The Autumn Statement II


The politics of the Autumn Statement once again are about fairness. The Coalition points out that under their plans the top 1% of earners will pay a quarter of all the income tax, and the top 5% of earners will pay 45%, more than twice their share of the income earned. The Coalition has raised taxes on the rich by more than taxes on other income groups. Labour says this is not enough, the richer people should pay more.

The Coalition counters by pointing out that the higher rate of Income Tax aimed at the top earners has so far caused (or coincided for those of you who still deny Laffer) with them paying much less total tax, a blow to a Treasury in need of more income to pay all its bills.

The Autumn Statement also reveals that since 2007 average earnings for those in work has risen by 20% (in cash terms – not real) whilst benefits for those out of work has risen by 24%. The Coalition as a result wishes to limit future rises in out of work benefits to 1%, likely to be below inflation. Labour is not sure it will support this, and asks to see the small print as to how many benefits are affected and if some of them are paid to people in work.

The best way to get the benefits bill down is to get many more people back into work. The UK state is still spending too much. Economic success will produce a more affordable state, and a more affordable state is necessary for economic success.

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  1. Old Albion
    Posted December 6, 2012 at 8:53 am | Permalink

    And the best way to get more people in work, is to close the inward migration door. Thereby preventing incomers from taking what jobs are available.

    • Disaffected
      Posted December 6, 2012 at 9:26 am | Permalink

      Autumn statement, good grief. Sack him and put him out of his misery. Let him go into the wall paper business and let us see how he survives on his economics- even with his father’s help.

      It is reported the money given away by Ed Davey on climate aid, and celebrated by Nick Clegg, is going to wind farm manufacturers and not the poor at all. If the government can waste, literally waste, taxpayers’ money like this and on things like EU, overseas aid, mass immigration, Energy Bill, Climate Change Act, legal aid, welfare, HS2 project, voting for AV, voting for police commissioners, politically correct bean counters, inquiries one after the other etc then it can afford to reduce taxes, help business, or reduce energy bills for everyone and in particular the old, reduce fuel duty for transport, free tuition fees- rather than just give free education to EU students, British students could equally benefit.

      These are political choices and very little to do with economics. The Tory led Coalition is borrowing money with interest to give away, literally give away. ANd at the same time tell us are debt is increasing!! The debt is spiralling out of control and they do little to make spending cuts. I have come to the conclusion they are doing this to pass the deficit and debt back to lLabour so the Tories stand a chance of getting in Government in 2020. They are wrong. People will never trust them. Lib Dems will be annihilated and the Tory base will plummet. People want results not false claims, empty promises, sophistry, deceit and lies.

      The taxpayer will have to pay for their stupidity for the rest of their lives and their children lives. If Cameron and Osborne think this is the right way to modernise the Tory party they are in cloud cuckoo land (Lib Dems are already there).

      Yesterday it was reported that Davey has promised £2billion in climate aid to third world countries. £70 from every household in the country when it is claimed by the Tory led Coalition that we are in times of austerity and on the day when Osborne is likely to announce more tax raids. How about stop spending our money on economic madness!! How about using the money to help old age pensioners reduce their heating and lighting bills, care home costs, university tuition fees, kick start the economy. No, Davey, praised by Clegg as fantastic news, is giving away £2billion pounds of taxpayers’ money. Is there anyone sane in the mad house of government? There are still politicians warning us of the dangers of Labour getting back in- yeah right.

      • Tedgo
        Posted December 6, 2012 at 7:39 pm | Permalink

        You have forgotten the £1 billion paid out recently on redundancy packages for NHS managers under the Coalition’s restructuring of the health service. The people receiving these payments only have to wait a month before they can take on a new job within the Health Service.

        • Disaffected
          Posted December 7, 2012 at 9:29 am | Permalink

          And the west coast rail line fiasco, anyone sacked yet. Or is incompetence part of an accepted culture in theTory Led Coalition?

    • zorro
      Posted December 6, 2012 at 9:49 am | Permalink

      It seems that they would rather continue the Ponzi scheme by building more homes and schools to cope with the huge inward migration…..


      • Disaffected
        Posted December 6, 2012 at 3:25 pm | Permalink

        JR is Evan Davis right? The deficit increased last year without the 4G proceeds, without the Royal Mail pension assets and without the profits of QE? If so what do you make of Osborne’s comments about the deficit and debt ie a true accurate reflection, slight of hand, sophistry, deceit or lies?

        Reply: Asset sales always count as offsets to the amount you have to borrow. The Chancellor set out all the figures, so you can adjust and quote them as you like. The actual amount borrowed will be substantially lower, but I think you should take into account the interest credit and the Royal Mail deal. I can’t see why people are so steamed up about 4G – it’s one of many modest sized items that helps bring borrowing down, as do various cuts in spending.

    • English Pensioner
      Posted December 6, 2012 at 9:56 am | Permalink

      I fully agree.
      The figures show that there are now more people in employment, but the number of unemployed has hardly changed. The difference is number of people entering the country.
      But the Tories under Cameron won’t tackle that problem as he appears to believe that it would be racist, hence his comments about UKIP.

      • lifelogic
        Posted December 6, 2012 at 3:30 pm | Permalink

        The problem is that many, even in employment, do not fully pay sufficient tax for the benefits they and their families receive, especially if much of the money is sent overseas and not spent in the UK as is often the case.

        • Bazman
          Posted December 6, 2012 at 6:48 pm | Permalink

          That would also apply to the very rich too I suppose?

          • lifelogic
            Posted December 7, 2012 at 10:53 pm | Permalink

            The very rich hardly use much by way of public services and almost always pay far more tax than the cost of these.

        • Bazman
          Posted December 8, 2012 at 12:34 pm | Permalink

          Simplistic prejudice fantasy and can we expect anything more from you? In a democracy the rich are supposed to pay more to cover things like building and maintaining the roads and schools because these are the things that enable their wealth. They actually do use the roads and schools more because the roads enable their businesses to prosper and the schools provide educated employees. But it isn’t just that the rich use roads more, it is that everyone has a right to use roads and a right to transportation because we are a democracy and everyone has the same rights. And as a citizen in a democracy you have an obligation to pay your share for that.

    • Denis Cooper
      Posted December 6, 2012 at 10:43 am | Permalink

      Correct, except for the minority of incomers who will set up businesses and create jobs. When you already have a surplus of labour it’s patently absurd to exacerbate that problem by importing more labour while paying members of the established population to remain idle. (Could any private company survive, if it decided that even though its present staff was under-employed it should still take on more staff?) Yet that is what most of our politicians on both left and right want, for their differing and generally disreputable reasons; so the question is how we can elect other politicians who do not want it and will stop it.

      • Disaffected
        Posted December 6, 2012 at 3:35 pm | Permalink

        Vote UKIP to make them realise we have had enough. MPs are still getting RPI for their pension schemes, they still are exempt from some taxes that other sectors of society are not. Some call for tough measures on tax dodgers when they know colleagues swapped their homes to avoid tax and make a profit from the taxpayer exactly the opposite of what they preach to us!!! Radical change is required. Gordon Osborne and the Tory led Coalition is not up to the job.

        Think about it every time you pay your energy bill and for those who cannot afford it, remember Ed Davey’s £2 billion give away to third world countries for wind farms and his i£5.5 billion increase on wind farms int he UK. Only EU jobs will be created and only EU countries will prosper for this massive incompetence, except a few greedy land owners. He might want to tell us what he is doing about the expected 125 million cars in China over the next 5 years when they only pay about 60p a litre for petrol. Or he might want to tell us what he is doing about Australia selling vast amounts of coal and iron ore to China to help their industry? Based on this alone it puts his ridiculous comments about Co2 emissions into context. Perhaps when the coalition leaves office they could take DECC with them, it serves no useful purpose to the taxpayer.

      • Electro-Kevin
        Posted December 6, 2012 at 5:28 pm | Permalink

        Each of those in the minority of unvetted incomers who create employment need to be weighed against those who become a drain on welfare, healthcare and the justice system (criminals)

        Next year we can expect another influx of a million or so ‘Europeans.’

        This is what we should judge the Tories on in 2015. Whether we get ‘Action this day !’ or ‘Jam to-morrow’ from them.

        The minor issue of mass immigration did get dealt with in a post by Mr Redwood … once.

        Of course, it has absolutely nothing to do with the unemployment figures so wasn’t worth a mention here.

        Reply I have often written about immigration, and agree with a policy of cutting net inward migration substantially as Mr Cameron promised.

        • Electro-Kevin
          Posted December 7, 2012 at 8:30 am | Permalink

          I read your blog at least twice a day, Mr Redwood and have done for years.

      • John Doran
        Posted December 11, 2012 at 6:16 pm | Permalink

        Denis, the 3 main parties are all signed up to a worldwide equalisation of wealth. This is the reason for our ludicrous foreign aid policies.

        It involves the impoverishment of the 1st world, & the enrichment of the 3rd world. This is why China, India etc are exempted from the ridiculous carbon taxes & CO2 targets, & why the US, EU & UK are currently going backwards in living standards. It also explains why this country is allowing huge inward immigration, it drives down living standards by depressing wages. It also damages our sense of nationality, which paves the way for one world govt, for which the EU is seen as the forerunner.

        It is a marxist plan, promoted through the UN, by it’s bureaucrats.

        The “Global Warming”, sorry, “Climate Change” scam has been dreamed up to frighten the !st world into paying carbon taxes & higher electricity bills to enrich politicians & bureaucrats & their favoured crony companies to keep them on board. The sums involved are enormous. We have a bigger world trade in carbon now than in wheat, I believe.

        There has been no warming now for 16 years, despite increases in CO2,
        funny that. There is evidence that the CO2 is beneficial, with vegetation reclaiming the Sahara desert right across North Africa, for over 25 years: & go to Biospheric Productivity in Africa.

        The pants are coming off the “Global Warming” scammers, with sane countries like Canada withdrawing from the Kyoto protocol, & it’s main proponents such as Al Gore not only refusing to debate the issue with Lord Monckton, because he knows he will be slaughtered, (etc)

        We live in interesting times.

    • Daniel Hewson
      Posted December 6, 2012 at 3:27 pm | Permalink

      Spot on, you will never significantly lower unemployment in the UK while we have an open door to the EU.

    • James Matthews
      Posted December 6, 2012 at 3:34 pm | Permalink

      Yep. That is blindingly obvious to almost everyone except the people who govern us (who also seem to think that none of these incomers need to use scarce land, housing or services). In London now every other youngish person you encounter in an unskilled or semi-skilled job, of whatever ethnic group, has an accent which indicates that they grew up somewhere else. In the main thay are pleasant, hardworking people who would be assets to any nation with more jobs and space than labour, but they are depriving our own young people of work or, conversely, , they are making it easier for our own young people to live on benefits, should they be so inclined. It really is madness to collude in this, even if it does make some employers lives easier.

      Then again, if you decide that 50% of your young people must have a tertiary education and thus foster in them the belief that when in employment they should be some sort of chief, you probably need to import a working underclass to avoid having a management/staff ratio of one to one. The children of this underclass, though, will, not unreasonably, want to be chiefs too, so once you start this cycle the logic is that you have to continue with it until overcrowding becomes completely unbearable and people start to slaughter one another or try to emigrate to a country run by a saner political class.

  2. me2
    Posted December 6, 2012 at 9:13 am | Permalink

    “The best way to get the benefits bill down is to get many more people back into work.”

    When we already have record employment in dire global economic circumstances?

    • forthurst
      Posted December 6, 2012 at 1:34 pm | Permalink

      “When we already have record employment in dire global economic circumstances?”

      Is this a comment on the record number of people, some of whom work, who are not English, living in England, which then is highly compatible with the statement that, “The best way to get the benefits bill down is to get many more people back into work.”? One of the other ways of getting the benefit bill down is to stop expecting English people to subsidise the lifestyle and benefits of people who we did not invite into our country and do not want.

  3. Brian Tomkinson
    Posted December 6, 2012 at 9:18 am | Permalink

    With respect, I am not interested in the politics of the Autumn Statement but the likely efficacy of the measures announced. Politicians spend too much time on trying to score party political points and lose sight of the real issues. Despite all the mock outrage there is little difference between the main parties – they all are addicted to spending. Many of us voted Conservative as we thought they would sort out the economic mess. The actions so far have been very disappointing and all the forecasts have been too optimistic. The deficit will not be eliminated in this Parliament but the national debt will have increased by a further £565 billion. How can we have confidence that any of you knows how to resolve the problems?

    Reply: That is why I usually write about the economics of the policies, and did so yesterday immediately after the announcement.

    • Brian Tomkinson
      Posted December 6, 2012 at 2:02 pm | Permalink

      Reply to reply,
      If our main political leaders were more like you then we might be able to feel confident that we are not still heading for a complete economic disaster. Alas,
      they are not at all like you and we can’t trust any of them.

  4. oldtimer
    Posted December 6, 2012 at 9:28 am | Permalink

    The state certainly is spending too much. The growth forecasts still look far too optimistic. It is a self indulgent Autumn Statement, resting on figments of the imagination and accounting legerdemain. This applies as much, probably even more, to the opposition as the the coalition.

    Three years have now been wasted in tackling the UK`s deep seated problems. Yesterday I happened to read an interview with Rahan Tata (in the D Telegraph). He made the telling point that the UK is not the country you would think of for setting up a manufacturing business and that the manufacturing supply chain for JLR, such as it is, is withering away. This is evident when the automotive balance of trade is measured on a vehicles only basis compared with vehicles plus components. It is significant that, as far as I am aware, despite JLR`s expansion no new suppliers have been persuaded to set up new operations in the UK.

    • Tedgo
      Posted December 6, 2012 at 1:45 pm | Permalink

      With JLR now setting up a joint venture factory in China, to manufacture JLR vehicles, I doubt there will be much production going on in the UK in five years time.

      Comments from several people about that article mention how many Indian Engineers are currently being trained at the UK factories, in all aspects of vehicle design and manufacture.

      We will probably be left with only a design centre if we are lucky.

    • forthurst
      Posted December 6, 2012 at 2:04 pm | Permalink

      “the manufacturing supply chain for JLR, such as it is, is withering away.”

      That should be a deeply worrying statement for responsible politicians, if they can momentarily be diverted from saving the planet by destroying our landscape; unfortunately, they only seem to worry about the health of their pals, the banksters, for whom no amount of taxpayers’ money is too much to keep them in the lifestyle to which their avarice and criminality have rendered them accustomed. On the hand, covering our ancestral lands with concrete could be another way of attracting in further large scale immigration of East European tradesmen, so you never know.

      • John Doran
        Posted December 11, 2012 at 6:29 pm | Permalink

        While my sons ( & grandsons?) are paying off the debts run up by our politicians over the last 35 years?

  5. Brian Taylor
    Posted December 6, 2012 at 9:57 am | Permalink

    With the 5% increase in benefits last year and the 1% for the next 3 years equals 8% over the 4 year period,not something those in work have achieved or are likely to achieve not in the private.
    If nothing was done it would be very difficult to make work pay.
    Have I mised the announcement about any incentives for Shale Gas?

  6. Richard1
    Posted December 6, 2012 at 10:44 am | Permalink

    Further support for the Laffer Curve, which its deniers should note, is the fall in revenues from capital gains tax. The increase from 18% to 28% has led to a fall in CGT revenues received, even though the period in which the higher rate applied has rising stock markets and property prices.

    Labour should decide whether they are Keynesians or not. it seems very perverse to be in favour of more public spending to boost demand but at the same time favour higher taxes.

  7. Acorn
    Posted December 6, 2012 at 10:50 am | Permalink

    “As things stand, Britain is going bust. This was the first message that George Osborne didn’t – couldn’t – deliver today. The second, equally-undeliverable verity was that most of Britain’s problems have been self-inflicted” says Dr Tim at Tullett.

    I am having difficulty trying to recognise Osbo’s numbers in the published data. There is much conflicting data being processed in different ways to make government fiscals look good. But the truth is even more opaque now than it was ten years ago. Simon Rogers at the Guardian Data Blog is having the same problem; even with his team of professional number crunchers.

    As he says, the true numbers come out of the departmental resource reports (supposedly). They are supposed to be in a standard format but they are not. They should all be available in spreadsheet format for people like you and me to play with, but they are not. Some don’t even get published when they are supposed to be. Even Cabinet Office minister Francis Maude, head of government transparency can’t get data into transparent formats. Frankly, it is all smoke and mirrors with this coalition; all flash and no bang. And, if you know anyone who ever got anything useful out of the COINS database, please let me know.

    One thing this coalition did get spectacularly right was its demoralising of a whole nation with its doom and gloom blaming the previous bunch. “Biggest peace time deficit”; “largest ever national debt”. “Let us compare that with what Labour left behind: a trillion pounds of debt for the first time ever, the largest deficit in the G20 and in our peacetime history, and the deepest and longest recession in the G20”. Two years of that sort of sermonising has done more damage to the British psyche than the Luftwaffe ever did.

    • Acorn
      Posted December 6, 2012 at 4:29 pm | Permalink

      Can you keep a secret!!!

      You know how grown-ups tell you when you are a kid that there is a Father Christmas. Well, when you start working they tell you that the taxes you pay buy stuff like hospitals and schools and grannies pension. It’s not true either. All the taxes you pay to the government disappear into the ether from whence they came. That fiat money the Government and its Central Bank created out of thin air, goes back into thin air as taxes.

      The government always spends long before it taxes. If it didn’t, you wouldn’t have any fiat money to pay your taxes with; geddit! The funds to pay taxes and buy government securities come from government spending. Taxes function to regulate aggregate demand, and not to raise revenue per se.

      • Acorn
        Posted December 6, 2012 at 5:56 pm | Permalink

        Sorry to be a nuisance today but you need to know this, I reckon, before you go to your next ballot box. Osbo’ has pencilled in a budget deficit at next election year of 4.2 % of GDP and 2.6% for the first year of the next bunch of lobby fodder. Now, the government has to run a deficit of around 3% of GDP to pay for our imports; otherwise, the private sector Households and Corporations have to start spending their savings or borrowing from the banksters to pay for them. Or, we just stop importing them BMWs and them 60 inch plasma TVs. (I am assuming that there will still be some solvent banks around, that have not drowned in their own toxic loan pools).

        If Osbo’ s predictions are correct ……… [pause for laughter] ………, the year after the election, is when (things go wrong). I thought you should know that. 🙁 .

  8. Denis Cooper
    Posted December 6, 2012 at 10:50 am | Permalink

    Of course you do realise, JR, that the arguments of the Labour party only have traction with the public now because the Tory party abysmally failed to explain the seriousness of the government’s financial position in the year leading up to the general election?

    When the Labour government was having to borrow a quarter of all the money it was spending, and could only do so because the Bank of England was using newly created money to rig the gilts market; and yet Osborne preferred not to hammer this home to the voters because he thought he might want to do the same thing, as indeed he has since done to the tune of another £175 billion on top of Darling’s £200 billion.

    • Denis Cooper
      Posted December 6, 2012 at 1:05 pm | Permalink

      Too close to the bone for timely moderation?

      • JimF
        Posted December 6, 2012 at 6:07 pm | Permalink

        It really does become apparent that this is a tweedle dum tweedle dee situation with each party carrying the can for a few years, with the added *benefit* of the Libdems this time around. Tories now concede to 5 years of Labour who will in turn concede to five years of Tory.
        The financial Levee has to break for this to change.

  9. David Jarman
    Posted December 6, 2012 at 11:24 am | Permalink

    It’s ONLY the politicians that borrowed the money and made the mess, so why should the public be made to bail them out? When people finally wake up and realise what Iceland did was so right we will have our corrupt politicians arrested for bailing out private banks with public money, huge amounts of debt will be written off (Iceland mortgages anything over 110%) and then our economy will begin to boom like ICELAND now is. You want to talk about fairness so explain to me after all the mess MPs have made why are they allowed to claim £160/week for groceries? They are pure filth!

  10. Bill
    Posted December 6, 2012 at 11:27 am | Permalink

    I am reading Chris Mullin’s diary, A View from the Foothills, about Labour’s period in office 1999-2005 and the astonishing thing is that, even when the benefits bill was being pushed up and up, he kept running across people complaining that the government was not doing enough. It is like the NHS: it is a bottomless pit. What we need to do is to restore a sense of entrepreneurial reality. Burgeoning bureaucracy equates hard work with slavishly following procedures evidenced by form-filling. We need to see that work has to have a social and commercial utility and to understand once again that ‘profit is the reward for risk’.

  11. David John Wilson
    Posted December 6, 2012 at 12:45 pm | Permalink

    I do not understand why the government does not adopt a policy of raising the minimum wage over a number of years so that it corresponds to the minimum living wage. Much of the cost to employers could be found from removing the employers’ NI contributions from the lower end of wages. This in turn would be met by the reduction in benefits and increase in tax that would result from the rise in wages.

    The reduction in NI contributions will have the added benefit of encouraging employment.

  12. adams
    Posted December 6, 2012 at 1:02 pm | Permalink

    Keep calm everybody . Just keep voting LiblabCon and go down the debt plughole with some decorum .

  13. Rebecca Hanson
    Posted December 6, 2012 at 1:10 pm | Permalink

    And they’ve also decided that PRP is good idea in teaching.


    How many times have politicians decided this?

    • forthurst
      Posted December 6, 2012 at 2:14 pm | Permalink

      glossary, please

    • Lindsay McDougall
      Posted December 6, 2012 at 2:40 pm | Permalink

      The trouble with PRP for teachers is that you first have to determine the quality of the pupils, in order to know what is achievable. It isn’t nasty Right wing b______s like me who refuse to carry out the necessary IQ and aptitude tests. It’s bigoted ‘liberals’, that’s who.

    • Edward
      Posted December 6, 2012 at 3:58 pm | Permalink

      I’m taking PRP to mean, performance related pay for teachers and lecturers Rebecca.
      Im all in favour of this. It is long overdue for areas like health and education.

      To have my pay negotiated for me, controlled centrally and set the same wherever I worked and whatever standard of work I did, seems very odd to me.
      But then Ive worked all my life in the highly competitive world of manufacturing for small companies.
      I am now self employed, the ultimate PRP situation!
      I would have thought that PRP fits well with acadamies and free schools.
      But I’m sure you will have your view!

      • uanime5
        Posted December 6, 2012 at 6:21 pm | Permalink

        You do realise that PRP means bad schools won’t be able to get good teachers because going to a bad school means a permanent pay cut.

        • Edward
          Posted December 6, 2012 at 10:55 pm | Permalink

          Or, the incentive might encourage them raise their standard

          “The bad schools” as you describe them, would be free to attract exceptional teachers with higher salaries if this scheme was in place.

          You are just so negative….. uanime5

        • David John Wilson
          Posted December 7, 2012 at 12:18 am | Permalink

          This is not true. They are talking about PRP as a result of appraisal. If implemented properly this means that good teachers in poor schools should still receive their rises.

          I have been involved in this system in private industry. Yes, poorly performing departments were restricted in the amount of money they had to distribute. However a significant improvement in performance was duly rewarded and the better staff often benefitted significantly.

          • Credible
            Posted December 7, 2012 at 8:30 pm | Permalink

            In teaching, the performance standard is not necessarily correlated with the standard of teaching. It depends on the demographic of the area.
            It’s easy to teach in a private school that makes sure no dissruptive, special needs or low IQ pupis attend. Not so easy to teach in a comprehensive in an area where aspirations are generally lower and anyone can attend.

  14. backofanenvelope
    Posted December 6, 2012 at 1:40 pm | Permalink

    The last couple of days have encapsulated the madness that has engulfed our political class. Osborne spells out how we are in trouble till the year dot. His forecasts are always wrong – why bother to make them? At the same time, two ministers, one of each party, announce in Doha that we are going to give TWO BILLION pounds to various African countries to build windmills plus 1.5 million to Colombian beef farmers. Probably anal plugs to stop them farting. The cattle, not the farmers. I have given up ranting over the breakfast newspaper – too busy pumping out gales of laughter!

  15. Lindsay McDougall
    Posted December 6, 2012 at 2:27 pm | Permalink

    Agreed that a more affordable state is necessary for economic success. I wonder:
    (1) Why there weren’t bigger reductions in the 2011 and 2012 budgets; and
    (2) When America is going to run out of road – can’t be long now.

  16. Pleb
    Posted December 6, 2012 at 2:58 pm | Permalink

    The government has nothing of its own.
    Anything they give to you has been stolen from somebody else.

    • Bazman
      Posted December 6, 2012 at 8:02 pm | Permalink

      Like infrastructure?

      • Edward
        Posted December 6, 2012 at 10:59 pm | Permalink

        Could have been provided by the private sector in the first place, but using money taken in tax from citizens and eventually after a big proportion is removed in admin cost the rest is returned to the private sector who then finally build “the infrastructure” with the money thats left

        • Bazman
          Posted December 7, 2012 at 2:26 pm | Permalink

          The gap cannot ever be filled by the private sector in a modern economy this applies to all countries and time and time again the private sector fails to deliver. They are no sat on billions from the boom and doing nothing. You blind belief in billionaires to save us from poverty is the very cause of it.

          • Edward
            Posted December 7, 2012 at 4:53 pm | Permalink

            Where did I say anything about billionaires?
            We live in a mixed economy with a public and private sector working together and it will always be that way.
            There is a political argument about their relative sizes and what each should be doing.
            I dont have “a blind belief” in the private sector being perfect in everything it does, nor it being the solution to everthing.
            But it would be nice to see you agree that the public sector isn’t always such a brilliant and efficient provider of services either.

  17. zorro
    Posted December 6, 2012 at 3:16 pm | Permalink

    John, did you just post another blog and then take it away or am I seeing things?


    reply No I did not intend to post another blog.

    • Brian Tomkinson
      Posted December 6, 2012 at 6:28 pm | Permalink

      I saw it too and then it vanished.

  18. Daniel Hewson
    Posted December 6, 2012 at 3:31 pm | Permalink

    John if you were serious about wanting to raise more revenue from the rich you’d support bringing higher council tax bands, mansion tax or best of all land value tax, I’m sure you could have done a deal with the lib dems to cut the top rate of tax to 40% in exchange for mansion tax or higher bands, it would please both coalition partners & I suspect, the electorate.

    reply: I do not agree.I have set out the evidence before on how to tax the rich more.

    • David John Wilson
      Posted December 7, 2012 at 12:25 am | Permalink

      Higher council tax bands would not only raise revenue at no extra cost once implemented. Some of the revenue raised could be used to decrease the council tax paid in the lower bands thus reducing the need for housing benefits. Land value tax or mansion tax have the huge disadvantage of increasing red tape.

  19. Edward
    Posted December 6, 2012 at 3:42 pm | Permalink

    The Insitiute for Fiscal Studies recent report says an extra £27 billion will now have to be found due to falling figures and that £7billion would probably come from higher taxes.
    I suppose the Government hasn’t thought of reducing spending instead?
    They have boxed themselves into a corner by repeatedly saying Education, Health and Foreign Aid are sacred and with ethese 3 areas accounting for over 40% of spending, big cuts will have to be made in the remaining areas.
    And it is becoming apparent that rises in taxes are having a depressing effect on the economy and rebounding on the Government with less than predicted revenues.
    This is becoming a vicious circle which some brave leader needs break.
    Is there anyone out there?

  20. Reaguns
    Posted December 6, 2012 at 3:48 pm | Permalink

    Two ideas.

    1. Instead of increasing benefits by inflation, which is far too generous compared to working people, or by 1% which seems acceptable now but if it causes hardship and crime may be used against the Conservatives later, why not increase benefits by the Inflation Target, ie 2%. Wouldn’t this be a wonderfully educating and incentivising approach? People would then put pressure on Mervyn King and co to keep inflation below 2%, or to explain themselves if they didn’t. Too many people currently think inflation is painless.

    2. Instead of workfare where we have a fascist/communist forced labour policies, of the sort that all socialist states must eventually resort to in order to get people to accept jobs, and instead of a system where you just collect dole without making any effort to follow a disciplined routine and improve the chances of working, why don’t we set up training centers (using existing buildings) and fit them with factory style clock card systems and make people attend for 2 days a week, starting at 9am, and they have to clock in on time and stay for 8 hours both days, doing whatever training activities we can provide them. This way its not forced labour, but it does interrupt a life of drinking and slobbery and enforces some effort and discipline, yet will be hugely beneficial for the claimaint?

    • uanime5
      Posted December 6, 2012 at 6:31 pm | Permalink

      Workfare is a right wing way to ensure that companies have access to cheap labour in order to produce greater profits. That’s why it wasn’t used in Communist countries.

      The problem with 2 is that it will only work if you’re training people in something they want to do and they’re developing skills that employers want. After all if the skills are useless or people don’t care about them all you’ll end up with a demotivation factory, which will make people less willing to work.

      What’s most likely to happen is that people just go into a “training centre” sit around doing nothing for 8 hours, then leave without having learned anything; which is exactly what happened when Labour introduced the New Deal. I guess it’s not forced labour when there’s nothing to do.

    • Bazman
      Posted December 6, 2012 at 8:01 pm | Permalink

      This nonsense assumes that most benefit claimants do not work. Many of the poor cannot get enough hours in their low paid jobs to make a decent wage. This idea that the unemployed could be forced to attend centers for training at no extra cost is just silly. The 1% being far to generous I suppose is to make them more desperate and desperation will create more jobs. How much do you think dole pays without any housing or council tax benefits? It’s £71. Do you relive this is to generous for one week? A banker on 250k will get a 5k pay rise next year due to the tax changes. Austerity for who? The ones striving to get enough work it seems. If you want to get serious with you retarded arguments then lets see them. In the meanwhile. Ram it

  21. Credible
    Posted December 6, 2012 at 4:05 pm | Permalink

    You made a typing error. Your first sentence should read.
    “The politics of the Autumn Statement once again are about unfairness.”

    You say “The best way to get the benefits bill down is to get many more people back into work.”
    Not if the work doesn’t pay a living wage. It just moves people into poverty. If benefits are cut in real terms – it just means people will move into poverty from poverty but work for the privilage (or continue not to). We should aspire to work and for society to work, but it needs to pay sufficient to live on. How about you give living on the minimum wage a go for a couple of months?

    You quote the increase in pay since 2007. Might it be more meaningful to look at the figures since 2009/2010.

    • JimF
      Posted December 6, 2012 at 6:12 pm | Permalink

      Doesn’t make sense.
      If more people are doing productive work instead of sitting on the sofa collecting benefits there just has to be more economic cake to spread around.

      • Credible
        Posted December 7, 2012 at 8:38 pm | Permalink

        It doesn’t make sense for someone to do a job that doesn’t pay enough to pay for accomodation, heating, food and clothes for their family. Would you do that job? Thought not.
        This government isgoing to reduce the incomes of poor people in work. Shame on them.

  22. Barbara
    Posted December 6, 2012 at 6:09 pm | Permalink

    I agree with the help for businesses, that should help unemployed people and companies, and the investment arm that as increased. We need growth urgently and we should encourage all avenues to get it. However, when it comes to the unemployed, some have worked but been unfortunate to lose a job after many years, that’s different from the hard core who have never worked. So, demonising all in the same predicament is wrong. This government is doing that by its stance on benefits. I agree we cannot keep upping benefits we have to draw a line, but the language this government is encouraging people to use is discrimatory.
    While they insist on keeping 7% of GDP for foreign aid their arguement is flawed. Its not their money but talk about a moral duty to contribute. Yes, but why so much? Why not the same amount as Germany which is far less. We taxpayers whether young or old have to furnish this policy with what we contribute, and it’s ‘morally’ wrong to spend money on foreign shores while our own citizens are in need. This coalition has no mandate for such a policy, its a policy to suit Mr Cameron’s will, and when he meets his counterparts abroad he can look them in the face and say he kept his promises. Its a pity he does not keep them for the electorate who voted for him and those who pay for his idea’s, the taxpayers. No, I’m sorry, this budget is a good attempt at fairness, but it fails with foreign aid, and the bluntness against our own citizens is a disgrace. Charity begins at home. We don’t have any moral duty to foreign shores while they amass, armies, navies and missiles in some states this government supports. In fact we owe them nothing, and I don’t feel we have to think or believe we do.

    Reply 0.7% not 7%

  23. uanime5
    Posted December 6, 2012 at 6:12 pm | Permalink

    John can you name any of these taxes that the coalition have raised on the rich? Taxes that effect the rich and poor more or less equally don’t count.

    John as you yourself pointed out the City bonuses have collapsed and people in the City are making much less money than a few years ago. Lower salaries are most likely why top earners are paying less in tax revenue.

    Finally as many people who work claim benefits (particularly housing benefit which has been rising rapidly due to rising property prices) getting more people into work will have a minor effect on the benefits bill unless these jobs pay a living wage.

    Reply Hiking Income tax from 40% to 50%, CGT from 18% to 28%, VED on bigger cars, Air Passenger duty to catch people who afford lots of foreign holidays, substantial reduciton in tax relief on top end pensions etc

    • Credible
      Posted December 7, 2012 at 8:41 pm | Permalink

      You seem to be confusing what the previous government did with what this government is doing.

  24. Steve Cox
    Posted December 7, 2012 at 6:39 am | Permalink

    Welfare spending is the largest part of the budget, and people rightly identify it as the most likely area in which to find substantial savings. However, pension payments form a major part of the total welfare budget, and yet the government has pledged to increase pensions by 2.5% or inflation, whichever is higher. Was this a wise move? I wonder if Mr. Cameron is now regretting such largesse?

    One way of keeping the potentially vote-winning 2.5%+ indexing while cutting the welfare budget significantly would be to start means-testing the state pension and universal entitlements such as free bus passes and winter heating allowances. Mr. Cameron has, perhaps unwisely, again promised that this will not happen during this Parliament.

    It seems that whatever options you come up with to reduce the deficit, the government has already ruled them out. This is another reason why I have never believed that the coalition is serious about cutting public spending t0 any significant extent. Just like their Labour counterparts, they are simply too addicted to it. Everyone knows that the current status quo on spending is untenable and unsustainable, the question now becomes when and how will it blow up in the government’s face.

  • 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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