New Green-linked report in Britain avoids the critical issue

I read a new Report this morning – Waste Not – that was published by a new unit in Britain called Verdant, which seems to have links to the England and Wales Green Party. The work is interesting and raises several issues that bear on how government fiscal policy should be assessed. The issues I have with the Report were not canvassed by the author to its detriment. It relates to the impact of government spending and the employment effects of cutting expenditure, regardless of whether we classify that expenditure as ‘waste’ or not.

I note the author of the Report is a co-chair of Verdant and was some years ago the economics advisor to Labour’s John McDonnell, who at the time was the Shadow Chancellor in Jeremy Corbyn’s time as leader.

I met with the advisor and John McDonnell in London in October 2018 and I summarised the meeting in this blog post – A summary of my meeting with John McDonnell in London (October 17, 2018).

You will see that I was less than impressed with the advice the John McDonnell was being given.

The advisor was also in cahoots with the authors of the (so-called) fiscal credibility framework, that the Labour Party ran with.

It was based on an obsessive fear of what the global financial markets could do to Britain should the government not run fiscal policy that advanced the interests of the billionaires at the expense of the rest of us.

The dominance of the ‘fiscal rules’ thinking within the Labour Party stood in sharp contrast to the then leader’s ambitions that he summarised as ‘For the many not the few’.

How could pandering to the top-end-of-town (the ‘Few’) and advancing their interests be in the interests of the ‘Many’?

That seemed to be lost on those present at that October meeting in 2018 when I pointed it out.

Adherence to mainstream economics motivated fiscal rules, that were based on the fallacy that the British government is financially constrained like a British household, made the pursuit of Labour’s Manifesto impossible to achieve.

The rules were inconsistent with the stated aim of ending austerity and achieving a progressive future for Britain.

My opposition to that ‘orthodoxy’ was met with rather rabid hostility from the academic authors of the rules and the author of this new Verdant report.

Social media attacks were regular and direct.

While the attacks were like water off a duck’s back, they told me about the character of the people who were advancing those rules.

I also considered the advice that John McDonnell was getting at the time to be one of the reasons Labour could not cut through in the political debate despite the appalling conduct and performance of the Conservative government.

Quite simply, the ambitious and excellent policy agenda being proposed could not have been delivered with the fiscal framework that Labour had tied itself up in.

The situation remains with Ms Reeves as the Chancellor.

Labour is walking the plank because they have tied themselves up in these neoliberal fiscal rules that make no sense.

In the years that followed that October meeting I regularly analysed and wrote about the development of Labour’s obsession with these ridiculous fiscal rules.

For example:

1. Tracing the British Labour Party’s fears of The City – Part 1 (May 20, 2024)

2. The British Labour Fiscal Credibility rule – some further final comments (October 23, 2018).

Search my blog and you will see many analytical posts about this issue.

In the lead up to the 2019 British election, I noted how the rules were subtlety changed without fanfare.

The changes were, in part, along the lines that I had argued – that the rules were impossible to honour without austerity.

The changed rules were still flawed but the glaring anomaly was abandoned.

To move on, this background explains why I was sceptical when I noted that the author was the same guy that had in my view performed poorly when advising John McDonnell.

I also noted that the same author had written an article in the UK Guardian (March 5, 2026) – Globalisation is under threat from Iran war – and Britain is uniquely vulnerable – which mentions Modern Monetary Theory (MMT).

And while the author would not care to publicly admit it (given the past history above), the article appears to represent a shift in perspective towards one that is on the whole compatible with the MMT analysis.

It notes that Britain can only continue to run external deficits while the rest of the world desires to accumulate financial assets denominated in sterling.

They are my words not his.

The point is that if a nation is dependent on imports for say energy and food, then it is variously exposed to the preferences of savers elsewhere.

While a currency-issuing government, such as in Britain, has no financial constraints and can always ensure all material resources that are available for sale in that currency are fully utilised, the situation becomes more complex when there are these import dependencies.

That is standard MMT and the UK Guardian article acknowledges that:

The UK is not only dependent on financing from the rest of the world; fundamentally, it is dependent on material resources from other countries to keep people fed, warm and with the lights on.

Note the first part – “The UK is not only dependent on financing from the rest of the world” – this is different from the UK Government being dependent on Rest of World financing.

The difference is important.

The capacity of the UK as a nation to have energy resources, food and other material things available is dependent on those foreign preferences for sterling financial assets, a situation that can change at any time.

And if those preferences changed rapidly then there would be pain for the British population.

I have written a lot about that in the past – pure MMT analysis.

Where the author returns to form is towards the end of the article when he talks about possible pathways out of the import dependency – expanded use of renewables, encouraging better agricultural practices which reduce the need for ‘artificial fertilisers’, and more.

He wrote:

But all of this takes time. And it will take major investment, which is far harder to finance today than before thanks to rising inflation and the increasing costs of borrowing. The “big push” this needs to start with has to be met with redistribution downwards – first in tax terms, via wealth taxes and a broader overhaul of the system, chasing down profiteering and rent-seeking, and second, in shifting market prices.

Yes, it takes time and the complacency of many governments to the need to address climate change for example is now coming back to haunt their nations given what is going on at present in the Middle East.

As an aside, I wonder what the politicians in Australia are thinking now, given they were advocating increasing taxes on EV users, which would discourage the transition away from petrol-using cars.

Governments in Australia have also lagged behind other nations (such as Norway) in terms of building essential charging networks that would have made the transition to EVs much easier in a large continent such as ours.

I had course to drive between Melbourne and Newcastle (1,100 kms) recently and while I eventually found the necessary EV charging stations for my car it proved to be a rather hit-and-miss operation that I would describe as ‘precarious’ and ‘anxiety inducing’.

However, in terms of his claim that government investment is ‘harder to finance today’ – that is pure mainstream fiction.

The Treasury gilt auctions are still running bid-to-cover ratios the high 2s, which means there is more than twice the demand for the debt being issued than there is debt being issued.

And on Tuesday (March 24, 2026), the UK Debt Management Office sold 2.25 billion pounds in October 2035-dated gilts at an auction where the bids received amounted to 7.88 billion – that is a bid-to-cover ratio (demand to supply) of 3.5.

Hardly a difficult auction.

And while yields have risen a bit lately, that is entirely a decision of the Bank of England and the Government could instruct the central bank to simply ensure it uses its currency capacity to drive yields down via purchases in the secondary market.

So a ‘financial crisis’ that manifests as rising bond yields for government is entirely self-made and preventable for a currency issuing government.

And if the private bond investors didn’t like the lower yields then the government could simply alter its institutional practices and not issue debt at all.

The Verdant Report admits this when it notes that during the early years of the Pandemic:

The UK government borrowed extraordinary sums during the pandemic, amounting to £313 billion over 2020-21 … To finance this, rather than turning only to the market for debt – with the danger that creditors would start to demand very much higher interest rates – the Bank of England rapidly expanded its Quantitative Easing programme to match government borrowing over the same period. This meant that, in effect, the Bank was financing the government’s borrowing by taking on the debt itself …

It can always do that.

In other words, the financial markets only have the scope that the government gives them.

They are the supplicants not the drivers.

The other problem with the view presented in the UK Guardian article is that it rehearses the familiar progressive ‘death trap’ – ‘let’s tax the rich so we can have better public services’ assertion.

Given the author’s statements earlier in the article that the real problem is access to material resources, this retreat back into the ‘death trap’ showed a remarkable level of inconsistency.

Sure we want to tax the rich more, but not to get their ‘money’.

The British government issues the currency after all.

We just want to tax the rich so they have less money and a reduced ability to pay lobbyists, influence the media and fund nefarious public relations strategies.

Tying the tax revenue to better services is a huge error and just reinforces the mainstream economic fictions that make it virtually impossible for a progressive political movement to make inroads.

It is why the British Labour government is so moribund and neoliberal agent.

This poor framing also permeated the Verdant report that was issued on Tuesday.

The basic proposition entertained in the Report is fine – eliminate wasteful government expenditure.

The author defines ‘waste’ as:

If the government spends money that it need not have spent to achieve some policy objective, this is waste.

I agree.

The aim of government policy should be (in the Verdant report’s words) efficiency “to minimise the cost of delivering a policy” and “effectiveness, where government would want to maximise the impact of a policy.”

Nothing controversial there.

I wrote about this issue many years ago – 1. What is government waste? (July 8, 2011).

But the Verdant proposals are being expressed in the media as a “Doge of the left” (Source).

I don’t think using such objectionable framing or language to describe a progressive venture is acceptable.

DOGE was a disgusting attack on the public sector driven by zealots with little understanding of the complexity of public service delivery.

We should never aspire to have a ‘Doge of the left’.

The Verdant’s report discussion of DOGE in the context of actual government waste is not helpful in my view.

The Verdant report also ties together the ‘waste’ with the funding of necessary services – in other words, reinforcing the idea that there is only finite government spending capacity.

The Report outlines some £30.9 billion in waste elimination possibilities including areas such as “outsourcing and procurement failures … fraud … tax losses” and more (“Fossil fuel producer subsidies” etc).

The pervasive presence of high-paid private consultants that have replaced much cheaper in-house analysis is cited as an issue.

This is an issue worldwide.

For example, never forget that the already scandal-mired PwC received an Australian government contract worth $A853,859 to produce a 100-page comprehensive and “independent review of the compliance and fraud activities” in the Commonwealth Department of Human Services.

In its 2017 output to government, it produced an 8-slide Powerpoint show as its work (Source).

The Verdant report makes a series of recommendations none of which are objectionable.

But what is missing is the recognition that while the £30.9 billion might be avoidable in terms of the definition of waste noted above, the fact remains that ‘aggregate demand’, which drives employment, doesn’t differentiate between waste and non-waste.

The current level of economic activity – and the aggregates tied to it such as total employment, unemployment, underemployment, poverty rates, etc – are all dependent of total expenditure.

What the Report doesn’t show is the impact on those aggregates of cutting the £30.9 billion out of the total public expenditure.

Employment would fall somewhere.

Now it might be in the public interest for management consultant firms to be deprived of ridiculously large (out of all proportion) consulting contracts but the fact remains that those contracts contribute to aggregate demand in some way.

It is also clear to me that the mix of total employment is not progressive.

We want more educators, nurses, climate scientists, etc and less army, less financial market types, etc.

So the progressive task is to identify where employment should be fostered and ensure that there is adequate public spending support for those jobs and less public spending in areas we eschew.

It might feel good to argue that there is £30.9 billion of waste not serving public purpose but one must also say how eliminating it will help redirect into and maintain employment levels in the desirable areas.

The Report is largely silent on that issue.

Finally, and perhaps controversially, for a sovereign government that issues its own currency there is no meaningful concept of waste that is specified in terms of £ net outlays.

Take two projects: A and B.

They both deliver a public building of similar dimensions and quality in different regions.

Contractors providing building A charge twice as much as the contractors who provide B and the government officials lack oversight to determine why?

The buildings are delivered on time and appear to be satisfactory against the specification.

Question: Is there any waste in Project B relative to Project A?

Answer: From an MMT perspective, there is no waste.

Both projects use the same quantities of real resources and transform those resources into a similar real output.

There is no waste that matters in the sense of resources going astray.

The fact that the Government paid the Project B contractors twice as much in nominal terms (£s) does not constitute waste unless we were already at full employment and the nominal demand that was created in the Projects (wages, salaries, equipment purchases etc) was pushing up against the inflation ceiling.

Presumably, the contractors in Project A and B distributed the income earned in a way that added to aggregate demand, which then stimulated further employment and output via the spending multipliers.

Some might argue that paying Project B contractors twice as much stops the Government from spending on other worthy programs and that is waste in the sense of a foregone benefit.

My reply is that there are no financial constraints on the British government and by spending X more $As on Project B the government is not reducing its capacity to pursue any meaningful and beneficial project.

Politically they might be constrained but then that is another debate altogether.

The only time they would be constrained in real terms would be at full employment and then the need for a large-scale fiscal intervention would be absent.

Please do not assume that I think the national government should be throwing millions towards unscrupulous building contractors.

The argument I am making is more substantial than that and takes us back to first principles.

Conclusion

In general, governments should spend and tax to advance public purpose.

There are only so many available real (material) productive resources that can be brought into productive use through expenditure.

The challenge is to use those resources in the best possible configuration.

Thus, I do not think pushing millions of public money into the hands of dodgy private companies is a good strategy but the waste I have in mind is the foregone employment that would be involved because the fiscal stance is not as well designed as it might have been.

Cutting £30.9 billion out of the British government’s spending might seem like a good idea but not if it causes unemployment.

That would be increasing waste (where I am drawing the distinction between real and nominal concepts).

The challenge is to cut the £30.9 billion but replace it to ensure aggregate demand remains sufficient.

And it might be that the employment lost from the specific £30.9 billion cuts require an even greater public spending injection to ensure that at least an equivalent number of jobs are created elsewhere.

The Verdant report is silent on those matters to its detriment.

That is enough for today!

(c) Copyright 2026 William Mitchell. All Rights Reserved.