As many people try to pretend the crises does not exist and whilst Labour try to absolve themselves of any blame for the mess they left the country in here is a briefing with some facts and figures in.
Why is the Comprehensive Spending Review (CSR10) so tough?
Since the General Election the Coalition Government has had to borrow an extra £400 million every day. That’s because for every £300 coming in we are spending £400.
In this financial year that will come to a total of around £150,000 million extra borrowed and added to the National Debt.
That level of increase in debt in one year is by a wide margin bigger than any previous year. The Coalition Agreement commits Liberal Democrats and Conservatives in Government to slow down the rate of extra borrowing such that by 2015 we are back on an even keel.
Please note that, despite sloppy media reporting, the aim is to stop adding to the National Debt, and certainly not to repay it. You can expect the National Debt to be larger not smaller in 2015 despite CSR10, and interest payment on it will still be huge.
The Government’s plan already include measures to increase income, including extra tax from banks and big bonus winners, capital gains, and large value pension pots, as well as the VAT rise. Announcements have also already been made to reduce spending, including the income limit on Child Benefit. (See Simon Jenkins in the Guardian,
Couldn’t we get away with leaving it for a bit?
That’s what the Greek government hoped. Now they are forced by the IMF and the EU to make far harsher cuts, and with no option to rebalance spending to protect the low paid and vulnerable as the Lib Dems have done here:
* taking 900,000 low paid workers out of income tax by raising the tax threshold,
* bringing in a Pupil Premium for disadvantaged children, and
* restoring the Pensioners’ Earning Link on the most favourable terms ever.
That’s what Gordon Brown hoped, too. According to Peter Mandelson, Brown overruled his Chancellor last year and insisted that it should be spend as usual, despite Alistair Darling’s dire warnings. Even so Labour did say that big cuts would be needed in the future – they just forgot to tell us what they would be.
So who is to blame?
Stern warnings at every stage over the past decade were given by Liberal Democrats in Parliament. Vince Cable repeatedly pointed to the dangers of wholesale bank deregulation, of the risks of an uncontrolled house price bubble, and of the huge rise in domestic debt. He was ignored or ridiculed by Brown right up to the big crash. Labour said that casino banks and massive bonuses were all part of making
Labour went on a ‘trolley dash’ and left us at the checkout on election night to pay the bill. We can now only afford the essentials, and we have to put the stuff we cannot pay for back on the shelf. But we are throwing away the tat as well! There is huge waste and bureaucracy, fuelled by a foolish belief that
How Bad Will It Be?
Even after CSR10 the size of the state sector will be as big as it was in 2006. And we will have a fairer and a freer country than when we started. It is going to be tough for everyone, but it is necessary, and it is going to be worth it.
Are you dizzy from all the spinning yet?
“That’s what the Greek government hoped.”
Your taking the media to task for sloppy reporting yet here your even guilty of being sloppy or wilfully misleading people. The Greeks had a guilt maturity of about 6 months whereas Britain’s is 14 years!!! We were never in danger of default as you and the tories claim, see
” taking 900,000 low paid workers out of income tax by raising the tax threshold, ”
Most of the money lost to this tax cut is going to middle and high income earners, it is being paid for by increasing VAT, how is it progressive to shift taxes away from earnings and onto consumption? Also, the coalition tried to make this tax cut more progress by lowering 40% threshold which means workers on the not particularly large wage, compared with some, will now be subject to 40% tax and they will lose their child benefit.
” bringing in a Pupil Premium for disadvantaged children, and”
I’m sorry but the pupil premium is a total waste of time and in many circumstances will actually increase inequality, see the IFS report. Also, the version being implemented is *not* extra money on top of the schools budget so is far closer to the tory policy than the one in your manifesto. Cutting education spending and re-hashing how the money is dolled to conform to a system that is one step away from parental vouchers isn’t going to improve schools.
” restoring the Pensioners’ Earning Link on the most favourable terms ever.”
The restoration of the earnings link is good and some thing Labour should have done earlier. But the cuts to welfare payments to parents, children, homeless, low paid, sick, disabled and pensioners is going to really hit them hard – why permanently link benefits and pensions to CPI rather than RPI or Rossi inflation indices? This will increase poverty, deprivation and income inequality.
“Stern warnings at every stage over the past decade were given by Liberal Democrats in Parliament. Vince Cable repeatedly pointed to the dangers of wholesale bank deregulation, of the risks of an uncontrolled house price bubble, and of the huge rise in domestic debt”
Erm, no you weren’t. Vince Cable has flip-flopped all other the place on economic issues, he was calling for “light-touch” regulation on the banks and only changed his mind in 2009, Cassandra he ain’t.
His warnings on excessive UK consumer debt causing a recession were wrong, the crash was caused by the mis-selling of bundles of US subprime mortgages as AAA rated. Labour’s failure in government was to regulate the banks but that was the post-Thatcher consensus on regulation of businesses.
“Even after CSR10 the size of the state sector will be as big as it was in 2006.”
A very misleading statement that doesn’t take inflation into account properly and the increase in public spending due to the recession among other things.
“And we will have a fairer and a freer country than when we started”
No we won’t, how will it be fairer if jobseekers are beaten with a 10% cut in housing benefit merely because they haven’t been able to find work? How will it be fairer if we reduce the deficit on the backs of the poor? How will it be fairer if bankers are taking bonuses at pre-crash levels while public servants are losing their jobs and pensions because of the bankers greed and ego?
Will it be freer? With the coalition planning to resurrect the compulsory recording of electronic communications, a plan Labour ditched, the big brother state will be stronger than ever.
You should be worrying greatly about a backlash in Bath, Don Foster has won that seat because of a large amount of tactical voting, when these cuts become the reality of reductions in services, jobs lost and increases in service charges.