We know the Tories economic policy has more than doubled our debt since 2010. We know that they have borrowed more than every Labour government combined and that they have always borrowed more and paid off less debt than Labour. In an attempt to defend against their economic incompetence Teresa May correctly informs us they have reduced the deficit. The deficit is the difference between incomings and outgoings, we run a deficit when we are spending more than we are taking in, it is currently informing us how much we have to borrow each year. On the surface a decreasing deficit appears to show that tightening our belts and enduring austerity is working, but the increasing debt tells a different story.

The issue is how the Tories have reduced the deficit. Spending cuts make sense to us because this is what we have to do when our outgoings exceed our income in our household budget. The flaw in this argument is that the economy cannot be run like a household budget, it is in reality an eco-system. We can’t simply cut spending in one area, without affecting other elements.

The majority of Economists agree that promoting economic growth is the best way to cut the deficit and stabilise the debt over the long-term. The Tories have prioritised drastically reducing the deficit through any means possible, but critics argue that the pace of the deficit reduction has been self-defeating, causing a double-dip recession.

A healthy growing economy requires high levels of employment, which increases tax revenue and reduces the welfare spend. Once we understand that workers are the source of prosperity in Capitalist societies, not the consequence of it, the economic model we need to have in place becomes clear. A living wage puts more money in our pockets, this provides businesses with more customers, the more profitable they are as a result the more employees they need, the more taxes we collect and the more we save on welfare payments, which reduces the deficit. This makes perfect sense, and the Tories are claiming to have done both, increased employment and reduced welfare spending, so what’s the problem? Again, it is the way they have done it that betrays their utter economic incompetence.

The 'Angry Birds' approach to understanding the deficit in the modern economy

The Tories have deceitfully massaged employment figures without decreasing the welfare spend as a direct result of effective employment. Meanwhile, they have cut the welfare spend by targeting the most vulnerable in the harshest way possible, ultimately increasing poverty and mortality rates in children and adults, and creating a looming mental health crisis.

Zero hour contracts and low wages have improved employment figures but there is no substance behind them. The Tories subsidise Corporations paying low wages, by paying working people tax credits and housing benefits. Low wages do not result in higher tax collection from the population or a lower welfare bill. Only a living wage can do this.

Forcing the disabled and jobless into this kind of employment by making the welfare system almost impossible to navigate and imposing unfair sanctions, has also provided no economic benefit. In fact the Tories have paid private companies so much to impose sanctions that we are paying £153 million more per year to impose them than we have saved in benefit cuts. Although, deaths have lowered the welfare bill (that statement can’t be made without referring you here) those still alive will undoubtedly end up costing the state even more as we deal with the mental health crisis and likely the physical health cost of forcing the disabled to work. The appalling Tory culture of waste on welfare spending continues here. The profound economic and social incompetence of the Conservative government is demonstrated in this paragraph alone.

The Tories claim that they need to do all they can to keep businesses and corporations in the UK, by reducing their taxes and allowing them to pay poverty wages, to ensure high employment rates. But this is a false economy as described above. Business can only thrive in an environment where people are earning enough to have money to spend. Billionaire Plutocrat Nick Hanauer who is part of the 1%, describes how essential this fair economic model is even to a Capitalist society in this video:

Beware, fellow plutocrats, the pitchforks are coming | Nick Hanauer

Tax reductions to corporations are also taking money out of the economy as most of the profits are being funnelled out into tax havens. A healthy economy aims to have as much money circulating in the system as possible, any money taken out of the system creates a drain. It is much more economically effective to tax corporations fairly and ensure a living wage.

Under the Tories corporation tax has been reduced from 28%, is currently at 19% and will be reduced to 11% by 2020. When the global average rate is 27%, surely this is economic suicide? Jeremy Corbyn meanwhile has said that he will reverse the damaging Tory cuts to 21% for small companies and 26% for larger companies.

Is there any basis to the Tory claim that they are valid in using their economic model because businesses will leave the UK taking their jobs with them? There is no evidence that cutting the rate has brought jobs, growth or new corporation tax revenues to the UK. Business itself did not lobby for low tax rates, and ours will remain around the average global rate. Corporations do make significant profits in the UK, they can afford to pay fair taxes and wages, and when they do they contribute to our economy. Bearing the above in mind, the question we should be asking is, is it really economically valid to keep businesses here if they are creating a drain on our economy through welfare subsidies and the removal of money from circulation?

The Tories have reduced their investment in infrastructure and industry and sold off assets to private firms. Whilst this provides an injection of money in the short-term, it impacts the economy negatively in the long-term. One way to reduce the debt in a stable way is to increase our income by bringing profitable industry back into state ownership. Currently we pay massive subsidies to private firms who own our rail and energy, and the profits they make are going abroad! This obviously has to change if we want a stronger economy.

Labour is also correct to invest in infrastructure and industry in the UK, this not only makes the state more profitable in the long-term but immediately creates an increase in the availability of effective employment that will boost economic growth.

Despite manipulated public opinion The Tories are the party creating economic and social chaos and this will only increase over time. The best way to create a growing economy and reduce the deficit and debt in an effective way is to create effective employment. A £10 living wage, fair Corporation tax, and investment that creates jobs will be transformational for all. Labour are introducing economic policies backed up by majority economic consensus that will create a social and economic stability we are all desperately crying out for.

Is it any wonder that at Labour's request the Tories have refused to provide the Office for Budget Responsiblity a copy of their manifesto, so that it can be compared to the Labour manifesto and the public can be properly advised?

CAN THE DEBT THE TORIES INHERITED AFTER THE FINANCIAL CRISIS BE BLAMED?

Can the Tories blame Labour for the debt they inherited 10 years ago? Government spending did not cause the financial crisis despite the Tory perpetuated myth, the banks did. And, if we are looking to blame Labour for not preventing it from happening, we need to consider that the Tories argued for LESS financial regulation at the time. Labour did not overspend and bankrupt the economy and here is the superbly presented data. The Tories need to take responsibility for their mistakes and continued failure at running our economy.

QUESTION

My question to the Tories is this; you have imposed austerity for years and yet the debt keeps rising, where exactly has all the money gone?

This BBC article provides a great explanation of debt and deficit and also:

"A neat, if rather simplistic, illustration of the different philosophies of the right and left in UK politics, some might say."

"If the government is running a deficit, it may make investments on top of this, and will therefore need to borrow to cover both. For example, in the calendar year 2007, the Labour government borrowed £37.7bn, of which £28.3bn was invested in big projects (the balance of £9.4bn represents the current budget deficit). Conversely, in 2013, the Conservative-led coalition borrowed £91.5bn, with just £23.7bn invested."

How have the Tories got away with it for so long?

References and further information:

Videos on the economy:

Stephanie kelton - https://www.youtube.com/watch?v=d57M6ATPZIE The 'Angry Birds' approach to understanding deficits in the modern economy.

Nick Hanaeur - https://www.youtube.com/watch?v=q2gO4DKVpa8 Beware, fellow plutocrats, the pitchforks are coming | Nick Hanauer

Articles:

They say Labour is financially inept. Yet just look at Tory welfare spending:
https://www.theguardian.com/commentisfree/2017/apr/27/labour-tory-welfare-spending-universal-credit-housing

The Conservatives have been the biggest borrowers over the last 70 years:

http://www.taxresearch.org.uk/Blog/2016/03/13/the-conservatives-have-been-the-biggest-borrowers-over-the-last-70-years/

UK Budget Deficit:

http://www.economicshelp.org/blog/5922/economics/uk-budget-deficit-2/

Should the Pace of UK's Deficit Reduction be Slower?

http://www.economicshelp.org/blog/5149/economics/should-the-pace-of-uks-deficit-reduction-be-slower/

We need to talk about the threat posed to UK citizens by Teresa May's Tory government:
http://the-vilemaxim.blogspot.com/2017/05/we-need-to-talk-about-threat-posed-to.html

Official report reveals the hated benefit sanctions regime costs taxpayers £153 million more a year to run than it saves:

http://www.dailyrecord.co.uk/news/scottish-news/official-report-reveals-hated-benefit-9361944

Jeremy Corbyn wins economists' backing for anti-austerity policies:

https://www.theguardian.com/politics/2015/aug/22/jeremy-corbyn-economists-backing-anti-austerity-policies-corbynomics

Economic Competence Revisited:
https://mainlymacro.blogspot.co.uk/2017/04/economic-competence-revisited.html

The Tory Deficit Myth and Other Lies:
https://politicalsift.wordpress.com/2016/02/17/the-tory-deficit-myth-other-lies/