Debt reduction

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ACCORDING to Alan Hinnrichs (Letters, 6 June), he believes that the Conservative cuts are “ideological” and doesn’t believe it is part of a package to get the deficit down. Then on the same breath, he accuses the Tories of borrowing too much by increasing the deficit from £811 billion to £1.2 trillion.

Fortunately most informed people understand the high borrowing (quantitative easing) was enacted as a direct result of the global financial crisis and was done to prevent the event turning into another Great Depression like that of the 1930s, which saw a crippling lack of liquidity creating mass unemployment and soup kitchens. 

Basically there are three ways to pay down the debt: grow the economy, raise taxes, reduce public spending.

The positive news is that the “public school-educated” Tory George Osborne has delivered an economy which is now around 3 per cent higher than before the financial crisis (Greece is at minus 20 per cent), unemployment half of the European average, and the foreword growth rate of 2.6 per cent is only equalled by the US. As Hank Paulson (a former US treasury secretary) said recently, Europe is still dealing with structural issues, but the UK is “one big bright spot”.

Another way to alleviate the cutbacks (austerity) would be to raise taxes, and with significant powers on general taxation soon to be devolved to the Scottish Government we will see if the SNP raises taxes compared to the rest of the UK.

Mind you, with only around 19,000 Scots earning over £150,000, which would only raise £100 million from a 50p rate, an increase in basic rates would be required.

The good news is that with the imminent introduction of the Scotland Bill, the SNP will be exposed on their true position regarding austerity prior to people voting at the Holyrood elections, unlike the general election.

Ian Lakin