Response is totally wrong (From Stourbridge News)

Response is totally wrong

5:00pm Thursday 29th January 2009 in Search

IT is worrying that the government’s response to the recession amounts to more of the same policies that make it likely that the recession in Britain will be deeper and longer than elsewhere.

What the government refuses to admit is how limited are the policy options open to them in tackling this recession. The national debt is heading past the trillion mark and adding to it by further borrowing is just storing up huge tax increases for the future. The tax rises will already be worse than those announced by the government at the end of last year as all the sums then were based on the recovery starting in the middle of this year.

Instead of the Government’s scattergun approach we need policies to free up business and get the flow of credit operating again. That is why the Conservatives are proposing a national business loan guarantee scheme so that loans to employers are underwritten by the government and credit becomes easier for companies to obtain. We should also look at regulations and taxes on small to medium sized businesses and see what can be reduced and made simpler.

These measures will be far more effective than reducing interest rates to practically zero, when it is the availability not the cost of credit that is the problem. Savers and pensioners have been badly hit by this policy whilst it has not had the effect on freeing up credit that was intended, so everyone has lost. That is why the Conservatives are proposing to remove the tax on income generated by savings for people who pay tax at the basic rate; as well as raising the income tax allowance and all age related allowances for pensioners.

Government policy is obsessed with getting us all to spend more. The perfectly sensible reaction of the public is to carry on spending but to demand more in return, retailers and service providers are having to discount prices and add value to get sales. The government needs to learn from consumer behaviour instead of trying (and failing) to dictate to it. The trouble with relying on government expenditure to get us out of the hole we are in is that by and large public money is not spent efficiently. Billions of pounds of taxpayers money is spent on our behalf by public servants, most of them well intentioned and thoroughly professional individuals. But human nature is human nature and people don’t spend other people’s money as carefully as they spend their own. There is also a natural tendancy to safeguard your own interests. In this climate that means of course that the public sector will put its jobs before value for the taxpayer. There are many public services that are contracted to the voluntary and private sector and there is scope for so much more of this to be done. It is all about getting more productivity for the same, and even less, public money.

This government’s propaganda machine has sown the myth that if you cut spending you cut services. During the good times people believed this without question. Now the government has run out of money and borrowing is out of control. Yet its response is simply to borrow and spend even more, with some vague plan to ‘get spending back under control in 2010/11’. That is the classic response of a weak government, just postpone all the difficult decisions.

The Conservative Party favours getting public spending under control now, not in two years time, and protecting services by obtaining greater value for the money spent rather than just assuming that by spending less we will get less. The private sector cannot afford to take that approach and neither should the public sector.

Margot James Conservative Party Candidate for Stourbridge