Opinion

Patrick Murphy: We can't believe Tory government on the economic situation

Patrick Murphy

Patrick Murphy

Patrick Murphy is an Irish News columnist and former director of Belfast Institute for Further and Higher Education.

Chancellor Jeremy Hunt delivering his autumn statement to MPs in the House of Commons.  Photo: Jessica Taylor/PA Wire
Chancellor Jeremy Hunt delivering his autumn statement to MPs in the House of Commons. Photo: Jessica Taylor/PA Wire Chancellor Jeremy Hunt delivering his autumn statement to MPs in the House of Commons. Photo: Jessica Taylor/PA Wire

Far be it from this column to suggest that we should never believe any British government, Labour or Conservative.

However, there comes a time when, as a matter of truth, decency and basic morality, it is necessary to politely point out that His Majesty’s government is being less than honest. Now is one of those times.

This week two Tory millionaires, Sunak and Hunt, announced increased taxes and reduced public spending in what they called an autumn statement. Their statement effectively said that they are pushing ahead with facilitating an unequal society.

They justified it with three false claims: there is a £50 billion “black hole” in Britain’s finances; the Bank of England is trying to keep down inflation and austerity is the only solution. With help from most of the mainstream British media, the gullible British public are once again being misled.

(British public gullibility was best illustrated recently when a protester threw eggs at the king and said, quite accurately, that Britain was built on the blood of slaves. Most others shouted, ‘God save the king”, which suggests that “gullible” somehow understates the problem. We’ll mention the gullible Irish another day.)

Anyway, back to the “black hole”. There isn’t one. Hunt is using a different method of debt calculation than Sunak used when he was chancellor. If Hunt were to use Sunak’s method, Britain’s public finances would have a surplus of £14 billion.

The “hole” is based on trying to forecast economic performance and interest rates. Change your forecasts and you can make the “hole” bigger or smaller. The forecasting is done by what the Economist magazine calls “40 nerds” in a London office.

So if there is no black hole, why announce the autumn statement? Sunak claimed that higher taxes and spending cuts were needed “to satisfy the markets”, meaning that financial institutions and shareholders should make even greater profits.

The millionaires’ second fallacy is that the Bank of England is trying to curb inflation and avoid recession by raising interest rates. (Interest rates were previously set by government until Labour gave that power to “independent” banks. That created an uncontrolled financial services sector which crashed the economy in 2008.)

If inflation had its roots in internal British factors, the bank’s rate rise would make sense. But, as Hunt admitted, current inflation stems from outside causes: rising food prices (the Ukraine war) and the shortage of products such as microchips (a hangover from Covid).

Higher interest rates will not influence these issues, but they will deepen the recession, boost the profits of high street banks and, of course, allow government to deny wage increases.

To combat externally generated inflation Sunak opted for the third fallacy: austerity is the only solution. (He increased our block grant by 4 per cent while inflation is at 11 per cent.) The UK has the second highest income inequality of any European advanced economy. Unequal countries have worse health outcomes, as you will have noticed this week in our hospitals.

The British Medical Journal reports that since 2010, austerity has caused “tens of thousands more deaths than expected”. The Tories have no love for the NHS. A private system would offer their friends in the financial sector greater opportunities for amassing more wealth.

Austerity is a choice, not a necessity. Among the G7 nations (the world’s most advanced economies) only the UK is using it.

Even the 40 nerds in central London agree that because of austerity following the 2008 economic crash, the UK economy is £100 billion worse off today. Sunak and Hunt copy Thatcher by claiming there is no alternative. There is. It is called investment in public services to boost the economy.

Because political policy has been presented as fact, thousands here will suffer from cold and hunger this winter and others will die unnecessarily. Maybe it is time to suggest, after all, that this week’s events mean that in future we might reasonably disbelieve anything the British government tells us.