SNP Westminster leader Stephen Flynn challenged prime minister Rishi Sunak on comments from the Institute for Fiscal Studies (IFS) at Prime Minister’s Questions (PMQs):
The IFS have warned of the ‘conspiracy of silence’ which exists between the Labour and Conservative Party when it comes to £18bn of looming public sector cuts. Indeed, just last night they actually outlined that the fiscal rules of Labour Party and the Conservative Party are in effect identical. So with such continuity on offer the public are right to be anti-Westminster aren’t they?
After years of austerity, either main party is set to deliver more with current plans at £18bn in public spending cuts per year. Labour leader Keir Starmer recently reaffirmed this:
We cannot and we will not allow public spending needs, however important, to threaten the stability of our finances
PMQs: cover for austerity
Labour and Tory fiscal rules that the government must bring down debt are based on a system that over-contains collective investment. These rules provide cover for austerity measures and are a manufactured reason to maintain the status quo.
The real constraints on government spending are the resources and manpower available. And to organise public investment, the government has a fiat currency.
While it sanctions the creation of pounds, the currency has not been linked to a system of gold standard since 1971. So the government can spend whatever it can physically achieve. The idea it needs to borrow is a scam to hold collective spending back.
If the spending causes inflation, the government can use measured taxes to bring that inflation down. That’s because taxes destroy money, making it more scarce and more valuable. This lens is known as Modern Monetary Theory (MMT).
Creating money to fund pandemic measures
The Bank of England and the government made the true ability to invest clear during the pandemic, delivering hundreds of billions in quantitive easing (QE).
QE is where the Bank of England creates money for the government to spend (through buying government bonds).
QE means the government can essentially create money and invest it to the tune of hundreds of billions. So both the Labour and Conservative leadership are in fact talking nonsense in an attempt to keep the public in line.
Scottish constraints
In response to Flynn at PMQs, Sunak accused the SNP of:
a savage tax and axe budget
But the Conservative government has far-reaching restraints on the budget of the Scottish government. Westminster also allocates the largest component of its available money.
Instead, Scottish independence advocates want their government to use the Scottish pound to invest. And they should use an MMT lens.
Thatcherite Labour on display at PMQs
At PMQs, Flynn also joked that the next Conservative prime minister may in fact come from the Labour benches:
Mr Speaker, with his backbenchers looking for a unity candidate to replace him, which of the now numerous born again Thatcherites on the Labour front bench does he believe best fits the bill?
This comes after shadow chancellor Rachel Reeves suggested Labour would take a Thatcherite approach if elected.
Such ideological austerity is a con to keep the public on the defensive. And both Labour and Tory are indeed engaged in a conspiracy of silence on the matter.
Featured image via The Mirror – YouTube
By James Wright
This post was originally published on Canary.
