A recent YouGov report puts support for the Conservative message of limited government, financial responsibility and lower taxation up amongst those aged between 18 and 24. 31% of the aptly named ‘Generation Y’ endorse the Tories. George Osborne’s statement that he will put a “limit on the nation’s credit card” will then presumably be met with a relatively warm welcome. This is doubly true when the UK’s national debt, currently 90% of GDP – a staggering £1.2 trillion is taken into consideration.
This figure however is only half the picture. On top of this, personal debt stood at £1.424 trillion at the end of April. Add to this the £347 million of student debt arrears as well as the £256.6 billion shortfall in the pension pot, and the true figure stands somewhere around £3,200,000,000. This puts debt owed by UK taxpayers almost exactly in line with the historic World War Two peak. When Liam Byrne said there was no money left, he meant it. How can this bleak situation possibly improve?
Across the pond the much maligned Federal Reserve recently announced it would be slowing down the process of quantitative easing. The total amount we in the UK have spent on QE is £375 billion, a policy which predominantly benefits the wealthiest members of society, who have more invested in shares or bonds. This is one of the mechanisms by which the state can essentially artificially create money. The main way banks artificially create money is through fractional reserve banking, a major contributing factor in the collapse of Northern Rock. More cynical members of the public believe that the inclusion of Winston Churchill on English bank notes is, at least in part, an opportunity to simply print more paper money.
There has been only minimal progress in the regulation of the finance sector despite David Cameron’s election pledge to take power from ‘the political elite and give it to the man and woman on the street’. Mr Osborne described Gordon Brown’s years as Chancellor as “scorched earth policy” which would hold the Conservatives back. It is interesting to note though that both the Banking (Disclosure, Responsibility and Education) Bill and the Banking and Financial Services (Community Investment) Bill, two private members bills brought under the ten minute rule, failed to complete their progress through Parliament.
The problem with British finances is evidently still huge. Here though emerges, what is for some at least, a dilemma. Another bill that failed to make it past its first reading is the Eradication of Slavery (UK Supply Chains) Bill. The free market, as envisioned by Adam Smith before the emergence of the modern day corporation and when resources were abundant, has now been mixed with the Darwinian concept of survival of the fittest. When rates charged by a sweatshop in country A increase, malfeasant corporations move production to a sweatshop in country B. This is a race to the bottom, not the invisible hand of mutual benefit and gradual improvement Smith envisaged. This problem is not limited to foreign climes though, and tackling it will no doubt form part of the ever present immigration and asylum debates. One of the policies announced that may go some way to combatting this problem is that to receive benefit payments, non-English speakers are to be obliged to attend language classes, which should help facilitate communicating such problems outside of what would otherwise be closed communities.
The budget for Government communications has been cut by £47 million, down to £237 million, but is still misleading in some regards. Advertising for military recruitment for example does not form part of MoD spending which has been essentially unaffected in Mr Osborne’s latest reforms. The basis of the Big Society concept is that voluntarism and business will step in to fill the power vacuum created by a shrinking state. The Central Office of Information, in charge of communications, acknowledges that ‘Government must recognise that partners have objectives and imperatives that may not entirely align with government’s, for example profit’. Whether or not this is an area that can afford to be cut further is a difficult question as ensuring government transparency has been a key principle in recent debate and communications form an integral part of this.
The Coalition inherited a profusion of interlaced and interweaving quandaries, and whatever solutions are offered have to fall within the confines of our dire financial circumstances. Mr Osborne has ring-fenced spending in the NHS, education and foreign aid. The Department for International Development has made efforts in light of the G8 meeting to ensure that natural resource usage is made more transparent.
This is of particular importance at present as the clarity of certain treaties regarding oil in the Caspian Sea is in dispute, so to have ensured Mr Putin’s tacit support is a diplomatic boon. The area of natural resources is notorious for its susceptibility to corruption, an area in which the UK has begun to lead the way after the introduction of the Bribery Act 2010, described as the ‘toughest anti-corruption legislation in the world’. The Americans are somewhat lagging in this area. The Foreign Corrupt Practices Act 1977 still permits the use of facilitation payments, which is, to be frank, a breeding ground for corruption, especially in countries that have only minimal safeguards in place having been torn apart by conflict. The FCPA was the first serious anti-corruption legislation in the world. Introduced in the wake of the Watergate scandal, which exposed dubious campaign contributions, it was ground-breaking in its day; however the US can no longer legitimately claim to be a world leader in this area.
‘Generation Y’ will be the group tasked with picking up the pieces of ‘Broken Britain’. To be critical of feckless layabouts is a natural evolution to the Darwinian concept of survival of the fittest, but this shouldn’t be confused by those in Westminster with support for abrogating the needs of the most vulnerable. Peter Bone, despite being something of a right wing nut, did pose an incredibly poignant question on the 24th. He asked: “what funding is made available by the Government for non-governmental organisations other than the Salvation Army for fighting modern day slavery?” The answer? Just £74,000…
