Day 11:04 am

  • Letter to Ed Miliband



    From: Alderman Michael Poulter MBE

    60 Corporation Street ,




    8th January 2014


    Mr Ed Miliband MP,

    Leader of the Opposition,

    House of Commons.




    Dear Mr Miliband,

    Osborne’s Deficit Scam

    The Excuse to Privatise, Outsource and Dismantle Public Services and the Welfare State


    In his New Year Message the Chancellor again exploits the alleged Deficit Crisis to trumpet a still imperative need for extended austerity and more severe cuts in Public Spending.

    In William Keegan’s words (Observer 29.12.2013) “Coalition Ministers still proclaim the ‘Big Lie’ that it was all down to ‘Labour’s Mess’ “.

    From its inception the Coalition claimed the National Debt was overwhelmingly large.It must therefore cut public spending and public services dramatically in order to restore the economy to health.


    But the Government’s claim is false. The Deficit Crisis is a fiction and the British Public are being subjected to one of the bigger scams in British history.

    There exists an impressively intellectual array of wise, educated and expert advice which tells us so.


    Professor Robert Nield of Cambridge University is the foremost historian of the National Debt.

    He analysed the Coalition’s claim and in effect rubbished it! He authoritatively states that for the last three centuries the UK has maintained a National Debt without difficulty.Much of that debt was higher than when the Coalition took power.It did not look alarming let alone abnormal ! He says that the application of Government policies justified by alarmism is leading into unnecessarily deep recession.

    Dr William Keegan ( Cutting welfare to ‘aid recovery ‘ is just a big lie ),quotes Brian Henry on ‘ Coalition’s Economic Strategy ‘. His careful analysis of the so-called structural deficit states it was no worse at the end of Labour’s pre-crisis years than it had been under the Conservatives and that the Coalition seized the opportunity to impose a protracted fiscal contraction with the aim of reducing the Tax Burden. Dr Keegan recalls John Le Carre’s powerful phrase about Coalition Welfare policy being tantamount to ‘planned penury’.

    I think the emphasis here must be on “the planned ”


    George Osborne and the Reinhard-Rogoff thesis.

    Before he took office Mr Osborne used this paper as key to his intellectual argument for the austerity programme.”Should Public Spending be cut to control deficits or should States pro-actively rekindle economic growth?” Their deeply argued analysis said Public Spending should be cut! Mr Osborne suggested that they offered perhaps the mosr significant contribution to understanding the origin of the financial crisis. But an authoritative study by Herndon, Ash and Polin found their conclusion was based on faulty maths and spreadsheet error. The assumptions and calculations (on which Mr Osborne based his policy) did not stand up.

    This criticism of Reinhart-Rogoff is also supported by Larry Elliot an economist of international repute. The intellectual basis for the Deficit Reduction policy is deeply flawed.


    Nobel PrizeWinner Paul Krugman explicitly denounces the Coalition Myth that the Deficit is unmanageable without cuts and great austerity! He quotes Keynes “The Boom not the Slump is the time for austerity”


    Robert Skidelsky, foremost commentator on Keynes also supports the view that Britain’s public debt was far from from crisis point.


    Will Hutton, Principal of Hertford College Oxford and public intellectual of great repute,comments “we need Government not to cut but which steps in to halt the plunge in private demand.We need public investment and job creation to survive as an economy”


    Joseph.E.Stiglitz is a Nobel PrizeWinner and former Chief Economist of the World Bank. In his book ‘The Price of Inequality ‘ he powerfully criticises “Deficit Fetishism” of the kind exhibited by the Coalition and the risks to the Public Good inherent in the advance to Privatisation. His is a powerful critique of Free Market Ideology.


    What conclusion might now be drawn ? On the basis of these expert views the Coalition Polcy is a sham !


    I go along with John Harris (Guardian ,28.02.2011)

    ”Coalition has sneaked a coup on a sleeping public” He says that what is occurring throughout the Western World is the planned dismantling of Welfare States.


    The alleged Deficit Crisis is being used as an excuse-(as in Naomi Klein’s ‘The Shock Doctrine’) to shock/persuade people that the Public Sector and the Postwar settlement must be swept away as unaffordable!


    Following Polly Toynbee’s excellent article in The Guardian ‘ Tory outriders reveal the party’s direction of travel’, I wrote to her quoting the authorities I mention above. Her immediate and personal response acknowledged their wisdom and suggested that Cameron had intended all this from the outset !


    Cameron and Osborne use this ‘Fiction’ of an overwhelming budget deficit to justify pre-planned privatisation and cuts in Public Spending (The Politics of Privatisation in Western Europe,1988) .

    Their cuts of 25-40% are thus causing the dismantling of our universally available Health, Social Service, Community Care, Education Services, LegalAid as well as Pensions, Retirement and Benefits Provision and entitlement for which fair and proper taxation policies have paid in the past.

    At the same time they impose the headlong drive towards Privatisation and Outsourcing thus threatening not only Health and Education but Prisons, Probation, Policing and Court Services.

    They enhance the interests of the large Corporate, Commercial and Financial organisations at the expense of the Public interest and the Public Purse rather than the majority democratic interest of all living in our communities. Cuts in Flood Protection are a recent case in point.


    The Deficit Strategy ( “Lie” as described by William Keegan) underpins the Coalition’s entire political, economic and social/welfare policy. As described above it is clearly based on complete misrepresentation designed to mislead and confuse the Electorate and to blame Labour for the damaging policies being forced through.



    Labour is thus unfairly and unjustifiably labelled as the cause of a Deficit Crisis which does not actually exist. A lack of rebuttal seems to encourage the Chancellor and Ministers, in Parliament and out in the country, continuously to make statements about “the financial mess they inherited.”

    Everywhere groups of people, in meetings, social gatherings and pubs, friends and acquaintances have all been imbued with the mindset of Deficit Fetishism .




    But there are now within the country profound stirrings of support for a concerted challenge to this Coalition Lie.This resides not only among intellectuals, economists, journalists and the Trades and Labour Movement but nationally and locally among many other people of good will concerned about the impact of this fixation on Deficit Reduction ( in part the cause of the Cost of Living Crisis) and about the disastrous and dangerous direction in which the UK is being taken. Their frustration and alarm could well be mobilised.

    Notable among them must be the recent positions taken by both Archbishops,Justin Welby of Canterbury and Vincent Nichols of Westminster ; ably supported it must be said by Pope Francis ! The significance of their Faith communities and their range of influence should not be underestimated!


    I write this letter to suggest to you that the tide is beginning to change and thus brings a challenging opportunity for Labour,


    You have a network of Constituency Parties, MPs, Parliamentary Candidates, Leaders and Councillors , Party Members and their friends within our Counties, Cities, Towns, Village and Rural communities -all of whom could be mobilised to counter the Coalition Lie and to demolish the mindset of Deficit Fetishism. Should this mobilisation occur the ground would be well prepared for a much more healthy and constructive debate about the future direction of our society and the kind of ‘people-based’, democratically- orientated economy ; for the reconstruction of which so many would vote in the next General Election,


    Yours Sincerely,


    Michael Poulter



    As a courtesy I have sent a copy of this letter to each expert person quoted within it.

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