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Breaking new ground

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Stephanie Flanders | 08:10 UK time, Wednesday, 7 April 2010

The Conservatives' pre-emptive attack on the government's plans to raise National Insurance has achieved something important. As the campaign proper finally begins, it has shifted the grounds of the debate.

George Osborne, Vince Cable, Alistair DarlingFor months, the discussion about cutting the budget deficit was dominated by the when, and the how much - debates in which the true differences between the parties were fairly small. But thanks to the Shadow Chancellor, we are now also talking about the how. There, the differences are not enormous either. But they are telling.

Senior Conservatives are now putting all their rhetorical energy behind the idea that there's a right way and a wrong way to cut the deficit. (In case you missed it: spending cuts good, tax rises bad.)

This shift of emphasis may or may not help their party. But for voters, it might, just might, produce a more meaningful campaign.

How so? Well, for starters, the debate about how to cut borrowing does reflect a genuine point of difference.

True, everyone (or nearly everyone) thinks that public spending cuts need to make the largest contribution to bringing the deficit down. For Labour the ratio of spending cuts to tax rises by 2015-16 is about 2 to 1 - for the Tories it's 4 to 1. As we all know, behind that difference of emphasis lies a larger difference of doctrine.

At the margin, the Conservatives want you to know they will fear tax rises more than spending cuts. Labour wants you to know that, in a tight spot, they will put public services first.

It may sound like a trip down memory lane to depict the two parties in this way. But that is what the past week has really been about. In effect, Labour and the Conservatives have been reminding voters that, when it comes to the deficit, the old biases still apply.

You might have come to that conclusion about Labour already, from the fact that the role of tax rises in the Chancellor's deficit reduction plan has grown steadily since it was first unveiled (that ratio used to be 4 to 1.) Now Mr Osborne has shown some old colours too, complicating his message on the deficit with talk of reversing most of Labour's 'tax on jobs'.

I should say at this point that what the Liberal Democrats' basic instinct would be is much less clear.

That is one of the many downsides to the rather false debate about the public finances that we've had so far: Britain's third party has been able to sound like the voice of reason, without ever really telling us what it would do. As of today, it is not entirely clear, for example, whether the party would protect any public services from cuts. Vince Cable says no. But other senior members of his party, including his leader, have been less clear. Apparently we have to wait for the manifesto to find out.

You've seen the economists battle it out over the timing of deficit cuts. Will we see the same war of words from them over the national insurance rise? Perhaps. But in the basic choice between tax rises and spending cuts - as I've written in the past - the academic literature is unusually clear. In normal times, the evidence suggests that spending cuts are less harmful to the economy than tax rises.

Needless to say, the economists - and everyone else - can still have a debate about whether these are normal times. Labour's basic argument is they are not: after an unprecedented global financial crisis, we can't count on private demand to fill the gap.

That takes us back to more well-trodden ground. But there's another reason why the debate over the national insurance rise is useful: it introduces a knowingly abstract debate to some brass tacks.

Once they had said they wanted to avoid the National Insurance rise, the Conservatives were forced to commit detail in describing what they would do instead - much more detail than we have had from them before.

Yes, Labour would say not enough - because the efficiency savings are not spelled out by department. But as I said last week, the government has not exactly been a model of specificity in this area either.

From them too, the Tories' move on National Insurance has forced more detail about their efficiency savings than they had ever provided before. (After all, to show how the Tories were duplicating their plans, they had to indicate what those plans actually were.)

There are risks here for both sides. Labour are clearly uncomfortable talking about the impact on the economy of higher taxes next year. And the Conservatives may find they have to choose between a promise to cut borrowing further, faster, than Labour, and a promise to avoid further tax rises. George Osborne has not (quite) given the second promise yet. Without the National Insurance rise, it's not entirely clear he can offer both.

But, here too, this might end up telling voters things they would like to know about a future government.

No, it isn't the honest debate about Britain's budget choices that commentators say the voters deserve. But it's a start.


Page 1 of 4

  • Comment number 1.

    In all the debates about spending cuts, two budgets appear sacrosanct - the NHS and overseas aid.

    Yes, of course the NHS must be maintained - but why overseas aid? There are constant press snippets about aid being misused, abused and managed to make money for the managers.

    It's terrible to say this but there are parts of our great cities and pockets of our countryside where poverty and living conditions sink to a third world level - but we'll continue to pay for foreign leaders to build palaces, exploit dwindling natural resources, fill Swiss bank accounts, acquire weapons and hang medals across their chests?

    Surely charity begins at home.

  • Comment number 2.

    It's a shame we have to go through the charade of no party admitting exactly what they'd do, but it is inevitable.

    The mess the UK finances are in is much deeper than the majority appreciate. Even closing down every school, college and university in the country immediately and forever would save only 10% of government expenditure - and the deficit is 12%.

    Any party revealing the true scale of what needs to be done could never hope to win the election, as the majority would perceive them as overly draconian.

    So the charade will go on all the way to 6 May.

  • Comment number 3.

    Steph. If you want an honest debate, ASK THE QUESTIONS!
    We all know the next Government will be hated if they address the issues. They have 5 years to turn things around. If Labour do win and delay, we have every possibility of going to the IMF again. Joe Public cannot handle the truth. The Conservatives tried at the beginning of the year to show how tough things will be and they lost their majority in the polls. Surely workers in this country are aware that an austerity package the size of Greece and Ireland is necessary. Wage cuts, job losses and longer working lives. Thanks Labour. You messed up again.

  • Comment number 4.

    National insurance tax rise is the most pernicious and cynical you can get as a government. It hits employees and employers and its done because because the government think that some of the populous don't see it as a tax because its not called a tax.

    Nobody seems to have questioned the government about the practice of future planned tax increases in a budget which should be outlawed. Either its in the current year or not at all as it provides a completely false picture. I see labour luvvies like Adam Boulton on Sky still announcing the scrapping of NI as tax cut when it isn't.

    It's about principle. How on earth can Labour say they're committed to a recovery whilst adding to employers cost?

    Its that simple. We know from Gershon that efficiencies can be made this year rather than leave it to next year sa the government have identified themselves. So why wait for another year of waste?

    Which bit of this do people still not get?

    It was interesting to see in the run up to this whole saga that there were several warnings posted in the media about tax on business. Labour chose to ignore them because they 'knew best'. Mmm.

    We can't have a real transparent budget debate until a spending review is done. The fact that this has been postponed until after the election in a time of crisis should be enough to get booted out of office and be hanged for treason to the realm.

    Welcome to the biggest non-event. The media are doing the best to make it 'tense'. Game over. Expect Labour infighting and disintegration to start within 2 weeks as polls widen........

  • Comment number 5.

    I don't think that we're going to get too much more in the next 29 days on this matter. The Government is very vague about virtually everything so one can't take them seriously. We should keep an eye on how expensive it is to fund borrowing in Greece at the moment.

    There has not been much talk about non strategic asset sales. The Government has mentioned the Tote. But what about prison buildings, hospital buildings etc. Is there any reason why these can't be passed to the private sector to manage? We have to shrink the state - it is like an octopus.

  • Comment number 6.

    After the years of hush hush government we now need a party that is going to be honest,open,and strong.We need to start re-building the strength that this country once had, stop the nanny state and stop the selling of our companies to other countries. Yes its going to be hard and a lot of people will be upset at decisions made. We all need to pull together ,keep what we believe in, put right the wrongs of the past and turn our country back into the strong country that it once was.Lets put the Great back into GREAT BRITAIN.Work together,work hard and lets not be afraid to once again take the risks.

  • Comment number 7.

    6. At 09:08am on 07 Apr 2010, Lockstox wrote:

    I agree. If only the majority cared we could make this a great country once again. Thank you for making me proud to be British for one small moment.

  • Comment number 8.

    Economists can be simply divided up along a main axis. At one end are the followers of Keynes. Where Labour’s policies are derived. At the opposite end are the Friedman-ites who defined monetarist doctrine for both Reagan and Thatcher. Milton Friedman is the Prophet for the Osborne-Cameron approaches. [OK, it’s more complicated than that – but this is a short blog].
    Keynes became famous as an advocate for the rescue of the US economy in the 1930s. He suggested that Roosevelt should spend America out of its downward spiral of growing unemployment. By such radical measures, money supply could be sustained. The US economy recovered and millions of families were rescued from destitution.
    The latest Wall Street crash is similar to 1929 and early thirties steep declines. Something had to be done quickly. Which were the decisive actions taken in the autumn budget of 2008. Driven be their monetarist rhetoric, the Tory response – supported by big business - was to pour scorn on those measures. They laughed when the stimulus measures were announced. But they’ve changed their tune now they’re playing out with such success.
    Governments are expected to deal with emergencies: terrorists, floods, foot and mouth epidemics and now the second Wall Street crash. No manifesto can predict those emergencies. Only the track record of political leadership can prove fitness for those purposes.
    As Britain’s recovers from the Nightmare on Wall Street, our very own Banks are getting back to paying big bucks in Tax. Those corporation taxes, dividends and eventual share sales will contribute mightily to paying down the current deficit. Raising a little more from big business from an employers’ increase in National Insurance will spread the rest of debt recovery more fairly. Much more fairly than the VAT increase the CBI recommends.

  • Comment number 9.

    The root problem is that our three main parties and all sitting politicians are thoroughly discredited.

    They MPs all connived in theft relating to expenses, the parties all conspired in the treason of signing away our sovereignty to the EU, and the majority took us into illegal wars.

    Thieves, traitors, murderers; don't vote for any of them.

    Break new ground and vote for someone you would respect and trust as your MP.

  • Comment number 10.

    I must first apologise but: as politics is 99 per cent hot air, then perhaps rather than "Breaking new ground", the title of this piece should be "Breaking new wind"

    Honesty in the face of undeniable arithmetic facts is never a strong point of the numerically challenged political classes (or the electorate), but during an election period it is crazy to even think that they would actually even understand that the numbers actually matter - they are a weapon in the war of hot air that is politics. Facts and reality get even less important during an election period - it is impression that matter - it is Jennifer's ear wot wins it! To believe otherwise is almost the height of naïveté!

    All politicians talk about listening to the people, but they don't and never will. For example: there are many times more savers than borrowers, but none of the parties even thinks it is worth mentioning the plight of savers - they only talk of borrowers - and this is all about support for the bankers - with whom many of the candidates hope to gain future employment - just short term (in many cases) self interest.

  • Comment number 11.

    George Osborne is saying that no increase in national insurance will lead to money being available for the NHS to increase expenditure on new drugs for cancer.
    Lower taxes and higher public spending . Sounds too good to be true. There might be a reason for this.

  • Comment number 12.

    Despite talk from all sides about "cutting the debt", as far as I can see what they are actually talking about is reducing the amount we have to borrow each year to meet the difference between what we spend and what we raise in tax (the deficit.) Even reducing the deficit to zero will do nothing to address the huge debt that is already there and on which we pay crippling interest.

    Can someone please explain in simple terms whether it is a good or a bad thing for a so called prosperous country to have any debt at all. To my simple mind, if we cant afford the services etc currently provided by government without borrowing then we certainly cant afford them once interest is added.

  • Comment number 13.

    "For months, the discussion about cutting the budget deficit was dominated by the when, and the how much - debates in which the true differences between the parties were fairly small."

    No - the media has been obsessed with how much and when - but in their usual pandering way never actually get to the questions that need to be asked.

    The rest of us already know - we know there will be cuts, it doesn't really matter how much and when - we will react when those cuts come into force - like the Greeks did.

    Only the sycophantic media want to find out beforehand - because they still live in the fantasy world that politicians tell the truth prior to election time and that there is any worth in what they say. The truth is a scarcity at the best of times but pre-election and only a gossip is interested in what they have to say so they can tittle tattle it across their media channels.

    Events change history - not stories about possible events.

  • Comment number 14.

    A plague on all your houses. All of th partis are looking at the wrong thing and the result will be a decade of continuous decline no matter who wins.

    On a purely staregic note if I were Labour, I'd push and push the hole in Tory finances. At the same time I'd rip to shreds the imabalance in their tax plans. As we close on polling day make the Tories look like the REAL nasty party.

    As for #4

    What a load of absolute Tosh! get back to Central Office (if your not already there). Until you can establish that SMEs in the UK (and they are the employers who you say will be 'hurt' most) can prove that they will truly ADD wealth rather than speeding up the circulation of money your argument is flawed. Just look at the reports of the CBI, IOD, and Chambers of Commerce - all project recruitment to be down or flat in 2010/11. So your argument is a joke.

  • Comment number 15.

    If avoiding a rise in NICs is such a good idea, why not reduce NICs and pay for the reduction with an increase in, say , income tax?

  • Comment number 16.

    It should be a given if you are living beyond your means (and we are - big time)that you should tighten your belt immediately rather than carrying on in the hope no-one will notice and it will all get better - which is the approach being taken by Brown and his merry band.

    Even if you accept Labour's argument that cutting now would be dangerous to the recovery and that they have identified wastage they will cut sometime in the future, why oh why dont they cut that waste now and use the money saved on something useful? Am I missing something?

    Finally, bankers have been fair game for the last 2 years - and rightly so, to a point. Lets not forget that its the banks and the City that provided the employment and paid the taxes that fuelled this country's prosperity during the 90's and most of the noughties. If we let them flourish again rather than hitting them over the head all the time, they will create wealth for us again. Yes they need to be regulated but not by the FSA which has gone from counting paperclips to stifling all activity in the sector. I'm not a banker but I do work in financial services. I have paid much much more in tax than i have received from the state - but fair enough. I just want to be allowed to carry on with my work without everyone baying for "banker blood".

  • Comment number 17.

    #8. leftie wrote:

    ".... Keynes.... Friedman..."

    I am unhappy with the Labour Government's policies being described as Keynesian. Why? : because Keynes's prescription for recovery, that worked) was prescribed after the collapse and de-leveraging of the debt mountain of the 1920s, not before it happened. Keynes's 'solution' worked because debt had already been unwound so creating more debt through the TVA etc. created economic activity - the present solution is to create more debt to prop up excessive debt, not to create economic activity.

    Milton Firedman's tragic error was to believe in the perfection of the market to cure all ills and thus he is a disaster of an economist and is substantially responsible for the collapse.

    Money supply matters, debt creation matters, the affordability of debt matters, but so does the proper return on investment, and to savers, - there needs to be a balance. We have gotten all of this basic economics wrong, and we are paying the price!

  • Comment number 18.

    What people should never forget is that the backdrop to this whole debate is the fact that Britain's deficit is much higher than any other major economy and this is due to to wreckless policies pursued by Gordon Brown as chancellor which he continued as Prime Minister.

    The problems we face in this country are particularly acute because of his incompetence in handling the economy.

  • Comment number 19.


    Can I draw your attention to the Conservative manifesto of 2005. I think they can justifiably claim that had they been elected we wouldn't be starting from our present position.

    If anyone can say "told you so" it's them, yet they aren't pushing the story.

    "First, we cannot continue down the path of ever rising taxes. Government is too big -
    it is spending too much, wasting too much and taxing too much. This threatens our
    economic prosperity. A strong economy is the foundation for everything we do in
    Britain. It provides higher living standards so that people can look to the future with
    optimism. It creates the jobs we all depend on - enabling families to build their
    financial independence. It should guarantee our pensions in old age. It provides a
    safety net for the least fortunate. It pays for our public services - our children's
    education and our parents' health. And it allows us to invest in our nation's security -
    defence, the police and border controls.
    Britain cannot continue indefinitely to spend more than she is earning without higher
    taxes or higher interest rates - either of which will harm our economic prospects. If
    we are to secure our future prosperity, government must once again start to live
    within its means."

  • Comment number 20.

    'In normal times, the evidence suggests that spending cuts are less harmful to the economy than tax rises'

    And in times like we have now this is even more the case. This explains why there has been an unprecedented level of opposition to Labour's plan to introduce a job destruction tax.

    Labour and Lib Dems have got themselves on the wrong side of this argument. The NI tax increase will snuff out an already fragile recovery and a growing number of people appear to be realising this.

  • Comment number 21.

    A very good post but what about the wasteful government spending?

    Why are the parties piddling around with £6bn or £12bn or £30bn - we all probably have some views on government wasteful spending - How much really is this waste £50bn per year? £100bn per year?

    Would the Labour government end the waste if re-elected? Or would it cut frontline services to ring fence its favourite wasteful spending?

    Will 'cuts' really harm the economy if 'cuts' mean that millions of ordinary voters are able to keep more of their own money in their own pockets - to spend how they think best and not allow big government to keep spending our money for us and much of it overseas?

    The unanswered questions?

  • Comment number 22.

    No. 11. Yes, there is still something very big missing here. When the paperclips in government offices have all been saved, what will be next? A VAT increase, from whichever party forms the next government? A move to means testing universal benefits like child allowances and the state pension? Hotel charges in hospitals to fund more expensive cancer drugs? It will be interesting to see what happens over the next 12 months.

  • Comment number 23.

    'I should say at this point that what the Liberal Democrats' basic instinct would be is much less clear.'

    I would go further and say Lib Dems don't have any instincts at all other than to be completely two faced.

    Appear as class warriors when addressing working class voters, appear as friendly to 'middle England' when addressing the middle classes.

    One minute they're in favour of 'savage cuts', the next they condemn the Tories for introducing cuts 'too early. They appear to be all over the place.

  • Comment number 24.

    #14 FDD

    Your comments are pretty offensive to SME owners including me. Your comments are nonsensical and hyperbole.

    I'm also just quoting from evidence. Latest bookies odds: Conservative majority 8-15, Labour majority 10-1.

    What do the bookies know that the pollsters/media don't?

    #11 Meatandpotatopie

    The reason is simple. Employee AND Employer NI affects the public sector just as much. The proposed NI tax will increase NHS budgets by £200 million (well they employ 1.61 million people) - a fact that Labour chose to ignore, the media have missed and the lefties on here choose to selectively ignore.

    In terms of reducing the national debt its less than peanuts - in terms of lifesaving treatment its extremely important. So you can see the rationale.

    I just hope enough people can see the Labour 'story' built on quicksand.....

  • Comment number 25.

    It is difficult to think of reductions in public sector budgets that help stimulate the economy. It is also quite difficult to think of reductions in these budgets that result in an effective reduction in public expenditure. Tax rises on those who save rather than spend is likely to lead to reductions in the current deficit but general tax increase like VAT will remove purchasing force from the economy and tax take. The most effective way to reduce the deficit is for the economy to grow briskly and the government should think of ways of attracting some of the 8 million who in one form or another are supported by the State to be paid bit more than benefits to do useful things like environmental improvement recycling etc.

  • Comment number 26.

    ' Labour's basic argument is...we can't count on private demand to fill the gap'

    But a healthy private sector is essential to jobs and the recovery, and the public sector can only be properly funded if we have a healthy private sector. If Labour are allowed to kill off the recovery with their NI tax rise it isn't just the private sector that will suffer. The public sector will suffer just as much in the long term.

  • Comment number 27.

    I can't understand how the UK voter has accepted NI becoming a tax, it is an insurance scheme. It has always been expensive; I started out paying 5s and 5d on a salary of £3 per week. Nevertheless, it is an insurance scheme, not a tax, and by all accounts there is enough in the kitty to pay out what is need to be paid out. For years we have bragged that our NI is fully funded, while other countries just dip into a general taxation kitty. But now some of our politicos have completely reversed this, and dip into a fully funded kitty to cover our taxation shortfall. This should be stopped, or the name NI should be changed.

  • Comment number 28.

    #15 smalleb

    Becuse it increases costs to business both public and private sector and its the last thing you want to do if you want a recovery.

    Too many businesses are already on their knees coping as it is. More taxation means less business investment means less jobs means less taxes.......

    And anyway why not convert all of the current NI into tax as it should be so people can really equate to how much they're really paying?

  • Comment number 29.


    Sorry to break it to you but its a tax. Short and simple. See my last comment in #28.

    Talks like a duck, walks like a duck...........then it is a duck.....

  • Comment number 30.

    After all that's happened with the expenses scandal, the banking crisis that allowed the major banks off the hook (which we the public are paying for) we we're hopefully going to get an truthful honest open debate that the public deserved. All I can see from one news report to the next is politicians resorting back the their old ways, both Labour and Conservative spouting the usual political spin, telling us only what they believe will get our vote.

    I think this is our chance to really show these two parties (who between them over the last 50 years or so have slowly bled this great country of ours dry)that we are sick of them and it's time to change this cosy two party state that they're used to. I know a hung parliament might not be good news to some sectors but I would much prefer it to having another term of either of these two treating us as fools.

  • Comment number 31.

    National Insurance contribution rises are the right way to raise additional taxation for 2 primary reasons: it is a progressive tax based on income and therefore affects the least well off the least and secondly, it is not as open to the tax avoidance / evasion scams as income tax.

  • Comment number 32.

    Agree with comment 1, charity should begin at home.

    We're a declining economy, now's the time to save ourselfs first and other countries later. Especially, I cannot figure out why we're giving money to China whose GDP is massively outstripping our's.

  • Comment number 33.


    Your first two paragraphs I skimmed but the third I had to read twice.

    Are you on the wind-up?

    'Lets not forget that its the banks and the City that provided the employment and paid the taxes that fuelled this country's prosperity during the 90's and most of the noughties.'

    The UK economy is highly dependent on selling houses to each other, high street spending, rampant consumerism and generally keeping up with the Jones's. Now remove the debt mountain that we built up over the last two decades and then measure how much our country 'prospered'. And just for fun, remove North Sea oil and gas revenues too!

    Also care to expand on how banks create wealth?

    This country is sinking and the City can't save it and never could.

    Lighter banking regulation is the fastest path to bankruptcy. Where have you been?

    As for the General Election, it's irrelevant. The electorate will vote for change, and get more of the same!

  • Comment number 34.

    #31 No it isn't because you're forgetting the employer cost which affects both private and public sector enterprises as previously stated.

    Which bit of your selective memory is having difficulty understanding this?

  • Comment number 35.

    Rugbyprof (24) does not understand simple arithmetic. The NHS do pay National Insurance but government revenues will be reduced by not collecting additional revenues . George Osborne is spending money he does not have. Does Rubgyprof really beleive that George Osborne can make eficiency savings of thsi level?

  • Comment number 36.

    You have to wonder why Brown is getting so agitated about Tory plans not to increase NI contributions. You might suspect that it is more important to his policy than simply acting as a tax increase. Would it do something stealthy that he does not want spotted. For example, what would happen to the employers' contributions from the public sector?

    Perhaps the increase would have been used to reduce clarity concerning public sector funding changes.

    Some more Brown statistics?

  • Comment number 37.

    32. At 10:54am on 07 Apr 2010, bpx wrote:

    Agree with comment 1, charity should begin at home.

    We're a declining economy, now's the time to save ourselfs first and other countries later. Especially, I cannot figure out why we're giving money to China whose GDP is massively outstripping our's.


    Wasteful government spending?

  • Comment number 38.

    Simples really - choice is:

    Nu (or is old again?) Labour - spend spend spend like a lottery winner until the country goes bust

    Conservatives - Slightly less spending, small chance of things actually getting better rather than worse over a long period

    Libs - Who cares, they are not going to be in power anyway

  • Comment number 39.

    As a genuine floating voter, I fail to see how specifying a tax cut is a move towards honest debate when it actually makes the major problem (the deficit) worse! It is easy to be specific about the popular things!
    This has lowered the Tories in my estimation because they keep telling us which taxes they would cut and which spending is "ring fenced" (almost all of it as far as I can see!) and still claim they would lower the deficit faster - it just does not add up.
    As for "efficiency savings" any fool can point out that the public sector is ridiculously wasteful (higher absentee rates, lax contract management) - the difficult bit is identifying levers elected government can pull to make it better. Unless you are committed to spending your first term in trench warfare with the public sector unions and the mandarins you are not going to make any efficiency improvements, and if you do so commit yourself you are not going to achieve anything else in that term.

  • Comment number 40.

    It would be nice to have some gold reserves right now...
    Where are these multi £billion ID cards that we were meant to have? I haven't got one. But I do have a licence and a passport... which i now have to pay a hell of a lot more for...
    Remind me again why we're still financing a multi £billion gorilla war when the regime has already been changed?
    Whats going on with the multi £BILLION NHS IT project to give everyone access to their medical history? I haven't got access to mine yet...
    What do we have to show for this Labour government...
    A collapsed financial system propped up by devalued-imaginery-printed money, a bunch of massive costly unfinsished useless projects that they can't see through as they haven't got a clue how to, a huge defecit in public finances to fund all of the above and a HUGE mountain of national debt. Not to mention the prospect of higer taxes for everyone which should have already been implemented but hasn't been as that will not win Labour votes despite being in the national interest.
    I will cetainly be putting a cross in that Labour box to vote them back in...

  • Comment number 41.

    I am surprised nobody seriously has taken Gordon Brown to task for his comments over the Tory proposals for NI rises to be largely scrapped as "taking money out of the economy".

    Surley the money is still in the economy, just in a different place. The debate about whether money is better in both business and conusumer hands rather than government doesn't seem to have been aired. I can only assume Gordon Brown is suggesting that in all cases money is most efficiently spent by government raher than anybody else.

    Given what I would assume are his natural instincts, I would have thought this was an open goal for David Cameron to shoot at. So far he seems incapable of picking up the ball.

  • Comment number 42.

    #35 meat and tato veg

    I'm fine with arithmetic though you seem to not understand alternate use of spend.

    Osborne is proposing alternate specific use for the NHS rather than just another generic raising of taxation in this instance.

    With regards to proposed efficiency savings, look up Gershon and related reports you'll find plenty to chomp ground level I see plenty of savings to be had.

  • Comment number 43.

    # 35

    George Osborne is spending money he does not have? errr.... What have Labour been doing?

  • Comment number 44.


    As Britain’s recovers from the Nightmare on Wall Street, our very own Banks are getting back to paying big bucks in Tax. Those corporation taxes, dividends and eventual share sales will contribute mightily to paying down the current deficit"

    you forget that previous years losses can offset present/future tax. Don't expect the big banks who announced record losses in their billions to be paying much corporation tax for the next 2-3 years!

    This is precisely why January's CTax take was so low, companies accrued massive losses so had virtually no CTax to pay. Same will happen next january which covers the 2009-2010 period.

  • Comment number 45.

    # 37

    Hit the nail on the head. WASTEFUL GOVERNMENT SPENDING

  • Comment number 46.

    I find the current political debate quite depressing. It may well be possible, although I think it unlikely, that the NI increase can be offset for one year by efficiency savings, it is clearly not possible to find the same savings year after year. I am sceptical about efficiency savings contributing more than marginally to deficit reduction. In the current debate Conservatives in particular conjure up notions of legions of bureaucrats/managers to be culled, but any examination of spending Depts suggests the overwhelming portion of the money goes on front line staff (doctors, nurses, paramedics, teachers, soldiers, policemen, firemen , social workers, cleaners,) or on materials/consumables (drugs, guns, computer equipment etc) the admin/managers may be 6-8% and may be less of the pay bill (in the NHS it is doctors not managers who constitute most of highly paid workforce). It is also the case that the NHS is about the largest civilian organisation in the world and needs a lot of people to organise getting patients to hospitals, purchase materials. As a former University teacher I could feel as exasperated as any by what I saw as unnecessary bureaucracy, but would also recognise the enormous amount of admin effort needed to get students into the place and to manage and assist so many aspects of their lives, and to manage a large complex organisation with complex and extensive site. In reality the largest savings that could be made without seriously damaging the organisation would be miniscule in relation to the size of the budget, and VCs and Senior managers elsewhere in the public sector are already looking for these (indeed have looked for them for the last thirty years) as they have other activities which they are desperately short of funding for.
    If we were going to have an honest debate about cutting the deficit , on the spending side it would have to include discussion about the number of frontline workers and/or the level of pay (and pensions) in the public sector and on the tax side either VAT or standard income tax rate or NI (which I view as interchangeable). The current Govt seems unwilling to go beyond the NI rise and will presumably offer unpleasant surprises later if it wins. If the Conservatives want to cut the deficit faster they should be talking about VAT and public sector numbers and pay and pensions. Given that both want to win votes I am not expecting a serious discussion to break out in the next four weeks.

  • Comment number 47.

    I want a combination of Conservative and Lib Dem doctrine on the tax system.

    Abolish universal tax credits and allowances, in fact abolish many of the tax credit schemes and use the saved administration costs to simply increase the personal allowance.

    Why is it so politically impossible to raise the personal allowance to 12000 taking millions out of income tax altogether whilst at the same time increasing the basic rate so anyone earning between 20K and under the 40% bracket is no better off?

    HMRC spends £5billiona year collecting income tax and even more than that in administering the tax credit systems.

    Drastically simplify the tax system and the savings alone could take milliosn of people out of taxation.

    ofcourse the quid pro quo would be a swathe of tax inspectors/collectors hitting the dole queue as their services are no longer required, but in my opinion thats no bad thing.

    I would rather have the low paid not paying any tax than have a wasteful overcomplicated tax system keeping unnecessary civil servants on the taxpayer payroll.

  • Comment number 48.

    Yes ... lets make lots of cuts, this will reduce the deficit... and by the way it will also make thousands redundant, therefore increase the burden on the State to provide more benefits to those made redundant. Public services will suffer. The people being made redundant will stop spending. The general public will panic given the expected media reports on job losses. This is the economy for the few. A NI increase will take some money out of our pockets, and the companies bottom line, but will keep more people in work, which in turn will make a fairer society where everybody has a place
    It sounds like turkeys voting for Christmas.
    George Osborne is only telling us what we want to hear... and he knows that.

  • Comment number 49.

    Labour personifies Britains champagne lifestyle on a beer budget. Borrow borrow borrow, consume consume consume, credit credit credit, consume consume consume, default default default!
    Borrow more to bail out
    Tax the richest more and punish prudent savers who live within their means

  • Comment number 50.

    But dont we laso need a vision for national renewal setting a path for new growth opportunities. Where is the Leadership?? Otherwise this debate looks like how many ways can we fleece Joe Public without him realising what we're doing.

  • Comment number 51.

    I very rarely agree with John-from-Hendon because I come from a right of centre background that believes in small govt and low taxes but every once in a while I find something in his blogs that just has to be repeated

    I must first apologise but: as politics is 99 per cent hot air, then perhaps rather than "Breaking new ground", the title of this piece should be "Breaking new wind"

    Marvellous - although I do think you might be slightly under estimating the hot air quotient

  • Comment number 52.

    #34 Rugbyprof - what part of "we can all be rude but it is better if you have an argument to back it up" do you not understand? There must be some logic in your rudeness somewhere but it is hard to fathom: I don't remember saying that it won't affect the public sector as well as the private. Nor should it - we all have to pay more in tax over the next few years but we will still be only a mid-range taxed economy. Are you related to kevinb by any chance? You seem to have many traits in common.
    My memory is not particularly selective, let me see: who had interest rates at above 15% in the 1980's? Unemployment at over 4.5 million based on claimant count alone? Took us into Europe? Signed up to Maastricht and the single market? Blew all our North Sea oil revenues on tax cuts for the rich whilst screwing the poor with "trickle down" economics? Declared there was no such thing as society and did their best to destroy everything that was good about the social fabric of the UK? Was that Labour? Of course it wasn't. Who gave us the only ever referendum on our membership of Europe? Was it the Tories? of course it wasn't.

  • Comment number 53.

    Have you seen the latest OECD report. Maybe, just maybe, the government's budget forecast was accurate. On the economy are Labour more capable than the tories? If these forecasts are accurate then the NI increase will be more bearable and does at least spread the painful burden more thinly. Budget deficit-with economic growth this will also become a smaller (although still enormous) problem.
    My fear is that inflation will let rip, destroy savings and impoverish those on fixed incomes. The very people who did not create the problem in the first place!

  • Comment number 54.

    Re: 39. I entirely agree. As for the public sector, the main area of "waste" appears to be the extremely generous final salary pension schemes that public sector workers enjoy, as compared with the private sector. That must be a huge potential saving, but can you imagine the ruckus any changes to the current position will create? Apart from that, it will be a question of cutting whole programs, such as aid to deprived areas of the country, Trident or our entire mission in Afghanistan. Everyone will have their preferences, but just imagine the outcry.

  • Comment number 55.

    It's a long time since I studied economics - but the principals have surely not changed? We make stuff and we sell them. We buy stuff, convert them, and/or sell them.

    In that equation comes the how we finance the process - the trick being to be 'half a sixpence better off' ( read Dickens if you are unsure of this model)

    In the UK 's case - the banking fraternity ripped the financing process off to fuel their own gains - and risked, and then endangered this country.
    If it hadn't been for the Labour government- and their brave ( yes brave, no-one had come across this problem before , so they had to think new ideas .. FAST) everyone of the above commentators would now be bemoaning their lack of a job , hyper inflation/deflation/inflation etc.
    (It's a matter of record that The Tories made the wrong call on every area of that episode, so why do the crop of commentators here now believe the 'new sliced bread' being issued by Central Office?)

    The General public is actually not that stupid....

    Of course there is a debt- defecit. We the public, that this government represents, bailed our banking system out and kept our country alive.
    Now we are in debt,and of course it will get reduced, and of course we will all pay to reduce that debt whether in income tax, vat, NI - less public services, no public services etc.
    We will pay ... and yes we did enjoy rising house prices over the years , and yes it is on hold for a while so we all will have to tighten our belts.
    All being the operative word.... SME's who wine of NI increases are part of the 'all'. just as much as the individual.So the SME's who are weeping at the NI increase need to look internally at their own performances over the last few years and see how lightly they have got off

    So forgive the cynicism I express at those SME's who wine about increased NI contributions. Yes of course it's a tax- but not on the employer's ability to have spare cash to hire new employees, - more like a hit to their revenues that will maintain their own personal financial status.

    At today's level, I would suggest that most SME's cannot cut their employee base any more without now sacrificing their output ratios. And if they are like the SME that I work for, they didnt take personal cuts of 15% to their salaries they forced on their employees but are enjoying a modicum of 'performance extra' pay which will be threatened by NI increases.

    Yes I will vote Labour. No I dont accept they are economic idiots who let the country down. And no I am not persuaded by a spiv from Central Office peddling a new brand of soap, with a 10 p off ( tax) sticker and telling me we are all in this together. And neither should those loyal SME's be persuaded by such shallow politics either.

  • Comment number 56.

    xbanker: I believe that the failed IT projects to which you refer were actually being carried out on behalf of the government by some major Private Sector IT organisations. It certainly was the government that commissioned them - and they went to the biggest and the best in the business who sold themselves on their expertise in these sorts of major capital projects - but it was the contractors who have failed to fulfill the briefs.
    The last time I looked the government didn't actually own any IT companies and have indeed outsourced almost all IT functions to external organisations, despite their continuing useless levels of performance. Remind me again: who started all this outsourcing nonsense in the 1980's? My selective memory has forgotten. Of course, once all the government IT departments were outsourced it became economically unfeasible to re-establish them.

  • Comment number 57.

    #17. John_from_Hendon
    I totally agree with your critique of #8. Leftie's analysis is totally flawed.
    Leftie appears to be oblivious to the fact that it was not Margaret Thatcher that introduced monetarist policies to the UK but rather the labour Callahan Government in 1976 following their going cap in hand to the IMF to be bailed out. As a result the labour government were forced to cut government spending and set strict money supply growth targets a policy they pursued until following the "winter of discontent " Callahan was defeated in the 1979 election.
    However, Nigel Lawson did in 1985 have to abandoned the MTFS M3 targets when it proved impossible to control UK money supply following the deregulation of banking and capital markets.
    So are there any lessons to be taken from the period 1979 to 1985 - we in the UK did worse than any of our European neighbours apart from Italy with higher unemployment, worse inflation and a deeper recession. The question to ask is was this because the policies pursued by the Tory government were wrong or was it was a consequence of the policies that Callahan had pursued in the period up to 1976 when his government all but bankrupted the Country? The answer I believe is given in Callahan speech to the labour conference in the autumn of 1976 in which he said “We used to think you could spend your way out of a recession and increase employment by cutting taxes and boosting spending .I tell you in all candour that this option no longer exists, and that in so far as it ever did exist , it only worked to inject a bigger dose of inflation into the system,.”
    When will we see Gordon Brown speak with such candour? Don't hold your breath

  • Comment number 58.

    TSArthur 46

    ' but any examination of spending Depts suggests the overwhelming portion of the money goes on front line staff'

    Really ? Then perhaps you'd like to explain this (from the Independent newspaper)

    'NHS spending on backroom staff and management consultants has increased by more than 80 per cent in just four years, new figures have revealed.
    Primary Care Trusts (PCTs) shelled out £1.2bn on administrative and clerical staff in 2008, up from the £530m they spent in 2004. It has led to accusations that the Government has broken a pledge to tackle the costs of bureaucracy within the health service'

  • Comment number 59.


    'Tax the richest more'

    No. That's Old Labour. New Labour have been taxing hard working families more & more & more.... The NI tax increase will compound this still further.

    Haven't hard working families suffered enough for New Labour's incompetence ?

  • Comment number 60.

    The truth is Stephanie that we are still not being told the truth. Both main parties would hold a post-election budget and a hung parliament would probably have one too.Policies after it will be different to what they are promising us now.
    The deficit is continuing to be mostly ignored by our political parties inspite of the fact that going forwards it is likely to be the most important issue. I have just been reading notayesmanseconomics analysis of the Euro zone rescue plan and how it has contributed to the way Greece's crisis escalated yesterday and feel that it is a warning sign for us. We are not in Greece's position fortunately but more dithering and dallying could put us there.Her government bond yields are now over 7% as opposed to our 4% so it would be painful...

  • Comment number 61.

    Financial incompetence has never achieved a higher level than that exhibited by Gordon Brown as Chancellor and Prime Minister.
    He signally failed, personally, and in his oversight of the (independent) Bank of England, and in the control of the managerial responsibility of the FSA.
    He MUST shoulder the blame for the destruction of the British Isles as a functioning entity.
    He MUST NOT be allowed anywhere near any position of responsibility in the future. He is far, far, too dangerous. He probably does not even know what he did wrong - and this is the most worrying thing.

    TRUTH has been the greatest loss to our group of nations during the last decade or more.
    Truth, honesty and immediate action to remove the huge national debt (not just reduce the interest on the debt) is the only way forward. The first of these actions is to extirpate the cancer of new labour.

  • Comment number 62.

    The new aristocracy are Labour's Public Sector management. With 200k in salaries they do not have to do a stroke of work a la Shoesmith. In the meantime cheap Eastern European labour act as their servants.

    It is this new ruling class that Cameron needs to concentrate on dismantling.

  • Comment number 63.

    Tyto alba:
    My memories of the 1980's are a little hazy as i was born in 1984.
    I certainly don't decide who to vote for based upon something that happened in history 20- 30 years ago. I am basing my opinions on the monumental string of foul ups the current government have made on worthless projects that haven't been completed in the last decade.

  • Comment number 64.

    Are all of these business leaders predicting mass unemployment at the rise in NI contributions the same business leaders that predicted mass unemployment after implementation of the minimum wage? I think we should be told - as clearly the predictive capabilities of these people is not very good - about on a par with that of the Tories who sang the same mantra.
    Anybody seen the latest OECD growth predictions?

  • Comment number 65.

    8. At 09:35am on 07 Apr 2010, leftie wrote:
    'Economists can be simply divided up along a main axis. At one end are the followers of Keynes.'

    Keynes is fine up to a point, and is nowhere near one 'end'. This government has taken us much further beyond that. Soon we'll be in Marx territory.

  • Comment number 66.

    At PMQ'a we had a labour MP asking G.Brown to garantee he would not remove 6billion from the enocomy next year!

    A) has she not read the budget? which is taking between 10 and 25% off departmental budgets next year.

    B) Did she not listen to Mandy when he anounced just short of 6billion (including 4billion from the NHS) of IMEDIATE cuts on budget day

    C) for the last few weeks their have been regular cuts anouncments (800million from the university budget for example)

    Yes in browns response he just wittered on about Tory Cuts and Labour investment.

    You coudlnt make this up!

  • Comment number 67.

    A small but important point: a cut of (say) 12 % in expenditure does not necessarily lead to a similar cut in services.

  • Comment number 68.

    No goverment department can be ring fenced. There are always wastes in everything. The NHS is terribly wasteful and needs to concentrate services on Front Line services that get things done and specialist that actually are skilled at saving lives and surgeons. There does appear to be too many cafes, catering services, shops selling sweets and newspapers, a never ending list of budgets thrown down the drain in hospitals, even large posh goldfish tanks in waiting rooms. What a waste.

  • Comment number 69.

    48. At 11:58am on 07 Apr 2010, Fair-Society wrote:
    "Yes ... lets make lots of cuts, this will reduce the deficit... and by the way it will also make thousands redundant, therefore increase the burden on the State to provide more benefits to those made redundant. Public services will suffer"


    Your first point about an 'increased burden' on the state:
    Making public sector workers redundent would actually save money - Salary, pensions, other entitlements and general 'running' costs (equipment, etc.) are a far higher burden than £60 a week job-seekers, plus rent rebate

    Second point - 'Public services will suffer':
    The amount of tax we have payed has steadily risen over the last decade or so, both nationally and locally (council), at a rate far outstripping inflation; And yet services to the majority have remained virtually static or decreased - With the glaring exception of 1) Social Workers and Care Services (not nurses and doctors) and 2) the administration of the benefits system. So WHICH services are you refering to, exactly?

    Overall both of these points can be overcome by reversing the proliferation of 'non-jobs' and duplicated posts, as well as reducing the amount of administration to an ever increasing non-productive fraction of society. IE: Less wasted expenditure = More available for essential services

  • Comment number 70.

    #24 rugbyprof,

    I do not care one jot if you are offended. When you peddle lies and obviscations then you deserve to be exposed for the faud that you peddle. If the messanger gets shot in the process so be it.

  • Comment number 71.

    22. At 10:18am on 07 Apr 2010, Michael wrote:
    'No. 11. Yes, there is still something very big missing here. When the paperclips in government offices have all been saved, what will be next?'

    Are you being obtuse? There are whole layers of management that can be got rid of.

  • Comment number 72.

    #14 FDD

    "On a purely staregic note if I were Labour, I'd push and push the hole in Tory finances. At the same time I'd rip to shreds the imabalance in their tax plans. As we close on polling day make the Tories look like the REAL nasty party."

    Labour have already tried this and was very correctly discredited by Stephanie on this blog. I am more interested in what Labour intend to do than smearing and misrepresenting the opposition's policies.

    "Just look at the reports of the CBI, IOD, and Chambers of Commerce - all project recruitment to be down or flat in 2010/11. So your argument is a joke."

    What point are you trying to make with this statement? It is okay to increase tax on employment because there is not projected to be an increase in employment anyway.

    #15 smalleb
    "If avoiding a rise in NICs is such a good idea, why not reduce NICs and pay for the reduction with an increase in, say , income tax?"

    With regard to EMPLOYEES' NI contributions, that would be far too transparent for GB who prefers to tax by stealth. I don't know what increase in income tax would be required so that the EMPLOYERS' NI contributions could be scrapped, but I would guess that it would probably be too much to consider doing in one go.

    #27 bankingballs

    Are you being obtuse or are you naive? The big secret about the NI fund is that 'there ain't no fund'.

    #55 Jakewells

    "Yes of course it's a tax- but not on the employer's ability to have spare cash to hire new employees, - more like a hit to their revenues that will maintain their own personal financial status."

    Wrong! Spectacularly so. The rest of blog reads like a petty rant against successful SMEs. You are also ignoring the fact that a good number are struggling and need an increase in costs like a hole in the head.

  • Comment number 73.

    10 reasons to vote Labour

    1. Increase in spending defecit
    2. Increase in debt
    3. Abolishment of boom and bust...
    4. They saved the world...
    5. High unemployemnt
    6. Higher taxation to follow
    7. Print money...
    8. 10% tax... (oh wait...what the hell was that anyway?)
    9. They will Cash Our Gold...
    10. "no one else can do better so vote for us..."

  • Comment number 74.


    No - I just asked why had you been so selective in your answer that you now acknowledge - strangely but with insults.

    Like many with a labour-siding you produce half an argument which falls apart on critique. And let me say it again. Economic recovery comes form many SMEs investing which in turn produces jobs which in turn produces more tax....

    How does an NI increase which hits both personal and enterprise (a double whammy) possibly help in this scenario.

    Your argument would suggest that you don't run any kind of enterprise whereas I do.

    Here's another ditty for you:

    I earned money through working and paying tax and NI. I managed to save a bit of which the interest was subject to tax.

    I plough what I have left into a business. I pay myself and fellow directors and employees money which is subject to tax and NI. The company also pays employers NI (greater sum than personal NI) for the privilege. The company pays business rates (tax) for the privilege.

    We manage to make some profit which is taxed. We pay a small dividend which is taxed. Of course not forgetting our own personal income tax.

    We have to deal with all of the uncertainty of cashflow and future investment whilst ensuring essentially mostly fixed cost (pared down). Pensions are unaffordable though my tax goes to paying for others' pensions.

    We'd like to have private healthcare as a back-up because of the impact on the business but its another expense we've deemed unnecessary. We are also in the minority of businesses that actually makes a profit.

    If we sell the business we're subject to yet more tax. All the while we are unpaid servants of the government for collecting VAT, tax, NI.

    I only ever wanted to be self-sufficient and contribute to society you see the problem?

  • Comment number 75.

    I have not bought my MP a retirement card, I definitely cannot afford to wrap an austerity package for him either.

  • Comment number 76.

    54. At 12:17pm on 07 Apr 2010, Michael wrote:

    "Re: 39. I entirely agree. As for the public sector, the main area of "waste" appears to be the extremely generous final salary pension schemes that public sector workers enjoy, as compared with the private sector."

    ...before you jump into the the ill-informed debate about public sector pensions - you might be interested to learn that most private sector companies run their executives pension seperate from the 'normal' employees pension.
    So when you refer to the comparison between public and private - to which area of 'private' are you referring to?

    I can guarantee that Bob Diamonds pension will be far in excess of the PM, or any civil servant you can find.

    ...and what 'value' has Mr Diamond 'produced'? It seems to me as he works in banking, his production is merely exploitation of others - or do you propose you know where else the profits come from?

  • Comment number 77.

    #70 FDD see #74 for the truth.....

  • Comment number 78.

    Dear jakewell, we used to make stuff and sell stuff but we allowed the making to be exported. Now we have plenty of jobless chasing the leftovers of our down-sized wealth creating sector. The ultimate goal must be to manufacture begging bowls,soon demand will be very high .

  • Comment number 79.

    58 Jobsagoodin
    Thanks for comment made me go and look at data. In light of that I cannot make much sense of Independent figures. I think they may have two non-comparable numbers possibly because of change in allocation of tasks/structure. Just to be clear about context spending on English NHS seems to have gone up from £64 billion to £90billion between those years with PCTs now responsible for 80% (£72 billion).
    If you look at data on employment levels of different types of staff (Health Committee Evidence 2010) we find for NHS staff England
    Doctors 2004 117,036 2008 133,155
    Nurses 2004 397,515 2008 408,160
    Managers 2004 37,726 2008 39,913
    Admin/Clerical 2004 223,131 2008 243397
    The total percentage change from 2004-2008 in numbers of managers and admin /clerical is just over 5% in case of former, and 9% for the latter but far below growth in budget (which in real terms has been growing between 5 and 6% per annum).

    For info the total spend on consulting organisations in 2008/9 seems to be £129million

  • Comment number 80.

    Economic research shows that in terms of cutting a deficit its spending cust that work faster and more directly than tax changes. So if teh objective is to cut the deficit the Tories have the rational edge.

    BUT, ask yourself this question, how did we get into this - and a world wide recession is not the whole answer.
    We have a structural deficit caused by Brown spending like a drunken sailor and in the end we cannot afford to continue.

    Now we live in a 'no blame' culture so I won't apportion blame here (I'm sure the blogs readership can do that well enough..) just to say - if he got us into this mess it does NOT make him best qualified to get us out ...

    In fact I'd go so far as to say I don;t think we can afford 5 more years of 'Brownomics' We had the party, time to tidy up ..

  • Comment number 81.

    A rise in NI is far worse than alternative tax increases.... because not only does it hit demand, but it also hits supply ... never good in any circumstances. Truly, it is very much a tax on jobs, the most ill-advised kind of taxation there could ever be.

  • Comment number 82.

    #55 jakewells

    You should also read #74 - you may just learn something.....

    #72 Dr Doom

    Good riposte.

    My greatest worry that even if the Conservatives go on to win I fear that there are just too many SMEs and self-employed will have had enough and simply give up in time.

    You see it's not the sheer extra hard work and sleepless nights of making a business a success but that the sheer incompetence of this government in adding extra burdens through its total mismanagement and the future implications of this.

    It's reading the likes of some of the idiotic stuff on here that questions your motives to contribute to a society of which at least 3 (possibly 5) in 10 don't care or haven't a clue.....

  • Comment number 83.

    The parties are not being honest about the size of the problem as many on here have said. The deficit reduction only means we are adding to the public debt less quickly. We need to be strongly in surplus to get the overall debt level down and this does not seem likely for many years. The BBC is getting terribly excited about this election. In 2005 just over one fifth of the electorate supported the winning party, Labour. There is a small hardcore of party loyalists, usually those aged 45 or over, a large group who are lukewarm either way, and an even larger group who will not bother to vote. This is down to apathy, disillusionment, ignorance, other distractions, and the fact that the politicians have not dealt with the real issues - Mass immigration, a public sector that is too large and inefficient, genuine banking and monetary reform, globalisation which has taken work from local people, and hugely expensive housing and massive levels of public and private debt. Labour has nurtured and encouraged a large benefits class over the last 12 years, and discouraged self-reliance, which eventually rots society from within. The Conservatives did not do much to deal with the last issue either when they were in office.

  • Comment number 84.

    xbanker: it is not ancient history - it is no wonder that at 26 that you have no perspective on this situation. The 1980's was the foundation for everything bad that has happened to the UK since. Try looking at it from a different angle: would a centralised electronic records system be a benefit in health care? Yes - definitely. If you want a system like that who do you get to do it? The experts. If the experts turn out to be has-been drips under pressure, whose fault is that? For the hard of thinking I will repeat: the "experts" are major private sector corporations. Funnily enough they are the same people that both government and the oppostion think can teach the public sector about efficiency and effectiveness.
    I renew my car tax on-line: the system was flawed to start with but is now incredibly efficient - it knows my car, who I am, what my insurance status is and the MOT status of the vehicle. Take the new passports: I waltzed through passport control in pretty much no time at all flying back from Portugal last week. Once derided systems that seem to be working efficiently.

  • Comment number 85.

    Conservatives – right and wrong way to cut deficit - spending cuts good, tax raises bad.
    I’m part of everyone, and I don’t believe that spending cuts will make much dent in bringing down the deficits.
    Conservatives want you to know they fear tax raises more than spending cuts. Would this be tax increases on corporations?
    How about a new tax on all foreign investments – the so-called Tobin Tax – which will fund social spening and reduce the deficit?
    In normal times, the evidence suggests that spending cuts are less harmful to the economy than tax rises…unless the tax is NEW and very appropriate to the circumstances, like the Tobin Tax on all foreign financial transactions.
    In my opinion, National Insurance must go up in order to protect services vital to the public, as well as closing the loophole re working for third parties which allows workers to take pay alternatives, like dividends, and thereby reduce NI deductions.
    Labour should be talking about a tax that will not impact the economy but in fact stimulate it with new money i.e. Money from the elite, the so-called Wall-Street boys (who caused the financial chaos in the first place). Labour should be talking about Gordon Brown’s suggestion that the UK implment a Tobin Tax and thereby Tax all foreign financial transaction, especially those coming from the United States. The system could serve a triple purpose:
    - monitoring financial traffic,
    - providing an audit trail, while
    - creating new revenue to pay down the deficit and provide for social spending.
    Voters (I think) would like to hear about a Tobin Tax – tax the rich for the sake of the common person and the poor. In fact, all of the EU will be talking about this at the next G-20 in Canada, and the EU has said that if necessary (over the yelling and screaming of the United States), the EU will go it alone on Tobin.
    I read that within 50 days of taking power, the Conservative Government would introduce an Emergency Growth Budget. The Budget is supposed to bring down the deficit, and (Are you ready?) unleash investment in the UK. It will cut the red tape of investment. Oh my goodness, the Conservatives are beginning to sound like the American Wall-Street boys – no regulation is good regulation. Where have the Conservatives been over the last couple of years? Have they not seen the effect of poor regulation? Have they not assessed the consequences of derivative trading and credit default swaps?
    So a Conservative Government will get out of the way of businesses - lower tax and reduce red tape. At least they acknowledge the need for credit, and there’s the rub! Financial institutions need liquidity in order to provide credit. They need to know their true capital worth and therefore what is avaiable to lend, but banking has become so incestuous (regular banking services married to risky investment gambling) that financial institutions have practically no idea of their true capital holdings. This non-regulation must stop. It can be stopped with an audit, identification and write-down of bad debt, breaking the incestuous loop, and following good, tight financial regulation, like Basel.
    It’s not astonishing to me that after three bank bailouts and an injection of £76.2 billion on capital, lending to businesses is still falling. Why?
    Because there is too much rot in the core – like derivatives, and credit default swaps, essentially garbage; and until this garbage is given the heave-ho, banks will be ailing – sick, failing - perhaps dying.
    At last, a Conservative policy that I can back: long-term reform of our banking system to help stop this crisis from happening again. But here’s where I deviate:
    “We will hold a competition review of the banking industry, etc.” This is like building a house on sand. First you must regulate and clean up the banks. Stop incestuous banking, apply stiff regulations and transform the banking industry into solid rock. How will turning over sick banks to the Bank of the England unlock credit or maintain a credit flow? This is like saying we will assign all persons to National Health Service, and voila - everyone will be well.
    As for the overhaul of welfare by paying them by the results they achieve; so, we had them a rotten economic climate, high unemployment and expect Welfare to achieve what, exactly?
    There is as much liklihood that opening the supply-side of education to new providers will drive standards DOWN as drive them up.
    I can't help but feel that almost everything the Conservatives are talking about doing IF elected, is on the wrong track and will ultimately make conditions in the UK a lot more miserable.

  • Comment number 86.

    Re: 71. No, I did not really mean that it would be possible to save billions by restricting the use of paperclips. I was writing in the context of the government having to save gigantic sums of money each year.

    The vast majority of the population has no idea of the cuts that will be needed over the next couple of years; even Alastair Darling has admitted that it will be worse than during the Thatcher years.

    Getting rid of whole layers of management will not be enough either, especially as both major parties have ruled out cuts to those areas of government spending that have seen the highest growth over the past 10 years: education and the NHS.

    Our main hope is that spending has been increased so much over a relatively short period of time that some of the extra spending may not have become "entrenched" - a doctor who has enjoyed a salary increase from £100,000 to £120,000 (or whatever) for just a few years may not find it so hard to give up part of it as someone who has enjoyed the higher salary for many years.

    It does seem to me that certain types of cuts are "off limits" in the UK - such as means testing universal benefits like child allowances and state pensions. Why can these not also be on the agenda? I realise that means testing was carried out in a most demeaning way back in the 1930s, but are we not yet beyond that?

    I expect that we are seeing more discussion in these comments of the reality we will soon face, than we will get in the next four weeks of campaigning from all the leading politicians.

  • Comment number 87.

    Rugbyprof: you are getting a little pathetic here. First, my post was about NIC being a tax on both the private and public sector - which it is. It has no reference to your previous posts because, frankly, you have nothing worthwhile to say to me - just rehashed Tory propaganda. Like Kevin B, you were just rude and didn't gainsay the point made - and now complain that I have been rude in return.
    Second - I have been sales director and shareholder in two small companies, one which merged into the second before I left to plough my furrow building new business streams for a major manufacturer. I have had my house on the line to underpin a company overdraft facility - and shared the pleasure of the moment when the bank said it was no longer necessary. So, read the brochure, been there, bought the T-shirt, paid the taxes, the rates, hired and fired, the whole lot - and would still prefer to see a proper democratic socialist party in power managing a pluralistic economy in partnership with the workforce and the management than the curent shambles - but I would rather what we currently have than return to the dark days of Tory misrule.

  • Comment number 88.

    Watching Gordon Brown at PMQs today one was struck by how often he emphasised those public services (health, schools, education etc. etc.) that Labour would be continuing and expanding. One was left with the overwhelming impression that Gordon Brown is committed to ever-increasing public expenditure without any mention of budget cuts or tax rises.

    So same Old Labour - tax and spend. Clearly this Labour leopard cannot change its spots.

  • Comment number 89.

    All a bit political this - anyone would think there was an election round the corner......

    I think the Party that lies the best will win the election.

    The poor old Lib Dems are therefore far too honest.

    That leaves Labour and Tories.

    Hard for Labour to lie about what has happened whilst they have been in charge.

    That leaves Tories who only need to lie about what they will do when they are in charge which is much easier.

    Tory win - Britain in the bin,
    Labour win - Britain in the bin,
    Lib Dem win - think I've been on the gin,
    No overall winner - bread and water for dinner.

  • Comment number 90.

    Its clear that some cuts need to be made and so far the judgement of the goverment has been right, whereas Cameron and Osbourne have clearly got things wrong on quite a few occassions. What business would wish to pay more tax but I dont see why the burden should be on Joe Public alone.


    We currently own $277.5 BILLION of US government debt and that has increased from $55 Billion since June 2008 during the worse economic crisis for 70 years. This huge sum of money represents approx 13% of our GDP why on earth are we buying the US debt and how soon can we get the money back, surely it makes sense to use this money on our debts and economy

  • Comment number 91.

    #79 TSArthur - do you have the costs of the PFI / PPP rip-offs in there as well?

  • Comment number 92.

    There is a letter in the press today from a teacher due to retire in 4 years at 60 on a projected pension of £15.5K.

    I presume this excludes the 3 times lump sum and the State pension of around 5K which I perhaps incorrectly think will be received as well.

    She says "Would most people be happy with a pension such as mine for the hours and years worked. I doubt it"

  • Comment number 93.


    PS Apologies for capitals - had caps lock on in error.

  • Comment number 94.

    Could anybody enlighten me, we currently have a low interest rate set by the BoE, if rates rise internationally does this mean that to a greater or lesser extent our rates have to follow? and if so what is the possible effect?

  • Comment number 95.


    You cry just too many crocodile tears.

    You did not start your business for the good of mankind. You started your business to make profit. All of the effort and taxes are merely an element of the effort required to make that profit. If your efforts do not make a profit or make insufficient profit considering the effort required then you have the possibility of working for another organisation that can produce sufficient profit to employ you.

    If you believe that you are engaged upon anything more than a profit making exercise then you are merely fooling yourself. If you cannot produce enough profit from this exercise then you really must look at both your business model and or your own abilities.

    The above is not meant as an insult. It is however a logical interpritation of events and hopefully sheds some light of truth on one more of the SME myths.

  • Comment number 96.

    I've read all of the comments on this article with quite some interest, with everyone giving an informed opinion on what should be being done, who should do what and who should take the blame, but I've not seen anyone mention who should actually be taking the blame for this whole fiasco. That would be us, the electorate.

    We voted these MP's into power and when the going was good, there wasn't too many grumbles from the general public. Sure people complained about the price of houses and the price of petrol etc, but nothing was done to sort this out by us, the general population. We were happy as our house prices rose and the debt mounted and we were basically mollified as we basked in the illusion of wealth.

    Now the froth has been blown off and the cold harsh reality is staring us in the face and we don't like what we see, but at the end of the day we've only ourselves to blame. We voted these people into power. We allowed the government to do what they liked. We allowed them to bail out the banks. We allowed them to take on huge amounts of debt to then carry us through the bail out. We sit back and let the banks pay huge bonuses.

    At the end of the day we can whinge and moan about politicians, but the truth of the matter is we are the cause of this whole mess, we the electorate and until we remember we are the bosses and the government are the employees nothing will ever change.

  • Comment number 97.

    John-from-Hendon (#17) complains that Labour's policies don't "..create economic activity".
    Oh dear! Better check the actual impartial data John!
    Our economy grew in the last quarter of 2009 whilst most of Europe stagnated. We're now widely predicted to be showing stronger growth in the first quarter just ended - whilst Euroland sinks - and the OECD forecasts that UK growth will out-pace France, Italy, Japan, Germany and the USA this year with a blistering 3.1% growth rate.
    UK policy follows Keynes open letter to Roosevelt in the 1930s: stimulii are needed to keep the money supply up so that private businesses can grow.
    Which is exactly what is happening. Bang on plan. And as Keynes' observations imply.
    Moreover, this government engineered recovery is bringing our Banks into profit and Corporation taxpaying mode. Which'll go a long way toward reducing the deficit too.
    John, you should give credit for this astonishing recovery where it's due.

  • Comment number 98.

    Re 13: you are, of course, right. Borrowing to fund 'living expenses' rather than a 'capital purchase' (such as a house) is reckless and simply leads to a default, sooner or later. Only the foolish (and governments) do this. Only the clever or gullible lend such money - and then only when it belongs to someone else. Banks are a case in point - in a fiat currency they simply create the money to lend, up to tem times the 'deposit' in their 'vaults'. This is all based on the sound, economic principle that there's no limit to growth. No oxymoron there then!

  • Comment number 99.

    59 -

    Harold Wilson's undoing was to tax the "not so rich" to pay for the "not so poor".

  • Comment number 100.

    How much is the amount of wasteful government spending under Labour EACH YEAR ... Is it:-

    £ 6 Bn
    £ 60 Bn
    £ 160Bn

    Money which isn't lost if the government doesn't take it from us - I can spend more of my own money in my local shops and stimulate my local economy - the government cannot do this - it sends too much money overseas and wastes the rest.

    Please, please, please - Someone tell me how much is being wasted!

    (Or is it just the case that no one knows or will admit to this abuse of our money being wasted?)


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