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So, last Thursday saw me at the School for Social Entrepreneurs, run by the incredible Alistair Wilson. For some time now I’ve argued we need something in our civic life that brings political activists and social entreprenuers together. Talking to some of the School’s students and fellows made me more convinced than ever.
On the one hand, a closer relationship helps people in politics understand better the kind of services and reform that works much better than the kind of things we do today. On the other, a stronger relationship creates for entrepreneurs a platform on which they can attract resources that enlarge their chances of success. More – much more – on this in the weeks to come.
Liam with some of School for Social Entrepreneurs' alumni
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So, Friday saw the FTSE 100 hit its highest mark, since September 2008 – up 4.6 percent on the week and 11 percent since Feb. 5. And in the US, February’s unemployment held at 9.7 percent – some 2pc higher than in the UK – (see Bloomberg). US payrolls dropped by 36,000 last month but the jobless rate has now been stable since October.
Against this backdrop, I saw three interesting comments on the risks of beginning to cut the deficit too soon.
President Obama’s chief economic advisor Dr Christina Romer (Statement on the Employment Situation in February) argued:
‘[A]n unemployment rate of 9.7 percent is unacceptably high and we need to achieve robust employment growth in order to recover from the terrible job losses that began over two years ago. That is why it is essential that Congress pass additional responsible measures to promote job creation. It is also vital that we continue to support those struggling with unemployment…’
A few economists have been underlining this argument for continued government support for the economy. Jospeh Stiglitz this week argued (Commentary, NY Times):
‘Most economists … agree that it is a mistake to look at only one side of a balance sheet (whether for the public or private sector). One has to look not only at what a country or firm owes, but also at its assets. This should help answer those financial sector hawks who are raising alarms about government spending. … Spending, especially on investments in education, technology, and infrastructure, can actually lead to lower long-term deficits. …
And earlier in the week, James Galbraith made a similiar point;
‘the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It’s not just the old and the sick who are threatened; we all are. To cut current deficits without first rebuilding the economic engine of the private credit system is a sure path to stagnation, to a double-dip recession–even to a second Great Depression. To focus obsessively on cutting future deficits is also a path that will obstruct, not assist, what we need to do to re-establish strong growth and high employment. …’
Cutting the deficit too soon – as the Tories here propose, would simply be an economic disaster.
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Below, the text of my remarks to today’s Scottish Economy Seminar, hosted by the Secretary of State for Scotland in Edinburgh.
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Tomorrow sees me in Edinburgh with our Secretary of State Jim Murphy and the Treasury team. We are meeting a cross-section of the business community to hear how they feel the recovery is taking hold – and what their priorities look like for the budget. More on this later.
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The Conservatives’ ‘panic of the polls’ is now producing a shriller lurch to the right as today, like a bad magician, Mr Osborne started claiming he can cut taxes and the deficit all at the same time.
In a very short speech, he claimed he wants Britain to make things and then said he’ll put up tax on business investment in a way our manufacturers say would be a ‘disaster’ for the recovery.
He spoke about fairness but he stood by tax cuts for millionaires while cutting child tax credits, and the child trust fund for those on modest incomes, in just a few months time
We were promised a 12 point plan but I’m afraid and we got just one idea. The Tories would slam on the brakes just as Britain is starting to recover. This man is a chancer not a Chancellor.
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Some of you might have seen a story in The Times today, which suggested that hospitals would close as a result of the savings and efficiencies in spending in the Department of Health, part of a wider programme of savings across government which I am driving as Chief Secretary to the Treasury.
This is wrong. The Times accepted that they’d made a mistake and overnight they changed the way the story was written to more accurately reflect what I said in the interview.
In the interview, I specifically said that hospitals would NOT have to close as a result of these savings. What I DID say is that hospitals will do more of their work in community health centres and the like. These centres – we’re going to get three in Hodge Hill – are more convenient, efficient and cheaper. And patients like them.
The Health Secretary Andy Burnham has said many times that he wants more care provided in the community, rather than in hospitals. Of course, if you start providing more care in the community, you might be able to stop using certain buildings on hospital sites – but ‘closing buildings’ is a world away from “hospital closures”!
For the record, here’s the relevant part of the interview transcript:
EXCERPT FROM INTERVIEW WITH LIAM BYRNE
INTERVIEWERS ARE RACHEL SYLVESTER AND ALICE THOMSON OF THE TIMES
FRIDAY 26 FEBRUARY 2010
RACHEL SYLVESTER:
Is it going to mean hospitals are going to close?
LIAM BYRNE:
No, I don’t think it is, but I do think that some hospitals will have to start doing more of their care in the community rather than in, you know, big expensive buildings, so we’re getting three health centres, big new health centres, in Hodge Hill, thanks to the fantastic constituency MP [sound of laughter from journalists] and a lot of hospitals will be able to do more of their work in centres like that which are in many ways more convenient
RACHEL SYLVESTER:
So you might be able to close some of the hospital buildings?
LIAM BYRNE:
Yes, well, a lot of hospitals I think are thinking about moving some of their business out into the community because it’s better care, it’s better quality, it’s more convenient, it’s round the corner, you know. It’s also cheaper.
ENDS
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Liam is the MP for Birmingham Hodge Hill, and Chief Secretary to HM Treasury. The youngest member of the Cabinet, he was formerly the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office. 
