10 years after the crash, alternatives are emerging | Letters

David Murray on debunking economic myths; Les Bright on politicians with no answers; Ed Runham on Labour being unfairly blamed; Alan Cleaver on banks having learned nothing; and Frank Field MP on a programme to boost wages

As Torsten Bell notes, those in Whitehall failed to see the crash coming (We let the financial crisis go to waste, 9 August), but a significant number of non-neoclassical economists did – it’s just that they weren’t listened to. It’s possible that Bell is also steeped in neoclassical economic beliefs, but in the hope that his good work at the Resolution Foundation might have loosened those chains, he could do enormous further service by speaking up to debunk a few economic myths.

When he writes “there is not some magic bullet”, it resonates with the now discredited “myth” that “there is no magic money tree”, employed by Thatcher, Cameron and May. After all, from his time in the department he must surely have been aware that in 2013, tucked away in the bundle of Treasury documents tabled by the then chancellor, George Osborne, on budget day, was one with this paragraph: “For example, it is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money. In theory, this could allow governments to increase spending or reduce taxation without raising corresponding financing from the private sector. Adair Turner, Chairman of the Financial Services Authority, has suggested this could be a tool to use in extreme circumstances.” Clearly such money could be used to increase spending to build houses and improve the lot of workers, both of which Bell recommends.
David Murray
Wallington, Surrey

• Torsten Bell’s assertion that “a period of prolonged fiscal consolidation is a very silly time to be making major tax cuts” is a welcome reminder that it doesn’t have to be like this. For the past seven years those holding the reins of power have consistently told us that there is no alternative, that we cannot carry on living beyond our means, and that the greatest gift is a low-tax economy. Those politicians, paralysed in the aftermath of the Grenfell Tower fire and by the wider housing crisis, and distracted by the Brexit agenda, have no answers. But the rest of us are crying out for the kind of vision and courage displayed by the 1945 government that laid the foundations of the welfare state and built the council houses in which so many of us were happy to grow up. An early general election will provide an opportunity to test these competing visions – let’s hope the Tories don’t opt for the “lipstick on a pig” solution again (Tories count cost of hiring strategist, 9 August).
Les Bright
Exeter, Devon

• As we commemorate the 10th anniversary of the global financial crisis, could we ask Conservative and Lib Dem politicians, together with the media, to stop blaming the last Labour government for the financial meltdown? The responsibility for the crash lies with the banks – although they seem unable to accept that or change their ways.
Ed Runham
Matlock, Derbyshire

• On Wednesday, the 10th anniversary of the financial crisis, I popped into my local HSBC bank. The cashier suggested I should take out a loan to “treat yourself to a new car”. I am 58. My current income is £300 a month. It seems the banks learned nothing from the crash and are happy to play silly buggers with our economy once again for a quick profit.
Alan Cleaver
Whitehaven, Cumbria

• Katie Allen offers a first-class analysis of the decoupling of wage growth from high rates of employment (Record employment rate tells skewed tale about jobs market, 7 August). The major economic task, if this trend is to be reversed, is to ramp up productivity. This will take time as well as new investment in skills, transport, and housing.

But might I set out the bones of a programme that would quickly set us on a path towards higher incomes for low earners?

Trade union activism has set off a domino effect against bogus self-employment in the gig economy. A swift legislative response to the Taylor review is now required to effect wholesale change that produces strong upward pressure on wages. A crucial test here will be to extend the protection of the national minimum wage to those who are wrongly labelled “self-employed”.

Next, the Low Pay Commission should be tasked with setting higher minimum wage rates in those sectors of the economy that could easily afford to pay it without shedding jobs. Moreover, companies should be required to publish the pay ratio between their highest and lowest paid staff, including contract and agency workers, and to peg subsequent increases at the bottom of the pay scale to those at the top. A requirement to offer all workers on zero-hours contracts the option of a fixed-hours alternative would also help.

Finally, the welfare system needs to keep up with the changing composition of the workforce. Universal credit, in its current form, fails in this task. By penalising households with one parent working full-time and another seeking to enter part-time work, universal credit makes it much more difficult for families to escape poverty.
Frank Field MP
Labour, Birkenhead

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