Squaring the circle

It seems that a tax on consultancy fees charged by ex-ministers for influencing government policy might yield a good return. Caledonian Comment

'However, it is clear to me that there will be a major new initiative to stimulate private and public investment - along the lines of a national investment fund or bank.'


Hopefully this would be a 'National Bank', owned by and for the benefit of the nations people (rather than just a bunch of bankers).

We used to have one, it was called the 'National Giro', very innovative, the existing banks hated it and so it was privatised and swallowed up.

This time there should be one non-transferrable share for each UK citizen to stop any future selloff.

As the parties seem to be unable or unwilling to regulate the banks so that they cannot steal from the people again, or atleast to a lesser degree, a National Bank is needed. It is what Greece will need as well. The bankers were bailed out and in appreciation have decided all the troubled economies, trouble the banks created, should be extorted. The banks have adoped the attitude of Divine Right and that they are above all the turmoil and distasteful barginning over budgets and services and such, as none of this effects them. We can hope some trials ensue and the bankers learn the feeling of insecurity and personal responsbility. An expectation that they may learn ethical behavior is simply not within their makeup so closer regulation is much in need.

"On the day, however, Darling will also be trying to make this a Budget for investment. In theory, all three audiences - voters, the City and his party - will be able to warm to the theme of raising UK investment"

Unfortunately history shows that Darling and Gordo's preferred method of raising money for investment is to clobber the drinker, the smoker, and the motorist in order to support the ever growing army of chav's and civil servants who can be guaranteed to vote Labour out of naked self interest. The (labour) voter and the party may get something out of the budget, but don't expect it to do anything for the average private sector worker.

Come on Alistair, a business friendly, front line public service and responsible pub friendly budget please (locals are good,rural post offices are good). Tax the supermarket booze and ferry tickets to France on vehicles larger than a ford focus. Even I may join Onward Ho in a jig down Pall Mall around Westminster and upto number 11 if you can deliver as reading all the business news I'd appear to have judged the UK wrong. I sense it could be labours for the taking!

Just incase you don't deliver, i.e. don't ping the banks and wasteful areas of the public sector (quangos, 'business' lunches and the like) I'll still be using my own savings and income for my business, living within my means,and holding off buying a new house and expanding my business - as I say, just in case!

PS Government sponsored tourism campaigns in Aus, NZ, Canada, US and Europe...and every other country bar Zim would be public money well spent! As would the grid whilst I can still power up my PC!!!

'And to show that savings from the smaller than expected rise in unemployment can now be invested in Labour priorities, notably training and jobs'

Except that these so called 'savings' are illusory. The number of those economically inactive is higher than ever, there have been no jobs saved in the wealth generating sector of the economy, and there will be mass jobs losses in the public sector post 6th May whoever wins the election.

'Arguably, he only got away with it because the City didn't think there was any chance that Labour would win.'

Agreed, and a corollary of this statement is that if Labour were to win there would be a sharp rise in interest rates, a collapse in Sterling, a collapse in business confidence and in all likelihood a fall back into recession.

Of course, this Budget is not worth the paper it's written on if Labour don't get back in, so it must be formulated with winning the election in mind in order to be anything other than pie in the sky.

Let us all hope, therefore, that what Darling deems good for Labour's election chances coincides with what will be good for the country. And perhaps, even if Labour lose, some good ideas may have gained unstoppable momentum come the election. It's not as if the Tories have a policy, so a few popular measures could easily be cribbed in the much-vaunted emergency budget.

Total government spending between 2005 and 2010 has increased significantly. Can the government say all this extra cash has been spent right or can perhaps reduce funding back as far as it can with minimal impact?

If the government wants a national bank why not a national sovereign fund for future pension schemes?

'Officials think that is too gloomy, and they may be right. Remember that even 3.5% growth, after the two years that the UK economy has just had, would be much weaker than the recoveries we've seen in the past'

Yes but the economy is much weaker than previous recessions because of the damage Labour has done to the wealth generating sector of the economy over the last 10 years. What sort of recovery can we except from an economy weighed down by a bloated public sector and a huge structural deficit ?

'On the day, however, Darling will also be trying to make this a Budget for investment'

They've been 'trying' to do this for the last 13 years and have failed 13 years in a row. The point is that Labour don't understand anything about wealth generation other than how to destroy it.

The challenge for the Chancellor is to show that national services services such as health and education should remain our national priority, and of course unemployment needs to be addressed too.

This government is going headlong into a General Election whilst these vital areas are facing spending cuts. Yet at the same time, is about to spend £97billion on a Trident replacement system. Even leading military advisors are saying to the government, and to the Conservatives, that we don't need Trident.

It seems immoral to me that we waste nearly £100billion on something that could be better used elsewhere - how many times do we hear that there are not enough nurses, or beds in hospitals? Or of the elderly not being able to afford adequate heating during the winter? How many schools would like to have smaller class sizes, an adequate stock of books and computers, and other facilities that provide a proper learning environment? The Higher Education sector is facing cuts, whilst at the same time many universities would like to see significant increases in student fees. I'm sure that £97billion would be warmly welcomed in all of these areas.

> On the day, Darling will also be trying to make this a Budget for
> investment. In theory, all three audiences - voters, the City and his
> party - will be able to warm to the theme of raising UK investment. But
> only if they can see through the pages and pages of red ink.

The "City" has got a cheek - it caused all the red ink in first place!
You can't keep slurping in the trough forever - somebody actually
has to do some real work, involving something significantly more
substantial than paper shuffling.

Dear Stephanie,
As an economist, you should not confuse "public investment" with "public spending".

'In theory, all three audiences - voters, the City and his party - will be able to warm to the theme of raising UK investment.'

Or they be sensible and might look at Labour's record over the last 13 years which has been one of abject failure and recognise that nothing he says will amount to a row of beans.

https://thescotsman.scotsman.com/economicindicators/UK-companies-39need-support39-.6106765.jp

"Fourth, along with everyone else, I expect some modest new spending on jobs for young people, but no big giveaways which have "six weeks before an election" written all over them. Mr Darling ruled them out explicitly yesterday talking to Andrew Marr. "

And you believed him? Stephanie, there's something you should know about politicians: they don't always tell the truth.

Of course there will be giveaways. Maybe not great big ones (after all, he can't afford them), but this budget comes just before an election, so there will undoubtedly be something headline-grabbing.

Denying that there will be giveaways is classic New Labour spin, designed to lower expectations. It works like this: if we have all been primed to expect big giveaways and we get small giveaways, we will be disappointed and not vote Labour, whereas if we have all been primed to expect no giveaways at all and we get small giveaways, we will be delighted with the Chancellor's generosity and we will all vote Labour.

I'm not falling for it. I suggest you don't either.

During labour's time in power had they been judged on their rhetoric then the country would not be in the state it now is.

They should be judged the party of rhetoric and spin but also the party that could never manage any of their policies in a controlled and efficient way.

The amount of money that has been thrown at Public Services should have provided the very best in excellence of the NHS Education Military Transport and just about everything else that has had enormous amounts of spending thrown at it over the last decade.

What we have got is inefficiency overstaffing and probably the worst public services in the whole of the EU.

No budget can put that right. And no rhetoric either.

It will take years for the right management to be brought in and to completely restructure and reorganise the whole caboodle.

That costs money so if the money being borrowed is put to that sort of use then it will be well worth the price we pay at the end of the day.

It seems a daft waste of tax payers money to have a budget if there is no guarantee that the policies can be implemented.

Why not wait to after the election...or would that be to sensible ?

With such a nice scary, spend, spend budget, he'd be very lucky to get much in taxes since all the smart money will be departing for pastures friendlier. In addition, the even smarter foreign investors will be looking for less risky investments; Zimbabwean National Bonds, perhaps !!

Weasel words like "invest" wouldn't wash with the foreign investors and they will want to see deep cuts or the next round of Gilt sales will see a significant absence of foreign buyers !!

Staphanie, given that it's likely to be labelled a "too little, too late" budget, I do hope that there are funds (probably printed) that are directed towards industry. We are in an evermore competitive world and the entrepreneurs of this country are going to need every bit of help they can get. We really do have to focus on exports to steer us on the path of recovery.

A big reduction in the 2009-10 deficit will be very good news and Darling should resist pressure to treat it as a "windfall" and ensure that borrowing is indeed cut back as much as possible. The original forecast of £178 billion could be replaced by a figure as low as £155 billion (HSBC forecast). This shows how government initiatives to keep people in jobs through the recession have paid off. It also has a knock-on effect in reducing the forecast deficits for subsequent years - all else being equal - due to lower interest payments. This "shrinking" of the deficit will help boost confidence in the UK economy.

The problem with a national investment fund or bank is that the commissariat would use it to pursue it's political aims by only investing in things that it considers politically acceptable.

Quote: "Unfortunately history shows that Darling and Gordo's preferred method of raising money for investment is to clobber the drinker, the smoker, and the motorist in order to support the ever growing army of chav's and civil servants who can be guaranteed to vote Labour out of naked self interest."
-------------------------------------

You forgot to add BBC journalists and bloggers to that list of labour's client state!

Absolutely no point in listening to another New Labour budget . . . . . every single one has been proven to be a less than elaborate con trick.

Wait until the number crunchers and small print analysts tell us the truth . . . . normally takes about 48 hours to join up all the hidden lines of dots.

But, be very watchful if Gordon makes a "good day to bury bad news" announcement of the Election date . . . . . just before the REAL Budget makes the front page.

I wonder if the banks see the UK as 'too big to fail....'

Thought not.

'And to show that savings from the smaller than expected rise in unemployment can now be invested in Labour priorities, notably training and jobs'
-------------------------

This is a joke, right?

There has been a big increase in the number of economically inactive people and the only sector to see a increase in employment is the public sector that have been throwing overpaid jobs to any idiot who can draw breath, so as to cynically and dishonestly mask the truly woeful state of the economy. These jobs are NOT contributing to government coffers by paying taxes, but COSTING the tax-payer far more than they receive back in tax contributions. It is the logic of the kind of idiot that goes into business and buys masses of their own product from themselves just to get a bigger commission cheque.

It is economic suicide and sheer lunacy at a time when tax revenues are falling due to the on-going recession, to be increasing the size of the state's vast wage bill by these amounts. Just as the Government sponsored insider-trading-esque house price boom continued so that they could build their private property portfolios at tax-payer expence, busted because it was unsustainable, so too is an ever increasing size of state unsustainable.

Labour are being thoroughly dishonest by hiding the fact that there will have to be massive public-sector job losses after the election.

And I cannot count on the "impartial" BBC to report on this honestly can I?

What's the point, this budget will be revised by the new government Darling will only make it look good for election purposes.

A fictional budget!

How did this 'bloated public sector' discourse start? I thought we all agreed that the NHS and schools were rubbish and needed more support. I appreciate that Labour took advantage of a boom which they encouraged and which they should have been able to predict would collapse at some point, but don't blame them for using the money it generated to improve public services. Or would you rather they had given us the money to buy more houses with?

'On the day, however, Darling will also be trying to make this a Budget for investment'
------------------

I am sorry but this really annoys me. Labour do not invest, they waste! Investment is the infusion of money to felicitate a profitable return. Labour just pump money out like it is going out of fashion. There is a big difference.

"Dear Stephanie,
As an economist, you should not confuse "public investment" with "public spending"."
-------------------------

Ah bit she is not just any economist, she is a BBC economist and so public investment to her, is whatever the labour party define it as. No questions asked!

Cameron’s problem is that his deficit argument is not working. Markets just don’t believe him. Nor do most voters. The UK’s credit rating is not in jeopardy in any way, and neither interest rates nor inflation show any sign of running away.
Reinhart & Rogoff reveal in their timely book (“This time is different”) that no high-income economy has ever defaulted on its external debt and that default is not in prospect now. The international Bond markets already know that. Cameron’s dire warnings do not have a basis. Reinhart & Rogoff’s 200-year analysis of 60 countries also shows that Bank crises are regular occurrences in all types of economy, and usually without prediction. Critical is how calmly a government bails out its failing banks; some even make a profit out of their forced ownership and eventual sales of shares.
R & R also find that the principle reason why government deficits soar when a Bank crisis hits is not because of the bailout costs, but because of the fall in tax revenues. Which is what’s happening to us now.
In 1983, Bernanke showed that the fatal mistakes in the 1930s were where governments cut spending just because of a temporary drop in tax revenues. Had they been less panic-stricken, continuity of spending would have prevented those spirals of decline and growing unemployment and social disaster. It’s a lesson most policy people understand very well.
Cameron has another problem too: the consensus forecast for UK growth for this year and next is well above that of the entire Euroland area and including Germany. Euroland is following the sort of German policy Cameron prefers and which is creating much higher unemployment in those countries. Brown and Darling have chosen a different approach and it seems to be working well.
Just like floods and cattle epidemics, Bank crises need the careful attention of governments and not the sort of panic measures Cameron and Osborne are so set on.
Cameron has a problem: his predictions are plainly silly and his prescriptions irrelevant. Should he sack his Problem Child now, or wait till after the election?

Don't you just love it, "savings", labour speak for not borrowing as much as you thought you would! Alice in Wonderland economics. Who says that the electorate isn't stupid?

Stephanie wrote: "There are always three audiences for a Budget: voters, the City and the chancellor's own party."

I would like to add a fourth interested party this time, the Unions. If Darling proposes anything that threatens unionised labour (e.g. Public Sector workers) such as cuts in public spending, out on strike they'll all come.

May be the Unions want it that way? All this unrest, strikes and threatened strikes just before a General Election is somewhat unusual when the Government is Labour.

You do get the feeling that the Unions are assuming Nu Labour is dead in the water, the election probably lost and now is the time to get more Union backed MP's and get the Labour party back to it's roots as a Left Wing Political Party and front for the Unions.

# 17. At 1:42pm on 22 Mar 2010, virtualsilverlady wrote:

> It will take years for the right management to
> be brought in and to completely
> restructure and reorganise the whole caboodle.

That's the trouble – everybody tries to reorganise everything, as if a shake up could fix anything. Mrs Thatcher shook everything up, and a fat lot of good that did. Now even the post office doesn't work properly, and we can't win a piddly little war in Afghanistan! Let's admit it - we're rubbish.

Stephanie - Good blog. More broadly, I do love Labour's economic record:

- average person in work paying double the tax they paid before Labour elected

- 25+% of working age people not in work, higher than ever before

- all jobs created under Labour in public sector; no net private sector job creation

- mass immigration has reduced working class pay levels to the breadline; sorry benefit line (And all the unions can do is strike at BA!)

- over 52% of the entire economy now public sector, the highest since records began

- largest annual national deficit in our history, despite taxes being more than doubled

- eliminating the annual deficit equates to A DOUBLING OF THE BASIC RATE OF INCOME TAX (okay, only 17p, but 20 to 37 still a pretty big leap). So pretty massive tax rises after the election then if Labour re-elected.

- even eliminating the annual deficit still leaves us with the largest national debt in history, both in absolute terms and as a percentage of GDP

- o, and tax on high earners now the highest in the OECD bar Norway and Iceland; can't imagine why our best talent will be leaving for France or Germany then.

What a brilliant record. Thanks goodness public services are so-oo much better than they used to be with state-of-the-art facilities and services. Otherwise, I'd begin to worry.

Even so, I'm sure that after another 5 years of Labour, things will be even 'better.'

mirkle 28

'How did this 'bloated public sector' discourse start?'

It's called telling the truth, but feel free to believe New Labour spin if you don't mind being taken for a mug.

leftie 31

'Cameron has a problem: his predictions are plainly silly and his prescriptions irrelevant.'

Really. Funny then that the IMF, The EU commission and pretty much the whole of British business agree with the Tories approach. In fact the only people that don't appear to be Labour apologists (like yourself).

Frankly, the budget is utterly meaningless, from any serious perspective without the full spending review, which has been put back to the autumn....

He will say there is recovery, that the Conservatives will put that 'tender recovery' under threat, by trying to balance the books, and might shave a fraction of off his upbeat growth forecasts, if not his eyebrows

It seems unlikely he will mention that the only reason we need a recovery, is the mess his party has made of things

Maybe he can get a cab home with Byers

35

Like I said on an earlier blog

This government is the first to screw everyone in work, low/middle/high earners as well as savers and pensioners, and students

Like they said in Airplane...sure picked the wrong time to be in one of those groups

I think watching the despatches programme tonight will be car-crash television

The most telling statistic today was that 52% of GDP is now spent by the public sector. Now in a recession it is expected that public sector spending rises (usually on benefits) but this is defying belief.

Putting in context normally at the height of the boom you would (on historic comparables) expect public spending to be around 35% of GDP in the UK.

That means that unless the economy grows by 50% between now and peak of boom (say in 5 years) with public spending staying at current absolute levels, we will need massive public sector cuts. I always thought we needed to cut public spending by 15-20% of current levels. It now looks as if I was optimistic and we need to cut spending by nearer 25% of current levels.

Not a single political party is talking about this size of cut or what it might mean to public services. Until they do they can fotget about my vote

Does anyone realise the reason Darling got the job in the first place?

Gordon looked around the cabinet at the start of the crisis and he thought to himself - which of these numpties around me is least likely to get lynched by the public when it all goes wrong

He took one look at poor old Alistair with his 'early grey' hair and his softly spoken voice, glasses (because people don't like to hit people with glasses) and he thought...

RIGHT - there's my patsy -
"Alistair, you are now chancellor of the Exchequer. - congratulations"

All the other ministers breathed a sigh of relief - the spectre of a job with no success achieveable was never going to be a good career move (and we know all politicans only care about their careers)

...and the rest is history - or at least it soon will be when the sov. defaults start rolling in..

The idea of a National Bank is fatally flawed: it is a bank. It would, like the innovative Girobank, become the target of private avarice and be turned into a sale item. A single share per person would never prevent this.

The idea of a national network of local building societies is far stronger. The existing network of Post Offices could do this. Each local office being the outlet into the community - all the high street banks who raced away from the high street to call centres might even buy the counter services.

The problem with such a project would be that it would create jobs, protect local communities and place a lot of financial power back with depositors and local communities. Not the kind of thing that the Parliamentary Parties (yes, parties) would want to see happen. Quite simply, the idea of putting power outside Westminister is too radical; the idea of putting economics outside the Square Mile is too radical; in short: doing the most sensible, boring, pedestrian thing is actually too radical for the existing parties.

It must be because the Budget has never been about sense.

#34 >>and we can't win a piddly little war in Afghanistan! Let's admit it - we're rubbish.

I'd suggest that you look up other "piddly little wars" like the Anglo-Afghan wars (I-III) of the 19th century, where we won one, drew one and lost one, the Russian-Afghan war which the Russians, a nuclear superpower, lost and the American attempts to lose this war !! Perhaps, if you were in the front line, being shot at, you wouldn't think it's quite so "piddly" !!

25. At 2:05pm on 22 Mar 2010, injected wrote:
'I wonder if the banks see the UK as 'too big to fail....'

What a fascinating question, which poses an interesting dilemna.

RE: 36. jobsagoodin

mirkle 28

'How did this 'bloated public sector' discourse start?'

It's called telling the truth, but feel free to believe New Labour spin if you don't mind being taken for a mug.

To expand on that a bit, the problem is that New Labour are spending substantially more than we can afford. Whether this money is spent on worthwhile things or not is largely irrelevant. We just can't afford it. Here's a small example.

We (the long-suffering tax payers) have a Potato Council, a quango that does something or other in support of the potato industry. Why? We don't have a Parsnip Council, nor a Raspberry Council, so why do we need a Potato Council? The Potato Council probably does do a few useful things, and if it were closed down it might inconvenience a few people, but really, at a time like this, do we need it? Of course, when compared to the Pacific Ocean of debt that New Labour are creating, the cost of one quango is just a little teardrop, but this one small example illustrates a more general problem. The same question occurs with ID cards - do we need them? Will the sky fall if we don't have them? And so it goes on - endless spending on ventures that consume far too much money for the little bit of value that they deliver. Now imagine what we would find if we took a detailed look at welfare spending or the whole PFI arena.

And for this, Brown is piling up a trillion pounds of debt.

Thank you for the update on what you feel that Alaistir Darling will do on Wednesday Stephanie. Having just read notayesmanseconomics web blog I have to confess that it felt I was going from a man with refreshing new ideas such as dealing with the poverty trap to the same dull old politics,but there you go!
As to your article I am curious about a couple of things.

"The bond markets are unlikely to be spooked by the chancellor leaving his deficit plan roughly where it is", can you let us know your analysis behind this assertion please?

"Second, the improvement in the underlying picture will probably prompt a slight downward revision to the growth forecast for 2011". Your sentence does not make sense.

#18 that because the Budget is going to turn into a 1.5hrs politcial broadcast , whilst others will not get the same amount of time to reply

And so the band played on, merrily playing to the socialist tune, whilst the HMS UK slowly but surely carried on sinking.

There are no icebergs...
There are plenty of lifeboats...
The ship is listing less than we thought....

A significant number carried on listening to the band, clapping and singing, merrily thinking of tomorrow and that life would go on just as it had in the rosy garden.

Some took their chances and dived over the side hoping to be picked up.

Others, observant of the danger signs, were resigned to their fate, trusting in the process of being part of the rescue.

This sucka's going down...................

its strange that NR runs billions of blogs on Ashcroft BUT hey
Labour MP's ex-ministers have there hand caught in the till for
cash for influence, much like UNITE but nothing to see apparently

The UK is an asset owned by the banks. The valuation is changed according to the needs of the banks. Will be bundled with other assets and sold to another bank. As we have all learned banks can create a high valuation for things that have low asset worth.
Banks and politicans betray everyone, personal wealth diminished, taxpayers fund bailout, banks pay large bonuses to those who wrecked the economy and extort nations for recovery.
I would think an overhaul of the banking system would be in order but of course that would require a government that represented the people and a party taking that position is not to be seen. The current generation entering the workforce will need a more modern term for "serf."

48. At 5:22pm on 22 Mar 2010, Rugbyprof wrote:

"And so the band played on, merrily playing to the socialist tune"

The government is guilty of many things and deserves much criticism, but to accuse it of being socialist is rather unfair on socialists (and complete nonsense)

Reada - you're saying that they're not socialist?

With an economy where government spending is bigger than enterprise...

Boy - the world certainly has turned. What is it then - communist?

Because it ain't centre or right of centre........

I can tell you now , there will be more tax rises. We must be getting close to 50% of average earnings being taken as tax...

Raising taxes to pay for over bloated public services is why this country is in such a mess. Anyone with any sense would not choose to invest in the UK while we have GB in control.

51. Reada wrote:
"The government is guilty of many things and deserves much criticism, but to accuse it of being socialist is rather unfair on socialists (and complete nonsense)"

Sorry, Rugbyprof is right. This is a very traditional Socialist Govt in disguise. They have been very clever. A little tax here a little tax there - stealth taxes - nobody notices until they look backwards.

Look who has been impacted by this approach.
- Businesses with a welter of taxes. We were highly competitive and now we have slipped down the ladder so much that even Wine importers are deserting us!
- Private sector pensions have been destroyed, Public sector pensions are enhanced.
- Public spending is now half of our GDP and look who's picking up the bill - you and me.
- Fiscal drag - not increasing Personal Allowances - has sucked millions into the 40% bracket.
- Brown wanted a savings culture but what he has achieved is a debt culture.
But critically our Fiscal probity has been utterly destroyed in the last 7-8 years - sorry that's Socialism and we have to redress the balance.

It is going to hurt and the BA workers in particular are living in Cloud Cuckoo land. We have to reduce our debt. The world does not owe us a living.

Kick out the Clown!

Is it not clear that we need three things ASAP...

- membership of the Euro
- public sector to be increased to 85% of GDP
- more immigrants
- a higher penetration of EU legislation (in particular legislation regarding the design of cricket balls and legislation to outlaw 'warm beer' and 'village greens').

... just thought I would liven things up a bit.

I think the legislation about cricket balls makes more sense than joining the Euro!

#57
"I think the legislation about cricket balls makes more sense than joining the Euro!"

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

But less likely (according to my sources).

Given that Lord Mandy, Lord of Everything, will be defacto puppet master in the next Labour administration.

8. At 1:14pm on 22 Mar 2010, Tim wrote:
Of course, this Budget is not worth the paper it's written on if Labour don't get back in, so it must be formulated with winning the election in mind in order to be anything other than pie in the sky.

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

This budget won't be worth the paper it is written on 'Period' as the Yanks would say.

Is this page an advertisement...for the labour party? No. Ok I thought so.

...for the government that might have promised to retain the TV license at its existing levels? Silence. Ok I thought so...

Many of us feared that the "poetic injustice" posting was just the exception, and how true we were!

I do not care much about the City, I confess. Perhaps what the young entrepreneurs think about the budget and the plans to divert money from bonuses to investment is more important. The only problem is that noone seems to care for them. As said above, the UK (similar to Greece) appears to be yet another commodity to be sold and speculated upon. The elections only matter with regards their effect on "stabilising the market". Empty words, empty pockets, empty ideas.

26. At 2:15pm on 22 Mar 2010, purpleDogzzz wrote:

Labour are being thoroughly dishonest by hiding the fact that there will have to be massive public-sector job losses after the election.

And I cannot count on the "impartial" BBC to report on this honestly can I?
==============

A bit harsh, Ms Flanders said Gordon 'was a Liar and we all knew it' a week ago, you can't get more honest than that.

52 & 54

Incompetent yes, but not socialist.

54 wrote:

Look who has been impacted by this approach.
- Businesses with a welter of taxes. We were highly competitive and now we have slipped down the ladder so much that even Wine importers are deserting us!
- Private sector pensions have been destroyed, Public sector pensions are enhanced.
- Public spending is now half of our GDP and look who's picking up the bill - you and me.
- Fiscal drag - not increasing Personal Allowances - has sucked millions into the 40% bracket.
- Brown wanted a savings culture but what he has achieved is a debt culture.

All the above impacts low to middle earners the hardest (although I don't think public sector pensions have been enhanced, just not plundered like private ones) while they have presided over a massive transfer of wealth to those already rich and powerful. Whoever wins the election the same people will be bearing the brunt of the cuts and tax rises.

If that's socialism then yes, its very well disguised.

#26
"Labour are being thoroughly dishonest by hiding the fact that there will have to be massive public-sector job losses after the election."

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

Why is it a fact 'fact that there will have to be massive public-sector job losses'.

More likely will be a ban on recruitment and a freeze on pay.

If Labour get their sums wrong and the deficit sticks at its present level or even increases there will most likely be 'tax rises'; the top rate of income tax, cgt, vat.

Leopards and spots.

63

This should be the encouragement to boot them out!

I see Alexander is not back to eat 'humble pie' after the Obama vote

Time for Cameron to stand up and be counted...come on chop chop

Call this government what you like

Just don't re-elect them

Didn't Canada bring this off with a pay freeze over two years ? All Brown needs to do is be honest (sic) and say this is a proven path to follow and he has credibility instead of trying to make it more complicated than it needs to be.

62. Reada wrote:
"I don't think public sector pensions have been enhanced, just not plundered like private ones"

I'm sorry you're wrong, while the Socialists stuffed the Private Sector pensions, they enhanced the Public Sector pensions quite simply by reducing the number of qualifying years. At one time the excuse for good PS pensions was low wages to compensate - not the case anymore.


"All the above (see blog 62) impacts low to middle earners the hardest, while they have presided over a massive transfer of wealth to those already rich and powerful. Whoever wins the election the same people will be bearing the brunt of the cuts and tax rises."

The point of providing that short list of the effects of this cloak and dagger Socialist Government is to highlight it is the Private Sector who have borne the brunt of Brown's Socialist values. Yes, the low to middle earners will suffer because the wealth creation of the Private Sector has been severely impaired. This is typical Socialist Government behaviour. Everybody gets levelled down!

You may be right about wealth transfer it does seem that many have wealth beyond our dreams but the most serious charge against this Socialist Government is that it too has been greedy. It's spent our money without regard to value and without regard to putting some aside for a rainy day - t'was ever thus! That's why we are in more trouble than any other major developed nation.

It does not matter who is Chancellor (or which party is in power) the consequence of each successive budget is more complexity. The consequence of more complexity is more and easier ways to avoid tax - for the rich!

I confidently predict a bigger tax manual! I also predict that there will be quite a few statements about 'redressing balances' which will in fact turn out to be nothing of the sort. So far all the government has done since the crash is to do its level best to create bubble economies as big and as fast as possible, whilst protesting all the time that bubbles are a bad thing. They also protest that the balance between saving and borrowing must be changed decisively towards more saving while at the same time making saving even more worthless!!!

#38. Kevinb wrote:

"He will say there is recovery, that the Conservatives will put that 'tender recovery' under threat..."

But isn't that true? And inevitable and indeed economically necessary. Tory policies (in so far as they have been honest about them) will bring about more rapid debt deflation, which is indeed a necessary precursor to a recovery. We, and the Nation, will not like it much and the Tories will deny it as do Labour and the Lib. Dems. but economically we must finish going down before we can go up again.

#62 Reada

Given your comments, one suspects that your definition of socialism is perhaps rather narrow for your observation.

Your answer is also rather worrying if you are representative of a common view re socialism and would explain why we seem to have such a mixed view in the UK at this juncture.

This government doesn't even disguise its socialist tendencies from laws through taxation to state control to indiviudal reliance on the state and to the lowest common denominator in terms of flattening individual talent/enterprise. So I admit I'm puzzled.

One would advocate that today's OECD report showing UK to now have government spending accounting for over 50% of gross domestic product (excluding nationalisd banks) would put it beyond doubt. The only call is how close to communism are we - its a lot closer than people realise.

As a comparison, I'm also constantly amazed how France talks of Sarkozy being right of centre which shows just how far to the left some countries, like France, have gone.

I'd be grateful if anybody could point me towards any right of centre economic policy France currently has in place, as an aside?

#66 >>Didn't Canada bring this off with a pay freeze over two years ? All Brown needs to do is be honest (sic) and say this is a proven path to follow and he has credibility instead of trying to make it more complicated than it needs to be.

There are some slight differences between Canada then and Britain now. Then, individual Canadians were not buried under a mountain of personal debt; many Brits are now so buried. Canada is also a net (major ??) exporter; of minerals, certainly.

But Canada definitely exports energy to the US who depend so heavily on them that when a sub-station between them blew, a few years ago, it blacked out a large swathe of the Eastern seaboard. Britain barely generates enough for its own use and may face blackouts without imported fuel (oil and gas); which it may soon not be able to afford.

These two facts add up to a trust by the markets in the Canadians but not so much in Britain. Therefore, Our Glorious Leader will *NOT* be trodding a "proven path" and his credibility is, to put it mildly, rather suspect at the moment !!

#68 >>I confidently predict a bigger tax manual!

Please God, *NO* !! Tolley's is already too large to fit on most shelves !! Any bigger and the floor beneath will collapse !!

https://www.lexisnexis.org.uk/taxannuals/

28. At 2:36pm on 22 Mar 2010, mirkle wrote:
How did this 'bloated public sector' discourse start? I thought we all agreed that the NHS and schools were rubbish and needed more support. I appreciate that Labour took advantage of a boom which they encouraged and which they should have been able to predict would collapse at some point, but don't blame them for using the money it generated to improve public services. Or would you rather they had given us the money to buy more houses with?

===========

We probably all agreed they were rubbish. But the answer is NOT more money, it is a change of mind about what they are there to achieve and how to achieve it and it ain't keeping with the Status Quo!

I was going to rant on about the Education system and the NHS, but I can't be bothered, if you haven't been in them you probably wouldn't believe what I said anyway. Both need a complete reform AND it isn't money that is the problem, it is the philosophy behind both. In both cases the means is now more important than the ends as far as Socialaits are concerned - which I guess is the perfect description of Sacred Cows.

51. At 6:49pm on 22 Mar 2010, Reada wrote:
48. At 5:22pm on 22 Mar 2010, Rugbyprof wrote:

"And so the band played on, merrily playing to the socialist tune"

The government is guilty of many things and deserves much criticism, but to accuse it of being socialist is rather unfair on socialists (and complete nonsense)

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

Yeeeessss - always the same, Socialism, never in power, never wrong, never been tried - you wonder why there isn't a queue of Socialists at the bridges along the Thames all jumping off, they NEVER get elected, NEVER get to rule, so have NEVER messed up, which, come to think of it explains the State Comprehensive System, as IF you were a Tory and wanted to keep the proles down, what better way than to deprive them of an education, which accounts for why the Tories never scrap it.

74. At 11:28pm on 22 Mar 2010, you wrote:
51. At 6:49pm on 22 Mar 2010, Reada wrote:
48. At 5:22pm on 22 Mar 2010, Rugbyprof wrote:

"And so the band played on, merrily playing to the socialist tune"

The government is guilty of many things and deserves much criticism, but to accuse it of being socialist is rather unfair on socialists (and complete nonsense)


=========

another thought - how dumb must Socialists be to keep voting in this non-socialist Government. 3 times so far and some arguing for a 4th - we need a new HSE warning on all Ballot papers "Socialism can damage your brain!" - Doh!

Can the Chancellor square the circle? We find out on Wednesday.

I think I was 6 months old when I discovered the square brick didn't fit into the circle hole. Maybe our Chancellor missed out on that bit of his education.

The main thing I'm interested in hearing is where he thinks growth is going to come from. Surely he cannot be expecting the public sector to grow even more than its current share of GDP, so will expect consumer demand and business exports to be drivers of growth.

Seeing as we are already personally indebted to levels beyond what is reasonable, can we really expect strong consumer demand over an extended period of years? And can our manufacturers, who only contribute something like 13% of GDP grow at a rate than makes much difference to the total GDP?

Considering the rate of growth expected by Darling from 2011 onwards is higher than we had in the 2001-2007 "boom" period, which we know was built on personal, corporate and government debt, it just doesn't add up.

Just because you want good levels of growth and will "support it with investments" doesn't mean you can just pick a growth percentage and hope that it will happen. I don't think its unreasonable for the Treasury to produce a table of figures, broken down into the various industries and service sectors, showing how in total the GDP of the nation is meant to maintain a steady 3.25% every year from 2011 onwards. I'll look out for it on Wednesday.

#76 >>And can our manufacturers, who only contribute something like 13% of GDP grow at a rate than makes much difference to the total GDP?

Taking your figures and the Chancellor's, and in keeping with the title of this blog, for the whole GDP to expand by 3.5% from growing only 13%(manufacturing) of it, that 13% has to grow at a rate of something like 27% (3.5 * 100 / 13) year after year.

Even China, starting from a very low base, and paying what many here call slave wages, can only manage an average of approximately 10-11% per year !! Obviously, someone in this government is (a) a spin doctor (who is good at ignoring inconvenient facts), (b) thinks s/he has a special phone line to God, (c) failed maths at infant school level or (d) thinks NuLabour has finally succeeded in dumbing down the populace so far that they can get away with such obviously impossible assertions and, therefore, can contemptuously tell them anything and be believed !!

I'm afraid everything above is wrong. The deficit isn't the problem. We cut it back down to 3% and we still have high unemployment. The north and the midlands and wales and scotland and the west country and, without banking, the southeast too, all declining for ever.

The real problem is the Town and Country Planning Act of 1947 because it had the effect of fixing the boundary of every village, town and city as it was in 1947 causing a chronic shortage of private family homes and frustrating needed infrastructure and commercial/manufacturing property.

On residential property alone the direct cost of planning permission on existing mortgage repayments is £50-£60 Billion a year out of our pockets, probably more.

I can't even guess what it is on commercial property or the losses to the economy of frustrated infrastructure, commercial projects and residential building.

If you doubt me work it out yourself.

Stephanie

One reason I suspect that the poll you refer to regarding the public finances is that too many don't understand the difference between the national debt and the deficit as a number of contributors over time have done on here, including myself.

You along with others including the current government should take the credit for that by making sure that the difference and its impact has remained diffuse.

It would be great if when you next presnt on the News you take time out to explain.

With regard to the budget - the numbers just don't stack up.

1. Growth - as some here have already pointed out the forecsts are way over-optimistic. Even the CBI's I believe are. We may have to get use to sub 1% growth in the near term. It maybe more subdued than people think.

2. Unemployment will rise over the next 1-2 years meaning that more money will have to go into paying benefits etc.

3. Tax revenues will remain subdued however much tax rises come into force due to a combination of a growing black market, less real wage earning and reduced consumer expenditure (in the light of any VAT rise). This I believe is being missed. Housing market will be subdued for a number of years with overall negative growth.

4. Interest payments on the national debt. Last year I stated that interest would eventually reach around 6% on government bonds. Given Greece's cost, the statement made last week that QE has lopped off about a percentage point from true UK borrowing cost and estimates from various quarters all seem to point towards c. 6% in future.

This means if we don't cut the deficit we will be paying around £90 billion in interest alone.

5. Sterling devaluation will cause input side inflation which in turn will cause acute budget problems, particularly in the public sector (exacerbating current issues) and cost of living further dampening any comsumer driven spend.

6. Conclusion: Budget needs to get far more radical with truer and more cautious growth forecasts. Better to know the depth of the hole rather than think (or say) you're at the bottom when you're not. We only get one chance to get out.

Any talk of accepting further budget deficits as ok is VERY VERY VERY DANGEROUS - PLEASE TAKE NOTE..............

PS
To provide comparisons with previous recessions people believe we're exiting. If the similarities are taken with the 70s/80s I think that we're on a par with 1979. 1980 and 81 are still to come. We better brace ourselves.

Gosh what a load of dismally poor quality right wing rants from the usual suspects. Come on lads, you're coming over more and more like a bunch of grumpy old men. You have weeks to go yet, so please don't blow your tops now. But please try to include some economics...

On a positive note, the most interesting and substantive comments by far were those written by leftie (#31) mirkle (#28). Thanks for posting.

jobsagoodin you seen to spend your day repeatedly posting the same comment about the so-called bloated public sector and repeatedly calling for job public sectors cuts. Very strange given that the deficit was priarily caused by the failure sof the private sector.

But jobsagoodin since you have called for this so often, perhaps you could help us by outline your experience of public services. For example,which UK public services do you a) use and b) depend upon?

And which ones you would a) like cut and b) by how much.

This would move your agument along a bit and save you the bother of posting the same comments every few minutes..

PS
I'm assuming of course that you're living and ranting in the UK and not just wallowing in and ranting from some place lile Dubai (lol).

#79
"One reason I suspect that the poll you refer to regarding the public finances is that too many don't understand the difference between the national debt and the deficit "

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

You can include Brown in that group. There have been many occasions when GB has painted the UK (68.6 debt to GDP) in a favourable light compared to Germany (73.9%); deficit is the key number (UK 13.0%, Germany 3.5%) as a too high deficit impacts ability to service the debt, affects the currency and spooks the market as well as making future investment difficult.

Incidentally Germany's high debt percentage is largely due to refurbishment of the old 'East Germany'.

Some 80 BN Euros per year has been spent on this over the last 20 years - money well spent by any measure. What did the UK spend it's money on - oh, bailing out the banks - money not well spent.

Free The Monkey

I see you've managed to conveniently not answer my direct question to you on the previous blog - see #493 and previous which leads me to conclude that you're all socialist mouth and no trousers? see:

https://bbc.kongjiang.org/www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/03/not_lagging_but_not_leading_ei.html

Please of course respond to my comment in #79 in your usual one-eyed, insulting manner. I look forward to it and perhaps we can expose a few more holes in your argument.......

The overall spin must be to make nothing look like something.

Alistair Darling can't really do anything for the following reasons.

1. He doesn't have any spare cash to play with
2. If he did he would have to use it for cuts
3. If he didn't use it for cuts it would spook the city

If he has no money he must manufacture it. This is the only manufacturing this government has supported in the past 13 years but it has done it really well. I don't mean quantative easing, rather the lets pretend type of manufacturing where he re-announces existing spending and uses the budget as a political lighthouse to existing Labour followers.

Expect comments on tax credits, education, crime and health, he will use the speech to comment on each of these areas, maybe a new initiative in each, with no real relevance to the overall figures but a chance to spin the issue again.

It's a tired old strategy but its the only one he has available. It'll be his last budget, which in one way is a pity, if he was part of a better administration his dour and tedious number crunching may have been exactly what we needed.

oops #79 To clarify, 1st paragraph should read

One reason I suspect that the poll you refer to regarding the public finances is that too many don't understand the difference between the national debt and the deficit as a number of contributors over time have pointed out on here, including myself.

The vagaries of english langauge when trying to communicate whilst in transit is full of traps......

Well done to Mark Easton for illustrating the great benefit of a free press and shining a light on a few more MPs who have fallen short on integrity. Thank you.
Hopefully soon a member of the press will shine the definitive light on the main minister with whom the buck should have stopped for the crucial failure of adequately supervising the banks. That the responsible minister has not yet owned up to this failure of the century is very disappointing. It is for sure that this coming budget will not be as it should have been because of this very failure.

SF writes: "But according to an Ipsos MORI poll last week, only 50% of people believe that public spending cuts will be needed to get the public finances in order".
And this after education, education, education!

I am sick of wiffly woffly presentation

Lets be frank:

Over the last seven years government has spent over £500,000,000,000 that it didn't have despite doubling the tax take from income tax (whatever reason is given)

It intends to spend another £500,000,000,000 that it doesn't have over the next five years whilst finding ways to increase taxes

Government debt is expected to be £1,400,000,000,000 by 2014.

That's up about a Trillion in about 10 years.

Last week ITV News at Ten pretty much presented in this way.

Its about time the BBC did too. The BBC Charter covers education, doesn't it?

Drop the percentages of this or that.

Drop trying to find some silver lining. For example the treatment of unemployment figures. Whatever else might have been the case JSA claimant numbers were up nearly 200,000 year on year.

Squaring the circle is a joke.

So in the blue corner we have the thieves, bankers and charlatans - and in the red corner we have the public sector, leaches and parasites. Both depend on the poor guys in the middle who supply the dosh. Where would you best invest ?

#86
"And this after education, education, education!"

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

Don't ya mean edoocashun.edoocashun,edoocashun !

#86

Perhaps Stephanie could put together some little pieces for radio, TV and this blog which might help to illuminate


For example she could start with how much is owed, how much its increased over the last 10 years, how much its going to increase over the next 10 years and what halving the deficit actually means.

Then she could move on to the interest charges on the debt already incurred, what that could pay for, how much more will have to be paid and what will happen in future years.

She could do a piece on the impact of increasing interest rates.

She could present the graphs from the ONS showing the exponential rise in government debt over the last little while.

There, a weeks worth of work and presumably, since the role of a BBC economist can only be to educate, it might meet a pressing need.

45. At 5:01pm on 22 Mar 2010, hants_gw

Re The Potato Council. It may be quasi-governmental but is actually "funded by the agriculture and horticulture industries through statutory levies".

Hardly a drain on your taxes or mine!

Regarding why there's no Parsnip or Raspberry council (and how do you know that actually?), well in case you were unaware Potatoes are a staple food of this country, along with Milk, Cereals, meat etc. Parsnips used to be until 17th century they were displaced by spuds thanks to W Raleigh and I'd like to see someone try to surive on a raspberry-based cuisine!

"They also want him to make a link between government action in 2009, and the recovery in 2010"

But this will be very selective, of course. For example, he won't remind voters that the Pre Budget Report last year (see https://www.employeebenefits.co.uk/item/9743/23/5/3%29 introduces tax on employer contributions to their pension scheme for people with higher incomes (this is surely the thin end of the wedge, given the need for cash regardless of which party rules, and the level will surely decrease).

What is particularly exercising me is - and this clearly links to the public sector pensions black hole - how the government intends to implement this for public sector employees on defined benefit pensions. Surely they would not be so brass necked to say that it doesn't apply - or would they?

#87 & 90 MrsBloggs,

I don't see the reason for your argument that Stephanie should undertake the exercises that you suggest. You appear to have already made your own analysis and reached conclusions that you are happy with. Therefore, appart from giving you an excuse to rant at her comments what useful purpose would they have for you?

It has been really funny watching the usual right wing ranters making a fool of themselves by demonstrating that they have no understanding of the basic principles of Socialism. I don't know how often those of us of the left have to point out to them that Nu-Labour are not, and never have been, a truly socialist administration!

However, if we take the lifetime of Nu-Labour governments, I defy you to identify any Tory policies that would have significantly changed the situation we presently find ourselves in.

45. At 5:01pm on 22 Mar 2010, hants_gw

"To expand on that a bit, the problem is that New Labour are spending substantially more than we can afford. Whether this money is spent on worthwhile things or not is largely irrelevant."

Is that it? - the potato council is your example?

I wonder if the Irish had a potato council during the potato famine of 1845-1852 - might have been useful no?

I would like to remind you that Gordon had his 'Golden rule' which was to create a stable spending to GDP ratio - which to all intents and purposes he kept (ignoring PPI for a moment)

It was the banks who smashed through the golden rule with their plea for bailouts and the need to reduce the BoE rate.

...or don't they bother to mention facts in the Daily mail anymore - I'm sure poatatoes are top of their gripes, but for me it's the £850 BILLION hole the banks blew in the budget....

...oh but wait - I'm sure the taxpayer will make a profit eventually

Ha ha, ha ha, ha ha

"Given that, perhaps it's no surprise to see from another poll this weekend that only 64% expect Alistair Darling to tell them the truth about Labour's plans."

"only 64%"

After 13 years of window-dressing announcements, of spin, deception, disingenuity and misinformation, the fact that about 2/3 of the population still believe that they are likely to hear truth from a government minister is quite flabbergasting.

Until now, I had no idea that the progressive education policies of the last 50 years had been so successful in disengaging the thought processes of so many people.

There's really no recovery from this, is there?

48. At 5:22pm on 22 Mar 2010, Rugbyprof wrote:

"And so the band played on, merrily playing to the socialist tune, whilst the HMS UK slowly but surely carried on sinking."

Oh you do make me laugh - when did 'socialism' happen again? Did I miss the revolution where the workers took control of the means of production? are we currently under the 'dictatorship of the proletariat?

No, we're not - in fact we're the furthest thing from 'socialism' - because in a socialist world companies do not need bailing out

The ignorance of some people in Britain is something we should be proud of. Capitalism fails - but somehow it's socialism's fault?

Is that how you like it? - good versus evil? I guess that fits in nicely with your Christian upbringing. It's just a shame that (as the bible said) - the devil will appear to bring all nations together (Capitalist Globalisation) - but it is a trick which man will fall for (that's the people who support Capitalism)

"This sucka's going down..................."

This is true, but it has nothing to do with the reasons you seem to indicate - you've been watching too much Animal farm - didn't you know cartoons are for children?

52. At 7:58pm on 22 Mar 2010, Rugbyprof wrote:

"Reada - you're saying that they're not socialist?

With an economy where government spending is bigger than enterprise..."

Oh dear - education time.

If this was a result of a 'decision' to make that happen, then yes it would be. However the spending increase is mild, what has happened is enterprise has fallen off the cliff

At the moment my spending is bigger than the enterprise of the country!

I think you'll find we're closer to Fascism (where the state and corporation merge) rather than anything socialist.

Free_the_monkey 80

'repeatedly calling for job public sectors cuts'

Haven't called for it once. I've simply stated that job cuts are an inevitable consequence of Labour's incompetence.

'But jobsagoodin since you have called for this so often'

ditto

'And which ones you would a) like cut and b) by how much.'

I think the Tories have got it about right i.e. protect the NHS, and aim to eliminate the bulk of the deficit in the next 4-5 years. The key is to have an approach that is credible. Failure to deliver on that will destroy confidence, delay the recovery and everyone will suffer in the long term not least the public sector.

Also key is to ensure that the reduced amount of money spent on public services is spent wisely. Clearly Labour have proved themselves incapable of doing this so if you REALLY cared about public services FTM you'd be as keen to see Labour booted out of office as I am.

54. At 8:18pm on 22 Mar 2010, dontmakeawave

You clearly don't understand socialism - you should stop talking about the subject.

High taxation is not a sign of socialism - it's a sign of failing Governments under a FIAT currency system which is doomed.

65. At 10:02pm on 22 Mar 2010, Kevinb wrote:

"Call this government what you like

Just don't re-elect them"


...and there you have the mistake the electorate will make. They will vote in 'someone else' and we all have a good idea of who that will be.

However, can anyone explain why 'the next lot' will be any better than the last time they managed the country - considering they have had 10 years practice of 'not being in Government' and 'not providing a credible opposition'?

Has that improved their chances then? - I don't think so.

I am not canvassing votes for Labour (far from it) - they are just as corrupt and useless. However don't think your solutions lie at the end of a Blue rainbow - because they don't.

I can only assume Kevin B is less than 10 years old because he obviously cannot remember John Major's Government (which the rest of us can) and the disasterous policies which led to George Sorus making a packet at our expense.