Chancellor aims to get serious about deficit

Check out the austerity measures launched in Ireland, we are only months behind them!

Will the Chancellor get real and serious and present a package that is good for Britain but not necessarily good for Labour - or will GB stick his oar in and meddle so that we have a vacuous electioneering witter.

Hmmmm - my money is on the latter - since Brown has given up all vestiges of being an honest politician and is now bringing Alistair Campbell to back up Mandy in a desperate attempt to cling to power and hang the consequences to Britain.

Never mind lads, only 6 more months till we can dump the dummies.

Nick, you say Darling wants to show the government is serious about cuts, whilst at the same time preserving spending.

There, in a nutshell, is the problem!!!

Mr Darling is the 'pushmi-pullyu' chancellor. (For those who remember Dr Dolittle)

What Darling does today is of very little importance, as there will be no more Labour governments after this one; with a bit of luck there won't be any Conservative ones either if the electorate votes for people and not parties.

What is important is that the murderers, thieves and traitors that comprise HM government and opposition are taken to court for their crimes.

Ok Nick. Here's a prediction.
This will be a political speech and Darling will say nothing of any real consequence concerning reduction of debt and public sector reform.
As a result the stock market and the curreny will slide.... heavily

This is where we get treated like children, patronised and lied to again isn't it?

In recent years this government has done everything it could to manipulate data and the budget report will be no different, I am expecting unusually good news.

Kind of along the lines of Phil Woolliasses statement that 'Foreign Born Mothers includes Britains born overseas and then returning', as if to say that its a figure that can be ignored when really it is to hide the fact that 125,000 foreign born mothers have increased the population of this country way past its breaking point.

Thanks Brown and co, no doubt the costs of staff and facilities accommodating this and all the other completely avoidable and unaffordable social measures this lot have brought to the taxpayer will all be included in the PBR.

Whatever the outcome you can bet the rich will laugh, leave and will leave those of us struggling with mortgages and working 60+ hours a week to be the ones paying for it.

Of course there is bound to be a Tax on any last joys of living we might have, like the glass of wine or a fag to steady our nerves from the remorseles pressure of having to work long hours to repay the massive debt, hoping against hope that maybe, just maybe, you can earn enough to relax for at least one week next year, only to find out that Labour have taxed any hope out of existence..........land of opportunity? I don't think so!

'Thank you for working so hard, but you must be prepared to shoulder the burden as you clearly earned more than that fellow over there. What do you need a break for anyway?'

Nick this is a difficult balancing act for Alistair Darling. In the 2nd quarter review 2009 Deloitte pointed out that financial crisis of the last 120 years create recessions that last on average apx 2-3 years, and cost 5-10% of GDP. The structural deficit that has been caused by free market capitalism will bring UK's total debt nearly to the levels of France, Japan and Germany, and will cause a deficit of £173 billion in 2013-14 (IFS) even with real across the board cuts of 2.6%. What is needed now is definitely not swinging cuts now as advocated by the Tories but a careful nod towards a rebalancing of the economy without such a heavy reliance on financials. This may lead to a temporary dip in shares, but the speculators are the people that landed us in this situation, but the main concern is that we can sell our debt. With the right strategic approach this is possible. What cannot be underestimated is the mess that unfettered free market behaviour has landed us in, and the need for a long term strategic approach to get us out of it. Whatever happens we cannot expect a quick return to the growth the economy has had over the last 12 years.

"Chancellor aims to get serious about deficit"? I would take issue with this headline which accompanies your post Nick. You seem to have forgotten there's a general election round the corner.

If the chancellor was really serious about cutting the monumental deficit then tough measures well over and above those proposed in the PRB would have to be introduced.

This is shaping up to be a blatantly political pre-budget. More about politicking and posturing for the election than tackling the deficit.

The narrative, as you've hinted, will be all about 'fair' - aimed at drawing a dividing line with the Tories and trying to shore up New Labour's core vote.

What is needed is a clear bold message on how to tackle the country's obscene deficit and a convincing plan for getting out of its own fiscal mess.

Hidden in all the spin, Darling's PRB should lay bare the full horror of the country's dire economic mess. How far will you have to drill down to find it?

https://theorangepartyblog.blogspot.com/2009/12/will-darling-dupe-voters.html

#7 Let us not forget who 'un-fettered' that market!

The absolute key to getting this country back on its feet is not spending on social causes, but rather investing in growth potential.

This government has a record of sticking it to the business sector and those that succeed.

What they need to do now is relax all the restrictions they have placed on businesses and allow them to grow, become profitable and then we shall see money flowing back into the economy, which will in turn reduce our deficit.

Only after that should they then consider social and public service spending.

This is not about cuts, its about sensible economics.

Sadly this government with its clear socialist elitism and cynical hatred of success is never going to be able achieve this and certainly doesn't give business investors the conifdence to boost British business opportunities.

If they get back in - we're doomed.

Nick Robinson wrote:
Chancellor aims to get serious about deficit

So he is aiming to get serious, and is therefore presumably not serious at present.

Let's hope the chancellor resists 30's style balance sheet obsession that will delay or even kill the recovery. More spending power in the pockets of the below average wage is what is needed so advancing the upgrade of benefits and adopting a version of the Vince's ideas on basic rate tax threshold e.g. no tax for those on less than £12K!

"Chancellor aims to get serious about deficit"

Really?

This is a pre-election pre-budget speech.
You don't really think Darling will be clear about the massive debt we are saddled with and the huge cuts and taxes necessary to pay it back do you?

Pre-election banker bashing, and burying of head in sand is what I expect.

Tough decisions. Hard choices. Difficult dilemmas.

(1) A hard cash terms freeze in public spending - no compulsory public sector job losses - any increases for specifics to be funded from cuts to other specifics - 3 years.

(2) A significant rise in personal income tax - for all but low earners - average earners to pay more - middle and high earners to pay considerably more.

These are the main things I'm looking for from Alistair today. Plus hit those City bonuses out the ground, of course.

Don't disappoint me, Darling.

Nick, having posed this question elsewnere and probably missed a reply, I would like to enquire again as to the obvious. I think it is time that we ask, no, demand to know, what these banking people employed in that 'investment' arena that has long been bereft of confidence, actually do to earn such rich pickings. Do they sit behind their desks in well pressed suits and polished shoes and watch while the system rachets up obscene profits from which no doubt their bonuses are assessed. Profits from what, from where, from whom?? And what have they done? Ticked a box or two and thereafter rise without having raised a sweat? What is the mystery in the world of finance that rewards this sort of success when many must be left penniless as a result. I need convincing that they have truly earned what they claim but quickly before they run off with it. 'Earned' being the operative word with its relevance to blood sweat and tears.

7. balancedthought

"What cannot be underestimated is the mess that unfettered free market behaviour has landed us in, and the need for a long term strategic approach to get us out of it. Whatever happens we cannot expect a quick return to the growth the economy has had over the last 12 years."


Absolutely... otherwise we'll be staring at another crisis. Less of the boom, less of the bust.

We really have 6 months of misery ahead with mindless claims and counter claims from all sides of the political domain. It really does not matter what further mess Brown and his Darling make to the economy as the forthcoming budget will be unwound very hastily be the next government. So don't waste your time worrying about it! The old addage of "when in a hole stop digging", does not seem to apply to this labour Government, so hopefully they will keep digging until out of sight and we can then fill in the hole.

Surely he should have been serious about the deficit anyway? After all it is his job to keep an eye on the countrys finances.

#14 Good point
How do Barclays get £6 billion profits ?
Answer look at the Stock market. It's not real profit as we know it Jim.
The banks profits this year are the banks losses of next year and we know who will be picking up the tab.

@13 Sagamix

Having seen many of your posts along similar lines, could you offer some numbers around low, average, middle and high and also what considerably more might mean.

I don't disagree with your thruse, just interested

The man with hilarious eyebrows gets serious! Now you know that is a nonsense don't you?!!

He will put on the appearance of seriousness, but will not tackle the deficit or the causes of the deficit - the quite obvious fact that we, as a Nation, cannot afford to support such a huge international banking sector. Unless this problem is tackled head-on nothing will reduce our deficit!

So he is going to cut the deficit by 50% in 4 years.
But lets get this clear he will still be borrowing around 90 Billion more than we are earning.

How is this a solution?

When is the debt going to stop increasing?

When is the debt going to be paid off????????

It means that disaster is only happening half as fast not that we are being rescued from disaster.

This PBR is going to be the concrete slab over the shallow grave of New Labour.

They were supposed to be unmoved about people getting filthy rich when getting elected.

Now its sack the rich to shore up the rump of the Labour vote and back to the politics of envy where we judge people on their background and for what they've got not for their intelligence and potential.

I believe Osbourne's father was a self made man as is Tony Blair's children should we sneer at them?

It just goes to show that even the basic concept of New Labour was a lie.

They have no political philosophy they are just a group of envy driven chips looking for shoulders to rest on.

No serious attempt at cutting the deficit then. The bonus tax is all to deflect attention from:

-this and next year's deficit of 200 billion pounds, or close to 8,500 pounds per person working in the private sector

-the structural, post-recession annual deficit of 100 billion pounds, or just over 4,200 pounds per person working in the private sector

-the fact that every week the UK is currently adding to its national debt over 3.5 billion pounds, or 175 pounds per person working in the private sector

This only sounds like peanuts for those on indexed public sector pensions; the rest of the population would do well to emigrate.

I wonder if the additioanl revenues that Alistair Darling is going to envisage today will also encompass the additional costs to the UK that are going to arise from any agreements that come out of Copenhagen to subsidise the Dollar Billions wanted by the Developing Countries (to Save the Planet as I understand the Environmentalists' concept of wealth redistribution!)?

Are we going to be looking at more taxes in the future - on top of any increased taxes that are proposed today to replenish the National Coffers? I am just wondering if Tax Freedom Day is going to be moving towards 31st of December if, Heaven forbid, Labour is returned to power in 2010 or get their 'hung Parliament' that they must be hoping for.

"sagamix wrote:

Tough decisions. Hard choices. Difficult dilemmas.

(1) A hard cash terms freeze in public spending - no compulsory public sector job losses - any increases for specifics to be funded from cuts to other specifics - 3 years."

Saga why should the public sector be totally isolated from reality in this way? We are spending billions more than we are getting in as income we have to address this and part of this would be a public sector culling.

In the private sector we are told to "work smarter not harder" however, in the public sector their working practices are neither smart nor hard. In my dealings with the public sector many of the people in place seem to exist only to justify their own jobs - something that can be turned around in hours privately takes weeks publicly.

The public sector needs to be cut down to size - but the government won't risk doing so as it would risk their standing in the polls.

As always we have a government unwilling to do what is best for the country for party political reasons.

"(2) A significant rise in personal income tax - for all but low earners - average earners to pay more - middle and high earners to pay considerably more."

Now this sounds like a good idea until you actually examine it first off it would cut the level of money that people could actually spend (if they are being taxed more they have less to spend - simple maths). If people have less to spend they either borrow more (and borrowing both public and personal debt is already much higher than we as a country can afford) or spend less.

So at a time where the shops are trying to recover from a recession (assuming we do pull out of it this quarter!) you want the Labour government to increase taxes (coupled with the VAT being raised back to 17.5%) - why not take the recovery out the back and shoot it in the head?

Labour have screwed up badly, yes the main cause of the recession was the global credit crunch but you can't build a bubble (based entirely on debt) up for over 12 years without it eventually popping.

Even if the global credit crunch had never happened we would still have had a massive recession (eventually people in large enough numbers would be unable to pay back the money they borrowed)

The fact that Labour persist in blaming the global climate shows that they really don't get it. Taking more money out of the workers pockets isn't going to make things better it will make things worse.

To put it in simple terms, if Middle Class Matt and his family are already struggling to pay the mortgage (because his private sector employer can't afford pay rises for the second year in a row) how exactly will tax increases help to improve his lot? Especially if interest rates rise?

All tax rises do is put a bigger squeeze on people who are already struggling, the really rich will just get their tax accountants to work an extra couple of hours.

Nick, what politician gets serious about anything just a few months before a general election?

Make smoke, make smoke!!! Polish mirrors, polish mirrors!!!

nothing @ 19

Yes, thank you for being interested.

As below for Income Tax:

(all figs in thousands)

up to 12 @ Nil
12 - 15 @ 10%
15 - 25 @ @20%
25 to 40 @ 30%
40 to 75 @ 40%
75 to 150 @ 50%
over 150 @ 60%

Until debt'n'deficit back in the comfort zone ... 3 to 5 years.

Then we settle on:

up to 15 @ Nil
15 - 20 @ 10%
20 - 30 @ 25%
30 to 50 @ 30%
50 to 100 @ 40%
over 100 @ 50%

Today will be a test of Labour:

"Party before Country or Country before Party?"

My fear is that the cabal of Brown, The Balls' and Mandelson cannot see the distinction.

My other fear is that the Tories will be petrified of making the argument for measures which will stimulate the economy and not see it go into a death spiral.

The depressing thing about newlabour (and sagamix come to think of it) is that there is never a 'Plan B' ..

If Plan A didn't work ... basically tax and spend, their answer is always MORE plan A. The very idea that tax and spend has got us into this mess doesn't seem to have occured to them. So the answer to everything that has failed under newlabour formthe NHS to education is quite simply to throw even more money at it and hope it works.

There is a vacuum where there is supposed to be brain with these people; most of them seriously believe the measures they have taken are working and we just need a little (or a lot) more money and time. it's the most disingenuous argument I have ever heard in my life (apart from the one that took newlabour into power in the first place) And, of course, it is an utterly indefensible argument, which is why you never see them in a debate with another politician and never se them on Question Time. how can it be of any use to Blair or Brown or Darling to go and debate about something they have decided is 'the right thing to do'?? It can't

This postion; that of rendering yourself immune from disproof has given us a war on Iraq now the subject of a fourth enquiry; the NHS that has had eleven reviews but none of their findings has been put though; an education system delivering worse results than twelve years ago but costing more than twice as much

This a farce of a self serving and self justifying administration, lurching from one banana skin to the next.

The desperately bad news that this budget will merely present us with more long term structural issues our children will be paying for is a travesty.

The dreadful realisation that this government has no plan B merely more of plan A is enough to make one weep.

Call an election.

Nick,
Couple of points if I may:

1. Conservatives are accused by Labour of planning 'deep and savage' cuts. Labour Government decry any cuts stating investment is best and then begin a series of cuts; mostly to deal with their own profligacy.

2. Conservatives are lambasted for not being specific over their financial intentions if they gain power; Conservatives not being in power to not have full access to the 'books'. Labour Government have accessto the 'books' but shift their position and aim towards window-dressing such as Repay state debt law and suggestions of taxing bank bonuses.

In the same way we should possibly see Tony Blair on trial for War Crimes I believe that if Gordon Brown and his puppet Chancellor should face charges for negligence based upon the parlous state of the nation's finances that they will gift (an apt term of their intent) to the next Government. Falling Governments (Callaghan/Major) have tried to mend the economy; given the warnings so long before the recession about Gordon Brown breaking his own rules and abandoning prudence this has clearly not been the case.

In the current economic climate austerity is a certainty. Mr Darling knows this and even his boss may have now returned from planet Brown and be forced to concede the point. The banker's bonus tax is simply a smokescreen to hide the bad news, a typical piece of New Labour spin and also an insult to the intelligence of the electorate. Caledonian Comment

21 Portcullis
George Osborne's father did start a wallpaper company, but it's slightly misleading to describe Sir Peter Osborne, 17th Baronet of Ballintaylor and fully paid-up member of the aristocracy, as a "self-made man". George Osborne himself is heir apparent to the baronetcy. But you're right to say we shouldn't sneer.

When it comes to tax, it is self-evident that, at a time when tax revenues need to increase, the better-off in society should be asked to contribute more. In fact, the principle of marginal tax rates is well-established, although a few people on this board might not accept it. So the only question really is: how much? I'd bring the threshold for the 50% rate down to 100k p.a. and introduce 60% for earnings above 200k. Nobody could call this punitive. (And I suspect it wouldn't raise enough on its own without also raising the basic rate a percentage point or two, simply because high earners are a minority.)

By the way, cutting the budget deficit in half is merely bringing it down from this and next year's level of 200 billion to 100 billion, which is the structural, post-recession deficit adjusted for lower benefits outlays and higher tax revenues.

In other words, halving the budget deficit is no more than letting it reduce automatically in a scenratio that discounts an economic recovery. Halving the budget deficit would not require any action in case the economy recovered to trend economic growth.

Wake up!

nick in singapore 16

"We really have 6 months of misery ahead with mindless claims and counter claims from all sides of the political domain. It really does not matter what further mess Brown and his Darling make to the economy as the forthcoming budget will be unwound very hastily be the next government."

I wonder how you arrive at the judgement that Mr.Brown and Mr.Darling made a mess of the British economy?, in the light of the following IMF report.

(1) The crisis of 2007-09 imploded in the private sector of the economy,
not government.

(2) The response of governments to the crisis has been broadly correct despite the rise in spending.

(3)The British economy was strong before 2007.(Blanchard,Caruana,Moghadam,IMF.2009)

To blame the British government for the crisis is to reverse cause and effect.The inflation in state spending is a response to a crisis which began in the private sector.Before 2007,government spending and deficit was around the European average with lower unemployment and faster growth.

You are repeating a political narrative, not making a serious comment on the pre-budget report..

There are millions of people at the bottom of the scale who will really suffer when public sector cuts kick in. The services and benefits provided by the state are the difference between survival and destitution for many of them.

How many of the bankers, paying 50% tax on their bonuses will really suffer because of that. ‘Sorry dear, only three holidays in the Maldives next year rather than four.’ Yet they are already talking about how they will ‘evade’ this tax. Presumably they are the same people who moan about ‘social security scroungers’ and ‘benefit cheats’ – without seeing the irony at all.

Mark WE (24) If ‘Middle Class Matt’ can’t afford his mortgage at the moment, with base rates down at 0.5%, then maybe he shouldn’t have taken the mortgage out in the first place.

The only way we are going to get out of this mess is to support the value adding parts of the economy (manufacturing) and bear down heavily on the value wasting (bloated bureaucracy) and the value destroying (banks)parts.

I think that Darling would do us all a favour if he set up the case for austerity without political grandstanding. Spin will just get everyone's back up.

I know it is the start of the pantomime season, but Alistair Darling must qualify for the part of Baron de Broke. Does he really expect the electorate to believe he can carry on spending on anything including "front line services" and reduce the massive overdraft that his dour fellow Scot has managed to accumulate over the 10 years he was at the Treasury. Why has it taken them 12 years to realise that they are economically illiterate and not fit to run a whelk stall. Apologies in advance to whelk stall operators at least you are good at what you do!

This comment was removed because the moderators found it broke the house rules. Explain.

"Welcome to the era when Budget speeches are no longer about giving away but all about taking away." NR

I'm sorry, Nick, but I must have missed all those Labour budgets that were 'about giving away'....could you tell me more about them?

"1. At 01:22am on 09 Dec 2009, wakeupbritain wrote:
Check out the austerity measures launched in Ireland, we are only months behind them!"

Maybe I missheared but I'm sure they said that the budget deficit in Ireland was £3.6bn. The UK can only dream.....

'Welcome to the era when Budget speeches are no longer about giving away but all about taking away.'
I wonder where Nick thinks the money came from that Chancellors 'gave away' in past budgets?
I know that politicians probably think it comes from a never ending supply that grows on money trees cultivated in crocks of gold and fertilised by rainbows that leprechauns deliver in the dead of night but that's no reason for Mr Robinson to.

When considering a windfall tax on bankers' bonuses, it might be useful to consider just how much benefit could be drawn from spending these vast sums in socially useful ways. Please read my article on this - https://slingerblog.blogspot.com/2009/12/protect-arts-drama-music-and-culture.html.

Thanks.

#26

Just curious...the tax rates all look very pretty.

How much money will this actually raise? Unless you know that, the talk of being back in some sort of 'comfort zone' in 3 to 5 years is meaningless.

And what would this 'comfort zone' be? Would the UK Government still be spending more than it was raising in revenue? If so, how long before the next crisis?

Mark @ 24

Hi, welcome back, what can I get you?

Couple of points:

(1) A hard cash terms freeze in public spending for 3 to 5 years is quite a thing - it's in no way exempting the public sector from pain.

(2) You say you want to see public sector job losses, and at the same time you oppose tax rises because it will leave people with less money to spend and that will hamper growth. Well, large numbers of jobless ex public sector workers will have rather the same impact, don't you think? Plus we'll be paying benefits.

(3) Further to the above, I'd rather that EVERYONE (in both private and public sectors) had a bit less take home pay than that SOME people lose their jobs and have NO take home pay.

(4) We should also remember the importance of a job for people's identity and self respect. It's no trivial matter to lose it. Especially in this climate. One thing to talk blithely of "cutting the public sector down to size" quite another to see those "cut down" individuals in the dole queue.

No, Mark, no. We need substantial tax rises and we need the hard cash freeze (but not savage cuts) in the public sector. My plan is the way to go.

We have a huge problem because there has been a wholesale, systematic failure of the banking industry and we are massively overweight banking. So it's particularly tough for us. We don't lever our way out of this purely on the backs of ordinary people who work in the public sector. We do that and it's bye bye to the "Great" in Great Britain. Would be shameful. Forget it.

We're in this together.

bryhers #33

Most sensible post on here.

Tax rises on high earners and middle earners will not touch our deficit. The figures for our deficit do not include the liabilities of the banks. This money is completely lost as the banks RBS and Lloyds have made losses which the tax payer will never recoup. This is due to the Government pouring money into both banks without reforming and dealing with the debt they hold, before tax payer money was used to prop them up. Added to this the stupidity of the merger between HBOS and Lloyds. Both banks are far too big and needed to be broken up and returned to the private sector as soon as possible. Now the tax payer has made big losses on both.

There is also the debt which is off book including public sector pensions which will runs into billions. Britain will have difficulty in affording next years public sector pensions let alone from then onwards.

The only way forwards is slashing public sector pay and benefits. Just as in the private sector people are accepting reductions in pay and benefits so must the public sector. All unnecessary public sector jobs and services must be cut. Ireland are moving forward in the right direction to cut their deficit. The sooner this happens the better, delay merely increases the problem.

There is no point in bashing the bankers because without healthy banks and debt reduction by cutting spending in Government there will be no recovery for Britain. Very high taxation on high and middle earners will achieve nothing except to see Britain lose investors and business to lower taxation Countries. This will see Britains tax take drop and put more people out of work and in turn less money for the public sector. Any dreams of lifting low earners out of tax will not happen, most will be lucky to keep a job. The Lib/Dems are not being realistic.

The longer the Government waits the more likely that these measures will be imposed on us and our debt will cost more to service as the outside World loses faith in Britains economy.

To do anything less than make these cuts, will see Britain enter a debt spiral. No matter which party comes to Government they will have to take these drastic measures.

I propose a 'beer and fags' budget.

Each person on benefits should be asked to give up one pint of beer and one packet of fags a week to help the economy. This means a reduction in benefits of around £6 - £7 a week.

I don't think it's asking too much of people who aren't working to also 'share the pain'.

With around 5 million either unemployed or on sick benefits, this is going to save around 1.7 bn a year, which is roughly what Darling has estimated the 50% tax rate will bring in, so there is a balanced fairness about it.

Nick

If the past tells us anything it will not be what is said by AD this afternoon, but in the documents that are released by the Government as the Chancellor stands up that contain the detail.

The previous budgets and PBR statements have been smoke and mirrors for the last 12 years and always with some rabbit out of hat attempts in the final minute. All with a significant dash of spin.

It is only with the analysis of the Red Book and other documents released does it become evident what has been "buried" so as not to attract attention.

Like others that have posted here today this is a pre-election PBR, it will be a populist statement with the Government trying to rescue votes. AD said on Sunday that they have not done a spending review, so any major spending cuts will be made if tired Labour win the election.

With the ratings agents looking at the UK and US and starting to mention that the economy of both countries is starting to look "flaky" then it is very possible that UK may go the same way as Greece has this week by having the rating cut from AAA to BBB+ making it difficult for the Government to borrow further. If that hapened taxes would rise significantly and spending on everything reduced.

Finally on a minor point


sagamix @13 wrote:

(2) A significant rise in personal income tax - for all but low earners - average earners to pay more - middle and high earners to pay considerably more.

===================================================================


Saga not wishing to be picky, but average and middle are the same. Average is defined as "The average is a calculated "central" value of a set of numbers." Central is the middle!!

I keep asking this question and getting no answers.

If the country's debt is somewhere between 600bn and 1,340bn and projected to rise to between 1.4tn and 2tn what difference does it make when GB finds the odd 3bn here and there what difference will it make when he taxes us more on the pleasures in life.

Surely there comes a time when we walk the Dubai road and say "Cant pay".
What happens then?

I noticed on last night's news, your esteemed colleague, economics editor Stephanie Flanders, suggesting that the Chancellor wanted to 'halve the deficit in four years' from GBP175bn to GBP97bn. With arithmetical skills like that, it's hardly surprising that this country's economy is in such a mess.

And of course all of this ignores the fact that whilst he is busy 'halving' the deficit, Darling proposes to increase the country's total public sector indebtedness (excluding PFI and unfunded pension liabilities), by in excess of a staggering GBP500bn to more than the total value of the GDP of the entire country.

And you call that getting serious with debt?

This comment was removed because the moderators found it broke the house rules. Explain.

#33

When I gave that great long list of IMF reports and warnings on the UK economy going all the way back to 2003, you said IMF reports were notoriously unreliable. Yet when you find one with a favourable verdict, you quote it as proving your case.

Were the IMF wrong in all those other reports? Were they wrong in
Jan 2009 when they warned that the UK would plunge into the deepest recession of any industrialised country? Were they wrong in Oct 2009 when they named Britain as one of the countries most vulnerable to a credit shortage? Were they wrong in Nov 2009 when they singled out the UK as being at significant risk from the threat of rising debt interest costs?

It does seem odd that all of those other warnings were wrong and they only got it right with the report that you quote.

Given that the UK is currently around £700bn in debt and will soon reach a trillion and that the banking crisis cost the country 'only' £130 bn or so, where does the rest of the debt come from?

Reading what you've written anyone woud think the economy had been well run, yet suddenly Labour can find billions in cuts, billions in savings on programmes that we don't actually need. Had it not been for the banking crisis, no doubt Labour would not have bothered with these cuts, would have plowed ahead with these unneeded programmes. Sooner or later the wheels would have come off. The economy was based on a premise that the good times would last for ever, something that has never happened in world economics before. Was Brown some genius who had done something no other economist had manged before in world history? Or was he deluded and deluding us?

In the true tradition of this government Darling will mouth platitudes in the HoC. But when all the supporting documents are analyised we will find that we the public/taxpayers have been royaly shafted.

Not sure where but am certain we will be, perhaps a tax on having a current account? Or a tax on a deposit account? they have already taxed our pensions etc

2.5% increase in fuel duty to cover for the change in VAT. But didn't that go up this time last year to cover for the drop in VAT. Duplicitous does not cover this covernment.

Brown may over rule Darling later, he still wants to run everything!!!

Andy @ 42

Fair question.

I estimate that these unfortunate but essential tax rises will have a deficit reduction impact of the order £75 billion per annum.

But you're The Man on this stuff - what do you make it?

Susan @ 45

"Tax rises on high earners and middle earners will not touch our deficit"

Of course it will - pls see above.

A significant portion of the above £75 billion is coming from high and middle income earners.

Quite a big chunk from Joe Average too (only the poorest are exempted from the pain). It's not a nice thing to have to do but it's necessary. It's necessary because we have a problem and, as you know ...

We're in it together.

"MarkofSOSH wrote:

There are millions of people at the bottom of the scale who will really suffer when public sector cuts kick in. The services and benefits provided by the state are the difference between survival and destitution for many of them."

It all depends on how cuts are made, getting rid of a level of middle management who seem to exist only to call meetings would result in very little impact to front line services. The vast majority of money spent on public services vanishes before reaching the front line. If you can't find people who can be removed from the civil service without any negative impact to the service you really aren't looking hard enough (or you work for the Government)

"How many of the bankers, paying 50% tax on their bonuses will really suffer because of that. ‘Sorry dear, only three holidays in the Maldives next year rather than four.’ Yet they are already talking about how they will ‘evade’ this tax. Presumably they are the same people who moan about ‘social security scroungers’ and ‘benefit cheats’ – without seeing the irony at all."

Oddly enough I don't see the irony - maybe I am too right wing. Or rather I see your point but I don't agree with it. If you were to imply that (some) bankers are basically benefit scroungers because their company have benefitted from a massive bailout you would have a point. However, there are banking companies which have not needed to borrow money from the government (but you could argue that they have benefitted from the government throwing money at the sector).

The government are looking at taxing bankers bonuses because they dropped the ball by not imposing conditions on the banks WE bailed out. When you are offering a company billions of pounds you are in a very strong position.

There is nothing wrong with the rich using legal means to avoid tax - if the laws are there they would be fools to use them. It is not an equivalent to benefit fraud - which by definition is illegal!

"Mark WE (24) If ‘Middle Class Matt’ can’t afford his mortgage at the moment, with base rates down at 0.5%, then maybe he shouldn’t have taken the mortgage out in the first place."

Unless someone took their mortgage out in the credit crunch it is possible that their conditions now are different to the conditions when they took out the mortgage. A friend of mine and his wife both had above average wages and could easily afford their mortgage, however his wife lost her job and my friend needed to take a small pay cut to avoid losing his - an affordable mortgage is now a lot less affordable (even with the lower interest rate). I doubt in the current market that my friend is alone.

Not everybody who is struggling to pay their mortgage took out a loan for 125% of a house which is worth 80% of what they paid for it.

"AndyC555 wrote:

"1. At 01:22am on 09 Dec 2009, wakeupbritain wrote:
Check out the austerity measures launched in Ireland, we are only months behind them!"

Maybe I missheared but I'm sure they said that the budget deficit in Ireland was £3.6bn. The UK can only dream....."

I thought the UK's deficit was in the region of £3.6bn - or were you talking about annual deficits and not a weekly one? :-)

"The structural deficit that has been caused by free market capitalism will bring UK's total debt nearly to the levels of France, Japan and Germany, ... What is needed now is definitely not swinging cuts now as advocated by the Tories but a careful nod towards a rebalancing of the economy without such a heavy reliance on financials ..... What cannot be underestimated is the mess that unfettered free market behaviour has landed us in, and the need for a long term strategic approach to get us out of it."

The "structural deficit" is the difference between what the government is spending and what they are taking in tax. Whether or not it will be "nearly to the levels of France and Germany" it began to increase sharply in 2003 and is thus not entirely due to the recession. Also, it is one of the factors that is concerning the credit rating agencies as they deliberate whether or not to reduce our rating.

And whether or not it was the "unfettered free market" that landed us in this mess, Brown was quite happy to go along with it provided the City generated the taxes [27% until recently] to fund his splurge in public spending. In fact, there was a Faustian pact between Brown and the City - they were allowed the "unfettered free market" so that he could fund his unfettered socialism.

And if he now gets vindictive with the City perhaps someone should ask him who or what will replace the taxes that sector has been providing for the Exchequer.

No33 bryhers,
It is clear that the UK faces some serious economic problems in the years ahead. However, in view of the fact that £850 Billion was made available to save the financial system from total collapse, owing to the behaviour of the bonus bandits, do you think the deficit looks like a marginal issue? and will the savage cuts proposed by some make the situation worse, by reducing demand in the economy, increasing unemployment and other costs associated with that approach.
I note the Tories answer to the problem is to introduce a tax change that will personally benefit at least nine members of the Shadow Cabinet to the tune of £520,000 each. We are all in this together.

uncivil @ 47

Average same as Middle?

Mmm. Can be.

But you have the "Mean" and the "Median". Mean being the simple arithmetic average, and Median being the salary at which the number of people earning MORE than you is precisely the same as the number of people earning LESS.

With income levels, the distribution is very unequal - there are large numbers of people earning peanuts and small numbers earning a wadge. The wadgies (because each of their wadges is such a wadge) drag up the Mean but don't impact the Median much. Thus the Mean (middle income earner) is quite a bit higher than the Median (average income earner).

That's how I make the distinction - thanks for forcing me to clarify.

Pre-election tinkering and bank bashing.

Why don't you and the rest of the media really challenge the Government about the size of the debt and how it will be dealt with after the election?

We all know there must be cuts and tax rises but no-one is seriously talking about it.

sagamix wrote:

"(1) A hard cash terms freeze in public spending for 3 to 5 years is quite a thing - it's in no way exempting the public sector from pain.
"

A pay freeze for 3-5 years but no risk of job losses? Wow that is really harsh - in this climate if you offered that to most private sector employees they would bite your hand off. People in the private sector realise that things are bad - they probably won't get pay rises for the next few years anyway and they have the risk of job losses as well!

This is still shielding the public sector from pain/reality.

"(2) You say you want to see public sector job losses, and at the same time you oppose tax rises because it will leave people with less money to spend and that will hamper growth. Well, large numbers of jobless ex public sector workers will have rather the same impact, don't you think? Plus we'll be paying benefits."

Oddle enough paying unemployment benefits to unemployed public sector workers would be better value. Simple maths would tell us that it costs more to keep a public sector in a job than it does to keep them on benefits (as if they earnt more by being on benefits they wouldn't bother working would they?)

And I agree that large numbers of public sector workers out of work would mean less money in the economy but it is all a case of numbers, on one hand you will have the majority of the population taxed so much they have no money left to go shopping (including the public sector workers) on the other hand you have a small section of the public sector unemployed (who if they aren't totally useless can probably find other jobs!)

"(3) Further to the above, I'd rather that EVERYONE (in both private and public sectors) had a bit less take home pay than that SOME people lose their jobs and have NO take home pay."

But we are in a recession people ARE going to lose their jobs, the Government has done nothing to stop people working in Woolworths, Threshers, MFI etc keep their jobs - so why should we pay taxes to safe guard jobs in the public sector? If the Government promised that nobody in the private sector would lose their jobs then you can ask the tax payer to provide the same assurance to the public sector.

I repeat my basic point - nobody in the private sector has a guarantee that they won't lose their jobs so why should people in the private sector pay higher taxes to provide that promise to the public sector?

"(4) We should also remember the importance of a job for people's identity and self respect. It's no trivial matter to lose it. Especially in this climate. One thing to talk blithely of "cutting the public sector down to size" quite another to see those "cut down" individuals in the dole queue."

Again we come down to the point why should the public sector be given job security that is not available to the private sector?

Perhaps we could come to an agreement - the public sector get their job security and THEY are the only ones who get the tax increases?

It seems to me to be a win-win situation - the public sector get job security and the private sector don't get to pay for it!

If the public sector put such a high price on the "identity and self respect" from having a job perhaps they should actually put a high price on it in the form of higher taxes?

"No, Mark, no. We need substantial tax rises and we need the hard cash freeze (but not savage cuts) in the public sector. My plan is the way to go."

Your plan is not the way to go, you squeeze one sector of the population (private sector) to provide benefits to another sector who just happen to work in different jobs. Asking a shop worker who would lose their job if their store closes to pay higher taxes to ensure that a council worker has job security is madness.

"We have a huge problem because there has been a wholesale, systematic failure of the banking industry and we are massively overweight banking. So it's particularly tough for us. We don't lever our way out of this purely on the backs of ordinary people who work in the public sector. We do that and it's bye bye to the "Great" in Great Britain. Would be shameful. Forget it."

Have you totally missed what has happened over the 18 months? The vast majority of people losing their jobs have been ordinary people in the private sector, the public sector have been isolated from the worst of things. The problem is with a deficit of nearly £200 million we can't protect them for too much longer.

And the Great in Great Britain was lost long ago.

"We're in this together."

Your plan reminds me of the end of Titanic, I see the public sector workers on their lifeboats telling that to the private sector workers who are drowning in the cold water. Under your plan we won't all be in this together, the private sector will be paying higher taxes to provide job security to the public sector knowing that if the economy takes another dive their jobs are on the line.

Anyone remember "Tory cuts versus Labour investment" repeated ad nauseum by Brown only a few months ago? What a sad joke these people are.

#46 AndyC555
'Each person on benefits should be asked to give up one pint of beer and one packet of fags a week to help the economy.'
Yes, because everyone on benefits drinks beer and smokes fags. They probably have children too but only for the family allowance so that they can buy more baseball caps, hoodies and trackies to wear when they go to MaccyDs for their Sunday lunch!

Rocket_Dog 44

It is also the most inaccurate post on here.

Good Government spends less in the public sector in boom years in order to spend more at times of recession. Britain had unpresidented growth in its economy during the Labour years. Brown spent this growth in expanding the public sector to unsustainable levels instead of creating jobs in the real economy, on which our taxes rely, the private sector. We were already carrying a deficit year on year in Government spending before the recession hit. There was no attempt to get our own people back to work, allowing them to stay on benefits while an increase in immigration filled the jobs our people would not do. Thus now recession has hit there are more unskilled workers who will need benefits as they come out of work, as well as the already large benefits bill of those who were already on benefits.

Added to this Brown allowed a credit bubble to develop because of his disastrous change of regulation of the banks in 1997. Labour moved itself close to the rich bankers in the City Of London and did not consider the wider economy. Our manufacturing base has gone down under Labour. Brown only considered the amount of tax he was collecting from housing and the use of cheap credit not the credit bubble that his policies were fuelling.

Despite all the warnings that the economy was in trouble Brown continued with his disastrous spending policies.

Britain now after 12 years of Labour has an economy totally unbalanced which is much more reliant on the service industries and the public sector for jobs, than it should be. This in turn relies on people spending and taxes collected. We do not produce anything anymore. In 2010 there will be tax rises for most and a public who will have to pay back for the personal debt that they have incurred over the Labour years. That means that the public are very unlikely to spend. The private sector is shrinking therefore there will be less tax take. With a Government which is carrying massive debt the only way forward is savage cuts in the public sector.

Despite all the money spent our services have not improved, there has been no real programme of house building or improvement in infractructure.

This is no way to run an economy and the Government is entirely to blame.

54 Mark_WE wrote:
"There is nothing wrong with the rich using legal means to avoid tax - if the laws are there they would be fools [not] to use them. It is not an equivalent to benefit fraud - which by definition is illegal!"

I disagree. Both are essentially fiddles which benefit the individual at the expense of society. Both are motivated by greed and selfishness. There is no moral distinction; if benefit cheats could afford professional advice, like the tax cheats, then they would likewise ensure that their fiddles were just the right side of the law.

"sagamix wrote:

Andy @ 42

Fair question.

I estimate that these unfortunate but essential tax rises will have a deficit reduction impact of the order £75 billion per annum."

And I say that a cull of Civil Service workers will save this country 1.5 trillion per annum and the average household enough money to hire a civil service workers as a personal lackey.

Pulling numbers out of the air without any explanation of how it breaks down is fun I can see why the Government do it!

I just want to know - where did all our money go? Please can someone explain this. I thought if we 'gave' some to the banks - then we would have some equity in return... Or did it all get spent on consultants in working out what to do - in which where in the economy is that money now? Can money disappear like this?

Just remember whatever happens at the PBR all new taxes are theft.

Grand larson from a deranged administration thrashing around trying to blame someone else for its own mistakes.

Theft.

Call an election.

Saga @58

Thanks for the explanation, nothing forced by the way. You didn’t mention those earning a smidgen or a tad over the mean or median wadge LOL. Sorry for the gallows humour.

Whatever happens everyone will be worse off and unfortunately that includes those not even earning a peanut let alone peanuts.

57. At 11:08am on 09 Dec 2009, IPGABP1 wrote:
No33 bryhers,
"It is clear that the UK faces some serious economic problems in the years ahead. However, in view of the fact that £850 Billion was made available to save the financial system from total collapse, owing to the behaviour of the bonus bandits, do you think the deficit looks like a marginal issue? and will the savage cuts proposed by some make the situation worse, by reducing demand in the economy, increasing unemployment and other costs associated with that approach.
I note the Tories answer to the problem is to introduce a tax change that will personally benefit at least nine members of the Shadow Cabinet to the tune of £520,000 each. We are all in this together."

It`s a difficult balancing act.he still has to sustain high rates of pubic spending to prevent a crash,at the same time do enough to satisfy our international creditors that the currency is sound.I`ts a bad hand however you look at it.The important thing is to hold your nerve and face the wind.

"pdavies65 wrote:

54 Mark_WE wrote:
"There is nothing wrong with the rich using legal means to avoid tax - if the laws are there they would be fools [not] to use them. It is not an equivalent to benefit fraud - which by definition is illegal!"

I disagree. Both are essentially fiddles which benefit the individual at the expense of society. Both are motivated by greed and selfishness. There is no moral distinction; if benefit cheats could afford professional advice, like the tax cheats, then they would likewise ensure that their fiddles were just the right side of the law."

I would imagine that you also have a problem with pensioners who claim the fuel allowance or free TV licence when they don't actually need it? Or parents who claim for child benefit when they can afford to get by without it?

None of these are benefit fiddles - they are people getting what the law entitles them to. Just as it is not a fiddle for people to use legal methods to avoid taxes.

You can argue that the law is wrong for allowing people to abuse it, but you can't blame people for using a bad law to their benefit.

"53. At 10:56am on 09 Dec 2009, sagamix wrote:
Andy @ 42

Fair question.

I estimate that these unfortunate but essential tax rises will have a deficit reduction impact of the order £75 billion per annum.

up to 12 @ Nil
12 - 15 @ 10%
15 - 25 @ @20%
25 to 40 @ 30%
40 to 75 @ 40%
75 to 150 @ 50%
over 150 @ 60%"

I hardly dare ask where you get the figure of 75 billion from.

The increase in the top rate to 50% is estimated to bring in £1.7bn, so let's double that as you are proposing 60%. So, 3.4 billion down, 71.6 billion still to find. You're probably taking the vast majority of part time workers out of the tax net altogether and anyone earning less than £40k will be paying LESS tax.

Only around 3.8 million people in the UK earn more than 40k, so around 25 million workers will be paying less tax. I'll be cautious and assume an average saving of £750 (your lower tax bands saving £1,500, cancelled out by higher rates at the £40k rate. As the average salary is £27k, the average saving may be higher, but we're not trying to be perfect). So that's a loss of £18.75 billion a year so the 71.6 bn rises to £90.35bn needed. This has to be raised from people earning between £75k and £150k since these are the only people whose tax is going up that we haven't already included. Let's be generous and say there are around 500,000 such people (less than 2% of worker earn in excess of £75k). That means that each of these workers will have to pay £180,000 EXTRA in tax above that already paid (currently averaging 30 - 35% or £22.6k to £52.6k.). I'll assume that the spread of people is even (obviously it isn't) and I'll spread the tax burden equally to.

So someone earning £75k a year will need to pay £202k a year in tax, a tax rate of 269% and someone on £150k a year will pay £232k a year in tax, a tax rate of 'only' 154%.

From which we might possibly conclude that you just made up the number of £75 bn off the top of your head and/or that you have no idea what you are talking about.

Mark @ 65

"Pulling numbers out of the air without any explanation of how it breaks down is fun"

Sure is.

But my tax rises have been through the machine - they're good.

Andy c555
"When I gave that great long list of IMF reports and warnings on the UK economy going all the way back to 2003, you said IMF reports were notoriously unreliable. Yet when you find one with a favourable verdict, you quote it as proving your case."

Everyone gave routine warnings on a variety of topics including the credit inflation.Bernanke did,the BOE did,the IMF did,even Brown did.The point is no-one knew enough to act on them because the credit instruments the banks created were not merely unknowns,they were unknown unknowns, they resulted in a banking castrophe across the world,and as I am now tired of repeating,it was produced in the private sector,not government.

Most of the insights now being offered on regulation are varieties of retrospective wisdom.Point is we live forward and understand backwards.
So you face the wind, you use the best knowledge available and not let yourself be diverted by soothsayers,ex post facto savants,pre-keynesian skywalkers and the whole gallery of economic occultists.

xtun @ 48

Many a mickle makes a muckle.

How's that?

"62. At 11:40am on 09 Dec 2009, Poprishchin wrote:
#46 AndyC555
'Each person on benefits should be asked to give up one pint of beer and one packet of fags a week to help the economy.'

Yes, because everyone on benefits drinks beer and smokes fags."

You're right of course and I'd overlooked those that don't drink or smoke. Perhaps they could be asked to give up a few boxes of micro-wave chips a week or maybe a few Sky channels?

I can't be expected to think of everything.

#39

for info

The 4 bn Euro savings the Irish are planning to make is just to try to restrain their PSBR to 12% GDP next year rather than the 13.5% if they do nothing.

This is still 4 times the level they are supposed to keep to under the Eurozone rules of 3% which they have to get to (in theory at least) before 2014.

This puts their PSBR at around the 30 billion mark in pounds.

The Irish property boom made ours look positively sedate by comparison and it has gone pop far worse. Hidden in the APS the toxic mortgages on UK residentials was matched by those in Ireland despite the large differences in economy size and popultion.
EU subsidied business investment is declining as the subsidy seekers find more amenable climes in accession countries.

Their degree of screwedness is more in keeping with the Baltics than with our situation. They have far more to worry about than we do as much as we have.

Of course if Ali kills the city then our situation will become as nothing, and the expats will be smuggly smiling the told you so smile.

pop @ 62

Indeed ... the sad sack cliches just keep coming ... only other thing missing is the famous "Plasma TVs", isn't it?

Until there is talk of Public sector job cuts and changes to pension schemes then this is all just spin.

The only way to reduce the defecit is to spend less than we earn in tax receipts and the biggest expenditure is the extra layers of bureacracy that Labour have introduced.

Reduce and remove most quangos?

How about effectively addressing the causes fof deficit. The victims of exploitations would like to know they will not be exploitated again and again.

UNFORTUNATELY: this is only going to effect the UK residients that are British, and as most of the senior and upper middle management of our investment banks are Res Non Doms (that means their earnings in the Uk are deemed to have been earned outside the country for tax calculation purposes), they will not be effected.

Again it is the British that are being 'ripped-off'.

When will get a Government that looks after the Indigenous peoples of this island. We are over taxed in relation to what we actually receive back from the Government. Unemployment benefit is not sufficient to maintain any living standard above the bread line. If one owns a house and insures against reducdancy, the job seeker's allowance is cut, so all in all if one just wanted to live ithout worries and without stress, then stay unemployed, claim housing benefit, move into a council house, do not pay the rent, nor the rates, nor contributr to the nation in any way. do odd jobs for cash in hand, and one could have a comfortable life.

With a new Tax Regime that will be introduced over the next few yearws, which ever current party wins power, the rates of taxation will be similar to Sweden, yet with benefits that are similar to Morocco

"72. At 12:00pm on 09 Dec 2009, sagamix wrote:
Mark @ 65

"Pulling numbers out of the air without any explanation of how it breaks down is fun"

Sure is.

But my tax rises have been through the machine - they're good."

Unfortunately, your figures only work in SimSagaLand where your crop of money trees is no doubt just coming into fruit. Soon too, the Magic Happy Pixie will banish sadness and everyone will be cheerful and meet up after work to sing folk songs, knit free-range bicycles and discuss Russian writers of the 19th century.

#43

"(2) You say you want to see public sector job losses, and at the same time you oppose tax rises because it will leave people with less money to spend and that will hamper growth. Well, large numbers of jobless ex public sector workers will have rather the same impact, don't you think? Plus we'll be paying benefits."

If a public sector earns £40k, that's £40k that the taxpayer has to pay, less, say, £10k they pay back as tax. Leaving £30k net from the taxpayer.

If they are out of work, it only costs the taxpayer about £6k, so it's a net saving to the taxpayer of £24k.

Yes, there would also be a reduction in money then being spent at shops etc, but that would be more than countered by the reduction in taxes paid by everyone else (or the reduction in increase of taxes).

If they had the massive tax increases which would be otherwise necessary that would drive wealth-producers out of the country, and demoralise the people actually bringing wealth into the country and make lots of companies go broke - which would reduce tax income, and then who would pay for all the public sector workers or the benefits for all those who have lost their jobs from the private sector?

#75 AndyC555
'I can't be expected to think of everything.'
Indeed. In fact your thought processes remind me of the proverbial dog that's been taught to walk on its hind legs: It's never done very well and you wonder why it is done at all.

Andy @ 71

Great, thanks. May need to fine tune then, by the sounds of it.

We want people on less than 15k to be paying less tax - on 15k to 25k to be paying about the same - on 25k to 50k to be paying more - on 50k to 75k to be paying quite a bit more - on 75k to 150k to be paying a lot more - and on over 150k to be paying an AWFUL lot more.

And we want a deficit reduction impact of, say, £50 billion per annum.

What bands/rates would deliver that, in your view? (just approx)

"Blimey wrote:
UNFORTUNATELY: this is only going to effect the UK residients that are British, and as most of the senior and upper middle management of our investment banks are Res Non Doms (that means their earnings in the Uk are deemed to have been earned outside the country for tax calculation purposes), they will not be effected."

Good grief. UK earnings are taxable in the UK. For a non-Dom, it is only non-UK income which is not remitted to the UK that is outside the scope of UK tax. There is no possibility of UK earned income being 'deemed' to be non-UK. Of course, the non-Dom could be on a dual contract in respect of non-UK services but that's something different. (I understand that some Premier league footballers are on such contracts in respect of Champions League away games, which seems a bit ripe!)

a @ 81

Can you please stop slagging me off, Andy, and get cracking on 84 - that's what's important - we're in this TOGETHER.

We need to revise, iterate and revert.

I'm now thinking a new basic rate of 30% kicking in at the £25k a year mark, and maybe going in a bit harder on the over £50k people.

But I want to hold off until I get something solid from an expert in the field ... that's YOU in case you hadn't realised.

70 Mark_WE wrote:
"I would imagine that you also have a problem with pensioners who claim the fuel allowance or free TV licence when they don't actually need it? Or parents who claim for child benefit when they can afford to get by without it?

I'm not sure why you would imagine that;they are unconnected with the point I was making.

Always dangerous to try and get inside another poster's head. But thank you for trying.

#83

They're cutting benefits in Ireland. Can you explain why they shouldn't over here in the UK?

@ AndyC555 for various posts to Saga....LOL!

I'm sure you realise that there is no reasoning with a dyed-in-the-wool Labourite, but at least it provides light entertainment from the grim reality of our car crash economy

@saga 86

We're not even remotely in this together. The structural defecit has been caused by the gorenments incompetence/wastefulness with a little bit of bank bailout thrown in.

We'll be in this together when the public sector gets trimmed and brought in line with the real economy.

How about a new 30% tax rate for everyone in the public sector? Or for anyone who voted Labour? That way the tax rise is actually targetted fairly......

"pdavies65 wrote:

I'm not sure why you would imagine that;they are unconnected with the point I was making.

Always dangerous to try and get inside another poster's head. But thank you for trying."

I wasn't trying to get into your head as it seems a rather worrying place!

However, the point I was trying to make is if you have a problem with one group (who lets face it are quite rightly disliked by the general public) using the law to their benefit you would obviously have a problem with another group doing the same thing.

To do otherwise would be fairly hypocritical IMO. There is an obvious connection (both are people who are rich enough not to need to use the law but still use the law for their benefit) you just chose to ignore it as it harmed the point you were making.

There are two differences between a benefit cheat and someone trying to avoid tax. The first difference is the legality involved (one is legal the other one isn't) and the second difference is the flow of money (one trying to avoid paying more tax the other trying to claim more benefits)

For the record I don't have a problem with people who claim benefits that they are entitled to just as I don't have a problem with people trying to avoid taxes.

However I do have a problem with the tax laws that allow the rich to avoid taxes just as I have a problem with some benefits that are paid out.

Benefit cheats are a totally different matter and I do have a problem with them - they are stealing from the taxpayer (and as a tax payer they are stealing from me).

"I_Despise_Labour wrote:

Or for anyone who voted Labour? That way the tax rise is actually targetted fairly......"

I thought the Lottery was supposed to be the stupid tax? ;-)

84

This will only work in SagaLand but let's give it a rough go anyway.

Well, tax of 99% on earnings over £150k will bring in around £10bn (of course, no-one will leave the country or just give up working, it's SagaLand after all)

You've now moved the 'paying less tax' amount from £40K to £15k and anyone earning over £25 is to pay MORE tax.

Unfortunately only 1/3 of people earn more than £25k (say 8 million).

So 16 million will pay less tax, including all those earning less than £15k who will pay no tax at all. That's around 5 million or so paying no tax at all and (using averages to get a rough idea) that's probably £4bn lost tax from the 'no tax' people and another £12bn from the 'less tax' people. So, to get your £50 bn, we need to raise £56 bn extra from 8,000,000 people. About £7,000 extra each. But of course, £7,000 extra in tax from someone earning (say) £30k just can't be done. We'll try and raise as much as we can by doubling the tax rate to 40% on earnings over £25k-£40k. Using averages, that'll bring in (say) an extra £18bn, leaving £38bn to be collected from the 3.8 million earning between £40k-£150k, an extra £10k each. Let's look at the 3.3m who earn between £40 and £75k. Shall we say 55% tax? brings in around £26bn. Only another £12bn to go! That will require a tax rate of around 75% on the 500,000 left.

So.....

0-15k 0%
15-25k 20%
25-40k 40%
40-75k 55%
75-150 75%
150+ 99%

Should just about do it. Of course, you may find that there aren't many people left in the country earning over £75k and no-one erning over £150k but I'm sure you can sort that out somehow? Perhaps you could ban people from emigrating, retiring or simply giving up working.

despise @ 90

"We're not even remotely in this together"

We are. Or we should be. Tax rises for all but the poorest, I'm afraid ... supporting detail coming through shortly from Andy ... plus freeze on public spending. The only way. Can't victimise the public sector, they're people just like you and me. Not on.

91 Mark_WE

Sorry, still not with you on this. Big moral distinction between tax avoidance and simply claiming benefits you are entitled to but may not need.

It's the difference between hitting a pedestrian accidentally and deliberately swerving to hit one.

"sagamix wrote:

Can't victimise the public sector, they're people just like you and me. Not on."

So are you moving away from your "guaranteed jobs for public sector staff" policy then?

Or are they "people just like you and me" who don't have to worry about losing their job?

93 Andy

Do people really emigrate when tax rates rise? In large numbers? Is there evidence of this?

I remember Phil Collins, back in the early nineties, saying he would emigrate if Labour were elected. That was what first started me voting Labour.

I think tax rates would have to rise an awful lot before I'd even consider leaving the country. Children in school is the biggest factor - family, friends, job (not relevant in my case, but would be for many), cultural ties, etc. I think it's always overplayed, this argument that if you raise top rate tax, we'll lose the 'talent'.

"95. pdavies65 wrote:
91 Mark_WE

Sorry, still not with you on this. Big moral distinction between tax avoidance and simply claiming benefits you are entitled to but may not need.

It's the difference between hitting a pedestrian accidentally and deliberately swerving to hit one."

Tax avoidance is legal. Tax evasion is not.

If you pay into a pension you are legally avoiding tax on that income? Do you pay into a pension? If so you are avoiding tax by doing so.

I'm not sure about the morality of being a benefit cheat but I can't see why one person avoiding tax legally is different from any other.

Many people seem of the opinion that tax avoidance is all about fanciful schemes involving tax havens and sham transactions. The vast majority is far more mundane, simply being well organised with your tax affairs. What on earth could be wrong about that?

74 Saga

At last an answer !

Could you please clarify how many mickles and muckles are involved in
the countrys current debt of at least 600bn and its projected debt of up to 2tn ; ie 2,000,000,000,000 quid.

Actually unless all those zeros have defeated me again 2 trillion is only 33k for every man woman and child in the country. Or should there be more zeros on that ?

93

People do emigrate when tax rates become what they consider to be 'penal'. Research has shown that around 40%, people can stomach, by the time you get to 50% people DO start to move. Don't forget, we have a lot of high earners in the UK who are not UK citizens. They have no ties here and it's as easy for them to live in Switzerland or Dubai or anywhere else as it is to live here. Business itself is far more mobile now than it has ever been.

So you're right if you think in terms of UK citizens (that it may take quite a hike before people moved) but for many who aren't, they may not want to stay.

And what about attracting NEW 'talent'. "Come to the UK, we'll tax the bejezus out of you and are in the process of making being a non-Dom a lot less attractive" hardly enticing, is it?