FOR BRITAIN ECONOMICS
LAUNCHED JULY 2020
For Britain is a party of trade and creativity. Freedom to trade is integral to freedom generally. It is imperative, and we know that it creates wealth and raises living standards.
However, we also know that over recent decades, a radical transformation has taken place, a chaotic capitalism has emerged and a debt-based bubble has formed; one that grows larger and larger and comes closer and closer to bursting point with each passing year. Few political parties will admit, or even discuss how much debt has transformed our economy.
We currently live in an economic zeitgeist of “get rich quick”. A free-for-all period of cheap borrowing led to the financial crisis of 2008. Easy lending in the United States caused an explosion in construction causing house prices to rise. Investment in construction in the US increased and the bubble grew. Oil prices rose in mid 2007 contributing to unemployment and followed by mass default on sub-prime US mortgages. When the bubble therefore burst, house prices declined, investors reported losses, and consumers had both defaulted on and accumulated enormous levels of personal debt.
The debt bubble, both for consumers and businesses, continues to expand.
British people and companies are now in unprecedented debt. A culture of “living for today” has changed our collective thinking about debt; creating irresponsible capitalism. Today, debt is ‘the norm’. Families are burdened with enormous mortgages; that too is ‘the norm’. For Britain believes strongly in the promotion of responsible capitalism and a move away from debt. We believe in ending the financial bias in favour of debt (over equity) and returning to careful capitalism.
Since 1963, consumer debt in the United Kingdom has risen dramatically. It is now the case that almost everyone is in debt. Solvency is a thing of the past and is actively discouraged. Instead of saving, consumers are encouraged (throughout the easy availability of credit) to borrow against future potential earnings – often at amounts far higher than their annual income. According to economist Michael Rowbotham, between 1963 and 1997, average household debt rose from less than 30% to over 100% of their total annual income. In other words, people are now in more debt than they can afford to pay.
People in the UK owed £1680 billion at the end of January 2020.
“In the year up to November 2019, UK households borrowed almost as much as the Government, demonstrating that debt remains both a private and public sector issue”
Businesses suffer similarly. Almost all businesses are in debt of some kind. Therefore, the race for profit in order to pay these debts has become a race to the bottom. In their bid to sell, businesses have expanded the areas in which they sell their goods – seeking a wider market to make more profit. This leads to greater transport costs (and more cars on the road), causing yet more expense and environmental damage.
The bid to sell, sell, sell has also led to a reduction in quality, as producers cut costs to mass produce products that they ship to faraway markets, and all to increase profits so that they can remain viable despite their mountainous debts.
Keeping production costs low has inevitably led to lower quality products and promoted a throwaway society. Not long ago, long-lasting household products were available from British producers whose costs were lower thanks to lower debt and fewer transport costs as targeted markets remained local.
Today, mass import of cheap foreign goods (such as from China) has destroyed Britain’s manufacturing base and filled our homes with substandard products – we no longer expect products to ‘last’. Again, this promotes short-termism and irresponsibility, which For Britain is determined to reverse.
As has already been mentioned, the easy availability of credit in the United States led to the financial crash of 2008. Almost all individuals and businesses, both in the US and the UK, are heavily indebted to banks. Debt weighs heavily on both production and distribution.
It is fair to say then that banks are extremely powerful – they can take people’s homes, close people’s businesses, cause global financial crashes and make millions unemployed. Subsequently, they can place intense pressure on governments and exert immeasurable influence.
How can this be? How can it be that banks have the power to bring an economy to its knees? Banks are neither elected nor accountable. During the financial crash of 2008, British banks were bailed out by the government. Although the banks had effectively caused the crash, taxpayers’ money was handed over to save them; they’d ‘got away with it’. No lessons would therefore be learned.
Prior to the 1970s, there were much tighter controls on banking, specifically on what percentage of depositors’ funds could be lent to consumers. During the ‘80s and ‘90s, much regulation was relaxed and banks liberalized credit, making it far easier to borrow. A society and economy mounted upon debt has been the result.
The bond market is little different and it too is encouraging irresponsible capitalism. If governments or corporations issue bonds to raise funds, when those bonds mature, they simply issue more bonds. This is an extraordinary situation and symptomatic of a circular debt market. Debts are incurred in order to pay off debts. The circle goes round and round… eventually, debts will be recalled and further borrowing (to pay off debts) will not be available. Eventually, the merry-go-round must come to a halt. This is why we must return to responsible capitialism.
For Britain is not opposed to debt per se, and we understand that many businesses have formed and gone on to achieve success, but the levels of debt, on both national and domestic level, has become too high and a move backward to a centre ground on this matter is required.
Furthermore, private ownership must be protected as a concept and encouraged in practice.
In order to promote moral money and responsible capitalism, For Britain will:
Ban the buy back of shares
If a company buys its own shares, it increases the value of each individual share. This means their shareholders receive a financial boost. However, it also drains cash from the company. This will in turn lead to more borrowing by companies as their cash balance drops.
During the coronavirus crisis of 2020, Airlines for America, the US aviation industry’s representative organisation, requested $50 billion from the federal government to help the industry through the crisis. Meanwhile, it is “estimated that the five biggest US airlines splurged 96% of their free cash flow on buybacks over the past decade.” Is it fair for the taxpayer to come to the aid of companies who have spent their money enriching their shareholders and themselves?
The buyback of shares is an inherent part of the get-rich-quick culture we now find ourselves in. Companies buying back their shares provides a hefty boost (and hefty bonuses) but at the cost of draining cash from the company. This means what hard times hit, the company will either lay off thousands of workers, or request state aid, or both, because it has no cash in the bank to fall back on.
During the coronavirus crisis, President Trump included on the buyback of shares to companies given public aid. For Britain will go further, we will ban the buyback of shares.
Share buybacks were illegal in the UK as recently as 1982:
“It’s the ultimate of what is described as financial engineering where the company is seen as a financial instrument rather than a thing which shareholders own and should be creating value from what it’s doing”
It was once seen as stockmarket manipulation, yet now it is common practice. We believe it must be brought to an end and companies encouraged to have enough cash in the bank for a rainy day, rather than call upon an already overburdened taxpayer.
For Britain believes in a low tax, low waste economy and that is what we will strive towards. It is mere common sense that the more money people have in their pockets, the more they spend, and the more money is injected in to the economy. It encourages entrepreneurship and discourages unemployment.
Therefore, we make the following proposals for revenue, tax, and the reduction of waste.
Where Will the Money Come From?
Before you spend the money you have to earn it. That’s why we have put this section first, unlike other parties who leave it to last or ignore it completely.
- Efficiency savings in national and local government and the NHS. Everyone who works in them knows there is endemic, horrendous waste. We will give managers the power and incentives (including a small percentage of the money saved) to cut the waste. Saving 10% of government expenditure is a very conservative estimate.
- No more subsidies to foreign countries and international NGOs except for genuine emergency aid. Close down DFID.
- Cancel HS2.
- Limit Child Benefit to two children per couple.
- For the first five years in the UK immigrants will not have access to the welfare system. They should be able to show they can support themselves, pay medical insurance etc. to enter the country as is the case in Australia.
- Strictly enforce the existing law that the NHS must secure the ability to pay for services provided for foreigners BEFORE treatment, except in emergency cases. There must be a mechanism to bill the person, or if necessary collect the money from their Embassy or the airline that brought them here
- Levy personal tax (replacing income tax and NI) at a flat rate of 25% above the personal allowance with no exemptions. This will save the economy many millions in tax simplification.
- Lower Corporation Tax to be the lowest amongst our competitor countries, to attract companies to locate in the UK and create jobs. Companies having more money to pay out as dividends and salaries will increase the total tax take due to the 25% flat rate.
- Remove those on the minimum wage from the income tax and NI nets. We will combine income tax and NI into the new personal tax and harmonise the personal allowance and minimum wage.
- Scrap all climate change taxes, eliminating subsidies to windmills and solar panels and the taxes that have been imposed on all energy users to pay for them.
- Scrap the TV licence, saving every household £150.50 a year. Fund the BBC by a voluntary subscription instead.
- Completely separate investment and retail banking so that investment banking cannot rely on the capital balances of retail banking.
- Substantially reduce VAT, which at 20% loads a crushing deadweight on to many transactions that become uneconomic. Immediately reduce VAT to 17.5% and eliminate VAT on home power and heating.
- Increase defence expenditure to properly fund our Armed Forces. We have two aircraft carriers with no planes on them and the smallest Navy since Henry VIII. An increase in defence expenditure from 2% to 3% of GDP, as 3 recently recommended by the Defence Select Committee.
- Help small businesses by reducing Business Rates by 50% on properties under £50,000 rateable value.
- Abolish Inheritance Tax. This is a regressive tax because only people of moderate means pay it. The wealthy can afford estate planning.
- Increase spending by £5bn on schools, the NHS and adult social care.
- Reduce Stamp Duty Land Tax across the board by 1% to get the stagnant housing market moving.
- Triple numbers in the Border Force to properly enforce immigration policy.
- Scrap NHS England car parking charges where they are not needed for parking management.
For Britain pursues a healthy economy; one with reduced debt, reduced taxes, lower waste and fewer burdens on business. Enormous debt, that cannot be paid, is now the norm at all levels of the economy, from Governments to private households. We must begin to reduce this debt. We must also reduce taxpayer bailout of irresponsible big business, all taxes must be paid, and people must have more money in their pockets to increase their own well-being as well as that of the economy.
It is only fair that the taxpayer gets value for money, so public sector expenditure will be required to reduce waste across the board. Resources must be prioritised with the best interests of the public in mind; we must use police resources on real crime for example, not Twitter or inspecting shopping trolleys!
We will bring common sense and responsible management back to the governance of this country. This is in the best interests of its people both today and tomorrow.
The policies above suggest a way of moving forward in to a new type of capitalism; a more responsible capitalism. However, plans for our economy were thrown way off track with the emergence of coronavirus from China in early 2020. Our economy has suffered enormous losses and billions has been paid out by the treasury to soften the blow.
At the time of publication of this manifesto, the Government’s ‘furlough’ scheme has not yet come to an end, and we do not therefore know the full extent of unemployment (and therefore welfare payments) that will result from the crisis. We do not yet know how many small businesses will survive or what other economic changes we may witness.
As a country, we are also about to formally end our membership of the EU when the transition period ends on December 31st of 2020. Just as we must with coronavirus, we are forced to adopt a wait-and-see approach for the remainder of 2020.
However, we are clear that foreign aid should not be paid to other countries and that £14 bm per annum would be put to much better use to help small businesses survive and to prevent yet more Government borrowing. Finally, immigration must stop. We cannot expect our economy to recover if more and more people continue to arrive, increasing the welfare bill, housing costs, and creating extended competition for jobs.
For Britain insists on putting the British people first, and policies related to coronavirus, as well as all other areas of life, must begin with that principle.
 Rowbotham: Grip of Death: A Study of Modern Money, debt Slavery and destructive economics