The UK does not have a debt crisis. Our debt is only around 60% of the annual value of the UK economy, or GDP. The UK’s debt was over 100% of GDP for every year between 1918 and 1963. The UK has £9 trillion of wealth, while our total debt is about £850 million. It’s like panicking about owing someone 95p when you have £10 in your pocket.
There is a problem that we are spending more than we are receiving in revenue. This is the deficit. No one denies there is a deficit. How to close the deficit is where we disagree.
The Tory and Lib Dem coalition says there must be savage cuts to public services and jobs. This is the same strategy that has failed in Greece and Ireland.
It’s like the medieval quacks who used to keep cutting away the infected parts of the body – and then they wondered why the patient died. The medical profession has learned to treat the problem not just to hack away. Some economists and politicians need to learn the same lesson too.
Labour has to offer an alternative to the failed policies of this Cabinet of millionaires. That alternative cannot be based on the demands of the City but on the demands of people: for jobs, decent pay, fair pensions and good public services.
Our economy has to shift away from its dangerous over-reliance on a deregulated and risky finance sector. We need state-controlled banks that act and invest in the public interest – not investing in what produces the highest returns for an already super-rich elite, but what benefits our communities.
Did we nationalise the banks in the 2008/09 bailouts or did we just privatise public money? If we allow the same bankers to run our banks and our economy again, how can we reduce inequality, how can we get investment in jobs, and how can we stop the tax avoidance schemes that deprive us of the revenue to invest in decent public services and welfare for all.
The LRC supports the ‘One Million Climate Jobs Now’ pamphlet: a costed programme to create jobs and invest in industry that can also transform our economy to environmental sustainability.
Above all we need an economy that operates in the public interest. If the mass people’s party is not in favour of this it has lost its way.
This text was prepared for the LRC's bulletin for Labour Party conference 2011.