The following was written by @PunkSunflower
The Fiscal Charter
In a little known piece of legislation – Budget Responsibility & National Audit Act 2011 – a legal requirement to create a “Charter for Budget responsibility” was founded. The details of the act sound reasonable and innocuous: “It provides a statutory footing for the already-sstablished Office for Budget Responsibility, and requires the treasury to set out its approach to fiscal policy in a Charter for Budget Responsibility.”
That is until you look a little closer.
What is this Office for budget responsibility?
A cursory search states it is an independent organisation. Yet even a Financial Times article debunks it’s claims of independence.
A truly independent organisation assisting the government with budget forecasts would be a great thing, but this isn’t what we have, we have an official sounding organisation rubber-stamping government policy and giving it the veneer of economic authority.
John McDonnell caused a furore across the media on Tuesday when he committed what was described as a U-turn on his support for the charter. The media described this in a myriad of ways: The Labour Party was anti-deficit reduction and the party was in a shambles. This view not helped by Ben Bradshaw’s public criticism.
What much of the media failed to report is that this years Charter included a clause that makes it illegal for the government to borrow to fund public investment that could create real economic growth.
The same kind of public investment that softened The Great Depression. During the previous coalition government no such clause existed. So why would any government want to tie it’s hands in such a fashion that prevents it adapting monetary policy to suit the economic climate?
Only a government that has adopted running a surplus as an ideological stance in order to reduce the size of the State.
The IMF projects That Greece and Portugal will be spending a larger percentage of GDP on public services. This is not a league table we can be proud of.
Public service spending includes everything that a modern progressive country relies on to create future generations of well-adapted, intelligent contributive citizens.
Admittedly the Labour Party has a shambolic PR style, but I’m willing to allow that #anewkindofpolitics takes some acclimatising to, and it’s not helped by some MPs deciding that every mishap in a new system must immediately be shared with the media, Twitter, in fact anyone who will listen.
Maybe debating the policies doesn’t garner as many ReTweets? I suppose we should be glad that they are interacting with the electorate?
One thing to be glad about is that despite the various responses of individual MPs, the Labour Party administration machine sent a clear message to all members by email and one that needs sharing with the wider UK populace:
There is no reputable economist currently advocating a budget surplus as either desirable or beneficial. I could provide an endless list of economists who would baffle us with financial data, but my favourite link is this:
If we want a modern NHS, excellent schools, a functioning Police force, comfortable pensioners, and a welfare safety net that protects in times of distress, we need to question:
Will this Fiscal Charter ensure that?
After World War II we created the NHS and built the welfare state. Austerity is a sham
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