The 2010 Emergency Budget thread

[I1L2T3]

Yes I seem to remember they called it 'creative destruction'!

 

Unfortunately Gordon Brown and 'new' Labour got way too close to the bankers and the square mile. I think there was some kind of Faustian pact where the financial services and the housing market were allowed to develop unchecked with little regulation & few questions asked - though what Labour got out of it is questionable. Pehaps the Kudos amongst journalists that they had left their 'cloth cap and smoke stack industries' image behind.

 

I suppose the ideal is that there would be a balance between the different sectors of the economy and different regions of the UK.

 

I can't say I disagree with much of that, except perhaps there was regulation but it wasn't applied as effectively as it could have been.

[Wildcat]

Yeah, but then they'll probably ask for a bailout again.

 

I would like to think that Osbourne will do what's right for the country, even at the expense of the coalition's popularity (such as it is) but I can't.

 

He will, in my opinion, shirk from being as savage a cutter as is needed, merely tinkering around the edges.

 

To anyone who thinks we shouldn't cut too much in case we "endanger the recovery"

 

[a] The Greeks were faced with this choice years ago, and as we now know, they chose the "easy" but incorrect option.

There is no recovery. That positive GDP figure is the product of many billions in quantitative easing, plus further billions in deficit spending. Borrowed money and phantom money created out of nothing do not add up to a real, sustainable recovery.

 

The greeks were faced with a very different choice because their debt was short term and external to the economy, UK debt is internal. To pay it back we need to nurture the economy not set about trashing it, which is precisely what this emergency budget appears to be setting out to do.

 

http://www.ft.com/cms/s/0/9ac5f98c-7a45-11df-aa69-00144feabdc0.html

 

Things are improving at the moment because of the VAT rise,

http://www.ft.com/cms/s/0/8a5c8d24-7abb-11df-8549-00144feabdc0.html

 

but slashing public spending endangers the recovery and 2.3m private sector jobs.

http://www.ft.com/cms/s/0/5d2a8604-7b00-11df-8935-00144feabdc0.html

 

And in case anyone still thinks that it's all the bankers fault, what were you doing these last 13 years?

 

I wonder how long it will take for the penny to drop, that the whole "prosperity" thing we thought we were experiencing was a bubble, the whole economy riding along on a decades long credit boom and that the boom and inevitable bust was caused by collective, mass behaviour, and with the governments complicity, as much as "a few evil bankers".

 

Anyone for example who thought it quite normal for house prices to rise by 200% or 250% withn a few short years for no coherent reason (other than pure greed and speculation).

 

Anyone who thought "it's different this time" needs to read Extraordinary Popular Delusions and the Madness of Crowds. It was published in 1841 but still rings true today.

 

I don't think anyone thought that house prices increasing was normal, but I can't see how this has benefited many people. Anyone selling will have had to bought another property, first time buyers were penalised. Nor can I see how anyone buying property can said to be at fault for this situation. The decision they have to make is whether renting or buying worked out cheaper.

[espadrille]

Tomorrow, the coalition government will deliver an emergency budget to bring order back to the public finances. It will be a difficult budget - but remember, as you hear it, why we have to do this.

Labour left our country with a mountain of debt. Every minute that goes by the government spends a staggering £80,000 on interest, that's over £800 million a week. If we don't take action now, the markets will force us into even more drastic measures as they have in Greece and Spain.

Without action on the deficit, we will carry on racking up unaffordable debts our children will have to pay off. We will carry on spending more money on debt interest than we do on our schools. And we will undermine the economic growth needed to create jobs and opportunities for all of us. There is nothing fair, liberal or progressive about any of that.

Of course, the Labour party will say that these decisions are not justified. They will say the budget creates risks for our economy and that Liberal Democrats have sold out to go along with Conservative cuts. They are wrong.

Every time you hear Labour say that, ask them why they covered up the details of the £44bn of cuts they themselves had planned. Ask them why they racked up so much debt that we could end up spending £70bn a year just on debt interest. And ask them why they created this fiscal bombshell in the first place by refusing to take action against the reckless banks even when Vince Cable warned of the risks they were taking.

Until Labour accepts the blame for the mess we are in and comes up with a plan for getting us out, they cannot be taken seriously.

[Tony]

The full text of today's email from Cleggy

 

Dear Tony,

 

Tomorrow, the coalition government will deliver an emergency budget to bring order back to the public finances. It will be a difficult budget - but remember, as you hear it, why we have to do this.

 

Labour left our country with a mountain of debt. Every minute that goes by the government spends a staggering £80,000 on interest, that's over £800 million a week. If we don't take action now, the markets will force us into even more drastic measures as they have in Greece and Spain.

 

Without action on the deficit, we will carry on racking up unaffordable debts our children will have to pay off. We will carry on spending more money on debt interest than we do on our schools. And we will undermine the economic growth needed to create jobs and opportunities for all of us. There is nothing fair, liberal or progressive about any of that.

 

Of course, the Labour party will say that these decisions are not justified. They will say the budget creates risks for our economy and that Liberal Democrats have sold out to go along with Conservative cuts. They are wrong.

 

Every time you hear Labour say that, ask them why they covered up the details of the £44bn of cuts they themselves had planned. Ask them why they racked up so much debt that we could end up spending £70bn a year just on debt interest. And ask them why they created this fiscal bombshell in the first place by refusing to take action against the reckless banks even when Vince Cable warned of the risks they were taking.

 

Until Labour accepts the blame for the mess we are in and comes up with a plan for getting us out, they cannot be taken seriously.

 

We have always argued that cuts would be necessary, but the timing should be based on economic circumstances, not political dogma. The economic situation today means that time has come.

 

A lot has changed even in the last few months. The crisis in the Eurozone and the problems in Greece and Spain have put huge pressure on us. The new Office of Budget Responsibility has shown that the structural deficit is bigger than we thought. And in government, we have discovered billions of pounds of unfunded spending promises Labour had made, cynically raising people's hopes when they knew the coffers were bare.

 

So cuts must come. We have taken the difficult decisions with care, and with fairness at their heart. You will see the stamp of our Liberal Democrat values in tomorrow's Budget. But nonetheless, it will be controversial. This is one of the hardest things we will ever have to do, but I assure you, the alternative is worse: rising debts, higher interest rates, less growth and fewer opportunities.

 

Sorting out Labour's mess will be difficult but it is the right thing to do.

 

Best wishes,

 

Nick Clegg MP

Leader of the Liberal Democrats & Deputy Prime Minister

[Wildcat]

Espadrille\Tony,

 

where is the evidence for all these hidden spending commitments?

 

The fact Net public borrowing is lower than the forecasts tells a rather different story.

http://www.ft.com/cms/s/0/8a5c8d24-7abb-11df-8549-00144feabdc0.html

 

Spin perhaps?

 

It will be interesting to see what happens with Capital Gains Tax tomorrow. The Libs managed to get that in the joint manifesto despite the whinging from the Tories, because top earners can use it to avoid paying income tax.

 

It will be interesting to see if it forms a part of the "emergency budget".

 

http://www.tuc.org.uk/extras/cgt.pdf

[I1L2T3]

There is no hidden spending. Government departments have been working with all parties in the run up to the election. There is no reason for impartial civil servants to hide anything.

[JFKvsNixon]

There is no hidden spending. Government departments have been working with all parties in the run up to the election. There is no reason for impartial civil servants to hide anything.

 

There is evidence that the civil service did not feel comfortable with the levels of government spending in the run up to the election.

 

Civil servants came under increasing pressure from ministers in the dying months of the Labour government to carry out expensive orders that they disagreed with and responded by submitting an unprecedented number of formal protests in the run-up to the general election.

 

In fact after the election a senior civil servant went on the record to complain about levels of the labour governments spending in the run up to the election.

 

David Laws, the chief secretary to the Treasury, told the BBC's Newsnight on Monday: "We're very concerned indeed that over the last few months of the last government there were a lot of spending commitments that were made and some of those may not represent good value for money and in some cases the decisions seem to have been made against accounting officer advice. There were examples of that and that concerns us greatly."

 

http://www.guardian.co.uk/politics/2010/may/18/civil-servants-labour-spending

[Greybeard]

"Until Labour accepts the blame for the mess we are in and comes up with a plan for getting us out, they cannot be taken seriously."

 

Why does Clegg want Labour to come up with a plan...isn't he happy with the Tory one ?

 

What he needs to think about is that if he doesn't display some independence of mind, rather than playing little master echo to David Cameron's spin, he and his party won't be taken seriously either.

[I1L2T3]

There is evidence that the civil service did not feel comfortable with the levels of government spending in the run up to the election.

 

 

 

In fact after the election a senior civil servant went on the record to complain about levels of the labour governments spending in the run up to the election.

 

 

 

http://www.guardian.co.uk/politics/2010/may/18/civil-servants-labour-spending

 

But none of it was secret spending. If it was so secret why would people be going on public record about it.

 

It's at best spin, at worst lies. Cons and Libs play this game where they pretend to have only found out about freely accessible spending records after the election. It's just nonsense. They were working with senior civil servants in all departments for months before the election with Libs being unusually heavily involved because of the prospect of a hung parliament. There is always a transition plan between parliaments. Always.

[I1L2T3]

"Until Labour accepts the blame for the mess we are in and comes up with a plan for getting us out, they cannot be taken seriously."

 

Why does Clegg want Labour to come up with a plan...isn't he happy with the Tory one ?

 

What he needs to think about is that if he doesn't display some independence of mind, rather than playing little master echo to David Cameron's spin, he and his party won't be taken seriously either.

 

bring back Spitting Image