March 2009? It's Too Late

Action Now

We are told that Alistair Darling is considering further action to end the recession - to be included in his budget statement in March. Why wait until March? It is obvious that people need help, and jobs are needed, NOW.

There is no case for delay. There is much uncertainty about: one certainty is that it is impossible to give too much help to struggling people, or to create too many jobs.

The Banks

In dealing with the banking crisis the government has done only half a job. We all agree we need a banking system. But we need a system which serves the people, not bankers and shareholders.

The banks owned by the taxpayer – Bradford and Bingley, Northern Rock, Royal Bank of Scotland (along with the Post Office) must be converted to a People’s banking system.

Instead of state control through nationalisation, which the government does not like, these banks should be established as Mutual Societies. They would then be owned by their members, which was the position of Bradford and Bingley and Northern Rock before the stupid Thatcher policy allowed them to convert to banks.

In the re-organisation, the commercial bits of RBS should be separated from the domestic bits. It could then operate as a separate company to take the lead in implementing government policies for the commercial sector.

The message from anyone (which appears to include government ministers) opposed to these proposals is that such matters are best left to the capitalist financial markets: this position is obviously out of touch with reality.

Action on Unemployment and Poverty

Some government ministers have made vague noises about measures taken creating a fairer society, as well as ending the recession. This is not true in any significant sense of the measures taken so far. Vague statements about the borrowing being repaid from ‘government receipts in the upturn’ are not good enough.

The vagueness gives some creditability to the Tory’s claim that the borrowing is irresponsible. It is not the borrowing, so essential to ending the recession, that is irresponsible but the vagueness on repayment.

A package to stimulate the economy at the same time (now) as President Obama’s will be much more effective than waiting until March. It should be more ambitious than the November £20 Billion: a £100 Billion, at least, but with a convincing strategy on repayment.

The priorities for the £100 Billion are to:

(i) take at least one million out of income tax brackets and increase allowances, including pensions;

(ii) provide finance for local authorities to support families unable to pay their mortgages (either by offering easier mortgage repayments, or renting arrangements);

(iii) create jobs, especially in the sphere of green energy.



Repayment of the £100 Billion Borrowing

A convincing repayment strategy, over a 5 year period, is aim to acquire the finance from:

(i) cuts in defence expenditure, where £50 Billion could be found (including £20 Billion from abandoning Trident);

(ii) Progressively higher tax rates for incomes over £80,000, and measures to prevent tax avoidance;

(iii) Windfall taxes on excessive company profits and, again, steps to prevent tax avoidance.

It is only with a strategy along these lines that movement towards a fairer society will be convincing. Until such a strategy is launched voters will continue to believe that government is on the side of bankers, not the people.

The Brown Government Must Govern

Help for Small Businesses

The help for small businesses announced today (14/1/09) must be welcomed, mainly because it will keep a few workers in jobs. But, regretably, it is a much smaller step than is needed.

While it would be a mistake to rely on the gloom and doom predictions of experts (almost all of whom got it wrong last year), unless we have government action on a much larger scale it is clear that thousands more will lose their jobs this year.

In my last Blog (Who Runs the Country?) I argued that the government, not bankers or financiers, must be seen to govern. The Brown government must get ahead of events and take action on a much larger scale. There is no danger whatever that too many jobs would be saved or created.

Tackle Inequality

There are claims by ministers that the action being taken aims to create a stronger economy and a fairer society. But, as I pointed out in an earlier Blog (Gloom and Doom: Kick It Out), there is a reluctance to tackle the unfairness issue.

A great deal more government spending (and, in the short term, borrowing) is required. However, the Conservative Opposition must not be allowed to get away with their 'saddling of future generations with debt' argument. The scale of national debt (incidentally a much lower % than other G7 countries) is the result of allowing the wealthy to keep too much money in their pockets or boardroom coffers.

The answer is to take action to demonstrate that the repayment will be from policies which (i) create a much fairer society and (ii) end damaging military intervention across the world. In other words, the money must come from wealthy individuals (eg the bonus gang); companies with excessive profits; drastic cuts in expenditure on so-called defence.

Intervention in, for example, Iraq and Afghanistan, and investment in Trident, have nothing to do with defence. They are to do with illusions on our world role, and individuals' world leader aspirations.

World Leadership

The £ Billions saved from the defence budget could not only repay debt but also make a major contribution to eradication of world poverty. This is where we should aspire to world leadership.

Urgent Action to End Recession

A continuing recession throughout 2009 is inevitable only if the government fails to act decisively NOW.

The predictions of the majority of experts for 2008 were wildly wrong. For at least half the year they failed to grasp what was happening - apart from the honourable exception, David Blanchflower, a lone voice on the Bank of England's Monetary Policy Committee.

The government was slow to act (it took over four months to deal with Northern Rock), and the Bank of England even slower. The failures of the high street banks, and the tardiness of the government and the Bank of England, are the reasons there are now predictions of up to another million unemployed in 2009.

This must not be allowed to happen. All three owe it to us to act, urgently and decisively, in January 2009.

(i) Banks The banks must move to a reasonable level of lending to businesses and individuals - if necessary as a result of nationalisation. In any case, the government already controls (and, therefore, can act directly with) Northern Rock, Bradly and Bingley, Royal Bank of Scotland, the Post Office.

The freeing up of credit is urgent to keep people in jobs and in their houses.

(ii) The Bank of England Apart from further cuts in interest rates, which are expected, the Bank of England must also make significant funds available to support lending by the the high street banks.

(iii) The Government The government must ensure that (i) and (ii) happen quickly. Gordon Brown and Alastair Darling must show the same urgency when people's jobs are collapsing as they did when the banks were in danger of collapse.

The new USA President is, we understand, poised to introduce an economic recovery package of around £700 Billion (perhaps more). The UK must act at the same time, with at least £50 Billion - to reduce taxes for the lower paid, and to increase benefits for families and pensioners.

Obviously, this will mean additional borrowing in the short term but it is sensible to show the means of repayment. The repayment strategy should include:

(a) closing tax loopholes used by companies and the rich £20 Billion
(the trade union UNITE estimates £30 Billion could be acquired);

(b) a higher percentage tax on higher income earners £5 Billion
(over £100,000 a year);

(c) expenditure cuts, mainly defence £25 Billion

Without prompt action along these lines, no significant number of jobs will be saved.