IN response to Mr Withers’ opinion ‘Rich look on as poor suffer’ Guardian, April 10, his views from an economic prospective are fundamently flawed as he seems to be holding the coalition Government from 2010 to account for the economic inbalance between the rich and the poor.
From 1997 to 2007,the New Labour Government as a business model was destined to implode from an economic perspective due to the inbalance between the rich and the poor. By the 2010 election, New Labour’s accounts showed that for every £4 of Government expenditure there was £1 of taxation.Where they did pay, the rich only paid 40 per cent tax and some of the predatory companies avoided it.
The bankers got rich with worthless financial products such as PPI, loan to value mortgages, 125 per cent mortgages which they in turn sold to speculators on the markets. The fundamental economic flaw here is it’s a one way bet that property values will inflate and not devalue. So the bankers, speculators, landlords of properties were all getting rich.
Meanwhile those at the other end of the spectrum were trapped on welfare, where in some cases work didn’t pay compared to welfare benefits. This created a gap in the employment market place for migrant workers to fill low paid roles. Coupled with the working families tax credits and Gordon Brown’s scrapping of the 10p tax rate for low income earners,the cost of living crisis was a creation of New Labour.
This, along with some academy establishments and NHS hospitals being tendered out to the private sector with huge interest payments attached, along with bailing out the banks with billions in taxpayer cash ultimately left whichever Government came to power with two choices, austerity and public sector cuts or more borrowing, higher inflation, high taxation, low investment, high unemployment equals more borrowing as it’s unstainable.
TONY FOX Stockton Heath