Bankruptcy, bubbles and bailouts: The inside history of the Treasury since 1976
by Aeron Davis
Manchester University Press £16.99

THIS is a splendid survey of a key department of state. The Treasury dominates the state machine.

What is its purpose? The record shows that it consistently opposes our national industries, regional development, central planning, and much-needed infrastructure projects.

By contrast it always gives foreign companies incentives to move to Britain — regional development aid, free enterprise zones, free ports. It backs international finance against national industry.

It presides over a declining economy that lives off financial speculation. It’s easier to buy, break up and sell off a company here than in almost every other advanced economy. Vital companies are sold abroad, so jobs, manufacturing capacity, investment, research and development (R&D), revenue and profits all vanish.

It imposes botched privatisations, where financial institutions snap up almost all the privatised companies’ shares. It promotes huge inequalities of wealth between regions, and opposes skilling up, levelling up.

It imposed the mass sell-off of social housing. When council house sales started, it blocked councils from keeping and reinvesting the profits and pocketed three-quarters of the revenue.

It builds up vast debts — individual, corporate, public institutional (from Brown’s PFI), and local and central government.

Before Thatcher, the private debt to GDP ratio was 60 per cent, by 2009, 197 per cent. Total household debt was £1.5 trillion by 2014, individual student debt £54 billion — 18 per cent of the population, nine million people, were “over-indebted.” As Davis points out, raising interest rates is “catastrophic to an economy now built on such huge debts.”

This is not “neoliberalism” but financialisation — putting finance in command. Nigel Lawson says, “Freedom of capital movement is, if anything, more contributing to the change in the nature of the world economy than free trade.”

Since the 2007-2008 crash, we’ve had the lowest rate of corporation tax in the G7 countries, but no increased investment. The rate of private-sector investment, particularly in R&D, is the G7’s lowest. But — surprise, surprise — dividend payments are far higher than the norm.

QE benefits only wealthy asset holders. Real wages fell between 2007 and 2015. By 2015, productivity growth was lower than any time since 1965. The Institute of Fiscal Studies noted “record low earnings growth, record low interest rates, record low productivity growth, record public borrowing followed by record cuts in public spending.”

The 2007-08 crash changed nothing. Financialisation has grown since then, creating the same conditions that caused it in the first place — maybe because the bankers who brought it about were then hired to fix it?

Naturally, this permanently, dogmatically, anti-public spending, anti-industry, anti-protection, anti-planning, anti-national, pro-monetarist, pro-austerity, pro-globalist, pro-capitalist body was fervently pro-EU.

Yet, after all this, Professor Davis comes out in “defence of the Establishment status quo and Treasury orthodoxy” and concludes that “no change is best.”

No, a working class that wants to take control of our country cannot accept the Treasury as it is.