6 August 2013
Threadneedle Street , the home of the Bank of England , is a world away from the East End ward that I represent where a relatively high Job Seekers Allowance rate persists in parts.
Threadneedle Street and the East End may not at first glance seem to be interconnected but the new Governor of the Bank of England has pointed to a solution that would undoubtedly be welcomed by its people.
Mark Carney, the new Governor of the Bank of England, has a reputation that precedes him from Canada on the issue of “dead money” .
He was highly critical of Canadian businesses hoarding large amounts of money that he said would be more productively used creating jobs and economic growth.
This “dead money” as he termed it should be invested to boost productivity, part of which had come from government reductions in corporate taxes paid by these companies.
Statistics Canada , the official national database , demonstrated that by the end of the first quarter of last year, non-financial corporations in Canada had amassed a hoard of cash valued at $526-billion by the end of the first quarter of last year .
The politics of this issue will sound familiar to us in Britain:
The New Democratic Party (NDP) , Canada’s equivalent to our Labour Party, accused Canada’s Conservative Government of having “chosen reckless corporate tax giveaways that failed to rally private investment or encourage economic growth.
“Instead of tackling the serious economic challenges facing Canadians, the last Conservative budget attacked essential programs and services like health care and Old Age Security and gutted environmental protections.”
The NDP called for a long-term skills training program to boost skills, an increase in funding for research and development, incentives for business that are targeted to create jobs , and more investment in infrastucture.
In the UK, similar sittings on lots of cash have been called out by Tax Research UK revealing that ;:
Over six years George Osborne is going to give £58 billion to big business – who are already sitting on a cash pile of more than £700 billion.
“That’s cash given to business it does not need, has no use for and will not invest. “
At the same time , wages and standards of living have been frozen or have fallen for the general body of population .
Paul Krugman, the Nobel Prize-winning economist , quotes Keynes to show why communities remain in an economic rut because of such policies :
“ If a particular producer or a particular country cuts wages, then, so long as others do not follow suit, that producer or that country is able to get more of what trade is going.
“But if wages are cut all round, the purchasing power of the community as a whole is reduced by the same amount as the reduction of costs; and, again, no one is further forward.”
And this need not be happening in the East End ward or anywhere else in Britain.
It is a consequence of choices , ideological choices that we need to tackle and reverse.
Claimant Count numbers and rates for individual communities in the East End ward
Pitkerro 356 10.2 per cent
Douglas 289 8.7 per cent
Craigiebank 130 5.5 per cent
Lesley Brennan : A Message from Canada http://t.co/Z4pQ6ksPXm— Dundee Labour (@dundeelabour) August 6, 2013