Labour’s economic plan

MaizieD local councils are impacted by lost value of commercial property, high inflation, interest rates and service demands.
By law councils are required to have a balanced budget each financial year and provide best value to residents. 13 section 114 notices (no new spending and need a new budget within 21 days) have been issued since 2018 . For example
Birmingham- equal pay claim and botched IT system
Nottingham- Robin Hood Energy collapsed
Thurrock - renewable energy scheme overvalued
The grocer’s daughter is so not involved in this fiasco but nice try.

ronib

I thought the country was bankrupt?

Well, it isn't bankrupt because a country which has its own sovereign currency , of which it is the sole creator, cannot go bankrupt.

The difficult financial position in which most of our public institutions find themselves, most noticeably and worryingly, local councils, is the direct result of tory government policy.

It is the tories who have cut public spending, year on year, for the last 14 years. There was never any need for it, it was driven solely by tory small state ideology, initiated by the grocer's daughter from Grantham...

I thought the country was bankrupt?

Again, I’m sure this is a reaction to the Tory’s constant assertions that Labour will bankrupt the country

MaizieD yes to net zero but in a way which is achievable and sensible and is not going to cause hardship.

growstuff well the OBR seems embedded in Reeves’ strategy. When was the OBR ever accurate?
I don’t like the presentation at all of the lecture. It really comes across badly to me.

ronib

MaizieD Carney is a committed net zero advocate. His opinions need to be scrutinised surely independently of any individual preferences?

You and I clearly differ in this case. I'm all for net zero, too.

He's also a banker with a view of economics which doesn't upset the current orthodoxies even if his views are liberal.

His endorsement of Reeves neither excites nor distresses me.

Rather than parrot other people's opinions, maybe you would explain why you don't "believe" in Reeves' plan at all.

MaizieD Carney is a committed net zero advocate. His opinions need to be scrutinised surely independently of any individual preferences?

"And blind belief seems to be the way you operate growstuff"

Would you care to explain that claim? Or do you prefer baseless accusations?

What exactly do I "believe"?

Oreo

ronib

casdon let’s be serious for a moment and consider how effective Carney was in the Bank of England. I know that he has swallowed net zero hook line and sinker …. My thoughts are equally valid. Please don’t negate me in this way.

From what I heard and read at that time, Mark Carney wasn’t the greatest!

I think that opinions of Carney vary according to the ideology of the persons expressing them.

growstuff but I object to your statement again that I have to believe in a politician’s plan because it has been approved/endorsed by someone else. This is ridiculous. I have not left my brain on the doormat because Mark Carney tells me.
This is bad for democracy.
I had read a fair amount of the lecture but Reeves is not an engaging communicator. That’s the first problem. The second one is by now, I don’t believe in her plan at all. And blind belief seems to be the way you operate growstuff

Oreo

Regardless of differing economic theories I think we all know what needs to happen.Just don’t expect much to change in the first two to three years, it takes time.

No, I don't think there is agreement about what needs to happen. I don't even think people have the same aims for the country.

Oreo

growstuff

ronib

growstuff well perhaps you would like to explain Reeves’ Mais lecture to us instead? It’s not worth my time since you have downgraded my input so over to you?

Read it for yourself! If you can't be bothered, don't waste our time commenting on something you haven't read.

What the hell is wrong with contributors to this thread? Is all this negating of posts just cos of different points
of view? So utterly childish.

No, it's not just because of differing views. I have read the transcript of Reeves' speech and I have reservations about it. What is childish is coming out with sweeping statements and smearing (without explanation) of somebody who has held senior economic posts, when it's quite obvious the transcript hasn't been read.

Regardless of differing economic theories I think we all know what needs to happen.Just don’t expect much to change in the first two to three years, it takes time.

growstuff

ronib

growstuff well perhaps you would like to explain Reeves’ Mais lecture to us instead? It’s not worth my time since you have downgraded my input so over to you?

Read it for yourself! If you can't be bothered, don't waste our time commenting on something you haven't read.

What the hell is wrong with contributors to this thread? Is all this negating of posts just cos of different points
of view? So utterly childish.

ronib

casdon let’s be serious for a moment and consider how effective Carney was in the Bank of England. I know that he has swallowed net zero hook line and sinker …. My thoughts are equally valid. Please don’t negate me in this way.

From what I heard and read at that time, Mark Carney wasn’t the greatest!

Casdon

There are hardly any public services where an immediate result will be possible, what’s most important initially is to develop plans to recruit and train more staff in the shortage professions, and building upgrade and replacement programmes. It will be two years before any significant additional resources will impact I would guess. Maybe the potholes!

I agree.
I think some people are expecting miracles from the get go.

Whitewavemark2

She is distinguishing current spending from capital spending.

I know she does, and that's what worries me.

She is essentially flagging up more austerity if she isn't willing to put more money into public services if the spending isn't matched by revenue. Which it won't be because it never is.

A great many perfectly respectable 'conventional' economists are calling out for immediate spending on public services.

I think it would work through much sooner than in 2 years if it means improving pay, increasing staff, such as in the police, and employing more staff to undertake the much needed repairs and refurbishing. The extra money in staff payments alone is going to hit the domestic economy pretty quickly. And be taxed back pretty quickly, too, directly and indirectly.

What about all those councils which are becoming bankrupt and are being forced to cut services even further? Is she going to leave them to struggle on inadequate funding?

She is distinguishing current spending from capital spending.

Reeves repudiates what she has termed “an excessive faith in the markets” but that investment would be driven by new institutions - a national wealth fund and the publicly owned Great British Energy - Labour will also nationalise the railway as contracts come to name end.
Reeves is definitely challenging the Westminster consensus. However, Reeves has committed to reduce debt on a 5 year rolling base but unlike the Tories this does not include capital spending which frees her to invest in order to grow the economy.

There are hardly any public services where an immediate result will be possible, what’s most important initially is to develop plans to recruit and train more staff in the shortage professions, and building upgrade and replacement programmes. It will be two years before any significant additional resources will impact I would guess. Maybe the potholes!

I don't think that an approach that defers improving public services will work. We need the nation's children to be better educated for a start including better opportunities for over 15s. We also need to improve the health of the nation. These things cost money, certainly, but above all they need the sustained attention of competent people with clout.

I agree with whoever said earlier that RR's approach as described here reeks of more austerity.

I agree with you Maizie. I'm not sure what to make of it. I'm just hoping that Reeves is trying to reassure voters that Labour won't bust the bank because most people do still seem to believe in the household economy model.

Cossy

MaizieD

First, that it is through growth and only through growth that we can sustainably resource strong public services, raise living standards, and compete internationally.

I think that she has got it the wrong way round here. funding (resourcing) public services will promote this 'growth' that she is anxious for, and only then will private investors be interested in putting their money in. When they can see that there is some profit to be made from the domestic economy. Waiting for growth from the promised long term investment will, IMO, take a while to work through into increased domestic spending to stimulate the provision of goods and services, whereas a boost to public services would be more immediate with the need for better wages,and employment in much needed repairs to the infrastructure.

So let me be clear about the rules which will bind the next Labour government. That the current budget must move into balance, so that day-to-day costs are met by revenues. *And that debt must be falling as a share of the economy by the fifth year of the forecast, creating the space to respond to future crises.

By 'revenues' I assume she primarily means taxation, but that's not going to happen if services are still in their current state. There is not a lot of money around to be taxed...

As to the 'debt', (or does she mean deficit, the gap between expenditure and revenue?) that really is irrelevant at this stage, (because no-one who 'owns' the 'debt' actually wants their money back). It can only be narrowed by an increased tax take, which isn't possible unless public services get more money, or taxes are raised, (which gives people even less money to spend), and, dare I say it, reducing interest rates to make it less costly to service.

Government has to spend first, before it can tax, raising taxes first just impoverishes people. That is a key principle of MMT which has empirical evidence on its side...

Let me be candid. We cannot continue with the short-termist approach that disregards the importance of public investment. But we also cannot ignore the pressing need to rebuild the UK’s public finances, to increase our space to respond to future shocks. That is why our fiscal rules differ from the government’s. Their borrowing rule, which targets the overall deficit rather than the current deficit, creates a clear incentive to cut investment that will have long-run benefits for short-term gains. I reject that approach, and that is why our borrowing rule targets day-to-day spending. We will prioritise investment within a framework that would get debt falling as a share of GDP over the medium term.

Sorry, but I see more austerity in the offing...

My understanding of that first statement is we need to grow our economy first before we spend more money on public services as public services are not income generating. She doesn’t seem to explain how this will actually happen. It’s really clear that Labour have to keep defending themselves in terms of the economy because they are constantly vilified for previous spending over a decade ago.

That is my understanding, too, Cossy and it's bonkers. As I explained in my post.

The money that the government puts in to public services is what will give the initial boost to growth. I have explained why many times on this forum. Once the money is there the increased revenue will follow because everything you buy is taxed, as is business income.

And, until the economy shows signs of growth we won't get private investors, new businesses or whatever because they'll only invest if they can see a marketplace full of people with money to spend. Which they don't at the moment..