Last week I spoke in the House of Lords by Zoom about the need to protect people from mass homelessness. I stressed the need for the UK to keep up with the other G7 nations who continue to support their economies. The UK response has been to limit the availability of support and hope for a revival to come out of the market.
The International Monetary Fund (IMF), usually the purveyors of austerity to solve economic problems, is advocating “spend, spend, spend, but keep the receipts”. Or this is what Kristalina Georgieva, managing director of the fund, has advocated.
Boris Johnson’s government needs to carry on propping up the economy for as long as is necessary. Removing the props anytime soon would be disastrous for our economy and therefore likely to destroy any attempt to ride out the recession. In fact it would cause a recession and with that even more millions of people would be jobless and therefore homeless.
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I asked the minister answering my question to go to Johnson and plead for him to make sure the “props of recovery” are not removed too early. Else our children and their children – we are all someone’s child – will be lumbered with a destroyed society. And we should follow the example of the other G7 countries and support the economy back onto its feet.
The minister replied that the government had brought untold and enormous levels of support to the economy. Which we cannot deny. But that we could not just spend, for that would in fact mean that our children’s children’s children would end up having to pay it all back.
In other words, we cannot impoverish the future because today has problems.
It is the job of the minister to defend the record of the government. A minister would not remain in place long if they agreed with any old critique of government performance. But the argument, which will be and is thrown around about impoverishing future generations, does not hold water.
“Whatever it takes” should be the strategy of the government, and we should all encourage it to go down that path
Speaking as part of the generation that was charged with paying off the cost of the Second World War, the minister’s argument does not hold up. The war debt was finally paid off on December 31, 2006 under the Blair administration.
Imagine if the argument that we couldn’t afford it and couldn’t lumber future generations with debt had occurred in 1940. We would have had to cancel the war and allow the Nazis to carry on subduing everyone in its way. We could well be in a Nazified world today, if we did not ‘encumber,’ ‘lumber’ the future with debts from the past.
If we do not follow the example of other economies then there will be precious left of the economy after we come out of Covid-19. And there’d be such high levels of instability, crime, mental illness and poverty that pre-pandemic times would be our golden past.
“Whatever it takes” should be the strategy of the government, and we should all encourage it to go down that path.
I do not envy the government’s situation. Caught as we are in the middle of a Brexit exit, and with the most debilitating virus mankind has ever faced – certainly in written history – it’s difficult to keep the show on the road. With so much instruction and advice raining down from all quarters, thanks to social media and a supposedly expert-laden public and press, you can’t move for advice.
And me saying “follow the IMF” will be added to that chorus of voices. But I am not the only one; the financial press and countless other financial experts are demanding the government look hard at the argument for supporting the props of recovery for as long as is necessary. Paying up for the past is the lot of any generation following a major change. The past always haunts the Exchequer and the ledgers of the country’s current administration. We cannot avoid that. The minister is right about not taking on unnecessary debt; but this debt is unavoidable.
Interestingly, just before Covid-19 hit, the Exchequer finally paid off the debt incurred in compensating the slave owners who were out of pocket with the ending of slavery in the British Empire in 1832. The British government of the time borrowed the £30m necessary to do this. That is how long government debt can hang around. What an alarming use of public money.
But back to Covid-19 today: this is the most honourable debt you can pass down to another generation, similar to the great debt thrown up by the Second World War. It was essential to incur the debt to stop the Nazification of all Europe and probably beyond. Imagine if Great Britain – as it was then called – decided it couldn’t afford it; that would not be much fun for our European friends. No European Community because it was that investment that paid off for others as well as us.
Now we have to grasp with both hands, and we must all campaign for it, to keep the show on the road economically, those precious props to recovery that the government seems reluctant to proffer.
John Bird is the founder and Editor in Chief of The Big Issue. @johnbirdswords