Ed Balls's Labour conference speech: full text

Shadow chancellor says Labour must "recapture the spirit" of 1945.

Conference, we meet here in Manchester, two years on from our leadership election, a contest held in the shadow of a General Election defeat.

And we all know what’s supposed to happen when political parties lose elections: acrimony and division, the party turning in on itself, out of touch with the views of the country.

Well Conference, two years on, in this generation, we have bucked that trend. I can’t remember our party ever being so united, so determined to win back the trust of the people.

And with our economy in recession, and the unfairness and incompetence of this Tory-led coalition now laid bare, let us show we are the people to rebuild Britain, strong and fair for the future.

And Conference, making the case for change, setting the agenda – on reform of our media, and banks, responsibility in our economy from top to bottom; showing the strength of purpose and moral conviction which won him the job and which will get him to Downing Street; Conference, let us pay tribute to my friend, our leader, Britain’s next Prime Minister, Ed Miliband.

Conference, I am proud to serve in Ed’s Shadow Cabinet - now with more than 40 per cent women, the first time that has ever happened in British politics.

And what a contrast to David Cameron's Cabinet: where the men get the jobs, the women get the sack and only the chaps get the knighthoods.

Let me ask you this: what does it take to get sacked from David Cameron’s Cabinet?

Swear at a police officer and call him a ‘pleb’? And you’re defended to the hilt.

Get caught red-handed texting market sensitive information to News International? You get promoted.

Flat-line the economy and deliver the most unfair and shambolic Budget in living memory? And you stay in post – more than that, you’re allowed to do it part-time.

Do all those things and David Cameron will let you keep your job. But not if you’re a woman.

Conference, what kind of Prime Minister thinks it’s fair to sack a 54 year old woman from his Cabinet because she’s 'too old' - and then give the job to a 56 year old man instead?

Let me tell you: a Prime Minister who only appoints five women in the first place, sacks three of them, demotes the other two - and then attacks the Labour leadership for not being 'butch' enough.

Butch? Butch? Whatever did he mean? And if David Cameron is butch, where does that leave George Osborne?

Perhaps this is why George Osborne will never be sacked. A Prime Minister and a Chancellor destined to go down fighting together. And this time, let’s see them riding off into the sun-set. Butch Cameron and the flat-line kid.

And Conference, doesn't it feel good to be back here in Manchester?

Or, should I say, to be back here in Labour Manchester: four Labour MPs, three world class universities, two world-beating football teams, one Labour Council. And not a single Tory Councillor in this whole city - not a single one.

Let us pledge today to keep it that way, and elect the brilliant Lucy Powell as Manchester's first ever Labour woman MP.

And let me say too, I can think of no-one better to be Manchester’s first ever Police and Crime Commissioner than the wise and highly respected Tony Lloyd.

And Conference, at a time of such tragedy for policing in this city, our whole country remembers two brave officers who lost their lives doing their duty, and we pay tribute to all those public servants up and down the country - police officers, fire-fighters, our armed forces - who every day put their lives on the line to keep us safe.

And Conference, as we rightly praise the success of London 2012, let's not forget it was Manchester’s hosting of the 2002 Commonwealth Games which showed the way, proving that Britain was ready to stage the biggest international sporting events.

So Conference, we salute Graham Stringer and Sir Richard Leese as we salute all those people who brought the Olympics to London, and made them such a success - Tony Blair and Prince William, Ken Livingstone and Gordon Brown, Lord Coe and Boris Johnson, too many others to mention.

But let us remember that none of them would have been able to play their part if not for the one person who made it all possible. Conference, please join me in thanking Dame Tessa Jowell.

Conference, it was Tessa’s officials who told her it would be a disaster to bid for the 2012 Games. It would cost too much, the stadiums would never be ready, London’s transport wouldn’t cope, the security would be a nightmare.

Tessa could have listened to all those concerns, but she didn’t. She persevered. We won the bid. And the rest is now part of our national history.

And Conference, this is the lesson we all should learn. With wise leadership and long-term vision and a strong partnership between government and citizens, business, trade unions and the voluntary sector, we can do great things, we can lead the rest of the world and we can rebuild Britain for the future.

But if you listen to the doubters, if you never take a risk, if you flinch when obstacles are in the way, you will never get anything done.

And if you spend your whole time fighting short-term political battles - Dave versus Boris, Boris versus George, George versus Vince - you will never rise to the long-term needs of the country. And in the end, you let people down and lose their trust.

And nowhere is that more obvious than in our economy today.

Thank goodness the Olympics has given us a short-term shot in the arm, that might just be enough to take us out of recession this quarter.

But that is no substitute for a long-term strategy. Not when families are struggling to make ends meet. Not when food and fuel prices are going up, but wages are frozen and tax credits cut.

Not when so many young people have been unable to find work or stay-on in education. Not when so many small businesses are struggling to raise finance so they can survive until the year-end.

Not when so many working people in the private sector and public sectors are worried about their jobs and their pensions - the human cost of this economic failure.

Remember what David Cameron, and George Osborne and Nick Clegg promised: that faster tax rises and deeper spending cuts would secure the recovery and make Britain a safe haven; that theirs was the only credible plan to deal with the national debt; and that we were all in this together.

Conference, the recovery secured? We’re just one of only two G20 countries in recession – the longest double-dip recession since the Second World War.

A credible plan to deal with our debts? Because we are in recession, the deficit is now not going down, it’s going up – up by 22 per cent so far this year. Rising borrowing not to invest in the jobs of the future but to pay for the mounting costs of this government’s economic failure.

Conference, there is nothing credible about a plan that leads to: a double-dip recession, thousands of businesses bust, a million young people out of work, billions wasted on a soaring benefits bill, and borrowing going up not down. That’s not credible, that is just plain wrong.

And as for ‘we’re all in this together’, we don’t hear that line anymore.

Not from a Chancellor who presented the most unfair and unpopular Budget in a generation. A Chancellor who tried to raise taxes on pasties, caravans, churches and charities, but who refuses to look seriously at proposals for a mansion tax.

A Chancellor who in six months’ time will raise taxes for pensioners on the very same day he cuts the top rate of tax for the very richest – a £3 billion tax cut, giving £40,000 a year to a millionaire.

Conference, what kind of government asks millions of pensioners to pay for a tax cut for millionaires?

What kind of government believes low-paid women will only work harder if you take away their tax credits and make them worse off, but millionaires will only work harder if you give them a tax cut to make them better off?

Conference, isn’t this the truth, we know what kind of government this is: failing on the economy, failing on the deficit, hitting the many to help a privileged few. Arrogant, complacent, out of touch.

Conference, it’s the same old Tory government. David Cameron, George Osborne, Nick Clegg. The same old Tories, every one of them.
But you know what the worst thing is? For two years they’ve told us all this pain will be worth it in the end, that it’ll be short-term pain for long-term gain.

But what we are now seeing is short-term pain already doing long-term damage.

Look at the facts: over 33,000 companies already gone bust since the General Election; investment plans cancelled – or diverted overseas; our economy weaker, capacity lost, more prone to inflationary pressures when the recovery finally comes; child poverty rising, and long-term youth unemployment becoming entrenched, damaging them for the rest of their lives.

And Conference, if we carry on like this - a divided coalition, muddling through, no vision, waiting for something to turn up - the danger is that two lost years becomes three and four and that we slip into a lost decade of slow growth, high unemployment and stagnation.

Lost investment, lost output, lost jobs, lost exports, lost tax revenues - a decade when we fail to make the investments and the reforms we need to make our economy stronger and fairer for the future.

And Conference, it doesn’t have to be this way.

While Britain has been stalled over the past two years, other countries have been forging ahead. Last year private investment in Germany rose by over seven per cent. One million extra students enrolled in university in America. China is building 80,000 miles of roads a year and is now planning 70 new airports.

And here in Britain? Private investment? Down over 2 per cent last year.

More students? No, over 50,000 fewer.

And not one of the road projects David Cameron announced last year even started in construction.

And when you look at this picture of stagnation and inaction in our economy, it’s no wonder the deficit is now rising.

We warned two years ago that drastic spending cuts and early tax rises - too far, too fast - risked choking off the recovery and making a difficult situation worse. We warned that you either learn the lessons of history or you repeat the mistakes of history.

Because this is the fundamental truth: if more people are on the dole, not paying taxes, you can’t get the deficit down. If businesses are going bust, not hiring new workers, you can’t get the deficit down. If the economy’s not growing, you can’t get the deficit down.

And that is why we must act now to kick-start the recovery, tackle the causes of rising borrowing and start to make our economy stronger for the future.

A year ago, we set out five actions the government should take - then and now - to boost growth:

    Tax bankers’ bonuses and build 25,000 social homes for rent and guarantee a job for 100,000 young people.

    Genuinely bring forward long-term investment in infrastructure.

    Temporarily reverse the damaging VAT rise.

    Give every small firm taking on extra workers a one year national insurance tax break.

    And cut VAT to 5 per cent for a year on home improvements and repairs.

But Conference, since last year David Cameron’s government has done next to nothing.

Their economic plan is failing – and they don’t know what to do. Plan A, Plan B, Plan A plus - with this government, I just don’t see any plan at all.

Conference, one year on, the need to kick-start the economy is even more urgent.

So we must go further. With 119,000 construction jobs lost in two years and a 68 per cent fall in the number of affordable homes being built, we need bold and urgent action now.

So with Hilary Benn and Jack Dromey, this is what I propose. The Government is anticipating a windfall of up to £4bn from the sale of the 4G mobile phone spectrum.

In the good times, Labour used every penny of the £22bn from the sale of the 3G licenses to pay off national debt. But in difficult times, we urgently need to put something back into the economy.

So with this one-off windfall from the sale of the 4G spectrum, let’s cut through this Government’s dither and rhetoric and actually do something. Not more talk, but action right now.

Let’s use that money from the 4G sale and build over the next two years: 100,000 new homes – affordable homes to rent and to buy - creating hundreds of thousands of jobs and getting our construction industry moving again. Add to that a stamp duty holiday for first time buyers buying homes up to £250,000 and we can deliver real help for people aspiring to get on the property ladder.

Conference, a clear and costed plan to kick-start the economy and get people back to work. Building the homes that we need now and for the long-term. Building our way out of recession and re-building Britain for the future.

And we also need reform to boost long-term investment and skills - the only routes to rising living standards for working families.

Chuka is right to say we need a modern industrial policy to support long-term wealth creation, with strategic support for our advanced manufacturing and service industries.

And we need to work and campaign together to tackle tax avoidance, end bogus self-employment, prevent a race to the bottom through regional pay; and enforce the minimum wage, help parents balance work and family life and make sure our labour market is genuinely flexible and fair to working people, and let’s go further and promote the living wage.

And we know too our banking system needs cultural change and radical reform - reform which this Government is only interested in watering down.

That is why Ed Miliband and I are clear, we do need:

    A full, open and independent public inquiry into the culture and practices of our banking system.

    Radical reform to separate retail and investment banking.

    Active support for mutuals and co-operatives.

    A continued campaign for an international financial transactions tax.

    And a proper British Investment Bank – fully backed by the Treasury.

And Conference, let me say this about the hundreds of thousands of working people, earning ordinary salaries, who work hard every day behind the counters of our high street banks.

They were as shocked and dismayed as everyone else at the gross irresponsibility and greed of a few millionaire bankers at the top who caused such damage and gave their industry a bad name. Working people who want tougher regulation, who want banks to work for the long-term interests of our economy, and who do not deserve to be pilloried for their hard work and service.

Conference, the financial crisis did expose deep-rooted problems in our economy.

After the global financial crash, it was always going to be difficult to get the deficit down. And even if we do get the economy growing again, even if we do reform our banking system for the future, we’re still going to face tough choices in the years ahead.

But the longer this Government staggers on with a failing economic plan, the worse it will get and the harder the job will be. Hard times will last longer than all of us hoped. And we cannot promise to put everything right straight away.

That is why, however difficult this may be, when we don’t know what we will inherit, we cannot make any commitments now that the next Labour government will be able to reverse particular tax rises or spending cuts. Because, unlike Nick Clegg, we will not make promises we cannot keep.

Of course we’ll make different choices – we’ll do things in a fairer and more balanced way and put jobs and growth first.

But Conference, as I said to the TUC, we must be upfront with the British people that under Labour there would have been cuts and that – on spending, pay and pensions – there will be difficult decisions in the future from which we will not flinch.

Before the next election – when we know the circumstances we will face – we will set out for our manifesto tough new fiscal rules to get our country's current budget back to balance and national debt on a downward path.

Not a meaningless fiscal rule like George Osborne’s - a promise to balance the books in five years time, with that five year period moving forward every single year.

Conference, our fiscal rules will be monitored, independently, by the Office for Budget Responsibility, and we will take the action required to meet them. And when we sell off the Government’s shares in the banks every penny will go to repay the national debt. Conference, fiscal responsibility in the national interest.

And because we all know there can be no post-election spending spree, in our first year in government we will hold a zero-based spending review that will look at every pound spent by government: carefully looking at what the Government can and cannot afford, rooting out waste and boosting productivity, building on the work that Rachel Reeves and Jon Trickett are leading.

But we will do things differently to this Government. Not slashing budgets without a care in the world - damaging the economy, hitting women harder than men – but assessing every pound of taxpayer’s money including for its impact on growth and fairness.

Not opting for short-term cuts that look ‘easy’ but which end up costing more in the long-term - like deep cuts to youth services, to adult mental health services and to public health.

And not ducking the hard long-term issues we know we haven’t properly faced up to and which transcend parties and parliaments and where we badly need a cross-party consensus. So let us get a long-term plan to support the most vulnerable in our society – looked-after children and adults needing social care.

Because this is not just about policy, but about the kind of country we want to be and the way we do our politics.

Where we face important long-term challenges, we must seek a consensus that puts short-term politics aside and puts the national interest first, just as we did over a decade ago when we made the Bank of England independent.

And nowhere is such a consensus more essential than on our national infrastructure.

The lesson of the Olympics is that if we approach major long-term infrastructure projects by building a cross-party sense of national purpose then we can deliver.

And yet, it took 13 years from the opening of the Channel Tunnel to complete the High Speed Rail link to London. Crossrail was delayed for decades.

And why is this so often the case? Yes, our cumbersome planning system. Yes, legitimate concerns for the environment. Too often in the past, governments have assumed that vital public infrastructure can only be funded by public investment – and then baulked at the bill.

But, above all, successive governments – including our own – have ducked or delayed vital decisions on our national infrastructure, allowing short-term politics to come first.

And just look at this government: will Boris or Dave win on Heathrow? Will Conservative MPs block High Speed rail? Will George see off Zac on renewable energy?

What a ridiculous way to run the country. No wonder business is fast losing confidence in this government’s ability to make long-term decisions.

But Conference, it is not just a problem of this government or this parliament - and we have to be the party to break this cycle.

Because if we don’t, if we put off major decisions for another generation, it will be our children and grand-children who will face the consequences.

Let me give you some examples. We must decide how and when we are going to deliver super-fast broadband across the whole of the UK and avoid a two-tier Britain.

We must decide whether we need to replace our antiquated National Grid, or risk more power cuts in the future. We must decide as a country on a clear plan to invest in nuclear power, wind and tidal power and other renewables so we can lead the world in delivering clean, de-carbonised energy and green jobs.

We must decide how we are going to protect our country from rising sea levels and exceptional rainfall, including whether we need to replace or reinforce the Thames Barrier to prevent London from flooding.

And we must decide, alongside vital decisions on rail and airport capacity, how we are going to get more freight off the roads and onto the railways - it won’t help that our grand-children are all driving electric cars if they are still sat in gridlock on the M6 or the M25.

On all these issues, if we don’t start to plan now, what will we say in 30 years’ time when our children ask: ‘why didn’t you act when there was still time?’

That is why we need a comprehensive long-term plan to rebuild Britain’s infrastructure for the 21st century, and a cross-party consensus to deliver it.

And it is why, too, at a time when Government budgets are tight, we must think innovatively about how we can finance these vital projects over the coming decades, drawing on the private sector and long-term pension savings.

So Ed Miliband and I have asked Sir John Armitt, the chair of the Olympic Delivery Authority, to consider how long-term infrastructure decision-making, planning, delivery and finance can be radically improved.

And I can announce today that Sir John has agreed to lead this work and to draw up plans for a commission or process, independent of government, that can assess and make proposals on the long term infrastructure needs of our country over the coming decades and help build that consensus.

Not repeating the mistakes of the past, but learning from them. Building a consensus which crosses party lines, without chopping and changing one parliament to the next. A consensus to re-build Britain for the future.

And Conference, there is another lesson we must learn from our history.

Many people have said over recent weeks: ‘this has been Britain’s greatest ever summer’.

But let me remind you of an even greater summer still: the summer of 1945 – the end of six hard years of war – when our nation welcomed its heroes home from the battlefields of Europe, Asia and the Atlantic, and celebrated together the defeat of fascism.

Conference, our predecessors were elected that year to rebuild a country ravaged by conflict.

They faced even greater challenges than we face today: an economy enfeebled by war; a national debt double the size of ours today. And they made tough and unpopular decisions: to continue with rationing; to cut defence spending; and to introduce prescription charges.

But that Labour Cabinet also remained focussed on the long-term task ahead. And they learned from history and rejected the failed austerity of the 1930s.

And that meant they could put in place long-term reforms, enduring achievements, vital to our country’s future: the Beveridge report; new homes for heroes; the school leaving age raised; and, for the first time ever, a National Health Service free to all, based on need not ability to pay - over 60 years later, celebrated in our Olympics opening ceremony for all the world to see, still today the greatest health service in the world.

Conference, they were very different times. But it is our task to recapture the spirit and values and national purpose of that time.

Just think of the people in whose footsteps we now follow. Working men and women who, in the years before, had see a hardship many of us will never experience.

But their suffering did not teach them selfishness, it taught them solidarity. And they never settled for second best in the struggle for education for all, free health care and proper rights at work.

Conference, we owe it to them – but more than that, we owe it to our children and their children to come – to learn from that example, to make the tough decisions but not to sacrifice their futures.

Because when our grandchildren look back at us, what will they say? Will they say we cast a generation of young people on the scrapheap of unemployment?

Will they say we dismantled the NHS and made it harder to go to university?

Will they say we plunged Britain into a decade of economic stagnation while other countries raced ahead? Will they say we left Britain less prosperous, more unequal, more unfair?

Or will they say – even as we made tough and painful decisions - that ours was the generation that got a record number of young people into apprenticeships as well as university.

Ours was the generation that safeguarded the NHS, and started the rebuilding of our national infrastructure.

Ours was the generation that tackled our debts by growing and reforming our economy - and making sure the banking crisis that caused those debts could never happen again.

Ours was the generation that broke from the cycle of political short-termism and started to rebuild Britain anew in the long term national interest.

So let us go forward. Not flinching from tough decisions. Giving our young people hope. Rebuilding Britain for the future.

That is our challenge. That is our mission. Let us rise to it together.

Shadow chancellor Ed Balls delivers his keynote speech to delegates at the Labour Party Conference in Manchester. Photograph: Getty Images.
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?