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IFS analysis of tax and benefit changes

Stephanie Flanders | 14:06 UK time, Thursday, 21 October 2010

The Institute For Fiscal Studies (IFS) says that the entire package of tax and benefit changes coming into force by 2014-15 is clearly regressive, including the tax increases put in train by Labour.

IFS report


The Treasury analysis for the spending review document, which suggests otherwise, excludes a third of the benefit changes planned by the government and does not go up to 2014-15. The changes excluded by this are clearly regressive - they have the greatest effect, relative to income, on people at the lower end of the income scale.

The IFS also notes the inconsistency in the Treasury analysis - that it should make the heroic assumptions necessary to model the effect of, for example, the pupil premium across households, while making no effort to calculate the effect of removing council tax benefit and cutting housing benefit. The IFS says both are difficult to do and sensitive to the assumptions used - but benefit changes are much easier.

Update 14:41: To get a sense of the numbers involved - if you rank households by income, the poorest 10% of households will lose an average of roughly £550, or just over 5.5% of their net income, versus a roughly 4.5% loss for the top 10%.

The IFS does not like focussing on the bottom 10% because a lot of people in this group are students or have intermittent income and are not "poor" in the sense we usually mean. So, it is more comfortable talking about the changes being clearly regressive "across 90% of the income scale", because the top 10% (largely the top 2%) are paying more than most other groups.

However, if you rank households by spending rather than income, which the Treasury also does in some of its tables, the bottom 30% of households are all contributing more to the deficit reduction effort, as a share of their spending, than the top 10%.

Taking into account all tax and benefit changes up to 2014-15, the average loss across the bottom 30% is roughly 6% of their spending, versus just over 3% for the top 10%.

More generally: the IFS notes that the benefit changes have actually increased, slightly, the money going to pensioners. By far the biggest losers from the coalition's benefit changes will be families with children.

As I discussed in a post in August, it is an interesting irony of the coalition's approach that a plan which is supposed to be "saving our children from the burden of rising national debt" is being paid for, in large part, by families and children.

The baby boomers who benefited so much from the boom, and will start to retire next year, are being relatively protected from the costs of paying for the bust.


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  • Comment number 1.

    Will the difference between the IFS and treasury analysis be commented on by the OBR at any point?

  • Comment number 2.

    Stephanie Flanders.

    "..they have the greatest effect, relative to income, on people at the lower end of the income scale."

    and that's before V.A.T.!!

  • Comment number 3.

    Kit @1

    Will the difference between the IFS and treasury analysis be commented on by the OBR at any point?

    I fear the OBR, like any government sanctioned institution, will do their master's bidding and say what their master wants them to say. What growth does the OBR predict for next year again? Alas, the so called 'independence' of the OBR is doublespeak.

  • Comment number 4.

    Just read Robert Peston's rather thin blog re the number of Public Sector redundancies.
    Stephanie - will you be able to cover this in more detail. Robert suggested that "private sector employment needs to rise by "just" 2%, to absorb all the jobs lost in the public sector."
    Now if Public spending is circa 50% of GDP and the private sector employs four times as many people as the public sector then surely there are a lot of private sector jobs that are linked in some way to the public sector.
    Was the 500,000 figure purley public sector workers or private sector workers working on public sector contracts?

  • Comment number 5.

    The things I have noticed in the analysis of regressive vs progressive argument is the range of taxes and spending cuts included and the range of time over which the analysis is done.

    Clearly is on day one you see a cut and this is maintained over a long time that is a real cut, but if the cut is to happen sometime in the future that is not a cut today but over time the effect may be the same. The choice of time to consider makes quite a bit of difference to the regressive vs progressive argument, particularly with matters that will impact only in 2018 - 2020! (The argument is that same for tax changes.) In other words you can prove anything you choose to!

    Honesty is what we and the British people need.

    Honesty that says the we all wasted a fortune on over-pricing homes rather than building productive capacity in the last decade.

    Honesty that says that the British Banks were on the brink of collapse because their funding model was fundamentally flawed and so the Government had to rescue them, and will have to do so again.

    Honesty that admits that private debt is far too high and that is what is going to cripple us for the next decade or so.

    Honesty that admits that this was all due to appallingly stupid regulation by the Bank of England and the Treasury and the FSA.

    Honesty that says that the private debt 'invested' in over priced property has to be unwound before the economy can recover as critically all new debt needs to be invested in productive capacity.

    Honesty that acknowledges that for the next decade or so the British Economy and overly indebted people are going to take a pounding.

    And that is why the country can no longer afford the generous welfare state or a generous tax regime or the pension provision of the past.

    Not to tell the people what a dreadful and inescapable hole they are in is a fraud on the people!

    By the way Germany is growing at 3.6% - might this have anything to do with the German habit of making things that people want as against our habit of wasting money on overpricing our own homes!

    Our silly Bank of England, led by the dolts that got us here is still intent on reflating the property bubble - they must go along with their daft policies before we can recover.

    And finally: honesty that admits the prospect is for a decade (at least) of Depression.

    And we have to join the Euro so that we can secure a large home market for our products. The only business that does not need a large home market is Banking and Financial Services - and look where that has got us!

  • Comment number 6.

  • Comment number 7.

    "The baby boomers who benefited so much from the boom ..."

    Not sure I understand this, unless it is very wealthy B-Bs being talked about. As far as house ownership goes, we had to save and then wait a long time before qualifying for a mortgage, and then pay huge interest rates on it for many years. Expensive houses only make you money when you don't need one to live in. Any savings we have are losing their value day by day. And only the very fortunate have protected end-salary style pensions to look forward to.

    In what way did the average baby boomer do well?

  • Comment number 8.

    Nobody likes cuts in spending, but I believe there is a fundamental dilemma facing orthodox (market) economic policy today. If Keynesian reflation is adopted by government using borrowed money provided by the bond markets, at some point there is a significant risk they will eventually take fright (e.g. Greece). On the other hand, if “hair shirt” monetary Puritanism is adopted to “sweat” debt out of the economy, particularly in the face of a slowing economy, the UK will almost certainly fall into a debt deflation trap (Japan). This economic policy choice is akin to that facing Jason and his Argonauts, when they needed to sail through the Straits of Messina, too far to the left risks being devoured by Scylla the sea monster (bond markets), and too far to the right, being sucked into the depths by the giant whirlpool Charybdis (debt deflation spiral).

    If these two orthodox economic consequences can be avoided (doubtful in my opinion), the business as usual “perpetual growth” model advocated by most mainstream politicians and economists will ultimately collide with the Earth’s finite resources. The first one being one of the most critical, will be reflected in the near term decline in the rate of oil production, which has been on a plateau since 2004, and in the medium term, declines in the production of coal and natural gas.

    This decline in the availability of cheap plentiful high net energy fossil fuel, particularly oil, will spell the end of significant economic growth and with it the ability to pay down debt accumulated by government, companies and individuals.

  • Comment number 9.


    "The baby boomers who benefited so much from the boom, and will start to retire next year, are being relatively protected from the costs of paying for the bust."

    A cheap and far from accurate rant for the majority of the baby boomers. Where did the majority of them benefit more than anybodyelse? If you want to talk about house-prices then you also have to consider that prices are relative. If you talk about pensions then why did so many in the public sector continue to work for so long when their wages were considerably lower than comparative wages in the private sector? Why did the financial services industry shaft those in the private sector so badly?

    The baby boomers did what every generation did - they tried to do the best for their families and they paid handsomely for it.

    In the great scheme of things what are the real costs of the 'protected benefits'? From what I hear, far less than it would cost to means test them. Also, they are about to see services that they will become more reliant upon disappear before their eyes. So how are they supposed to pay for them?

  • Comment number 10.

    Stephanie says: "if you rank households by income, the poorest 10% of households will lose an average of roughly £2,800, or just over 5.5% of their net income".

    If £2,800 is 5.5% of their net income then the total net household income must be approximately £51,000! And this is the poorest 10% of households?!? Wow.

  • Comment number 11.

    hillwalker19 #7.

    "In what way did the average baby boomer do well?"

    free (ie fully funded by grants) university education, for instance.

  • Comment number 12.

    Does the analysis also factor in the changes to public sector pension contributions and the uprating SERPS/ASP by CPI v. basic pension by RPI (+). Also there is the reaction of local government to draconian cuts - job losses, pay freeze and possibly pay cuts, service cuts and/or new or increased charges etc, etc. - most of which will disproportionately fall on the poor.
    What are the 'green shoots' of recovery in the private sector - the news is all about job losses (e.g. Lloyds Bank and others).VAT may bring a pre New Year spending binge but a massive and prolonged hangover - not cold turkey but no turkey.
    PS Presumably the poorest 10% lose £2800 over the whole period of four years and not annually?

  • Comment number 13.

    JFH 5

    The reason why Germany's manufacturing is doing well is it builds things people want abroad and their companies continually re invest in their products. It's social housing policy is absolutely disconnected.

    Debt is not a bad thing ,its only bad when you can't pay the debt down ie Governments "Investing" in public spending and suddenly finding its income (Tax take) is seriously reduced. In effect prudent borrowing is in effect the only way to grow any company , growing from positive cash flow is usually not a real option.

  • Comment number 14.

    Update 14:41: To get a sense of the numbers involved - if you rank households by income, the poorest 10% of households will lose an average of roughly £2,800, or just over 5.5% of their net income, versus a roughly 4.5% loss for the top 10%.

    So let me get this right, the poorest 10% of households in the country in that case to be worse off by £2,800.00 a year, which means their nett income must be £51,000 per year, a gross of 75-80k.

  • Comment number 15.

    I agree with Andrea #10.

    "To get a sense of the numbers involved - if you rank households by income, the poorest 10% of households will lose an average of roughly £2,800, or just over 5.5% of their net income, versus a roughly 4.5% loss for the top 10%"

    This is plainly rubbish unless the poorest ten percent have an annual net income of £51,000. Does nobody check these numbers?

  • Comment number 16.

    #13. hughesz wrote: "Debt is not a bad thing, its only bad when you can't pay the debt down"

    I do not agree, entirely...

    When debt has been backed by a security and the price of debt is too low then the future consequences are truly terrible as we are seeing. The UK 'has' to pay its workers sufficient to have a house over their heads near-ish to where they work.

    The consequence of this is that property prices are far too high when compared to our competitors. Hence debt is going to cripple our economy for a generation no matter how much the currency is depreciated. etc. etc. (and all that flow from that)

  • Comment number 17.

    #10, 14, 15

    Well spotted!


    I assume it is over the 4 years of the spending review not per annum?

  • Comment number 18.

    Thank goodness for the IFS! It's worrying that their ex-boss appears to have gone native so quickly. It's also worrying that the IFS analysis is receiving so little coverage in the media - look at the BBC news front page, for example. I don't think anyone now can ever accuse Labour of having the monopoly on spin. At the moment Osborne is going around cheerfully saying black is white & the media are lapping it up. It's also foolish. It won't be too long before people realise who's being hit hardest & the Government will have damaged their credibility with this deceit in exactly the same way as their predecessors. I'm beginning to believe we need a "Tea Party" or "Truth" party in this country which actually tells it straight - at the moment we've got a bunch of power-mad egotists who believe we have to be lied to systematically in oreer to maintain their grip on power

  • Comment number 19.

    The big question, Steph, is is it better for children to suffer a little now or a hell of a lot more when they start working and they have to pay for the greed of the current generation while also being burdened with personal debt? And for those who only care about children, what about the children THEY will have?

  • Comment number 20.

    Stephanie, I find the slant of the IFS report, and your subsequent journalism on the subject biased.

    “The Institute For Fiscal Studies (IFS) says that the entire package of tax and benefit changes coming into force by 2014-15 is clearly regressive, including the tax increases put in train by Labour.

    The IFS says both are difficult to do and sensitive to the assumptions used - but benefit changes are much easier.”

    So benefits only are analysed since its ‘too difficult’ too analyse the effects of taxation.
    Of course benefit cuts will hit the poorest hardest - thats what they are there for.(Except child benefit to higher rate taxpayers)
    “To get a sense of the numbers involved - if you rank households by income, the poorest 10% of households will lose an average of roughly £2,800, or just over 5.5% of their net income

    versus a roughly 4.5% loss for the top 10%”

    You either include a figure here for both %s or neither. To do one and not the other is wrong, also what time span is this £2800 over - the whole CSR or 1 year or 1 year in real terms ??

  • Comment number 21.

    Why is it only income which is considered when making these comparisions? Surely wealth is also important when considering the effect of tax changes. Obviously someone who has considerable wealth to fall back on will not suffer as much hardship as someone who has none. Indeed if they have arranged their affairs so that they have only a modest income, someone who is very wealthy could even avoid paying higher rate income tax.

    It was obviously the wealthy who would have lost most, if the banks had been allowed to collapse, while the poor had nothing to lose. A fair government, as the coalition claims to be, should be using some form of taxation on wealth, such as a property tax with a threshold set so as to only effect the very wealthy, to pay down the deficit. It is presumably the wealthy who directly or indirect own most of the bonds which represent the public debt, so an extended period of negative real interest on these bonds would also be a fair way to reduce the real value of the public debt.

  • Comment number 22.

    These "regressive" views are somewhat disingenuous.

    You really have to exclude changes to welfare since they, by definition, affect the least well off since they are (supposed to be) the only people who receive them.

    There were many aspects of the welfare system that needed to be changed, too many scroungers and layabouts, not to put too fine a point on it and that has to be seen as an exercise outside of the other changes to the structure of society.

    So yes, the poorer section of society will suffer most but the idea is that they don't stay that way. Government cannot say this, but much of this is targeted at people who simply don't want to work and the only way to make them get on with it is to squeeze their benefits and make their lives on benefits less comfortable than the alternative of working.

    All parties knew this had to be done, so let's not get all bleeding-hearted about it, it is necessary and it has been done.

    I agree with #20 that the IFS and your report seem biased but in a sense it is refreshing to see a BBC blog express a personal opinion for once, even if I don't happen to share your views.

    Regarding the methodology used for these comparisons - they are always expressed in percentage terms - comparing amounts of money might be informative when you see one family contributing tens or hundreds of thousands of pounds into the kitty and another, who may be contributing more in percentage terms, are chucking in 30 quid a year.

    One last thing - reducing child benefits to the well off is hardly wrong and with population rising it makes sense to encourage sensible family planning. Child benefit should never have been a "universal benefit" so it is about time something was done. The problem is that it gives the soggy socialists the chance to bribe the electorate by proposing to reinstate them at the next election. These people simply will not allow the country to operate in a fair manner. Why should someone sponsor other people to have kids? Particularly when some of the people doing the sponsoring cannot afford their own children?

    Taxes pay for benefits and taxes come from people, not from some magic well in the government buildings.

  • Comment number 23.

    How can the cuts be fair. My wife and I are pensioners with a full state pension each, an occupational pension each, and investment income, which puts one of us into the 40% tax bracket. We have hardly been touched excpet for reduction in services which will be inevitable for all. Our state pension will be uprated in line with increases in wages and we even retain our winter fuel allowance and free bus pass. Other families with similar income with children to bring up lose a months pay in child benefits just at the time they need it most.

    My son and family have much lower income and work part time whilst they share child care. They will have lower child benefits and family tax credits which are either inflated by CPI or frozen and capped and will lose 6% of their meagre income by 2013.

  • Comment number 24.

    An absolutely pathetic and gutless approach to the problem driven by voter block influence. The group that lead selfishly to this point are to continue to be cosseted. This is a move to economic opportunity segregation.

    So we have NuLab who promised to help children born into poverty and dismally failed - with more born into poverty not less under their watch - and now the Coalition dominated by the Conservatives - which claimed it was concerned about the same problem - and has done nothing to deal with the problem.

    It doesn't appear to matter who gets in the actions are the same and the performance equally dismal. The whether forecast is reign reign reign. that appears to be the only thing they are interested in.

    There is only one message. Succeed and or emigrate. No wonder Grate Britain lost an Empire, No wonder Grate Britain lost a manufacturing base. Both where gained by individuals, both were lost by governments.

    BTW the US is actively waiving immigration criteria if you are good and work in key areas. Unlike the UK. At least they still know a good thing when they see it.

    A pox on their houses, Commons or otherwise. They are just hot air factories, posture and preen. How on earth anybody can think anything will come out of them worth reading 24 hours later I cannot see.

    There is somebody saying I am doing too much and somebody saying I am doing too little so that means I am right because I am in the middle. No idiot it means they have a different opinion that's all.

    How many times do we have to go around this loop.

  • Comment number 25.

    23. At 5:52pm on 21 Oct 2010, johntebbs wrote:
    My son and family have much lower income and work part time whilst they share child care. They will have lower child benefits and family tax credits which are either inflated by CPI or frozen and capped and will lose 6% of their meagre income by 2013.

    My view of what the Big Society should be includes the return to the idea that the extended family is there to help when needed. You can always pass on the benefits you feel you should not get to others in your family that are more in need.

  • Comment number 26.

    I will get the winter fuel payment and I don't really need it - I've been lucky I know as I work with many for whom it is a lifeline. I will probably give the money to charity. Not just my usual favoured charities, but one of the ones that may lose some of their funding from the local council.

    What would be really helpful is if Councils could publish a list of charities which they are going to abandon and then I can find one to support. I work for a charity which has to hire a church hall every Saturday. At the moment it gets £3000 a year from the Council. 12 people who feel that their winter fuel payment is not necessary could keep it going.

    Some people are saying that the baby boomers are selfish this would show in a small way that this is not totally true.

  • Comment number 27.

    #11 - get real :)

    At 55 years old, I am a baby boomer and most of my peers left school at 15, they didn't even have a state funded tertiary education. Then something like 10% or 15% went on to university to get a degree.

    Now all kids get free education until they are nineteen, and the chance to get into a university course. T

  • Comment number 28.

    What I am worried about is the near 50% increase in the the pension contribution for NHS staff. This seems to be timed for after the pay freeze ends, so NHS staffs' first payrise for 3 years will be reduced by having to pay 3% extra on top of the 6.5% pension contribution they make already. Those on just over £21,000 pay may have a period of 5 years without any rise in pay. The ones struggling by then, - many! - may well choose to opt out of a pension altogether. Would a fairer option be a two tier pension system? Current payments, one level of pension; enhanced higher payments, a higher level?

  • Comment number 29.

    It makes little sense to judge the cuts without considering the initial position. If that was too progressive, regressive changes were needed to rectify the situation. That isn't to say the cuts were right (or wrong), just to express my frustration at all the nonsense I read.

    The nonsense includes "fair"..what the ******* does that mean?

    Also the persistent use of "regressive" and "progressive" as if they were synonyms for "bad" and "good". (Tom and Dick have equal access to government services. Tom pays 50% more than Dick in taxes. Is that "fair" for equal access? Tom earns twice as much as Dick, so even though he subsides Dick, their relative tax positions are regressive. Even if Tom paid 99.99% more than Dick it would still be regressive. Why does Tom have to subsidise Dick? And even beyond their income ratio before the position is seen as progressive? Perhaps most who read this blog know the meanings of the words. I reckon many of the wider population would say "regressive? that's bad cos it aint fair, innit?" And that is why politicians like those words.

  • Comment number 30.

  • Comment number 31.

    I am fed up with the whinging about tax increases or benefit cuts:
    the big issue for individuals is whether or not they have a job in a few years time. These cuts will have a marginal effect on most people but a huge effect on those who lose their jobs.
    re changes to university funding: If going to university was a guarantee of a good job then I would say the cost is irrelevent, but of course it isnt, raising the level of salary at which students have to pay back loan is most progessive thing around. it is criminal they have to pay back for getting job at mac donalds, cos they were lead to believe a university education was a ticket to riches.

  • Comment number 32.

    If landlords are receiving less rent from Housing Benefit why is this regressive?

    It means those who are working and paying rent will pay less. Surely this is sound economics.

  • Comment number 33.

    jr4412 #30

    "sure, but they do have to pay, don't they?"

    Yes, just like I have to pay for things I want (because I think they will provide me benefits).

    If graduates earn more than non-grads, partly because of their education, why should non-grads subsidise them? Of course, if education means grads increase their contribution to society, then it might seem "fair" that the rest contribute to the cost of their education. So there should be government subsidies so that fees do not have to cover full costs. Bit like it will be soon!

    The real worry is the nonsense would be students are told about the benefits (salary) of education. Clearly the figures quoted are based on historical data, from the days when all universities had entry standards and courses had rigour. Are the historical data relevant to today, when in some cases the entry criterion is "is s/he still warm?" (Sorry, not quite as bad as that, but I have worked on a university clearing line when almost no one was rejected; senior managers made sure of that. Most academic staff were a little numbed.).

  • Comment number 34.

    So if a cut of £2800 is 5.5% of net income, that means the poorest families have a net income of about £51,000.


  • Comment number 35.

    #30 - ahh I guess you reckon you would have been one of the lucky 10% in my time then?

    Indeed today's students do have to pay for their shot at a degree - and to the point where I have recommended to my son that it doesn't look a good investment at the moment.

    However, did you read the bit about most of my generation leaving school at 15? The vast majority of my generation did not get a shot at a degree at all - either free or by paying for it :) Now we pay for much more free education than we did in my day - we just spread it about a bit more than we did.

    Modern kids are, in general, getting much more free education than my generation ever did. And that is as it should be :)

  • Comment number 36.

    I am confused! The ifs have said that "apart from the richest 2% who do pay the most, the spending review is not progressive." If the richest 2% are paying the most does this not make it progressive? Some half truths going on here I think. Clearly the Treasury and the IFS are choosing different ways of analysing the effect of the changes but I would venture that families with children have done pretty well over the last decade or so which in some cases has contributed to the welfare gravy train debacle. So we are not really starting from a "fair" point are we?

  • Comment number 37.

    TomNightingale #33.

    originally, this was only about #7 & #11.

    "If graduates earn more than non-grads, partly because of their education, why should non-grads subsidise them?"

    but they (we!) don't. higher income as a result of 'letters after your name' also results in paying more taxes, both direct (ie income tax) and indirect (VAT etc because of more income being disposed of). I'm inclined to agree with the second paragraph of cark's #31.

    "..I have worked on a university clearing line when almost no one was rejected; senior managers made sure of that."

    standards have fallen, true, but I'd say that the admission thing was much to do with the government funding scheme at the time, ie per head taken on.

  • Comment number 38.

    All this user's posts have been removed.Why?

  • Comment number 39.

    Lowered Corporation taxes from 28% of profits (already far below US Rates) to 24% by 2014 will be paid from increased taxes on the poor.
    It isn't as if higher VAT and and lower Corporation Tax will be any use in re-balancing the economy either. This is a supplementary budget that attacks the poor and rewards the wealthy.
    Instead of relying upon these Reaganesque "trickle down economics" which failed to reward anyone but the rich, these tax changes will actually slow growth and stall tax revenues as Unemployment rises and will, therefore, actually increase the deficit. Because low growth and employment cut tax revenues.
    So far from a recovery programme, the Tories and their Lib-Dem poodles have launched a programme to raise unemployment by a million and leave us even more dependent on financial services.
    [A more balanced approach would cut VAT on hospitiality industries, increase alcohol duty to compensate for that and go all out to raise usage of restaurants and cafes to continental levels. Why should we tax hotels and restaurants three times more than the US and remainder of the EU?? No wonder we have a deficit in tourism with our people holidaying abroad to take advantage of lower taxes elsewhere].
    All this is the "madness of George". Once again "a price worth paying" for Tory delusions is mass unemployment for the lower income groups.
    Retribution is available to electors at the Council elections next May!

  • Comment number 40.

    John #35.

    it's not that I'm in total disagreement, just that the picture you paint is too rosy.

    see Table 2 in 'Trends in standards of literacy in the United Kingdom, 1948-1996' and "'Dismal picture' of adult literacy in UK".

    the basic education may be free, but is it worth it?

  • Comment number 41.

    Iwas born in 1953,my mother and father came from a low wage area and we never had much,no TV,no Car and no family allowance utill my brother was born 3 years later, but we always had a meal on the table every night.We were always told that you get nought for nought and that hard work will never kill you, and I have followed these thoughts all my life with out ever being out of work and only ever having three tough jobs. But sadly in 2008 I had to retire through ill health, I am not a sponger and I can tell you I would swap with anyone the Disabilities I have got but after yesterday I feel let, down this deficit was not cause by me or my family,my benefits are all I have to survive,being ill caused my income to drop and my standard of life went down.I have been told by doctors that I am never going to get better and in time will get worse so why am I being hit when the people who caused this are still being paid big bonuses,Mum and Dad are both in their 80s now and have seen this country go through so many harsh times but the rich always survive and the poorest get hit the worst.They keep saying that it is to stop the future children paying for our mistakes, we are still paying the price of the 2nd world war. I am very worried about my future and of my family all because people got greedy!!!!!!

  • Comment number 42.

    decfict good surplus bad
    deficit good surplus bad
    deficit good surplus bad

    Theres no place like home

  • Comment number 43.

    Hi Kit Green,

    "My view of what the Big Society should be includes the return to the idea that the extended family is there to help when needed. You can always pass on the benefits you feel you should not get to others in your family that are more in need."

    I'd agree the extended family is good, but too often in modern society Boomers fob off their riches by saying "you'll inherit". This leaves children in serfdom to their parents until they are 60. It's degrading. Also what about those whose parents have no assets / spare cash? The best thing would be for each generation to have a fighting chance of standing on their own two feet, unsubsidised. Another poster mentioned people leaving school at 15 - at least they had a chance of buying a home before they hit 40 without help from their parents. We live in stasis, fobbed off with iphones. What would you rather have? Financial independence or wireless google maps if you get lost?

    The majority of degrees are the equivalent of factory farmed chickens. All part of the unimaginative ponzi scheme manufactured by the Boomer generation, where adding real value means nothing and refinancing rules ok. The boomers will, like it or not, go down as having made Britain a real mess. It's telling that the majority of posts by boomers on boomers are "I was just doing my best within the system". I'd say this is symptomatic of a generation with no introspection. Yes, the next generation is worse, but this is a downward progression, a negative feedback loop where consumerism is inversely proportional to educational standards, nailed on by KFC degrees and reality tv. Coupled with the demographic time-bomb I really can't see this ending well. At least you'll all have your houses and your tellies. That's probably all you've ever wanted.

    I don't mind paying more tax but the tv / drinking culture in the UK does make me want to leave.

  • Comment number 44.

    Johann Hari - if you ever get bored with writing left wing sensationalist nonsense, then a career in stand up awaits. No wonder the Indy will end up a free rag. Then it will just be the loss making Grauniad to go.

  • Comment number 45.

    Well of course the poor are going to get hit harder. There are more poor people than there are rich ones. Labour made sure of that by creating a dependency culture and encouraging the transfer of wealth from the poor to the rich.

    They needed that of course because those on benefits are more likely to vote Labour. Look at Scotland if you don't believe me.

  • Comment number 46.

    The BBC reported that ‘ Mr Clegg said those who called the measures unfair "were not being straight with people".’ What would he know about being straight with the people.
    Mr Cameron said “we are going to take the country with us." If he thinks that this is what the country wants, then he can call an election to ask them. Some people say that these cuts are courageous. They would only be courageous if they called an election. They will make many others unemployed but will not risk it themselves. I think that is called cowardice.
    I don’t think that the majority of the unemployed are lazy scroungers. Firstly, many have paid national insurance and tax to fund their unemployment benefit. Secondly, it is not their fault if they have been made redundant. In the next few years many hard workers who have paid their taxes and national insurance will be made redundant because the government, with a smile on its face, has caused them to be made redundant.

  • Comment number 47.

    Surely "fair" is not to make people's lives (even more) unbearable?

    I live on benefits and get 9k a year *in total* (incapacity, housing and council tax benefits). It's not the "great" life it's made out to be by the press and the government - it's a hell of isolation, loneliness and the futile hopelessness that comes from waiting for NHS mental health to simply say "we're still trying to find something that'll help you but there's a long waiting list" - assuming they can find something in the first place...

    I've tried going back to work several times, each of which has resulted in a considerable worsening of my mental health (and led to a number of suicide attempts). However, the government, because it's assessment criteria doesn't take into account mental health, is going to force me back to work with disregard for the consequences to my health. It's going to do this by taking away my home, my few charity based support contacts and so forth. All because it looks good on a balance sheet.

    On the other hand, perhaps when I *really* have nothing left I'll have the impetus to jump from the nearest tall building instead of overdosing like usual.

  • Comment number 48.

    'By far the biggest losers from the coalition's benefit changes will be families with children'

    That's because they along with pensioners were the biggest gainers in the previous regime.

  • Comment number 49.


    Oh, I don't claim the current system is perfect - I just object to being told 'Boomers have it all and are greedy' :)

    One thing this will do though, is force the universities to move away from the 'one size fits all' model they have pushed hard - because that is where the money has been. Now they might be forced to think about properly transferable modularity for their courses, that will allow people to study flexibly while they work.

  • Comment number 50.

    apropos of the ongoing macro-economic debate...

    1. JfH says that the cause of the problem is private sector debt.

    2. The debt-free money campaigners say that the deficit problem is private sector saving.

    This seemed inconsistent, but both sides are making valid points. Anyway, I was puzzling about this, and suddenly had a moment of clarity down in the mushroom farm.

    Putting these two together..does that mean that the money that has been paid for inflated assets (mortgages) has not been properly taxed as income to the recipients?

    I am sure this is not a new thought.


  • Comment number 51.

    44. At 8:36pm on 21 Oct 2010, truths33k3r wrote:
    Johann Hari - if you ever get bored with writing left wing sensationalist nonsense, then a career in stand up awaits. No wonder the Indy will end up a free rag. Then it will just be the loss making Grauniad to go.

    So which bit was sensationalist.

    ...and which bit was nonsense.

    The Keynsian approach has a track record of success where it has been applied properly.

    Compared to the Austrian School which has failed dismally.

    The private sector has no track record of generating 'proper jobs' and that, plus a very uncertain world economic situation, is why Condem Cuts ar nothing more than a rather dangerous experiment with very uncertain outcomes.

    So on the one side you have Stiglitz and Krugman and the Financial Times, and in the right corner you have the Daily Mail and a motley crew of private business men who no doubt have abolition of the NMW as their next target (after all it hinders creation of £2 an hour jobs). There will be part time job creation at very low rates and no doubt the ConDems will massage these to fudge the Unemployment stats.

    The current crisis is largely down to the toxic shock effect of a sharp reduction in liquidity and now the ConDems want to add into the mix a sharp decline in demand. Madness.

    All the upside factors like increasing exports, getting the banks to lend more, a consumer boom in USA (haha) are unlikely.

  • Comment number 52.

    Nice one, Mrs Flanders. Perfect article.

    I really think the UK gov is messing things up now. I think the conservatives are living in the past, and I don't get a sense of pragmatism at all, more ideology and muddled thinking.

  • Comment number 53.

    Relative, derivative stats generally seem to be dangerous nonsense.........

    If you earn an average wage around 25,000 you'll probably be paying about 6 grand in tax and national insurance.

    If you earn 100,000 you'll be paying lots more - around 35 - 40 grand.

    That's progressive (good) isn't it - its proportionally more.

    Hey, the higher earner might even be spending the rest and contributing lots of VAT too.

    If you earn over 150,000 you've already had a bend-over boy and take this whacking increase in direct taxation. That's progressive too isn't it.

    Tax relief on pension contributions for higher earners is to be reduced. That's progressive isn't it.

    The child benefit changes are progressive aren't they.

  • Comment number 54.

    52. At 9:34pm on 21 Oct 2010, Oblivion wrote:
    Nice one, Mrs Flanders. Perfect article.

    I really think the UK gov is messing things up now. I think the conservatives are living in the past, and I don't get a sense of pragmatism at all, more ideology and muddled thinking.

    Looking at the players are you surprised - they have no concept of what it is to be a normal working person (and no doubt want the next 3 generations to have no concept either).

    No different from the Donkeys that led Lions in WWI the sole aim of which was to move General Haigs drinks cabinet a few feet nearer to Berlin.

    To keep electing these types decade after decade has to mark the British people as the greatest masochists in history.

  • Comment number 55.

    Of course the poor will have a larger portion of the burden...that is how modern day capitalism works. The Free Market is not free, it is controlled by big business and banking and facilitated by their political handmaidens. I guess no one has been watching for the past two years. The political bail out the rich and hand the bill to everyone else. Hard to be a critic of India's class system these days as it is even more rigid in the West. As long as the same parties and the same people are elected you can count on further abuse. Time to start talking about immigrants again to take everyones mind off the real problems. The bottom has yet to be reached. The bankers want more money and it doesn't matter how that impacts everyone else. When listening to your elected officials, if their mouth is moving, they are probably lying. I wonder where they learn to act like they have compassion? We can be sure that governmental contracts with private big business will be continued. I have noticed that the discussions are to move some of the decision making down to lower levels. This is to run from the responsbility for the decisions that are being made. Leadership is not the issue...there is no sign of leadership...cowardness rules the political world. Spin, Spin, Spin, the truth is not important. The continued position of "just think what would happen if we didn't do this." Well, we really don't know, do we. What we do know, is that the last time they said that, they said that they had to bail out the banks to make sure they would be able to provide loans to businesses to keep the economy growing. That didn't happen. Maybe the soliders that will be dismissed can work as security guards at the banks that are flush with cash. The longer this goes on the greater the need for security will be.

  • Comment number 56.

    Nick Clegg accuses critics of "not being straight"

    From the front page of the website either the Beeb has accured a new found sense of humor or the reporter who wrote this can't see the irony, either way it made me laugh

  • Comment number 57.

    Sorry but thats rubbish,its massaging the figures again, which is what got us into this mess. I remember too many governments now and they have all done this none of them tell the truth, and yet today, I feel like I have been back stabbed by the man who wrote me a letter during the election telling me voting for his party was a good thing for Britain. Today as a disabled benefit claiment with children, tax credits and a husband in part time work because there are no full time jobs in my town due to migrant workers being cheaper than locals, claiming housing benefit and in social housing, I fail to see where these cuts are fair just and honest.
    Believe me, if I could work, I would, but in an economy where part time and cheap migrant labour is the buzz word, it wouldnt be hard to see why I am still as unemployable as I was 20-30-40 years ago.
    None of the current economical problems this country is in is my fault, I dont have a mortgage or a credit card, nor am I ever likely to have, and yet, the lower end of the income earners today have been right royally hammered.
    But hey, the devil is in the detail, it might not be as bad as it seems...

  • Comment number 58.

    What's her name... the Rosa Klebb of the British Bankers Association.... has just said that the banks will simply pass on the additional costs of any tax to their customers.

  • Comment number 59.

    I've read almost all the comments posted and have come to the conclusion that we have a society that has been so feather bedded in the past that they are now whinging that life will, for most of them, be just a little more uncomfortable than in the glory days of the state looking after them beyond what should have been the case. I am 84 being the youngest of a family of 10 children whose father died when I was 3 months and the eldest child 12 years. There were no state hand-outs in 1926. Just whatever the local parish would consider just enough. So 3 brothers were sent to the National Children's Home for 7 years without seeing their family at all in that time. The rest of us had enough basic food and many second hand constantly repaired cloths. One coal fire in a drafty house that allowed ice to form on the inside of the windows. No electricity or gas, just oil lamps downstairs and candles taken up to bed. With a heated brick rapped in brown paper in lieu of a water bottle.
    I left school at 14 as was normal for all but those whose parents paid for grammar and public schools with a very few getting a scholarship . I was told by my mother on leaving school that I needed to go and look for a job. Fortunately with the 2nd World war starting this was not difficult. At 16 I joined the Navy. After the war I trained as a carpenter and joiner and spent almost all the rest of my life in the construction industry eventually becoming a site manager. When I married I bought an old terraced cottage rebuilt much of it and modernized it to a degree. I worked on it ( I mean all the work of all trades) most evenings and every week-ends for 9 months before moving in and then did much more work on it for a further 6 years before selling it and buying a new 3 bed semi. My company only started a pension scheme 12 years before I retired. I paid 75% of all contributions from my salary, increasing the payment by increments in the last 5 years up to 40% for the last two years. My bit of luck was when I purchased an annuity when the bank rate was 15%. I found in life that generally we get what we deserve in this world. I. E. Bust a gut without whinging. I learnt also that no one owes you a living and were possible you get off your arse and earn it.......Never mind about regressive and progressive. Advice: don't expect you can raise your standard long by using a plastic card. That mentality has got us largely into the mess you are all squealing about now. Bye!

  • Comment number 60.

    When petrol was increased and the refineries were picketed BBC News interviewed a number of motorists on a garage forecourt asking drivers there opinions one of the drivers said that it was getting difficult to run a car on benefits what is todays benchmark for poverty growing up during the war there were still barefooted children in our area, whilst there is genuine hardship it appears to be the people who do not know how to work the system while a substantial minority manage to live at a level not achieved by the industrious neighbours

  • Comment number 61.

    What a gutless lot the British public have become. Everyone acknowledges we are in deep debt,even the Labour party who planned to make 20% cuts and increase VAT to 20%. But everybody wants the pain to be taken by somebody else,preferably that popular,persecution minority group - ' the rich ', some example of democracy ! Time to look after number one now, that seems to be the message from the media reporting of this issue.

  • Comment number 62.

    59. At 10:37pm on 21 Oct 2010, sagrith wrote: "I found in life that generally we get what we deserve in this world. ... I learnt also that no one owes you a living and where possible you get off your arse and earn it.."

    sagrith - couldn't agree more.

  • Comment number 63.

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

  • Comment number 64.

    Have your moderators checked my comment as the short delay is now becoming a rather long one..Perhaps it's bedtime?

  • Comment number 65.

    #59 sagrith,

    Stories like yours, and many others are one of the main reasons why I continue to be a socialist. No family, through no fault of their own should have to suffer the way that you did.

    Whilst my own father enjoyed the love of both his father and mother he had to suffer the indignity of soup kitchens along with his brothers. Listening to their experiences confirmed in me the belief that people are far more important than the profits of the few. This is not the politics of envy it is a moral stance.

    I do not condone anybody abusing the system, however I still believe in a society that prides itself in providing for its disadvantaged.

  • Comment number 66.

    62. At 11:26pm on 21 Oct 2010, dontmakeawave wrote:
    59. At 10:37pm on 21 Oct 2010, sagrith wrote: "I found in life that generally we get what we deserve in this world. ... I learnt also that no one owes you a living and where possible you get off your arse and earn it.."

    sagrith - couldn't agree more

    A sound philosphy.

    The key phrase is 'where possible'. People who really need state help do you just sweep them under the carpet - that used to happen.

    Some perspectives.

    Nothing wrong with a ConDem cabinet with 20 millionaires; shows they have some nous.

    Everything wrong with a ConDem cabinet with 20 millionaires...who use off-shore tax evasion (irrelevant if it is legal).

    Nothing wrong with bankers bonuses.

    Everything wrong with bankers bonuses...if paid out of a sector propped up by the bail-out. A sector that failed dismally, triggered the worst downturn since WW2 and was spared the adjustment of the market.

    This should not be too hard to follow.

    You could say that this country is riddled with a sense of entitlement; not just the sink estates but also bastions of privilege like Eton.

  • Comment number 67.

    Busting a gut without whinging doesn't necessarily give you what you deserve though sagrith. You got an annuity at 15% plus. If you were 20 years younger and retiring it would be nearer a third than a half of that. Instead of that stroke of luck you may have fallen off a ladder at a construction site and been disabled. Or do only people who don't bust a gut get unlucky? No, obviously they don't.

  • Comment number 68.


    "So yes, the poorer section of society will suffer most but the idea is that they don't stay that way. Government cannot say this, but much of this is targeted at people who simply don't want to work and the only way to make them get on with it is to squeeze their benefits and make their lives on benefits less comfortable than the alternative of working."

    Do you really believe this disingenuous nonsense?

    There are simply not millions people who do not want to work. Just as benefit fraud is not the huge drain on the public purse the government would like us to believe.

    Still to quote Goebbels, "If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

    So have you fallen for this ploy or are you party to the dissemination of the the propaganda as well?

  • Comment number 69.

    let me explain how the baby boomers have done well, and how it's younger families expected to pick up the tab for that. It's pretty obvious, and those here saying they don't get it just show how everything people do get from the government is just taken for granted. Life is never as good as it should be, they think. Let me show you how good life has been.

    Born in the late forties. Just in time for the National Health Service to get you through those crucial first years, and just in time for your parents to get family allowance on your behalf for the first time.

    Fast forward to the mid 60s, and time to start thinking about university. Can you afford it? Yes, the 1962 education act meant Local Education authorities had to provide full, living, maintenance grants and pay the university fees in full.

    Didn't take the university route? No problem, plenty of decent apprenticeships in a wide range of industries, and more or less full employment.

    Time to settle down, start a family of your own? Well, a first time buyer in the 1970s could afford a decent house on a mortgage of 3 times the salary - you're on the property ladder. Or there were plentiful social housing stocks too - high quality and affordable council properties.

    And if you were in a council house, you could from the 1980s, buy it at a discount. Very few left to be able to do that now, and very few left that people would want to - social housing and council estates are now for the desperate, not the stable communities envisaged.

    You could also start buying shares in nationalised industries at discount prices. Not that you'd need these to top up your pension, as you'd likely have a non-contributory or low-contributory one, based on defined benefits, probably final salary.

    And if you are saving money, plenty of tax breaks come along with the advent of ISAS and PEPs. Your kids are getting full child benefit payments, now, no matter how many, no matter what your income.

    If you did lose your job in an 80s recession, you had generous unemployment benefit and housing benefit to tide you over.

    Then into the 90s, with child tax credits for most of you if you had kids later in life as well as child benefit.

    But more likely, your approaching retirement age with your kids grown up, or taken early retirement - nice. On a defined benefits pension, with no fear that these will be reduced - accrued benefits look guaranteed, and when it comes to pension reform, it's the people coming into the labour market most affected.

    And on into retirement in the noughties , the inflation linked state pension plus your occupational one, also inflation linked, plus, the free bus pass, winter heating allowance, etc.

    If you get sick in old age, the NHS budget is ringfenced. And so are all the retirement benefits.

    Add to that, they are the first generation in history who have lived through 65 years of peacetime at home. Not jealous of that, it deserves to be celebrated, and they deserve some credit for the part they've played in that. But it's definitely a life benefit compared to those who've gone before, and who knows what will follow.

    Now, can someone tell me how baby boomers haven't done well. No one has ever done better. As a member the next generation down, it gets my blood boiling when the government say we have to tackle the deficit rather than make our children pay - its baby boomers children paying in a way that their parents haven't had to. And still don't have to, it seems. If we have to tackle the deficit, and we are "all in this together", then what about the baby boomers who've benefited most, in health, education, housing, and benefits paid in the last 60 years? Are they in this with us? What is their contribution to deficit reduction?

  • Comment number 70.

    I think it should be taken as given that everyone and every organization will use the available data in such a way that it best supports their argument or agenda. I suppose we should expect the BBC to present an unbiased assessment rather than simply re-cycling the slanted views of others.

    Anyway, surely we can expect that the 'poorest 10%' will be most affected by the changes in public spending. It must be understood that they, compared to say the top 10% of earners, are spending a far higher portion of their income. Indeed personal debt levels suggest maybe greater than 100% of income!.

    So to those of the left persuasion - what is the alternative?
    Continue to cosset public sector workers? Inflation-proofed pensions, fat redundancy packages, etc.
    Continue with building up the inefficient non-productive sections of the economy? HS&E 'jobsworths', move to once yearly refuse collections, perhaps?
    Continue to run up unsustainable debt, which comes at ever higher interest rates?
    Continue to 'bash' bankers and banks until they up sticks and move elsewhere (you would be amazed at the relative ease with which a private sector finance team can move overseas compared to say how a government department (or the BBC) can move within the UK!)


    Do we have a reality check and make what are relatively speaking small cuts.

    These cuts are from a vastly and unnecessarily inflated level set by the last government. Reckless bank lending and speculative activity probably did lead, in great part to the financial crisis. However, it is governments, not just our own, that were spending and spending money and running up huge deficits. Not bankers! Not speculators! Governments!

    The 'state' needs to be rolled back. These 'swingeing cuts' are really nothing like that 'swingeing' We will still be spending more than we ever used to and spending more than the government takes in.

    Radical? Bold?? This spending review was a small step in the right direction but much, much more needs to be done.

    The one positive from this, is that no one seems to be paying any attention to the unions and their bleating, except for union members (how do they get time-off to attend 'mass' meetings during working hours?). Labour's response was, in some ways responsible - they know that the cuts had to be made - and in other ways irresponsibly political - as the defeated party, they could afford the luxury of saying let's wait and see. Ed and Alan's solution to 'maxed out' credit cards is to get more credit cards, migrate to store cards and then juggle with loan sharks - and this lot were trusted with the public purse!! I can't recall my Dickens too well. Did Micawber stick his head in the sand while waiting for something to 'turn up'?

  • Comment number 71.

    Further to my last post.

    Raise the pension age, by 2025, to 68 or 70 for all

    Require all public sector employees, earning more than national average salary, to contribute an extra 5% to their pension and and public sector on twice national average salary an extra 7.5% and all those public sector employees on more than twice average salary an extra 10% contribution. Those percentages are based on their salary not as an increase on their current contributions.

    Require all public sector redundancies to be compensated in line with the government statutory minimums and not the sweetheart deals that prevailed in earlier rounds.

    Scrap the Barnett formula - it is no longer relevant and it penalises England in favour of the devolved assemblies.

    Reduce the EU budget and our contribution to it. 'We are all in this together' must include the EU. Maybe a dose of economic reality will cause the EU to focus on the real issues facing Europeans and drag them away from the fantasy land they now inhabit.

    As much as possible, make all international aid be dependent on the use of British made products. Insist that all such aid must go into a country free of any import duties. If it doesn't - don't give it to that country, give it where it can.

    Reduce Corporation Tax and introduce Corporation Tax free holidays for new start-ups - let's say 5-10 years. Business likes certainty and likes incentives.

    There is a whole lot more we could do if we grab the initiative and are truly bold.

  • Comment number 72.

    50. At 9:24pm on 21 Oct 2010, stillpuzzled wrote:
    1. JfH says that the cause of the problem is private sector debt.
    2. The debt-free money campaigners say that the deficit problem is private sector saving.

    Both statements are correct. Your conclusion is not.

    The deficit reflects the reduction of private debt by definition in National Income equations (Even the mainstream idiots accept that)

    By targeting a reduction in the deficit the opposite will occur.
    The correct course of action is for additional Govt spending to fill the spending gap while private debt is being reduced to a level where people start spending again. After that reduced welfare payments and increased tax receipts will take care of the deficit automatically.

    By the way, if there was no public debt there would be no savings or financial wealth in the non government sector. If the Govt was in surplus, the non government sector would be in net private debt.

  • Comment number 73.

    Hanoidan (no.69) is correct, and in fact a government minister, David Willetts, has made exactly the same case in his recent book "How the Baby Boomers stole their children's future, and why they should give it back". It demonstrates statistically, amongst other things, that the baby boomer generation has had far more from the state than they have paid in, while for the generation after them it's the other way around. Perhaps Mr Willetts might give a copy of his book to the Chancellor and the PM?
    While lots of pensioners survive on very little - and I don't think anyone thinks they should have LESS - there are some who have no need of the universal benefits recently retained by the Chancellor. The argument that 'we are all in this together' does ring a trifle hollow when I personally know baby boomers in their early 60s, already retired, who use their winter fuel payments to fund foreign holidays during the winter. Perhaps these benefits should be taxed at the highest rate pensioners pay? The poorest would loose no benefit, the wealthiest pensioners only 40%. That, I think, would be fairer than the system announced on Wednesday.

  • Comment number 74.

    It does make you wonder how in the years after the war, this country managed to create the welfare state with the public debt to GDP ratio greater than 180%. Could the jobs and the spending created by these jobs have had anything to do with its steady reduction to 50% by 1970.


  • Comment number 75.

    Re:... " The baby boomers who benefited so much from the boom, and will start to retire next year, are being relatively protected from the costs of paying for the bust. "

    I'm a baby boomer, and I'm skint. There are plenty like me. Electricity key meters, scouring the reduced and value things at Tescos.

    This 'baby boomeer blah, blah' thing seems to have become a term of abuse.

    I do have a vote, though. And one good thing has come out of this. I'm a long-time Liberal voter. I've now seen who they are.

  • Comment number 76.

    To hillwalker19 asking how did the baby boomers benefit? 1)They have received pensions at 60 or 65 which are continuing to be protected & paid for by Generation X'ers and Y'ers who have pensions that are slipping further & further away into a distant future that will probably never materialize at all. 2)They received free university education and grants at degree & post-graduate degree level 3)They received universal free health care including dental and optician-free bills 4)generally lower cost of living 5)greater protection at work through employee rights when unions were a powerful force to be reckoned with 6)free bus passes & fuel allowances as pensioners 7)universal child & family benefit etc etc. The list goes on... It is the current generations who are paying for all this when there will be nothing there for them when it is their time to retire. Hardly fair!

  • Comment number 77.

    Steph: "The baby boomers who benefited so much from the boom, and will start to retire next year, are being relatively protected from the costs of paying for the bust. "

    You need to separate the propaganda from the reality, on retirement.

    9 out of ten people aged over 60 (ie born before 1950) have already "retired" ie are not working.
    Put that against the rhetoric on public sector pensions and the changes in pension age.[ As the private sector is 75% of the workforce even if 100% of the public sector pack up at 60, then so must 87% of the private workers.]
    This is not a new trend, applying to baby-boomers, it was like that for the war generation and the depression one.

  • Comment number 78.

    oops: Ctrl-v didn't work on my post above.

    This is a simple wiki page on retirement age real and nominal by OECD countries.
    For those too lazy to link :
    working at age 60-64
    UK 10% Greece 6% Germany 3%
    Austria, France, Italy 1% USA 20%.

  • Comment number 79.

    Apologies, SF and posters here, not had time to read Blog or posts. Hope/am sure discussion has been good.

    Spend & tax are two sides of same coin. GO has now tackled spend.

    Hopefully, he will go on to tackle tax, pronto.

    UK fiscal system is broke and needs fixing. Wrong things are taxed. Too much tax is paid at wrong end of earning scale. Needs adjustment. Taxes, in short term, probably need to rise a bit but 1. rise must be temporary, and 2. it must be followed by more cuts and efficiency savings.

    Have a good day everyone ...

    Hey! Let's be careful out there today.

  • Comment number 80.

    48 mrsbloggs13c2:

    ''....'By far the biggest losers from the coalition's benefit changes will be families with children'

    That's because they along with pensioners were the biggest gainers in the previous regime.......''

    Really. 4 million children - one in three - are currently living in poverty in the UK, one of the highest rates in the industrialised world. The figure has steadily risen.

  • Comment number 81.

    With regard to Baby Boomers, Ms Flanders forgets that we, females, endured unequal pay for the first part of our working lives. I was 30 when the equal pay act came into force, and have suffered 3 recessions already in my lifetime, and at one point had 2 jobs to keep up with the interest rates on my home. Women are still not on equal pay, and what will your generation do about it? At least we BB's started the ball rolling!!
    With regard to final salary pensions, once women married they were regarded as a temporary workforce, and excluded from the scheme with their contributions returned. This remained in place until the 80's, so not all BB's are wealthy.
    Gordon Browns 10 pence tax gaff, would have affected mostly retired women between 60-65, as well as the low paid. I am afraid it will be women again, in the Public Sector, that will bear the brunt of the cuts.
    So I do not understand the correlation between protecting pensioners and B B's? Some of us are already pensioners, and no doubt Mr Osborne will review the situation again next year with regard to our Winter Fuel Payments, bus passes etc.

  • Comment number 82.

    Of course some of the poorest must be hit hardest, because in this section of the public you find the benefit cheats or those that claim their "bad backs" or their "stress levels are too high to work" - and then run the line for their kid's football team!

    So, we should rightly target these people and protect those with genuine needs.

    I found it quite interesting when Jeremy Paxman interviewed the Culture Secretary and he stated that people should be able to afford children before having them. He was then questioned on this, as Paxman does, and backed away from this stance.

    My thoughts are that he should have said "If you have children and you can't afford them, shame on you for bringing a child in to this world destined for poverty because we, the Government, are not going to bail you out".

    Having children has become a money-maker and a recipe for a roof over your head for the rest of the parent's lives. I want my Government to stand up to these people and stop this ridiculous affair. If you have children and subsequently lose your job, then you should be protected, but if you have 5 kids and never had a job, then you should be penalised and the kids should be protected.

    But the Government would never say this - why? Because scroungers and benefit cheats vote too. I was devastated to watch, before my eyes, the Culture Secretary back down so easily.

    Last year, I lost my job and we have 3 kids. I live in South Wales and had to go to London to find a job. So I did - I spend days away from the family and it is not great being in that situation, but the truth is I like my job, I would rather work than scrounge and can see no reason why anyone else should.

    Work is out there so go where the work is. In places like Merthyr Tydfil with 40% of the population out of work, you think to yourself, why don't you move or at least look for jobs in Cardiff, Bristol, anywhere else? There is a train station, buses etc.

    Government should be saying "get on your bike" but everyone backs away from it - it would be refreshing to hear someone with a bit of honesty come out with something to this effect.

    And yes, we should be looking at the wealthy too - I agree. But I don't think the two stances are independent ideas - they can easily work together.

  • Comment number 83.

    JFH good posts particularly the first one.

    History teaches us a great deal, the problem is as history becomes more ancient it progressively fades from memory and hence influence. 3rd generation children aren't motivated by avoidance of the soup kitchens their grandparents and great grandparents endured and so behave and think differently. Their attitude to work/reward is very different from people in China and India where the experience of hunger and real basic needs depravation is still relevant.
    Hence the people there work harder for much less than people here are prepared to work for. I believe this gives us 2 options:

    1) Be truly global and accept huge asset and wage deflation in the West to create a fairer and more even playing field world-wide.

    2) Be protective of our living standards and limit our trade and prosperity to a specific economic zone wherever possible, for example the EU.

    I believe 1 is not acceptable, desirable, or possible, so that leaves us with 2.

    The Utopian 3rd way of why can't everyone have Western standards completely overlooks finite and already overstretched world resources and over population, so is not an option.

    However you approach it, if we do not want to see a leveling (lowering for us) of living standards world-wide we have to limit our trading to areas of the world that already have a Western standard of living.

    We currently are spreading the jam of finite resources much too thinly to sustain anybody for much longer. Unless we stop consuming other than what we actually need plus the occasional luxury we will exhaust the world that sustains us. Consumptive growth on a world wide scale is no longer possible we have to be smart, ally ourselves with Europe, and spend more time enjoying the simple things in life instead of consuming ever more stuff we don't really need.

  • Comment number 84.

    79. At 08:46am on 22 Oct 2010, Up2snuff
    'Spend & tax are two sides of same coin'

    No. They are not.

  • Comment number 85.


    There are those who can't work and those who won't.

    The problem is those of the latter are very good at pretending to be the former.

  • Comment number 86.

    The Government predicts that:
    Household debt will increase from £1457bn to £1823bn over the next five (25% increase)
    However at present, household debt is only increasing by 1.0% p.a.

    The increase in debt is needed to create more money to pay interest and capital on existing debt, and 1% per annum is not nearly enough.


    The Treasury records the following:
    Year 2007 – 2008 Tax receipts £549bn
    Year 2008 – 2009 Tax receipts £534bn (2.7% fall on previous year)
    Year 2009 – 2010 Tax receipts £515bn (3.5% fall on previous year)
    And predicts the following:
    Year 2010 – 2011 Tax receipts £548bn (6.4% increase on previous year)
    Year 2011 – 2012 Tax receipts £584bn (6.6% increase on previous year)
    Year 2012 – 2013 Tax receipts £622bn (6.5% increase on previous year)
    Year 2013 – 2014 Tax receipts £662bn (6.4% increase on previous year)
    Year 2014 – 2015 Tax receipts £700bn (5.7% increase on previous year)

    So if those figures are to be believed a major turnaround will be happen this financial year. In fact we’re going from – 3.5% to + 6.4% right now.

    Now you have to ask yourself: Do I believe this?
    And if you don’t then all those other predictions in the spending review are probably not believable either.

  • Comment number 87.

    I forgot to add that Baby Boomers, brought this generation up, who seem to have become reliant on handouts, instead of getting another job, and perhaps that was the fault of the Baby Boomers in that we did not instill the work ethic in them, together with self worth, and that you have to fight for what you want. Don't forget Unions are only as strong as it's members.
    Perhaps we BB's gave the present generation too much, and they became greedy?

  • Comment number 88.

  • Comment number 89.

    It is obvious to me that those at the top of government, those making the decisions on cuts, ministers and senior civil servants alike are acting with a degree of self interest. No doubt they will have considerable share portfolios and money invested in financial institutions or abroad. So we have a miniscule levy on the banks and no clampdown on tax evasion, two measures which would potentially remove a huge proportion of the deficit. We live in a two tier society, the elite and the rest.

  • Comment number 90.

    Thank goodness for the continued objective/evidence-based analysis of the IFS. Have just looked at Ramsay McClegg's attack on their analysis. McClegg's position is shameful, he can produce no solid evidence in support of his view that the Coalition is creating greater opportunity, it is simply an assertion by a now completely discredited politician. One point worth noting however is that by prioritising monetary over fiscal policy in the attempt to secure economic recovery the Coalition favours borrowers over savers -low interest rates are conferring substantial advantages on those with large mortgages, I presume few of this group are in the bottom 20% of the income distribution.

  • Comment number 91.

    If you went born into the baby boomers you have no idea what was the reality, family allowance was for the second child many had only one, none of my friends could go to university,because they had to get a job, many had their grandfather still living with them gassed or cripled in WW1 you didnt get full pay till you where 21. My father left work when I was 18 deaf and cripled with arthritus the war left many factory workers like that. Most lived in private rented accomodation, my mother looked after her father for 12 years,mom didnt have a holiday dad took me. On Grandads death the landlord could have terminated our lease, my cousin looked after his mentely ill mother from the age of twelve. When I was 16 thirty thousand car workers lost their jobs, I stayed because of the junior wages. And you'e never heard of the setee fund Friday night you desperatly whent down the back to hope you found ten bob for a drink.
    Unions where not universally strong and often would not support workers in weaker unions, health and safety didn't exist and working conditions hadn't changed from the war.
    I was 23 before I got a living wage. You probably have never seen the slums many lived in, not cleared till well into the sixties, My wife and I have worked for every penny never received benifits, also you could be on the scrap heap in your forties when companies only went for youngsters. The orange and apple for christmas is no joke.
    Except for my mother having little time to be with me I thought how lucky that I lived at the top of the hill I had a garden. not a brick yard. In the sixties political activists thought there was going to be a military coup to remove Wilson a man who I thank god didnt send my generation to die in the Mekong Delta with the Americans and I enjoyed every minute of life

  • Comment number 92.

    Economic Pain Index

    In an effort to bring clarity to the who is worst hit by the cuts may I suggest a different way of looking at things.

    The idea of my 'index' the Economic pain index is to assess what actually hurts people economically. I suggest that what hurts most is the reduction of a persons income not by some 'fair' percentage, but by when the reduction no matter how small takes their income below some minimum expected level.

    It is the reduction that takes the individual below their minimum expenditure level that hurts disproportionally that can be a 70% reduction in income or a 0.01% reduction. Fairness is subjective. I haven't the data to work out the Economic Pain Index (nor the time to do it!) for the set of groups of individual circumstances - but I am sure that someone with a team of economists could do this.

    What I am suggesting is that the way that my index works, by taking into account the minimum expenditure level for each strata of society is a better guide to fairness than to say that everyone is suffering an equal percentage cut in income. My index requires a value judgement of what people can do without and the relative pain suffered by its removal. The second home, the fourth Caribbean holiday, food one day a week, dare I say it an internet connection - my index would require evaluation of the pain caused by the removal of each. Then for each group the Economic Pain Index would be an assessment of the probability that these costs would be suffered by each group and the value of each loss suffered.

    This is what I believe incenses people. Taking away the cash that lets someone eat matters more than the reduction in the number of foreign holidays even though the first is caused by a 0.1% cut and the latter a 25% cut. Isn't this what we mean by 'fairness'? That is to say I believe that we mean is 'fairness of outcome', judged by the harm to survivability not 'fairness of opportunity' where it is the marginal effect that matters.

  • Comment number 93.

    Its all about fairness isn't it?
    Most people would think it is fair that the type of benefit 'scrounges' revealed in papers like the Mail get their benefits curbed, but just how representative are those examples of most people who will be on the receiving end of the cuts?
    The 'all low paid workers are nothing more than a sponging underclass' brigade have had years of press coverage totally biased in their favour.
    But now, if the effect of the cuts are accurately reported the public should get to see the other side of the story.
    In order to buy into the cuts narrative as portrayed by the coalition you have to be convinced that there is no alternative to the timetable, and that there is no choice about where the axe falls, and it is above all else, fair.
    But will people think it is fair when the sick on ESA have their benefit cut off after 12 months even if they can prove that they have done all that could be asked of them to find a job? After all no employer is going to take on someone who might need a week off a month due to ill health no matter what the law says, not when there are plenty of fit, young, able bodied people applying. The consequences for the hundreds of thousands who find themselves in that position will be debt and homelessness. Will that be seen as fair when it becomes a reality?
    Will it be seen as fair when the lowest paid workers are priced out of social housing because of rents rising to 80% of the market rate? Those same low paid workers are having their taxes spent on paying the mortgage interest payments of homeowners. Interestingly this benefit keeps on being extended, first by Darling then again by Osborne in order to support the housing market. Will they be extending benefit limits to the weak and vulnerable I wonder? Somehow I doubt it. Is that fair?
    The whole purpose of social housing is to provide low cost, secure accommodation to the lowest paid, and most vulnerable in society, most of the social housing tenants near me are young disabled people who all have low paid part-time jobs. What happens to them? Is it fair? Is there really 'no other way'?
    It seems to me that those with the least amount of political clout have been hit hardest. The soft targets. In other words, the weakest and most vulnerable. Will the majority still think it is fair as this becomes increasingly apparent over the coming months and years?

  • Comment number 94.

    Any massive adjustment of welfare and other govt benefits will on analysis of 'averages' as used by IFS (and very few people in reality fit the 'simple average' model)... INITIALLY ... be regressive in the first few years ... just as President Clinton's adjustment of welfare in the USA in the 1990's, proved to be ... initially.

    Pontificating about the fairness of a welfare system whereby the often long term beneficiaries of that system pay very little into if anything into it ... is fairly unfair on those who pay the taxes to support it ... and fundamentally, is a constitutional and sovereign rights and privileges issue.

    In other words, in the absence of a clear UK constitutional position on the issue ... then there clearly is no answer to what is and is not 'unfair' about the CRS, with particular income groups.

    What I find amazing is that the so 'called' cuts are the largest in living memory and only take us back to 2008 govt spending levels ... which means that the Last labour govt presided over the largest increase in govt spending, in living memory, over the same period.

    The CRS is statistically 'unfair' if those who are able to help themselves a bit more ... choose not to do so. When I needed a job ... I always got on my bike and travelled and found work ... just like Norman Nebbit's father is described as doing so ... by his son (but I would be the first to acknowledge that not everyone is able to 'get on their bike' and travel).

    Reality check ... our constitution should, to some extent, recognise 'affordability' in front of 'fairness' otherwise our nation will go bankrupt.

    My estimation is that Ian Duncan Smiths' universal benefit and the Chancellors' March 2011 budget will address the remaining issues on 'fairness' before most of the so called 'cuts' take effect. i.e. with better govt policy detail on 'back to work' and other 'programmes'.

  • Comment number 95.

    69. At 03:57am on 22 Oct 2010, hanoidan wrote: "Now, can someone tell me how baby boomers haven't done well. No one has ever done better."

    I'm a couple of years early to be called Baby Boomer but the phrase is emotive. Boomer refers to a bulge in babies born, not necessarily wealth. The 50's and early 60's were no picnic. Money was in short supply, no packaged holidays, no restaurant visits, few cars, expensive and laughable TV's etc. etc. Macmillan's "never had it so good" was propaganda and not the reality which was grim for most.

    Sure I got a secondary good education - Grammar School (last place available in Nottingham and Red Brick Uni) but my primary education was totally screwed up following my father from Army posting to army posting (10 schools before aged 11). However millions didn't get proper secondary education as the 11plus consigned them to lesser job prospects and hence income.

    As to doing better it was up to yourself. The real jump in wages and prospects occurred for the majority after Thatcher. But think of all those industrial workers who lost their industries, are they still 'booming'? No.

    "As a member the next generation down, it gets my blood boiling when the government say we have to tackle the deficit rather than make our children pay"

    Hey mate, I didn't hear my fathers generation whinge because they had to fight a war to keep us free. At least you still have a life. Do I need to say more? Our problems didn't have to be so difficult. We were in a good financial situation some 7-8 years ago. It was profligacy and the debt culture that has laid us low with a bit of help from the sub primers in the good ole' USA. So why blame us? And anyway, many Pensioners are living off about £7-9000. Would you like that - some boom!

  • Comment number 96.

    24. At 5:58pm on 21 Oct 2010, Not Buzz Windrip wrote:
    "A pox on their houses, Commons or otherwise. They are just hot air factories, posture and preen. How on earth anybody can think anything will come out of them worth reading 24 hours later I cannot see.......
    How many times do we have to go around this loop."

    Until enough people get organised to change things. Unless you want violent revolution this probably involves a new political party, attracting people over a period of time till it can put candidates up in many constituencies. These will all lose their deposits for several elections as most people will not vote for them because "they cannot win so I am voting lab to keep the Tories out" or vice-versa. Also of course once you stand for election people will regard you as a politician and therefore of course "just the same as all the others". They will say you only come round at election time - i.e. they want to sit on their fat backsides while others do the work for them.Oh, and the mass media will give you zilch coverage most of the time, and you will need large amounts of money, but if you threaten the status quo you won't get any big donations.

    My qualifications for this rant? Green Party activist 1980-1994.

    I put a lot of time into this - it's someone else's turn now.

  • Comment number 97.

    I'd love to see a clampdown on societies biggest scroungers. Those who don't pay the tax they are due but who are able to exploit the loopholes in the system. These people should be stigmatised and hounded with the same energy as those deemed too lazy to work.

  • Comment number 98.

    Is it not possible to simplify the tax system? I'm a total layperson on this - but why can we not have a tax rate of 10% across the board? with NO exceptions and loopholes - and only start taxing income at 10K - I dont even mind if we tax companies less - but at the minute between dividends and registering off-shore and all the other ridiculous tax loopholes - the guys at the top must be paying way less than 10%?

    Are there any countries in the world who have done this and are they better off in the long run?

  • Comment number 99.

    94. At 10:00am on 22 Oct 2010, nautonier
    'What I find amazing is that the so 'called' cuts are the largest in living memory and only take us back to 2008 govt spending levels ... which means that the Last labour govt presided over the largest increase in govt spending, in living memory, over the same period.'

    Except something else happened in 2008 didn't it? Something that made a large hole in our GDP figures against which these claims are being twisted. The problem is that GDP is not going back up quickly and this will slow it down.

    Labour did indeed significantly increase spending on education and health; those were the commitments that got them elected. The Coalition has ‘ring fenced’ those areas so are cutting back on very little of Labours additional departmental spending.

  • Comment number 100.

    What a pathetic little man Nick Clegg he is a Tory in drag.
    He has little knowledge of the outside world, his only concern is the benefits that are claimed. Welcome to the real world where you do not claiming or are able to claim benefits when at work, as he is with his MPs allowences, Are the increases going to effect him or the PM "NO" they will claim more in allowences than the average working man gets in pay.

    The IFS study does not state those on unemployments benefit it states the poor, and if he dosn't like it then react as he did when the Labour Party was in power and back the IFS reports
    I have never claimed benefits, what I want is the money that I earn to stay in my pocket, not to pay for the bankers who unfortunately cannot or will not be put money to work, for there is more of our money in their vaults or pockets.
    With all these savings in job losses then that is where you will see Benefits rising by the Employment Agency, help from Social Services, for the unemployed who cannot find jobs in the private sector that is if there were jobs in the area you live in, or should we travel 200miles to get a job come down to reality.
    You made promises and now you heve renaged on them and shown your true colours YELLOW


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