Last week we in the UK had our PBR (Pre-Budget Report), when the Chancellor of the Exchequer revisited his spending plans. I am sure it has a purpose but I am afraid I am just not smart enough to figure it out!
![MPj04432080000[1]](http://www.afeelingofworth.com/wp-content/uploads/2009/12/MPj044320800001-150x150.jpg "MPj04432080000[1]")
On this occasion the Chancellor announced that government borrowing for the year would now be £176 BILLION, rather than the £178 billion previously stated. This negligible reduction will do absolutely nothing to reduce the highest level of peacetime debt in history – and remember:
- It was only in the past eighteen months or so that Britain actually finished paying off her debts from the war.
- The recession was caused by too much borrowing to begin with.
Even more frightening was that, at more-or-less the same time, it was announced Britain will be making the biggest contribution – £1.5 billion – to a new £ 6.0 billion European fund to help poorer countries deal with climate change. So Britain is effectively borrowing money to give it away!!
Now I am not for a moment denying that we need to do something to protect the world’s environment, but is giving £6.0 billion to poorer countries – ironically also announced on the same date as a news report that gift aid to Somalia to feed the starving people there is being openly traded in the market – really the best way to go about it? And, even allowing for the moment that it may be, should we really being going into debt to pay it?
There is a whole climate change conference going on in Copenhagen right now to discuss the subject of safeguarding our planet, and we can only hope that there is enough collective intelligence gathered there to develop a viable solution for us all. However, there are some important issues closer to home that need to be addressed.
Firstly, as I argue in the book – paying for the environment is a consequence of inappropriate accounting and false profits in the past. Effectively, environmental costs are actually surcharges for past consumption. Rules of sound financial practice say that it is wise to borrow for investment and unwise to borrow for consumption. As the economic crisis proves, anything else is ultimately a recipe for disaster. Need I say more?
Secondly, it is all very well government being showing such largesse, but remember whose money it is they are actually spending. Government has no money of its own, but is ultimately just a redistribution channel for our money. So, if we would not borrow for consumption when managing our own affairs, why should we allow government to do so on our behalf now?
Thirdly, public finances should be governed by principle not policy! This means that it should not be subject to the vacillations of party politics as is presently the case. Britain is obliged to have a general election before May next year. There are critics who say that the PBR is a last effort by a desperate government, that polls indicate have very little chance of being re-elected, to win votes. This is invariably the situation at the end of any tenure, but surely you agree that national finances – decisions about how our hard-earned money is spent – should not even be open to such possible accusations? How can the Chancellor make announcements about what he is going to do to increase revenues and decrease borrowings in 2 years time when he won’t be in charge? Especially, when – as the current environment situation indicates – there are likely to be astronomical new costs in the future that we haven’t even begun to contemplate yet. How will we ever reduce debt and meet those costs?
It would be nice to think that the people managing our finances have the competence to manage it at least as well, if not better, than we would ourselves, wouldn’t it? Unfortunately the evidence suggests otherwise and we need to change this urgently if we are not to see our lives and livelihoods wasted along with those of future generations. If the model is not working we have to change the model, and unfortunately there is no indication – even now, as this PBR so clearly indicates – of anyone being willing or able to do this.
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This blog is one of several that I write, but is not regular and I only post to it when current events prompt me to make a comment and invite yours. I do hope you will contribute to the discussion and thus help to initiate and bring about the change that is so badly needed. Please click on the link on the top right of your screen to subscribe to a feed. My primary blog is my business one at Zealise but you can also connect to me at Facebook or Twitter
There is no doubt that business is one of the biggest – if not the biggest – determinant of economic development, and hence one of the primary influences in everyday life. The current economic climate is sufficient evidence of that, as well as primary proof of the need for business to be properly, ethically and efficiently managed.