UK Budget- The Axe Falls

[tibilicus]

http://news.bbc.co.uk/1/hi/politics/10371590.stm
The supposed "emergency budget" was revealed today and well, it was pretty much what everyone expected. Surprisingly however, despite what the naysayers said, it appears that the British public sector isn't going to be completely screwed to the wall, all in all, many people should be happy, obviously many aren't though.

Yesterday saw the surprising alliance of agreement between the Tax Payers Alliance and the TUC. Obviously they both have different motives for opposing the rise in VAT to 20%, the Tax Payers Alliance opposed it on the grounds they hate the word tax in general and the TUC because they hate everything proposed by Conservative governments, in general.

Perhaps the best thing in budget related news today however was watching Harriet Harmann and the Labour Party oppose the so called "reckless" budget. After 13 years of spending and spending beyond our means, Labour's solution to the problem? Spend some more! All this time not a single apology from a single Labour shadow cabinet member and still the party which used to be known for "taxing and spending" refuses to accept its new role as the party of "borrow and spend".

So, reactions, did anyone think it was going to be worse? Did anyone think it was going to be kinder?

[rory_20_uk]

Either Labour thinks heading for an IMF bailout is a badge of honour, or to admit everything they did was merely flashing the credit card would spell political suicide.

Best decry how theoretical jobs will be lost and gloss over how we got here.

[Beskar]

Only way you could spend more to get out of it, is if you are spending it wisely.

After the 2nd World War, the Country in times of debt even set up the National Health Service, etc, and we got ourselves out of it.

However, I am still thinking this whole "budget" thing is a scam. Trying to use the recession to slash across the board on budgets, as if to say, it was in fact the Budget which was the problem and not the bankers.

It was the Bankers fault for the recession, and it was the bankers fault for us the taxpayer having to bail them out with money we didn't really have in the first place. However, I do agree that spending needs to be looked at, but I don't think we are nessecarily going the right way about it. Though a 20% VAT will make Furunculus wake up on the wrongside of the bed as it makes us hit the European levels.

[rory_20_uk]

The banks had to sell shares to the government. We're close to the point that selling them would make a profit. That leaves aside the money to insure the deposits which was further billions. Long term, the government could make a decent profit from being the world's biggest hedge fund.

The banks didn't create the structural deficit, nor the ballooned debt. And Brown's fiscal austerity is merely 400bn or so off...

[Idaho]

Hmmm... Looks like those earning wages will be paying more, and those who profit from dividends, capital gains and company and corporate profits will be better off. Who'd have thought the Tories would do a thing like that?

And while the public sector is being slashed and people made redundant, housing benefit is slashed 10% too. Nice. So out of a job, and then out on the street. Good old Tories!

[Seamus Fermanagh]

Hmmm... Looks like those earning wages will be paying more, and those who profit from dividends, capital gains and company and corporate profits will be better off. Who'd have thought the Tories would do a thing like that?

And while the public sector is being slashed and people made redundant, housing benefit is slashed 10% too. Nice. So out of a job, and then out on the street. Good old Tories!

Have they got to the part about starving the kids and old people yet? It's never FUN being a conservative until you get to the juicy stuff.

[InsaneApache]

Have they got to the part about starving the kids and old people yet? It's never FUN being a conservative until you get to the juicy stuff.

They don't starve them. They eat them donchaknow!

It's a bit rich to blame the new government for slashing budgets and raising taxes. Then again some people live in a sort of parallel universe where all are winners and all the Tories want to do is enrich themselves and destroy the economy. Cos they can.

[Beskar]

http://news.bbc.co.uk/1/hi/business/10376512.stm

List of it all by section.

Edit:

Just saw this little gem

Meanwhile corporation tax will be cut next year to 27%, and by 1% annually for the next three years, down to 24%.

So we pay more taxes, we lose benefits, and Corporations get free tax cuts? So much for everyone "feeling the pain", doesn't include you if your name is Steve Jobs, Lord Sugar, or a typical Conservative funder, etc.

[InsaneApache]

See. I knew one would be along in a minute.

[rory_20_uk]

Hmmm... Looks like those earning wages will be paying more, and those who profit from dividends, capital gains and company and corporate profits will be better off. Who'd have thought the Tories would do a thing like that?

And while the public sector is being slashed and people made redundant, housing benefit is slashed 10% too. Nice. So out of a job, and then out on the street. Good old Tories!

Amnesia kicking in already? Any idea why the country has no money? Another party? Likes to spend, pend, spend? Confuses "investment" with "waste"? Doling out houses and benefits make us a powerhouse of a country or a basket case?

Capital gains went up by 10%. It was reduced by Labour.

Almost entirely the Private sector makes money whilst the Public sector recycles it. So, we need more of the former and less of the latter.

[Vladimir]

http://news.bbc.co.uk/1/hi/business/10376512.stm

List of it all by section.

Edit:

Just saw this little gem


So we pay more taxes, we lose benefits, and Corporations get free tax cuts? So much for everyone "feeling the pain", doesn't include you if your name is Steve Jobs, Lord Sugar, or a typical Conservative funder, etc.

You know corporate tax is a myth, right? It's the only tax you can pass onto someone else.

[Furunculus]

Good budget, I want it considered a point of fact by the thinking majority (obviously excludes the TUC) that spending more than forty percent of the nations wealth of government programs is immoral, as it destroys the long-term growth and competitiveness that will maintain our standard of living in a generations time.

My only worry is as to whether Defence can be considered a Whitehall department, and thus subject to the full 25% haircut, or whether only the MoD itself fits that definition in which case the likely Defence cuts will be closer to the RUSI prediction of 12-15 percent...........?

[Beskar]

Almost entirely the Private sector makes money whilst the Public sector recycles it. So, we need more of the former and less of the latter.

Mainly because we sold our profit making infrastructures or closed them down.

[Furunculus]

Mainly because we sold our profit making infrastructures or closed them down.

quick question, are we still in your fantasy land where socialism would work effectively had you been in charge?

[Beskar]

quick question, are we still in your fantasy land where socialism would work effectively had you been in charge?

Not really a fantasyland. My breed would socialism would work, and no, it is nothing like the CCCP. Also, you wouldn't have to pay income tax either.

[Idaho]

Ah yes - Tory governments. It's been so long I'd almost forgotten what they were like.

If you are rich, prepare to get richer. If you are poor - you're ******.

[Furunculus]

so much venom..................... but who cares?

[InsaneApache]

Not really a fantasyland. My breed would socialism would work, and no, it is nothing like the CCCP. Also, you wouldn't have to pay income tax either.

Please elaborate. I'm curious on how your socialism differs from what's been tried before and found wanting?

[rory_20_uk]

Any analysis or constructive input? Or merely teh rather stale declamations which are not greatly based in reality.

[Beskar]

Please elaborate. I'm curious on how your socialism differs from what's been tried before and found wanting?

Any analysis or constructive input? Or merely teh rather stale declamations which are not greatly based in reality.

Incorrect Rory, it is firmly based on reality.

It is quite simple really, if the wealth generated is fed directly into the system, it would bypass all outgoings and middle men which clog up the private industry, and directly into the coffers. This would in turn fund all the projects and welfare required, without having to resort to "tax".

The world is structured with various different artifically constructed systems, as such, Tesco could be described as one system, who operates in various other systems. On the fuller picture, you have a tangled mess of various systems working in a complex arrangement far beyond the scope of the human imagination. However, there are two main elements present in these systems (which many like Marx identified) which is the "Creation of Wealth"/"Availability of Resources" inline with the "Users of Wealth"/"Resource Depletion". In a stereotypical capitalist system, you have the Corporations, all these various groups who create wealth for their own purpose. In reality, majority of this wealth feeds those within those systems, especially the dictator CEO's at the top. Any resources which come available is mainly from those within the system exporting the wealth out, or via taxes (by Governments or other entities). In these systems, you have all the middle men too, such as the Shareholders, and those earning far beyond their means with no work of their own. On the grander scale, all these different systems are not co-operating, but are infact competitive, they serve themselves opposed to serving humanity. This is a very inefficient, corrupt and pretty much goes against any logic or reason.

So what is the ultimate aim/goal? Without this, you cannot advance further. In short, I will simply quote this from Political Compass:

If economic globalisation is inevitable, it should primarily serve humanity rather than the interests of trans-national corporations.
Agree
Disagree

I believe that the economies purpose is to serve the interests of humanity, not the selfishness of the minority or a corporate elite. To be honest, I might as well as summarise it as this, you either pretty much agree with me, and you aim for that goal, or you disagree with me, then it is pretty pointless me and you having a discussion on economics unless you decide to change your mind as we will never agree.

Anyway, equipping yourself for this goal instead of that of selfishness, you would first try to develop an overarching system which can be managed, which you would then simplify to improve efficency.

Firstly you wouldn't bother with small buisnesses such as the corner shop, these simply are wealth-recyclers, not wealth generators. Infrastructure is that, these are not wealth generators by themselves, but these are nessecary to produce wealth (transport, electric, water, schools, etc). As for big wealth generators themselves, you bring these into the hands of the people, to be used to pay for the infrastructure, and to fund the otherthings such as healthcare which may be requested. As these wealth generators would automatically be funding these, this means that there doesn't need to be any income tax, since the wealth generators are what gives the wages in the first place so substracting it from that, doesn't make sense, as you could just extract it from the wealth generation itself.

Now you end up with the different systems, encompassed within a controllable singular environment, to produced the results we desire. Pretty easy to understand conceptually and logically and makes perfect sense.


[The finer details and structures of such systems, etc, are another subject within itself]

[rory_20_uk]

Bescar, I was referring to Idaho's comment. Apologies for causing ambiguity - I should have quoted.

I am a scientist by trade (sort of) and so I am happy to have anything challenged. I think that Small government capitalism is the best model, but if there are others that work better then that's fine.

I would say that competition is required to up the game of all as well as to find the best solutions (often there's more than one).

State-run institutions are not automatically better. They are often massively inefficient, slow to adapt and fail to innovate. Often they are also self serving (BBC which gets given money by the state still has a small army of people on more than £100,000 - why? There's no need for ruthless cut and thust as the money is already there.) Other examples: MoD purchases run years late as a matter of course, NHS spine cost over £12 billion - and doesn't work. Google grew from out of a shed and I can plot routes on my phone.

In drug research, things might work like a dream i the lab. It doesn't mean it'll work in a human though.

[Beskar]

Bescar, I was referring to Idaho's comment. Apologies for causing ambiguity - I should have quoted.

My full apologises, it was mainly replying to a couple of comments in the thread. Don't take my reply personally as any attack or insult against you. Wasn't my intention.

I am a scientist by trade (sort of) and so I am happy to have anything challenged. I think that Small government capitalism is the best model, but if there are others that work better then that's fine.

I would say that competition is required to up the game of all as well as to find the best solutions (often there's more than one).

State-run institutions are not automatically better. They are often massively inefficient, slow to adapt and fail to innovate. Often they are also self serving (BBC which gets given money by the state still has a small army of people on more than £100,000 - why? There's no need for ruthless cut and thust as the money is already there.) Other examples: MoD purchases run years late as a matter of course, NHS spine cost over £12 billion - and doesn't work. Google grew from out of a shed and I can plot routes on my phone.

In drug research, things might work like a dream i the lab. It doesn't mean it'll work in a human though.

I don't agree with small state capitalism, as it just allows those with the means of production to run amok. I believe the economics, just like the politics, should be in the hands of the people for the benefit of humanity and not simply the shareholders or high-fliers.

I also do believe in healthly competition, especially in the inventor/research and development. I am a big supporter for technological advancement and progression. Many ways this could be done is rival public-owned institutions in the forms of different universities and research facilities. This would allow the sense of co-operation and competition to go side-by-side. I remember an interesting combination between the Health Research and companies such as BAE, and with this co-operation, there were some big leaps conducted, such as the rotatary-heart pump, etc. There are a lot of advantages that co-operation can bring which we can miss out on, simply because these are all different systems.

As for state-run = better, I agree, it isn't automatically better. But public-owned institutions are potentionally far-superior to fulfilling the task required of them (serving humanity), in comparison to private-owned institutions who simply have the goal of "making as much wealth for as little work as possible" and this usually for the private elite at the top. Also, I disagree with many laws and practises that have been or are currently in place. I am all for changing the public-sector as you call it, and making it better.

As for examples like google, I am all for public-support of such projects and advancements.

[Andres]

I don't agree with small state capitalism, as it just allows those with the means of production to run amok. I believe the economics, just like the politics, should be in the hands of the people for the benefit of humanity and not simply the shareholders or high-fliers.

Allthough that sounds very noble and good, I wonder what system you're going to implement to accomplish that. It's nice to use noble phrases as "for the benefit of humanity" and "in the hands of the people", but how exactly are you going to accomplish that?

Otherwise, what you are saying is just another empty slogan

I also do believe in healthly competition, especially in the inventor/research and development. I am a big supporter for technological advancement and progression. Many ways this could be done is rival public-owned institutions in the forms of different universities and research facilities. This would allow the sense of co-operation and competition to go side-by-side. I remember an interesting combination between the Health Research and companies such as BAE, and with this co-operation, there were some big leaps conducted, such as the rotatary-heart pump, etc. There are a lot of advantages that co-operation can bring which we can miss out on, simply because these are all different systems.

How will you stimulate the competition? Or do you expect the competitors to compete for the sake of competing? People need motivation to work harder. Expecting people to work harder than others "for the benefit of humanity" is naive. Certainly if the guy saying it has his pockets full of tax money and lives a lazy life in a villa with swimming pool, a personal driver and doesn't do much more than doing a few passionate speeches about humanity every once in a year.

As for state-run = better, I agree, it isn't automatically better. But public-owned institutions are potentionally far-superior to fulfilling the task required of them (serving humanity), in comparison to private-owned institutions who simply have the goal of "making as much wealth for as little work as possible" and this usually for the private elite at the top. Also, I disagree with many laws and practises that have been or are currently in place. I am all for changing the public-sector as you call it, and making it better.

As for examples like google, I am all for public-support of such projects and advancements.

Again, "serving humanity" is vague. It sounds sloganesque. Most people won't work hard for "serving humanity". They want material stuff. We can regret that, but it's simply how most of us are

So, you'll need something adapted to this reality to reach your ideal society. But I wouldn't throw away capitalism all together.

[Ja'chyra]

As I've siad before I'm a civil servant, so you know where my views come from.

I can accept a pay freeze even though most of the things you hear about our pay and pensions are total lies, we do get paid less than the going rate, in my case the industry equivalent is on double, our pension isn't gold plated, £12k for me at pensionable age and more than half way up the civil service food chain, and we're lazy buggers, I and my better half regularly work at the weekends and when on leave for no extra pay the same as industry do. What I can't accept is the lies printed about us that the government seems to agree with to the point where Foxy himself said he would sack 40,000 defence procurement staff even though there was only a total of 27,00 at the time and there is significantly less now.

So while I can accept a pay freeze as being in the best interests what it boils down to is the governement wants to replace us with contractors, how can that possibly cheaper? Answer - It isn't but it comes from a different budget so it will seem to be. Another thing is the contractors they replace us with will be the same contractors that receive the contracts that their own staff will be placing.

[rory_20_uk]

If the Public sector is so bad - leave for Industry. I did. Not for the pay, merely to do something that was interesting.

Some contractors do offer a very bad value for money. About a year ago another friend who is fast tracked in the DoH (Physics degree) was proudly telling me how they'd improved bidding for services int he NHS. Long story short the "innovation" was working out what something cost - which they'd not bothered to do for the preceding decade. Spine is another case in point. Contractors love government contracts as they're so lucrative. That's a failing of the Civil Service more than anything else. Doing things more efficiently would be the ideal - but whether that happens is another story.

Isral has a much smaller MoD and yet manager to be more efficient. I've no idea how they do this, but learning from them wouldn't be such a bad idea.

A friend of mine in the Bank of England has been offered a job with a 25% pay premium in the Private Sector, but is still unsure whether to take it due to the pension and security he currently enjoys. The pension is worth currently 20% of one's pay in terms of value.

[Myrddraal]

Putting aside the rhetoric, both parties want to reduce the deficit, and I think we could all agree that it is for the benefit of the country to do so.

The real question is, will this budget achieve this? It's too easy to simply say cuts = lower deficit, it doesn't work like that and it never did and the conservatives were close to lying through their teeth (perhaps I should say, were being misleading) when they implied as much during the election campaign.

In the simplistic way in which I understand economics, to lower the deficit the government's income needs to be higher than it's expenditure. Simple as that.

Does this necessarily mean small government? No. Despite the Chancellors extensive use of the word necessary, this deficit is also being used as an excuse to reduce the size of government, a philosophy which the majority in this country do not support (hence the need for an excuse, with no mandate from the people).

A completely separate question is: will these enormous cuts work? They might do, but I'm not sure.

I really do only have a basic understanding of economics, but here's the situation as I understand it:

It is impossible to do reduce a government deficit without taking money out of the UK economy (unless the organisations to whom the government owes money are British, could anyone enlighten me on this?). The question is where to remove this money from, do you remove it from the income and wealth of the entire population, or do you remove it specifically from the public sector?

Lots of government cuts & No tax rises ↔↔↔↔↔↔↔	↔↔↔↔↔↔↔↔↔ No government cuts & Tax hikes
Vast amounts of unemployment is created in a very short space of time. Tax revenues plummet, and not only is the economy in ruins, but the deficit actually increases. Money is removed from the economy in one focussed area: the public sector. Public sector jobs and services disappear.	In the short term the government succeeds in balancing the books, but the high burden on individuals and companies leads to a poorer population, and such a tactic will only last till the next general election. Money is removed from the economy across the board. No individual sector is hit hard, but all suffer.

The extreme left (or should I say right) of this graph would clearly be a disaster. Have the conservative government got the balance right? At this point I'm lost, and the debate essentially becomes a debate between economists, but I can't say I'm overjoyed at the dangers present in this budget.

This is just my understanding of the situation, I don't pretend to be an authority on economics, and if I need putting straight in any way, fire away.

[gaelic cowboy]

Meh arguing over semantics the lot of ye, who care's about Marx or Maggie.

What 's being cut my friends how much is be added to petrol, drink or the fags, thats what is important to the man in street is his pension to be cut or VAT to increase not who spends more or if marx is wrong.

[Vladimir]

Myrddraal,

It looks like you're taking a private sector approach.

Cutting government budgets doesn't automatically mean layoffs like in the private sector. It is possible to cut the budget without affecting unemployment. However, while it is possible it is not probable.

[Furunculus]

Does this necessarily mean small government? No. Despite the Chancellors extensive use of the word necessary, this deficit is also being used as an excuse to reduce the size of government,

a philosophy which the majority in this country do not support (hence the need for an excuse, with no mandate from the people).

It is impossible to do reduce a government deficit without taking money out of the UK economy (unless the organisations to whom the government owes money are British, could anyone enlighten me on this?).

yes, because a level of governement spending over and above 40% of GDP has been shown to depress long term growth, which given our declining demographics is a sure way to make life miserable for future generations. having massive deficit spending also greatly increases the amount of debt interest a country has to pay, money that could be spent on services, an example of which is that by 2011 the british government will be spending nearly twice as much on repaying debt interest as it does on the defence budget.

i remain utterly and totally unconvinced that there is a majority in favour of keeping government spending as high as it is now, and if spending must be lowered then so must government ambitions.

government spending at best recycles money around the economy, and excessive spending has been shown to depress growth, so while the economy may take a short term growth hit while the private sector moves to occupy the space vacated by the public sector it will in the long term boost growth, and boost trade competitiveness by reducing the tax burden on british companies.

[Philippus Flavius Homovallumus]

I think it was overall a good budget, things like pensions will rise when they should (and they REALLY should) while other benefits, which have risen unrestricted will be cut and then capped. Capital Gains tax will rise, allowing more money to be clawed back from non-wage earners while the pain will be mitigated somewhat by cutting corporation tax.

We have to recognise that right now oil and banking make us money, and have done since Thatcher closed the massively inefficient and wasteful state-subsidised industries that wer, frankly, pathetic by modern standards. We must remember that the reason why we have no car manufacturers, motorbike manufacturers, or shipbuilders is because of state ineffiency, where innovation was quashed and these industries were used as a sort of feel-good form of subsidised working.

What no needs to happen is that industry and other forms of wealth generation are created and bedded in outside the South East, and the budget helps to encourage this as well.