Opinion from Lord Digby Jones

I'm sorry there's no money left

Published Wednesday 6 May, 2015

"Dear chief secretary, I'm afraid there is no money. Kind regards - and good luck! Liam Byrne ...........read the note left for the Coalition Government in 2010 by the outgoing Labour Administration.

One of the many things that have irked me over this Election Campaign is that I have heard not one word of apology from Ed Miliband for that!

Of course many other factors caused the Financial Crisis as well. Arrogant, greedy bankers, poor regulators, politicians basking in the reflected warmth of a happy electorate spending borrowed money they had no hope of repaying.......but one of the causes that took our Nation to the precipice of bankruptcy (by Labour's very own admission) was that Ed Miliband's Party in Government had borrowed far too much and left (to take a phrase from the Boardrooms of Britain when planning borrowing against outgoings and cashflow) no headroom with which to weather the slings and arrows of an International Banking crisis. So why oh why will Ed Miliband not apologise for that? If it is because he fails to recognise his (and Ed Balls') culpability (and I think it may be, given his "never happened Guv'nor" replies when challenged on the issue) then God help us if he ever becomes our Prime Minister. If he is in denial, why wouldn't he do it again! Putting a man who likes his drink in charge of a distillery comes to mind!

But imploring the help of the Almighty may well be required for another reason. Labour leaders since Michael Foot (and certainly the last couple) and even "Red Ken" Livingstone as Mayor of London all encouraged UK businesswomen and businessmen to get on with what they do better than anyone else (and definitely better than politicians) ....creating the dosh that generates the jobs and the tax that pays for a public sector. For sure, they wanted to take more of everyone's money off them in taxation than others thought suitable but they had the row on the amount of tax not on making the money in the first place. This time things are different; VERY different.

Running through all he says is one rock-solid belief; intervention. Our Ed is a 24-carat, good old-fashioned interventionist Socialist. From energy to housebuilding, from pay to the world of work, the Labour Leader really does believe he can run business better than business. For sure there are bad business people, but there are bad politicians, bad journalists, bad teachers, bad coppers, bad nurses....but the bulk of all those people are good, decent folk...and so are the vast majority of businesswomen and men in our Nation. Demonising them as Ed Miliband has been doing is a disgrace. Wealth creators aren't "hard working families" then, Ed?

Mr Miliband doesn't understand creating wealth, not once has he mentioned, let alone supported the making of profit (that word is not in his lexicon), he has never taken a risk, hired someone or sadly faced up to having to fire someone, worked twice as many hours a week as most people, mortgaged his house and asked the whole family to put up with a lot less so that jobs can be created, profit earned and tax generated. Ed's life has been a Business-free, Profit-free Zone. His whole mantra starts with spending it. He is myopic on the "earning-the-stuff" front!

And a reminder of what happened the last time politicians in this Country adopted interventionist policies......out of control Trade Unions, the three day week, the IMF running the Country (when the Unions weren't), the deserved tag of "The Sick Man of Europe" .....high interest rates, rampant inflation and high unemployment. At the moment, we have the most successful economy in the Developed World with no inflation, low unemployment, low interest rates and high growth.

So what would the next five years look like under a Miliband Administration? Well, the macro-economic picture wouldn't change much at all for a year or so; Big Economies are like super tankers, it takes ages for them to change direction. The damage would'nt start to show up in the figures until Year Two. Four features would then be clearly coming to the surface:-

1. Wage inflation. An unearned large rise in the National Minimum Wage would have led to those on hourly rates a few quid above the NMW rightly asking for their differential to be maintained and so on and so on through the work forces in both the public and private sectors. When wages increase because of increased output or earned profits, that is a good thing. When they go up just because an interventionist politician says so, the increase isn't matched by productivity increases  and the result is inflation, which leads to:-

2. General Inflation, because prices go up to pay for the wage increases, and so living standards drop (this is basic economics Ed, geddit?) and interest rates go up to choke off inflation so mortgages are more expensive...and so on and so on. 

3. A shortage of property available for rent. Landlords, unwilling to be trapped in a three year, increase-free, one-way contract, will have withdrawn their properties from the market. Rents will have therefore increased due to short supply and people won't be able to afford them. Ed's intervention will have hurt the very people he says he wants to help.

4. A loss of confidence around the World in the UK being a quality, stable economy in which to invest. A Prime Minister who has failed to carry a majority in England propped up (in one way or another, whatever the Scottish Leaderene or Miliband may say) by a Separatist Party who not only wants to destroy the UK but for whom only 4% of the UK Electorate voted, will have little or no legitimacy and still less power; that impacts on our Country's dealings with the World and detrimentally on others' perception of us. Add our economic deterioration into the mix and our fall from the Top Spot will be marked indeed.

The rest of the world must be looking at our General Election Campaign and thinking we must be mad that we are even contemplating changing any of this.

Do we really want to go back to the Seventies? Interventionist Socialism didn't work then and it won't work now!
                               ..........................................................................
Lord Digby Jones was Director-General of the Confederation of British Industry from 2000 to 2006 and Minister of State for UK Trade and Investment from 2007 to 2008. He remains the only Government Minister not to join the Party of Government. He sits as a non-aligned, cross-bench Peer in the House of Lords.

Cheers

Digby