Today we’ve released an ‘alternative spending review’ titled ‘Invest to grow: a spending review to get Britain moving.’
Our Chair Neal Lawson has also written a related blog on comment is free here.
The report is based around a four point plan including:
– A £55 billion fiscal stimulus in green and social infrastructure spending
– Tough fiscal rules with democratic fiscal oversight
– Once recovery is assured, the elimination of the structural deficit through a series of progressive tax rises and cuts in wasteful public spending
– A restructuring of public services to ensure sustained efficiency, responsiveness and innovation
A supportive letter was published in today’s Guardian and features a string of top economists and ex Labour Minister Rt.Hon Peter Hain MP.
In a related action we’re asking supporters to send Ed Balls a message of encouragement to stick to his guns and not give George Osborne a ‘get out of jail free card’ by echoing Tory spending plans. Click the picture below to send him an email.
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While supporting the broad thrust of the alternative spending review I was concerned by this passage:
“With the economy operating at well under
full employment this money could be created
through
Quantitative Easing
(QE) without the
risk of generating high inflation.
Indeed, you
could spend £60bn on infrastructure in every
year of the next Parliament and still spend less
than the £375bn we have already spent on QE in
this four year period. It is essential that any use
of QE is invested in investment projects and not
to provide ‘new money’ to financial institutions
who are then not passing the money on.”
It’s surely the case that “we” have not “spent” £375bn on QE; rather, the Bank of England has bought £375bn of assets which in due course it will sell again. Unlike public expenditure on real goods and services, this is a reversible transaction, and the macro-economic implications of the two are entirely different. Confusion on this point weaknes the broader argument by seeming to pretend that the economic damage wrought by the banks and the coalition can be magically reversed by ‘printing money’.