Commentators like to talk about “defining moments” in the history of governments. Here’s one for them: the decision to abandon support for Sheffield Forgemasters, announced in the second round of pre-budget softening-up cuts.
The company needed a loan of £80 million to fund an expansion programme that would have brought 180 industrial jobs and allowed it to meet contracts for the nuclear industry.
As the name Forgemasters suggests, it makes its living from producing forged metal components. But not just any components – components for the nuclear industry so large and needing such fine tolerances that there is only one other company that could take its market. That company is in Japan.
Instead of making what we need for our new power stations here, creating British jobs with the 15,000-tonne forge it wanted to install, the components will now be imported.
Nick Clegg said the government could not afford the loan. Strange, that. It can afford to carry on with Labour’s policy of quantitative easing, whereby the government “prints money”, and increases its debt.
The planned total of quantitative easing planned for this year is £200 billion, enough to finance 15,000 Sheffield Forgemasters. That £200 billion is debt that the British taxpayer will have to fund at some point. And it comes on top of nearly that amount last year.
That £200 billion is going somewhere. It is going to the banks, and is virtually free money since the government is lending it to them at an interest rate of 4 per cent, scarcely (or by some measures not even) the rate of inflation.
And what are the banks doing with this? They are primarily using the free money to fund speculation. Where they are lending money they are doing so at interest rates 3, 4 or 5 times what it costs them.
So the bankers are getting richer. The speculators are getting richer. That’s what the government means by “sharing the burden” – sharing it out among workers.
Since the Labour government started quantitative easing the stock market has boomed by around 50 per cent. Good news for shareholders. House prices have risen by 10 per cent. Good news for speculators. Bad news for first-time buyers, or anyone needing somewhere to live.
Effectively, a few hundred billion of government debt (to be carried by the working class) has been incurred to boost the wealth of the country’s rich – to the tune of £1.5 trillion (thousand billion).
Our remaining industry is being starved. The old and young must pay to swim. VAT, a tax that disproportionately hits the working class, is set to rise. All manner of savage cuts are being prepared. But the City will grow richer.
Some people think the City must be saved at any cost. Well, let them save it. For the rest of us it is a parasite. In the decade before the crisis hit, only 3 per cent of bank lending went to manufacturing industry.
Don’t expect that figure to rise. Lending by banks to companies has fallen since quantitative easing started. In fact, by early summer last year it was negative (i.e., they got more in interest than they paid out in loans), as a report by Giles Wilkes for Centre Forum showed.
We are being robbed blind, and paying for the privilege. So let’s talk about cuts: cut the banks, cut the City, cut capitalism. It’s either that, or cut our own throats.