VOICE OPINION: There’s never been a better time for a progressive agenda but ‘learned helplessness’ of UK govt finances stands in our way

Posted on August 21, 2026 by Scottish Socialist Voice

by William Thomson

PROMISING A NEW VISION for the UK, a new Labour Prime Minister has taken up residence in two No 10s. With a huge 170 majority, Andy Burnham has the parliamentary support for a new agenda. If there ever is a time for a generational shift to a more democratic and fairer society, it is now. There is an ecological crisis to address; pressure from the devolved nations for change and wide support for fairer taxation.

First, the crisis. Across the UK, the ecological crisis is biting. Droughts in England and Wales. Forest fires in England and Scotland. Food shortages across the UK. Everyone can see — in some cases hear and smell — the creaking ecosystems that sustain all life on the planet.

Evidence suggests that a warming climate is already raising food prices; compounding a related cost of living, or more accurately, the cost of capitalism crisis. Climate justice is social justice and no policy area chimes more closely with a socialist agenda.

Meanwhile, pressure mounts on London’s political institutions. Three new ‘separatist’ administrations, the Sinn Féin-led Northern Ireland Executive, Scotland’s SNP and Plaid Cymru in Wales, are pushing for more progressive and fairer policies for the UK’s devolved nations.

Finally, the idea of a ‘wealth tax’ has entered the mainstream consciousness. The majority of British people think that you can have too much wealth. Recent surveys have suggested that even most millionaires want to be taxed more.

There is an open goal for the progressive politician.

“Reduce inequality”, “Embrace a socialist agenda”, are the calls from every corner of the UK.

All that needs to happen is for Team Burnham to unlearn the helplessness that has stymied progressive policies since the early 1970s, underlined as it is by the pointless and damaging search for a government budget surplus via fiscal rules.

The UK’s fiscal rules

The UK’s fiscal rules are designed to reduce day-to day spending to enable the government to run a budget surplus by 2029-30. The chance of this materialising is firmly 0%.

But Burnham’s ‘Iron Chancellor’ John Healey said they will keep to the current fiscal rules and that the new administration will be “built on fiscal discipline”. To prove his point to ‘the bond markets’, he warned Ministers that “no new money is available”. More fiscal austerity is on the way. All this pain in the pipeline to keep within totally arbitrary, unscientific fiscal rules. Rules that we will inevitably break. This is a special kind of comedy madness.

Slow down to catch up

One of my favourite moments from The Simpsons is when Bart spends a day in the ‘remedial’ class. He says, “So the plan is that you go slower in this class in the hope that you eventually catch up with the kids who are going faster? Cuckoo, cuckoo”.

The same logic applies to the government’s plan to run a budget surplus.

According to the House of Commons Library, since 1970/71, the average annual budget deficit is 3.7% of Gross Domestic Product (GDP). So your first thought must be what’s wrong with a government surplus if it is normal for the UK?

Next, you can consider the starting point. Last year, the UK had a public deficit of 5.2%. So, experience alone strongly suggests that achieving a balanced budget is highly unlikely, but when you understand the plan, you know it is a fantasy.

Here is that plan:

Cut government spending.
Don’t increase taxation.
Grow the economy.

Cutting government spending makes intuitive sense in reducing the budget, if you only consider the government’s side of the balance sheet. That spending enters the economy and contributes to GDP. When the government reduces spending, it reduces one of the biggest contributors to our national income.

So, if you reduce GDP and the amount of debt stays the same, the budget deficit will actually increase in percentage terms. If you don’t increase taxation, you leave more money in the economy. The government budget deficit is simply (and exactly, pound for pound) the difference between government spending and taxation. So, a lower tax take leads to a bigger budget deficit. You can argue that neither spending nor taxation levels matter so much if the economy grows.

During the last 50 years, the average UK GDP growth was around 2%. The UK’s economy will grow at less than 1% in 2026. So we need a large spike in growth figures above the historic average (remember we are already reducing government spending) during a climate crisis, with conflicts across the globe, rising commodity prices which will increase the value of imports (which reduces GDP) and a likely massive private sector contraction after the inevitable AI bubble bursting.

Yes, that is the plan. “Cuckoo, cuckoo”.

‘The Last Progressive Left Standing’

In 2011, Warren Mosler, the founder of Modern Monetary Theory (MMT), wrote an opinion for Bloomberg highlighting that in calling for a budget surplus, the Democrats were no more progressive than the Republicans. It is easy to cut and paste and update this piece for the UK in 2026. In summary, you cannot have a progressive voice if you call for a budget surplus or support fiscal rules. Doing so only feathers the bed of capital.

The Labour government are a lost cause.

There is no way they will abandon the fiscal rules, and despite increased consumption leading to the ecological crisis, they will search for growth as the solution. Labour will promise big things and fail, not by accident but because the system is designed to ensure failure.

So this call goes out to the much wider socialist movement. To all those reading this piece. Join the last progressives left standing—those who understand MMT. Engage with the wide body of literature on monetary operations. Read Stephanie Kelton’s ‘Deficit Myth’ and Warren Mosler’s ‘Soft Currency Economics’. Read the regular blog posts by Bill Mitchell.

Escape the learned helplessness

For the last half a century — since we finally dropped off the gold standard — we have lived in a world of learned helplessness. The UK government is not fiscally constrained. It can increase spending to achieve its social goals, improve wellbeing and enhance democracy across the UK.

It can reduce the interest rate it pays on government borrowing to zero. It can remove all voluntary unemployment via a government job guarantee. We can afford to fight the climate crisis.

We can tax wealth — not to fund the government — but to reduce inequality and improve public services
and democracy.

We can increase day-to-day spending while still investing in our infrastructure.

We can have more firefighters, nationalise utilities across the UK, build more storage capacity for fresh water, improve flood defences and greatly improve the financial health of households and businesses across the UK.

So what should a socialist do this month? Engage with MMT.

Knowing that the UK government is not constrained in the way that most socialists think is not the pivot to a new economy or a society. No one could be that naïve.

But the knowledge provided by the MMT lens pushes us towards a tipping point for a more socialist society.