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Richard Murphy

28 Feb, 9 tweets, 2 min read

The framing of this budget is that we have a Covid problem, but all will be well by the summer. This was also the framing for Sunak's first budget, last March. He was back at the Dispatch Box very soon thereafter, having to increase his support for an economy blighted by Covid.

Sunak’s now going to offer some token gesture support for the next few months, just as he did last March, and then declare that by the summer we will all be eating out again, even if not with so much of a state subsidy this time. But I think he’s wrong.

I have not got a crystal ball. But I do know three things. The first is that current UK vaccination policy, popular as it is, provides a perfect opportunity for vaccine resistant mutations to develop. They may not. But equally likely, they might. That’s what vaccines do.

Second, reopening schools will push R over 1. Almost all the scientific advisers say that. And R will simply increase again at every successive reopening, because each will provide increasing opportunity for it to do so. By June, at this rate Covid could be rampaging again.

Third, a tired, underfunded NHS, staffed by people already stretched to their limits, might well finally snap under this strain. Unless, of course a wise government locks down again to prevent that happening, which is precisely why we have had all the lockdowns to date.

Now, I may be wrong. Maybe Sunak’s gamble will pay off. And I am not a betting person, but as a boy a favourite uncle taught me all about odds. And I would say Sunak is backing a 100 to 1 outsider here. His chance of success is remote in other words. Just like last March, in fact

Of course, an extraordinarily wealthy person whose position is unchallenged by the outcome of his wager can back such an outside chance of success, as Sunak is doing. But real lives, real livelihoods and real wellbeing depends on his gamble being right. And I don’t think it is.

In summary, a gov’t with a track record of exceptionally poor judgement on Covid is now backing a health, social and economic policy that has the potential to kill vast numbers more people in the UK. They have done it before, of course. They think they can get away with it again.

I wish I was not so worried about what is about to happen. But I am.

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More from @RichardJMurphy

Richard Murphy

@RichardJMurphy

2 Mar

@BBCRadio4

I have been asked by some politicians to answer the question ‘How we should we deal with the mountain of Covid debt?’ which is the question that they all fear when facing a radio or television interviewer. What follows is my fantasy @BBCRadio4 exchange.

INTERVIEWER: Let's face reality here. The country is more than £2 trillion in debt, and this has got to be repaid. What would you do about it?

POLITICIAN: I am sorry to say that I do not agree with the arguments implicit in your question, and I need to explain why.

Read 36 tweets

Richard Murphy

@RichardJMurphy

2 Mar

We have just had another week when the media has obsessed about what they call the UK’s national debt. There has been wringing of hands. The handcart in which we will all go to hell has been oiled. And none of this is necessary. So this is a thread on what you really need to know

First, once upon a time there was such a thing as the national debt. That started in 1694. And it ended in 1971. During that period either directly or indirectly the value of the pound was linked to the value of gold. And since gold is in short supply, so could money be.

Then in 1971 President Nixon in the USA took the dollar off the gold standard, and after that there was no link at all between the value of the pound in the UK and anything physical at all. Notes, coins and, most importantly, bank balances all just became promises to pay.

Read 82 tweets

Richard Murphy

@RichardJMurphy

28 Feb

To listen to Rushi Sunak you’d think that if interest rates rose now the government would see its interest rate costs rise by £25bn, but this is complete nonsense. Let me explain why.

First, most government borrowing is on fixed rates. And these aren’t short term. They are 14 year fixed terms, on average. So it will take a decade or more for the increased cost to worth through into the system, if it ever does. That covers around £1 trillion of the debt.

Second, most of the rest of government ‘debt’ is actually made up of bank deposits, either by commercial banks with the Bank of England or the public with NS&I. And the government sets the rates on these accounts.

Read 5 tweets

Richard Murphy

@RichardJMurphy

28 Feb

How long does it take for a good idea to get wings? Colin Hines and I first proposed green bonds in 2003. A week ago Starmer used the idea. Now, apparently, they are going to be announced in the budget, in a half hearted way. That’s progress, but there is a long way to go.

If bonds are to be used to fund the recovery three things are essential. First they have to pay an above average rate of interest. Second, they have to be government guaranteed. Third, the link to investment has to be very obvious and real.

So, the bonds have to guarantee investment where people are. There should be regional, Scottish, Welsh and Northern Ireland bonds in that case.

Read 11 tweets

Richard Murphy

@RichardJMurphy

17 Feb

Tories are now saying there should be no tax rises this year. Overall, I agree. Right now we don't want overall tax increases taking demand out of a fragile economy. But that doesn't mean no tax increases. It means we need tax increases and tax cuts. Let me explain in a thread.

Tax is not all about raising revenue. Far from it, in fact. We now know that government can spend without taxing: the last year has proved that, for good. But that should mean that we also understand that tax has other important roles too, like tackling inequality.

Inequality has always been significant in the UK. And Covid has made it worse. There has been a dramatic increase in unemployment. Many on furlough are on less than normal pay. And many self employed people have been hit very hard. But others have seen their wealth increase.

Read 41 tweets

Richard Murphy

@RichardJMurphy

12 Jan

The crisis in the NHS is overwhelming this week. It has reminded me of conversations I had with my late father on how to manage within the state sector. I think they're worth sharing.

My father worked for the nationalised electricity industry from the late 1940s to late 1980s. He spent much of that time as a fairly senior engineer. He was committed to what he did. He believed electricity supply was a human right. And he sought to delver it.

He left the industry and retired when he realised that privatisation challenged what the believed in. The priority was no longer supply. It was, instead, profit. He had a clear example of the difference this made. It was about emergency management.

Read 14 tweets

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