Rachel Reeves needs a history lesson

And a lesson in government finance

I really don’t have a clue….

Published as the lead letter in The Herald and in The Scotsman, July 10th, 2024.

Rachel ‘there’s no more money’ Reeves claimed English Labour has inherited “the worst set of circumstances since the Second World War.” Not so. In 1945, the UK had a debt-GDP ratio of 250%. Today it’s under 70%.

In 1945, the UK was flat broke. It owed the US for wartime Lend Lease programmes and its empire was imploding. What did the newly elected Attlee Labour government do in response? It didn’t adhere to some made-up fiscal rules that artificially constrained it from acting in the peoples’ best interest. It opened up the spending taps. It created the NHS from scratch. It bought out the coal mines, power companies and railways from private companies and invested more in them. It spent money on education, on social services, on social housing. For once, the people were the owners of public assets, assets that would be worth £trillions if they were in the public domain today.

What happened? The economy surged. There was full employment with low inflation. GDP grew substantially and the UK paid off its debts. Massive government spending on the people - health and education - and on productive investment, signalled to the private sector where to put its money. In other words, government spending led the way to economic growth and prosperity for all - it always does.

Ms Reeves not only needs a history lesson - she needs a lesson in government finance. Her solution - to provide public money to the private sector, hoping it will somehow ‘grow’ the economy - will fail. And she ignores entirely government’s chief obligation which is to promote and protect the nation’s most precious asset - the health and wellbeing of its people.

For the Scottish People to prosper, they must end this failing union.