The Spending Review (tackling the Socialists debt mountain)

[benjii]

The cuts really aren't as big as the doom-mongers would have you believe. They are around 4%. Public spending has gone up under Labour by many, many times that amount. Have your lives all improved by 60% under Labour?

 

The issue is that spending cuts are usually mitigated by governments by some monetary loosening, however at the moment there is no where to go on the monetary side apart from up. The key therefore will be to ensure that confidence isn't rocked too hard - as everyone knows, expectation is a huge driver of macroeconomics. It would help if all political parties could try to work towards this rather than run purile and infantile arguments about "hitting the bankers instead" etc.

[Johnny Bognor]

It wasn't intended to be misleading, and I don't deny the situation, but to claim that the Tories had 'wiped out' the debt is a blatant untruth, as it was increasing dramatically when the 1997 election took place. And, take note, over the first 6 years of Bliar's tenure, it went down, which gives the lie to another myth about Labour's stewardship of the economy.

How would it look if the US hadn't dragged the world to the event horizon of an economic black hole ?

 

True, they certainly hadn't wiped it out. It went up as a consequence of the early 90's recession and with Gordon Brown following Ken Clarke's spending plans for the first two years of his tenure ensured that the rise was halted and started to fall into reverse. The debt fuelled boom following the millenium ensured it fell back to pre-90's recession levels until Labour went on a spending spree.

[OldNick]

Why do people just lie to back up their arguments? I only have 3 posts so can't get into a big debate but its obvious you either made this statement up or were grossly misinformed.

With the other argument that the banks would leave if we raised their taxes to a fair level thyey would leave, well i say let em leave then nationalise all of their branches and offices here without compensation and finally get off our backsides as a country and diversify our economy into other industries i.e: I.T, blue chip industries and quality made products that the chinese can't make.

The Germans and Japanese can do it so can we.

the taxes that are generated by the banking system would be replaced by what? Where are we going to get the heavy industries like Germany and japan. We all drive their products or use their Tvs etc all big tag products. It is a terrible situation and it is worrying for our children and children's children, whatever political persuasion you follow.

[buctootim]

the taxes that are generated by the banking system would be replaced by what? Where are we going to get the heavy industries like Germany and japan. We all drive their products or use their Tvs etc all big tag products. It is a terrible situation and it is worrying for our children and children's children, whatever political persuasion you follow.

 

Anyway, increasingly 'Japanese' goods are actually made in China. BMW have factories in South Africa and China. VW has factories all over the world and only a minority of cars a\re made in Germany. All multinational companies have governments by the short and curlies, threatening to relocate if taxes approach anywhere near what they should be - and its true - its very easy for a company with a presence in many markets to simply relocate its head office to the one with the most attractive (ie lowest) tax regime.

[Thorpe-le-Saint]

According to the Guardian, nearly 500,000 public sector jobs are to be axed...we will see what happens there but if it is the case the private sector MUST WITHOUT FAIL take up the slack.

[benjii]

According to the Guardian, nearly 500,000 public sector jobs are to be axed...we will see what happens there but if it is the case the private sector MUST WITHOUT FAIL take up the slack.

 

I would imagine the private sector has already been hit much harder than that.

[Thorpe-le-Saint]

I would imagine the private sector has already been hit much harder than that.

 

That's not the point I was making was it?! Cameron has 'promised' (for however much his promises are worth) that the private will take up the slack. I'm not expecting it to be able to take up all half a million however.

 

I'm no economist, but I imagine it's would cost the government more in JSA/no income tax being paid etc than to employ the 500,000 in the long term, so I would imagine the government needs the private to take on some of these poor sods who are about to be made redundant if the government is to make any saving at all.

[benjii]

That's not the point I was making was it?! Cameron has 'promised' (for however much his promises are worth) that the private will take up the slack. I'm not expecting it to be able to take up all half a million however.

 

I'm no economist, but I imagine it's would cost the government more in JSA/no income tax being paid etc than to employ the 500,000 in the long term, so I would imagine the government needs the private to take on some of these poor sods who are about to be made redundant if the government is to make any saving at all.

 

Ahh, sorry, I didn't pick up on the Cameron dig.

 

No doubt the private sector will pick up the people that it thinks have something to offer.

 

I'm no economist either but evidently whether there is a net saving or not depends on a huge number of factors such as: mean time of unemployment, average wage of dismissed employees, savings on pension contributions, savings as a result of streamlined operations etc etc, blah, blah, blah. What would be a complete crime would be failing to address state sponsored inefficiencies and gravy trains at this time of economic difficulty.

Edited 19 October, 2010 by benjii

[Johnny Bognor]

I'm no economist, but I imagine it's would cost the government more in JSA/no income tax being paid etc than to employ the 500,000 in the long term, so I would imagine the government needs the private to take on some of these poor sods who are about to be made redundant if the government is to make any saving at all.

 

Say the average salary is £25,000 per year, of which £5,000 is clawed back in tax. Are you suggesting that the average JSA payment would be more £20k per annum?

 

It won't be the case, because if this was the case they could employ everyone who is unemployed and save a fortune (whilst wiping out unemployment altogether).

 

As it happens, 500,000 extra people have been taken on since 2003, so it is only rolling the clock back 7 years. According to the Guardian, it will take 5 years to complete, so at 100,000 per year this is equivalent to 1.5% reduction in head count per year. I'd wager that this could be achieved through natural wastage as more than 1.5 people in 100 retire each year.

Edited 19 October, 2010 by Johnny Bognor

[buctootim]

Say the average salary is £25,000 per year, of which £5,000 is clawed back in tax. Are you suggesting that the average JSA payment would be more £20k per annum?

 

It won't be the case, because if this was the case they could employ everyone who is unemployed and save a fortune (whilst wiping out unemployment altogether).

 

 

As it happens, 500,000 extra people have been taken on since 2003, so it is only rolling the clock back 7 years. According to the Guardian, it will take 5 years to complete, so at 100,000 per year this is equivalent to 1.5% reduction in head count per year. I'd wager that this could be achieved through natural wastage as more than 1.5 people in 100 retire each year.

 

 

There are savings obviously in cutting back state employment, but not as much as you'd expect. Besides income tax you lose their NI contributions, most of the VAT on things they would have bought and council tax, then if they have a family you might have to pay out £15,000pa or more on benefits. Plus the public sector employer will likely still have the same fixed costs in buildings, utilities etc. You really only save much money when you release people into a buoyant employment market when they can be absorbed by the private sector - hence the Keysian argument for counter cyclical public spending - cut back in good times, spend in bad.

Edited 19 October, 2010 by buctootim

[buctootim]

...

Edited 19 October, 2010 by buctootim
so good i typed it twice

[Johnny Bognor]

There are savings obviously in cutting back state employment, but not as much as you'd expect. Besides income tax you lose their NI contributions, most of the VAT on things they would have bought and council tax, then if they have a family you might have to pay out £15,000pa or more on benefits. Plus the public sector employer will likely still have the same fixed costs in buildings, utilities etc. You really only save much money when you release people into a buoyant employment market when they can be absorbed by the private sector

 

Yes, fair enough

 

- hence the Keysian argument for counter cyclical public spending - cut back in good times, spend in bad.

 

Keynes is quoted as to why we should spend more now, but the problem is that we did not cut back in bad times.

 

Something in my water tells me that this thread might liven up today.

[trousers]

Yes, fair enough

 

 

 

Keynes is quoted as to why we should spend more now, but the problem is that we did not cut back in bad times.

 

Something in my water tells me that this thread might liven up today.

 

Knees jerking? On this forum? Never!

[hutch]

Anyway, increasingly 'Japanese' goods are actually made in China. BMW have factories in South Africa and China. VW has factories all over the world and only a minority of cars a\re made in Germany. All multinational companies have governments by the short and curlies, threatening to relocate if taxes approach anywhere near what they should be - and its true - its very easy for a company with a presence in many markets to simply relocate its head office to the one with the most attractive (ie lowest) tax regime.

All your C Class Mercs are made here too. And your Toyota pick up trucks. Bet you didn't know that.

[Verbal]

Something in my water tells me that this thread might liven up today.

 

Your water is wrong. This thread is to be closed because of budget cuts.

[LGTL]

PMQ's looks like a right laugh.

[dune]

Funny as **** seeing David Cameron wiping the floor with the geeky Labour leader.

[Johnny Bognor]

Your water is wrong. This thread is to be closed because of budget cuts.

 

 

Look at all the administrators we had on SWF........the place has improved since they have all gone (mods and admins alike).

 

SWF is like a parody of the public services - cut out the wasters at the top (reducing headcount) and the service not only does not deteriorate, but actually gets better. So see, cuts aren't all bad and SWF is living proof.

Edited 20 October, 2010 by Johnny Bognor

[benjii]

Osbourne just pointing out that, even with the cuts, Government spending will increase over the next four years due to the interest repayment obligations on our debt.

[LGTL]

Clegg's face is always a picture. He sits there like he's about to breakdown in tears. Cheer up Nick, you got the little bit of power you so craved, even if you are already realising that some of these decisions go wildly against what you truely believe, and that you've ruined any chances for the Lib Dems once the coalition is over the honeymoon period and future elections are upon us.

[dune]

Although i'm not in favour of any international aid, it's good to see that GO is reversing the Socialists decision to give aid to China ad Russia.

[dune]

Good to see the government increasing payments to pensioners, whilst making life harder for Labours slobs. It's about time we had a govt that did the right thing.

[badgerx16]

Good to see the government increasing payments to pensioners, whilst making life harder for Labours slobs. It's about time we had a govt that did the right thing.

You are far more entertaining in the evening

[bridge too far]

Brilliant and very funny response by Alan Johnstone

[LGTL]

Funny as **** seeing David Cameron wiping the floor with the geeky Labour leader.

 

Likewise Alan Johnstone wiping the floor with the geeky Tory Chancellor (god help us).

[Thedelldays]

Likewise Alan Johnstone wiping the floor with the geeky Tory Chancellor (god help us).

 

well..in terms of taking the micky..but did not offer a single alternative...which is kinda his job..

GO getting one up on him again

[LGTL]

It's all fun and games isn't it.

[bridge too far]

well..in terms of taking the micky..but did not offer a single alternative...which is kinda his job..

GO getting one up on him again

 

Funny you should say that because, as was pointed out, GO on the one hand said that the Labour government had no plans to tackle the deficit and then, almost in the next breath, he said that the ConDems had in fact adopted many of the plans the Labour Party had proposed!

 

[dune]

Harriet Harman is how i'd imagine BTF. Whenever I see her smugly nodding on the front bench I just think she should get back to her kitchen sink.

[thefunkygibbons]

No surprises

 

All well leaked in advance

[SuperMikey]

Not sure where GO thinks 490,000 public sector workers are going to go...on the dole queue is my guess. Hardly going to help cutting back on public spending by increasing the amount spent on unemployment benefit.

[bridge too far]

Not sure where GO thinks 490,000 public sector workers are going to go...on the dole queue is my guess. Hardly going to help cutting back on public spending by increasing the amount spent on unemployment benefit.

 

and thereby taking the demand out of the economy too as well as resulting in a decrease in taxation / NI to the Treasury coffers.

 

And also Price Waterhouse Cooper (that bastion of socialism) reckons a further 500,000 private sector jobs will be lost as a result of the shrinkage in the public sector.

[Sheaf Saint]

http://newsarse.com/2010/10/20/live-spending-review-as-it-happens/

[OldNick]

and thereby taking the demand out of the economy too as well as resulting in a decrease in taxation / NI to the Treasury coffers.

 

And also Price Waterhouse Cooper (that bastion of socialism) reckons a further 500,000 private sector jobs will be lost as a result of the shrinkage in the public sector.

but if the jobs are not needed but just manufactured (only thing that this country can manufacture now) the wages will be far more than benifits. A % will get a job and so i doubt all will go on the dole. I would like no-one to lose their job but we are in this state and so we have to plug some holes.

[Whitey Grandad]

and thereby taking the demand out of the economy too as well as resulting in a decrease in taxation / NI to the Treasury coffers.

But that demand is created by borrowed money that we can no longer afford. The money paid in salaries is far higher than the NI/PAYE.

[bridge too far]

But that demand is created by borrowed money that we can no longer afford. The money paid in salaries is far higher than the NI/PAYE.

 

Yes of course it is. But then add in the benefits that would have to be paid out and both the loss from VAT on goods not purchased and the small businesses that will fold because 1 million more people out of work won't have the disposable income and it won't look like a saving at all.

 

Add into that the probable drop in house prices (because people out of work can't keep up with mortgage payments, leading to a glut of houses up for sale) and things look decidedly not rosy at all.

 

It just needs to be slower and less deep.

[badgerx16]

But that demand is created by borrowed money that we can no longer afford. The money paid in salaries is far higher than the NI/PAYE.

However much of the debt was borrowed to prop up the banks - make them pay the interest charges that amount accrues.

[trousers]

Very poor performance by Alan Johnstone IMHO

 

Was fairly lucid when reading from his prepared notes but bumbled his way through the unscripted bits.

 

And emailing the outdside world part way through GO's speech admitting that "Labour had no plan and welcomed ideas". What was that all about?

[badgerx16]

Yes of course it is. But then add in the benefits that would have to be paid out and both the loss from VAT on goods not purchased and the small businesses that will fold because 1 million more people out of work won't have the disposable income and it won't look like a saving at all.

 

Add into that the probable drop in house prices (because people out of work can't keep up with mortgage payments, leading to a glut of houses up for sale) and things look decidedly not rosy at all.

 

It just needs to be slower and less deep.

And add into the mix that the job losses won't be evenly spread; for instance if RAF Lossiemouth closes, how much will that area's local private economy be able to absorb ? What happens to the BAe sites that are closing due to the cancellation of Nimrod ?

 

I want to know the details of exactly how much, personally, Cameron, Clegg, & Osborne will be suffering. After all, it's supposed to be about everybody paying their 'fair' share, and they can afford a darned sight more than I can.

[Whitey Grandad]

However much of the debt was borrowed to prop up the banks - make them pay the interest charges that amount accrues.

 

They already pay interest - over 12% - on what they 'borrow'.

[bridge too far]

As someone interviewed on TV so eloquently put it:

 

"The bankers caused this mess but the children and the poor will pay for it"

[Whitey Grandad]

Yes of course it is. But then add in the benefits that would have to be paid out and both the loss from VAT on goods not purchased and the small businesses that will fold because 1 million more people out of work won't have the disposable income and it won't look like a saving at all.

 

Add into that the probable drop in house prices (because people out of work can't keep up with mortgage payments, leading to a glut of houses up for sale) and things look decidedly not rosy at all.

 

It just needs to be slower and less deep.

We have already borrowed far too much and it has to stop. Interest payments last year were £30bn and this year they are £40bn. That is far more than our defence budget.

[bridge too far]

Another thing that intrigues me is this. If all the 'developed' countries adopt a similar harsh deficit reduction, where on earth will the increased business come from?

 

Fortunately, most of the rest of the world is being a tad more sensible in how they address the problem.

[Whitey Grandad]

Another thing that intrigues me is this. If all the 'developed' countries adopt a similar harsh deficit reduction, where on earth will the increased business come from?

 

Fortunately, most of the rest of the world is being a tad more sensible in how they address the problem.

 

This is a (forgive me) simplistic approach. We all need food and other basic necessities. We don't need gender-reach consultants. We don't need designed obsolescence in mobile phones and computer operating systems. Why do we need increased business? What has changed in the world since the 1950s, 1960s ? Only that young mothers are forced out to work and put their children into day care.

[JustMike]

Good to see the government increasing payments to pensioners, whilst making life harder for Labours slobs. It's about time we had a govt that did the right thing.

 

look after the rich you mean.

[OldNick]

Another thing that intrigues me is this. If all the 'developed' countries adopt a similar harsh deficit reduction, where on earth will the increased business come from?

 

Fortunately, most of the rest of the world is being a tad more sensible in how they address the problem.

the rest of the world,I assume you are not counting Ireland Spain Greece, are not in the state we are in. If it is so easy to spend on hospitals schools and health why dont the rest of the world? We have debts that are unsustainable and you spout about putting paying it off slower, well the interest on the interest gets bigger the longer you let it fester.

There is no soft way out of this, and the prudent, who have saved in the good days are now paying for the irresponsible people who spent spent spent.

It is not all down to the banks,we were outspending our earnings years before the banks went pearshaped. The nation went on a spending spree and the chickens have come home to roost.

[OldNick]

look after the rich you mean.

 

I don't see pensioners as rich, but there again Im a bit closer to being one than you Mike.

Don't fall for the rich getting away with it. The super rich maybe as they can flit from country to country but generally everyone is worse off.

[badgerx16]

They already pay interest - over 12% - on what they 'borrow'.

Who do they pay that to ? Other banks and international monetary agencies. HM Treasury spent over £109Bn in keeping them running in the 2008-2009 financial year, what with buying shares, making loans, and guaranteeing insurance on bad debts, etc. They should shoulder the burden of the interest on that amount, it comes to nearly 20% of the total Government spend.

[bridge too far]

Nick - the recession is global, caused by a global banking crisis.

 

All countries with developed economies spend on hospitals and schools. They may do it in different ways but they all do it. All countries have deficits. It's the way of the world, living on credit, and we're so far down that road now that the worldwide economies would collapse if every country tried to be 'in the black'.

 

My point was this. If all countries were as stringent with their deficit reduction plans, they'd have no money to spend on things like buying things from us, like aeroplanes for example. We rely on exports to keep our business economy going - if we can't export because other governments and their people don't have money to spend then our businesses won't be able to grow.

 

Sweden has one of the lowest deficits in the EU but has a much larger public sector than do we

 

http://www.businessweek.com/news/2010-08-16/sweden-election-pledges-soar-amid-smallest-eu-deficit.html

[Fuengirola Saint]

An Eminent professor along with a civil service study concluded that 6 million people in this county own FOUR THOUSAND EIGHT HUNDRED BILLION POUNDS of the nations wealth.

 

Let them pay the deficit.