The public spending debate

You lost me a bit at the end Stephanie. Surely the reason nominal figures go up is because we have consistently had inflation. If we get deflation nominal figures will have to fall as well or even a freeze would be a real term increase.
I assume that inflation rather than deflation is built into these assumed figures. Was Fraser Nelson correct when he called Mr Brown for lying at that press conference claiming the Treasury figures showed 3.5 % cuts per annum in real terms over the three years from 2011? I am surprised that inflation is assumed to be as high as that. If it isn't would cuts of that level not require cuts in nominal figures too?

The paradox is that they might both be saying exactly the same thing. If they're not, then it's hard to explain how the bond markets are reacting:

https://www.knowingandmaking.com/2009/06/mini-paradox.html

Quite. In other words the PM either didn't understand the figures he was quoting or was deliberately misleading parliament - to say the least.

Mr. Lansley seemed confused on the Today programme this morning and I was puzzled as to why he was trying to comment on the NHS Confederation's figures. Surely, it was for the government to respond to what the Confederation had said. I think he was being too eager to score points.

I think the NHS Confederation was quite right to raise the issue but not for the cynical reasons you suggest.

The cuts in public spending which are pending by this government dare not speak their name and anyone working in the state sector has my sympathy as at any time now anyone can be shown the door as the money has run out. I know of one instance in the training sector where funds have strangely not become available and there are the eccentric planned cuts in the Forensic Service.

This discussion though is about future cuts and the nature and extent of these are dependent upon the performance of the economy as a whole. This is not too hopeful is it? The reality that there will have to be real cuts in the public sector are not doubted but these should be sensibly calculated and not based on slash and burn. I think this is what the NHS Confederation are trying to achieve.

Stephanie as you highlight, the average likely real cut is 10% and every government commitment that doesn't fall by as much as that means a greater fall for the remainder.

You can also pencil in growing pension commitments, a need to maintain police and anti-terror (it's likely to get hairy out there).

Wouldn't like to be planning any government funded arts projects in the next few years.

Any views on the likely shape of tax rises? Would a VAT rise back up above 20% make any difference or does this feed straight to the EU? The reduction certainly irritated France & Germany.

You don't make clear in this post, Stephanie, that Lansley's error was a simple mistake of which he was unaware. He wasn't attempting to deceive his audience that the Conservatives are planning something that they are not. Brown, on the other hand, is deliberately and continuously using language and claims that misrepresent what Labour are planning. Sure, it's not what Labour would like to be doing - if they could commit ten times as much resource to the public sector they'd be like pigs in clover. Buttheir ambitions have been thwarted by the constraints of what is actually possible, and the political debate now needs to be about how best to slow down an expenditure juggernaut that has no internal brakes, and is never other than on a slope that encourages it to accelerate.

I'm not party political, and I should hope that in your position, neither are you. But what I think is inexcusable is that the Prime Minister is refusing to engage in a rational discussion about the way out of a serious problem. It's not behaviour that people would tolerate in their children, or employees - why should we tolerate it in the Prime Minister?

so to summarise PMQ's then , Brown says we will spend more Tories will introduce cuts, this is what they will spearhead their election on, and Brown is clearly LYING then.

So his big speech after PMQ's was full of empty promises given he already lied, those are the facts.

Im no Tory voter but for the man this morning to say 10% cuts is only logical, because there is no money in the pot, you dont need to be a politician or an economist to work that one out

As your article points out higher interest rates of that future higher debt will only lead to even more drastic cuts because more will need to be spent on interest.

Shouldn't the BBC be asking why do we need increase the amount we borrow if we plan to cut what we spend because we are having to borrow more?

It seems like we are in a situation where we need to borrow more just to meet future interest payments.

The government has no plan to stop the budget deficit remaining high after 5 years.

Has the BBC even questioned what projected borrowing figures are for years 6-10, oviously if the treasury and Darling went to all that effort to do 5 years worth they probably have done or can easily do years 6-10.

Brown's figures weren't new - they're in the Budget Report, table C4, the total of current expenditure and gross investment.

Ah, many thanks for your post #7 Stephanie. I must confess I was a bit confused, but that clarifies everything.

And even more thanks for a critical look at these numbers and doing some real journalism. Politicians use misleading statistics all the time, and one of the most useful things journalists like you can do is make it clear how misleading they have been.

Keep up the good work!

The public sector is the equivalent to an iceberg with a load of penguins on it floating into warmer water. It will shrink and some penguins will fall off it. Those desperately interested in the services those penguins perform will see a reduction in such services. Whatever waffle occurs in westminster village makes no odds. It is not hard to identify those public services which will be more secure so other sectors will see a more marked reduction. It is absolutley inevitable that more means testing results and more ingenuity follows in stealth taxes, stealth charges and stealth massaging of waiting lists. Loadsa guff will come out of the public sector as different factions fight with the we hold the moral higher ground message. It will make no odds the money is not there. The voluntary sector will have to perform pick - up - a - penguin and it is unlikley to plug the gap. It is obvious that if the same level of services are wanted that individuals will have to pay more somewhere in the process but on the whole they will baulk at paying. There are limits to how high taxation can be taken and the hole that needs plugging is larger than any easy answer. We can expect loads of guff over the next few years from interested penguins trying to hold onto their position on the iceberg. It has already started. Great expectations that are too great. What the Dickens.

6. At 6:01pm on 10 Jun 2009, ExcellenceFirst wrote:
...But what I think is inexcusable is that the Prime Minister is refusing to engage in a rational discussion about the way out of a serious problem. It's not behaviour that people would tolerate in their children, or employees - why should we tolerate it in the Prime Minister?

=========

Perhaps the answer is that he's currently fighting on all the fronts that he can handle without cracking up altogether? He's not going to start poking at anything that he doesn't absolutely have to just now, and will postpone the uncomfortable confrontation for as long as possible. Only human? Yes. Wise? Search me.
But as he himself might say, he's only got two pairs of hands.

As the Government debt is so high it looks like the pensions paid to state employees will also have to be cut by at least 10% or more. They may have to use sneaky tax increases to do this, rather than a straight cut but the result will be the same.

No surprise that Brown is trying to confuse the debate but it is certain that the true picture will be outed sooner or later. There are areas that can be cut without tears like Trident replacement and two new aircraft carriers both of which I have not heard have yet been cut. The need is to protect the poor and vulnerable and to tackle the enormous overheads of consultants and management that the public sector has been burdened with under New Labour - not to mention the costly privatisation and PFI's of the last 10 years.

Just one thing I forgot, from a purely political outlook, any government could easily sack the whole Health and Safety Executive without any flak. ( 350,000 of them) :)

Re These increased interest payments: So what you are saying is thanks to Uni-Trade with China (we buy from them, they dont buy from us) this now de-industrialised country is now so much in hock to the Chinese Communists (what they do buy is our government bonds and other financial assets including mortgages which has helped to finance the housing bubble, both here and in the US) - that to meet their interest payments we have cut back on is this Free Trade thing such a good idea ? And if it is, why are we allowing the Chinese to play only half the game ? which is causing so much of a problem. If we add the NPV of all future interest payments (and maybe a suitable figure for the social cost of the de-industrialisation) onto the price of cheap Chinese goods, how cheap will they really be ? Ricardo only ever did a theory of International Trade we lose some industries but you lose some industries, we specialise you specialise. There is no theory of International Uni-Trade : we lose all our industries and pay for your goods with our houses and future tax revenues with interest till the end of time because it looked cheap at the time and we didn't really think about properly !

Comment 13 : It's an Outrage

Thanks for your response.

I don't think, to be honest, that I worded my post particularly well. I do think that Mr Brown is a hopelessly inadequate person, and that an effectively functioning system of preferment to authority would never have allowed him to get anywhere near a position where his decisions directly affected the lives of so many others.

The focus of my disquiet, however, is not with Brown. He's done what he was capable of doing, no more, no less. What I lament is that we are not prepared to admit that our system encourages certain types of flawed character to satisfy their lusts in politics. I'm quite prepared to accept that it may be the case that there is no acceptable way of stopping the wrong 'uns without also stopping the right 'uns, but I don't see that we do ourselves any favours by placing a taboo over the whole discussion. Particularly when we consider how much national opportunity has been wasted by at least the last two Prime Ministers not being out of the top drawer.

Any chance you could let your colleague Nick Robinson in on these facts. Most of us know what you say to be true, shame Mr Robinson continues to cast a fog of war over the whole debacle and simpyl cannot bring himself to criticise the Prime Minister.

The public have a right to unbiased budgetary evaluation and the BBC as a taxpayer funded corporation should be the ones to tell it straight.

Shame we simply don't get the real facts communicated in plain and comprehensive terms. The British Tax payer deserves the truth about our current predicament, Labours last budget and both parties proposals. Then they are in a better position to choose who gets their vote.

As it is politicians are all fiddling figures and telling porkies in the commons thanks to Parliamentary Privilege.

More articles like this please Steph, tell it like it is.

As a resident non - economist I really do worry about politicians pronouncing about what is going to happen, or what they are going to do in the future. There are just so many unknown (or easily / conveniently overlooked) factors that may or may not be taken into account so attaching any credence to these pronouncements may be risky. There are just too many balls to juggle with, and the trouble is that it isn't just the excess balls that get dropped, it's all of them. I really do wish that politicians could resist the urge to speak out unless it is really necessary, but they all seem to be gripped by a compulsion to talk.
On a lighter note, I found a wonderful quote by Woodrow Wilson: "The way to stop financial joy - riding is to arrest the chauffeur, not the automobile."
Oh how I wish...

"Predictably, he claimed the Conservatives - in the person of Andrew Lansley - had revealed plans for sweeping cuts in "vital services"..."

Hey, "Blue Labour"! Start exhibiting some intestinal fortitude for once. This is what needs to happen if the "sheeple" should somehow vote you lot in at the next election:

SLASH AND BURN

Slash:

Government can stimulate the economy by doing three things. The key is to make available tangible resources and profitable production opportunities. First, slash spending. Second, slash taxes. Third, slash open production alternatives for labour and capital in the economy.

Spending can be slashed by simply making the current government budget subject to proration so that it must be balanced by spending cuts (i.e., no deficit). I know this is not much of a reduction, but it does send an important message and it does release real resources from the clutches of the government and places them back into the productive economy.

Taxes can be slashed in any number of ways, but it would be best to emphasise taxes on saving and production. My personal favourite would be to eliminate taxes on interest, dividends, and capital gains, but I would also be open to a system-wide reduction (and eventual elimination) on all taxes. Reducing taxes makes production more profitable.

Slashes for category three involve the government turning over existing resources to the private sector and opening up other profitable production processes that are currently restricted by government. The government has plenty of land, natural resources, and real estate that could be auctioned off.

Burn:

The question is; what is to be done with all the money from these auctions? I would imagine that some airline would be willing to pay big for the rights to convert the military airfields into a commercial facility (by the way: private airports would solve many problems that are currently associated with airlines rather than airports). I would also imagine that an oil-producing country would be willing to pay "big bucks" for the right to build a port facility, oil-refinery, and a pipeline distribution network on government property in suitable coastal areas in the country.

Some people would want to use all this money to help the poor or to bailout business. Others would want to pay down the national debt, to pay for increased regulation of business, or to subsidise something like stem cell research. However, the best use of the money would be to burn it. That's right. Burn it. The problem of the recent housing bubble and credit crisis stems from too much money, and it would be a good public demonstration that more money is not the answer.

Did you mean to say ' highly judicious' in their use of facts?

Lets also not forget some of the underlying assumptions on expenditure going forward :-

CPI inflation levelling at 2%
Asset sales 16 billion sterling
Savings / efficiency 9 billion sterling
Financial losses on banks 20-50 billion sterling
QE boosting GDP as if unimpaired and successful
Bank lending restored
Current spending 0.7% per annum in real terms / 2.6% in real terms over next five years?

DIFD? Surely you mean the DFID (Department for International Development)?

Summary: Somethings going to give!

The soft areas of all of these projections are the impact and rate of inflation and interest rates, additionally to the actual ability of the government to restrain spending.

My hunch is that inflation will not stay below 3 percent (as indicated) and nor will interest rates stay at zero (as implied). Both of these assumptions appear to be built into the forecasts.

The other side is costs - I am still not convinced that 1930s' style cuts in pay will not be forced upon the public sector as they were in the 1930s and I am also not sure that the next government will not impose pay restraint on the private sector.

I am also not convinced that it will be possible for the government (of no matter which party) to cut back the increase in spending in the (dramatic) way indicated.

All in all I think these figures should be taken with a very large pinch of salt!

The figures released today, I assume are based on the assumptions of the treasury. What happens if the tax receipts are not as robust as predicted?This 10 % cut in 2011 could easily turn into 15% plus. To me the 2011 argument is irrelevant.I am more interested in the margin between tax income v public expenditure over the next 6 months.The prospect of ring fencing specific areas might proof to be impossible or incredibly stupid .

John_from_Hendon # 24

"All in all I think these figures should be taken with a very large pinch of salt!"

Fifty bags worth, perhaps?

Ooh; something I can understand! LibertarianKurt suggests selling off a quantity of government land. Now I don't know the figures but I do know that some government land was obtained from its previous owners prior to or during the war, but part of the agreements made at the time mean that if the government decides it doesn't want the land anymore it must sell it back to the original owners (or their heirs, I presume) at the original price and in the original condition. So apart from getting next to nothing for the land the government (or more correctly the taxpayer) would be faced with heavy remediation costs up front; not a good idea. Additionally, a lot of the land doesn't enjoy particularly good access, so any prospective buyer might be faced with difficulties there as well.

On the topic of "burning" the monies received, does this not run into the problem of money being "fungible" as per an earlier article by Stephanie? The effect would be the financial version of cutting off our noses to spite our faces; having said that as and when the banks pay back all the money they have had handed to them (I have omitted the "if" as being just too depressing) then I would have to admit that ensuring that it doesn't just vanish into the system has to be a good idea.

However the point about the house price spiral being fed by too much money sloshing around is undoubtedly true. Some have suggested that higher interest rates are the correct tool for managing that, but I have never found that idea particularly convincing; while that approach might well work higher interest rates also affect other sectors as well, and that might not be desirable. Surely the best way of controlling house price inflation is by proper regulation of deposit requirements, loan to value ratios, and loan sizes in terms of salary multiple? From the government's point of view this has a serious downside; dampening house price rises would constrain Stamp Duty receipts; a case of the interests of the government and the governed not being coincident.

Or have I missed something?

#26. LibertarianKurt wrote:

"
'All in all I think these figures should be taken with a very large pinch of salt!'

Fifty bags worth, perhaps?
"

Aah barter - something you can trust!

THERES NO DEBATE Just the USUAL SPIN FROM GORDY & THE REMNANTS.

nulabour STILL HAVE NOT GOT IT!

IF YOU HAVE A POUND IT CAN ONLY BE SPENT ONCE!!

nulabour think they can SPEND the SAME pound AGAIN & AGAIN= DEBT BIG TIME

SO ITS CUTS! SIMPLE?

IS MUGABE nulabours ECONOMIC ROLE MODEL?

IF IN DOUBT PRINT IT WITH A BIT OF Q.E. BY THE STATE BANK!!

Radiowonk # 27

"So apart from getting next to nothing for the land the government (or more correctly the taxpayer) would be faced with heavy remediation costs up front; not a good idea."

The key word here is auction and besides once taxes are reduced or, better still, eliminated altogether, the "taxpayer" will be much better off, wouldn't you agree? As an aside, just when did the taxpayer physically receive anything whenever the government sold something off?

"On the topic of "burning" the monies received..."

It was a light-hearted attempt to express what I really feel about fiat (government) paper money. Moreover, it was also an implicit argument for a return to sound money i.e., gold. I hope that is acknowledged?

"Surely the best way of controlling house price inflation is by proper regulation of deposit requirements, loan to value ratios, and loan sizes in terms of salary multiple?"

The best way of controlling inflation is for the government/central bank to immediately stop increasing the money supply which is, in fact, inflation itself. And then afterwards, get out of the counterfeiting business period!

John_from_Hendon # 28

"Aah barter - something you can trust!"

John

It just might come down to that (barter) when the whole rotten paper money scam comes crashing down around our "glorious" political leaders' ears!

#18 ExcellenceFirst

"Particularly when we consider how much national opportunity has been wasted by at least the last two Prime Ministers not being out of the top drawer."

Then pray tell me which PMs were "out of the top drawer"?

If there are "Green shoots of recovery", what is funding them ?

The only answer I can think of is the BoE asset relief scheme. £80 billion spent in 3 months with a vote to extend the limit of the £150 billion scheme due.

So what happens when the scheme ends ?

Isnt this just an extension of the 6 years of wholesale funding boom we've just been through ?

Arent we just digging the whole deeper ?

When do we expect the recession mark II ?

A good analysis Stephanie. The scary thing is that Brown has deluded himself so much by his "saving the world" rubbish that he actually thinks he can get away with this nonsense.

Just one more assumption in the 2009 budget audited by the National Audit Office ( independent, then) :-

Price of oil $46.7 per barrel then constant in real terms

NB

Brent crude stands at $70.71 per barrel and was it BP saying the balance oil price should lie between $60-90 per barrel going forward.

It should be pretty clear that it does not matter which party is in power, working withing the system and playing with numbers there is not much that can be done to prevent continuing decline.

John from

I think you are on the money with your comment that cutting at the level indicated will not be easy and 'overspends' against cut budgets will occur. I think some are already in play. It will not be just the providers fighting the cuts it will be the consumers. I expect genteel middle england to get a bit heated and they are very good at hitting the target.

Lib Kurt

Barter? How do you barter in A&E. Oh, I get it, you rub the bags of salt into the wound. That will bring tears to the eyes. I shall barter with the bin men by presentation packing my garbage. lol.

Never mind Browns got his place in history and the economystics say we will be on the up soon.

Public spending will have to be cut, substantially and quickly, everyone knows that. Why can't we have an open and honest political debate about anything in this country? We now have the 2 largest parties lining up to say that they won't cut the nhs budget, no doubt the liberals will say the same. Yet it is the NHS which is bankrupting the state. Spending on the NHS has trebled in 10 years- are we all 3 times as healthy? Well no, not when most of the money has been stuffed into the already well filled pockets of the consultants and GPs. Where is the party who will address this? There isn't one, because politicians assume that any mention of cutting health spending is an automatic vote loser. The fact is that health spending could be halved, and it would still be 50% higher than 10 years ago. So can we at least have a debate on NHS spending? No, I didn't think so.

#12 "The public sector is the equivalent to an iceberg with a load of penguins on it floating into warmer water. It will shrink and some penguins will fall off it. Those desperately interested in the services those penguins perform will see a reduction in such services."

To use your analogy, it's not the penguins that we have to worry about !! It's when the government suddenly lobs a load of sea lions onto the iceberg, in the form of "performance statistics" and "managers", that shove more of the penguins into the water than is necessary !!

I should know about this since I hear about this almost every night, at dinner, from she-who-must-be-obeyed about the time and effort wasted in filling in forms and not spent on those who need it most, the patients !!

Saying the debate will be dismal is right.

I have just listened to Liam Byrne on The Today programme repeating , almost hypnotically, over and and over again that " Inheritance tax savings of £200,000 for almost 3,000 millionaires" are a Tory Policy that has landed them in trouble.

This robotic repetition, ('The do-nothing party'was another ) just seems to be self defeating trick of the 'used to work but doesn't anymore'---presumably this sound-biting technique in TV and radio debate that was such a success in the 90's is why Peter Mandleson was brought back--- with no-one else having enough to brains to make it work .

John Humphreys was reduced to amused but slightly worried bafflement---- he was trying to get an answer he just could not get The Chief Secretary to the Treasury to give one.

A dismal debate in content...and quality----

Comment 33 : foredeckdave

Prime Ministers

Well, most of them, really. Some more than others, but even the most perfect aristocracy that man can devise won't guarantee that the top job is always done by the creamiest of the cream. Major was not in the same bracket as Thatcher, Wilson was better than Callaghan, Macmillan than Heath. I have a lot of respect for Home, although he didn't have long enough to prove himself, and someone else would probably have been chosen had the full extent of Eden's illness and treatment been known.

The key point is that we were much more of a representative democracy than we are now. We elected people to Parliament because we respected their minds, not because of their commitment to do our bidding. There was an understanding that cleverness is a very inferior substitute for wisdom, and the political battle for this principle to prevail over the popular will was lost when the cleverness of Clinton/Blair failed to anticipate that the Third Way would have consequences beyond mere electoral popularity.

The question which should be asked of the NHS Confederation and its members is what are they doing about the forecast (including its risk assessment.) Everyone know there is a very high risk to put it mildly cuts in public expenditure and they are already talking place in the NHS and Education.(HE and FE) Any Public Sector Manager who has financial discretion ( and there are lots of them) will be hopefully drawing up flexible draft budgets to deal with possible contingencies rather that '10% off everywhere.'

But this is about boring unpopular 'management', and the BBC currently has given up programmes about the real economy in favour of 'business'(the city and finance') and has apparently no specialist reporters and no blogger on the what is going on of the 'real' world.

I'm sure I am not alone in budgeting for a carry overable surplus in the current year (which my sector allows) and looking ahead to the next two years. I don't think we will get any help from the Cameroons should the voters decide they want them, but obviously one of the budget versions will be based on no cuts.

#13 "But as he himself might say, he's only got two pairs of hands. "

He has ?? X-men returns ?? Mr. Octopus ?? No wonder he thinks he can save the world !! :-)

#16 "Just one thing I forgot, from a purely political outlook, any government could easily sack the whole Health and Safety Executive without any flak. ( 350,000 of them) :)"

Sea lions on the iceberg !! See above. The culling should start at the top; the Sir Humphreys of this world and move steadily down the chain !!

#17 "Re These increased interest payments: So what you are saying is thanks to Uni-Trade with China (we buy from them, they dont buy from us) this now de-industrialised country is now so much in hock to the Chinese Communists (what they do buy is our government bonds and other financial assets including mortgages which has helped to finance the housing bubble, both here and in the US) - that to meet their interest payments we have cut back on is this Free Trade thing such a good idea ? And if it is, why are we allowing the Chinese to play only half the game ?"

Actually it's the Brits and the Yanks that are playing half the game. See Rio Tinto deal for more info !! The Chinese were willing to put the money on the table but the Brit, and the Aussie, politicians pulled the rug from under the deal whilst strenuously denying any involvements !!

The Yank politicians did it first with their off-shore oil company deal !! That's why the Chinese, and now the Brazilians, are happy to dump their USD denominated debts onto the IMF and let them sort out that problem while grabbing a larger chunk of the SDRs !!

IN IMAGES

Liberal Democrats.
Anarcho-Capitalists.
'Nazis'.

Or in words.

Most posters here are tied up inside a Liberal-Democratic bubble which stops them thinking the unthinkable i.e. statism. See current censorship of BNP which some fear risks exposing this collusion of main party 'bubble politics'. There is little diagreement between them in reality.

One can't predict what is going to happen if the system one is in is designed to render it unpredictable/manageable. Free-market anarchism is designed to be unpreditable/unmanageable so that those who control market share are not impeded by the state and regulation. Enormous resources are put into this so that those in power keep a light hand on the tiller. Most of what we read by economic journalists is therefore techno-fiction as a consequence. Note how SF hedges all the time. Ask any trader what someone outside the markets can do. It's all short-termist and where it's not, it's hedging. Look where that led.

The bar graphs on Public Spending vs growing National Debt over the next decade or so shown on Newnight last night were...... frightening. if that doesn't tell everyone why there's no real difference between the three main parties, nothing will.

Bottom-line: What is the UK going to competitively produce given falling human capital and numbers, and non-falling labour costs?

It is similar to Japan's lost decade



Note how within the range of variation for private debt, there is a dramatic decrease in private debt at the start of the lost decade, compensated for by government spending. The result is basically a conversion of obligation from private to public.

#17 "we lose all our industries and pay for your goods with our houses and future tax revenues with interest till the end of time because it looked cheap at the time and we didn't really think about properly !"

Caveat Emptor !! So don't buy Chinese goods and see what happens. No more TVs, computers, music players, cameras, mobile phones, washing machines, fridges, microwave cookers, vacuum cleaners, etc. Smuggling becomes rife and the black economy balloons !! Inflation goes through the roof and Britain envies Zimbabwe for its "low" inflation !!

Rhetoric, rhetoric and more rhetoric !! What we need are more realistic solutions somewhat along the lines suggested by a few posters above !!

ishkandar (#40) "To use your analogy, it's not the penguins that we have to worry about !! It's when the government suddenly lobs a load of sea lions onto the iceberg, in the form of "performance statistics" and "managers", that shove more of the penguins into the water than is necessary !!

I should know about this since I hear about this almost every night, at dinner, from she-who-must-be-obeyed about the time and effort wasted in filling in forms and not spent on those who need it most, the patients !!"

Anarchists don't do empiricism or evdience driven practice as it's too accountable. 'Feminized' people are anarchists' best troops as in terms of brain sexual-dimorphism as it goes with 'gathering' (today, shopping, buying, i.e. taking). It also goes hand-in-hand with makeovers and other cosmetic subterfuges. Sadly, it doesn't go with building or manufacturing :-(.

There is a price to pay for that.

#12 "My personal favourite would be to eliminate taxes on interest, dividends, and capital gains,"

There are *NO* taxes on interests, dividends *OR* capital gains in Hong Kong and I do not see them having to borrow large sums in the foreseeable future just to balance the books !! No VAT either, but that another story altogether !!

given that the Chancellor (either AD or GB) is incapable of forecasting even three months in advance then all this talk of 2011 - 2015 is of no consequence whatsoever.. if the performance yesterday by GB was an example of the "new open" style then i am afraid "more of the same" comes to mind... in the last budget statement AD said they would "halve the budget deficit to 98 billion in five years" ..... to do this means finding more than 90 billion, perhaps the new open prime minister would like to explain how this is to be achieved without any cuts..

#27 "having said that as and when the banks pay back all the money they have had handed to them (I have omitted the "if" as being just too depressing) then I would have to admit that ensuring that it doesn't just vanish into the system has to be a good idea."

Depressing or not, it may soon come to pass - https://news.bbc.co.uk/1/hi/business/8092538.stm

After pouring billions in taxpayers' money into Northern Sponge, oops sorry, I mean Rock, the Treasury has decided that it wasn't such a good idea after all !! Now they want to flog it to another mug, oops sorry, I mean, informed purchaser, who may either go bust owning it or asset strip it and cry all the way to *their* bank with those zillions of taxpayers money that had been poured in !!

GlenisDevereux (#17) "So what you are saying is thanks to Uni-Trade with China (we buy from them, they dont buy from us) this now de-industrialised country is now so much in hock to the Chinese Communists (what they do buy is our government bonds and other financial assets including mortgages which has helped to finance the housing bubble, both here and in the US) - that to meet their interest payments we have cut back on is this Free Trade thing such a good idea ? And if it is, why are we allowing the Chinese to play only half the game ?"

It's called economic warfare. They get their greedy capitalist enemies to hoist themselves with their own petards. Liberal-Democrates have below replacement level TFRs and high differential fertility so are deskilling too, genetically.

Note how many posters and journalists ignore this, or worse still abusively argue it isn't true.

When SF interviewed some of the people in the field a couple of years back (see Newsnight or BBC archive), she interviewed the wrong people (not that she can be held responsible I suspect). If she'd interviewed the right people, more people may have caught on to what was going on well before August 2007. The right people don't get airtime but are well known in the procession. One must ask why this is the case.

#39 "Spending on the NHS has trebled in 10 years- are we all 3 times as healthy? Well no, not when most of the money has been stuffed into the already well filled pockets of the consultants and GPs."

There's lies, damn lies and NHS spendings statistics !! What they won't tell you is that a very large chunk of the NHS spendings (billions of quids) was wasted in that oh-so-wonderful, world-beating IT system that will save us zillions but has not worked at all to date despite all that money poured into it !! If that money had gone to the frontline workers, the service would have been a whole lot better !!

Dear Stephanie,

I'm sorry, but I have to criticise this article. It appears to accept the contentions of monetary conservatives regards the limits on state borrowing supposedly imposed by the bond markets.

Most of these are, in my view, irrelevant in the current complicated global context but, be that as it may, to draw conclusions from assumptions of lower tax income made by somewhat doctrinaire advocates of fiscal rectitude strikes me as doubly dishonest.

The simple fact is no one knows, or can possibly know, what the tax take and sovereign borrowing requirement will be next year let alone beyond 2012. Government can, and should, make assumptions over a range but they remain assumptions, not facts. If the economy recovers somewhere near the rate the Chancellor has assumed then his expenditure expectations are near enough right. If you take the most pessimistic assumption about recovery, as have the Conservatives, then of course you get different numbers. In this game the numbers used are variables picked to suit an argument, not facts.

At the risk of repeating myself, the future is unknown. You can't know the precise difference between government income and expenditure very far ahead, particularly when much income may come from re-privatisation of Finance. When you do know there is a choice as to how you fund it - if at all. I must say I'm shocked that Stephanie, hitherto the epitome of clear reportage, has failed to convey these simple truths - this reads more like John Humphries trying this morning to trip up Liam Burn.

As ever, the argument is actually political. Most economists would say it was a very bad idea to cut expenditure, or increase taxes, in a recession but the Conservatives seek to persuade the public that cuts are essential rather than discretionary it fits their underlying philosophy. Labour on the other hand wish to justify previous trends in expenditure and, rightly in my view but maybe not yours, take a more Keynesian approach to generating a recovery (their high rate tax increase bit isn't economically helpful but provides an incidental answer to any Conservative wolf-crying). Their contention is that resumption of growth will sort it out (I think they are probably right - things tend to return to trend, but that is just one opinion).

My concern here is that the article feeds the politically inspired (and untrue) myth that 'big cuts are inevitable'. I therefore think it inappropriate and unbalanced and must say Im disappointed.

Comment 24 : John from Hendon

"I am also not convinced that it will be possible for the government (of no matter which party) to cut back the increase in spending in the (dramatic) way indicated."

referred to by Comment 38 : Glanafon

"I think you are on the money with your comment that cutting at the level indicated will not be easy ..."

I'd like to know the basis for your suggestion that spending cuts will not be easy. Should we be looking at this from the viewpoint that the costs of public service provision are already pared to the bone, and that there are really very few economies that can be made that don't involve reducing the level of services provided? That is, that there are no appreciable savings to be gained from improving efficiency?

Or does the difficulty arise from the ethos of the public sector and the people that work in it? Is it the case that there is huge cost efficiency potential, but that it can never be achieved because it is impossible to change the outlook of the people who have to make it happen? That is that it can be done, of course it can be done, but not with the people who'll have to do it.

I agree with Brendan Harris who wrote in a comment to Roger Bootle's Telegraph article last weekend:-

"as anyone who works in the public sector will freely admit, the colossal waste is effectively an untapped source of funding for the government. It would be relatively painless to take GBP50bn - GBP75bn out of public spending, and certainly possible to do so without touching a single school or hospital."

#39. haufdeed wrote:
"... We now have the 2 largest parties lining up to say that they won't cut the nhs budget, no doubt the liberals will say the same. Yet it is the NHS which is bankrupting the state. Spending on the NHS has trebled in 10 years- are we all 3 times as healthy? ... So can we at least have a debate on NHS spending? No, I didn't think so."

I agree. Why should the NHS be sacrosanct? In particular, the over-use of outside consultancies should be ended forthwith - their inflated charging rates are a disgrace.

Stephanie, perhaps you could do a piece comparing how our NHS costs stack up overall against equivalent costs in other countries? OK, not easy, given the different systems in operation elsewhere; but surely worth a look?

BE AFRAID

Where is the money going to come from? What will we produce? Certainly not children.

As you follow Reisman's case here, be sure to watch his use of intensional sleights of tongue. The intensional idioms of propositional attitude resist logical quantification-in, which comes down to their being non truth functional, ie they are ideal vehicles for spin and subterfuge. Where he talks of shortages think of queues at bus stops or in front of a cash machine. Anything which you can not get immediately can be defined as evidence of a shortage. Now think Hyperbolic Discounting. Take the Credit Crunch (and predatory lending) as a shortage of money, this can be (and has been) attributed to totalitarian Chinese saving for their future and putting freedom loving Liberal-Democrats out of work.

Families living together can be described as due to shortage of housing so people can't be individuals. fear of the 'secret police' or neighborus informing on you dabbling in the black-market can be thought of in less sinister terms as conscience, community spirit, and being law-abiding. Alternatively, where that is relaxed and decriminalised you could say you legalise theft, predation, and expect an increase in violent crime as people just take what they want whne they want. There is no end to this infantile, adolescent me me me narcissistic/anarchistic spin. Those with the least conscience will do best in such conditions. We call those people psychopaths and narcissists. See 'The Apprentice' or Hollywood.

In the end, you have to look at the birth-rates. Liberal-Democratic nations all have below replacement level fertility and high differential fertility. That describes biological and socio-economic 'unfitness'. It's literally a description of population extinction/democide and collapse of civilization where it's happening. It is not happening in non Liberal-Demoratic countries. The population in the PRC is under state eugenic control. It is not in free-fall. It is improving.

betulac (#58) "Why should the NHS be sacrosanct?"

Suppliers.

First, I'd just like to say well done to Stephanie and Paul Mason last night. I've had my criticisms of BBC News and Newsnight of late, but that was a valiant attempt to cut through a complex story where the political spin machines were on full blast. A heretical thought - is Newsnight a lot better when Gavin Esler is in charge? Less ego than certain other presenters, and lets the interviewees "flow". Discuss...
Glad to see some people like shireblogger (#22) bringing up the inflation thing among others, I came here to make the same point. Given that government policy seems to be to print money and inflate the debt away, every % point of CPI over 2% represents a further cut in future services. Ditto if our credit ratings get cut like Ireland's have been. I wonder if we'll see the Tories trying those angles - suggestions like "Upsetting S&P = several £bn less for the NHS" might be a bit subtle for the average political debate in this country, but that stuff is fundamental.
Incidentally sb - although they would never admit it, the government want the oil price as high as possible. It maximises their tax revenue from the 1.5 million barrels of oil coming out of the North Sea each day. The 2008-9 Budget assumed $83.80 oil - funnily enough, Brown has kept rather quiet about that aspect of high oil prices, we need to maximise revenues before North Sea production runs out (helped by Brown's inane petroleum taxes, although Darling seems to be trying to undo some of the damage). And high oil prices help increase inflation, which they need to reduce the debt, whilst any effects on the economy won't happen until they're out of office.
Whilst we're on the subject of that kind of stuff, did anyone notice yesterday's trade statistics? Deficit on goods widened to £7.0bn in April, net of services it went up to £3.0bn in a month. I know it's very unfashionable to talk about such things, but how sustainable is a deficit of £36bn/year? Again, another source of inflation, and another way in which the current government will have reduced future spending on public services.
Must admit, I do despair about this Tory commitment to preserve NHS spending at any cost, even if health inflation runs rather higher than CPI. It's painful to say it, but our post-Brown finances just cannot afford to spend £30,000 on some drugs to keep an 80-year-old alive for a few more months, whilst cutting spending on skills and the encouragement of R&D. To extend Cameron's analogy, it's like buying ice cream and plasma TVs whilst the roof is still leaking. I'd disagree with watriler (#15) - we need to concentrate our limited funds on industries that will benefit the economy long-term. Ignoring the final products, defence spending is great for this - it supports job creation in the UK in high-technology industries with good export potential. Spending the same money training Filipinos to empty bedpans does not have the same benefit. And if budgets get really squeezed, buying toys for the military gives us something tangible we can sell directly to other countries, like submarines to Canada or frigates to Chile. The last thing we want to do is to repeat the mistakes of the past, that saw things like the APT axed and sold to Fiat in the 1981 recession, and now we're having to increase our trade deficit to buy trains from Italy and from Japan.
Yet Labour continue to parrot this "Labour investment" line when they're halving government investment over the next few years (see Table C4 mentioned above). Instead they should be cutting current spending on "ice cream" to match our economy's ability to support it - in fact well-paid bureaucrat jobs are anti-investments given the pension debts they represent. If Brown was a true Keynesian, he'd be promoting investment, building more ships for the Navy for instance rather than slowing down the carriers. Instead he tries to create this spurious dividing line, that the Tory spending plans for 2014 will harm Britain during a recession. By which he's implying that the Brown recession will last until 2014 - he can't have it both ways, is he trying to talk down the economy or not?
Hmm - Stephanie, might it be time for a piece on the Austrians' favourite recession, the one that didn't happen in 1921 thanks to Warren Harding's austerity measures? Deserves at least as much mainstream currency as the early 1930s surely? :-)

You are quite right Steph, the quality of discussion from our esteemed political leaders, is quite frankly dreadful.

It seems the Crazy World of Gordon Brown wants to claim that increasing debt payments are in fact investment in public services. Total hogwash.

We all know the public accounts are in a mess. They should all simply acknowledge this, and then get on with the real discussion about how we get out of the mess, and where the priority spending areas ought to be. On top of that, they should focus on how some of the "automatic" spending increases like the dole can be mitigated by getting people back to work.

Instead we get Byrne on the Today programme this morning trying to insist black is white.

If this quality of discussion took place in a real company in the real world, the management would be out on its ear. We need a General Election to cleanse the system of this nonsense.

57. ExcellenceFirst

Re query public spending cuts why hard.

I think they will not be easy because it is dealing with a culture and my expericence is changing culture is the hardest thing to do of all. All the lobbists will come out of the woodwork in droves. They are already. It is not a question of scope for cutting it is that every inch will be fought all the way both by the providers and the consumers.

Re NHS spending growth raised by somebody else. I understand the UK lagged behind the rest of Europe prior to NuLab, particularly with cancer treatment, which was regarded as grossly underfunded. Cutting the NHS budget is not going to be easy, it is emotive and individuals are effective at getting decisions overturned via media campaigns. The Irish model where vouchers are given against treatment and the individual can chose where to spend and to top-up if they want to looks interesting - but appears to be opposed by much of the NHS who appear to view the money as theirs not the patients.

Good luck to anybody taking on politicans who bend with the wind, often their own wind, the sector providers and the public who consumer and expect provision by right.

Garthking,

If we are to avoid treading the path pioneered by such fiscal luminaries as Italy and Zimbabwe, then public debt approaching 100% of GDP is simply no sustainable. It might be 70%, it might be 110%, as you rightly point out we don't know for certain.

But it is going to be well above Gordon's Golden Rule, and well above what many would consider sensible.

So, we have to plan for the inevitable and take action. Not just sit tight and wait for seomthing to turn up.

Comment 56 : Garthking

"If you take the most pessimistic assumption about recovery, as have the Conservatives"

"Most" is the archetypal New Labour word to use in this context. Sure, the Conservatives' assumption about recovery is more pessimistic than the government's. It's also less optimistic than the government's, but, of course, this wording doesn't quite do the government's bidding, does it?

At least the Tories are giving credence to the assertion that there will actually be a sustained recovery, of sorts. There are more than a few who aren't quite so sure about this. Maybe the "most" pessimistic assumptions would come from within this group?

"Most economists would say it was a very bad idea to cut expenditure, or increase taxes, in a recession but the Conservatives seek to persuade the public that cuts are essential rather than discretionary"

Ding Ding! An appeal to authority based upon a false assessment of the opposition's position. Even more New Labour than the last illogicality. Tell me, Garth, what would "most economists" have to say about massive public sector deficits during the upturn? Also, would they, like you, misinterpret the Conservatives appeal for fiscal rectitude over the medium term as being "making cuts essential in a recession"? Or would they have more respect for their intellectual standing to risk being caught with their trousers down over such an obvious falsification?

#56 @Garthking
"My concern here is that the article feeds the politically inspired (and untrue) myth that 'big cuts are inevitable'. I therefore think it inappropriate and unbalanced and must say Im disappointed."
Amazing here that you challenge the one premise that just about everyone across the political spectrum DOES agree on. That there is and will be a UK public debt figure of unimaginable proportions. I haven't heard anyone challenge - no myth, it is a fact (though no one has yet been able to convincingly quantify this, granted, generally accepted to be mind bogglingly large). It has resulted from the need for UK Government to replace finance previously supplied by the wholesale markets, to guarantee debt created in the past decade or so that is uncollectable, and to support the balance sheets of banks around the world that came very close to collapse. Our government's share of that replacement debt and its ongoing commitments, raised on the world bond markets, needs to be paid back in the medium and long term. It also needs to be serviced, by paying interest.
What SF is saying, not unbalanced as you indicate, is that there are some tough choices to be made as the commitments/repayment/interest comes from a finite pot of resources available to the government. We all expect the tough choices as the only way to increase that pot is to raise higher taxes (or same taxes in a growing economy). Over the last few days, politicians have been ring fencing some of that pot of resources, by making promises to maintain NHS and DFID spend. That, along with higher interest rates, further pressurises the amount left in the pot for Trident, Aircraft carriers, White Elephant computer systems, consultants and the H&SE. Just to confirm then, 'big cuts are inevitable' is not a myth, it is reality[for the next 30 years], get used to it!

Whoever wins the next election will have to cut public spending and increase taxes whatever happens. The labour way of tax/borrow/spend is unsustainable, you always have to pay it back at some point and the longer we put it off the more expensive it will be. After running a defecit all the way through the boom years Gordon is looking to cling on before leaving the mess for the tories to sort out.

Of course the real issue behind all this is the lamentable value for money we've got for the decade of extra "investment". When people are dying in hospital wards and there are more consultants than nurses you have to ask if the money is being spent wisely.

Stephanie I certainly agree that we are in for a long and unconstructive debate on spending, which will certainly be miserable; and utterly pointless and contemptuous of the voter, as it will see the 2 major parties putting a huge effort into spin and misleading statements about what they are doing, will do, would like to do; the fog of economic war

But now that the NIESR and various other esteemed economic organisations are saying that the recession is over (technically-speaking) I want to know if these blogs (and especially Peston's) will be dropped and if the BBC will be changing their jagged, downward pointing red arrow logo for economic doom?

It might be an idea to give us a break before the 2nd part of the W-shaped dip next year!

Vote PIRATE

oh, I forgot to say that the nasty tories make "cuts" whilst caring labour makes "efficiency savings" ;)

after 12 years in charge the spin has turned into doublespeak

18. At 8:01pm on 10 Jun 2009, ExcellenceFirst wrote:

...I do think that Mr Brown is a hopelessly inadequate person, and that an effectively functioning system of preferment to authority would never have allowed him to get anywhere near a position where his decisions directly affected the lives of so many others...
...we are not prepared to admit that our system encourages certain types of flawed character to satisfy their lusts in politics. I'm quite prepared to accept that it may be the case that there is no acceptable way of stopping the wrong 'uns without also stopping the right 'uns, but I don't see that we do ourselves any favours by placing a taboo over the whole discussion...

===========

Couldn't agree more, but as you suggest,has there never been an effectively functioning system of preferment to authority. Call me a cynic (you would be right) but I believe that most politicians are driven, occasionally subliminally, by a lust for power. That does not necessarily mean that they are incompetent of course but it does mean that they take their eyes off the ball usually at the worst possible time.
Perhaps the only way to achieve a higher quota of first-raters is to make it easier to jettison the second raters but as you also suggest, there is the issue of babies and bathwater. Perhaps we are stuck with the Peter Principle.

David Cameron said in response to the Budget: But the Budget still does not do enough to get the public finances under control. In two words, it is completely inadequate.

The clear implication of that statement is that a Conservative Government would target smaller fiscal deficits than those set out in the Budget. There is no reason to believe that economic growth over the medium-term will be stronger under a Conservative Government and every reason to believe that a Conservative Government would be more reluctant to increase taxes (and keener to cut them should growth turn out higher than expected). It follows, therefore, that a Conservative Government would have to cut public spending by more than the Labour Government is currently planning to do.

Yes the Budget plans imply cuts in department spending between 2010/11 and 2013/14, in real terms. But unless David Cameron is going to retract the above statement or announce a series of tax increases it is reasonable to conclude that the first Budget presented by a Conservative Government would contain larger cuts.

There may no longer be a choice between Labour investment and Conservative cuts, but there is still a choice: between Labour cuts and deeper Conservative cuts.

tonyparksrun (#67) "Amazing here that you challenge the one premise that just about everyone across the political spectrum DOES agree on. That there is and will be a UK public debt figure of unimaginable proportions. I haven't heard anyone challenge - no myth, it is a fact (though no one has yet been able to convincingly quantify this, granted, generally accepted to be mind bogglingly large). It has resulted from the need for UK Government to replace finance previously supplied by the wholesale markets, to guarantee debt created in the past decade or so that is uncollectable, and to support the balance sheets of banks around the world that came very close to collapse."

The electorate can rest assured that the de facto Liberal-Democractic (anarchistic) coalition has contrived an economic state of affairs whereby it is obviously not worth fielding, never mind voting for, a party with Left-Wing National Socialist policies such as the BNP or Old Labour (if it regrouped) in the iminent General Election as there will be no money to sustain the state.

The NHS is just a very reliable consumer of Private Sector goods at the tax-payers' expense (disease/death and taxes) just as the US Military is.

Who would ever have thought it was no way but the free-market Private Sector way? Except those who looked to New Labour's funders a while back.

Its_an_Outrage (#71) "I believe that most politicians are driven, occasionally subliminally, by a lust for power. That does not necessarily mean that they are incompetent of course"

It's their job to be incompetent in Liberal-Democracies.

When exactly did the word "investment" replace the word "spending".Anyone remember, or even care? Money is being squirted against the wall, and all we hear from the politicians is that it is "investment". What an abuse of language!The lie is actually built into the words themselves, but not one interviewer (bbc or other) ever asks the person using the word to actually explain how throwing money away is in any sense an investment. Let's double doctors' pay, what a great "investment". Trouble is you get nothing whatsoever in return- some investment!

I wish the politicians would stop telling us what the other lot are going to do, and start telling us what they intend to do themselves. It wouldn't be hard, and it would at least be honest.
We all know that taxes will rise and public spending be cut in the years ahead, what we all want is to be part of some kind of honest political debate about how that is to happen, and what choices that gives us as voters.
I get worried when all the parties try and dodge the issue by assuming we are all idiots that will confuse political hot air with substantive policy debate. It makes me feel as if I'm being talked down to by people who are less intelegent than me!!

Governmental budgets are only political props, they have no real meaning as they are based on forecast that they make up themselves. Appropriations and expenditures do not often match and governmental oganizations seem to always find funding for something that becomes a crisis or is desired by the well-connected. Bureaucrats have traditionally cut those program that would hurt the most people when asked to cut their budgets to create a sense of public outrage when these are nothing more than blatant acts of job protection. No one in the political arenas want to make difficult decisions so they often throw any responsbility off in favor of across-the-board cuts as an act of "fairness." This places road beautification projects as the same importance as healthcare. When one views overall unemployment from recent financial theivery it is easy to see that although jobs have been lost and reveunes reduced there does not seem to be any adjustments in the public sectors. Economic pain is not equal. Somehow in the minds of politicians, the factory workers who loses his/her job does not derserve the same consideration as the metermaid, maybe because one produces and one collects. Governmental budgets are based on the concept that all will be spent and if anything is left over it will be deciated to be spent at some later time. Effectiveness an efficiency became non-factors many years ago. How many elections have promised control of governmental spending and better use of tax dollars, yet nothing every changes. It is like the American politican who continues to run on term limits and says that if he doesn't keep getting elected the issue won't be discussed.

haufdeed (#75) "Let's double doctors' pay, what a great "investment". Trouble is you get nothing whatsoever in return- some investment!"

You may not, I may not, but Liberal-Democratic politicians buy lots of placated doctors with that hush-money/bribe, and given that doctors are very bright, that's a very good return for their 'investment' whilst the 'government' is busy selling off the public's 'inefficient' NHS via PFI, don't you think?

#74. JadedJean wrote:

"It's their (the politicians) job to be incompetent in Liberal-Democracies."

I will not let this give away line go unchallenged! I totally disagree with you that it is their JOB. It may happen that way but it is not their JOB. Your statement says far too much about your own fears, doubts and uncertainties, but it is, as a bald statement, wrong.

muggwhump (#76) "I get worried when all the parties try and dodge the issue by assuming we are all idiots that will confuse political hot air with substantive policy debate. It makes me feel as if I'm being talked down to by people who are less intelegent than me!!"

They count on most people not thinking critically and on reporters not asking the sorts of questions which they ask of others.

Narcissists are like this.

Sadly, most human females are rather good illustrations of this hypocrisy, and so it's much caricatured by comedians. It is not limited to females by any means. People, alas, are not all that rational. See Kahneman's Nobel.

Comment 72 : Tony Dolphin

"There may no longer be a choice between Labour investment and Conservative cuts, but there is still a choice: between Labour cuts and deeper Conservative cuts."

I think that this is probably true for the next 3 to 5 years. Labour's guiding principal will be, as it's always been, that public expenditure should be kept at the absolute maximum it's possible to be without causing a revolt of either the taxpayer or international finance. This is not the same as the Conservatives' view, which will be that public expenditure should be no greater than the level at which the nation's economy can function efficiently. To Labour, society is the public sector. Everyone needs to be dependent upon it, for to their mind it's the only thing that can bind people together. Conservatism recognises that there needs to be a publicly provided safety-net to protect the weakest in society, and also that there are certain activities where the balance of advantage lies in public provision, but that within these two provisos the size of the public sector should be kept to a minimum.

The Conservative argument, which Labour never manages quite to refute, is that a small-state economy will grow and develop far quicker than the big-state model, so that in the medium term even a smaller proportion of GDP devoted to the public sector will actually result in a greater absolute amount of resource going in that direction. So whereas in the short-term the Labour cuts may be the shallower, if they don't totally wreck the economy in the process, in the longer term it is more likely that the ability of the public sector to help society will be less under Labour than under the Conservatives.

#64, glanafon

"The Irish model where vouchers are given against treatment and the individual can chose where to spend and to top-up if they want to looks interesting - but appears to be opposed by much of the NHS who appear to view the money as theirs not the patients."

Certainly NO THANK YOU to that particular model. When in Spain last year, I met many many Irish people who had taken a short break to Spain mainly so that they could buy their prescriptions OTC in Spain at a fraction of their cost in Ireland.

Late last year I need an emergency operation. I didn't need to even consider if a voucher would cover the cost. I neded 2 sheets of specialised material at £5000 per sheet - I didn't have to rely on some insurance clerk to decide if I was or was not covered or change the material on purely cost grounds!

There is plenty wrong with the way that the NHS is run and without incuring millions in consultant fees, cost-efficiencies can be made. However, if we loose or obscure the fundemental point of being "free at the point of delivery" then the UK will loose its greatest ever civilising structure.

We may have landed our children and their children's children with loads of debt but if we destroy the concept of a 'free' NHS I doubt that they will thank us for it. And don't say we can't afford it because we can if we want to. As you yourself have said who cares if the wealthy end up with a little less wealth.

#76 muggwhump

Agreed

John_from_Hendon (#79) "I will not let this give away line go unchallenged! I totally disagree with you that it is their JOB. It may happen that way but it is not their JOB. Your statement says far too much about your own fears, doubts and uncertainties, but it is, as a bald statement, wrong."

Sorry Dorothy - (ask Toto, he knows!)...

I read that report from the NHS Confederation. I love the approach. This is what should be adopted for the country/world in general. Take for example the following quote:

"The NHS did not always make the best use of all the additional money it received and it should not waste the opportunity that the crisis presents."

This ought to read

"UK private and public entities and individuals did not always make the best use of all the additional money they received and they should not waste the opportunity that the crisis presents."

It is true. As a technologist I can say that the expenses of every company I have worked in could be cut by a half for the same or improved operational performance. What prevents this are the incentives.

It is good that an important entity like the health service will be incentivised to improve

cuts what cuts?.........Up to £500million funding for new hospitals and refurbishment work will not be released by the Government as part of the start of a series of severe cuts on the NHS.

In a letter between health chiefs it appears funding for the construction of a new generation of community hospitals - announced three years ago - will now not go ahead.
https://tinyurl.com/n53gwj

#72 TonyDolphin - Either you are seriously deluded or you are an agent for the Labour Party. There is no substantive difference in the policies of either the Labour or Tory parties. Whoever wins any election will implement the same broad swathe of cuts - the only difference will be in presentation.

#78 Jadedjean - At last you have succeeded in identifying a group of very bright people by reference to something other than racial origin. Well done, keep it up you may find more - how about vets?, or maybe the senior management of building societies?

#82 foredeckdave - You and I must have vastly different experiences of the NHS. If, in ots operation, that is a civilising influence then bring on barbarism I say.

Ask yourself why, in Spain, you can buy medicines for a fraction of the cost that is charged in Ireland and the UK (albeit in the UK those costs are socialised). Maybe the answer is that in Spain the government tries to act in the best interests of its population as opposed to acting in the best interests of a small band of semi criminal drugs conglomerates.

#81 ExcellenceFirst

You put it very well, excellently in fact.

Nevertheless, today's Golden Soundbite Award goes to #72 Tony Dolphin for trying to stay on-message with an almost plausible argument in very difficult circumstances.

armagediontimes (#87) "#78 Jadedjean - At last you have succeeded in identifying a group of very bright people by reference to something other than racial origin. Well done, keep it up you may find more - how about vets?, or maybe the senior management of building societies?"

You're still not quite getting to grips with this class concept and how it relates to economies, are you?

Is everyone in the blogosphere equal?

Has it dawned on you that you may have something to learn? ;-)

87 arm n leg times

Surgical as ever, even if a bit dismembering rather than keyhole. Bedside manner needs to soften. Glad I don't have to have an op at the moment with Dr Arm n Leg. It would be a bit like the proposed - to - be - wife of King Henry the whatnot, who said - I'd marry him if I had two heads so it didnt matter if I lost one. But keep it up, the energy is needed.

82 Deckforedave

Expect your enjoying the rum n sun as usual just to make sure we enjoy the odd rainstorm and flash flood here, I know.

I don't give a monkyes if 'the wealthy' have to pay a bit more. Not so sure about people having to sell their homes to pay for treatment.

When a NHS trust complains about patients having the right to take their budget elsewhere when the trust in question cannot provide the facility needed for treatment then the system has broken down. The trust in question even stated they regarded it as their budget, a loss of budget.

Similarily when somebody needing a heart from somebody else recently deceased, and complains that there is an evaluation system and they are rated further down the queue, then again the system has broken down.

There simply are not enough replacement hearts available to meet demand therefore some evaluation sytem has to occur, or you are left literally with a lottery.

Similarly there simply is not enough cash in the sytem to satisfy provision. Every time a medication is available and is not supplied due to either cost or effectiveness then somebody somewhere complains and agitates, often they get their way. I do not blame the individual, I would do exactly the same. But the fact remains the budget demand expands and the cash is limited.

The NHS has to change. It is inevitable. Just a bubble problem, and you know how people like to keep on pumping up the volume.

As an aside - Furthermore the behaviour of consultants is remarkably different if you suggest going privately. If you want a laugh just try it next time you are queuing for treatment. Suddenly nurses wear napkins on their heads as if that makes any difference, and waiting lists shrink from 2 years to two days and one file is handled at a time rather than 5. And suddenly the medic is interested in you. All a bit Fawlty Towers.

NHS, value for money, responsive to the patient, sees the patient as a customer, or - sees the government as a customer, dominated by the budget for supplies from the drug companies. Make your mind up. Now why is Alan Sugars latest wheeze supplying information resource screens to GPs FOC paid for by advertising from guess who. What do you think the relationship is between a GPs salary and the drug bill for the prescriptions that a GP issues. Over 100 percent on ave I think you will find. Hmm.

There again as a salesman for medical bits and bobs said to me - your lying in bed the needle is going in and the surgeon says which bit do you want fitted, this one which is 98.5 percent effective and half the price or this one which is maybe 99.5 percent effective and costs twice as much. Or as another salesman I knew said when he found out that a medic had worked out that the industrial version of a medical product was identical to a medical version other than the paperwork and was using it instead, we can't have that it will blow a hole in out profit figures (an inert plastic fibrous micro-structure used for tissue regrowth, also used for microfiltration industrially, effectively the same when autoclaved).

Thats the problem with the NHS. To much emotive. To many motivated activists. Any politican with half a brain will try to swerve. Even Tony Blair who pretty much single handedly ramped up expenditure in the NHS to catch up to devloped EU average levels got collared and dressed down by a member of the public and was rendered speechless. Takes a bit of doing IMO, enjoyable though. Bit like when that Mrs dressed down the smooth articulate Lab fellow on Question Time, gotta smile, he was speechless too, like his battery had suddenly run out.

So the NHS problems will not go away. The NHS budget will probably be protected as much as possible so other depts will take more of a hit. Wont solve it though. Just defer.

When the NHS was floated after WW2 there was no idea of the current situation. It was little more than providing access to GPs, and upon retirement most people conveniently died. As euthanasia is not popular then all I can see is people working longer, if there is indeed the work. Glad it's not my problem

Think I'll have a rum. Weather decent forecast.

: )

foredeckdave # 82

Read this story here, Dave:

https://www.nytimes.com/2006/02/16/international/europe/16cancer.html?_r=1&oref=slogin

It highlights one of many essential flaws in Britain's socialised healthcare system. It serves to illustrate the collectivist stupidity (I call it a national religion!) of the publicly funded NHS. Here was an individual (a cancer victim) who was compelled to pay taxes all her life to fund the NHS and had thus been equivalently deprived of funds she might have otherwise used for her own medical care and who was then denied money because the needs of others were held to be more important than her own.

And this is the mark of a civilised society? C'mon Dave don't you agree the NHS is FUNDAMENTALLY flawed?

77 jj

The question is why are so many students at the best UK medical universities not from the UK (the majority) and why is a medics income relatively higher elsewhere. Why is it regarded as a crisis if the working hours directive is followed so fatigued doctors do not make mistakes. Why are consultant nurses in short supply. Ditto relative income. BTW GPs I believe are to an extent outside the NHS structure as they have a seperate contract of service provision, unlike consultants who I believe are employed directly. But somebody can always correct me.

72 TonyDolphin

Re NuLab and BabyBlue.

Alas both want to have the same pound of flesh. Makes no odds methink. Hubble Bubble Toil and Trouble, but there is nothing in the cauldron. Merv has spent all the gold coins on QEasy Street buying magic beans and there is a pandemic in the streets. We all herd it on the grapevine, I mean BBC.

I agree with #81 ExcellenceFirst. foredeckdave commented earlier that we have to choose between the French model or a libertarian one and that is exactly the issue. On the one hand you have successful small-state countries like Singapore, South Korea and Switzerland (unemployment respectively 3.2%, 3.7% and 3.4% in 2009 - Wikipedia) and on the other you have bloated-state countries like France, Germany and Sweden (unemployment rates 8.8%, 8.3% and 8.5% in 2009 - Wikipedia). Also note that Switzerland and Singapore do not have a minimum wage.

Contrary to post #56, many economists would say it's good to cut spending (at any time) for the simple reason that large government spending usually acts as a brake on the private sector. What the government spends, comes from tax and cannot be used by people to buy the things they want or by companies to invest in the production capacity to make the things people want.

UKIP would definitely take the small-state road while New Labour will continue on the big-state road. Not sure about the Conservatives. The big-state road is much easier for politicians and it's very hard to turn around. For example, Sarkozy has been unable, or unwilling, to reduce the size of the French public sector.

#62 Stop_it_Aggers mentioned the trade deficit. I'll just point out that unlike the budget deficit, the trade deficit is not a problem at all and can be as high as you want. All trade is beneficial, and the fact that you're exporting more or importing more is inconsequential. It is QE that is inflationary, not trade.

The_judge_of_it # 94

Another lone voice of sanity! Keep going my friend.

;)

#89 Jadedjeanb - Yeah always keen to learn. Your Dr. thing is much more straightforward than you probably think. Drs. in the third world are routinely hoovered up by the great liberals and humanitarians in the north. They get to swap sawing the leg of some kid who stood on a landmine for making sure that people like uou or I have a nose in perfect proportion to our wealthy faces.

This means there are less Drs. in the third world and more Drs. in the first world and allows some second rate administrative creep to bang on about how another set of targets has been met. The sick and injured in the third world are left untreated, but hey who cares about them. lets move on.

Sick people in the third world are most unlikely to vent their spleen on BBC blogs, and even if they did their messages could probably be removed for breaching house rules. So, in answer to your question: No all are manifestly not equal, and one powerful explanation is that the dice are loaded so as to ensure a perpetuation of inequality.

#94 The_judge_of_it. Consider (or judge) this:

In Singapore it is illegal to be homeless. In order for this law to be enforced (as it is) it is clearly necessary that someone provides access to housing. Who cares anything about a minimum wage if you are homeless?

What do you think makes Switzerland such a great model? Take away all the crooks and tax dodgers and would you have left there? Who cares anything about a minimum wage if you have an endless stream of billionaire crooks turning up with vast wedges of cash. Seseki Mbuto late of Zaire plundereed that country of billions and invested it all in Swiss Banks - you want a make a living like that? Even worse you seriously want to develop an economic theory based on that kind of activity?

armagediontimes (#96) "#89 Jadedjeanb - Yeah always keen to learn. Your Dr. thing is much more straightforward than you probably think. Drs. in the third world are routinely hoovered up by the great liberals and humanitarians in the north."

Really? Take each country's mean IQ and plug it into a Gaussian distribution with a SD of 15 points and see what ratio you get given that a minimum IQ for a competent doctor is probably something like 110 and in the West closer to 120. I suspect you can't/won't do that. Given the points I've been making, this one is really obvious and yet you didn't grasp it first time round. That doesn't bode well generally, does it? :-(

You really should think about all of this.

armagediontimes # 97

Rather than questioning the Swiss "model", you should be asking yourself the question why such African dictators as Mobutu Sese Seko Nkuku Ngbendu wa Za Banga got away with plundering his country of billions.

Don't our own ruling political elite plunder the wealth creating sector of the nation for their own personal enrichment albeit to a lesser degree?

We will find no sanctuary in statism.

Stephanie, while I cannot argue the figures you have highlighted one way or the other I do believe only part of the arguement is being reported. After all public spending is as a result of tax receipts or the lack thereof, so where is the money actually coming from ?

In the light that we have just lived through a 6+ year period where the media failed to spot the foriegn wholesale funding debt being funnelled into the UK mortgage market and corporate debt - which has led to near economic collapse.

Would it not be prudent for someone, anyone to please look into who or what is receiving the funds from "Quantative easing" ?

Given that billions of pounds are being spent in what seems a blatant effort on the part of the BoE/government to reinflate the bubble - could the BBC please give the people of this country a chance to see which individuals and organisations are on the receiving end ?

Perhaps if this issue was actually reported to everyone we would have a chance in ensuring we dont end up in a situation where corrective action is taken far too late ? either as a result of such reporting or by the electorate deciding their fate - rather than putting up with the situation as is.

Better late than never - but can we have some investigative journalism on top of just reacting to current events ?