The case for a new kind of quantitative easing

Policy-makers are clinging to a rigid determination to do everything at arms-length. Even when it do

Vince Cable famously described his critics as the "ideological descendents of the people who sent children up chimneys". But the real problem is not the influence of those who voted against the Ten Hours Bill. It is that economic policy remains in the hands of those with a snobbish horror of trade.

Perhaps it is a horror of government intervention. Perhaps it is a horror of broken finger nails. But, whatever it is, policy-makers cling to a rigid determination to do everything at arms-length. Even when it doesn't work.

Instead of effective local economic regeneration, based on using local money flows more efficiently, we have plans to raise the motorway speed limit to 80 mph. Instead of reforming local government systems to bring to bear people's face-to-face skills and pride in the job, we get shared back office services and call centres.

But worst of all, instead of ambitious projects to direct new money where it is needed, we have quantitative easing -- a hands-off, labyrinthine scheme for buying government bonds from banks, which they then use for bonuses. All the evidence from Japan over the past generation is that this form of quantitative easing doesn't work. It seems unable to kickstart the zombie banks into life.

But perhaps that is hardly surprising, because it is so indirect. Why have we lost our faith in our own ability to roll up our sleeves and make things happen?

The news that the government will launch "credit easing", a project to invest government money in small business bonds to help them expand, is a sign that the coalition has begun to feel the same way. It is a sign that ministers realise not just that Project Merlin has failed, but that if you want something done, you will be as old as Methuselah (as Ebenezer Howard used to say) if you expect the money to trickle down magically into the right sectors.

You have to use money more precisely, not just from the centre but locally too. We have to find the enterprising people and the green business projects, help them with their plans, find them the start-up finance, provide them with mentors. There is no point waiting politely for the trickle down that never trickles.

So here is the real test. When we get a new round of quantitative easing, as we almost certainly will, can we persuade the Bank of England to abandon the gentlemanly -- and, let's face it, downright wasteful -- hands-off method?

If they are going to create the money we need, interest-free, then for goodness sake, they must direct it to where it matters. We don't have the time for trickling. They must:

  • Put it directly into the new institution, buying small business bonds.
  • Buy bonds in the new Green Investment Bank, so that the money goes directly into loans that build the green economy (green quantitative easing).
  • If necessary, create the money to pay off the euro debt that threatens the world.

No more polite distaste for the mucky business of making things happen. It is time to act and to innovate. Because, at the end of the day, economics was made to serve humanity, not humanity to serve economics.

David Boyle is a fellow of the New Economics Foundation and the author of The Human Element (Earthscan).

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What is the Scottish Six and why are people getting so upset about it?

The BBC is launching a new Scottish-produced TV channel. And it's already causing a stooshie. 

At first glance, it should be brilliant news. The BBC’s director general Tony Hall has unveiled a new TV channel for Scotland, due to start broadcasting in 2018. 

It will be called BBC Scotland (a label that already exists, confusingly), and means the creation of 80 new journalism jobs – a boon at a time when the traditional news industry is floundering. While the details are yet to be finalised, it means that a Scottish watcher will be able to turn on the TV at 7pm and flick to a Scottish-produced channel. Crucially, it will have a flagship news programme at 9pm.

The BBC is pumping £19m into the channel and digital developments, as well as another £1.2m for BBC Alba (Scotland’s Gaelic language channel). What’s not to like? 

One thing in particular, according to the Scottish National Party. The announcement of a 9pm news show effectively kills the idea of replacing News at Six. 

Leading the charge for “a Scottish Six” is John Nicolson, the party’s Westminster spokesman for culture, media and sport. A former BBC presenter himself, Nicolson has tried to frame the debate as a practical one. 

“Look at the running order this week,” he told the Today programme:

“You’ll see that the BBC network six o’clock news repeatedly runs leading on an English transport story, an English health story, an English education story. 

“That’s right and proper because of the majority of audience in the UK are English, so absolutely reasonable that English people should want to see and hear English news, but equally reasonable that Scottish people should not want to listen to English news.”

The SNP’s opponents think they spy fake nationalist outrage. The Scottish Conservatives shadow culture secretary Jackson Carlaw declared: “Only they, with their inherent and serial grievance agenda, could find fault with this.” 

The critics have a point. The BBC has become a favourite punch bag for cybernats. It has been accused of everything from doctored editing during the independence referendum to shrinking Scotland on the weather map

Meanwhile, the SNP’s claim to want more coverage of Scottish policies seems rather hollow at a time when at least one journalist claims the party is trying to silence him

As for the BBC, it says the main reason for not scrapping News at Six is simply that it is popular in Scotland already. 

But if the SNP is playing it up, there is no doubt that TV schedules can be annoying north of the border. When I was a kid, at a time when #indyref was only a twinkle in Alex Salmond’s eye, one of my main grievances was that children’s TV was all scheduled to match the English holidays. I’ve migrated to London and BBC iPlayer, but I do feel truly sorry for anyone in Glasgow who has lost half an hour to hearing about Southern Railways. 

Then there's the fact that the Scottish government could do with more scrutiny. 

“I’m at odds with most Labour folk on this, as I’ve long been a strong supporter of a Scottish Six,” Duncan Hothershall, who edits the Scottish website Labour Hame. “I think the lack of a Scotland-centred but internationally focused news programme is one of the factors that has allowed SNP ministers to avoid responsibility for failures.”

Still, he’s not about to complain if that scrutiny happens at nine o’clock instead: “I think the news this morning of a new evening channel with a one hour news programme exactly as the Scottish Six was envisaged is enormously good news.”

Let the reporting begin. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.