Will Government Listen?

Forget the City

The Blair governments’ strategy, which has persisted since he resigned, was to avoid upsetting the City at all costs. Favourable financial conditions (e g low taxes, the prospect of big bonuses, high returns on investment) would, it was argued, keep money flowing into London and support an expanding economy.

We now know where this strategy has landed us. Without government £ Billions, the banks would have collapsed – resulting in the collapse of the capitalist economy.

It is now clear that the position would have stabilised much more quickly if, instead of the half-cock arrangements we now have, the banks had been nationalised. The government could then have determined a level of lending (and interest rates) to save jobs and stabilise the housing market.

YouGov Poll (Guardian 9 March 2009)

This poll of Labour Party members found over 70% support for most of the measures advocated on this Blog over the past 3 months. There is support for:

A Windfall Tax on excessive company profits (e g the utilities);

Ending, or drastically reducing, bonuses;

Higher rates of tax on those earning over £100,000 a year;

Greater equality (through legislation).


The only major issue (which I regard as very important) not mentioned in the report is a large reduction of expenditure on defence.

The Budget and Economic Recovery

In 20 February Blog (Will April Be The Cruellest Month?), I predicted that there would be signs (green shoots) of the recession end April/May 2009. Significant recovery will follow, however, only if the government takes further action.

The action must include job protection/creation, taking at least a million out of tax brackets, increases in allowances and pensions - and, vitally important, a strategy for repayment of the necessary borrowing over a 5 year period.

The strategy for repaying the borrowing is a key factor in creating a fairer, and more equal, society.

My proposal, which the YouGov poll indicates would be supported by a large majority of Labour Party members (and, I believe, a majority of citizens) is for borrowing of £100 Billion to fund the above.

The repayment strategy, over a 5 year period, should be along the following lines.

Reductions of expenditure (mainly defence) £35 Billion

Windfall Taxes on Companies £25 Billion

Higher Tax Rates on Personal Income £30 Billion

A Wealth Tax £10 Billion


Without this kind of strategy, any claim that the government intends to create a fairer, and more equal, society will lack conviction.