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Questions for debate

Stephanie Flanders | 21:27 UK time, Monday, 29 March 2010

The men who would be chancellor had a spirited debate this evening - with each playing to their strengths. Chancellor Darling put the emphasis on "judgement calls"; Vince Cable on his honesty; Mr Osborne on the need for change.

Alistair Darling, Vince Cable and  George Osborne

We'll wait to see how voters viewed the debate, to the extent that they viewed it at all. Even I might wonder whether an hour of debate on economic policy would set the airwaves alight.

The only news I spotted was the chancellor's admission that the government would not be proposing a death tax as the single means of paying for social care for the elderly, though it might be one of a range of options. It turns out the prime minister was supposed to be confirming that tomorrow.

But Mr Osborne did have to defend his promise to avoid Labour's "tax rise on jobs". After a day of claim and counter-claim on his proposals, this, I think, is where we are.

First, the Conservatives have done what we've been asking all the parties to do: they've suggested how they would cut spending this year: by £6bn in 2010-11. That's in addition to the roughly £7bn in savings Mr Osborne proposed last year, most of which - like the targeted public sector pay freeze - will only kick in from 2011.

Conservative officials insist that these cuts will accumulate over time, meaning that borrowing after 2010-11 under the Tories would be lower than Labour now plans. That may be so. But they haven't given us any firm targets for borrowing this year, or any other year. And they haven't even given us a guess as to how the efficiency savings announced today would continue to cut spending after 2010-11.

Given what senior Conservatives have said about government efficiency drives in the past - they will perhaps not be surprised if we don't give them the benefit of the doubt for 2011-12 onwards.

As for the 2010-11 savings outlined this morning: as I said earlier, it matters whether any of these are included in the government's own efficiency drive for this year.

The Conservatives say absolutely not. Labour says they might well be. But when they have yet to identify £26.5bn the £35bn they've promised in efficiency savings by the end of this fiscal year, Labour won't be surprised if we don't give the government the benefit of much doubt either.

Second, the Conservatives are swapping a certain tax rise next year for an uncertain spending cut this year.

The tax rise, they say, would have penalised employment - and hurt job creation - at a crucial time for the recovery. That may be. But by paying for the tax rise with new spending cuts this year, Labour and the Liberal Democrats say the Conservatives risk hurting the economy this year instead.

Of course, they may all be right. Given the weakness of the economy, most governments would rather not take £6bn out of the recovery at all. But unfortunately, we're borrowing nearly 12% of national income.

With luck, the equivalent of roughly half of a percent of national income won't make a key difference to the recovery in 2010 or 2011. But the Conservatives seem to be saying that £6bn is a hugely damaging number for the economy when it's a tax rise - but when it's a spending cut, it's a bagatelle.

In fact, when you add in the child trust fund and child tax credit changes they have committed to implement this year, the spending difference between the Conservatives and the other two major parties in Westminster this year is now more than £7bn.

There are some academic studies suggesting that tax rises are more harmful to growth than spending cuts at times like these. Equally, it's quite possible that greater spending cuts this year will not put the recovery at risk. It's impossible to know.

I return to my earlier point: if the savings are real, then so will be the effect on the economy, even if the private sector makes up the gap. And even if the hole in the public finances - under the plans that the Conservatives have revealed so far - ends today almost exactly what it was at the start.

Comments

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  • Comment number 1.

    'I return to my earlier point: if the savings are real, then so will be the effect on the economy, even if the private sector makes up the gap'

    Yes, but surely you're replacing something which has no benefit to the rest of the economy (by definition) with something that DOES have real benefit.

    Cutting costs on business will encourage business to invest and create jobs. This will benefit everyone down the line including the public sector.

  • Comment number 2.

    Oh well, seeing as no one else is around.

    'But the Conservatives seem to be saying that £6bn is a hugely damaging number for the economy when it's a tax rise - but when it's a spending cut it's a bagatelle.'

    Not sure that's quite fair. I think all their saying is that a tax rise on business will do more harm than cutting waste. I think that passes the common sense test.

  • Comment number 3.

    'The tax rise, they say, would have penalised employment - and hurt job creation - at a crucial time for the recovery.'

    Surely that's one thing no right minded person would deny. I think it would have been safe for you to say 'That will be' as far as that statement is concerned.

  • Comment number 4.

    Its a con trick.

    They want to buy everyones votes with a very expensive tax pledge that won't save the average person very much each year - the richest people affected by this will be about £12 a month better off - the vast majority of people will benefit less than that.

    Also, what happened to their priority to reduce the deficit?

    They miraculously find £6bn in savings and suddenly want to cut taxes - but apparently we need an age of austerity and savage spending cuts and tax rises elsewhere to pay off the deficit sooner than the government plans.

    This policy just doesn't make sense - it a complete u-turn on their previous position and its unaffordable and uncosted.

    The Tories would have you believe they can protect public services, cut taxes and pay off the debt.

    Don't fall for it.

  • Comment number 5.

    Stephanie,

    "There are some academic studies suggesting that tax rises are more harmful to growth than spending cuts at times like these. Equally, it's quite possible that greater spending cuts this year will not put the recovery at risk. It's impossible to know."

    To grow we need to compete, don't we? And this means compete internationally. There are broadly two classes of costs that all enterprises need to consider, capital costs and revenue costs. The first class (capital) are less depended on actual output but critically necessary, such as a building to work from etc. The second class are more directly proportionate to output, such as nuts, bolts or in the case of this country paper clips.

    The incidence of tax on these classes of cost is hugely complex, but generally only a (smallish) part of the cost base. Now there are bigger constituents of an enterprises costs, such as cost of premises to work from and equipment to employ. It is certainly possible to argue (as I do) that in the UK business is put at a huge disadvantage internationally by our over priced property market. And further that the incidence of policy on this cost is larger, even far larger, than revenue taxation. I shall in this instance also disregard the incidence of policy on exchange rates (but just to note Mrs T let the US Dollar pound rate rise to 2.4 USD to GBP).

    Returning to the impact of policy on the cost base of business - pushing property prices up is hugely damaging to commercial users of property, when if the operated in most other countries of the World their property related cost would be far lower. Instead Chancellors seem to be under the misapprehension that pushing up property prices somehow helps the country - which I hope by the forgoing analysis I have shown is generally wrong, when prices rise above those of our competitors. Chancellors glorify booming property prices - frankly they are idiots! Particularly when they 'design' policy to engineer tax advantages to those pushing up property prices. ('Design' may of course be see to be a synonym for accidentally, ignorantly and incompetently.)

    My theory as to why Chancellors and their minions in the Treasury and the Bank of England do not understand how directly damaging their tax and interest rates policy is to business is that they actually have never run a business, and couldn't, not even a whelk stall!

  • Comment number 6.

    #3 jobsagoodin

    I don't agree - I think the NI change was too small to have a significant effect on job creation.

    Far more important is the support for the economy, businesses and jobless people that the Labour government has pledged to continue and the Tories have suggested we should slash - a policy which would send us back into recession and cost the country far more.

  • Comment number 7.

    Surely the point is that ONLY the public sector can get away with the principle that the only way to "balance the books" is to put up prices (ie taxes) every year. Why can't we have a hardnosed business man run say a Government Agency for a year? That would either demonstrate significant savings can be made or prove they can't and allow us as a Country to come up with the next good idea.

  • Comment number 8.

    #1 jobsagoodin

    Oh you have such faith in businesses don't you?

    Hasn't the banking crisis taught you that the only thats certain in business is that people will try and make as much money as possible.

    Just because you reduce costs on business doesn't mean that they will definately recruit more staff. They may just increase their profit margins or pay off debts with that money. Or even pay themselves a nice fat bonus.

    Obviously you shouldn't have punitive tax rates but the idea that businesses will suddenly start employing tens of thousands of more people because of a minor tax change such as this is laughable.

  • Comment number 9.

    #2 jobsagoodin

    I think it is fair - the Tories can't have it both ways. And they can't claim to be responsible on the budget deficit whilst going on an uncosted, unfunded spending spree.

    The real cost is £30bn over the lifetime of the parliament.

    £30BN!!

    Big hole in Osbornes first budget already - what shall we get rid of to pay for that? All primary schools?

  • Comment number 10.

    Politicians discussing the cuts in state expenditure is equivalent to discussing the timing of coitus interuptass and difficult for those that believe "Things canned only get better"

    They have there standhards to uphold anyway.

  • Comment number 11.

    Beware of politicians bearing efficiency savings. We've had the Gershon review, Value for Money targets, Public Value programmes,Comprehensive spending reviews, operational efficiency programmes,departmental delivery agreements,etc etc. If these are being exchanged for hard revenue-raising I can see why Darling got so emotive with Osborne in the C4 debate. He knows guff when he sees it. He sees the risk to credibility in the markets when deficit reduction depends on 'savings'. He would prefer to bank on the hard cash - in our pockets!

  • Comment number 12.

    5

    You still haven't answered my questions, yet still manage to get in the point about property prices ...once more

    Do you intend never answering it?

    The debate was interesting for only three minor aspects

    1) Vince Cable made the ridiculous comment that the Conservatives top tax priority is reducing IHT..a moronic comment, spoken to achieve a popular reaction. He also mentioned the mansion tax and called it contraversial...is that a new term for stupid? I would be more inclined to book him as an after dinner speaker after tonight, less inclined to let him anywhere near the economy

    2)Alastair Darling made some silly comment about needing a bigger public sector, or did I not hear that correctly? Isn't 52% big enough?

    3)George Osbourne came across pretty well, and his understated manner probably doesn't help to repel the Labour Party smears on him at present

    Numbers wise it wasn't really much of an exercise

    You wouldn't want to be trapped in a lift with them, that's for sure

  • Comment number 13.

    Ms Flanders wrote:
    'The men who would be Chancellor had a spirited debate this evening - with each playing to their strengths. Chancellor Darling put the emphasis on "judgment calls"; Vince Cable on his honesty; Mr Osborne on the need for change'


    Well I'd go for honesty every day of the week and twice on Sundays

  • Comment number 14.

    So much for Gideon's giveaway. Oh yes it will save billions renegotiating outsourcing contracts. An excellent idea. Private sector contractors have milked the public purse dry and will trigger penalty clauses through this short sighted ill thought out policy. Ken Clarke and Norman Lamont were the architects of this PFI disaster and now Gideon and his band of incompetent men have brought things full circle. Gideon's jobs not a goodin'

  • Comment number 15.

    12. Kevinb wrote:

    5 (me) "You still haven't answered my questions, yet still manage to get in the point about property prices ...once more

    Do you intend never answering it?"

    Now you are really moving rather rapidly towards becoming rather pathetic as you seem unable to even understand your need to read the references that are the basis of economics - until and unless you bother I really don't see what can be done for you.

  • Comment number 16.

    quite Dempster. Cable won that by a mile. Honest and above all, specific. Darling second, Osborne trailing hopelessly at the back. He's done the Tories no favours there. The only thing that will save them was the very final point he made - there simply won't be a Lib Dem government so the Tories get it almost by default. Shame, Cable looks easily the most capable of those three

  • Comment number 17.

    kevinb - 'you cannot be serious' as they say. Osborne came across well? Astonsishing to hear you say that. I thought he was by a considerable margin the most bland and waffling contributor of the three. He made Darling look like a policy genius who had all the details worked out. And that shade of hair colouring, well, honestly!

  • Comment number 18.

    6. At 9:53pm on 29 Mar 2010, Voice_of_Reason wrote:


    Far more important is the support for the economy, businesses and jobless people that the Labour government has pledged to continue and the Tories have suggested we should slash - a policy which would send us back into recession and cost the country far more.
    -----------------------------------------------------------------------
    Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.-Dickens


    How much more unsupportable sillyconomy do the Labour tutts want before the centre of their gravyterrain wundebrar topples their producked onto their Dickens

    One reason the imbalance of payments is not worse is due to the sale of once usefully deployed plant and machinery that is now leaving the country in containers on on its way to the far yeast, due in part to the falling pounds of less and the fact that it cannot attract employees from the caring economy with index linked pensions .

  • Comment number 19.

    #12 kevinb,

    Early returns of media research are showing that you reaction is individual to say the least.

    Vince Cable appears to have gained a clear 'win'.

    When asked to list prefernces for Chancellor the ranking order appears to be:

    CABLE
    DARLING
    OSBOURNE

    Can't give you the sources but they are trustworthy.

  • Comment number 20.

    Voice of reason

    3 reasons why I think you're wrong to say the Tory's policy isn't credible.

    1. They aren't going to cut NI. They are simply going to raise it less than Labour would. Taxes will still go up under the Tories as a whole.

    2. They aren't saying they won't cut public spending. They're just saying certain areas will be off limits (i.e. NHS) They accept that other areas will require substantial cuts.

    3. I believe there is more room for efficiency savings than there's ever been due to the excessive waste under Labour over the last 10 years.

  • Comment number 21.

    kinky boots 14

    'So much for Gideon's giveaway. Oh yes it will save billions renegotiating outsourcing contracts'

    There's no giveaway. They're simply promising to raise taxes less than Labour.

    As for the savings, these were recommended to them by people that New Labour originally hired to recommend how much could be saved.

    Don't you think hard working families have paid enough for New Labour's incompetence ? It seems to me that the difference between New and Old Labour is that Old Labour taxed the rich until the pips squeaked whereas New Labour tax hard working families under the pips squeak. Job's not a goodin.

  • Comment number 22.

    Dempster 13

    Thought Vince was excellent but not sure he's quite as honest as he tries to come across.

    Aren't Lib Dems more guilty than any party on relying on dodgy rich donors with their noses in the trough ?

    http://www.guardian.co.uk/politics/2009/apr/19/liberaldemocrats-donors-corruption

    http://www.independent.co.uk/news/uk/politics/absent-liberal-democrat-donor-convicted-of-fraud-1039869.html

  • Comment number 23.

    Not one of the 'Chancellors' said that they could save at least £45m a day, yes a day! by withdrawing GB from the EU. There are a lot of people in this country who would like that to happen so why do they not discuss it. It would certainly help the economy with no adverse effects.

  • Comment number 24.

    George Osborne says he will find an extra £6Bn in savings to fund a bribe to the electorate. This will entail large job losses in the public sector and guess what, this means that these people don't pay tax and have to receive money from the Government (namely us!)for the dole putting up public spending. I can't see how this money saving can be achieved for the National Insurance rebate. If anyone is sensible and on a middle income in the public sector, they would not vote Tory as their jobs will be more at risk under Osborne and Cameron.

  • Comment number 25.

    foredeckdave 19

    But is that ranking any different to what it was before the debate. I doubt it.

    Agree that Cable was the clear winner but then it's easy to be 'Mr Honest' when everyone knows you're not going to be in government anyway.

  • Comment number 26.

    "George Osborne says he will find an extra £6Bn in savings to fund a bribe to the electorate."

    Maybe they've taken a leaf out of Labour's book? After all they've just thrown a "own your football club" bribe today to the plebs who are too stupid to see through the proposal, to go along with all the state benefits they've been paying out to their core vote.

    I will never vote Lib Dems due to disagreeing with most of their policies, but Tory and Labour are frankly lying to the public. Most people are simply not intelligent enough to realise the state we're in, and will go voting blindly for the party that promises the most, when the fact is neither Tory or Labour will be able to deliver on their promises. Labour cannot keep spending like they are, the Tories cannot make the cutbacks they are promising from efficiency savings alone.

    All this election is doing is highlighting that British politics is in the gutter like never before.

  • Comment number 27.

    #9. The real cost is £30bn over the lifetime of the parliament.

    £30BN!!


    I really don't know how you have the nerve to come on here so boisterously defending this government.

    You want some numbers? How about their promise over the lifetime of the parliament to borrow another £600 Billion.

    £600BN!!

    Well at least they have bought your loyalty with it. I wouldn't mind so much if a slice of the £600 Billion wasn't coming from me.

  • Comment number 28.

    Its amusing to see how many comments can reveal a persons voting intentions. Apart from one, however, the Liberal faithful did not reveal their future voting intentions half as obviously as a number of Tories and a rather less number of Socialists.

    As for myself, Vince Cable seemed to be more honest and not quite so party politically influenced in his comments.

    Whatever the result of the forthcoming election, I personally would like a hung Parliament with the Liberals getting over 100+ M.P.'s and Vince Cable being made the Chancellor .

    Its unlikely but one can never say never..... or can one?

  • Comment number 29.

    GO "the end is NI" thanks to gullible warmink

    Cable Darling 0sborne[ Team for UK]

    New MProved CDO's will reinvinigarate the nations vintage corked AAA security holes plus vat

  • Comment number 30.

    #25 jobsagoodin,

    Don't have the pre-programme info but like you I don't suspect it was much different.

    All you can say is that none of them fell over or wet themselves (not noticeably anyway).

    Nobody delivered a 'killer blow' like "you are not Jack Kennedy" and the public learnt nothing new.

  • Comment number 31.

    "even if the private sector makes up the gap" - the 'gap' is the difference between wages in the pocket + dividends received by individuals and prices in the shop, the latter being higher due to profit. The 'gap' is filled either by government going into debt, mortgages payers going into debt, student debt, credit card holders or companies on fixed asset programmes - the other source is foreigners going into debt by being Net Importers of our stuff - what a silly game to have the population of the World spend their existence filling a numerically inevitable un-fillable 'gap' under the present system instead of just using the NEFS system - Net Export Financial Simulation

  • Comment number 32.

    Let's assume, for the sake of argument, that the respective strategies of Labour and Conservatives are both aimed at reducing the deficit by half in four years, but that Labour are going to tread water for a year to protect the recovery and seriously start a year behind the Conservatives. The required reduction in deficit per year is around £21B and assuming they both could achieve this run rate, by March 2015 the national debt would have risen by £687B under the conservatives and by £792B under labour, i.e more than £100B difference over 5 years, or £20B per year deeper in the mire under labour. When looked at in this way, cutting the deficit by half in four years doesn't sound such a big deal to be proud of, and delaying starting by a year even less so. We should not have been here in the first place.
    If labour's analysis is right, the conservative plan could well result in a double dip recession, as measured by negative GDP growth, whereas if the conservatives are right a failure to give an early indication of tackling the deficit could lead to a downgrading of our credit rating which would increase the interest payments on our loans, and make spending cuts even more stringent to maintain the deficit reduction.
    Also, there seems to be an assumption that growth in GDP of 3.5% would play a big part in the recovery, but surely this would only be true if all of the growth was export lead, and not just a measure of internal economic activity.
    On the whole, I believe the threat of loss of credit rating is far more dangerous than the failure to produce GDP growth.
    Having watched the three wise men in action tonight, I'm still not convinced that any of them can see past year one of a deficit reduction plan. Remember,in order to get us out of the mess we are in requires sustained reduction in the present deficit year after year for more than one parliament. We need to reduce our current level of spending relative to income. Cutting out future spending plans does not count as a reduction of deficit, but stopping ongoing projects which are not really necessary does.
    Finally, would it not be refreshing to find a politician of any party being honest enough to accept an incontrovertible truth that the concept of continuous growth in any finite system,such as our planet, whether it is expressed as GDP per capita or population, must be an impossible dream, however macho it may sound. This government even has a department devoted to investigating the possibility of prosperity without growth, whose reports it has steadfastly refused to acknowledge. It will be interesting to see if it is one of the first things to go when the serious cutting begins.

  • Comment number 33.

    All Labour have to do is think of something to spend zillions on[shouldn't be too difficult after a few butt liquerrs] , like the cohabitating rights and lefts of mixed up BeLizan dung beetles and then [eureka ] decide not to interfere with those that prefer to roll their own and let devolution take its natural course whilst proclaiming the saveink publicly.

  • Comment number 34.

    I think whoever gets in its either pain now or pain later...

    The recovery ? Its not happened yet there are lots of us still lingering on the dole.

    Sure a few things look better but is it all a mirage ?

    Until one of them gets a clear mandate and invests in new ideas innovations and gets Britain working !!! we'll all be in no mans land...

    Taxing people more is not the answer don't you think we are taxed enough sure if we were all richer who'd care to be taxed ...

    When times are bad you need every penny!!

    Why can't they tax big business all over europe and start funding startups , training that will get jobs moving ?

    People talk about immigration but you can't stop people coming from eastern european countries its part of the social chapter and free movement of workers ...

    The rest of immigration policy is let large company bossess get richer by bringing in cheap labour whilst shedding adequate well paid workers here!!! Its not immigration thats to blame but large greedy consultancies ... thats been happening for some time now...its not the poor immigrants that you should be blaming..

    There used to be good competition lots of little players.... What we really need is Anti trust laws

    one wonders wonder if any of them have guts to tax large companies to provide loans for startups and to sponsor innovation.

    More small companies mean real competition going people being employed again more employed more tax collected more spending more growth.

    Plus small companies may take xyz 's product from a small company.

    Sorry to have to say that this whole debate is pointless i.e who will cut when either we'll have a longer recession lasting the five years ...or a deeper one to begin with...

    Until there is company growth funded from somewhere we are not going to get out of this mess

    This ukip libertarian policy of leaving europe and somehow going back to the commonwealth seems bizare at best .. The fact is the laws are in place and under the treaties british law takes second fiddle now the Lisbon treaty has been ratified. Are they somewhat misinformed ???
    ..i watched David the other day sort of skip around the subject of immigration saying he was going to put in temporary measures but he knows full well the treaty is ratified and that these interim measures could well be challenged in court and the law declared incompatible.
    the rest of what he said made perfect sense. The guy is incredibly bright he knows he can't have a referendum because the treaty is now law.
    Any half qualified lawyer will tell you.

    Half the stuff complete Mumbo Jumbo and what does it matter he went to Eton why are people discriminating him ?

    Then on the other side there is Gordon he is going to have to tax large companies to fund growth. This death tax to be honest i don't think is popular with anyone whilst the sentiment is fine and the aim of providing a better society ... its the wrong time to be taking more of hard working peoples money away money they want to help their kids get out of the mire. What about the living ??...and are we really going to get this social care improvement in the sense when someones on their death bed few have the patience and the tolerance to spend the time with them... most pretend but really run a mile.

    I am really sorry but i find these debates well the whole thing sureal especially some of things said in the debates. They must know people aren't as quite as stupid as they treat them ??

    Whoever gets the Clear Mandate whether is David or Gordon is going to have to seriously consider anti-trust laws and the need to grow competition.

    Else we 'll have the same crazy debates in five years time that is if we survive the end of the Mayan Calendar.


  • Comment number 35.

    Actually i have to agree with Kevin i thought Osbourne did well.

  • Comment number 36.

    I tuned in thinking it was a new episode of Blackadder and then realisd that Blackadder is more in touch with reality than any one of the three stooges who stood up tonight, blowing hot air like they were trying to re-inflate a crashed Zeppelin.

  • Comment number 37.

    The simple fact is those cuts are going to be made whoever gets in either now or in the future because the main spending is on the public sector it stands to reason thats where the cuts will be made ??

    I am sorry but i can't believe some of you actually think that the cuts won't happen if one party gets in instead of the other ??

    We have a 12 % black hole to fill or else interest rates will go up !! and we'll be forced to make cuts ...

    Its when we take the pain ...

  • Comment number 38.

    Having lived through thatcher & all her cohorts i think that people should have a think about having David Cameron & Jimmy Clitheroe Gideon Osborne in charge. When they decide to cut public services they wont care what they cut, they don't really need to worry anyway, most of them dont use public services.

  • Comment number 39.

    I am no expert economist, I have run and set up a few businesses though, including a printing business and a successful web community.
    When I look around Europe and compare economies, It seems to me that the ones which are doing best are those which have regulated themselves well and invested heavily in their populations. The more equal the country, the better the standard of living and more highly skilled and robust the economy.
    Denmark for example, who's education system Labour has indicating it wishes to emulate, has a wonderfully well educated and highly skilled population, they give their health service a 91% approval rating!(91% seems incredible, they must have very attractive nurses or something)

    Sweden regulated her banks so that the crash left her unscathed- initially anyway.

    Germany has regulations which require solar panels on all new homes- Imagine the innovation and Jobs that alone is able to stimulate.

    What the successful states all seem to be doing is what Labour is generally proposing. Recovery from debt is pointless if we end up skint and stupid.

    We risk a recovery from debt which leaves us unskilled, unemployable beggars under the Tories.

    It was places like Greece which took the biggest dent. deregulation effectively allowed wealth to drain away, it was legalized tax evasion, how is emulating this supposed to help us?

    I read in the Guardian recently that many of the wealthiest people actually want to pay more tax and consider the equality gap to be nuts.
    Consider that inequality has soared under the bonus culture set up by Maggie Thatcher and Regan.

    If you ran a business then where would you rather set it up?
    In a crime black-spot, with unskilled, uneducated, unhealthy workforce, where the Govt was trying to push up property prices for a fake boom?

    Or somewhere where you might have to pay higher wages, but where your energy was supplemented by solar panels, where the population was excellently educated, healthy, highly skilled, innovative, flexible, and happy.
    Where transport was efficient and cheap, where you could go out for a beer after work with employees and know that you were safe in the poorer end of town?

    Tories would have us selling plastic toys to Taiwan.. yet even Taiwan has robots to make those today.

    Of course we need to make savings, however, if investments in people are neglected then it is poitless.
    We need robot engineers and designers, pleasant working environments, security. real numbers in the economy so that we can make sound decisions.
    The days of Victorian workhouses are long gone. The Tories seem stuck with cliches which never worked, even in the past.
    It is almost as though they are calling for the formula which got us into this mess in the first place.
    That is my opinion anyways.

  • Comment number 40.

    The majority of you are arguing over between 6-12 £bn of a deficit which; is at the higher figure around 7.5% of the actual total (growing) debt. Surely people must be aware that the proper major political challenges are ahead of us for a considerable time. I personally think whoever the next govt is is on a hiding-to-nothing.

  • Comment number 41.

    36. At 01:27am on 30 Mar 2010, tacrepus wrote:
    I tuned in thinking it was a new episode of Blackadder and then realisd that Blackadder is more in touch with reality than any one of the three stooges who stood up tonight, blowing hot air like they were trying to re-inflate a crashed Zeppelin

    woaaaah!Tacrepus thats very Freudian !IT'LL take more than a reinflated zeppelin to fill the gap in the future Redadder chancesellers hyderrogenous spark free zone[if such a thing be possible in politics ] .
    What we need is a fiat mirage we can believe in ,without all the sand and heat in front ,like Stephanie and Peston back to back with no apple trees or naughty blackadder looking for a bite .

  • Comment number 42.

    Instead of sacking loads of direct and indirect public employees, why not keep them all on in exchange for a 10% pay cut. Then take a long and considered look at restructuring with the help and advice of the people who do the job.

    Sorted, structural deficit solved in 18 months. Got any other more difficult problems.

  • Comment number 43.

    Whatever happened to BBC impatiality, this was a three way debate, but the blog suggests it was at best two sided. The reality was far different.

  • Comment number 44.

    The key point is the difference between a deficit and the national debt. We have a large deficit this year, adding to our national debt. The government are pledging to halve the deficit in 4 years.

    Just think about that, they aren't pledging to reduce the national debt, or even pretend to be slightly interested in doing any such thing. They are going to add, add, add to the already bloated debt.

    Until recently the debt was trending at about 40% of GDP, but the projections are that it will rise to over 70% by 2014. This is horrendous and given that this is the projection using optimistic forecasts and a recovery that starts pronto, you have to wonder where the debt will actually peak!

    It will take decades to get the debt back down to 40% of GDP and those decades will be hard, trying to get GDP growth up whilst still lowering the national debt as a share of GDP.

    As we constantly give away industries and hurt the financial sector with excessive taxes and regulations we are reducing our chances of getting high growth, there is not much left to sell! We are also weakening the pound by forcing our economy to rely heavily on imports from overseas, whist having little to export in return.

    The future is not bright.

  • Comment number 45.

    Public service costs need to be slashed and kept down. Why has noone suggested slashing civil servants, their pensions and projects by 50%? a further commitment to close one Whitehall department would also show they mean business. Then let's pay off the defecit altogether and start a sovereign wealth fund. Only joking, I love being run by these governments, choking on debt and living beyond their means. Afterall, how brilliant is that to borrow unlimited funds to waste, knowing it is someone elses job to pay it back. Where do I apply for one of those credit cards?

  • Comment number 46.

    "There are some academic studies suggesting that tax rises are more harmful to growth than spending cuts at times like these."

    Isn't this the general consensus of most "academic" studies; looking at the effects of adopting such policy options in the real world?
    & then of course there's the competitive global market issue, and the fact that increasing tax rates can actually reduce tax revenue.

    The concept of "living within our means" seems to be ignored; we expect too high a standard of living, while contributing too little to the world.

  • Comment number 47.

    15

    I learnt many years ago, that when someone resorts to abuse and denial, it is pointless trying to reason with them

    Every topic there is on here, you repeat the same personal debt deflation mantra, quoting various historical perceptions, without having any intrinsic understanding of them

    I took your logic apart on a previous post, yet you still repeat your false allegation that I refuse to read your posted collage

    As you refuse to answer the question I asked you, I and fellow posters can only assume you want 5% interest rates NOW, a 40% reduction in house prices NOW, and you view the deflation of personal debt, irrespective of consequences similar to the devaluation of corporate debt in the 30s, even though it is completely different, and from 1925 onwards, when this analysis was made, money has been delinked from the Gold Standard

    To resort to your intellectual level for a moment....

    You are a plank

  • Comment number 48.

    The main difference between the 2 main parties is one of ethos.

    Labour believe in a large state, running people's lives and hence a large public sector; they then think about whether it can be paid for and how to raise the funds as a secondary issue.

    Conservatives tend to look more at business and what it needs to drive the economy; and then consider what it can put back.

    Unfortunately, running an economy on the basis of wishful thinking will always be economic suicide, as labour governments have proved every time they've been in office.

    Although now maligned, Thatcherite policies did help to turn Britain's economy around, similar medicine is needed, but our society may well have gone too far down the "something for nothing" route.
    Without considerable change, Britain's economy is destined for terminal decline, maybe propped up by The City for a time, especially when bubbles inflate, but eventually the future is bleak.
    After all, what do we have to offer that makes us so special?

  • Comment number 49.

    The return of the Grin.

    Great News. Tony Blair has announced that he will return to help labour (preumably) fight the General Election.

    "Things can only get better, can only get better........."



  • Comment number 50.

    17 & 19

    I don't profess to be in the majority with my view, although I notice that the news agenda has shifted, and now Darling is on the back foot re the Death Tax comments, and Vince Cable is being praised for his comedic, rather than political skills

    Osbourne is understated, and in the course of this long election campaign, don't write him off too soon

    Interestingly, his decision not to impose an increase is still being called a £30bn cut, which is just incorrect

    It is like me saying I will spend £1M (which I couldn't..as I don't have £1M) then saying I won't, and claiming I will have saved £1M...

    To repeat, I said Osbourne came across pretty well, not good nothing more than pretty well

    Anyway....thanks for responding in a civil manner, unlike some

    24

    Unfortunately you are just not correct..not imposing an increase which hasn't happened yet, cannot be a cut!!!

  • Comment number 51.

    #47 Kevinb

    "...you want 5% interest rates NOW, a 40% reduction in house prices NOW,"

    Which interest rate are you talking about?

    After all you pay a lot more than that for most loans, as do businesses.

    When you can borrow cheaper against property than to invest in "proper" productive businesses, is there any wonder that capital goes towards inflating speculative bubbles rather than investing in R&D or state of the art plant?

    The illusory "wealth creation" through property price inflation, does little for the economy, except create a feel good factor, raise expectations and encourage secondary borrowing.
    But their has been a brainwashing to convince people that rising house prices is good - its only wealth if you can sell the property and release it.

    Even with The City generating so much revenue at the peak of its bubble, we weren't paying our way, either in terms of out of control public spending or indeed internationally with the balance of trade.

    A massively flawed economic model, but until it fell apart it kept key middle class voters happy.

  • Comment number 52.

    51

    Bank of England Base Rates...he keeps referring to the 0.50% level, so I am using that as his yard stick

    Obviously I am aware of the varying relationships between BOE/LIBOR etc and associated margins

    Some people are paying under 1.00% on their mortgages at present...others a lot more

    I put the consequences of his suggestions to him...and he just refuses to answer, yet keeps posting the same old stuff

    You can draw your own conclusions from that

    The last 13 years have been an illusion, no boom, just bust really, with huge debt and even more i PFI taken into account

    Very sad

  • Comment number 53.

    42. At 05:16am on 30 Mar 2010, sizzler wrote:
    Instead of sacking loads of direct and indirect public employees, why not keep them all on in exchange for a 10% pay cut. Sorted, structural deficit solved in 18 months. Got any other more difficult problems.

    ================================

    That is the type of idea which certainly would be very useful. It has been used in some countries immediately to fix budget deficits caused by the financial turmoil (in HK for example Doctors were given a 10%cut, nurse 5% and lowest paid no reduction to balance the budget).
    It can even be used to even up the playing field by sliding the scale of cuts based on pay scales, a rather progressive way of improving equality and fixing a deficit at the same time.

    Many private sector employees have faced such choices and where managers have been open and also done the same - i.e. sacrificed salary inline with the workers they generally manage amicable settlements.
    Traders and trades have seen the same - less work = less pay.

    In many public sector workplaces they are now run by the new breed of extremely highly paid management (who couldn't make it in private enterprise and seek solace in the public sector - talk the talk but rarely walk the walk) seeking huge rises year on year - so when it is reasonably suggested that for the sake of saving jobs everyone should consider a reduction in salary the predictable result is strike action. Afterall how committed to saving can a leadership be if they are still taking double digit rises and bonuses. It is double standards and no one is going to stand for that.

    A overall salary reduction would undoubtedly be an extremely useful aid to reducing the deficit quickly however none of the parties have the stomach for the fight that would inevitably occur with unions since it is unlikely that the leaders have the stomach for setting the example required.

  • Comment number 54.

    8

    Whilst you are usually ranty I have to say that you have a valid point in the respect of business.

    I looked damn hard to find a UK manufacturer for any products which my company uses in our European plants (there are precious few left in my field). We had the usual quality problems (we still don't get it in the UK- sign!) but tried to work through them but now the economy is picking up, we have increased our orders, their factory is now full, they may even have sufficient volumes to put extra shifts on (more employment) good story yes?.
    Last week they come to the door and demand a double digit price increase - and their reason - margin improvement.

    Unfortunately my view is unprintable here - however I will go back shortly to my previous non-UK supplier and sadly they will never do business with me again, 4 star idiots.

  • Comment number 55.

    6 Voice of 'Reason'

    'I don't agree - I think the NI change was too small to have a significant effect on job creation.'

    What a load of tosh. Not even Labour front benchers have denied that it will have an impact on jobs.

  • Comment number 56.

    Let's be honest here. We are all going to have to make sacrifices in income, pension entitlement and lifestyle if we are to fight our way out of this mess. I run a small company and recently had to place my employees on a 4 day week with the subsequent lowering in pay. There is just not enough work to justify 5 days employment. At the same time my wife and I took a substantial reduction in our income and have adjusted our spending patterns accordingly. BUT I set out an agreement with the staff that when the economy improves, and it will eventually, I will cover the gap in their income now with a lump sum payment once profitability is back on track. Is that not something other employers could consider. Keep your skilled workforce intact with a fair and realistic approach to the problem.

  • Comment number 57.

    Could somebody tell me how much the budget deficit would be if there had been no need to bale out the banking system ?

  • Comment number 58.

    I know the BBC is impartial but this is an opinion piece right? Try getting off the fence for once.

  • Comment number 59.

    43. At 05:40am on 30 Mar 2010, Hannah wrote:

    Whatever happened to BBC impatiality, this was a three way debate, but the blog suggests it was at best two sided. The reality was far different.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>

    Yes! Exactly

    The government have all of the figures and the BBC cannot benefit from a single 'leak' when Gordon Brown made a career out of Whitehall leaks when in opposition

    How the Murdochs must relish the BBC's biased economic reporting on this and the Great Gordon Brown Recession.

    What better incentive and assistance do the Murdochs need for opening up the BBC's monopoly on UK broadcasting than biased economic reporting just weeks before a general election:

    How much money has been wasted by New Labour over the last 13 years and how much money will they keep wasting if re-elected?

    The recovery that 'is not' and 'never was'.

    The war in Afghanistan/Iraq is still costing the UK £30? billion a year - why is the UK still in there when other countries that are doing better than us have the common sense to pull out even if on eceonomic grounds?

    Anyone see Paul Masons excellent summary on Newsnight last night - Britain is in a real mess - Thanks a bunch Gordo!

    A proverbial rod for thine own backs BBC?

  • Comment number 60.

    To anyone saying that Cable would make a fine chancellor but this is irrelevent as the Lib Dems will never take power...

    Vince Cable as our chancellor IS an option available to us - don't believe any spin that suggests otherwise. We have a ballot where we can exercise our choice, and it is OUR FAULT if we throw that choice away in favour of two party politics.

    And make no mistake, the Chancellor of the Exchequer is the most important role to fill this term, by a country mile.

    WE have allowed our politics to become a two-party system, and we have reaped the pain as a result - with two opposing systems of fiddling, and the damage that comes from eternally reversing the previous lot's changes. This is why we swing from crisis to crisis.

    And seeing Osborne's complacency that he has a greater right to the office of chancellor, than a man who is clearly better for the job, is a bitterly apt example of this system failing us.

    This country NEEDS a hung parliament - ignore the scaremongering. No single party is worthy to take on the mess new Labour have created through their mixture of incompetence and scorched earth. Perhaps with a coalition we can cherry-pick the best PEOPLE to get us through - and that, of course, includes Mr Cable.

  • Comment number 61.

    57

    You will get different answers from different people

    Firstly, you need to differentiate between the deficit (how much more we are spending this year than our income) and the debt (how much we owe in total

    Unfortunately this is not always explained in the media, and the general public inter-change the two terms

    When Darling talks of halving the deficit in 4-5 years, he really means he will be reducing the amount we are over spending by

    So in terms of the deficit, it could be argued quite legitimately that very little of it is due to the bail out of the banking system

    Quite different with the debt, although that was not the question you asked

  • Comment number 62.

    #2
    "Not sure that's quite fair. I think all their saying is that a tax rise on business will do more harm than cutting waste. I think that passes the common sense test."

    =====================================================================

    It does pass the 'economics' common sense test.

    It fails the 'political' common sense test.

    The general public see the headlines they don't look at the reasons and the detail.

    Its a tax cut from a party that 'wants to cut deeper and quicker'. Another change of tack.

  • Comment number 63.

    21. At 11:32pm on 29 Mar 2010, jobsagoodin

    The use of 'hard working families' is a political device, a piece of meaningless emotive rhetoric. We expect it from politicians but in sensible debate this kind of term undermines credibility.

  • Comment number 64.

    57 Geoff

    `Could somebody tell me how much the budget deficit would be if there had been no need to bail out the banking system.'

    Good question: it would seem that prior to the autumn of 2008 the government were moving towards a possible GBP 48 billion deficit for that year.

    What caused the deficit to then balloon to the current GBP 163 billion is a combination of rescuing certain banks and taking a severe hit in income because the self-same banks were the major source of cash for the government. I believe that it is this loss of income which is the real problem as the government has refused to amend its attitude to spending.

    The desire to halve the deficit over five years as planned by Labour is fine except that it doubles the size of the debt to about GBP 1.4 trillion. I don't see this as a practical stragegy.

  • Comment number 65.

    Don't know how you can write a column based on last nights performance Stephanie. Reminded me of an episode from "Bill and Ben", just about as wooden, and the link man was toe curling. Can't really imagine the "PM's" debate will be any better.
    Newsnight changed the line up of muppets, Hammond vs Balls instead of Byrne, just as useless however.
    Paul Mason came up with a new tilt, hope he does n't jump off a high building before the end of the series.

    Thought struck me last night listening to Darling Doris, He seems to be saying that we must create employment in the public sector to keep the economy going, and develop jobs in the private sector.

    So when the high paid, well pensioned, wealth creating jobs a plenty occur in the private sector, who will want the wage frozen, pension frozen, low skilled jobs in the public sector ? How about that one Paul ?

  • Comment number 66.

    #57
    "Could somebody tell me how much the budget deficit would be if there had been no need to bale out the banking system ?"

    ======================================================================

    Depends on how you massage the numbers.

    Here goes.

    Deficit £168 BN (projected current financial year)
    Which is 12.6% of UK debt
    Therefore UK debt is £1.3 TR

    Bank bailout cost £850 BN of which £200 Bn is guarantees (will not be needed if economy recovers).
    Will be less when bank shares sold.

    So lets call it (Bank Bailout) 50% of total UK debt.

    But, a large part of the increase in debt over the past 2 years (apart from direct Bank Bailout) was recession damage limitatation, and remember the recession was caused by the banks.

    If the government had not spent to replace private sector contraction where would we be now.

    There are some on this board who will say that the banks had nothing to do with it.

    PS: 'Monkey Boys' back - death knell to any hopes of Labour winning.

  • Comment number 67.

    #60
    "This country NEEDS a hung parliament "

    ===================================================================

    Agreed.

    They should dangle from lamp posts; every one of them.

  • Comment number 68.

    Hurrah!!!! The UK on a growth path from September 2009 @ 1.6% projected for 12 months forward. Let us rejoice (MTh).Spring is here and it can only get better... :-)

    By the way, what are the current revised figures of GDP for all quarters of 2009?

  • Comment number 69.

    I have no intention of voting for any of the three main parties, or any sitting MP; they are all crooks.

    Vote for someone you can trust.

  • Comment number 70.

    As I predicted, UK growth Q3 2009 geting better by the minute.

    http://news.bbc.co.uk/1/hi/business/8594409.stm

  • Comment number 71.


    The three contenders gave an optimistic view of Britain. They're each assuming that the recovery plan's working. Phew! What a relief!
    Tory Osborne was the most flattering. He's switched from forecasting a financial crisis of surging interest rates and debts to a benign outlook that now has room for tax cuts (he says). Moreover, Osborne now also believes the government plan to achieve savings through investment in IT will pay off! He proposes using those savings to fund a tax cut - not a deficit cut. Things must be looking up!
    We need more good news like this. And we're getting that too.
    Asset prices are recovering - that's property and share values - which are the usual signs of imminent recovery. And employment and output growths are still small, yet rising.
    Tax revenues fell in 2008 and 2009 because banks stopped paying taxes. They argued that lots of their loan book probably contained some bad debts, especially as the economic outlook was poor. So the Bank of England's rules required they make large provisions for those potential bad debts. Just in case.
    That meant banks weren't paying taxes due on the interest payments they received. Tough on the Treasury's income. Tough on us too, as it made the government shortfall of tax revenue look very bad.
    But Osborne and Cable both imply that the economy is getting much better than their own forecasts last year. So they say our government can support more spending.
    I'd prefer we stick to the steady economic plans outlined by the Treasury and the Bank of England. We need to pay off debts as the Banks recover and then sell those bank shares only when they're fully recovered and paying dividends again. That'll net billions of profits. Could be worth more than the £22billions profit made on the sale of the mobile network ten years ago.
    So thanks contenders. You've cheered me up. It's back to normal. The recovery's well under way, and Tories are pushing for tax cuts for people with above average incomes. As ever.


  • Comment number 72.

    66

    The cost of the bank bail out is not £850bn, although you and others keep posting this number

    For a start, this includes the £250bn Government Guarantee, which has NOT been spent yet, and will only be spent if there are future failures with the banking system

    I do not wish to go into any further detail, as this has been done to death

    Please will you at least acknowledge that the point I have made regarding the guarantee is accurate

  • Comment number 73.

    talking to a plumber yesterday quoting a new boiler for my parents the 400 pound grant has seen his workload has increased so much he is now able to charge 500 pounds per job extra another waste of taxpayers money.

  • Comment number 74.

    Good to see that after months of Govt bashing on this forum - some fair -some unfair that Osborne has finally been found out.

    Darling and Vince (Surely the best Chancellor we'll never have?)made him look like the treasurer of the Eton tuck shop fund that frankly he actually is.

    As they say in the US "its the economy stupid" and frankly i know whom id rather trust at the moment.

    The Tories keep going on about how terrible things are, and indeed for some people they are grim, but i do see signs that things are turning around.

    I spoke to a local KIA salesman the other day. Hows business i said, too busy he said, we need another two people on the shop floor straight away. In the show room people were literally queing to speak to a salesman.

    I wanted to visit my local Santander branch to sort out a new ISA before the tax year ends. Oh a 10 day waiting list said the lady on the phone for ISA appointments.

    Our local Tescos has been jammed every day for the last two weeks with things like pressure washers, Sat Navs and Ipods flying off the shelves.

    People are getting rid of personnal debt at an astonishing rate - surely a good thing.

    I could go on and its all anecdotal but things dont seem to be as bad as the Tories wish us to think. I would be grateful if other contributors can tell me if they have noticed the same things happening.

    Sure the defecit needs to come down and frankly if NI has to go up a bit then so be it. But the Tories gimmicky approach of stopping this without really explaining where the money will come from is starting to scare me.

    Added to this i know they will always look after their rich (Banker?) friends before worrying about the little people first. Leopards dont change their spots -ever!

  • Comment number 75.

    66

    The 12.6% is of GDP not debt.....The £200bn of quantative easing was a Bank of England decision to enhance the money supply, and will be taken out of the economy in due course

    Whilst we can all give our view on the impact of the QE as time goes by, the short term impact has been to allow the government to pretend we are coming out the recession, which without the QE would have technically been a depression as GDP would have fallen by 10%

    I don't think anyone would say the banks had nothing to do with the recession, although some people still view everything in 'complete terms'

    Dreadful thinking

    ALL MPs fiddle their expenses...ALL banks were to blame...just pathetic really

    We were heading for disaster anyway, due to the fact that the government spent far more than they should have

    The impact of PFI alone is estimated to be £9bn this year...those numbers aren't even included in the debt

    Had the government not been so irresponsible, we would have more room to spend now

    Basically, whichever way you look at it, we are in a big, deep, dark hole

  • Comment number 76.

    Based on the reactions here, a lot of people were expecting detailed, costed plans from the three would-be chancellors. How odd. Face it - this was treated as an extended party political broadcast, the main aim of the three was to score points off each other.

    Labour needs to reassure its core voters that it will not massively cut back on public services, while convincing marginal voters that it will control the deficit and lead us through the recovery without dramatically hiking taxes.

    The Conservatives need to reassure its core voters that it will cut back on the size of the state and not increase taxes, while convincing marginal voters that it will control the deficit and lead us through the recovery without dramatically cutting back on public services.

    The Lib Dems need to differentiate themselves from the other two, offering policies which at least sound plausible and credible.

    The protracted election campaign will see the two main parties each trying to square their own particular circles, while the Lib Dems wait to pounce on any electoral crumbs the other two might spill. Don't expect anyone to announce a clear, funded plan which will control the deficit and maintain public services without raising taxes; for now, the oft-promised, ephemeral 'efficiency savings' offer Labour and the Tories at least the appearance of respectability without actually covering up their economic nakedness.

  • Comment number 77.

    I am not sure who would have the key of number 11 but in my view George Osborne looked uncertain, feeble in his conviction and rather peevish in his arguments.

  • Comment number 78.

    Alastair Darling and Vince Cable made a very good double act. They certainly made it clear that they could work together if we end up with a hung Parliament. Apologies if this point has already been made.

  • Comment number 79.

    The wellbeing of the British economy relies on wealth creation and that is the role of the private sector. Wealth creation relies on people in work in the private sector. Hence Osborne's emphasis on job creation by reducing Labour's NI increase, a payroll tax on jobs, is an essential precursor to reviving the British economy. Like it or not, the public sector spends money, raised via taxes, but does not directly create wealth. The sooner we start to generate more wealth the better.

  • Comment number 80.

    71

    What planet do you come from? Are you staying long?

  • Comment number 81.

    #72
    "Please will you at least acknowledge that the point I have made regarding the guarantee is accurate"

    ==================================================================

    Read my post - I did acknowledge the guarantees.

    I also have recognised that the deficit would be too large even without the 'bailout'.

    The effect of the 'bailout' was like dropping a wrecking ball into a canoe with a hole in it.

    The deficit needs to be taken down to no more than 3% - Maastrict Rules.

    In the good years it would be sound management not to have a deficit at all.

  • Comment number 82.

    From an "age of austerity" to tax cuts in six months! Gorgeous George and his pals have really lost the economic debate.What next to try to buy their way to office? Free beer for the Great Unwashed? Thanks guv!

  • Comment number 83.

    66 & 72

    Last year the IMF set the cost of the bank bail out to the UK taxpayer as GBP 1.227 trillion.

    To the expected government debt in 2014/15 of £1.41 trillion needs to be added approximately another GBP 1 trillion of off-balance sheet liabilities.

    The situation is quite absurd that the political class should still talk about bribing the electorate with their own money. They are close to bankruptcy and the only strategy they can come up with is to dump all this debt on the taxpayer.

    Much of the industry in this country was knackered before the credit crunch. It has received very little help overall in the last year and could easily turn up its toes if the current lack of support continues. All we get is a deafening silence. is this indifference, ignorance or fear?

    I reckon its the latter: they don't know what to do so its rabbits in the headlights time.

  • Comment number 84.

    #57
    "Could somebody tell me how much the budget deficit would be if there had been no need to bale out the banking system ?"

    =======================================================================

    Bank bailout costs ->

    http://www.independent.co.uk/news/uk/politics/163850bn-official-cost-of-the-bank-bailout-1833830.html

    The Independent take their figures from the National Audit Office (NAO).

    The £850 BN is a headline figure and includes guarantees, insurance, etc.
    The final cost will not be known until the shares in Lloyds and RBS are sold and if the guarantees are not called might be around the £100 BN mark. Equal to the annual NHS budget or two and a half times the defence budget.

  • Comment number 85.

    74

    That's ok then....

    I must be imagining the £1,400,000,000,000 we will owe in 4 years time, with interest payments of an estimated £80,000,000,000 every year

    Wherever you live it is not the normal situation across the Uk

    Finally, Osbourne is talking about not implementing a tax rise proposed by Darling

    It is NOT a cut

  • Comment number 86.

    “With luck, the equivalent of roughly half of a percent of national income won't make a key difference to the recovery in 2010 or 2011. But the Conservatives seem to be saying that £6bn is a hugely damaging number for the economy when it's a tax rise - but when it's a spending cut, it's a bagatelle.”

    ==================================================

    Oh hum! Smoke and mirrors.

    Historically after a recession there is a strong surge in production which businesses have complained that they cannot cope with because they have laid off the trained personnel they need. There are a lot of good professional people who leave never to come back. All this has been a well documented drag on the recovery on the UK economy which looses market share as a result.

    What is different about this recession is that more people are taking reductions in their wages or working part time. It will be very interesting to see how this influences the upsurge, what ever its size, as there can be fewer complaints in industry about lack of trained personnel and the cost of ‘training up’ which they have needed in the past. One thing is certain they don’t need extra costs and drag when grabbing market share on the international markets.

    This said even now as already mentioned by Stephanie the pound had dropped yet the exports are not picking up! This is a new game which might rubbish our immediate reference to historical theories and expectations.

  • Comment number 87.

    81

    I did read it....it still uses the £850bn figure which is the maximum it could cost if we get nothing for the shares and spend the guarantee, both almost absolute zero chance

    No need to start with your Maastricht rhubarb either

  • Comment number 88.

    76

    Good analysis

    I thought Vince Cable damaged himself with the stupid suggestion that cutting IHT was Osbourne's top tax priiority, though

  • Comment number 89.

    8. At 9:57pm on 29 Mar 2010, Voice_of_Reason wrote:

    Hasn't the banking crisis taught you that the only thats certain in business is that people will try and make as much money as possible.

    Just because you reduce costs on business doesn't mean that they will definately recruit more staff. They may just increase their profit margins or pay off debts with that money. Or even pay themselves a nice fat bonus.

    -----------------------------------------------------------------------
    Have to agree with you on this. I cant see the PLC I work for employing any additional staff for some time.

    We have had two years of pay freezes, we have seen almost every benefit of working for the company gone, we have been buying companies that have gone into administration on the cheap, squeezing what we can out of them and fitting them into our model.

    From that, we end up being asked to do what used to be done by two people, get calls as late as 22:30 onwards on why we feel a bid went wrong or where we could improve our margin etc...

    They may as well be saying "if you dont like it go elsewhere if you can".

    So no chance of them looking to increase the staff when they are having all this success in flogging us.

    P.S - I am off today so have some time to debate

  • Comment number 90.

    #5 I do not often agree with you but I just had to repeat something you said

    "My theory as to why Chancellors and their minions in the Treasury and the Bank of England do not understand how directly damaging their tax and interest rates policy is to business is that they actually have never run a business, and couldn't, not even a whelk stall!"

    How true and sadly it has been true for a very long time. I think the last successful businessman in the cabinet was Heseltine, not counting the odd life peer.

    Property prices are a major problem for business but sadly we are a small, over populated island where a lot of land needs to be set aside for agriculture and a lot (about 75% of Scotland) is either too far away from transport or simply empty of people to be any use for business. Net result is that our land prices will always be higher than, for example France. Of course our planning system makes things worse.

    Coming back to last nights debate. Cable won, the other two ended up in a nil - nil draw. The debate was a great cure for insomnia but as a worthwhile discussion of policies it had zero content. In fact the only policy announcement ("no death tax") by Darling has, about 12 hours later, become "no death taxes, but a compulsory levy", which no doubt will be payable on death.

    No one was willing to confront the scale of cuts required, at least Cable did not come up with some phoney promise to protect NHS.

    No matter how you cut it, as usual, Labour has massively overspent, public spending was out of control before the credit crunch. Their only policy to deal with this is to tax the rich "until their pips squeak" because as Darling kept saying we want a "fair" tax. At no time is he prepared to say what is fair - 50%, 60%, 90%? I have simple idea for "fair tax" - no one, no matter what their income should pay more than 1/3rd of their earnings in income tax/NI.

    What is needed is a proper plan to reduce public spending (in good times) to around 35-36% of GDP. Labour in 2007 spent 44% (excluding "investment") current public spending is the highest (as a percentage of GDP) in peace time since records began - and the previous highest figure was also by a labour govt. So public spending needs to be cut by around 20%. Personally I believe the "efficiency savings" are a myth and from the looks of some of the announcements a great deal of the cuts will be by reducing maintenance of buildings etc. I remember the effects of that from the early 1990s. We were looking at building a new hospital in one of UK middle sized cities. It already had a perfectly good hospital on an ideal site but the maintenance backlog built up over 40 years (so both main parties at fault) was so large that it was 50% cheaper to buy a new site, built a brand new hospital and knock down the old than it was to bring the old hospital up to reasonably modern standards. I also remember a story about the privitisation of the army houses. The private owners of the houses decided that it would be a good idea to upgrade all the houses to double glazing. They had costed it out, it would save energy. But the govt rejected it - double glazing is only suitable for officers quarters. Army houses are now some of the worse maintained properties in UK because the govt will not pay for it (under the privitisation deal, govt is responsible for maintenance). Similar current story, no first class travel for generals and admirals, but MPs (and there are more MPs than admirals and generals) of course will be able to claim for first class travel.

    Does any one actually believe that labour is capable of cutting public spending by the £120bn (compared to last years spending) it actually needs to cut - incidently Cable is the one who came up with the £120bn figure

  • Comment number 91.

    The £6bn NI tax rise is not a big number: whats at issue is a point of principle.

    Labour believe that £6bn of wasteful government spending does more good to the economy than the damage done by a £6bn tax rise.

    And that is just bonkers.

  • Comment number 92.

    have yet to identify £26.5bn ((( of ))) the £35bn they've promised in efficiency savings by the end

  • Comment number 93.

    I recorded this debate knowing that I would become so angry that I would not be able to watch in one sitting. This morning when I start to watch sure enough I reached the point when I could watch no more.
    As the co-owner and managing director of a small business struggling to keep the business solvent. My task would be made simple if we returned to the activity levels of two years ago. Sales volumes are far more important than tax tinkering.
    My business became a major supplier of components to the wind generator manufacturers but we sold our products via a Dane. This relationship broke down in an argument over our roles in the design and we lost a large proportion of our turnover.We have struggled ever since to regain a foothold in the original equipment market.
    My anger boiled over when Alister Darling declared how well we were doing in wind energy by attracting a company (German/Danish or American) to set up here. This company will undoubtedly bring its own supply chain from the continent creating the minimum number of jobs here.
    No mention was made of the UK company ceasing work in this field in the mid 1990s, nor the failed attempt of a UK engineering conglomerate to set up in the Midlands in the mid 2000s, nor the closure or a VESTAS wing turbine manufacturing pant in Scotland a couple of years ago. The last closure probable have a direct bearing on the much greater publicised closure of the Ilse of wight blade manufacture. The later company would still be British owned and we would not have surrendered our lead to the Germans if there had been wind turbine manufacture in this country.
    The labour party continued the rape of British manufacturing started by Margret Thatcher. For this they should be banished to the political wilderness for some time to come.
    GIVE VINCE A CHANCE

  • Comment number 94.

    This debate was an interesting innovation and well done to Channel 4 for showing it. Sadly though it was somewhat dull and something of a score draw. The people's favourite probably remains Vince Cable.But none came close to describing the scale of the problems ahead of us.
    Any chance of an update on todays GDP figures Stephanie as I see the BBC website talks of it being revised upwards? I am grateful therefore to be a reader of notayesmanseconomics web blog who appears to read the whole report from the ONS as earlier figures have also been revised down.So net we are very slightly worse off....

  • Comment number 95.

    @Stanilic
    Fear leads to denial
    I think you have it, Sir!

  • Comment number 96.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 97.

    So much misinformation being thrown about by the left wing bloggers today.

    Why is it a Bribe of the electorate when osbourne rightly wants to DEFER a tax on jobs during a fragile recovery?

    Why is it crazy to want to tackle inefficiencies NOW? surely its insane to identify £12 billion worth of inefficiencies (which labour have done) but refuse to actually put a stop to them until 2011/2012?

    If I found out I was paying £30 a month too much for my mobile and £25 a month too much for my Electricity, I wouldnt think "let me see, I dont want to pay extra but I willw ait for a year before I change my providers"

    You left wing government apologists really are something, your lack of logic and sense defies belief.

    Also this whole "£30 billion bribe" some of you are labelling the NI tax deferment is pure lies.

    How about saying "Labour intends to put a tax on anyone earning £20000+ starting now which will take £30 Billion over the life of the next parliament" Ah not such a nice thing this NI tax now is it?

    To be quite frank, I would much rather see VAT go up than anythig else, MOST things the poor pay do not carry full VAT, anyone arguing differently is just blinkered.

    No VAT on mortgages or rent
    No VAT on most food and childrens clothes
    Reduced VAT on Energy

    Government could quite hapilly scra the fuel duty rise to offset any VAT increase to keep fuel costs neutral also.

    What else do poor people spend vast sums of their limited incomes on if not those items listed above?

    Contrary to popular belief, the NI increase is DEFINATELY a tax on the many and a VAT increase is a consumption absed tax that hits the well off more than the poor as it is consumption based. You spend more, you pay more VAT.

    This country has no bloody idea what how badly the current tax system screws the poor and the middle earners of this country.

    I liek Vinc's idea of raising the personal allowance threshold to 10K, but it beggars belief how he wants to do this, but lambasts Osbourne for wanting to use the parallel tax (NI is additional Income Tax in all but name) to achieve pretty much something VERY similar.

    This government spends tens of billions of pounds administering their 10000 page + Tax system, they could simplify it and actually CUT the base rate of income tax or even raise the personal allowance to heklp the poorest in society, but large swathes of the electorate cannot even add up let alone see the benefits of changes to our tax system!

  • Comment number 98.

    Where oh where is the truth in politics? We have been told for years about so called 'new' efficiency savings. Its another cliche like 'lessons learned', they never seem to learn from them. It is just todays soundbite to make us feel good. We shouldnt need efficiency savings just because we are in such a crisis. Surely efficient govenment is what we should expect all the time? What they all really mean of course is 'cuts' which is precisely what we do need if we are to repay our debt and no doubt along with paying more tax too. From the politicians perspective 'efficiency savings' sound so much nicer doesnt it? It is abit like telling us that things are not nearly as bad or clataclysmic as we (the politicians?) thought. We are supposed to feel good about that too. Who shall serve us best? I really am not sure but I have to wonder whether those that got us into this mess deserve the chance.

  • Comment number 99.

    #93

    I agree completely. Labour is only interested in ticking its policy boxes not in using policies to establish a UK engineering/manufacturing capability in any particular sector. It would much prefer that other countries pay for all the R&D and commercialisation so that we can buy what we want when we want it using credit provided by the Govt's pals in the City or in the case of a lot of the offshore wind projects, finance provided by foreign utility companies.

  • Comment number 100.

    The NI cut is the most sensible thing I have heard so far. I understand that it is worth 50,000 new jobs, as a small business owner this would seem logical. Lower employment costs means more free capital, more potential for recruitment and more business growth.

    If the alternative is keeping some inefficient public sector staff sat at a desk for some political stand or for some bizarre Keynesian motive I would go with the Conservative proposal every time.

 

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