Monday 17 September 2018

Borrowing and investment

Yesterday’s Sunday Times carried what appeared to be an almost blow-by-blow account (paywall) of who said what in a crisis meeting of the Cabinet last week called to discuss Brexit.  The extent of the leaking of what are nominally ‘confidential’ discussions (the paper claimed at least six different cabinet sources just for its reporting of what the Chancellor said) shows how power and influence are ebbing away from the Prime Minister, with her underlings keen to parade their credentials in the inevitable battle to succeed her.
But if the leaking in itself showed an increasing detachment from any idea of collective responsibility, some of the proposals apparently made look like desperation is setting in.  One example was the claim that the transport secretary put forward a proposal to give everyone in Britain a Brexit bonus of £200.  Given the fact that any suggestion of there being a Brexit bonus has been well and truly debunked many times, it is unclear where he thought this money was coming from, but bribing people with their own money doesn’t look like honest government. 
One minister, Andrea Leadsom, reportedly did come up with a proposal to raise some money: the government should sell ‘Brexit Bonds’ to get people ‘investing’ in the government. (And of course, if each of us ‘invests’, say, £200, the government will have enough money to give us all a ‘Brexit bonus’ of £200 – the sad thing is that some might even be taken in by that one.)  ‘Selling bonds’ is something the government does all the time.  Whether labelling them as ‘Brexit’ bonds would make them any more saleable or attractive is doubtful, but we do know that the government can, at the moment, sell as many bonds as it wants to; people and institutions are queuing up to buy them.  It is one of the main routes by which government raises money, although it’s more usually called ‘borrowing’ - because as any accountant or book-keeper will be aware, anything that looks like an investment to one party will look like a loan to the other.
Calling on people to ‘invest in the government’ may have a nicer ring to it than ‘the government should borrow more’, but it amounts to exactly the same thing.  I welcome any recognition in government that they can and should borrow more to invest in services and infrastructure; I just wish they weren’t in a position where they have to do it to pay for the folly of Brexit, let alone in order to try and trick us into thinking we’re getting some sort of bonus.

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