Lindsay Mackie is a consultant at nef. She is leading nef’s post office campaign and works on Clone Town and Ghost Town Britain.
I’ve always been keen on scanning the skies for new forms of avian life. And as I twitch with other bird watchers, I’ve registered the dark and looming shape of the deficit hawk.
This creature seems to be a bit picky about what it will devour. It swoops hungrily on some prey and whimsically leaves other, fleshy and well padded beasts well alone. It seems to be concentrating its attentions on our publicly owned pastures, leaving the private estates well alone.
Enough with the metaphor. What is happening is that the response to the financial crisis is being dictated by those, in Government and outside it, who believe that the words ‘bloated’ and ‘public sector’ belong together and that the crisis cannot be resolved without first cutting back – 20 % is being mooted – on our public sector. The deficit hawks are currently in control of the skies.
Since the banking crisis began nef has been clear that we cannot resolve our economic crisis without first reforming the banking system. We know that the banking system has decoupled over the past decade from the productive economy. That linkage has to be restored but with a banking system radically re-formed.
The Government seems to agree: Vince Cable said last week that ‘ we have a seriously dysfunctional banking system’. And in case anyone forgets that our crisis came about through banking failure these figures will remind them:
- UK government support package for banks totalled £1.3 trillion
- Combined losses of ten major international stock markets reached $9.5 trillion between the start of 2007 and 2009 , or over 10 per cent of global GDP
We now urgently need another linkage between the programme of public service cuts and the demands we must make of the banking system. These principally refer to availability of credit but also to the establishment of a Universal Banking Obligation which means that the banks offer a service to the millions of people who currently have either no bank account or who cannot get even small amounts of credit for the kinds of economic activity that will help our economy to grow (money for training, for education, for house maintenance, for energy saving).
Only radical reform of the UK banking and financial sector can deliver institutions capable of investment and lending that is economically and socially productive. And a concentration on cutting public spending without this reform will be disasterous for our country.
Image by The Original Ki via Flickr