Since the Tories came to power in 2010 rates of poverty in the United Kingdom have soared, and ever more people have found themselves in such dire economic circumstances that they've had to resort to charitable food handouts from an ever expanding network of food banks.
The Tories always bluster on about how "work is the best route out of poverty" but what they don't ever admit is that under their extreme economic mismanagement the number of UK workers living in poverty has been increasing way faster than the new jobs Tory ministers keep bragging about.
The upshot of this deliberate Tory policy of turning the UK into a low-wage economy is that four million British workers are living in poverty, and ever increasing numbers of working people are becoming reliant upon food bank charity in order to feed themselves and their families.
You would have thought that the dire consequences of this ideologically driven Tory assault on the economic well-being of UK workers would be a source of shame for them, but you'd be making the mistake of imagining that members of this grotesque elitism club are capable of feelings like guilt, remorse, or shame.
In fact the Tories are so shameless that they actually decided to launch a coordinated publicity stunt to gloat about the wave of food poverty they've inflicted.
It's difficult to imagine the thinking processes of the Tory wonks who came up with a coordinated effort to send Tory MP out to their local food banks for publicity pictures to upload onto Twitter.
Perhaps they thought that pictures of Tory MPs at food banks would cast them in a sympathetic light as if they actually care about people in poverty?
Aside from the fact that numerous Tories were so inept at pretending they cared about poor people that they all lazily copied the same copy n' paste Tweets, there was also the obvious public backlash to consider.
Soaring rates of poverty in the UK didn't just happen by chance. The huge rise in families in such poverty that they can't afford to feed themselves are the result of eight devastating years of Tory economic misrule.
- Not only have the Tories overseen a historic collapse in the value of workers' wages, they've also attacked the social security system for low-paid workers. Arbitrary and ideologically driven cuts to Tax Credits, Housing Benefit, parental pay, and Child Benefit have dumped huge numbers of workers into destitution.
- The Tory decision to engineer a deliberate six week wait into applications for Universal Credit has also left huge numbers of families in destitution, because the last thing you need when you lose your job is six weeks without a penny as you wait for Universal Credit to kick in.
- The shocking rise in Zero Hours Contracts and fake self-employment jobs in the gig economy have created levels of job insecurity not seen since the 1930s.
- Tory austerity dogma has resulted in economic stagnation, shocking under-investment in infrastructure and public services the slowest post-crisis economic recovery in Centuries, and startling collapses in economic demand and productivity. All of which has made Britain a much poorer place than it could have been under a sensible investment-based economic recovery strategy.
In light of these factors is it any wonder that huge numbers of people saw the Tory food bank publicity campaign as the political equivalent of depraved trophy hunters posing beside the carcasses of the wild animals they've shot?
It just goes to show how wildly out of touch with reality most Tories must be that none of them even questioned the wisdom of a deliberate coordinated effort to associate themselves with the appalling wave of food poverty they've created.
The fact that their ruinous hard-right anti-welfare anti-worker, anti-investment policies have created such suffering and destitution is bad enough, but their total bone-headed willingness to even recognise what they've done makes them utterly unfit to rule ever again.
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Theresa May has conducted one of the most comprehensive government minister culls in British history, but one of the few ministers left standing after the massacre has quit anyway.
Claire Perry first came to attention on this blog when she made the economically illiterate public declaration that the national debt and the national deficit are "the same thing". It's staggering that someone who worked in finance for years and then as an economics spokesperson for the government could make such a bizarre claim, but in a Westminster establishment system where politicians spouting abject economically illiterate nonsense is the norm, Perry's gaffe passed virtually unnoticed.
In 2014 Perry was appointed as Parliamentary Under-Secretary of State
for Transport with responsibility for the dysfunctional UK rail network. After two years in the job she tendered her resignation without explanation. The stress of dealing with the calamitous Southern Rail franchise is being widely cited as her reason for quitting.
The big problem Perry always faced is that the Tory party have a burning ideological hatred of nationalisation, which is the only sensible solution to the Southern Rail farce. In fact, during her tenure as rail minister she oversaw the re-privatisation of the successful East Coast Mainline (because the Tories couldn't bear to see the public sector outperforming all of the private franchises), then she oversaw the sale of the UK's stake in Eurostar for £757 million (after the UK government had poured over £3 billion into it).
Perry has been stuck in a situation where the solution was obvious, but the government she belongs to remains ideologically wedded to doing the exact opposite.
Pretty much everyone knows that rail privatisation has been an expensive disaster, with the taxpayer bankrolling corporate profits with vast subsidies that are far higher than the entire running cost of British Rail used to be, overcrowded and delayed services, a £38 billion Network Rail black hole of debt an appalling lack of infrastructure investment and eye-watering fare rises year after year after year.
66% of the public believe that the rail network should be renationalised. Even 52% of Tory voters think that rail nationalisation is preferable to the current shambles, but the Tories will never ever countenance giving the public what they want by renationalising the rail network, because of their hard-right ideological objection to running public services as not-for-profit public services rather than cash cows for their corporate mates.
Perry fell on her sword because she was stuck in an impossible bind. It's hard for me to find much sympathy for a Tory MP. However as rail minister she had become the figurehead for the resentment of millions of frustrated and ripped-off commuters, but she didn't design the farcical system she was put in charge of, and she was completely powerless to reform it for the better, so it's no wonder she chose to give up and quit on the day after she said this:
"I have been to London Bridge and Victoria stations many times and travelled on the trains and I have been ashamed to be the Rail Minister. I suggest that successive Rail Ministers over many years in many Governments should share that sense of shame." [source]
Perry is absolutely right. She should be ashamed of her performance and her predecessors dating all the way back to John MacGregor who introduced the hopelessly botched Tory rail privatisation in 1994. Many of the transport ministers and rail ministers with the most to be ashamed of are the Labour ones who spent 13 long years refusing to undo the Tory rail privatisation fiasco.
The problem is that Perry's resignation solves absolutely nothing because the system is going to remain exactly the same. The Tory hierarchy will simply find another empty suit to fill her place and ensure that the status quo of huge corporate profits in return for crap services and minimal investment continues, and the UK rail network will continue to be a massively overpriced laughing stock compared to most of the rest of the developed world.
Sitting back and hoping for a Tory minister to see the light and renationalise the railways is utterly futile, because it will never happen. The only effective way of opposing the 22 year long Tory rail privatisation fiasco is by supporting people and organisations who are arguing the case for renationalisation.
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"We've cut the deficit by a third" has been the endlessly repeated mantra of the Tory party for the last couple of years. This is a quite extraordinary boast to anyone who knows what the deficit is, and is capable of remembering what the Tories were saying about the deficit when they were enabled into power by the Liberal Democrats back in 2010.
Debts and deficits
[Main article]
The first thing to note is the way that several of the Tories who endlessly repeat this mantra of "we've cut the deficit by a third" seem to be economically illiterate, or outright lying in the hope that the public confuse the meanings of the words deficit and debt.
In 2013 David Cameron lied that the Tories are "paying down Britain's debts" in a party political broadcast, presumably hoping that the public could be hoodwinked into believing that borrowing a few billion less per year than their predecessors were at the very peak of the global financial sector insolvency crisis is exactly the same as actually reducing the debt.
The Tory economic spokeswoman Claire Perry even went as far as claiming that the debt and the deficit "are the same thing" in a BBC radio interview! No wonder the economy crashed and has suffered 0% growth for seven long years if Tory economic spokespeople who used to work in the financial sector are so economically illiterate that they don't know the difference between a debt and a deficit.
What the Tories were promising back in 2010
Here's a direct quote from George Osborne's incredibly hubristic budget statement in June 2010, where he claimed that as a result of his ideological austerity experiment the budget deficit would be completely eliminated by 2014-15, and that by now the budget would be in surplus and the national debt would be falling.
"[The] deficit will then be eliminated to plus 0.3 per cent in 2014-15 and plus 0.8 per cent in 2015-16. In other words, it will be in surplus. Public sector net debt as a share of GDP will be 62 per cent this year, before peaking at 70 per cent in 2013-14. Because of our action today, it then begins to fall, to 69 per cent in 2014-15" [source]
A look at the reality shows us that the deficit is still absolutely enormous. Instead of reducing net borrowing to zero as he promised, he's still borrowing almost as much as Labour were at the very peak of the economic crisis. By the end of 2014-15 Osborne will have borrowed over £207 billion more than he said he would, and the economy will be over £127 billion per year smaller than he claimed it would be. In fact George Osborne has already created more debt in four years than all of the Labour governments in history combined!
Instead of the national debt falling to 69% of GDP this year, George Osborne's 2014 budget statement admitted that it would rise to 77.3% of GDP and wouldn't start coming down until 2018-19. It's hard not to notice that in 2010 he claimed that it would take four years to eliminate the deficit, yet four years later he's still claiming that it will take four years to eliminate the budget deficit!
Upon realising how spectacularly inaccurate his predictions have proven to be, it's hard to understand how the public aren't completely furious about this abject incompetence.
Eventually it's possible to understand how the public have been duped into trusting this over-privileged towel folder by looking at the way the mainstream media reports his failures. Instead of holding him to account by comparing his latest increased borrowing figures and downgraded economic growth figures with what he originally claimed, the media compares them with his previous set of increased borrowing figures and downgraded economic growth figures, meaning that his failures are dished out incrementally, rather than being held up against his ridiculously hubristic promises in 2010 that he would have eradicated the entire budget deficit by now.
Excuses, Excuses
The excuses for the failure of Osborne's ideological austerity experiment have been as laughable as the "wrong kind of snow" and "wrong kind of leaves" excuses used by rail operators to excuse disruption to train services.
In 2012 when Osborne had managed to turn a recovering economy back to negative economic growth, the Tories even tried to blame the results of their economic mismanagement on stuff like the Royal Wedding and the Queen's Diamond Jubilee, but the most feeble excuse of all has been to blame the Eurozone Crisis for the failure of "Osbornomics". The reason that the Eurozone has been suffering poor economic growth is exactly the same as the reason Osbornomics has failed; imposition of ideological austerity on economies like Spain, Portugal and Greece that desperately needed investment in the productive economy and financial sector restructuring instead.
Conclusion
When you've promised to cut something by 100% by a certain point, endlessly bragging that you've cut it by significantly less than half is an absolutely ridiculous tactic. The only possible explanation for this idiocy is that whoever writes up these ridiculous political soundbytes for the Tory party to repeat is so out-of-touch and contemptuous of the public that they imagine that people don't know what the deficit actually is, and that they don't have the capacity to even remember what the very same people were saying about it just four years ago.
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I'm disappointed, but not surprised at the outcome of the Scottish independence referendum.
It's no surprise that a lot of voters didn't dare to defy the entire Westminster establishment, the whole mainstream media (except the Sunday Herald), the outrageously biased BBC (reputation surely tarnished beyond repair now), the bully boy banks (who were bailed out by us just a few years ago when they caused the crisis that the Tories have so gleefully exacerbated through ideological austerity) and countless businesses who were pressurised by the government into making ridiculous threats (price rises, relocations, job cuts etc).
You can't blame people for being afraid and making what they consider to be a conservative decision. However many "undecided turned no" voters may live to regret their decision in 2015 if the UK ends up with the nightmare scenario of a Tory-UKIP coalition (Boris and Nigel) hell bent on punishing Scotland for daring to even have such a referendum, and dragging Scotland out of the EU, (no matter which way the people of Scotland vote on the matter). Many people have simply failed to realise that uncertainty cuts both ways.
It is saddening that the figureheads of the Westminster establishment are taking this result as a glowing endorsement of their unified agenda of austerity and privatisation, rather than a simple demonstration that their fear campaign just managed to overpower the hope that Scotland could do better without people in London holding the purse strings.
The people of Scotland have voted to allow London to continue taking the bread of Scotland's incredible wealth of natural resources and for the the Scottish parliament to continue distributing the few crumbs that fall off the Westminster establishment's table. All the while with the right-wing press shrieking "look at those disgusting Scottish scroungers stealing our crumbs".
The people of Scotland have voted to allow the Westminster establishment to continue parking their outrageous stockpile of (privatised) Weapons of Mass Destruction just 30 miles from their biggest city.
The people of Scotland have voted to allow politicians in London to continue imposing disgraceful stuff (Poll Tax, "Bedroom Tax" Royal Mail privatisation ...) that the majority of the Scottish electorate strongly oppose.
The people of Scotland have passed up this extraordinary opportunity to effect real political change and take more control over their own destiny. So what now?
The first thing to do must surely be to demand all of the additional powers that were promised, because we all know that David Cameron and Nick Clegg are about as trustworthy as a bad case of herpes. If the people of Scotland want any of these last minute promises to be fulfilled, they'll have to work hard to ensure that they are, because there are already growing calls for the "timetable" to be torn up and thrown away. The calls to renege on these promises are being led by Tories like Boris Johnson (the man who wants to impose a 50% turnout threshold on trade union ballots despite being elected mayor of London on a 38% turnout) Claire Perry (the woman who thinks a debt and a deficit are "the same thing") and James Gray (a man who used a charming junkie analogy to demand that Scotland be punished for their audacity and banned from ever obtaining more autonomy from Westminster: "talk about feeding an addiction. The more you give them, the more they want").
It would be crazy if the Welsh and Northern Irish didn't make demands that they also get the kinds of additional powers that the three stooges were prepared to offer to Scotland during their last minute panic. I've got less faith that anything serious will be done to devolve political power in England, given that the English have mainly been content to allow the Westminster establishment to continue ruling over them with impunity, and do little more than just whinge about the unfairness of Scotland getting free prescriptions.
There are two devolution options for England. Either a single English parliament, or a number of regional parliaments for areas like Yorkshire, Cornwall, London etc, but maintenance of the ridiculous status quo is much more likely because the Westminster establishment are notoriously reluctant to give away any of their powers without a big fight, and the English electorate simply don't seem to have the balls to stand up and demand the greater political representation that the Scottish, Welsh and Northern Irish have had for years.
Another thing that should be done is preservation of the incredible grass-roots movements that grew up around the independence campaign. These movements did not quite achieve the independence they wanted, but they did inspire hundreds of thousands of people to get more involved in politics, which is a very good thing in its own right. These politically engaged communities shouldn't be left to wither and die because they can still be used to effect political change, it's just that the changes will be even harder to achieve from within the Westminster straight jacket that the majority of Scottish voters have apparently endorsed. It is undeniable that Scotland can still be made a better country if enough people are prepared to stand up and demand it.
Update: Alex Salmond was announcing his decision to retire pretty much at the same time I was writing this article, raising more questions. Who will be the next First Minister of Scotland, and what political direction will the SNP take?
Another Angry Voice is a not-for-profit page which generates absolutely no revenue from advertising and accepts no money from corporate or political interests. The only sources of income for Another Angry Voice are small donations from people who see some value in my work. If you appreciate my efforts and you could afford to make a donation, it would be massively appreciated.
Sometimes it is easy for me to take my understanding of basic economics for granted. Having written articles explaining things like Credit Default Swaps, Information Asymmetry and Fiscal Multipliers in this series, it is a bit of a step down to explain the difference between simple economic concepts like debt and deficit, but I have two good reasons for doing so.
Reasons for writing this
Firstly, the education system in the UK has denied the vast majority of state schooled children an education in the economic fundamentals. The 7% of kids that attend private fee paying schools are much more likely to receive a basic education in economics at a young age, then to attend Oxford University universities in order to study Politics, Philosophy and Economics (which has represented an open door to political power to countless politicians ranging from honourable politicians like Tony Benn, all the way down to untrustworthy spivs like David Cameron).
Without the basic grounding in economics that the children of the wealthy tend to receive, many ordinary people go though life, by no fault of their own, as functional economic illiterates.
The second reason is that even people in positions of power that should know this absolutely foundational economic stuff get deficits and debts confused. One of the prime examples being the Tory MP Claire Perry, who proclaimed debts and deficits to be "the same thing" during a Radio 4 interview in 2012.
The ordinary man or woman in the street has an excuse for this kind of confusion (having never received an education in the economic fundamentals). Claire Perry MP has no such excuse having worked for two banks (Bank of America, Credit Suisse) a major management consultancy firm (McKinsey), an advisor to George Osborne (2006-2009) and an economic spokesperson for the Coalition government. It is no wonder that the economic system failed so spectacularly in 2008-09, and that George Osborne's economic plans have been so ruinous if a person can have a career like that without apparently knowing the fundamentally basics of economics.
Explanation
I find that the best way to explain the difference between a debt and a deficit is through the use of a simple driving analogy.
Lets imagine that the speed of the car is the debt and the rate of acceleration is the deficit (the rate at which the debt grows).
If you put your foot hard to the floor (run a high deficit) the speed of the car (the size of the overall debt) increases rapidly. If you apply the accelerator gently (run a small deficit) the speed of the car (size of overall debt) still increases, but at a slower pace.
Once you are aware of this, the true meaning of the Tory bluster about how they've "cut the deficit by a third" becomes clear. It is an open admission that they are still borrowing ever more money, and they've not even halved the rate of borrowing that was going on during the incredible fallout from the biggest financial sector insolvency crisis in human history (2009-10). They just seem to be hoping that people are too economically uneducated to read between the lines of their bluster about the cuts they've made.
Returning to the car analogy, the Coalition government still have their foot on the accelerator quite hard, but they're trying to convince their passengers (the public) that the car is getting slower with misleading narratives about how they are "paying down Britain's debts" to quote David Cameron verbatim.
Anyone who claims (as Claire Perry did) that a debt and a deficit are "the same thing" is essentially saying that the speed of our hypothetical car and its
rate of acceleration are "the same thing". For someone actually working
in the field of economics to make such a ludicrous claim is akin to a physicist
(lets say a NASA engineer) not knowing the difference between the speed and
acceleration of the space flight he's supposed to be plotting
the trajectory for.
When George Osborne came to power in 2010 he made two claims repetitively. That he would eliminate the budget deficit via his ideological austerity experiment, and that he would protect the AAA credit rating of the UK economy. He has failed dismally to achieve either of those objectives. According to his latest (still fantastical) projections, the deficit won't be eliminated until 2018-19 (well into the next parliament) and under George Osborne's watch the UK has been stripped of its AAA credit rating for the first time since the 1970s.The fact is that
George Osborne has already borrowed more money in under four years than New Labour did in the preceding 13. Another fact is that by 2015 Osborne will have racked
up a mind boggling £207 billion more in debt than he projected he was going to back in 2010.
It is absolutely no surprise at all that "Osbornomics" has failed so demonstrably, given that he himself has no formal economics qualifications, and his economics adviser between 2006-09 is apparently so economically illiterate that she thinks a debt and a deficit are the "same thing".
To illustrate exactly how clueless the Tory shadow treasury were at the time Claire Perry was Osborne's economics adviser, it is worth noting that George Osborne was still describing the Irish economy as "a shining example of the art of the possible in policy-making" and explaining how the UK should emulate them in 2006. Osborne's Irish eulogy came just 2 years before the Irish economy imploded catastrophically, and just 4 years before Osborne himself had to sign off on a £7 billion bailout for Ireland because their "shining example of the possible" had revealed itself to be a classic illustration of a crony capitalist Ponzi scheme scaled up to the national level.
Conclusion
I hope that after this explanation you have a better understanding of the basic difference between a debt and a deficit (and a handy little analogy to remember it by). I hope you also appreciate how utterly scandalous it is that a Tory party economics adviser could be so clueless as to confuse these two very basic economic concepts, and even claim that they are "the same thing".
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On the 8th of October 2012 the Tory party kicked off their conference with two breathtaking displays of economic illiteracy on national radio.
On Radio Five the Tory MP for Devizes in Wiltshire made the absurd claim that the deficit and the national debt are the same thing. Here's a transcript of the interview:
Victoria Derbyshire: "What is puzzling is, under Labour debt equals bad, under the Conservatives and Liberal Democrats national debt equals?"
Claire Perry: "We have cut Labour’s deficit Victoria by a quarter"
Derbyshire: "I’m talking about debt"
Perry: "Well it is the same thing"
Derbyshire: "It is not the same thing!"
What makes this confusion all the more shocking is that Perry is a former banker who worked for Bank of America and Credit Suisse. A banker getting confused between the concept of debts and deficits is equivalent to a physicist getting confused between the concepts of speed and acceleration!
It suddenly seems no surprise at all that the world has been engulfed by a gigantic financial crisis, if banks have been employing people so economically clueless that they are incapable of differentiating between two such fundamental economic concepts. It is also no surprise that the crisis has dragged on for so long if the political classes are also incapable of making such simple economic distinctions.
Aside from the fact that this seemingly economically illiterate woman has spent a long career in banking and business, another surprising fact is that she also worked as an advisor to the Tory party chief strategist and current Chancellor of the Exchequer, George Osborne. A man who just happens to be the other Tory to have brazenly displayed his economic illiteracy on national radio that same morning.
Osborne's crime against economic coherence is one that he has repeated time and again. It is the simplistic justification narrative that the record low cost of government borrowing is directly caused by market "confidence" in his ideologically driven and economically destructive austerity experiment. here's exactly what he said.
"Our
policy has got the deficit down by 25%, it is every single day
delivering in the World bond markets record low interest rates for this
country, which shows that it has credibility."
I've already written a long article outlining exactly how fallacious this argument is (which you can read here) however for the purposes of this article I'll summarise some of the main points.
1. Yields are extremely low because of high demand for "safe" investments like government bonds in times of economic crisis. If the market had confidence that Osborne's fiscal policies could stimulate economic growth they would be investing in the wider economy in the expectation of growth, not in extremely low interest government debt. The fear of excessive risk elsewhere in the system is driving investors to mothball their wealth in safe but unprofitable government debt.
2. There is quite obviously more correlation between all time low bond yields and the Bank of England's "unprecedented" monetary policies than Osborne's fiscal policies which are only unprecedented in the scale and longevity of the catastrophic economic consequences.
3. Countries that like the UK have held interest rates at near zero and
created vast amounts of quantitative easing cash (Japan, USA) have also
experienced repeated record lows in state borrowing costs.
4. Other countries implementing similar austerity policies to "Osbornomics" (Spain, Italy, Portugal, Greece) - but not creating quantitative easing windfalls due to lack of monetary autonomy - are suffering recessions like the UK, but also facing unsustainably high borrowing costs.
5. Countries that have been largely avoiding such drastic "cut now, think later" austerity measures are benefiting from similarly low borrowing costs to the UK (USA, Finland, Germany).
All in all a powerful demonstration that Osborne is talking economic gibberish. There are obviously two potential reasons for this, he is either economically illiterate and doesn't even realise that he's talking bobbins, or he knows exactly how disingenuous it is to conflate fiscal policy with monetary consequences, but he has such contempt for the British people that he believes he can just "get away with" creating such a misleading economic justification narrative.
Given the fact that Osborne has no economic qualifications and one of his former advisers doesn't seem to understand the difference between a deficit and a debt, it seems entirely plausible that he is actually so economically illiterate that he actually believes his own pitiful justification narrative. On the other hand, his party have such a long record of dishonesty and contempt for ordinary working "plebs", it is also entirely possible that he knows exactly how disingenuous he is being every time he repeats his absurd "market confidence" story.
Whatever the case, these two examples of Tory economic illiteracy on the same day clearly demonstrate that the Tory party is full of people that either don't understand basic economic theories, or are prepared to talk absolute nonsense in the expectation that the general public are so economically illiterate that they wont get called up for spreading such abject gibberish. It is quite remarkable that the Tories still manage to posture themselves as the most trustworthy party in economic matters, when their economic strategy has been such a disaster (the UK economy is actually smaller now than it was when the Tories came to power despite £200 billion in QE cash during the period) and they feel free to openly demonstrate their economic illiteracy on national radio.
