commitment to British state ownership of our rail,  power and water, ‎as opposed to the foreign state-backed exploitation of our essential services supported by the Tories, shows that Jeremy Corbyn’s Labour is clearly fighting to protect our national interests.

“Labour’s manifesto recognises the dangers of Driver Only Operation and commits to safe and accessible railways for all.  The manifesto represents a massive boost for public transport after more than two decades of Tory privatisation and RMT welcomes this departure from the failed, profiteering model that has dragged Britain into the slow lane.”

Why the ‘Magic Money Tree’ Matters

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 On BBC Question Time, the Prime Minsiter, Theresa May told a young nurse who hasn’t had a pay rise in eight years and is trying to earn a living that there was no more money, and that there isn’t a magic money tree. (See link)

The Tories know full well, that funds are available for the UK government to use as they think fit,  as we are a sovereign state, and have our own currency which the government releases for investment. But while in 2010 they made a public  fuss about a piece of paper which was saying ‘no money left’, they knew, all along’ what they wanted to do. They used this (ill-advised) joke to add credence to their Austerity agenda which has resulted in cuts so severe it has left people disabled suicidal, people homeless, and people who are working very hard, in poverty. Yet they  wanted those funds for the few, not for the many.

Since Margaret Thatcher’s cruel government snatched our children’s milk, and did not replenish our social housing, and decimated our industry,  and yet helped itself to public assets, the media has reinforced myths about mainstream economics. It continues in 21st Century, while  today’s Tories want to finish the job by, for example, cutting Police and Army personnel, and now they want to privatise our National  Health Service.

We cannot progress in redressing this imbalance  between rich and poor until these myths are exposed for what they are – just lies!

These are myths the Tories want us to believe ( see article) They are untrue, all of them

  • The state money system operates like our own household budget
  • Government spending relies on taxation and borrowing
  • The government needs to reduce the deficit, balance the books and save for the future
  • The government must learn to live within its means
  • The government has to cut public services like the NHS, education or welfare because we can no longer afford to pay for them   

The government is forever saying it’s the ‘taxpayers’ money which funds public services, and this just is not true. The government is the source of the money, and tax a tool for resdistributing  the wealth produced by our working people.   Once we accept this concept, then  we can see that Jeremy Corbyn’s Labour Party Manifesto is not a “Chritsmas Card List”, but a costed plan to invest in our society to rebuild Britain for the many, not the few. This is something which the vast majority want to see, but are still believing the Tory myths.

The Modern Money Matters website is a good source of information 

The Magic Money Tree Exists, Modern Money Matters

“Like the elephant in the room The Tree cannot be mentioned, because then the electorate might start asking awkward questions about public services — perhaps we should have some? — and taxation — are we overtaxed for the size of government we have, given that we still have people without work?

Once you know about The Tree you might have your politicians delay a casino build and build a hospital instead. You might let the rich people keep their coins, but stop them using those coins to reserve scarce doctors and teachers for their own purposes ahead of the general population.

The Tories want to privatise everything, and Labour want to hit rich people hard with taxation sticks. There are no doubt reasons for these fetishes that psychologists would find fascinating. But they are damaging to our nation. They get in the way of doing the job.”

In 1945, a Labour Government, after the ravages of war managed to invest in our society, and the will was there to do so. I believe the will is there now, but generations who have grown up believing what the Tory press have said,  do not realise this is all possible. Here is the Magic Money Tree idea of Labour’s Manifesto. Further economic explanations can be found as Modern Monetary Theory. (These are both known as MMT).

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Let’s dispel the Tory myth, and get the MMT idea of Economics out there. Then we start the rebuild. Our society has become so divided, we need to join together in creating a society for the Many not the Few.