Sunday, 8 November 2015

George Osbornes plan for a £10 billion budget surplus is simply stealing from the poor

Exposing the porkies about a budget surplus
The core objective driving everything in George Osbornes economic strategy is to achieve a £10 billion budget surplus by 2019-20. This is why Barnets Libraries are being decimated. This is why hard up families are being crucified by cuts to tax credits. George Osborne tells us that we must do this because to do otherwise would be fiscally irresponsible. Whilst Mr Osborne is entitled to his view, what disturbs me is that seemingly no one is prepared to stand up and challenge it. I am especially surprised that no one on the right of the British political divide has said a dickybird.

It is quite clear that the ideal budget is one which is balanced. The government should work out what it needs to spend and collect the required amount of tax to meet those bills. Clearly this cannot be done down to the last penny, but to plan a surplus of £10 billion is simply theft from the hard working families of Britain. To have £10 billion a year simply sitting in the treasury, whilst families suffer, the NHS crumbles and libraries are shut is nothing more than robbery.

George Osborne believes debt to be  a terrible thing. This is the workings of an intellectual lightweight who clearly doesn't understand the way economics work. In a modern economy, debt is an essential part of financial management. Borrowing should be managed responsibly. Where there is a clear case for infrastructure spending, it is clearly sensible to borrow. The UK has an excellent credit rating, so can borrow money very inexpensively. A well planned infrastructure project will produce a return on investment. With the base rate currently at 0.5% many infrastructure projects returning 5-10% on investments produce huge profits for the UK PLC. Why swould we not want to borrow. As a business owner, I've borrowed for business projects on numerous occasions. It is a simple process. You identify an opportunity for your business to grow. You work out a budget for the project. You then work out how much you have to borrow, go to the bank with a proposal and they lend you the money. If you are sensible, you use very conservative projections. In general such projects produce a far greater return on investment and so your profits are robust. We live in a capitalist economy and such projects make profits for my business and the bank. The bank uses this to lend to other customers and generate even more wealth for the nation.

If George Osborne believes that cancelling profit generating projects because he wants a budget surplus is a sensible way to run the economy, then the UK will see a rapid deterioration of both our infrastructure and our national wealth. When we look at national debt, we need to look on what that debt is servicing. I would agree with George Osborne that debt should not be used to pay normal running expenses, such as wages for teachers, nurses and politicians. Where there is a clear case that spending a penny today saves a pound tomorrow, the case is completely different. Just suppose a new strain of flu is found. It is far chearper to have a rapidly implemented immunisation project than to have the costs of a flu pandemic. If this isn't to be found in this years budget and no contingency funds are available, it would be sensible to borrow to pay for it.

All of this is however, skirting around the main issue. A budget surplus means that people have been taxed, but the money is not being spent to make the country a better place. There is no way we can justify taking money from the poor to meet such a completely pointless objective. Of course for George Osborne, this isn't a pointless objective. Once he has the billions in the bank, it gives him the cash to do what the rich backers of the Conservative Party paid all those donations for. It means he can give the very richest people in the land a tax cut. In effect George Osborne is Robin Hood in reverse. He steals from the poor, to give to the rich. As someone who is not badly off, I don't want any improvement in my lifestyle to be funded from the pockets of the poor. I really don't understand the mentality of people who are mega rich, have fantastic lifestyles, but still want to see those who have none of the luxuries they take for granted squeezed, just so they can see even more digits on their bank balance.

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