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Dear Rob,
Leading economists wrote to the
Chancellor this week demanding a change of direction.
Concerned that the government
won’t invest enough in public services and infrastructure, the group of
economists – including top civil servants and academics – wrote an open
letter to Rachel Reeves in the Financial
Times.
They argue the government is
prioritising reducing government borrowing – and ushering a new round of
public spending cuts – over investing for the future.
Such a move would condemn the
UK to remain in the same “vicious circle of stagnation and decline” it’s
been in for the past decade and a half, the economists write.
A period of
national renewal
They put forward an
alternative: the government should prioritise public investment. They
propose a “step change in levels of public investment”.
They mean the government should
invest in things like roads, hospitals, power networks, schools, water
treatment plants, railways and a host of other things that keep the country
running.
By doing this “the government
will have a real chance of genuinely fixing the foundations of the UK
economy and ushering in the period of national renewal that is so sorely
needed.”
This letter is an important
intervention from some of the UK’s biggest and most respected names in
economics, including: former Cabinet Secretary Gus O’Donnell, Former
Commercial Secretary to the Treasury Jim O’Neill, Mohamed El-Erian and
Mariana Mazzucato.
A brighter
future
The economists were prompted by
Invest
in Britain, who campaign for higher levels of public investment. We
couldn’t agree more with their argument.
The UK has one of the lowest
levels of government investment in the developed world. And it’s projected
to fall
even further.
This means the government will
invest less money in the public services and infrastructure that keep our
economy and society working.
Only through investment in
these things now can we reap the benefits later.
Let’s take one example of where
more government investment now could boost the future economy: the NHS.
Cut waiting
lists to boost the economy
Waiting lists in the NHS are at
record levels: 8 million people are officially waiting for procedures. A
further 7 million are estimated to need procedures, but haven’t come
forward for them.
This huge, unmet healthcare
need is causing harm not only to patients but also to the economy more
broadly.
It’s not hard to see why.
Unaddressed medical problems can decrease overall economic activity given
they reduce the ability of people to work, care, and contribute in their
community.
If the government invested more
in the NHS it could reduce waiting lists. The economic effect of this could
be huge.
A leading think tank, and
allies of ours, the IPPR, estimates
that if the government invested to boost elective NHS procedures by 30 per
cent, economic activity would be increased by £73 billion over five years.
£14 billion would also be saved
in health and social care services over the same period.
Which path do
we take
This is just one example of how
government investment now can have huge benefits on the economy in the
future.
In contrast: by slashing public
investment now, the government condemns future generations to a stagnant
economy and struggling public services.
At Tax Justice UK we know which
is the better path.
We also know that a fairer tax
system can fund a lot of the money the government must invest.
Our ten wealth tax policies set
out how the government could raise an extra £60
billion a year.
If you’d like
to see the government invest more in our public services, share our message
on social media:
  
This note is also available on
our blog.
Thanks for reading and
supporting our work,
Robert Palmer
Executive Director
Tax Justice UK
P.S. Come and join our
team: we are still recruiting for a new Head of Advocacy and Policy. If you
or anyone you know would like to apply, you’ll find all the details here.
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