I beg to differ.

Brent crude oil has just hit $100 again. This is the FT chart.

If this does not say that markets are waking up to the reality of what I have been saying, I am not sure what does. That uptick is not stopping right now, especially with safe passage through the Red Sea now also being in doubt.

The cost of Trump's fascist war - apart from that to all those who have died and been injured, displaced or lost loved ones on all sides - is going to be enormous, and might now last for years.

I would have thought that the world would have realised by now how expensive fascists are, wherever they seek to grab power, including here in the UK. It seems that might not be true, as yet. But I think the realisation will dawn sometime soon.

The problem is, where do people go then?

Where is the party with the credible alternative political and economic narrative?

The Richard J Murphy YouTube Channel

And

My View on …

Work

Richard J Murphy

_____________________

This post is part of an ongoing series in which I set out my views on significant issues in economics, political economy, politics, taxation, and accounting. It should be read in that context. It provides an overview of a position that I have developed over many years of writing and analysis, rather than a comprehensive treatment of the subject. If you would like to explore these ideas in more detail, the reading list at the end of this post provides a good place to start.

The whole View On series is available here. 

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What we get wrong about work

Here is a thought experiment I have used more than once when trying to explain why our economy rests on foundations that mainstream economics barely acknowledges.

Suppose no one went to work tomorrow. Not because of a strike, or a bank holiday, but because of a complete and universal cessation of human effort for a single day. Food would not be produced or distributed. Care would not be delivered. Services of every kind would collapse. Money would still exist, but it would be meaningless because there would be no one in the banks to manage it, no one in the shops to exchange it for, no one in the fields or factories to produce anything worth buying.

That is important, because what that thought experiment reveals is that wealth is not money. Wealth is the product of human effort, and without that effort, the money is worthless.

Despite that, our political debate, our economic measurement, and our public policy all proceed as though money were the thing that matters, and work is merely the means of obtaining it.

In what follows I want to argue that this confusion runs very deep, that it has distorted the way we value different kinds of human contribution, and that getting it right is not an abstract philosophical question but one of the most pressing practical challenges we face, touching everything from the productivity crisis in the British economy to the coming disruption of artificial intelligence and the growing insecurity of working life.

The classical economists had it right

Adam Smith understood something that his modern successors have largely forgotten. His book, The Wealth of Nations, published in 1776, was not a defence of markets as such. It was an account of how human effort creates value. Production, Smith argued, depends on labour. Labour and enterprise create wealth, while rent and interest extract from it. That framework, developed and extended by the classical economists who followed Smith, was shared across what would later seem like very different intellectual traditions. Significantly, even Marx accepted it, even as he drew very different political conclusions from it.

What then happened in the 1870s, when economics was transformed into a largely mathematical discipline, was that this foundational insight was progressively abandoned. The focus shifted from how value is created to how prices are formed in markets, and the role of human effort in producing anything was increasingly taken for granted or ignored. Finance was elevated above production. The corporation became the dominant institution, concentrating power and extracting value rather than creating it. Rent extraction, once regarded by the classical economists as unproductive, became normalised as a legitimate form of income, so that today we regard someone who owns land or property or financial assets and extracts income from them as doing something equivalent to someone who actually goes out and makes or does something. We have our economics backwards, and much of what follows from that inversion is damaging.

Marx saw this clearly enough, though he made an error of his own that is worth noting. He treated paid employment as the definition of real work, reducing the human contribution to wages earned in the market. That framing overvalues market activity and ignores everything else. It is a mistake that much of the political left has inherited, and it matters because the economy as we live it depends enormously on work that is never paid for at all.

Why we need to work

Before continuing, there is a question that sits beneath everything else I want to argue in this piece, and it is worth addressing directly.

Why do people work? The obvious answer is that they need the money. But that answer is incomplete, and we know it is incomplete because of what people do when the money is no longer the reason. Studies of lottery winners consistently find that the majority return to work within a year or two, not because their winnings ran out, but because they found, often to their own surprise, that they missed something they had not expected to miss. Ask most people whether they would continue working if they did not need the income and a significant number say they would not. Watch what those same people do when that situation arises, and most of them carry on working, or find something very like it.

The same is true of many retirees, whether they retire early or not. Many find that after a few months they want to work, and do so, if only part time. Work meets a need they had not appreciated before being asked to do without it.

What they are missing, I think, is not the work itself in any narrow economic sense, but everything that comes with it. Work gives people structure. It divides time into the meaningful and the purposeful. It provides a reason to get up, a rhythm to the day, a boundary between effort and rest that makes the rest feel earned. Those who have spent time out of work, whether through unemployment, illness, or caring responsibilities that the world does not count as real work, often describe not the loss of income as the hardest part but the loss of that structure, the sense of days that run into one another without shape or direction.

Work also gives people somewhere to belong. For most of us, our working lives are where we make friends, where we encounter people we would never otherwise meet, and where we are part of something larger than our own household. The social fabric of work is something we rarely notice until it is gone. When it goes, as it does for the long-term unemployed or for those in the fragmented, isolated conditions of gig work, the consequences for mental health and social connection are severe and well documented.

Guy Standing's account of the precariat captures this precisely: what the precariat lacks is not merely income security but the stable occupational identity and social belonging that steady work, at its best, provides.

Importantly, work gives people a way of being seen to contribute. This, I think, is the deepest of the reasons why we want to work. Human beings appear to have a genuine need to feel that their efforts count for something, that they are making a difference to other people, that the world is in some small way better because of what they do. This is why the question of time expended on hobbies interests me. When I observe people outside paid work producing things of extraordinary skill and dedication for no financial return at all, what I see is not a leisure activity but a form of work in every meaningful sense, motivated not by money but by the need to apply effort purposefully and to have that effort result in something real. The drive to contribute is not manufactured by employers or by economic necessity. It is prior to both.

This matters for the argument I make here, because it means that the degradation of work under neoliberalism is not merely an economic injury. It is an injury to something people need to live well. And it means that the disruption threatened by artificial intelligence is not simply a problem of income replacement. It is a problem of what people do with themselves, how they structure their time, how they remain connected to one another, and how they retain the sense that their contribution to the world is real and recognised. These are not soft or secondary concerns. They are central to what it means to take the role of work seriously within society.

The work we do not count

The pints just noted feed naturally into a point far too rarely noted in economic debate. We live in a world where a great deal more work is done than is ever measured or rewarded. Care work, in particular, is the invisible foundation of much that is of value in our society. Activities such as childcare, care for elderly relatives and household labour of all kinds sustain the daily lives of most people in society and make all other economic activity possible, and they are disproportionately performed by women. None of this appears in GDP. None of it is reflected in wages or salaries. None of it is acknowledged in the political rhetoric about working people, which defines work almost entirely in terms of paid employment and payslips, yet it has enormous value.

The same is true, in different ways, of volunteering, community activity, and creative work done outside the market. When I look at the people who run charity shops and community gardens and local repair cafes, I see people doing work of genuine social value that our economic system classifies as worthless because no money changes hands. When I go to hobby exhibitions and similar events, I see people producing work of extraordinary quality using skills that their employers might have never thought to ask them to use at work.

This matters not only as a philosophical point about how we measure things, but as a practical economic observation. The UK has a persistent and troubling productivity gap relative to comparable economies. Part of the explanation, I am increasingly persuaded, is that British employers systematically fail to engage the skills, creativity, and initiative of their workforce. People who are told at work to follow instructions without exercising judgement are the same people who go home and produce astonishing things in their own time, because there they are allowed to use their abilities. The frustrated energies that end up in hobbies is the energy our economy could also be capturing in productive work.

GDP as currently measured gets all of this this comprehensively wrong. It counts the imaginary rent that homeowners supposedly pay themselves for living in their own homes. It records the costs of cleaning up environmental disasters as economic output. But it ignores care work and volunteering entirely. The result is an economic measure that systematically understates what sustains life and community and overstates the contribution of financial transactions that may add nothing to anyone's wellbeing.

The degradation of work under neoliberalism

If classical economics got the foundations of work right and then forgot them, neoliberalism took the forgetting further. The political project that reshaped British and American economic policy from the late 1970s onwards did not merely deprioritise the question of what work is for. It actively degraded the conditions of working life, shifted risk from employers to workers, and rewarded ownership over contribution in ways that have steadily eroded the labour share of national income.

The evidence for this shift is not contested. The labour share of income in the UK has fallen significantly since the late 1970s. Working people are, in aggregate, receiving a smaller proportion of what the economy produces, while capital receives more. This is not the result of some impersonal market force. It is the consequence of deliberate policy choices such as the weakening of trade unions, the deregulation of labour markets, the growth of zero-hours contracts and casualised employment, the promotion of self-employment arrangements that deny workers the rights and protections of employment while disguising the dependency relationship that actually exists.

Guy Standing, whose analysis of what he calls ‘the precariat’ I find compelling in many of its essentials, has described a structural transformation of labour markets in which insecure jobs, unpredictable income, and the absence of long-term prospects have become the norm for a growing section of the workforce. Work no longer guarantees security, identity, or dignity for very many people.

This was not inevitable. It was chosen. The idea that flexible labour markets are simply a response to economic reality, rather than a political construction designed to shift the balance of power between employers and workers, does not survive even a cursory examination of how these changes were made and who benefited from them. The growth of the gig economy has cost the public exchequer billions in lost tax and National Insurance revenues because employment relationships have been recast as self-employment to deny workers their rights and reduce employer obligations, without any corresponding economic benefit to anyone except those at the top of the firms involved.

The Labour Party was originally founded not to extol the virtue of work as such, but to resist the exploitation of those who had no choice but to sell their labour. That distinction matters enormously. There is nothing dignified about degraded, insecure, low-paid work that strips people of autonomy and treats them as interchangeable units of production. The rhetoric of the dignity of work, deployed by politicians across the spectrum, often amounts to little more than a demand that people accept whatever conditions they are offered without complaint, on the grounds that any job is better than no job. I do not accept that framing. What people deserve is not merely work, but work that is worth doing, on terms that respect their capabilities and their humanity. The fact that we now have no political party championing that idea is one of the failings of modern British politics.

The coming disruption of AI

The question of what work is for, and who it is for, is being given new urgency by the advance of artificial intelligence. I have written about this at length in recent months, and I want to be honest about the extent of my uncertainty here as well as my concern. AI will displace significant numbers of workers in many occupations over the coming years. This is already happening in graduate-level jobs, where AI-assisted processing has enabled employers to shed entry-level positions while maintaining output, with the result that a generation of young people entering the labour market finds itself in an arms race with technology it did not design and cannot control.

I do not think the situation is hopeless, but I think it is more serious than the optimistic version of events, which holds that AI will create new jobs as fast as it destroys old ones, as the internet did, allows for. Research on automation has identified what might be called a demand externality: when firms replace workers with machines at scale, they reduce wage income, which reduces consumer demand, which weakens the economy on which those same firms depend. Individual firms acting rationally in their own interests can collectively produce an outcome that is bad for everyone, including themselves. This is not a small-scale or marginal risk.

The right response to automation is not to prevent it, which would be neither possible nor desirable. It is, instead, to ensure that the gains from automation are shared, that the workers displaced by it have somewhere to go, and that the economy continues to generate the kind of meaningful, skilled, well-remunerated work that people want to do. That requires active public investment in the kinds of work that AI cannot readily replace, such as care work, skilled craft and technical trades, education, community services, environmental restoration. It also requires an education system reorganised around the skills that will matter in an AI-assisted economy, rather than one built around the requirements of a world that is already passing. And it requires, above all, a politics willing to treat the question of what work is for as a public question, to be decided democratically, rather than leaving the answer entirely to market forces and corporate strategy.

Answering the sceptics

There are three objections to the argument I have set out here that deserve a serious response.

The first is that the concern about unpaid work and care is well-intentioned but economically marginal, that what matters for living standards and prosperity is what happens in the market economy, and that the invisible sector of unpaid contribution, however valuable in human terms, cannot substitute for paid employment and economic growth. I think this objection is wrong in two different ways.

It is wrong about facts, because the scale of unpaid care work is not marginal at all: estimates of its value consistently run to a very large fraction of GDP, and the NHS and the social care system would collapse within days without the unpaid labour that sustains people in their homes and communities.

It is also wrong about values, because the question of what we measure and what we ignore is itself a choice with consequences. An economy that counts financial speculation as productive and counts care as nothing is an economy organised around the wrong priorities, and the policies that flow from those priorities will consistently underinvest in the things that actually sustain life.

The second objection is that the concern about job quality and the degradation of work amounts to a counsel of perfection, that in a competitive global economy employers have no choice but to seek flexibility and reduce costs, and that demanding better conditions will simply drive jobs elsewhere. This objection contains a grain of truth, in that the international dimension of labour markets is real and cannot be wished away. But it substantially overstates the degree to which low-road employment is economically necessary rather than merely convenient for those at the top.

The UK's productivity problem is not unrelated to its employment model: an economy that relies on large numbers of people doing low-skill, low-wage work with high turnover and low morale will not generate the investment in skills and capabilities that a productive economy requires. Countries that have maintained stronger labour protections, higher minimum wages, and greater worker voice have not suffered the productivity disadvantage that the race-to-the-bottom argument predicts; in many cases they have significantly outperformed economies that took the low road. The argument that good jobs are unaffordable is, in practice, usually an argument that the people who currently benefit from bad jobs are unwilling to accept a different distribution.

The third objection, increasingly pressed as AI becomes more prominent in public debate, is that worrying about the degradation of work is a distraction from the larger and more urgent disruption to come, that if AI is going to transform the labour market fundamentally, arguments about zero-hours contracts and the labour share are essentially beside the point. I take AI's potential impact seriously, but I reject the conclusion that it makes the present condition of working life irrelevant. The choices we make now about labour rights, job quality, and the distribution of economic gains will shape the way AI's impacts are distributed. A society that enters the AI transition with a strong floor of worker rights, a functioning social security system, and a culture of public investment in skills and infrastructure will be far better placed to manage that transition than one that has spent decades eroding all of those things in the name of market efficiency.

Conclusions

Work is the foundation of wealth. Money, ownership, and financial engineering are not. Human effort is. Our labour, care, creativity, and effort are what actually produce the things on which every life depends. Classical economics understood this. We have progressively forgotten it, with consequences that are visible throughout the British economy and throughout the working lives of millions of people.

What I want to see is an economy that starts from this reality rather than from the fiction that wealth flows from capital rather than from the people who do things. That means measuring the things that matter, including unpaid care and community contribution, not just the transactions that happen to involve money. It means treating job quality as a legitimate public concern, not merely a private matter between employers and the workers they happen to engage. It means investing, through a Green New Deal and through genuine public provision, in the kinds of work that are socially necessary, properly rewarded, and capable of engaging the capabilities that people have and currently find no productive outlet for.

It means, above all, refusing the political language that divides people into those who work and those who do not, as though work were a simple and self-evident category rather than a complex social relationship that our current economic arrangements systematically distort and undervalue. Almost everyone contributes. The question our politics has consistently failed to ask is why so much of that contribution goes unrewarded, unrecognised, and unmeasured, while the extraction of rent and interest is treated as the most legitimate form of economic activity there is. Until we ask that question seriously, we will keep getting the answers wrong.

Reading list

The world’s biggest ultra-processed food companies have filed scores of lawsuits challenging government policies that tackle junk diets, the Guardian can reveal.

As they added:

Ultra-processed food (UPF) is linked to harm in every major organ system of the human body and poses a seismic threat to global health. Worldwide consumption is rising and UPF now makes up as much as half the average diet in many countries, including the UK, the US and Australia.

To contextualise this, they said:

Governments around the world have adopted measures to fight back and safeguard the health of children and adults. Among the regulations are front-of-pack warning labels, marketing restrictions on unhealthy products to make them less alluring and taxes on junk food.

Publicly, the world’s biggest UPF companies insist they support the policies, are committed to helping consumers make informed choices and want to be part of the solution. But an investigation by the Guardian, in collaboration with academics, the non-profit newsroom Lighthouse Reports and a coalition of media partners across four continents, found many of these same companies are taking governments to court to overturn, weaken or delay the policies.

The result was that 235 lawsuits were identified over health policies targeting UPF in Mexico, Colombia, Brazil, the US and the UK from 2010 to 2025.

None of this surprises me. Over the last 40 years or so, neoliberalism has constructed an international framework of trade treaties and legal protections designed by big business, endorsed by willing collaborators within the institutions of global politics, and supported by governments. Their purpose has been to concentrate an ever greater share of the world’s wealth in the hands of a few, while creating the legal architecture that allows the world’s largest corporations to exploit their power in pursuit of ever greater profits, regardless of the consequences. Those consequences now include the destruction of the planet, whether through climate change, the wider poisoning of the environment or the abuse of its people through the sale of ultra-processed foods.

What this article, quite appropriately, highlights is that, in very many countries in the world, including the UK, many secretive structures created by trade agreements, most of which have been subject to remarkably little parliamentary scrutiny, if any at all, are now being used to reinforce the harms that can be deliberately created to undermine well-being.

Can we do anything about this? If many international lawyers are to be believed, the answer is that we can do nothing at all. The structures that now exist have been created to be permanent, and any attempt to change them would, in itself, give rise to claims for damages from the companies whose interests would, in their opinion, be harmed because the well-being of other people around the world might be given priority over the interests of their shareholders.

I hear what is said. I do not believe it. At some point, abuse is always contained, and the power base shifts. Rotten governments have always been overthrown. So too have empires, and if neoliberalism is an economic empire, it too will pass, one day. People never tolerate abuse forever, and the internal contradictions and power struggles of those seeking to exploit often pull down empires long before they are overthrown. Their collapse is built into their destructive DNA of greed.

So, will this exploitation last? I think not. For how long must we suffer it, though? Some time to come, I suspect. And that is why reports like this are important. They not only point out truth, abuse and the consequences of excess power. They also signal pathways to what must happen, which in this case is the restructuring of the architecture of power within our societies so that abuse is not pervasive, and ceases to be tolerated.

Some things have changed since the long hot summer of 1976. One of the abiding legacies of Britain’s shift to the right in the 1970s was the idea that there was no difference between the government and a household when it comes to spending, with the implication that either can go bust if it lives beyond its means. That notion lives on today, with even the most modest of ministerial spending pledges met with the challenge: how are you going to pay for it? If Burnham is serious about rolling back neoliberalism, he needs to start by challenging this entirely wrong-headed idea.

I agree.

I sent him a note of thanks.

DEBATE AMMUNITION

John Healey's Four Wrong Assumptions

Funding the Future | July 2026

Topic

John Healey's first speech as Chancellor of the Exchequer revealed his four foundational assumptions, all of them wrong, about what a Chancellor of the Exchequer’s job is.

He conflated fiscal control with economic competence, mistook restraint for stability, revived a century-old doctrine to claim that shrinking government makes room for growth, and supposed that defence spending can be calibrated to GDP.

Each assumption needs to be challenged, because together they guarantee the same failures Britain has endured under every Chancellor since 2010, at least.

The video to which this Debate Ammunition relates is available here.

The Core Argument

A Chancellor's first duty is to, at a minimum, to deliver real outcomes for the government he or she serves, including full employment, sustainable living standards, reliable infrastructure and a managed green transition, not to balance the books. Treating fiscal control as the priority confuses an instrument tool with the goa of economic policy.

The Treasury View that Healey expounded, which suggest that government spending crowds out private investment was only ever true under the gold standard, which Britain left in 1931, and the world abandoned in 1971. A currency-issuing government creates money when it spends, and the Bank of England has confirmed this since 2014.

What is more, real security is not a function of GDP. Energy independence, education, health services, infrastructure and scientific capacity create the resilient society that defence protects. Sizing weapons budgets to a percentage of national income is an arbitrary ratio, not a strategy.

Every Chancellor since George Osborne has operated inside the same Treasury framework that Healey now says he will use and failed. Repeating those assumptions, as he explicitly did, is the definition of the mistake, not a route to stability.

Key Statistics

The Argument Structure

Step 1 — Fiscal control is a tool, not a goal:

John Healey opened by declaring fiscal control to be his first priority. But a Chancellor is not an accountant. The purpose of fiscal policy is to deliver outcomes: full employment, rising living standards, rebuilt public services, affordable homes and a managed transition away from fossil fuels. None of these appeared on Healey's list. He has confused the map with the territory, and a Chancellor who prioritises the tool over the outcome has already failed before he has begun.

Step 2 — Fiscal restraint does not create stability:

Healey's second claim was that fiscal restraint delivers stability. But the crises of recent decades were not caused by government borrowing. The 2008 financial crisis arose from excess private debt. The energy shock came from geopolitical disruption. Brexit was a political choice. The pandemic was a biological event. None of these were fiscal in origin, and none would have been prevented by a smaller deficit. Stability requires resilience across the whole economy and society, not a particular balance sheet target.

Step 3 — The crowding-out story died with the gold standard:

Healey's third claim, that fiscal credibility creates growth, rests on the Treasury View: the idea that government and business compete for the same fixed pool of money, so government must shrink to let business expand. That doctrine was coherent under the gold standard, when the money supply was genuinely constrained. It has been false since 1931. A currency-issuing government creates money when it spends, just as commercial banks do when they lend. There is no competition. Government spending crowds investment in by creating the customers that give businesses a reason to invest.

Step 4 — Growth does not produce security, security enables growth:

Healey's fourth claim was that growth creates national security. But threats are not calibrated to GDP. A recession does not make Britain safer by implying we need a smaller defence budget. Strategy must determine the right level of defence spending, not an arithmetic ratio. More fundamentally, real security requires energy independence, good infrastructure, educated people, strong public services and scientific capacity. These are not the products of growth; they are its foundations. Healey has the direction of causation exactly backwards.

Their Argument → Your Rebuttal

The One-Liners

“A Chancellor who treats balancing the books as his first duty has confused an economic tool with the purpose of government.”

“The Treasury View died in 1931. Healey has arrived in 2026 to reanimate the corpse.”

“Security is not a product of growth. It is the foundation on which growth becomes possible.”

“Every Chancellor since Osborne used these ideas. Every one of them failed. Repetition is not a strategy.”

Questions to Ask

Why were full employment, living standards, climate, housing absent from Healey’s speech?

If fiscal restraint creates stability, which of the crises since 2008 was caused by excessive government borrowing rather than private debt, geopolitics, or pandemic?

The Bank of England confirmed in 2014 that government creates money when it spends. If there is no competition for a fixed pool of money, what exactly is being crowded out?

If growth creates security, does a recession automatically make Britain less secure, and does that mean defence budgets should fall in a downturn?

Further Reading

He said:

• fiscal control is the first duty of any Chancellor,
• fiscal credibility delivers economic stability,
• fiscal credibility creates growth, and
• growth delivers national security.

Those ideas sound reassuring, but what if every one of them is wrong?

In this video, I explain why those four assumptions have already failed Britain before and why, if John Healey governs on the basis of them, he is likely to fail as Chancellor as well.

I argue that:

• putting fiscal control ahead of outcomes means confusing accounting with economic management.
• Stability depends on far more than government finances.
• Growth comes from investment, innovation and confidence, not from shrinking the state in pursuit of Treasury orthodoxy.
• And national security is created by real capabilities around energy security, infrastructure, education, research, and resilience, and not by assuming defence spending should simply rise with GDP.

Healey did not put forward new ideas. He repeated the same Treasury thinking that has dominated British economic policy for decades. His claims represent the thinking that has delivered weak growth, crumbling public services, underinvestment and stagnant living standards. Repeating those ideas, yet again, will not produce a different result.

If Britain is to prosper, we need a Chancellor who measures success by the outcomes government delivers, not by applying arbitrary fiscal targets. Until that changes, we risk repeating the same mistakes while expecting different results, and Einstein quite correctly once called that a definition of madness.

This is the audio version:

The Debate Ammunition for this video is available here.

This is the transcript:

John Healey is the new Chancellor of the Exchequer of the UK, appointed by Andy Burnham on Monday, and as far as I can see, he is a man on a mission to fail. He made his first speech as Chancellor this week. He made it to his team in the Treasury, and very small parts of it got broadcast and commented upon in the media. But in what he had to say, he made four assumptions about his job that nobody else has questioned, but I will.

In this video, I'm going to say he got everything wrong. He said fiscal control is the first duty of any Chancellor, and I don't agree. And then he said fiscal credibility delivers stability, growth, and security, and again, I don't agree. The media treated all these claims as obvious common sense, but in truth, they're a chain of dubious economic assumptions, all of which require deep scrutiny. And that's what I'm going to do in this video.

The first assumption that John Healey made was that fiscal control is his first priority. But why? That's the question I'm going to ask. This is a man who thinks that he's an accountant or maybe even a bookkeeper. Nothing wrong with either of those roles, but he's just become Chancellor of the Exchequer. His role is not to be an accountant. He can rely on others to do that. His role is to be a finance director, somebody who ensures that the government can deliver. It is not to make sure that the books balance.

So, why is he saying that controlling government finances is his first duty when that comes way down the list?

Why isn't he talking about the more important things that he should be enabling through fiscal policy?

Why isn't he talking about full employment or rising living standards?

Why isn't he talking about tackling climate change or rebuilding infrastructure?

Why isn't he talking about building the homes that people in this country need?

None of those came up on his list of priorities. Balancing the books did.

He's got the ordering wrong. Governments and Chancellors of the Exchequer should be judged on the outcomes they deliver, but he isn't. He is talking about prioritising a tool, not an outcome. And in that case, he's confusing the map with the territory. He has got his job priority wrong, and that is seriously worrying.

His second assumption was that fiscal restraint creates stability, and this is just nonsense. Stability depends upon much more than public finance, and all the crises we've had of late have arisen from something other than a breakdown in financial or fiscal stability.

Energy shocks did not come from excess government borrowing. Financial crises like that in 2008 did not come from government borrowing. They came from excess private borrowing.

And Brexit was not caused by government borrowing either, nor, come to that, was a pandemic.

Stability requires resilience across the whole economy. So why is he claiming that fiscal restraint is what creates stability when there is quite simply no evidence that it does? He's wrong, and that assumption is also wrong, and he shouldn't have been talking about it.

John Healey's third assumption was that fiscal credibility creates growth. This is the old Treasury View. The Treasury View was created in the 1920s and 1930s in the UK. And it is wrong because it was based upon the gold standard. The gold standard limited the amount of money in the UK to the amount of gold that we supposedly had in the vaults of the Bank of England. But that has not been a constraint since 1931, when we left the gold standard. And most certainly since 1971, when the USA did, taking the whole of the world with it out of this old order.

That therefore is not a view that should be presented as a reason for fiscal credibility creating growth now. There is no competition between the state and private sectors for the creation of money. And how do we know that? It's because the crowding out story has always failed.

We know that the government creates money when it spends, and we know that the banks in this country create money when they lend. The Bank of England has said so and has done so since 2014. So, why doesn't our new Chancellor of the Exchequer say that?

There is no competition for money. If we need money in this country for constructive purposes to buy things that this economy can deliver, we can always have the money in question. Therefore, the whole basis of this claim, that fiscal credibility, which in these terms means a shrinking government, creates the opportunity for private sector growth is just wrong.

And we also know that because it hasn't worked out in practice, and we know that in reality, that's because private businesses have been given every opportunity, including all the funds created by quantitative easing, to invest since 2010, and they haven't. But at the same time, what we also know is that public investment has been kept in short supply, and as a consequence of that, we've had a shortage of education, health, transport, and a green transition. And they all create demand, value, growth, and spending. And so, in fact, government spending actually crowds in investment by creating the customers who want to spend with the private sector, giving them the reason to invest. John Healey got his logic wrong, and that's really worrying. If he's going to get something as basic as this wrong, what else will he get wrong in the future?

Let's look at his fourth assumption then, because this one is very specific and as wrong as the rest.

He claimed that growth creates national security in the UK. Now we know that John Healey has been focused upon defence for the last six years or so, as Shadow Defence Secretary for Keir Starmer before Labour won the 2024 general election, and as Defence Secretary since then, until he resigned because he wanted more money from the Treasury, of which he's now in charge.

This is a man obsessed with defence in that case. But why should he think that growth creates the prospect of national security? This makes no sense at all because security depends upon real capabilities and growth cannot guarantee that they exist.

So, let's just look at this particular question in more depth because it seems worthwhile given the obsession with defence spending which is now pervading not just the UK, but the whole of Europe.

NATO measures defence spending as a percentage of GDP. But as a matter of fact, threats are not measured that way. So, to measure the quality of the spend in proportion to GDP makes no sense.

Does a bigger economy mean that we automatically need more tanks? I don't think it does.

Does a recession make Britain safer because we would then require smaller defence spending, because that's what this claim implies? Surely not.

Doesn't strategy always determine the right level of defence spending, and not some arbitrary ratio, which is what John Healey and NATO are all talking about?

In other words, this does not make sense, and anyway security creates growth as often as the reverse. And security is a much bigger issue than defence.

Energy security supports business investment.

Good infrastructure creates security because we then have systems that could survive a situation of stress as a conflict would create, but it also raises productivity.

Education strengthens the economy and defence because we then have trained people.

Scientific research creates new industries, and they can stimulate defence initiatives.

Security is then the foundation of growth. But Healey doesn't seem to get any of this. He wants to spend on the whiz-bangs first and worry about the economy second. He's got that wrong. And anyway, without all these things to defend, why do we need the weaponry anyway? That's the question people in this country will ask, which it seems John Healey is not.

So, if he's got all these assumptions wrong, what should he be doing to be credible? Credibility is not about pleasing financial markets. That is what John Healey thinks, but he's wrong because financial markets are dependent upon the government: the government is not dependent upon financial markets. Financial markets need government bonds to operate. Credibility is then about delivering public purpose and not keeping market operators happy.

Credibility means full employment and stable prices.

It means resilient public services and investment in infrastructure.

It means tackling climate change and making sure that people feel safe in their homes for the long term.

It means creating confidence in society.

That is what real credibility means. That is what John Healey should have been talking about, but he didn't. And this shows how seriously he has misunderstood his job. In fact, he defined his job in the way that George Osborne might have done in 2010, and look what happened to him, oh, and all those Chancellors that followed him.

Do you remember Philip Hammond? Do you remember Kwasi Kwarteng? Do you remember Rishi Sunak, who went on to become Prime Minister? All these people failed, as did Rachel Reeves, and John Healey is going to fail in the same way because he's using the same ideas as they did in exactly the same fashion. And you cannot succeed where others have failed by repeating their ideas. That is the definition of madness, as Einstein once put it.

So, the real problem we face is with Treasury ideology. Healey's statements reflect orthodox Treasury thinking. These assumptions are treated as unquestionable truths, but they aren't. They've been wrong in some cases for more than a century, and all of them are political choices and not economic laws.

Westminster rarely challenges these frameworks, nor does the mainstream media, but that is Britain's real problem. We have no thinking going on about economics in this country. We are not short of money. We are short of ideas, and that's why this channel exists. That's why we are doing what Westminster won't.

So, we need better questions. John Healey should be challenged.

He should be asked: Why is fiscal control the first priority?

Why do you assume government crowds out growth?

Why are you assuming that security can be supplied in proportion to our national income?

And why are you basing your assumptions upon a Treasury view that is very obviously failed?

These are the conversations we now need in the UK. These are the challenges that John Healey needs to face. My concern is that unless we focus on outcomes, we are going to carry on discussing these silly rules that only reinforce failure, and that is the last thing that we need.

That's my opinion. You may disagree with it. If you do, there's a poll down below. Let us have your comments. Please share this video. Please like it. Please subscribe to the channel. Ring that bell because that means you get notifications about every single video we produce. And at the same time, if you'd like to buy Tom and me coffee, that would be great because creating these videos costs money and we rely upon your support.

Poll

As many readers will be aware, we decided not to proceed with one in Sheffield in late June, and as it turns out that was a very good idea, although we could not have known that when we cancelled. As a matter of fact, I would have been quite physically unable to do it. We saved ourselves a great deal of cost as a result.

Having cancelled, we have had the chance to reflect at greater length on what we might want ot do next, and because our goal is to make these things work for the benefit of all participants, I am sharing our current thinking here.

We are currently planning to do a meeting at the Poets' House Hotel in Ely, on Saturday 3 October. That is near home for us, and that makes things easy to organise. It also reduces potential costs significantly.

The event we are planning would be for a maximum of about 50 people, and would have a heavy focus upon Q&A sessions and interaction, so that everyone had a chance to take part in discussion. It will not be unlike the Cambridge event, be a sage-on-a-stage event, but will instead be more like a large, discussion-led Q&A. At the same time, though, it would not be an open platform in the sense that we would not be encouraging presentations from audience members: Q&A will be the likely focus.

John Christensen has agreed to chair. We might ballot those who book on potential session topics, but a key aim will be to allow plenty of time for interaction, and keeping numbers low will help that.

We think a ticket price of £50 for 12 until 5 is fair. That could include two rounds of tea and coffee. The chance to buy food from the hotel would be available. The event will be very near the Cathedral, and right opposite Oliver Cromwell's house. It is a 15-minute walk from the station, and less than a £5 cab ride. There are several cafes available nearby.

So, some questions, and your early responses will help us decide whether to go ahead with this, but I stress, please do not say you will definitely come if that is not the case:

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

As The Guardian has reported:

Single bus fares across England will be capped at £2 from January, the prime minister, Andy Burnham, has announced.

I welcome that. It is positive and necessary, although some investment in rural bus services, in particular, might make it much more useful.

What worries me is in the paragraphs that follow:

The measure, which will apply across England except London, is backed by £454m of funding, including money to allow devolved governments to take similar action.

About £400m of that funding will come from switching investment in international climate finance to loans, with the rest from savings in the Department for Energy Security and Net Zero budget.

This is, yet again, the Treasury view in action. Instead of asking whether the policy will make the economy function better, ministers have immediately framed it in terms of where they have “found the money”. That is the wrong question.

As a matter of fact, the UK government does not need to "find" £454 million before it can cap bus fares. Parliament authorises spending, the Treasury instructs the Bank of England to make the payments, and the money is created. That is the entirety of the funding process.  The relevant questions around this issue are not financial. They are whether the buses, drivers, maintenance facilities and administrative capacity exist to deliver the service, and whether the resulting demand would create inflationary pressure. Those are the real constraints on government spending, but none of those appears to have entered the discussion.

Instead, ministers have chosen to present cheaper bus travel as something that can only happen if something else is sacrificed. That reinforces the entirely false belief that government finances resemble a household budget. It is precisely the narrative Labour claimed it wanted to escape. Instead, the household analogy is alive and well and living in Numbers 10 and 11 Downing Street.

The political consequences are very unfortunate. Instead of celebrating cheaper public transport as an unambiguously good policy, the government has invited supporters of climate finance and clean energy investment to see themselves as the losers. Politics becomes a competition between worthwhile causes when government should be asking how it can deploy society’s resources to achieve several worthwhile objectives simultaneously, when there is no economic necessity that requires this trade-off.

Bus subsidies, climate investment (whether here or overseas) and energy security all have one thing in common. They expand the productive capacity and resilience of the economy. Better transport improves labour mobility and access to jobs. Climate investment reduces future damage and protects livelihoods. Investment in energy security reduces dependence on volatile fossil fuel markets. These are complementary investments, not competing claims on a mythical pot of money.

However, the  Treasury’s accounting framework cannot see that because it reduces every decision to balancing financial numbers instead of asking how best to use the nation’s people, skills, technology and natural resources.

But there is another problem that deserves much greater attention. The government says it will replace international climate grants with loans to fund these cuts to bus fares. That immediately raises questions, all inspired by the failed Washington Consensus that demonstrated how disastrous international loan finance for development can be.

Will those loans be denominated in sterling, in US dollars, or in the local currencies of the countries receiving them? If they are not denominated in local currency, the borrowing countries will bear exchange-rate risks over which the countries to whom funds are loaned will have no control. A depreciation of their currency could dramatically increase the real burden of repayment, even if they have managed their own economies well.

And what interest rate will these loans carry? Will they be genuinely concessional loans, with interest rates close to zero and repayment terms reflecting the long-term nature of climate investment? Or will they be commercial loans that simply increase the debt burdens of countries already struggling to finance adaptation to climate change?

These are not technical details. They go to the heart of whether this is climate assistance or simply another financial transaction.

The government appears not to have noticed that it is in danger of recreating many of the conditions associated with the Washington Consensus (follow the link for the glossary entry on this issue, which describes all its failings).

For decades, developing countries were encouraged, and often required, to borrow in foreign currencies, liberalise their economies, privatise public assets and pursue fiscal austerity in order to satisfy international lenders. The results were frequently disastrous:

• Exchange-rate movements increased debt burdens overnight.
• Rising interest rates made repayment more difficult.
• Public investment was cut.
• Growth slowed.
• Poverty increased.
• Many countries spent years trapped in debt crises from which they struggled to escape.

Surely we have learnt something from that experience? Are we to repeat it now when climate finance exists because the richest countries have contributed disproportionately to climate change while many poorer countries face its greatest consequences? Why should support for dealing with that injustice become another source of indebtedness?

If these loans are to avoid repeating the mistakes of the past, they should, wherever possible, be denominated in local currencies, carry very low interest rates, and have repayment terms designed to support development rather than maximise financial returns. If they do not, ministers need to explain why they believe the outcome will be any different from that produced by the Washington Consensus.

There is a depressing irony here. At home, the government remains trapped by the Treasury fiction that every new policy must be paid for by cutting another. Abroad, it appears willing to revive one of the most discredited models of international development finance of the last half century, and neither approach starts from the real question.

What this government should be asking is how available resources can best be used to create a more prosperous, more resilient and more sustainable society, here and across the planet. Instead, it obviously believes money is the scarce resource, when it is not. Ideas are.

The Richard J Murphy YouTube Channel

And

My View on …

Fiscal Rules

Richard J Murphy

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This post is one of an ongoing series explaining my views on significant topics in economics, political economy, politics, taxation, and accounting. It should be read as such, as an overview of a position developed across many years of writing and analysis, and not as a comprehensive treatment. Where more detail is required, the reading list at the foot of this post is a good starting point.

The whole View On series is available here. 

_________________

Introduction

Few topics in contemporary British economic debate attract more sustained criticism from me than fiscal rules. For the better part of three decades, successive Chancellors of the Exchequer have reached for these self-imposed constraints as proof of their financial seriousness.

My view is simple and consistent: fiscal rules are not laws of economics. They are political inventions, dressed up as economic necessities, and they have caused serious and ongoing harm to public services, living standards, and democratic accountability in the UK, and wherever else they have been tried.

What Are Fiscal Rules — and What Are They Not?

My starting point is definitional. Fiscal rules are restrictions on government spending and borrowing that governments impose upon themselves. They are not statutory obligations. They are not laws of nature. They are guidelines invented by a Chancellor, shaped to suit a particular political moment, and routinely rewritten or abandoned when they prove inconvenient, rendering them largely meaningless in the grand scheme of macroeconomic management.

The history of UK fiscal rules bears this out. Gordon Brown introduced the first set in 1997, motivated largely by a desire to demonstrate that an incoming Labour government would be financially responsible. Since then, the UK has had at least nine distinct sets of fiscal rules across Labour and Conservative administrations. Not one has survived intact. Chancellors have changed them, suspended them in crises, and quietly redrawn the parameters when targets looked likely to be missed. This is not, I would argue, the behaviour of a mechanism that is genuinely constraining; it is the behaviour of a rhetorical device. As I have put it, fiscal rules are at least as flexible as rubber bands.

The corollary matters enormously: if fiscal rules are endlessly malleable, they cannot be the principled framework their proponents claim. The Office for Budget Responsibility (OBR), created in 2010 by George Osborne, has reinforced this theatre. I am sharply critical of the OBR, arguing that it exists not to give independent economic guidance but to enforce the fiscal rules that successive Chancellors have already decided upon, rules premised on the idea that the government must always balance its books, borrow from the City, and constrain public expenditure to satisfy the demands financial markets.

The Household Analogy — and Why It Is Wrong

At the heart of my critique is a rejection of the household analogy that underpins fiscal rules. This is the idea that a government, like a family, must not spend more than it earns. This analogy is, in my view, not just misleading but fundamentally false.

The UK government issues its own currency. It has its own central bank. It cannot, in any meaningful sense, run out of money in the way a household or a business can. The real constraint on government spending is not monetary; it is the availability of real resources: labour, skills, materials, productive capacity and the constraints imposed by the demand for environmental sustainability. A government that ignores spare capacity in the economy and instead imposes austerity in the name of balancing an arbitrary ratio is not being responsible. It is being economically illiterate.

This matters because fiscal rules are built not just on the household analogy but on economic forecasts that are, as I frequently observe, always wrong. The OBR and the Bank of England produce projections five years into the future that have the appearance of precision, stated to one or two decimal places, but are in reality informed guesses, at best. Chancellors then use those guesses to justify decisions about present spending, cutting public services today on the basis of a forecast that may be entirely mistaken. The result is that austerity is imposed not because the economy requires it, but because a spreadsheet has been set up in a particular way, and too often, wholly inappropriately.

The Political Function of Fiscal Rules

My analysis goes beyond the technical. I argue that fiscal rules serve a clear political function: they maintain the status quo and deliberately prevent transformative change. The aim for Conservative governments has been to shrink the state. The aim for Labour governments has been to appease financial markets and the media. Fiscal rules, whichever party creates them, have achieved both of these ends simultaneously by presenting the impossibility of progressive policy as an economic given rather than as a political choice.

This is why I describe fiscal rules as political straitjackets designed to stop change. Every Chancellor since Brown has used them to limit public spending, block investment in the green transition, and enforce permanent austerity. The consequences are visible: an NHS under sustained pressure, schools without adequate resources, a housing crisis deepened by decades of underinvestment, stagnant wages, rising inequality and the unaddressed consequences both domestic and international of climate change. These are not the results of bad luck or global circumstance alone. They are, in significant part, the results of fiscal choices that fiscal rules have made politically, but not practically, impossible to reverse.

The link to democracy is also direct. By presenting spending constraints as inevitable technical facts, fiscal rules give the impression that elected governments are powerless in the face of economic necessity. I regard this as corrosive. It removes real decisions from democratic accountability and transfers them to forecasting bodies, financial markets, and institutional conventions. Government ministers are stripped of meaningful power to respond to the genuine needs of the people they represent.

Rachel Reeves and the Continuity of Error

I have been a consistent and vocal critic of Rachel Reeves’s fiscal framework. I have noted that her current rules are in all substantive respects identical to those proposed by John McDonnell under the previous Labour leadership and to those maintained by Jeremy Hunt: a commitment not to borrow for current spending, and to reduce national debt as a share of GDP over a five-year period. That these identical rules can be endorsed across such supposedly different political positions reveals, in my view, how far fiscal conservatism has colonised British economic thinking.

I am particularly critical of the way in which Reeves’s rigid adherence to these rules has produced predictable and damaging outcomes. Because the rules are public and the Chancellor’s likely responses to changing circumstances are therefore known in advance, financial markets can and do anticipate those responses, often in ways that make meeting the rules harder, not easier. The rigidity of the framework undermines the flexibility that competent economic management requires. When the IMF and others forecast declining UK growth, my argument is that the cause is not external misfortune, but an economic policy framework designed to prevent the investment that could have changed that trajectory.

Reeves’s spending review of 2025 illustrated the point. While announcing large capital expenditure figures stretching into the distant future, the review delivered real-terms cuts across most non-protected departments, with departments outside defence and the NHS facing reductions of around 1.3% in real terms. The conclusion I drew was unambiguous: despite the rhetoric of investment and stability, this was austerity continued under another name.

We await to see what Reeves’ successor will do.

What a Genuine Fiscal Rule Would Look Like

I do not argue that government should spend without discipline or purpose. My argument is that the wrong things are being measured. A genuine fiscal rule, in my view, would be outcome-based rather than ratio-based. It would set targets that reflect real economic and social goals, such as:

• full employment,
• the elimination of child poverty,
• adequate educational provision, and
• a managed and properly resourced transition to a low-carbon economy.

These are the things a government should be held accountable for delivering. Instead, we measure debt-to-GDP ratios and current account balances; targets that are at best proxies for wellbeing, and at worst active obstacles to it.

A defensible fiscal framework would also accept the monetary reality: that a sovereign government issuing its own currency is not revenue-constrained in the way a household or local authority is. It is resource-constrained. The question is not whether the government can afford to spend, but whether the real economy has the capacity to absorb that spending without generating inflation. That is the discipline that matters. Everything else is theatre.

The existing rules should, in my view, be abandoned. In their place, the government should focus on counter-cyclical spending by investing more when the economy underperforms and moderating when it overheats, and on maintaining the public services and infrastructure that underpin private sector productivity. The goal of economic policy is not a ratio. It is the wellbeing of the people the economy is supposed to serve.

Answering the Sceptics

The most persistent objection to this analysis is that without fiscal rules, governments will spend irresponsibly, accumulating debt until financial markets lose confidence and a crisis follows. This argument sounds plausible but rests on two assumptions that do not hold. The first is that the level of government debt is the primary cause of financial crises in countries with their own currency. It is not. The 2008 crisis originated in unregulated private financial markets, not in government borrowing. The second is that financial markets are reliable judges of economic health. They are not. Markets are capable of being wrong for sustained periods, as the histories of the eurozone, Japan, and the United Kingdom itself repeatedly demonstrate.

A related objection is that the Office for Budget Responsibility provides the independent oversight that fiscal rules need in order to function. I have already set out my scepticism about this claim. The OBR was created to give authority to a framework already decided upon, not to assess that framework independently. Its forecasts carry the appearance of precision but are produced by models that cannot anticipate structural shifts in the economy, and that consistently miss their targets. Treating OBR projections as constraints on democratic decision-making is not prudent fiscal management. It is a category error.

Some argue that I am proposing, in effect, to allow governments to spend without limit, creating inflation that will destroy the living standards of the people fiscal rules are meant to protect. This is a misrepresentation of my position. The constraint I identify is not monetary but real: what limits government spending is the availability of labour, skills, materials, and productive capacity, within the limits of environmental sustainability. A government that spends in excess of what the real economy can absorb will generate inflation. That is precisely why counter-cyclical fiscal management involves spending more when the economy is operating below capacity and moderating when it is not.

Finally, there are those who argue that other countries operate fiscal rules without the damaging consequences I describe, which implies the problem is one of poor design rather than the rules themselves. The evidence does not support this conclusion. Every country that has adopted fiscal rules has, when pressed, bent, rewritten, or suspended them. The EU Stability and Growth Pact, which mandated strict limits on deficits and debt, was suspended by the countries that designed it within a few years of its introduction, then reformed, then suspended again during the pandemic. The rules were not vindicated by this history. They were revealed, once more, as political theatre unable to survive contact with the real economy.

Reading List

The following posts from the Funding the Future blog provide further detail on my thinking on fiscal rules. They are drawn from across several years of writing.

As I noted on Monday evening, he might have spent time in the Treasury under Tony Blair and Gordon Brown, but since then he has shown little interest in the issue until he quit as defence secretary over funding.

That absence of thought matters. I described him in that same article as "a man to perpetuate the status quo." That's what people who have not thought do: they note the rules, and work within them.

Now we know that this is what Healey, backed by Burnham, who reiterated his commitment to fiscal rules yesterday, will do. That is because he made a speech at the Treasury yesterday in which, according to the FT:

He declared that “fiscal control is the first duty of any Chancellor”.

He then added:

“It is the fiscal credibility that gets us economic stability, growth and national security.”

The statement attracted remarkably little comment. It appeared well down in the FT article. It was noted as if it were simply a statement of fact. It is, however, nothing of the sort. In those few words, Healy revealed his assumptions about how economies work, and every one of those assumptions is open to challenge, not least because they both define much of modern British economic policy, and explain why it has failed.

The opening claim was that fiscal control is the first duty of a Chancellor. The obvious question to ask is, why? That is not a rhetorical question. Instead, it is because I think that a Chancellor’s first responsibility is to create a prosperous, resilient and fair economy.

After all, why should controlling the government’s finances be considered more important than maintaining full employment? Or ensuring the delivery of decent public services? Or tackling climate change? Or investing in the country’s future?

Managing the public finances is one of the tools available to achieve those objectives, but it cannot be the objective itself. Confusing an instrument of delivery with the purpose of activity has become one of the defining characteristics of Treasury thinking. And that confusion has consequences, because once fiscal control becomes the goal rather than the means, every other ambition the government might have is subordinated to it. To open your description of the job you plan to do with a category error is quite something, but Healey managed it.

Healey then went on to claim that fiscal credibility creates economic stability. Again, the question is why? There is good reason for asking. Economic instability has many causes. Of late, the UK has endured banking crises, energy shocks, Brexit, supply chain disruption and pandemics. None of these arose because government borrowing was too high. None arose because a fiscal rule designed to deliver fiscal credibility had failed. That is because economic stability does not depend on such rules. It does, instead, depend upon secure energy supplies, functioning financial markets focused on delivering working capital for the economy and not speculative finance, productive investment, resilient infrastructure, effective public institutions and social cohesion. Fiscal policy contributes to that stability, but it most definitely does not determine it. Once more, in that case, Healey's claim was wrong.

Then Healey went on to argue that fiscal credibility produces growth. Behind that simple statement lies an entire economic philosophy.

The assumption is that if government demonstrates fiscal restraint, financial markets become more confident. Interest rates then remain lower, and private businesses invest more as a result. The claim is that growth then follows. This is simply another version of what is called the Treasury View. It rests upon the belief that government borrowing crowds out private investment.

The evidence to support this claim is not encouraging.

That is partly because this View is based on the belief that there is a finite pool of money in the economy and the government competes for use of that limited resource with the private sector.  That might have had some basis in truth a century ago when the country used the Gold Standard to limit the money supply, but it does nothing remotely like that now. Instead, as we know, banks do not lend because someone else has first deposited savings with them. They create money whenever they make loans. The stock of loanable funds is not fixed. Businesses do not invest because the government has borrowed a little less. They invest because they expect customers to buy what they produce. Reducing public borrowing does not conjure those customers into existence.

The whole intellectual foundation for this View is based on an outdated falsehood, in turn based on the mistaken belief once held by the UK Treasury that government activity must be constrained by limiting the money supply, in turn based on the mistaken belief that individuals always know best how to spend and invest because there are no communal goals or public goods

The reality is the opposite of the beliefs implicit in the Treasury View. Public investment frequently does create the customers that the private sector seeks. Investment in transport, education, housing, research, healthcare and energy systems expands productive capacity while increasing demand. It creates profitable opportunities that encourage private firms to invest alongside the public sector. Far from crowding private investment out, government investment often crowds it in.

This is not just theory. Britain has already tested the Treasury View, which is the foundation of austerity.  Following the financial crisis, governments pursued fiscal restraint for much of the period after 2010. If the orthodox theory were correct, business investment should have surged as government stepped back. Instead, productivity stagnated. Business investment remained weak. Infrastructure deteriorated. Economic growth disappointed year after year. The promised private-sector renaissance never appeared.

So, let me come to Healey's final claim, which is, in many ways, the most curious. He said fiscal credibility delivers national security.

The implication seems to be that stronger growth enables higher defence spending. But even if that is true, it does not explain why defence spending is so often treated as though it should simply be a fixed percentage of GDP.

If GDP rises because house prices increase, creating more transaction income, or because the City of London enjoys another profitable year, does Britain suddenly require more warships? And if GDP falls during a recession, are we somehow less safe than we were the week before?

National security should begin with strategy. What threats does Britain face? What capabilities are required to meet those threats? What investment is needed in defence, intelligence, cyber security, energy resilience, food security, scientific research, infrastructure and public health? Only after answering those questions should government decide what resources are required. Strategy should determine expenditure. A ratio derived from GDP is merely a convenient accounting convention, and they are rarely of any use to anyone but managers with limited imagination and little strategic ability.

The relationship between growth and security also runs in the opposite direction to that implied by Healey. Investment in resilient infrastructure strengthens the economy. Investment in education raises productivity. Investment in research creates new industries. Investment in secure energy systems reduces vulnerability while supporting economic activity. Security often creates growth. Growth does not automatically create security.

The real significance of Healey’s statement is therefore not just what it says about one politician, important as that is right now. It reveals how deeply embedded Treasury thinking has become within British politics. Ideas that are, in reality, contestable economic theories are now presented as unquestionable common sense.

Fiscal control comes first. Fiscal credibility creates growth. Growth creates security. Defence should be measured as a share of GDP. Each proposition reflects a political choice about how we should organise our economy, but none of them does in any way represents an economic law, let alone a fact.

That matters, most especially because Britain desperately needs a different conversation, and Healey's suggestion represents a brazen attempt to close that opportunity down.

The question we should be asking is not whether governments are sufficiently fiscally disciplined, but whether they are creating the conditions in which people can flourish.

Success should not be measured by compliance with arbitrary financial rules. It should be judged by whether governments deliver decent housing, secure energy, productive investment, high-quality public services, environmental sustainability and genuine economic resilience.

Those are the outcomes that matter. Fiscal policy should serve them. A Chancellor who begins by treating fiscal control as an end in itself has, before a single decision is made, already confused the map for the territory, and that always leads to economic and political failure, a situation with which we have become all too familiar.

I had some hopes for Andy Burnham. John Healey has shattered them. More of the same is the same hard gruel he is going to supply.

DEBATE AMMUNITION

The Government's Media Green Paper Is a Threat to Free Speech

Funding the Future | July 2026

Topic

The UK government's Green Paper on media proposes that social media platforms such as YouTube, Instagram and TikTok should only promote content from officially designated trusted publishers, downgrading independent creators and commentators in search and recommendation algorithms.

The proposal raises profound questions about who defines trustworthiness, whether this amounts to state-sanctioned censorship, and whether it will entrench the neoliberal economic assumptions that already dominate mainstream broadcast media while silencing the alternative perspectives that democracy requires.

The video which this Debate Ammunition supports is available here.

The Core Argument

The government's Green Paper proposes that social media algorithms should be required to prioritise content from designated trusted publishers, a category it will probably define as mainstream broadcasters and legacy newspapers, while independent creators and commentators are likely to be downgraded in search and recommendations.

There is no adequate definition in the Green Paper of who counts as trusted or who decides. The government, a regulator, or existing media organisations could all end up as gatekeepers, each with an obvious interest in favouring themselves and suppressing challenge to established orthodoxy.

The practical effect would be to grant official prominence to outlets that share the same neoliberal economic assumptions and to marginalise independent voices that challenge those assumptions, narrowing rather than widening the economic and political debate on which democratic progress depends.

The consultation is open until 31 August 2026, and every submission challenging the proposals will matter. Plurality of media is as fundamental to democracy as reliability, and the two should not be traded against each other.

Key Statistics

The Argument Structure

Step 1 — What the Green Paper actually proposes:

The government wants social media platforms to promote only those outlets it designates as trusted publishers, likely meaning mainstream broadcasters and established newspapers. Everyone outside that category, including independent political channels with hundreds of thousands of subscribers built without any institutional backing, are likely to be downgraded in search and recommendation functions.

Step 2 — The definitional problem is not a detail, it is the whole problem:

The Green Paper contains no workable definition of trusted. If the government decides, that is political control of the algorithm. If a regulator decides, accountability depends entirely on how that regulator is appointed and to whom it answers. If existing media organisations decide, they will inevitably favour themselves. Dissenting voices can be excluded under any of those arrangements without any finding of actual misinformation.

Step 3 — Independent media performs a function that mainstream media cannot:

Major broadcasters and newspapers share, without exception, a neoliberal economic framework. Alternative economic thinking, including the analysis that informs this channel, receives almost no coverage there. Independent creators fill that gap. Granting official prominence to the mainstream does not improve the quality of debate; it forecloses the arguments that the mainstream chooses not to host.

Step 4 — The principle at stake reaches beyond any single channel or political tendency:

A government that sets the algorithm today for left-of-centre economic channels could, under a different administration, use the same mechanism against conservatives, Greens, libertarians or any voice that challenges the orthodoxy of the moment. The correct response to genuine misinformation is to enforce the laws already on the statute book, not to create a blanket architecture of preferred publishers that embeds institutional bias into every social media feed.

Their Argument → Your Rebuttal

The One-Liners

“Deciding which voices are trusted is the oldest tool of censorship; it just usually comes with more paperwork.”

“If the mainstream media were doing its job, there would be no audience for the channels this Green Paper wants to silence.”

“Plurality is not the enemy of reliability. It is the only guarantee of it.”

“The algorithm that favours today's approved voices will be pointed at your voice the moment you become inconvenient.”

“You do not protect democracy by letting the government decide what democracy is allowed to hear.”

Questions to Ask

Who will decide which publishers are trusted, by what criteria, and what mechanism exists to challenge that decision?

If mainstream broadcasters promote neoliberal economic assumptions as settled fact, are they producing misinformation under any definition this Green Paper would apply?

Why are existing laws against harmful misinformation not being enforced rather than a new architecture of preferred publishers being constructed?

What safeguard prevents a future government from using the same mechanism to downgrade any independent voice it finds politically inconvenient?

Further Reading

The proposal suggests that platforms should give greater prominence to "trusted" news providers. At first glance, that might sound sensible. We all want accurate information.

But who decides who is "trusted"? And what happens to independent journalists, commentators and creators who challenge mainstream opinion? Are they going to be silenced by social media, as a result of government demands?

In this video, I examine what the proposals actually say, why they matter and why many independent creators are deeply concerned.

If implemented, these changes could affect search results, recommendations and audience growth across social media. That would have profound implications for political debate, freedom of expression and media diversity.

This is not simply an issue for people on the political left. Any future government could use the same framework against voices it dislikes.

The consultation is now open, and everyone can respond before the deadline.

Whether you agree with my conclusions or not, I hope this video encourages you to read the proposals for yourself and decide whether they strengthen democracy or risk narrowing public debate.

This is the audio version:

The Debate Ammunition for this video is available here.

This is the transcript:

The UK government has published a new Green Paper. Green Papers are the things that the government puts out when they want to float an idea that they think might become policy, and this Green Paper is on the media.

Now, the media is a very broad topic. It includes television, newspapers, and these days it includes social media. And the impact could be dramatic on social media, especially for channels like this one.

That's because in this Green Paper, the government is proposing that social media organisations like YouTube, Instagram, TikTok, and others, like Facebook, should only promote trusted news providers and that everybody else in the news media area should be downgraded when it comes to their presentation on social media channels. This could affect all YouTube search and recommendation functions and who those channels are allowed to promote.

The claim is that this will tackle misinformation in the media as the government, however, defines it. But who decides what counts as trusted? Who decides what is misinformation, and is this censorship in all but name? Those are the questions that I want to ask.

Ministers say that reliable journalism supports democracy, and I can't argue with that. That is true. As a consequence, they claim they want quality news to be easier to find, so they say that reliable media must be promoted to people. But they define that as the mainstream broadcasters. You know who they are. That's the BBC, ITV, Channel Four, Channel Five, and other large media organisations. We would expect the mainstream newspapers to be included in this; all of them with their obvious right-wing bias, The Guardian included.

Meanwhile, independent creators and commentators, like me and many others you may watch, could be left outside this system of promotion. We will not be promoted. We will be downgraded. You'll have to work hard to find us. This is seriously difficult for left-of-centre channels on YouTube.

Most independent political channels are not, of course, the mainstream media. By definition, we are challenging that mainstream media in most cases, and we rely on YouTube search and recommendations for people to find us, to generate our traffic, and also to generate our income. We've built our audiences without institutional backing. There are over 380,000 people who subscribe to this channel, for example. But reduced visibility could reduce our reach dramatically. And let's be honest. We are worried about this, and so are a lot of other people we know.

The proposals may unintentionally favour existing media power. And the question is: why is that existing media power being promoted? That's because, as we all know, they do not challenge the mainstream orthodoxy, whereas those of us outside the mainstream do. This is the real issue that we're talking about here.

There is a lot of definitional problems with this Green Paper. The Green Paper talks about trusted publishers, but there is no suitable definition of who is to be trusted. Who decides who is trustworthy, for example? Is that the government? Is it a regulator? Or is it existing media organisations, who will inevitably favour themselves? And how will they do this and why? What will the criteria be? Is dissent sufficient to be not trusted in these terms? That is the worry because the risk of suppressing dissenting voices is high. And yet democracy depends on more than established broadcasters and more than compliant voices.

Independent journalism, like ours, challenges conventional thinking, and that challenge is essential. You cannot get change without ideas being challenged, discussed, debated, and then developed. And new voices often expose issues ignored elsewhere. A healthy media actually encourages disagreement, but the whole approach of this Green Paper would appear to be to suppress it.

Diversity of opinion is the basis of democratic strength, but the government appears to be undermining that because, by emphasising trusted media, it is talking about dissent as being not trusted. There's a real risk as a result of deliberate institutional bias being built into the media as a consequence.

We all know that major broadcasters share similar economic assumptions. Without exception, they are all neoliberal. That is the only economic framework they now talk about. Alternative economic perspectives receive remarkably little coverage in that mainstream media. It's very difficult to break in. So, independent channels like us try to fill that gap.

Giving official prominence to established media may simply reinforce the existing bias that is already embedded in our mainstream media. And that could narrow rather than widen public debate. And that could be harmful to democracy, economic debate, and the real progress we need to face the challenges that are happening.

On YouTube, this will have the practical impact of meaning that people like me, and Gary Stevenson, Owen Jones, Grace Blakely, a whole load of other people will no longer be appearing in your social media feed. Recommendations may become, in fact, a lot less balanced than they are now. And smaller channels may become harder to discover. And existing subscribers may only find content if they click the bell button when subscribing. And if you haven't, please do that now, because that is the only way you can guarantee you will always get notifications.

Future audience growth could become much more difficult. That challenges our channel viability, and that of many other organisations. People like The Canary are, for example, very worried about this.

And let me be clear, this is not just an issue for the left. Today's rules may affect left-of-centre channels when it comes to economics, and I think they do. But tomorrow they could be used to impact conservatives and then the Greens or libertarians; any independent voice could be disadvantaged by these rules depending on which government is in office. That is what worries me.

There is a principle at stake here, and it's a vital one. The principle is that dissenting is not about creating misinformation; it's about being allowed to disagree. The government should not be stopping dissent. It should not be stopping disagreement. It should not be setting the YouTube algorithm. It should not be setting the Instagram and TikTok algorithm either. Competition on information and on debate should be based on quality and not on official recognition.

Now, I'm convinced that there is a reason to ensure that serious misinformation is tackled, and I would desire that when it comes to things like racism and the promotion of hate and deliberate misinformation, if we can see it happening, which is going to cause people harm. Why not? But we already have laws to do that, and they are not properly policed.

That is what worries me here. I think the government is trying to promote this new law to avoid the fact that it doesn't want to spend on the powers it already has to tackle misinformation. And the consequence is that it is trying to impose a blanket ban on any form of dissent rather than use its discretion to tackle what is deliberate misinformation instead.

That is the problem. What we really need is that identical standards apply to everyone. The mainstream media can also mislead, after all, and it does regularly with regard to economics. So, we should not create officially preferred publishers or rig search results in favour of legacy media. People should be allowed to decide whose journalism they trust. That is a definition of freedom.

And there are questions we should all be asking. Who decides which publishers are trusted? Who can that decision be challenged by, and how? Will independent publishers qualify to be considered to be trusted? And how will algorithms be monitored? And what safeguards will protect freedom of expression?

You can take part in this debate. We're going to put up a link down below to this consultation process. We're going to put up a link to the email address you can use to provide responses. You need to do so in particular to questions four, five, and six in the consultation paper. They're the ones that really matter. And you need to do so by the 31st August, 2026. Every single submission that is made that challenges what the government is doing will help. We need a free media in the UK. Plurality matters as much to democracy as does reliability. And this debate affects everyone who values a free and diverse media. I'd really appreciate it if you could make a submission. We will be.

We'll share that in a community post. We'll share this information in a post on here as well. But in the meantime, please let us know what you think. I've made it very clear what I think. I think this is something which is moving toward censorship, and I feel very uncomfortable about that. Let us have your comments. There's a poll down below. Like this video if you do. Please do subscribe, and as I said, please do hit that bell button. It really matters because that's what guarantees you'll continue to receive notifications from us. And because the future of this channel is being threatened, if you'd like to support us with a donation, we'd really appreciate that.

Poll

Someone asked me how I was. It was someone I know, so the enquiry was a bit more than the usual polite exchange.

And it occurred to me that for the second day running I am feeling OK. Even, back to normal.

I have energy again. My body is functioning in a way that I recognise, and which I last experienced in mid-June. There is no discomfort.

Perhaps that scan late last week revealed something that I was not aware of at the time, which is that my kidney stone had departed, or was departing.

If so, I am very pleased, because this is not an episode that I would like to repeat in a hurry.