Where’s the big debate we really need on the economy?

Riches to rags on oil and gas

Oil imports paid in dollars and rising long-term global demand will see bills for UK consumers rise further. Britain’s North Sea oil reserves are running down rapidly and we will be reliant on more expensive oil and gas imports. A study for the Department of Business Enterprise, UK Continental Shelf Oil and Gas Production and the UK Economy, predicts that in five years the UK could run up a cumulative deficit in oil and gas imports of more than US$500 billion.

Pensions and PFI

Brown also embraced the costly Private Finance Initiative (PFI), off-loading debts from Treasury balance sheets to look prudent, but in reality, storing up a huge burden on taxpayers for years ahead. Now, the PFI sector is rattling the begging bowl, claiming a 40 per cent, £4 billion shortfall in funding. A double whammy on the taxpayer. The respected Institute for Fiscal Studies estimated that creative accounting by the Treasury already conceals a £500 billion public service liability for PFI schemes, Network Rail debts and public sector pensions.

Much of the blame for Britain’s pensions crisis also rests with Gordon Brown for his tax raid on pensions in 1997, according to former Treasury adviser Dr Ros Altman, costing pension schemes an estimated £5 billion a year. Now we are told his “quantitative easing” or printing money will further hit pension funds. Why doesn’t Brown help hard-pressed pensioners now reeling under near zero interest rates on any savings by removing this tax on pension funds?

Billions to trillions

As the economic crisis unfolds, we need to ask whether throwing trillions into the marketplace will do more harm than good. Governments around the world have already pumped in around US$10 trillion into banks. This should have solved the toxic sub-prime mortgage problem, but the underlying problem is the financial “debts and bets” market amounting to US$500 trillion, when the annual GDP of the whole planet is around US$50 trillion. Where has all the money gone? We need to think radically about how to ditch this impossible financial burden. Bankers need to do more than say sorry as they walk away with knighthoods and obscene rewards for failure.

Now the bubble has burst, instead of the casino deregulation popularised by the Thatcher and Reagan administrations, we need to get back to real financial values and quality investment. It is one thing trying to keep people in their only home, but the taxpayer should not be bailing out the buy-to-let property market. Nor are many sound businesses about to collapse. We need to rethink and rebuild.

As Brown spends billions he hasn’t got “to restore growth”, in a world of finite resources that are depleting rapidly, Green parties should be welcoming this warning for the endless "growth is good" mindset that will wreck our planet.

After years of crazy price inflation, house prices are beginning to drop to more affordable levels. A modest reduction in market capitalisation would be a buffer on the free-spending leverage and investment that creates so much unnecessary growth - in speculative empty office blocks, hedge funds and a shopping binge economy.

The crisis has revealed the fragile interdependence of the globalised economy, where many countries can be involved in the supply chain to produce a single component manufactured in one of them. In a few years, the markets will face another major trauma when they realise that once plentiful oil supplies are running down rapidly and the “globalised” economy this has supported will have to rethink completely. Major investment in a “Green New Deal” to help us adjust to post oil realities would be a start.

A crack down on money laundering and tax avoidance by the super rich using tax-free enclaves, needs more than talk about “naming and shaming” countries that are not transparent in their banking practices. We have long known of this problem, yet with a bundle of tax havens under UK jurisdiction, socialist Gordon Brown for years looked the other way.

Where is the choice and fresh thinking from our leaders, locked in a world of “me too” politics? The electorate deserves more than bailing out bankrupt politicians and bankers.