George Osborne prior to an EU Economic and Financial Affairs meeting on 6 May, 2014 at EU headquarters in Brussels. Photograph: Getty Images.
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Why is the alternative to austerity kept such a secret?

An ambitious growth plan could be implemented with no public borrowing at all. 

The Tory attack lines for the next general election are already crystal clear. They run as follows. "Labour left a dreadful economic mess which we had to clear up the way we did.   It’s been painful, but we were all in it together.  We always had a long-term economic plan, and now it’s come good. We have a strong economic recovery, the fastest of any industrial nation. So do you want to give the keys back to the people who caused all the trouble in the first place?" Every one of these claims is untrue, but they have gained momentum because none of them has been contested.

Labour didn’t leave behind an economic mess; the bankers did. In the Labour pre-crash years, the biggest deficit was 3.3 per cent of GDP, whereas the Thatcher and Major governments ratcheted up deficits bigger than that in 10 of their 18 years; and whilst Thatcher-Major produced surpluses in two years, Blair-Brown achieved surpluses in four. We were not all in it together when the burden of the cuts was split 80 per cent on reduced benefits and only 20 per cent on higher taxes, and even the higher taxes were mainly the VAT increase which impacts highly regressively on the poor. Nor is it a fair carve-up of the post-crash cake that average real wages have fallen 7 per cent while the richest 1,000 in the UK population, according to the Sunday Times Rich List, have doubled their wealth over this short period to more than half a trillion pounds.

Osborne’s long-term economic plan was to shrink the public sector so that the private sector could expand to fill the space, but that didn’t happen. Such growth as there has been has come from (dangerously) inflating the housing market though Help to Buy and from easing some of the capital cuts he had unwisely made earlier. And as for the present "recovery", it is far too dependent on rising consumer debt and is not sustainable when wages, productivity, business investment and net exports all remain negative.

But the biggest fib in the Tory attack plan is that they had to clear the huge deficit by prolonged austerity. Alistair Darling’s two stimulatory budgets in 2009-10 brought down the deficit sharply from £157bn in 2009 to £118bn in 2011. Thereafter, Osborne’s austerity budgets have reduced this to a trickle to reach £108bn in 2014. Not much doubt, then, about the quickest and most effective way to cut the deficit.

So how would a growth plan work? Initially it would use public investment, till there is a strong enough recovery to encourage private investment to flow back in, directed in consultation with industrial leaders at energy, transport and IT infrastructure, house-building, and laying the foundations for a low-carbon economy. The obvious objection is: how will it be paid for? The conventional answer is that, with interest rates at 0.5%, a hefty investment package of £30bn could be purchased from the markets at the bargain basement cost of £150m a year.

But if that is still too much for some conservative minds, the same investment could be secured in three other ways with no increase in public borrowing at all. A further £25-30bn tranche of quantitative easing, tiny compared to the £375bn already issued, could be directed not at the banks as before but at agreed industrial projects. The publicly owned banks RBS and Lloyds could be instructed to prioritise their lending on industry, rather than speculation abroad or property. And the very rich 1 per cent who have monopolised 90 per cent of the gains since the crash could be subject to a special super-tax to help contribute to tackling the nation’s debt, which some of them helped to create and from which they have most benefited.

That of course is only the start of generating growth that is really sustainable and redressing Britain’s deep structural problems. The UK manufacturing base has been hollowed out leading to a current deficit on the manufacturing account of over £100bn a year. The economy has only been kept going in its steady decline by ever-higher consumer borrowing. Income growth per head has almost halved in the 30 neoliberal years since 1980 compared with the 30 years before. And the banks not only exploited the deregulated system, but blew it up.

A major expansion of high-tech manufacturing, with jobs and skills that go with it, has therefore to be a central goal of the next government. That will require smaller, more specialist banks as well as much greater public control of the money supply when at present only 8 per cent of the nation’s capital goes into productive investment. A new relationship between state and markets is needed which is neither centralised planning nor deregulated markets, but which tries to learn the lessons of highly successful post-war Asian economies among others. And the excesses of inequality need to be addressed by giving other stakeholders and employees, as well as shareholders, a voice in determining pay.

Michael Meacher is Labour MP for Oldham West and Royton, and was environment minister from 1997-2003.

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Aussies and Kiwis can be “us” to Brexiteers - so why are EU citizens “them”?

Nostalgia for the empire means Brexiteers still see Australians and New Zealanders as "Brits abroad". 

There are many terrible things about Brexit, most of which I counted, mournfully, on the night of the referendum while hiding in a stairwell because I was too depressed to talk to anyone at the party I’d just run away from. But one of the biggest didn’t hit me until the next day, when I met a friend and (I’m aware how ridiculous this may sound) suddenly remembered she was Dutch. She has been here 20 years, her entire adult life, and it’s not that I thought she was British exactly; I’d just stopped noticing she was foreign.

Except now, post-referendum, she very definitely was and her right to remain in Britain was suddenly up for grabs. Eleven months on, the government has yet to clarify the matter for any of Britain’s three million European residents. For some reason, ministers seem to think this is OK.

If you attended a British university in the past 20 years, work in the NHS or the City – or have done almost anything, in large parts of the country – you’ll know people like this: Europeans who have made their lives here, launching careers, settling down with partners, all on the assumption that Britain was part of the EU and so they were as secure here as those with British passports. The referendum has changed all that. Our friends and neighbours are now bargaining chips, and while we may not think of them as foreigners, our leaders are determined to treat them as such. People we thought of as “us” have somehow been recast as “them”.

There’s a problem with bringing notions of “us” and “them” into politics (actually, there are many, which seems like a very good reason not to do it, but let’s focus on one): not everyone puts the boundary between them in the same place. Take the Tory MEP Daniel Hannan. The sort of man one can imagine spent boyhood afternoons copying out Magna Carta for fun, Hannan spent decades campaigning for Brexit. Yet he’s not averse to all forms of international co-operation, and in his spare time he’s an enthusiastic advocate of CANZUK, a sort of Commonwealth-on-steroids in which there would be free movement ­between Canada, Australia, New Zealand and the UK.

When pushed on the reasons this entirely theoretical union is OK, when the real, existing one we’re already in isn’t, he has generally pointed to things such as shared language, culture and war memorials. But the subtext, occasionally made text by less subtle commentators, is that, unlike those Continentals, natives of the other Anglo countries aren’t really foreign. An Australian who’s never set foot in Britain can be “us”; the German doctor who’s been here two decades is still “them”.

There’s a funny thing about Hannan, which I wouldn’t make a big thing of, except it seems to apply to a number of other prominent Leave and CANZUK advocates: for one so fixated on British culture and identity, he grew up a very long way from Britain. He spent his early years in Peru, on his family’s farm near Lima, or occasionally on another one in Bolivia. (You know how it is.) That’s not to say he never set foot in Britain, of course: he was sent here for school.

His bosom pal Douglas Carswell, who is currently unemployed but has in the past found work as both a Conservative and a Ukip MP, had a similarly exotic upbringing. He spent his childhood in Uganda, where his parents were doctors, before boarding at Charterhouse. Then there’s Boris Johnson who, despite being the most ostentatiously British character since John Bull, was born in New York and spent the early years of his life in New England. Until recently, indeed, he held US citizenship; he gave it up last year, ostensibly to show his loyalty to Britain, though this is one of those times where the details of an answer feel less revealing than the fact that he needed to provide one. Oh and Boris went to boarding school, too, of course.

None of these childhoods would look out of place if you read in a biography that it had happened in the 1890s, so perhaps it’s not surprising that they instilled in all of their victims a form of imperial nostalgia. I don’t mean that the Brexiteers were raised to believe they had a moral duty to go around the world nicking other people’s countries (though who knows what the masters really teach them at Eton). Rather, by viewing their homeland from a distance, they grew up thinking of it as a land of hope and glory, rather than the depressing, beige place of white dog poo and industrial strife that 1970s Britain was.

Seen through this lens, much of the more delusional Brexiteer thinking suddenly makes sense. Of course they need us more than we need them; of course they’ll queue up to do trade deals. Even Johnson’s habit of quoting bits of Latin like an Oxford don who’s had a stroke feels like harking back to empire: not to the Roman empire itself (he’s more of a late republican) but to the British one, where such references marked you out as ruling class.

There’s another side effect of this attitude. It enables a belief in a sort of British diaspora: people who are British by virtue of ancestry and ideology no matter how far from these shores they happen to live. In the 19th century, Australians and Canadians were just Brits who happened to be living abroad. What Britain absolutely wasn’t, however, was just another European country. So, in the Leavers’ minds, Aussies and Kiwis still get to be us. The millions of Europeans who have made Britain their home are still, unfortunately, them.

I’m sure these men bear Britain’s European citizens no ill-will; they have, however, fought for a policy that has left them in limbo for 11 months with no end in sight. But that’s the thing about Brexiteers, isn’t it? They may live among us – but they don’t share our values.

Jonn Elledge is the editor of CityMetric

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

This article first appeared in the 18 May 2017 issue of the New Statesman, Age of Lies

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