Blood, Sweat, Toil and Tears Now

The potential threat facing the country is as great as the actual one was in 1940. The country needs to be roused to the challenge that faces it.

In 1940, Churchill did not offer the country ‘blood, toil, tears and sweat’ to then postpone efforts until after an election. He asked for an immediate coming together of the best sides of the nation. Today the country cannot be roused to the huge financial challenge it faces if the two main parties duck and tell us that they’ll be back once the votes are counted.

It is vital that politicians and the media move on from the bread and circus agenda of MPs’ expenses and get real. The big issue confronting the country is whether it can raise huge, unprecedented shedloads of debt.

Vince Cable and I have tabled today an Early Day Motion calling for a serious debate now, and not after the next election, on how to balance the nation’s accounts.

Both major parties are stringing the voters along, teasingly suggesting that big cuts in expenditure and tax hikes will be necessary, but neither has any intention of disclosing their plans to rational debate before the election. What both major parties overlook is that the money markets may not be compliant in a game of party politicking over the country’s future.

Even on the Government’s own figures, Britain will proportionally be trying to borrow more money to balance its accounts over the medium to long term than any other G8 country.

The markets are already showing some nervousness as the Government sets out to raise a record £220bn of loans this year. It costs more, for example, to insure against the Government defaulting on its gilts than it does, say, to insure against Cadbury’s being unable to redeem its company debt.

If the Government has difficulty in finding the necessary borrowers there could be a swift collapse in our currency bringing economic chaos in its wake. If this scenario is allowed to develop the Government will be forced to slash and burn public expenditure projects.

It is to prevent this scenario, and for the country to begin a rational debate on how tax and revenue streams are brought into balance in the medium term, that Vince and I have tabled today’s motion. The Government’s expenditure programmes currently come in at 48%, yet the Budget Red Book shows that in 2013/14 less than 38% of what we produce will be raised in revenue to meet this bill. These figures not only highlight the danger to which the country is now exposed – can the gap be filled by borrowing? – but they usher in a new political era.

The size of the State or – what Governments can do – is going to change. If we don’t have an open and full debate the new politics will quickly take on a reactionary bent.

The new politics offers a once in a generation opportunity for radical politics. The first concern in increasing taxation is to ensure that those on modest to low incomes do not bear once again the main brunt of tax rises.

Similarly, the new politics offers the opportunity radically to rethink what the Government’s objectives should be. I have detailed elsewhere how the goal of eliminating pensioner poverty could be achieved while at the same time cutting back over a fifteen year period the tax subsidies to pension savings, the cost of public sector pensions and, because the single thrust of Government policy is to abolish pensioner poverty, a significant reduction and then elimination of the pensioner means-tested programme.

It is reforms like this that have a single objective which can be achieved over the medium term that will transform the national accounts. We now have time to set out how the nation’s finances can be transformed.

The stranglehold on this debate by the two main political parties must be broken. Failure to convince the money-lenders than the country is serious about balancing its books could lead to a failure to raise the shedloads of debt any government must raise in the short run, resulting in a further collapse in the currency (already down by 30%) and untold economic chaos and misery.

If the two major parties fail to act, the House of Commons must seize the initiative to begin plotting a new safe course for the country.

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