Spending Review

[Lookers_Carl]

Well, what do we make of it?

 

Times are going to be tough but I refuse to believe things would have been rosy had Gordon Brown been re-elected. There still would have been deep, painful cuts resulting in job losses under a Labour government.

[leeslover]

It’s the hangover after a 13 year bender, there’s no way to make it painless. Hopefully they can actually deliver on the plans, another two or three Parliaments of that and the country might actually be getting into decent shape

[BlueJazzer]

I'm expecting shift changes, training sessions in the small hours, and removal of kitchens. So that said, I'm gonna go to work now and eat a slap up Mexican, watch some footy, and get a bit of kip, cos next time I clock in after my leave the job will have changed beyond all recognition!

[razza699]

as long as they dont cut the World Cup my job is safe

[opinions4u]

I totally accept that failure to act would lead to a massive economic collapse.

 

We can all argue the toss about where the cuts should or shouldn't have been made. I think health could potentially have given up more, not comfortable with throwing money at climate change and while foreign aid is admirable it's invariably chucking money in to the hands of a wealthy dictator and his cronies. Freezing the TV licence? About bloody time! Now find a way to scrap it. Drop in the ocean though. Overall, something had to be done!

 

I've not quite worked out what the "welfare reforms" are. High hopes that Duncan-Smith and Field have been working on some masterplan. Not sure this has been unveiled yet.

 

It looks to me like this is simply wave one and there will be more to come next year. And the year after. 10% reduction in public sector workers doesn't reverse the increase implemented under Brown and Blair.

 

What's missing is the driver of economic stimulus. In the 1980s government implemented tax cuts and encouraged enterprise. What are they doing this time round? Still a massive risk of double-dip recession.

Edited October 20, 2010 by opinions4u

[Lookers_Carl]

It’s the hangover after a 13 year bender, there’s no way to make it painless. Hopefully they can actually deliver on the plans, another two or three Parliaments of that and the country might actually be getting into decent shape

 

Couldn't have put that any better myself

[24hoursfromtulsehill]

It’s the hangover after a 13 year bender

 

Before the banking crisis, there was no bender. Britain had the second lowest debt in the G7. The banks are responsible for the mess, not the Government. I've said it before and no one's challenged it, so I'll say it again. The debt crisis is not a crisis until there is a risk of default, which there isn't. UK bonds are fine. No trouble borrowing at all, and no real prospect of trouble.

 

I haven't read much about the actual cuts, but I gather that 500,000 or so public sector workers are to lose their jobs. Apparently the private sector will take these people on, just like that. My question is this: what if the private sector does not meet that objective? Whom do we hold accountable in that situation?

 

There's another democratic problem. The Tories have announced the cuts, but they're leaving it to each public sector employer to work out the implications - meaning to deciding whom to sack. They're against quangos on the basis that they're unelected bureaucrats - exactly the type of people who must now make the big decisions.

 

Osborne is clearly the Cat-in-the-Bin Chancellor.

 

[24hoursfromtulsehill]

In the 1980s government implemented tax cuts and encouraged enterprise.

 

Really? How so? When?

 

I must have missed that. Does creating economic conditions in which 3 million are unemployed every five or so years constitute "encouraging enterprise"? Me no understand.

 

[opinions4u]

Really? How so? When?

1980. The basic rate of income tax was reduced by 3% and the top rate was reduced from 83% to 60%.

 

I must have missed that. Does creating economic conditions in which 3 million are unemployed every five or so years constitute "encouraging enterprise"? Me no understand.

It may sound familar, but a lot of the mess of the early 80s was a direct result of the previous government.

 

The debt crisis is not a crisis until there is a risk of default, which there isn't. UK bonds are fine. No trouble borrowing at all, and no real prospect of trouble.

Carry on with the same deficit operating and the bond markets will not be fine.

 

Though I doubt you will agree with me.

Edited October 20, 2010 by opinions4u

[leeslover]

Before the banking crisis, there was no bender. Britain had the second lowest debt in the G7. The banks are responsible for the mess, not the Government. I've said it before and no one's challenged it, so I'll say it again. The debt crisis is not a crisis until there is a risk of default, which there isn't. UK bonds are fine. No trouble borrowing at all, and no real prospect of trouble.

So just because you have consolidated our credit cards and are able to cover the payments from your salary each month then it's hunky dorry that you spending more on covering the interest than you do on beer, football, your children's clothes and trips to the Georgian. Right.

[oafc0000]

I am not going to get into the lies and bollocks which are constantly spread on here regarding the past 13 years and the actual level of debt etc... See Alan Johnsons comments for more...

 

What I will say is the cuts didn't need to be as deep or as hard as they will be... Specially when the likes of Vodafone have billions wiped off their tax bill...

 

The poorest 10% are having to foot the mistake of bankers and it sucks big time...

[24hoursfromtulsehill]

So just because you have consolidated our credit cards and are able to cover the payments from your salary each month then it's hunky dorry that you spending more on covering the interest than you do on beer, football, your children's clothes and trips to the Georgian. Right.

 

Childish analogy between household or personal debt and national or sovereign debt duly ignored.

 

[24hoursfromtulsehill]

1980. The basic rate of income tax was reduced by 3% and the top rate was reduced from 83% to 60%.

 

I don't want to fight old battles but what happens to the income tax take if 3 million are on the dole? Is that what we're calling "enterprise"?

 

 

Carry on with the same deficit operating and the bond markets will not be fine.

 

Though I doubt you will agree with me.

 

Your doubts are well founded. The Debt Management Office in the Treasury (which sells UK bonds) is not worried about bond terms or about selling bonds, and it never has been.

Edited October 20, 2010 by 24hoursfromtulsehill

[oafc0000]

Childish analogy between household or personal debt and national or sovereign debt duly ignored.

 

People referring to the national budget as being anything remotely like a household budget should be duly ignored...

[garcon]

People referring to the national budget as being anything remotely like a household budget should be duly ignored...

I'd love to see a coherent and accurate explanation as to why they're so different.

 

How can spending an exponentially increasing amount on debt interest payments possibly be a prudent use of public money?

[opinions4u]

People referring to the national budget as being anything remotely like a household budget should be duly ignored...

While the instruments of raising capital and repaying capital are significanlty more complex, and the numbers involved a hell of a lot bigger, spending more than you earn and then not being in a positon to repay it when required has pretty much the same outcome. It hits the fan.

 

Brown pissed away the rainy day savings account and this is the result.

Edited October 20, 2010 by opinions4u

[downender2]

It’s the hangover after a 13 year bender, there’s no way to make it painless. Hopefully they can actually deliver on the plans, another two or three Parliaments of that and the country might actually be getting into decent shape

 

It’s the hangover after a 13 year bender and lets not forget the repercusions of the breakdown of the banking system due to the greed of those involved at the top of this "crooked profession"

 

 

[downender2]

Before the banking crisis, there was no bender. Britain had the second lowest debt in the G7. The banks are responsible for the mess, not the Government. I've said it before and no one's challenged it, so I'll say it again. The debt crisis is not a crisis until there is a risk of default, which there isn't. UK bonds are fine. No trouble borrowing at all, and no real prospect of trouble.

 

I haven't read much about the actual cuts, but I gather that 500,000 or so public sector workers are to lose their jobs. Apparently the private sector will take these people on, just like that. My question is this: what if the private sector does not meet that objective? Whom do we hold accountable in that situation?

 

There's another democratic problem. The Tories have announced the cuts, but they're leaving it to each public sector employer to work out the implications - meaning to deciding whom to sack. They're against quangos on the basis that they're unelected bureaucrats - exactly the type of people who must now make the big decisions.

 

Osborne is clearly the Cat-in-the-Bin Chancellor.

 

spot on...(I should read the whole thread before posting )

[Guest Scratch2000uk]

And just how much are the banks responsible for the huge national debt.

Edited October 20, 2010 by Scratch2000uk

[opinions4u]

And just how much are the banks responsible for the huge national debt.

In terms of the equity stakes taken in RBS and LBG, the paper value of that debt is somewhere close to zero. Current share prices suggest that the Government will actually make a profit on the deal when they come to sell.

 

In terms of the Special Liquidity Scheme, it's an obscene amount (£250m rings a bell) but this does look likely to be replaced by the wholesale markets after 2012.

There are also debts to the FSCS for the Bradford and Bingley bailout (£20bn if I recall) although this will be taken from future levies placed on the banking industry.

 

As for the mortgage books of Bradford & Bingley and "bad" Northern Rock? The outcome is unclear with some analysts suggesting the Government may make a profit, with other suggesting a loss over the next 25 years totalling around £20bn.

 

As for good Northern Rock? Sale proceeds should ensure that any losses taken on by the taxpayer are recovered.

 

The big difficulty for the banks is that they won't want to retain a reliance on wholesale funding in the future, so as loans are repaid they would prefer to repay it, rather than those funds on again. It would be madness for them to make the same mistakes that HBOS, Northern Rock, Alliance & Leicester, Bradford & Bingley etc made in building their business model on the back of funds that could dry up at relatively short notice.

 

In other words, when a politician complains that "the banks aren't lending" it's because by lending in the way they did 3 years ago they know perfectly well that their business would remain unbalanced and liable to collapse.

Edited October 20, 2010 by opinions4u

[24hoursfromtulsehill]

While the instruments of raising capital and repaying capital are significanlty more complex, and the numbers involved a hell of a lot bigger, spending more than you earn and then not being in a positon to repay it when required has pretty much the same outcome. It hits the fan.

 

Brown pissed away the rain day savings account and this is the result.

 

Hitting the fan in that context means defaulting. We're not going to default and we never were.

 

The Government, incidentally, does not "save" money in a rainy day or any other type of account. What goes in goes out, every year. That is called the Budget.

[oafc0000]

Hitting the fan in that context means defaulting. We're not going to default and we never were.

 

The Government, incidentally, does not "save" money in a rainy day or any other type of account. What goes in goes out, every year. That is called the Budget.

 

Yup...

 

I thought Alan Johnson has done great the last couple of days to also remind the Tories of how the argued for more spending and further deregulation of the banks, something they seemed to have forgot

[rudemedic]

Meh! We knew it was coming it wouldn't have mattered if Gordon Brown, Nick Griffin or David Cameron was in power the country needed to make cuts. Upping the retirment age is one thing, in the old days once you retired at 65 living to 80 was probably about a quarter as common as it is now. Making the healthy work longer is one thing (I'm not 100% sure a mandatory retirement age isn't discriminatory) but it doesn't stop those retiring on ill health grounds. More should be done to make sure those who are now retiring on ill health grounds do something constructive in places like the health service.

 

What I didn't realise is that we were giving aid to China and Russia, considering the amount of "aid" the Chinese have been giving to the developing world in the last 15 years there is no way we should be giving them any money. Russia is richer than us as well. That being said they could screw us.

 

I'd agree with zeros if Vodafone had been made to pay their tax bill the cuts could have been less here and there, its the same with other companies and it was the same under Labour. But some things were being built and upgraded which didn't need to be, I'm not sure what the money for Transport in the North East was being spent on but the service is pretty good (its better than the Metro in Manchester at any rate). The public sector is bloated and needed to be trimmed (the fact that Cameron leads his party without any help from the unions says a lot about this). They say across the public sector there will be about 500,000 jobs cut but is this actual firings, not replacing people who retire, or because other bits are being cut and so the people are no longer needed. Large sections of the public sector is staffed from those people who immigrated into this country in the 60s +/- a few years, those people are now retiring having worked in the country for long enough. I can see a larger % of those moving abroad as it were than the british born retirees.

 

One thing I will pick up on though is they say the NHS has received a % rise in real terms, i.e. I think its 0.1% above the level of inflation. That is not a % rise in real terms, NHS spending goes up year on year for various reasons, like new drugs, an ageing population, actually being better. With the cuts and job losses elsewhere this is emplified as various people have proven that socio-economic status is a big determinant in health status, so more money will need to be spent to make up the difference as it were.

 

The cuts being announced today are the fault of many people, some of them are down to the banks, some are down to Labour's over spending, as well as their bad management of assets (like the gold reserves), and some are down simply because they could have been put off until "tomorrow" and were put off to keep popularity, well "tomorrow" is now today and so the axe has come down. Some are being made are still the Tories fault (they are just as much to blame for the defence over spending thanks to 2 wars as Labour) and some because they have made a decision to cut when some would argue it wasn't necessaary.

[oafc0000]

Brown pissed away the rainy day savings account and this is the result.

 

Show me any government in the history of the United Kingdom who kept a rainy days savings account ?

 

You have bought the Tory bull:censored:, hook line and sinker...

[opinions4u]

Show me any government in the history of the United Kingdom who kept a rainy days savings account ?

They don't. But then you couldn't quite grasp the comparison between household finances and national finances, so I'm not going to lose sleep over it.

 

They manage the level of national debt over the "economic cycle". They can choose to increase that debt, reduce that debt or balance the budget of said cycle. Invariably they increase it, waste the money spent from that increase and then get chucked out of office.

 

Gordon Brown was himself committed to balancing the budget over the economic cycle. In other words, not increasing debt. He defined his economic cycle as 7 years. When we got to year 6 he realised that he was overspending. So he change the rules and redefined the economic cycle as 9 years. A bit like consolidating you loans and credit cards over an extended term. As year 9 approached he changed the rules of the game again and, because he'd "beaten Tory boom and bust", he came up with the magic number of 11 years for his economic cycle. In other words, after consolidating his credit cards two years earlier, he'd built up the debts again.

 

Year 11 came along just as the banking system imploded. Because he had failed to manage the economic cycle, and the importance of the banking industry to the nation's finances, he was left high and dry. Yes, he could borrow the money to "save" the banks. And he had little choice but to do so. But the economic collapse that followed meant further borrowing would be needed for a hell of a long time. And that line of credit would get pulled sooner or later unless the nation's finances were brought in to order.

 

You have bought the Tory bull:censored:, hook line and sinker...

You've thrown that line at me before.

 

I've bought nothing.

 

I've stated very clearly before that I have little time for politicians, think that they're a breed of scumbag out for their own ego or financial gain and because they know their careers are limited there is little incentive to make the tough financial decisions that the country has to make.

 

The problem with Brown is that he really believed that he'd built a recession proof empire and as such could continue to tax, borrow, spend and waste at will. What an idiot.