UK Budget- The Axe Falls

[InsaneApache]

I'm drunk.

[Furunculus]

interesting article on just how savage these cuts really are:

http://www.telegraph.co.uk/finance/c...that-deep.html

not that savage really.

[rory_20_uk]

Although public sector job losses does decrease the tax revenue, seeing as the WHOLE salary was from taxes this is proportionally a saving.

[Idaho]

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

This budget is an aggressive attack on working people's wealth, and an unshackling of wealthy people's wealth. This budget will create unemployment on one hand, and with the other hand remove benefits from those it has made unemployed.

There are more unemployed already, than there are jobs to do. This drives down wages. Reducing benefits drives down wages. Increasing unemployment drives down wages. Increasing VAT drives down wages.

All the while talk of 'scroungers' increases (front page of the Express yesterday). It's the 80s again. Implement policies that increase unemployment, then blame the unemployed.

[rory_20_uk]

This budget is an aggressive attack on working people's wealth, and an unshackling of wealthy people's wealth. This budget will create unemployment on one hand, and with the other hand remove benefits from those it has made unemployed.

There are more unemployed already, than there are jobs to do. This drives down wages. Reducing benefits drives down wages. Increasing unemployment drives down wages. Increasing VAT drives down wages.

All the while talk of 'scroungers' increases (front page of the Express yesterday). It's the 80s again. Implement policies that increase unemployment, then blame the unemployed.

Mass immigration for a decade of Eastern Europeans coming to the UK to work. Does the UK have full employment? It must do surely. People wouldn't be unemployed whilst there are jobs to do that we have to get in others to fill? Uh, yes there are. Why is this? A system where benefits is more attractive than working - yet others are prepared to immigrate to do it...

The unemployed don't have to sit there waiting the next government job to come along. They could set up enterprises themselves! Do something without the State being involved. Heresy I know.

As jobs are basically infinite (although many oddly not wanted, as I said earlier). Persons can create them by doing new things. Innovation? I know, another dirty word.

Driving up wages achieves one of two things:

• Inflation (1970's Labour)
• Massive Government Debt (2000's Labour)

I realise that you seem to think printing and handing out money to all at a rate that would make Mugabe blush is a good idea, but oddly enough this tends to destabilise... everything.

Humans are generally extremely resourceful. They can find activities to do if need be. Currently doing nothing just happens to be the better option. I'm not blaming, nor telling the unemployed what to do. I am just not prepared to subsidise their inactivity when many jobs are either going unfilled or to migrant workers.

[Furunculus]

This budget is an aggressive attack on working people's wealth, and an unshackling of wealthy people's wealth. This budget will create unemployment on one hand, and with the other hand remove benefits from those it has made unemployed.

There are more unemployed already, than there are jobs to do. This drives down wages. Reducing benefits drives down wages. Increasing unemployment drives down wages. Increasing VAT drives down wages.

All the while talk of 'scroungers' increases (front page of the Express yesterday). It's the 80s again. Implement policies that increase unemployment, then blame the unemployed.

Why do you not get this?

The noughties is not affordable, and continueing to pretend that is is will lead to the UK spending 27% of tax income on debt interest repayments by 2040, due to a national debt that is 400% of GDP!

This will not just be because of deficit spending, it will be because a high tax economy with a declining demographics in a world of aspiring BRIC nations is going to see its growth and competitiveness depressed by that high tax, which will limit our ability to let the deficit take care of itself.

What is more, continueing this high-spending madness will utterly ruin the quality of life for future generations when they are expected to cough up for the 20 million public sector pensions that are currently COMPLETELY unfunded. some might consider that immoral.......

[Idaho]

The unemployed don't have to sit there waiting the next government job to come along. They could set up enterprises themselves! Do something without the State being involved. Heresy I know.

As jobs are basically infinite (although many oddly not wanted, as I said earlier). Persons can create them by doing new things. Innovation? I know, another dirty word.

I realise that you seem to think printing and handing out money to all at a rate that would make Mugabe blush is a good idea, but oddly enough this tends to destabilise... everything.

Yes I have frequently promoted printing and handing out money. Also it's entirely feasable that 2 million people can set up successful innovative small businesses. You are really on a roll here

Meanwhile back in the real world...

Why do you not get this?

The noughties is not affordable, and continueing to pretend that is is will lead to the UK spending 27% of tax income on debt interest repayments by 2040, due to a national debt that is 400% of GDP!

This will not just be because of deficit spending, it will be because a high tax economy with a declining demographics in a world of aspiring BRIC nations is going to see its growth and competitiveness depressed by that high tax, which will limit our ability to let the deficit take care of itself.

What is more, continueing this high-spending madness will utterly ruin the quality of life for future generations when they are expected to cough up for the 20 million public sector pensions that are currently COMPLETELY unfunded. some might consider that immoral.......

I have never said that public spending should not be cut. You and rory breeze in with assumptions that are as lazy as your assertions. There are numerous, almost infinite other ways to reduce public spending and raise more money. This government chose a very specific method which will hit those on lower incomes hardest, whilst at the same time blaming them for their own situation. All the while, their corporate backers are looking at bumper profits and slashed tax bills. These 'wealth creators' as you like to coin, aren't motivated by employing people. If you gave the chance to make £10 more by sacking 10 people, they wouldn't even blink.

[rory_20_uk]

Yes I have frequently promoted printing and handing out money. Also it's entirely feasable that 2 million people can set up successful innovative small businesses. You are really on a roll here

Meanwhile back in the real world...



I have never said that public spending should not be cut. You and rory breeze in with assumptions that are as lazy as your assertions. There are numerous, almost infinite other ways to reduce public spending and raise more money. This government chose a very specific method which will hit those on lower incomes hardest, whilst at the same time blaming them for their own situation. All the while, their corporate backers are looking at bumper profits and slashed tax bills. These 'wealth creators' as you like to coin, aren't motivated by employing people. If you gave the chance to make £10 more by sacking 10 people, they wouldn't even blink.

Small business often employ other people. Suddenly the 2 million appears ridiculous.

Loads of other methods to cut spending and raise money... Odd you didn't mention any of them...

Businesses are not motivated by employing people. You're thinking of the Civil Service and other massively bloated industries that the state has owned in the past. But they do require people to be employed to, y'know, function.

Always better idea... just none that happen to work in reality. Socialism in a nutshell.

[Idaho]

Small business often employ other people. Suddenly the 2 million appears ridiculous.

Loads of other methods to cut spending and raise money... Odd you didn't mention any of them...

Businesses are not motivated by employing people. You're thinking of the Civil Service and other massively bloated industries that the state has owned in the past. But they do require people to be employed to, y'know, function.

Always better idea... just none that happen to work in reality. Socialism in a nutshell.

Sorry but if you really think that unemployment can be reversed by a few tax breaks for start ups and the odd grant, you're living in cloud cuckoo land.

[Vladimir]

Sorry but if you really think that unemployment can be reversed by a few tax breaks for start ups and the odd grant, you're living in cloud cuckoo land.

If we use your statement as a metric than he's nutty as a hatter.

[Philippus Flavius Homovallumus]

Sorry but if you really think that unemployment can be reversed by a few tax breaks for start ups and the odd grant, you're living in cloud cuckoo land.

And if you think that the defecit can be cleared without brutal restructuring of the Public Sector you're considerably worse off.

Do you know what the best taxt rise really was? VAT, why you ask?

The answer is that it is unavoidable for both rich and poor, but it taxes spending rather than earnings, thus discouraging the rich from putting their money into things like capital, because no matter how they earn their money, when they spend it they will pay.

[Myrddraal]

The answer is that it is unavoidable for both rich and poor, but it taxes spending rather than earnings, thus discouraging the rich from putting their money into things like capital, because no matter how they earn their money, when they spend it they will pay.

Could you explain this to me? It doesn't seem to make much sense. How does a tax on spending (essentially a tax on consumption) discourage people from investing in capital? If VAT was to have any effect, wouldn't it do the opposite to what you say?

And if you think that the defecit can be cleared without brutal restructuring of the Public Sector you're considerably worse off.

Why brutal? Theoretically, the deficit can be cleared without any restructuring of the Public Sector, simply introduce phenomenally high taxation. I'm not claiming that this extreme would be any better than the other, but to pretend that 'brutal' restructuring of the Public Sector is necessary to clear the deficit is just that: pretence. Whether or not it is desirable is another matter.

Any why the word brutal? It's almost as if you are relishing the thought. like a child about to knock over a game of jenga.

[Philippus Flavius Homovallumus]

Could you explain this to me? It doesn't seem to make much sense. How does a tax on spending (essentially a tax on consumption) discourage people from investing in capital? If VAT was to have any effect, wouldn't it do the opposite to what you say?

People trying to get money out of capital rather than wages do so for tax purposes, raising VAT wipes some of that out. Also, a rise in VAt will probably drive down spending on luxuries, hopefully this will encourage people to spend less often and save to buy, rather than using credit.

Why brutal? Theoretically, the deficit can be cleared without any restructuring of the Public Sector, simply introduce phenomenally high taxation. I'm not claiming that this extreme would be any better than the other, but to pretend that 'brutal' restructuring of the Public Sector is necessary to clear the deficit is just that: pretence. Whether or not it is desirable is another matter.

Any why the word brutal? It's almost as if you are relishing the thought. like a child about to knock over a game of jenga.

The size of the State pretty much doubled under Labour, didn't it? The population didn't. Even assuming that the Conservatives under-funded the State, which I think is true in at least some cases, probably less in others, that expansion is untenable. So now the State needs to shrink, probably by 25% (which would still make it roughly 50% larger than it was 13 years ago.

How could anyone possibly think that, in a time when there is a massive hole in the public finances we can continue to use the State as a sink for those who might otherwise be employed.

As to Hyper taxation, it would never work because anyone with the money would leave the country and you'd be left just taxing poor people.

[Beskar]

As to Hyper taxation, it would never work because anyone with the money would leave the country and you'd be left just taxing poor people.

This ends up going into one of those "What if" situations where some one who didn't have an opportunity to create money because some one in the market is already there would then get the opportunity to make that money in their place.

When people leave, the wealth they would have recieved means they would have no longer recieve it, but other people do instead of them. Thus the money stays within the system. Therefore providing opportunities for others to recieve it.

[Philippus Flavius Homovallumus]

This ends up going into one of those "What if" situations where some one who didn't have an opportunity to create money because some one in the market is already there would then get the opportunity to make that money in their place.

When people leave, the wealth they would have recieved means they would have no longer recieve it, but other people do instead of them. Thus the money stays within the system. Therefore providing opportunities for others to recieve it.

Unless people, when they leave, take their money with them; further, hyper taxation always hits the poor as well as the rich, and as soon as you start making money you get even more hammered for it.

Even further, such a State (like the Labour one now being dismatled) has greater incentives not to work than to make money.

Ergo, tax revenue falls, so welfare dries up, so everyone ends up wretched. It has always happened in every instance, and the harder you push the worse it gets. Witness the difference between 1970's Britain and the Soviet Union; the latter took the doctrine to the extreme and the former was only rescued from complete ruin by Thatcher's own brutal form of politics, far more ruthless than Cameron and Clegg today.

[Beskar]

Unless people, when they leave, take their money with them; further, hyper taxation always hits the poor as well as the rich, and as soon as you start making money you get even more hammered for it.

Not necessarily, hyper taxation based on income only affects the money given to the individual. The money being made could hypothetically be used to hire more workers, lower the price of the product, be invested or be saved by the company itself. It doesn't have to be paid to that one person.

Though, I believe I said earlier that ideally, I would be in favour of no tax on income, under an ideal system.

Even further, such a State (like the Labour one now being dismatled) has greater incentives not to work than to make money.

Unfortunately, there are many people who cannot get jobs. I got a friend who keeps getting refused for being over qualified with a BA in History. Some of these interviews they were basically the only one even turning up in a smart dress. There is a real situation of people unable to get work and who want it, and can't get it, and they are expected to live off £50 per week. (I earn that in under 5 hours work).

Ergo, tax revenue falls, so welfare dries up, so everyone ends up wretched. It has always happened in every instance, and the harder you push the worse it gets. Witness the difference between 1970's Britain and the Soviet Union; the latter took the doctrine to the extreme and the former was only rescued from complete ruin by Thatcher's own brutal form of politics, far more ruthless than Cameron and Clegg today.

I haven't actually complained about the Budget for a reason, you know. My only main gripe was the reduction of Corporate tax.

[Furunculus]

Any why the word brutal? It's almost as if you are relishing the thought. like a child about to knock over a game of jenga.

I am relishing the prospect, because I believe that titheing more than 40% of the wealth of a nation on an annual basis, and then borrowing still more, is immoral because it is both punitive to this generation, and will destroy the living standard of the next by reducing long term growth.

[rory_20_uk]

Not necessarily, hyper taxation based on income only affects the money given to the individual. The money being made could hypothetically be used to hire more workers, lower the price of the product, be invested or be saved by the company itself. It doesn't have to be paid to that one person.

Though, I believe I said earlier that ideally, I would be in favour of no tax on income, under an ideal system.


Unfortunately, there are many people who cannot get jobs. I got a friend who keeps getting refused for being over qualified with a BA in History. Some of these interviews they were basically the only one even turning up in a smart dress. There is a real situation of people unable to get work and who want it, and can't get it, and they are expected to live off £50 per week. (I earn that in under 5 hours work).

I haven't actually complained about the Budget for a reason, you know. My only main gripe was the reduction of Corporate tax.

Although I agree that often the amounts those at the top of companies is obscene (especially when they get multiples of the average wage for leaving tee company they almost destroyed) good ones can add great value to the company. I don't like him particularly, but Steve Jobs has added billions to the value of the company and vast numbers of jobs and sales. He is probably worth the vast sums of money.

The end user gets £50 a week. Sadly, there is an army of form fillers etc to manage this so it costs the taxpayer a lot more to dole out the dole. Many long term unemployed also do other work and just not register it. What is the government going to do about it? They've no material posessions of their own, and prison is more expensive.

£50 isn't much of itself. Hell, my company charges clients £160 per hour for me (I've never bothered to work out the fraction I see - too depressing). Then add in council tax exemption, free prescriptions, free / subsidised housing, increased child benefit allowance and so on it becomes more substantial. Have enough children and as has been mentioned you loose when you work in absolute terms.

[Idaho]

And if you think that the defecit can be cleared without brutal restructuring of the Public Sector you're considerably worse off.

Do you know what the best taxt rise really was? VAT, why you ask?

The answer is that it is unavoidable for both rich and poor, but it taxes spending rather than earnings, thus discouraging the rich from putting their money into things like capital, because no matter how they earn their money, when they spend it they will pay.

Then why is a VAT rise recognised by 99% of economists as being the most regressive way of increasing tax revenue?



Far be it from me to defend the last Labour government. But it strikes me that they weren't entirely responsible for this situation. Unless of course they managed to somehow create the exact same situation in Spain, Greece, Germany, France, etc, etc. I am deeply suspicious of the deliberate shift in the blame from the bankers to the previous government. Especially as the bankers got away with a £2bn levy in the budget. The banking equivalent of chump change.

[Beskar]

Although I agree that often the amounts those at the top of companies is obscene (especially when they get multiples of the average wage for leaving tee company they almost destroyed)

Agreed, it is quite disturbing.

£50 isn't much of itself. Hell, my company charges clients £160 per hour for me (I've never bothered to work out the fraction I see - too depressing). Then add in council tax exemption, free prescriptions, free / subsidised housing, increased child benefit allowance and so on it becomes more substantial. Have enough children and as has been mentioned you loose when you work in absolute terms.

Yeah, but those those with no children, having to stay at home with parents for example, because they simply cannot move out, and no matter how hard they try, cannot get a job, the whole situation is still quite dire and depressing. There should be more opportunities for people to get work. Unfortunately, I believe one of the schemes to do that was recently scrapped by the conservatives in this budget. Another bad move, in my opinion.

[tibilicus]

Then why is a VAT rise recognised by 99% of economists as being the most regressive way of increasing tax revenue?



Far be it from me to defend the last Labour government. But it strikes me that they weren't entirely responsible for this situation. Unless of course they managed to somehow create the exact same situation in Spain, Greece, Germany, France, etc, etc. I am deeply suspicious of the deliberate shift in the blame from the bankers to the previous government. Especially as the bankers got away with a £2bn levy in the budget. The banking equivalent of chump change.

I thought the credit crunch (caused by the banks) and the structural deficit (caused by a government spending beyond its means) were two separate things? In this case, aren't the Tories attacking Labour for causing the structural deficit, not the credit crunch and recession in general?

[Beskar]

I thought the credit crunch (caused by the banks) and the structural deficit (caused by a government spending beyond its means) were two separate things? In this case, aren't the Tories attacking Labour for causing the structural deficit, not the credit crunch and recession in general?

The thing is, the structural deficit was managable before the Credit Crunch and then the Recession. While Labour were not making much fininical sense, they pretty much would have gotten away with it, if the Credit Crunch/Recession never occured.

This is not just in Britain, but in countries across the world. The recession cut hard and deep, and with the spiralling costs of lower taxes, and greater handouts, and reduction in the economy, it pushed a lot of countries over the edge, where they were previously comfortable.

This is even more complicated by the fact those that caused the mess in the first place, recieved handouts, and are now causing more of a mess themselves. Hedge Funders who set-up the dodgy American loans, for them to intentionally fail, are trying to make countries collaspe economically, in order for more wealth for themselves. It is highly immoral, and should be franky illegal, to the point of an act of war.

[Slyspy]

Frankly I regard increasing VAT as increasing tax on the poor (a class, and it is a class, that I'm not too far from being). They (we?) can least afford the extra cost. If you think that VAT only applies to luxuries then think again. This is unfortunate, and inevitable given the current coalition government. That said, I'm also convinced that a Labour government would have done no better for what you might call the working class.

Money has talked and those who truly caused the current crisis avoid the fall. It has not always been thus, but this time the poorer sections of society are taking the punishment alone.

[rory_20_uk]

So, Europe with Socialist governments are in problems (not all Labour, just very similar). Canada is doing rather well. The last decade they've been insurplus. They didn't borrow for the current spend.

Lack of regulation of banks. Yes, I agree. Thanks Gordon for splitting up oversight which didn't work.

[Beskar]

So, Europe with Socialist governments are in problems (not all Labour, just very similar). Canada is doing rather well. The last decade they've been insurplus. They didn't borrow for the current spend.

Lack of regulation of banks. Yes, I agree. Thanks Gordon for splitting up oversight which didn't work.

America is in trouble too.

Also, Norway isn't in Trouble as well as Canada and they are both European-styled socialist governments. Mainly because of the vast amounts of Oil/Natural Resources though.

[Philippus Flavius Homovallumus]

Not necessarily, hyper taxation based on income only affects the money given to the individual. The money being made could hypothetically be used to hire more workers, lower the price of the product, be invested or be saved by the company itself. It doesn't have to be paid to that one person.

You have to pay someone who runs a company lots of money (or significantly more than their workers) because they need to be able to hire personal staff as well as workers for their company. A large sector of our economy is focused on providing various services, people need money to use those services.

Also, entrapeneurs use their own money to A: Create new companies, and B: lend money to others to start new companies. My Uncle did such a thing a few years ago, he now employs several hundred people in several counties, and in various parts of the UK.

Unfortunately, there are many people who cannot get jobs. I got a friend who keeps getting refused for being over qualified with a BA in History. Some of these interviews they were basically the only one even turning up in a smart dress. There is a real situation of people unable to get work and who want it, and can't get it, and they are expected to live off £50 per week. (I earn that in under 5 hours work).

He should move, there are plenty of jobs about for those with the sheer bloody-mindedness to get them.

I haven't actually complained about the Budget for a reason, you know. My only main gripe was the reduction of Corporate tax.

Corporate Tax is a tax on business, and hence commerce. It's more than made up for by the 10% rise on Capital Gains.

Agreed, it is quite disturbing.

Yeah, but those those with no children, having to stay at home with parents for example, because they simply cannot move out, and no matter how hard they try, cannot get a job, the whole situation is still quite dire and depressing. There should be more opportunities for people to get work. Unfortunately, I believe one of the schemes to do that was recently scrapped by the conservatives in this budget. Another bad move, in my opinion.

There are, just not where you are. You have to move to another part of the country in that case.

Frankly I regard increasing VAT as increasing tax on the poor (a class, and it is a class, that I'm not too far from being). They (we?) can least afford the extra cost. If you think that VAT only applies to luxuries then think again. This is unfortunate, and inevitable given the current coalition government. That said, I'm also convinced that a Labour government would have done no better for what you might call the working class.

Money has talked and those who truly caused the current crisis avoid the fall. It has not always been thus, but this time the poorer sections of society are taking the punishment alone.

The rise in VAT has funded tax cuts and child tax credits. VAT is not just a tax on luxuries, but it doesn't include essentials, like food. Raising VAT hits everyone equally, the charge that it is not "progressive" merely means that it does not punish the rich more than the poor.

I am not a wealthy man, but I am glad the taxes have been raised, because otherwise I know I will die a poor and wretched man, just like everyone else in my blighted nation.

[Beskar]

He should move, there are plenty of jobs about for those with the sheer bloody-mindedness to get them.

How would they move? They have no money due to be debt due to University, they have no way to pay for rent, food or anything in order to make this move. Even then, most jobs do not even pay in advance, unless they are specialised, so they would have to some how try to survive for at least a month on absolutely nothing.

There is no practical way.


I am in a job, so I am happy as larry. Not everyone else is so lucky.

[Idaho]

He should move, there are plenty of jobs about for those with the sheer bloody-mindedness to get them.

Corporate Tax is a tax on business, and hence commerce. It's more than made up for by the 10% rise on Capital Gains.

So you believe that there are more job vacancies than there are unemployed? Despite all statistics to the contrary?

10% rise in capital gains - but an increase to £5m of the tax free threashold? Sounds like rich people with a good accountant will be entirely unaffected.

[Philippus Flavius Homovallumus]

How would they move? They have no money due to be debt due to University, they have no way to pay for rent, food or anything in order to make this move. Even then, most jobs do not even pay in advance, unless they are specialised, so they would have to some how try to survive for at least a month on absolutely nothing.

There is no practical way.


I am in a job, so I am happy as larry. Not everyone else is so lucky.

Well, getting a job is hard, but when you're somewhere where people use your degree as an excuse to turn you down you're totally screwed. So you have to move to find a job, because a job will never come to you.

In your friend's case he has to scrounge/beg/borrow (not steal) £750-1,000 in order to set himself up once he has a job, and he needs train fares to commute to where the jobs are in the interim, so perhaps £1500 over all. In my case I had a little money left over after my second degree, and my parents helped.

Your student depts don't exist from a budgeting point of view until you are working any way, so you ignore them.

In my case I was lucky and well qualified, but no one down here is refused a job for having a degree, so your friend is clearly in the wrong place.

[Beskar]

In my case I was lucky and well qualified, but no one down here is refused a job for having a degree, so your friend is clearly in the wrong place.

There are the normal bank debts, since the Student loan doesn't even cover accomendation + Food bills, etc. I was working part-time, so I was able to get through without going into other debt, but other people did. I remember them doing so during my first year and thinking "What the heck?"