THE BIG ISSUES- BREXIT AND THE ECONOMY
Brexit (required by the 2016 referendum result) and the success of the economy (required to deliver the services individuals want) are the two biggest issues of this election. Individual people ultimately pay for everything. Since some 43% of adults in the UK pay no income tax, the people who do so pay bear the biggest financial burden.
GOVERNMENTS- THE EXPERT WASTERS OF OTHER PEOPLE’S MONEY
The NHS, education, nationalisation, infrastructure and climate change are big examples of the spending programmes promised by political parties in the election so far. The carrots to entice votes. Spending money is easy – we can all do it – and the amount of spend is not a measure of any achievement. So, the wider question is how smartly it will be spent, another topic, except it is worth remembering that Governments generally are the expert wasters of other people’s money. These promises have one thing in common-they all have to be financed in the short and longer term. They are on top of the regular public services budgets and other Governmental commitments.
WHERE DOES THE MONEY COME FROM?
What are the sources of finance? Tax (such as income tax, VAT, National Insurance, Corporation tax); and Borrowing. The Government has no money but that which it gets from elsewhere or simply prints. Ultimately the taxpayers will pay, and must earn the money to find the tax. All very obvious, but easily forgotten. Some will argue borrowing is cheap today, but if the economy declines the borrowing cost could well go up. Interest rates do rise, though many young voters may never have experienced that! All borrowing must be repaid.
Since simplistically the taxpayer gets their money from working somehow in the UK, it is obvious that they will have that money only if the economy thrives and grows- that means primarily private small and medium sized businesses, the large often international corporations and other employers and the UK’s leading financial sector and its growing technology enterprises, all in the private sector. And high, improving productivity is often cited as key. Unless this success arrives, the taxes cannot be levied to pay for all the commitments in the end, or, if they are, they will become so high as to destroy the incentive to work.
GOVERNMENT MUST PROVIDE FRAMEWORK FOR INVESTMENT
The only Government worth electing is one which can provide a framework, an environment, where individuals, corporations and other investors will risk investing time and effort and money to produce the necessary results. Investment from outside into the UK is vital blood for the economy’s veins and must continue to be attracted. Historically people invest in the UK and come here because among other things it is relatively stable and predictable, its laws are fair and reliable, it has a skilled workforce, it is innovative, it has attractive culture and values. The UK has nice places to be, and generally welcomes all comers from overseas who want to contribute. The UK is not perfect and can improve but its qualities as outlined are attractive particularly when compared to many other alternative nations.
GROW THE CAKE – BEWARE NATIONALISATION
A fundamental question each voter must ask and answer is whether the party concerned will provide the environment where the economy is most likely to deliver the success described and so grow the cake of wealth from which the public spending promises can be delivered. Any policy which might drive investment and people away, or which denigrates honest wealth creation must be dismissed. The singular policy in that category is Nationalisation. If a Government can simply take assets away from citizens (theft in normal parlance) over and above fair taxation, in the name of ideology, will it hesitate to take away freedoms in the same name?
