I had been on the point of questioning the fiscal black hole hanging over us when a report emerged from a think tank of economists also questioning the figures.
Those of you who use an accountant to present your finances to the Receiver of Revenue must always question how, to a layman the income and expenditure can be legally manipulated to present a different picture to your common sense. How that income stream is generated or which bracket to enclose a particular expenditure around is a potent mix of fiscal assumptions, deduct this, add on that and the outcome becomes a blur.
The nations balance sheet is a many coloured pallet and very much dependent on how it’s perceived by our overseas lenders and it puzzled me that in the short space of time Liz Truss was in power we went from ‘good boy’ to ‘bad boy’ almost overnight.
The machinery of state continued to turn, the widgets continued flow, people went to work but suddenly it wasn’t enough.
The fiscal crisis brought to a standstill the nation and like the pandemic allowed us to stagger on like a boxer receiving a sucker punch. The effect of the disruption of gas from Russia, an event which could have been long foreseen because the invasion of the Ukraine has been on the books for decades and was simply another destabiliser to the cosy global economy. But these events didn’t broadcast the dire straights we were in, printing money when ever we were short (quantitive easing) not investing in projects which could have instilled confidence, not only in our own people but in the world economies as a whole. It wasn’t until Liz Truss and Kwasi Kwarteng took us on a financial neoliberal helter-skelter, placing their trust in the Market, whilst planning to dismember much of the Welfare State and also the unique social and economic pact it holds on the UK population.
The Market was spooked whilst, in its heart of heart it liked much of their plan but knew it was politically unsafe and said no. All this though didn’t change the composition of the financial books, the red and blue ink was still there but suddenly the taps on credit were turned off, confidence was gone and the pack of cards which supports international finance came tumbling down. It is so reminiscent of the financial crash of 2008 where it was a glitch in bankers confidence that caused the overnight position of Lehman Brothers to be rejected and everyone shut up their financial swap shop.
Our indebtedness and our ability to pay our debt is only questioned in parenthesis, the mechanisms were and are there to shuffle the Monopoly Board around, you roll the dice and sell off Hyde Park, (or at least the bits not owned by the Russian oligarchs) and with a change on the tiller financial health is qualitatively resumed but with even more red ink. Unfortunately theirs is another game afoot, a game which has been in the long grass since Thatcher, ‘the dismemberment of our Welfare State’.
The mantra of low taxes “keep the money in your own pocket” has some merit but what of the discipline required to put money aside to provide for a rainy day, the police, the nurses and doctors, the humble household refuse collector not to mention the teachers and the administrators who guide us through this labyrinth of modern living. The nature of people in general doesn’t give me much faith that they will stump up for a service given the option not to and it’s sensibly left to a central authority, paid for through taxes to do the job for us but if you are not a user of those services and prefer to rely on the private contractor, Eton College to school the kids, Bupa medical insurance to provide the doctor, security firms to provide your security, that only leaves the refuse collection guy and when push comes to shove you can hire someone to take the bags to the dump.
The Welfare State was designed to protect the sick and unemployed, not act as a State support for those employers who plead that their profit is too low for the business to survive without paying their employees a wage below the cost of living and therefore have to rely on the taxman, (you and I), to support these businesses by all kinds of ingenious support mechanisms. We support the rental market, we pay subsidies to the farmers to offset the low prices the supermarkets pay and so subsidise us at the checkout. We top up the minimum wage, acknowledging it’s not enough by providing free school meals, free prescriptions and subsidies for many essentials all now paid for by the state.
The State has its fingers in all those transactions whilst still failing to address the shortfall in the minimal tax it collects from the profit and dividends. We have in effect a Ponzi scheme where the State becomes a non for profit shareholder to thousands upon thousands of businesses through the misuse of institutions like the Welfare State acting as lender of last resort. It’s a scam deliberately engendered to empower the Tory rich but it also attracts those befuddled, so called “red wall voters” who feel they have an affinity with the scam. To wear a blue rosette is apparently to wear a badge of exclusivity, even as you negotiate the broken paving and potholes outside your council house.
It’s a funny old world !!
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