CashNews.co
Your obituary of Peter Jay “The editor who became Britain’s man in Washington” (September 28) highlights his continued importance, not least to students of economics who are still reminded of the speech he drafted for his father-in-law prime minister, James Callaghan, to deliver at the 1976 Labour party conference. It included the lines “we used to think that you could spend your way out of a recession . . . I tell you in all candour that that option no longer exists”.
Jonathan Derbyshire’s obituary correctly points out this speech “called time” on the traditional economic policies and instruments of the postwar consensus. But the tribute could have made more of the period when Jay was BBC economics editor. There was no mention, for example, of his documentary and book The Road to Riches. It’s worth rereading. In it Jay comments that after many years of wars (from the nine years’ war to the American war of independence) there had been a massive increase in the UK national debt despite a huge increase in taxation. Sound familiar? The solution, he wrote, was “to make it easier and more attractive for those with money to lend to the government and less burdensome for the government to borrow”.
In modern terms, reform of the government bond (gilts) market could provide a parallel. Three aspects are worthy of attention. The market could be made more easily accessible to retail investors via online share-dealing platforms.
Inflation-linked annuities — surely the most appropriate investment for securing retirement income — could be provided directly by the Debt Management Office. The private sector seems particularly poor at providing such instruments.
And third, government debt to directly finance much-needed capital infrastructure projects could be launched. It is a time for creativity in government debt management rather than just filling black holes.
Paul Temperton
Chalfont St Giles, Buckinghamshire, UK