Left Foot Forward's Will Straw and Paul Staines, of the Guido Fawkes blog, debated debt on the BBC's Daily Politics show today.
Today’s Daily Politics featured a debate between out very own Will Straw and Guido Fawkes, aka Paul Staines. The debate was generally friendly despite Staines asking Straw to apologise for working for the Treasury under Gordon Brown.
Staines is one of the few who have criticised the coalition government for not cutting further. He said:
“The Tories plan under this deficit reduction plan to have the structural deficit eliminated by the end of 2015 that’s not good enough we want the debt to come down. The Tories ran with posters saying that every baby born is born with £17k of Gordon’s debt well they will have £19k of debts by the end of the Chancellor’s term…
“What we are looking for is expansionary fiscal contraction so the private sector expands while the public sector is shrunk. The productive sector of the economy cannot support this amount of non-productive.”
Staines argument appears to assume that Britain’s public sector is bloated. But as Straw pointed out, public sector spending prior to the recession was 42 per cent, the same as in much of the 1980s. In addition, Britain’s net interest payments on its debt are now lower than under the Thatcher government, as the graph below shows:
Reversing the Tory talking point about household budgets, Straw said:
“There are businesses and households all round the country who borrow either to invest or because they are borrowing for a mortgage. What’s important, and anyone who’s got a mortgage will tell you this, is not the stock of the debt it’s your ability to pay it back.
“And the debt interest payments that Britain has are lower than in the entire period when Margaret Thatcher was in power.”
Straw did criticise Labour for not stating exactly where the £40 billion they would like to see cut would come from:
“We have to be realistic about the cuts and where they would fall.”
Staines, on the other hand criticised the Conservatives for not cutting further and admitted that putting up VAT had damaged demand in the economy and even went as far as to say:
“It was regressive, it hit people on low incomes harder.”
He went on to say said that recent local election results show there is a mandate to cut faster and further, and in a final flourish of hawkishness he said it was also immoral to have a 52 per cent tax rate.
Staines will be a guest speaker at the ‘Rally Against Debt’ tomorrow, described on its website as “a great networking opportunity” – presumably because you will have the undivided attention of many of the speakers, and they might have yours. Only around 3,000 are expected to attend.
The rally’s website also advises that journalists will be present at the event, giving you an opportunity “to get your face out there”, and so requests placards and gimicks from attendees to make the event more media friendly. The website recommends placard lines including “I understand economics” – though if you are holding this sign tomorrow you may wish to move away from those who brought the “UK credit card is maxed out” signs; here’s why.
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17 Responses to “Straw v Guido: The debt debate”
matthew fox
Tories forget Thatcher was bankrolled by North Sea Oil, and when Labour came to power in 1997, the National debt stood at £400 Billion.
I hope the organisers of ” Rally against Debt ” don’t offer Paul the use of a free bar.
13eastie
@wdjstraw
Interest rates are currently 0.5%. Can you forsee any dangers with banking on this carrying on in perpetuity?
Are you proposing we inflate the debt away like we did after the previous debt zeniths on your chart? Inflation is the most regressive tax of all.
BenM
I love that chart.
Just rips the guts out of the rightwing whinge about interest payments.
mr. Sensible
Nice to see Guido admitting that increasing VAT was regressive.
But, since he’s in an admitting mood, will he now admit that George Osborne’s medicine is hurting but not working? We’ve had it on VAT, can we have it on the rest of the government’s economic policy?
Growth flat, unemployment up, public sector net borrowing up.
Will Straw tries this difficult economics stuff
[…] fails: what did you expect? “There are businesses and households all round the country who borrow either to invest or […]