Your leading article was right to highlight the challenge that the chancellor faces in demonstrating fiscal responsibility while reviving the economy (23 September). As it pointed out, the London School of Economics published a report in January – of which I was a co-author – that made a compelling case for an increase in annual public investment of about £26bn per year, equivalent to 1% of GDP, to jolt UK productivity and economic growth out of its rut. This would pull the UK out of bottom place in the G7 league table for public investment, and would promote confidence in private investors that having skin in the game would mean the government would provide supportive policies to ensure healthy long-term returns.
Our report made a further case that the strongest returns would be secured from green investment that accelerates the transition to a sustainable, inclusive and resilient economy by tackling even more effectively damage from climate change, biodiversity loss and other environmental degradation, including air and water pollution.
Borrowing long-term at low cost for highly productive investment is fiscally responsible, building the skills, markets and technologies that will strengthen UK competitiveness. A failure to invest would be not only fiscally irresponsible, but would miss opportunities to boost growth, productivity and the environment. There is no other credible path to sustainable growth, and the chancellor should not allow an arbitrary public debt rule invented by past administrations to derail the government’s central economic mission.
Bob Ward
Grantham Research Institute, LSE
• I think Polly Toynbee needs to listen a little harder to what Keir Starmer and Rachel Reeves are actually saying and where they say it (Labour has been overdoing the doom and gloom – but now Reeves has given us a glimpse of sunshine, 24 September). Reeves talked a lot in her conference speech about trust, about the £22bn black hole and about how there would be no return to austerity. Crucially, though, she didn’t define what she meant by “austerity”. The impact of a de facto cut through not increasing public spending will be felt just as much as a deliberate reduction.
In her February business conference speech, she said Labour “sees profit not as something to be disdained but as a mark of business succeeding”. All well and good, but profit isn’t generated simply by “business” but by the surplus labour of those who work for it, and nowhere does Reeves talk about how such profits might be more fairly distributed for the benefit of working people and public sector growth. Meanwhile, with the threat of a crackdown on “benefit fraud”, it seems things really will get worse for the poorest. In July, Polly told us she would “eat my hat … if Keir Starmer and Rachel Reeves don’t soon find the money to bury the pernicious two-child benefit cap”. Now she can only “urge” Reeves to do so. Get the salt ready, Polly…
Nick Moss
London
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