Where has the money gone?

Greta

We should ask the government to explain. Democracy demands it.

Unfortunately we've at least a year before we can do that.

We should ask the government to explain. Democracy demands it.

What I don't understand is why the Conservative govts since 2010 have been so keen on austerity. I get that it's a major part of their ideology but why would they want to see most of the population getting poorer. How does it help them.

I understand divide and rule, as is happening now with the migrants/refugees. I think by now that most of us know that they could have continued to fund the asylum processes but that they've chosen to spend that money on projects designed to inflame numbers of the population.

What I don't understand is why?

The opposite of money creation by the state (the only agency that can legally create our currency) is destruction of money. Which the state does by taxing it back.

Banks create money for loans under licence from the state. Loan money is cancelled/destroyed when the loan is repaid.

Much of the money the state creates is cancelled by taxation, but money that is saved, by investing in shares & bonds, or deposited in banks/building societies, or in state savings vehicles, NSI & Premium Bonds, doesn't get taxed until it's spent.

But my real question is, if the state has put all that money into the economy, but has very little to show for it in terms of improvement to infrastructure, and has actually declining public services, where has the money gone?

Why hasn't it benefitted people and services that are in need of it?

WW2:
'What’s the opposite to creates?'

I think it's just evaporated (somehow) into shareholders' accounts.

The government ignored the recommendations with regard to preparing for a pandemic MaisieD because it didn’t fit the Austerity agenda.

As Richard Murphy mentioned today, the U.K. is not short of money, it is wealth distribution that is the problem, and the real crisis we face in this country is inequality.

Inequality maintains the status quo, and I doubt even a change of government will make a difference.

Greta

I think a weakness in the UK is that we don't plan and prepare. The government had been warned before the Covid outbreak that if a pandemic arrived we would not have adequate protection. So what to do? Continue NOT to prepare. Then when the pandemic became a reality panic set in and vast amounts of money was wasted.

As far as the covid debacle is concerned the weakness was that the government was told of our weakness in pandemic preparation. At least two pandemic exercises had been carried out in the previous decade but the government just ignored the recommendations of the exercise reports.

I think a weakness in the UK is that we don't plan and prepare. The government had been warned before the Covid outbreak that if a pandemic arrived we would not have adequate protection. So what to do? Continue NOT to prepare. Then when the pandemic became a reality panic set in and vast amounts of money was wasted.

It seems the unevidenced experiment of Austerity between 2010 and 2019 caused total economic damage to the U.K. (also some other European countries)

I saw on the Public Economy Forum, using figures from the OBR, if growth in public spending prior to 2010 had been maintained, government debt would have been reduced. Instead real wages and job security were undermined, and we are now left with ravaged health and public services.

Austerity set the stage for Brexit, then Covid caught us unprepared and then the War in Ukraine

We are left with the legacy of a divided country where the well off become richer and the others, poorer. Ideology over evidence yet again.

Farzanah

I’d start with the banks. Look at the high interest rates and the profits they have made this year for example.

It always comes back to the banks 😡

I’d start with the banks. Look at the high interest rates and the profits they have made this year for example.

Dinahmo

They've extracted money but where has it gone?

I don't think it's so much 'extracted' as it has been paid out to someone or something, but it certainly wasn't the public sector, they've been cutting that like mad. And it's not ending up in the domestic economy or that would be growing. Which it isn't.

Ping! Gone 😄😄. So the government creates money and can do the opposite. What’s the opposite to creates?

I’ve been (slowly) reading about this.

They've extracted money but where has it gone?

Money has been extracted from the economy over the years by the Tory party by means of high taxation, and debt. The government has ensured that money creation has been cut year on year thus ensuring that public services are cut to the bone.

Public sector wages don't drive up inflation because they are not manufacturing or buying and selling services or stuff.

The Tories have told so many untruths over the years that people believe them.

Jill Foot (wife of Michael) said that Labour would never win an election until they learned to fight as dirty as the Conservatives. There is an element of truth in that.

What is not clear to me is that the Tories say public sector wage increases drive up inflation yet they ignore the larger private sector increases for directors and employees. Their refusal to talk with the junior doctors is costing patients' lives and extending the NHS waiting list as well as wasting billions on covering for strike absences.

t we need to do is limit the inflationary pay rises given to company directors.

I think that pay rises for senior staff and directors, once they sign on, should be limited to the average for all staff in the company in the same country. Directors should be tax domiciled in the country they work in. Bonuses should be an equal % for all staff.

Yes, I know salaries for the directors of international companies needs to meet international averages, but many companies are based entirely in the UK, so international comparisons do not come into it, and many such companies are subsiduaries of larger companies and the same rules apply.

Dinahmo

The reason given for the high salaries paid at the top of the state and charity sector is that their pay should be commensurate with that of those a the top of the private sector.

And of course that position hasn’t changed in the last 13 years, it was already part of the terms and conditions of service.

The reason given for the high salaries paid at the top of the state and charity sector is that their pay should be commensurate with that of those a the top of the private sector.

Chardy

Witzend

I can’t remember the details, but recently I read a piece about what the writer evidently thought is a hugely bloated civil service* with masses of CSs on £100k plus salaries, and presumably pensions to match.

*Especially when compared to its efficiency, was the tone of the piece. It was in the Times or the Sunday Times, can’t remember though.

So that’d be at least one drop in the squillion quid ocean.

Telegraph says
'2,050 mandarins now take home six-figure salaries'
www.telegraph.co.uk/politics/2023/08/09/rise-in-senior-civil-service-whitehall-pay-freeze/

I suspect the Civil Service is only contributing very marginally to the overspend. I queried comparison Civil Servants 2010 with now, and although there are some increases they are relatively recent, and there was a big reduction in the middle period, which should have saved money. Look at the graph for a quick ready reckoner.
www.instituteforgovernment.org.uk/explainer/civil-service-staff-numbers

Actually, I tell a lie. The 2008 round of QE caused asset price inflation. Bonds and shares and high end property. Nothing to affect CPI or RPI.

M0nica

Not to mention Quantitive Easing that devalued the currency and contributed to inflation.

No it hasn't, MOnica.

QE started in 2008 to rescue the banks, more in 2016 to boost the £ after the Brexit vote and the last lot for covid. None of which caused inflation, which remained pretty stable around the 2% mark until last year.

GrannyGravy13

Furlough wasn’t a cheap exercise neither was subsidising energy bills over the winter months.

Yes, GG13, but the money for the cost of living help primarily ended up as bumper profits for the energy companies and supermarkets. To be paid as dividend to mostly already wealthy shareholders who have done nothing to justify the increase.

And don't try to justify the covid money pouring into the hands of tory friends and donors for the provision of worthless PPE. Isn't it something like £11billions worth which has to be destroyed because it was unusable? Or companies fraudulently obtaining loans. That was a few £billions as well.

I'm afraid some high civil service salaries amount to nowhere near the scale of these... (no, I know you didn't mention them, but someone has)

But this extra money apart, where has the rest gone? It plainly hasn't gone on public services and infrastructure because they have been continuously cut back over the past 13 years. And that includes the civil service.

Not to mention Quantitive Easing that devalued the currency and contributed to inflation.