Below is the full text of my John Smith Annual Finance Lecture; The New Opportunity Economy. There’s a bit of a trail in the Guardian today. The argument is simple; is we make the right choices now, we can not only rebalance our economy towards investment and exports, but we can open the new jobs that it is possible to create to people from a wider range of backgrounds, tackling the issue of low pay, and redoubling efforts to get people back to work.
Here’s the link to my rather long Channel 4 interview about George Osborne’s school-boy economics. A transcript of my Sky interview is below.
Basically George Osborne first said there were ‘secret’ tax plans. So secret they were set out in Table 2.9 (page 40) of the Budget’s ‘Economic and Finances’ document, and Table C7 (page 235) of the Red Book.
Then we heard there ‘must be a black hole’ because we projected money from taxes goes up sharply in future years. Of course it does. Partly because we announced tax rises for top earners in the last budget.
Second, because as an economy returns to growth, tax receipts go up – part of a process called ‘fiscal drag’. In a downturn income tax falls sharply – by some £12 billion we estimate. But in a recovery, they bounce back. National Insurance contribution don’t move around so much because they are a flat rate tax.
Conclusion? Either George Osborne doesn’t understand public finance. Or, he’s determined to twist the truth. Neither is a good sign for his future. Sky transcipt below…. Continue reading
The OECD says fighting unemployment – not cutting back inthe middle of the recession – has to be everyone’s top priority; ‘Helping the unemployed and getting economies moving again will be among the most pressing issues on the table at the G20 Summit in Pittsburgh on 24-25 September 2009.’ Keynes, I think, would have agreed. Reviews of Robert Skidelsky’s new book on Keynes are out in both Business Week and the Washington Post.
ONS set out latest public spending numbers, recording a £12.8 billion deficit in August, broadly in line with Budget forecasts, as tax receipts fell sharply on the same period last year.
Meanwhile a series of surveys underlined the need for continued government action – not cut-backs – to accelerate the recovery. The Bank of England’s Lending Survey found the weakest flow of total net lending to UK businesses since 1998, as some lenders some lenders said companies used the proceeds of money raised on capital markets to pay back bank debt. In other words, creating ‘headroom to enable them to respond quickly to any future investment opportunities’ But ‘The availability of finance remains more constrained for smaller companies.’
Unemployment figures were published showed a continued rise. ONS, however, confirms retail sales for August were 2.1% higher than August last year and Markit’s survey of labour activity concludes; ‘September data from the Markit/YouGov Household Finance Index (HFI) highlighted a rise in activity at respondents’ workplaces for the first time since the start of the survey in February 2009’.
The FTSE100 posted a second weekly rise, and now stands 47% than 3 March.
A simply incredulous attack on the cost of fighting the recession, from Mr Cameron today. He has attacked this month’s deficit figures; and yet admitted in his press conference earlier this week, that his plan for £5 billion cuts in public spending this year wouldn’t reduce the deficit by a penny – the money he said would go to pay for a tax cut for a handful of savers. Naturally, the BBC has carried Mr Cameron’s line straight.
And for those interested, just six Tory policies have been estimated to cost upwards of £35 billion; the costs are calculated by civil servants and were issued under a Freedom of Information request earlier in the week. You can see them here.
After street surgeries in Bordesley Green yesterday, I had the incredible privilige last night of hearing the report back of a dozen teenagers who visited Sweden to research how we can use sport to transform our community. The group, organised by Comm:Pact, spent some time in Sweden looking at the extraordinary availability – and accessibility of sports facilities, and showed in what was at times an incredibly moving presentation, how better use of sport could transform the self-confidence and self-esteem of our youngsters, equipping them with the forward drive to really make an impact on life. I’ll be posting my video report shortly.
The next step is really feed this work into our ambition to create a sports village trust for the constituency, owned and run by local people. WE took a big step forward last night, in getting a vision for the trust in place. Well done Comm:Pact.