I feel I have to reply to the misleading letter from Margaret Wilson printed in your paper on April 21.
She states in her letter that the financial crisis was the fault of the last Labour Government. Doesn’t she realise it was an international crisis, and resulted from policies that Margaret Thatcher implemented when she was Prime Minister.
Thatcher created a culture of paying bonuses to workers instead of inflation-led pay rises
Thatcher created a culture of paying bonuses to workers instead of inflation-led pay rises. This resulted in wages lagging behind inflation, and so employers developed ways to pay larger and larger bonuses to keep their workers contented. The major banks adopted Thatcher’s policy of paying bonuses on individual results against objectives, which led to the excessive bonuses that we see today, and was one of the components of the banking crisis.
Thatcher also deregulated the banking industry during her time in office, allowing building societies and others to enter the market, believing that competition would make loans cheaper. On this occasion she was very wrong. Instead of making mortgages and loans cheaper, the new banks invented new innovative ways of lending money to the public, inflating house prices, and it was obvious from the outset that as house prices increased and wages didn’t, that at some point it would become unsustainable and it would all come crashing down. What led to it becoming an international crisis, was Ronald Reagan’s obsession with Thatcherism. He followed similar politicise, which created the sub-prime mortgage crisis in the US.
Thatcher also sold off council houses at a discount, which fuelled the housing market, and the property price explosion. All the banks responded to this new increase in demand by bringing in new types of mortgages, and again Thatcher refused to interfere and introduce regulation to curb the market. Not only did this policy fuel the banking crisis, but it also led to a shortage of affordable social housing, and forced the youngsters of today into the private rental market. These private rents have also increased, resulting in financial problems for the tenants, and the growth of food banks in this country.
Margaret Wilson is keen to have a referendum on the EU but this would be a costly distraction for the country. Both Ed Miliband and David Cameron have stated that they do not want to leave the EU, and to have a referendum would mean that the PM would have to concentrate his energy into fighting to stay in the EU, instead of dealing with more important issues.
Ms Wilson also refers to the tax cuts in the latest budget. Has she forgotten the VAT rise from 17.5 per cent to 20 per cent imposed by George Osborne in 2010/11, whilst giving tax cuts to the top earners. History shows that the only party to raise VAT, and to enlarge the scope of VAT is the Conservatives, and the only party to cut VAT is Labour.
Finally, is spending £100 billion on replacing Trident a good use of tax payers’ money, as Margaret Wilson believes, especially when it will never be fired in anger? Surely that money would be better spent on the NHS, building affordable housing, reducing the national debt, and an efficient police and fire service or protecting the environment.