Bolitics The New Condem Government

[snowychap]

One interesting idea buried in today's excitement was the prospect of public service workers being offered collective wage reduction and hours reductions instead of job cuts. It's the wage bill that needs reducing, not the number in employment. If people can be persuaded to take a pay cut of, say, 10% then this has a double effect. Everyone still has 90% of their income, we are not all paying for 500,000 people to be on benefits.

Yes, why was that 'buried'?

Was it perhaps so that it can be brought out in the future by the government as a defence?

I'd suggest that it is laying the groundwork for passing the buck or 'devolving the blame'.

"It wasn't us who cut the jobs, we gave them/you choices. It is your fault that you're out of work."

[Gringo]

...although that may involve physically moving to an area where there is an opportunity.

You are Norman Tebitt I claim my five pounds.

And when they lose that job they will be forced to move back to a poor area as the housing benefit cuts dictate that the areas with jobs will have less social housing available.

[LondonLax]

One interesting idea buried in today's excitement was the prospect of public service workers being offered collective wage reduction and hours reductions instead of job cuts. It's the wage bill that needs reducing, not the number in employment. If people can be persuaded to take a pay cut of, say, 10% then this has a double effect. Everyone still has 90% of their income, we are not all paying for 500,000 people to be on benefits.

Yes, why was that 'buried'?

Was it perhaps so that it can be brought out in the future by the government as a defence?

I'd suggest that it is laying the groundwork for passing the buck or 'devolving the blame'.

"It wasn't us who cut the jobs, we gave them/you choices. It is your fault that you're out of work."

I don't see a problem with giving people a choice.

[Gringo]

So you're given two choices, neither of which you think are desirable and then given the blame for not making a choice - it's a false dilemma.

[snowychap]

I don't see a problem with giving people a choice.

Neither did Hobson. :winkold:

I think it is less the 'giving of a choice' (whether that is actually a choice) more the seed sowing for those in government to distance themselves from the reults of decisions which they took.

[blandy]

The there's the issue of the credit rating agencies. As I have read, again, if we have AAA rating, interest rates are lower, than if the rating is downgraded...

There would be two points that I would make: that the fixation on the triple A rating is overplayed (from what I have read it is the market where the government seeks to sell its gilts, &c. which determines the interest rate and not what a credit rating agency or two decide or think - hence why our cost of borrowing has decreased since the beginning of the year and not just as Osborne claims)

I completley agree it's being overplayed by the Gov't, but it is absolutely the case that if the rating is reduced, the cost of borrowing (and interest) would rise. The rating doesn't set the rate, it affects the rate charged.

Osbourne fibs

Let's nail one fib before George Osborne stands up to deliver the Comprehensive Spending Review today. The line parroted by the Chancellor andother Coalition ministers over the past week that not to adopt the cuts to be announced today will return Britain to the "brink of bankruptcy" just makes them look economically illiterate.

One can understand the desire to rewrite the narrative of the final years of Labour – and it would require an unhealthy dollop of revisionism to suggest that the previous government's record, particularly in its third term, was not one of increasing profligacy. Still, the claim Mr Osborne made on Sunday's Andrew Marr Show, that "before the election, actually people had a real question mark over Britain's ability to pay its way in the world", is plainly wrong.

Countries do not retain their AAA credit ratings from all three of the world's major ratings agencies if there are doubts about their ability to repay their debts. It is true those agencies had warned that Britain's top-notch rating might be undermined by a failure to take sufficiently robust action on the deficit. Standard & Poor's, for example, said in April: "The rating could be lowered if we conclude that, following the election, the next government's fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory." But even it put the chances of a rating cut at only one in three (and the reduction would hardly have been to junk bond status).

Clearly, had the worst come to the worst, and S&P followed through on its threat, Britain's cost of borrowing would have risen. In fact, as Mr Osborne likes to point out, since the election, the rates paid by Britain for its debts have fallen. There can be no argument about that, or that the falls reflect the zeal he has shown in tackling the deficit. But if Britain's cost of borrowing is the only measure by which we should judge economic policy, why not swing the axe even harder today? The quicker we cut the deficit, the more borrowing costs will come down.

This argument is important because the Coalition has very deliberately sought to paint a picture in which there is no other choice but to take the most painful road towards deficit reduction – arguing that without cuts of the severity of those to be announced today, Britain will suffer financial meltdown.

Does Mr Osborne really believe that? The alternative strategy – to cut spending and raise taxes more slowly – would not automatically lead to a credit rating downgrade, assuming the deficit reduction programme was still credible, let alone to bankruptcy. And it would have allayed the fears of those economists, including at least two Nobel laureates, who fear the cuts will take us back into recession.

In truth, no one knows exactly what level of cuts we can get away with without stifling the recovery, just as no one knows exactly what level of failure to respond to the deficit would have prompted a downgrade. But Mr Osborne risks dropping us into the first of those soups with his insistence that no cuts that fall short of his would dunk us in the second drink.

It is rhetoric that has had dire consequences even before the detail of the cuts is known. For months now, all indicators ofeconomic confidence have been trending downwards. Consumers, increasingly fearful, have beensaving more (despite the pleas of the Bank of England's chief economist for them to spread their money around). House prices have been sliding as buyers stay out of the market. Businesses anticipate hiring fewer people over the next 12 months. The list of negative indicators goes on and on.

One can date almost exactly the moment when many of these benchmarks reached their inflection points: it was 22 June, the day of the emergency Budget. As soon as Mr Osborne spelled out the extent to which he was set upon dishing out the hair shirts, Britain began hunkering down. The Chancellor, in other words, began the conversation in which the country has been talking itself back into a downturn.

[snowychap]

...it is absolutely the case that if the rating is reduced, the cost of borrowing (and interest) would rise. The rating doesn't set the rate, it affects the rate charged.

Indeed, amongst other factors it affects the rate, it does not therefore follow that it is 'absolutely the case...' though it probably does absolutely follow that a rating reduction, ceteris paribus, would cause the yields to increase (i.e. the impact of this one particular input would be detrimental).

[chrissmith921]

So, economic experts of VillaTalk, what effect would having single mothers put into communes rather than given their own houses etc have on the economy as a whole?

My belief is it would seriously lower the amount of kept, unwanted pregnancies - particularly if coupled with state provided child care at each commune to allow the mother to go to work.

Of course, they could live with their parents... but I'm on about the baby factory types who do it for the houses they get.

[snowychap]

[peterms]

Now, does anyone think the banks are going to be made to make a contribution towards the economic mess they have bequeathed us?

Think again.

The Treasury today slapped a £2.5bn a year levy on the banking industry but still left some of the major banks better off as a result of corporation tax cuts being implemented in the next four years.

As the electorate was hit by £81bn of cuts to public spending that will leave the poorest section of society worst off, City minister Mark Hoban issued legislation that made some concessions to the banks after a summer of intense lobbying by the industry. This could even result in the banks paying a lower rate.

[peterms]

So, economic experts of VillaTalk, what effect would having single mothers put into communes rather than given their own houses etc have on the economy as a whole?

It would have a number of effects.

There would be a need to construct such communes. Since people wouldn't go there voluntarily, new sites would be required, with suitable room for security fences and clear sightlines for the watchtowers. That could help to reduce the overhang of unsold land held by property speculators, and generate more income for them to spend on BMWs.

As well as physical security, no doubt some form of electronic tagging would be required, giving a further stimulus to manufacturing industry.

Energy could be provided through a system of treadmills, saving pressure on the national grid and helping our commitment to renewable energy sources.

Staffing would be needed as well, probably at quite an intensive level. That would help to mop us some of the jobless hordes who will soon be emerging, blinking, from the town halls.

There would be a need for extra court time and legal appeals to deal with the many challenges which would be mounted. Oh, hang on. We've reduced court time and legal aid, so probably better just to pass a law preventing appeals. So scrap that one.

As an alternative to building compounds on land, we could possibly consider a more mobile form of incarceration for these indigents. A while back, the prison system used old ships as "hulks" to house prisoners. Standards have changed since those days, so rotting vessels would probably be unacceptable. I gather there are a couple of ships in production, only one of which will be able to carry the planes it was meant for. Possibly that might be a cost-effective alternative use. No-one could object to these women being given a brand new, gleaming facility like this.

Problem solved. A bit of waste avoided, some new employment created, and the offending women tucked away out of sight.

[chrissmith921]

So what, keep giving them houses for free eh?

Spot the people living in the rich parts of the country here, where this stuff is well hidden so they dont know it goes on

I feel depressed. Therefore I must be on the seek.

[snowychap]

It would appear from here and Faisal Islam's comments (and 'tweets') that the IFS briefing on the coalition's plans are not quite in tune with the coalition's own appraisals.

I'm not sure whether they (the IFS) will continue to be referred to by Osborne in quite the same (glowing) terms as they were yesterday (probably we'll get some comment about it all being down to Mr Chote and now he's at the OBR, they're the only ones to listen to).

Ive been to some caustic IFS takedowns of previous Budgets and spending review. That presentation was pretty bad...

...

Laughter at the IFS briefing as it shows the most regressive looking graph in history vs the puny looking treasury version

...

half way thru briefing, already the most devastating critique of flaky claims, policy inconsistencies, dodgy maths, ive ever seen by IFS

[Richard]

The cuts are reckless, based on idealogical views held for many years within the Tory party - we have seen them before and we are seeing them again. The LibDems have no credibility at all.

Couple of things with just this paragraph (lots with the others as well but not sure that a response taking up the whole page would be welcomed by readers of the site)

Interesting that Alan Johnson is now saying he does not believe the cuts are ideological yet the ideological line is still being peddled by opposition supporters, does that put the shadow chancellor at odds with those in his own party do you think?

Second on the we have seen it before and will see it again bit, yes just like we have seen before ( and no doubt will again ) the Labour economic shambles in this country that once again the Conservative Party has to come in and do something about. Ask yourself why we see these cuts from the Tories after each Lab govt.

And on the Lib dem credibility thing, well sorry but they have credibility from being responsible enough to realising action needs to be taken and taken quickly. They are not deficit denyers

[LJRM050389]

Have people seen the BBC Editor Nick Robinson Youtube doing the round, shocking, he should be sacked!

[Clarry]

Second on the we have seen it before and will see it again bit, yes just like we have seen before ( and no doubt will again ) the Labour economic shambles in this country that once again the Conservative Party has to come in and do something about. Ask yourself why we see these cuts from the Tories after each Lab govt.

I've said elsewhere, the State is like a parent. Labour are an over-indulgent parent spoiling the child. Conservatives are an abusive, nasty parent.

[djdabush]

Have people seen the BBC Editor Nick Robinson Youtube doing the round, shocking, he should be sacked!

Nope, link?

[snowychap]

Have people seen the BBC Editor Nick Robinson Youtube doing the round, shocking, he should be sacked!

Just googled it and I guess you mean this one of him destroying the placard?

I must admit that I chuckled quite a bit when a second placard (on about one minute) emerged behind him. :-)

[Awol]

...although that may involve physically moving to an area where there is an opportunity.

You are Norman Tebitt I claim my five pounds.

And when they lose that job they will be forced to move back to a poor area as the housing benefit cuts dictate that the areas with jobs will have less social housing available.

Loving the positive thinking fellas. Maybe your right, if people lose their jobs they should give up, sit on their arses and not make every effort to find new work - particularly if that means actually doing something proactive like moving or making a lengthy commute. It's not like there isn't plenty of money to pay people to sit about doing rock all, right?

Obviously that won't work for everyone, but it amazes me how many people seem to think personal responsibility doesn't extend to making every effort to find yourself gainful employment. The Government does owe people a living even if too many now believe the reverse.

[slowandlow]

Robinson is a muppet but what do you expect from an ex-head of OUCA