The Shadow Chancellor warns us wisely

Today the Guardian runs a most important interview with George Osborne. In it it he makes some crucial points.

1. The government has borrowed far too much off balance sheet through Private Finance Initiatives, Public/private Partnerships and similar deals. These need to be evaluated, and their true liabilities and costs put into the public accounts.

2. Green taxes have been given a bad name by Labour, and are now seen as Stealth taxes by the public. The public does not want more of them.

3. The current large deficit will cast a long shadow over a future government. It will place such a government in a straitjacket.

These important statements imply that a future Conservative government cannot promise to match any spending plans for the next decade that Labour likes to dream up. Whilst no Conservative government would want to sack teachers, nurses or doctors, it will have to rein in the wasteful and undesirable spending which now abounds.
It also implies that tax cuts will not be funded from unpopular tax rises, but from the proceeds of growth as the economy starts to recover. Recovery will be strengthened and speeded if government gets a proper grip on spending.

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19 Comments

  1. Blue Eyes
    Posted September 8, 2008 at 10:44 am | Permalink

    I reckon that spending on the "core" services like health, education, defence, emergency services could be increased and taxes cut. There is so much waste going on out there.

  2. Letters From A Tory
    Posted September 8, 2008 at 10:45 am | Permalink

    The Conservatives don't have to sack teachers, doctors and nurses to curb public spending. They have to focus on chipping away at the agencies, initiatives, policies, private sector deals and other waste that has sent public spending through the roof.
    http://lettersfromatory.wordpress.com

  3. Brian Tomkinson
    Posted September 8, 2008 at 10:55 am | Permalink

    Some reality at last, but these facts have been obvious to most of us for a very long time and well before the idea of matching Labour's spending plans was mooted by Cameron and Osborne.

  4. APL
    Posted September 8, 2008 at 11:00 am | Permalink

    JR: "The government has borrowed far too much off balance sheet through Private Finance Initiatives, Public/private Partnerships and similar deals. These need to be evaluated, and their true liabilities and costs put into the public accounts."

    My preference is that the authors of these Enron deals should be bankrupted stripped of their state non contributary pension and sent to the workhouse, then and only then should we the tax payer be obliged to pick up the tab.

  5. Johnny Norfolk
    Posted September 8, 2008 at 11:04 am | Permalink

    At last some sanity. This is what needs to happen. Labour are incapable of reducing spending. I cannot think of one thing they have done to make this country any money. All they have done is spend,spend,spend. Thats why our position during this recession is so much worse than anyone else. The person to blame is Brown then the Labour party for allowing it and following like sheep..

  6. Man in a Shed
    Posted September 8, 2008 at 11:47 am | Permalink

    George needs to move to expose Labour's borrowing to try tio fund its own electoral chances at the expense of our futures.

    Whether its the GBP2.7 billion tax bride, 'planned expenditure moced forward' – see Hazel Blears, or even the old spending our pensions now for Labour's benefit when many will only realise how their future has been stolen by Brown when it too late to do anything about it and when current ministers are enjoying their lavish gold plated super pensions ( which we also paid for ).

    On that basis David Cameron restating the policy to bring MPs and perhaps other public servants pensions onto the same basis as everyone who pays for them have to struggle under would be a good move.

    Also – close to an election – Osborne should restate the governments accounts with the off balance sheet stuff moved on, and state what the equivalent income tax would be with stealth taxes rolled back. The public are now ready for this message and the only problem would be stopping Labour ministers getting lynched in the street.

  7. Tony Makara
    Posted September 8, 2008 at 12:02 pm | Permalink

    I hope Mr Osborne will do everything in his power to lighten the tax burden for business, in fact this should take priority over personal taxation. There are two ways to create jobs, through the public sector and that requires higher levels of taxation, or through the private sector by imposing lower levels of taxation. We need to let business grow, perhaps even taking small and new business out of the taxation regime altogether, then we will see real, lasting jobs being created. I'm so pleased that Mr Osborne is now moving away from trying to match Labour's spending plans, now it the time to free-up money in the form of tac cuts for business, to get our economy moving again.

  8. Eddie Allen
    Posted September 8, 2008 at 12:41 pm | Permalink

    It's an economic impossibility to match Labour's spending plans ( hence the debt )

    George Osborne is only stating the obvious !!

    There has to be RADICAL CHANGE and people will undoubtedly be worse off for it than many ( not all ) have ever known. JOB CUTS in non essential administrative posts in the public sectors are a MUST in order to trim away the budget deficit. This will likely lead to strike action which brews now but is held back only by the union affiliation to Labour and not wanting to kill off "their" party.

    Calls for a General Strike are now being discussed within the TUC and a European General Strike is being called by activisits in Spain, Portugal and France where feelings are mirrored for a need for radical change.

    The two aircraft carriers Brown has signed up for should be cancelled, and Trident should be revisited, ID Cards should be scrapped, so too spending on the EU Project to install unitary regional government and all manner of crazy bureaucracy which prevents a our economy working efficiently.

    Our participation in Afghanistan or at least Iraq should be curtailed.
    A wage freeze should be applied.
    Higher tax for higher tax earners should be made along with tax for non-doms and an abrupt end to tax havens.
    Foreign companies with assets overseas which contribute nil tax to the UK should be banned and windfall taxes should be applied in the interim.

    Immigration should be banned and illegals and non-citizens without work should be sent home to ease the cost on services.

    Interest rates should be placed back under government control and we should pull out of the "Mass Trick" treaty and Lisbon Treaty and scale the UK to EFTA ( trade only ).

    VAT should be reduced on essential items in order to reduce the burden of inflation on families and to help promote growth in our economy.

    Family allowance should be stopped for families with incomes over £50,000 pa.

    The NHS should be scaled down to what it provides as it is too costly to provide for everything it does now.

    They should also reclaim the £9 billion in grants they gave of taxpayers money to utility companies. Re-install our fishing rights too along with farming subsidies to get our essential food resources back under state control.

    The human rights act should also be looked at to put a stop to the litigatious culture which has developed which are providing massive payouts from the state along with a culture which thinks it's "good" to sue your government for it's us taxpayers picking up the bill.

    Radical reforms are essential to our economic and sovereign survival and playing around with figures ( the debt we have ) will not get the country back on its feet or mend our broken society either. This means radical reform AND it means union participation.

    RADICAL REFORMS ARE ESSENTIAL TO THE UK ECONOMY AND TO OUR REVIVAL AS A SOVEREIGN COUNTRY.

  9. Matthew
    Posted September 8, 2008 at 1:39 pm | Permalink

    The problem is Osborne's shown no capacity for prioritising tax cuts. He's promised slashing (almost to zero) tax on inheriting money, when the cash foregone could have cut income tax with much better incentive effects. So someone inheriting £2m in cash pays no tax, whereas a hard-working businessman on £40k will still pay a marginal rate of 40%.

  10. figurewizard
    Posted September 8, 2008 at 4:17 pm | Permalink

    I see somebody mentioned Enron. The principals of that business were put on trial because (it was alleged by some they had misled-ed) those who had put money into it. ( I am against -ed)The rescue of Northern Rock to protect electoral assets of the Labour party and the subsequent cost to the taxpayers of this country.

  11. Ermintrude
    Posted September 8, 2008 at 9:37 pm | Permalink

    "Whilst no Conservative government would want to sack teachers, nurses or doctors, it will have to rein in the wasteful and undesirable spending which now abounds."

    come on, what you are saying is that you now have a license to sack teachers, nurses and doctors – and you're looking forward to it

    Reply: Don't be so stupid – of course not.

    • mike stallard
      Posted September 9, 2008 at 8:21 am | Permalink

      Comrade, this remark is considered Blairite.
      We have the anti-terrorism laws, you realise.
      We recommend a retraining course.
      We know where you live.

  12. mike stallard
    Posted September 8, 2008 at 10:12 pm | Permalink

    The Shadow Chancellor is so right about figures.
    It would be fascinating to see what the real national debt is at the moment. What with the PFI initiatives, Northern Rock and pensions added on (apparently all excluded at the moment) we get, apparently some 100% of the GDP as our debt instead of the (false) 40%. This is way up there with Italy and Spain.
    Another interesting real figure would be the coyly avoided amount of tax that is due but never paid to the Treasury. Apparently it is well under 14%.
    The real question must be this: if tax were reduced to sensible, payable levels (currently almost half of everyone's salary goes in tax), would this percentage of unpaid taxes actually decrease so that the Treasury actually got more money in?

  13. Eddie Allen
    Posted September 9, 2008 at 1:21 pm | Permalink

    Back in the old days income tax was 33%.
    I forget how long ago this was but I'm talking light years I guess and way way way before VAT ever existed.
    Stuff was cheap then and you knew that the money in your pocket meant something AND that you were doing your bit for society.

    Since VAT was introduced things changed altogether.
    We've had government after government making speeches about cutting taxes whilst in the back-door raising taxes and duty on things we buy.

    I understand the country runs along on around 40% of what we earn as an economy so this amount cannot be escaped and it should be broadcasted……the country needs 40% of what we earn and it has to get it in either by income or by consumer taxes ( now green taxes too ), and of course don't forget the motorist either with their taxes which are totally scandalous incidentally.

    So where's the 40% come from then if two thirds or more are paying 20% tax ? Oh aye, VAT and duty !!

    So the money in their pockets is not really worth as much now because everything we need to buy to live our daily lives is taxed to the gunnels because Labour has lowered taxes on incomes where they should have left them alone. Even raised a bit more in fact from top earners !!

    This isn't brain surgery and nor is it socialism.
    It's simple maths and social economics which has a conscience to society when it calculates the tax thresholds, which is not really what Labour do at all.

    It's the only smoke and mirrors trick they've been playing and people ( I guess ) are sick to death of it. Giving with one hand and taking with another !

    So far from lowering taxes I'd be advocating taxing those who escape it, taxing top earners a bit more, stopping tax havens and the flood of non-taxable profits of foreign companies leaving our shores and generally being more open and honest with people and businesses at budget time than Gordon Brown has ever been.

    I'm sure however that if we weren't paying bucket loads of pound notes to Europe every 5 minutes, we'd be better off financially, and I'm sure some of that VAT and duty could be a lot less than it is now.

  14. Pat C
    Posted September 9, 2008 at 2:30 pm | Permalink

    Most comments here seem to be saying much the same.

    I think we have to emphasize again and again that there is NO need to cut back on nurses and doctors and teachers, and to say it in simple language like that!

    On the other hand I agree completely with 'Letters From A Tory' @ 9.45am yesterday, a lot of money could be saved by cutting back on all the hundreds of 'agencies', both large and small; the 'initiatives' and private sector deals would need to go as well.

    I expect it would be too complex a job, as well as too expensive to do a 'cost-effective' exercise on all these hundreds of 'agencies'. Such a large amount of taxpayers money has been diverted to agencies and quangoes over the last ten years, that it could be informative to discover just how much has reached A destination with some effect!

    • mike stallard
      Posted September 9, 2008 at 6:34 pm | Permalink

      Why do you think that Our Tony and Brilliant Gordon use so many people outside the Civil Service at such enormous cost to us?
      Nobody seems to be addressing this point.

  15. Keith
    Posted September 9, 2008 at 3:10 pm | Permalink

    I wish Osborne/Cameron would stand up and say all this to the man on the Clapham omnibus. It's all very well talking about problems here, problems there etc. What said man wants to know is what the 'guvinment' is going to do. All we've heard from them is a deafening silence.

  16. Eddie Allen
    Posted September 9, 2008 at 5:06 pm | Permalink

    Mentioning loss of jobs for nurses and teachers ?

    People might not realise that 40% of jobs in the NHS are taken up by immigrant workers and I guess this figure is mirrored in teaching. But I've never heard anyone saying about the 250,000 teachers which have left the profession of the tens of thousands if not hundreds of thousands of nurses and doctors who've ran off to Canada, America and Australia for a job which isn't through an agency, isn't part-time and does carry a retirement pension. ( Something which will be a future problem when people find out their on state pension when they should have been on occupational pensions ).

    But quango's are undoubtedly a big area to cut back on, no doubts about it, and so too the privatisation initiatives which basically farm out lots of work to overseas companies ??? What on earth is that all about ???

    If those jobs were brought back here then we'd not be needing to chop so many jobs anyway particularly if immigration is tightened and jobs ended for non-citizens when the contract is up.

    Incidentally, tyo give another figure here.
    I think adding up what figures I've been counting in my head, there must be close to 100,000 jobs in the finance industry and other call centre based jobs which have left these shores due mainly to the minimum wage and the bureaucracy heaped up firms by European diktat through the FSA and DATA control.

    That's a laugh because the government has no control itself over data but expects people and businesses to be ready to go to jail if they drop the odd name.

    Totally crackers this country has become and its all dowen to lazy good for nuthin Labour control freaks wanting to centralise everything in sight.

    Example here:
    I spoke with a lady yesterday who worls for a utility company.
    She told me she is "not permitted" to say certain phrases like "That's not a problem", or "Is there anything else I can help you with" – why ? Because apparently it's not right to be your own self anymore and engage the human race when in business. I said, if this carries on we'll have an end to our happy friendly british culture in no time at all. But I guess noone knows any of this because they don't really care ?

    I often wonder if I stepped into Dr Who's Tardis by mistake and ended up on another planet at some stage without being aware of it.

  17. Eddie Allen
    Posted September 13, 2008 at 7:59 am | Permalink

    People must learn to realise that power struggles work on many different levels and they must not only see the problems but they must also learn to appreciate the benefits of a capitalist system of government and realise it's not all bad.

    At the moment we have only slight differences between European, U.S. and Russian politics, not to mention Chinese communism and a third world way of living too to contend with and understand.

    Europe would do well to start by thinking we are not in any way superior in what we do, we are just different.

    As an example of what I mean, we have an elite guy in America who's rich and famous. Obama is his name but it could be any number of people or it could be Tony Blair or even Queen Elizabeth but I'll take Obama when I compare his lifestyle to that of his Grand Mother's in Kenya when I ask are they not "both" happy ?

    I'd say his grand mother is at least as happy with her lifestyle as Obama is with his, possibly moreso.

    I once likened a lady cooking rice on an open fire in Africa as being possibly just as happy as a guy driving around in a Bentley.

    We live in this world once and all we need to think about is living it peacefully, happily, comfortably, and as long as we can.

    That doesn't mean we all have to be rich and famous we just have to be happy.

    So when it boils down, capitalism can allow the natural productive skills of mankind to develop a better world, but it's only a better world if everyone in it is happy. peaceful, comfortable and with equal opportunity without repression, hunger or early death.

    Europe has the ability to look inward at itself first and to think "people" rather than "project".

    Nothing of a project which was born from depression, war, and grave circumstances can possibly be right for today's modern world if it is conducted on old theories which still continue to tag along on the back of "rampant unchecked capitalism". i.e. The Free Market.

    The Free Market is a simple slogan for see who gets rich first.
    It is for the elite and not for the people.

    If the EU was "for the people", then we wouldn't have Gordon Brown ripping people's pensions off, we wouldn't have Sarkozy doing that and him and Brown increasing retirement ages, and we wouldn't have minimum wage levels and an open door immigration policy which feeds only the elite capitalists.

    We'd have more teachers ( educationalists ), more foster parents, more social workers, more secondary jobs like part-time nurses, bus conductors and the like. We'd have better and more modern transport, we'd have totally electric cars, we'd have a free trade in wheat and corn and barley and sugar and any other foodstuffs, we'd not be levied taxes at the rate we have now and businesses would be levied more tax but small businesses which are growing or just starting out would be incentivised.

    We wouldn't be competing between governments with grants to businesses and there'd be no advantages or disadvantages within our systems which allowed businesses to pick and choose. This gives them the upper hand to control political decisions which prevent people coming first.

    Russia should be met with a new politic – People first all else second. Russia will engage with it. The US should be met with the same new politic and if they don't want economic disaster to befall them they will engage too. China and the rest of the world should be met with this plan too. People first all else later !

    Any country which will not put its people first, will die politically.
    It will lose power and its economy will shrivel.
    America would have to limit arms because its money would be spent on its people instead, so too Russia.

    Only by engaging with BOTH, will Europe itself survive politically and economically and it can only do that by putting people first. ( All people of the world ).

    Europe has the perfect chance to re-think, change its strategies, make an impact for world peace, be the marriage route between Russia and America, and it can do it if it believes in itself that the people will support it if they see ( by proper explanation ) how these monumental changes will benefit their own and everyone's lives.

    This is social economics built on a fair capitalist driven democracy.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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