Apparently when Mr Osborne says he has halved the deficit as a percentage of the economy, he is according to Labour wrong to mention that true figure. He should concentrate on the cash figures, which show the deficit down by one third.
So why then does Labour bang on about the Conservative spending plans for the next Parliament, and claim wicked cuts to get it down to 35% of GDP? Applying their own latest logic, they should accept that Mr Osborne’s plans for cash public spending show further gr0wth of ÂŁ40bn a year by the end of  the next five years. Fair’s fair. If it’s cash we are using, then Conservatives plan rising spending next Parliament.
January 2, 2015
Logic is not as logical as one thinks. Can deficit reduction and spending be equated as easily as you suggest ? I am not saying that it cannot , but asking a genuine question.There again, both parties figure situations to the interest of their own party.
January 2, 2015
Well said Dennis. Do you mean like our hosts reply to a blog yesterday? He was also not goin to let matters rest there. Taking into account his strong warnings of the Lisbon Treaty and what it would mean to the country. It appears perfectly reasonable to think he had ratted on what he wrote and said. Moreover why give away fundamental rights of EU citizens when implementing the EAW when he did not have to, and he prevented a debate when he said he would allow one in parliament. Like the ÂŁ1.7 billion con he tried to spin to the public recently or the guarantee not to promote closer union when he gave away another ÂŁ18 million pounds of taxpayers money to do exactly that. JR was present at the debates and must realise Cameron did not keep his word. The public do not believe a word he says.
January 2, 2015
Aiming for any specific deficit figure is an absurd objective. The deficit / surplus needs to be whatever maximises employment without exacerbating inflation too much, as indeed Keynes and Beveridge pointed out almost a century ago. And since no one knows how confident or spendthrift consumers and businesses will be in two years’ time, it’s ludicrous to think one can predict what the optimum deficit will be then.
A better objective is to keep interest on the debt near zero. Even better: keep the REAL or INFLATION ADJUSTED interest on the debt negative (which is where is was between about 2011 and 2013). That way, the government profits at the expense of its creditors. So if interest on the debt creeps up, the remedy is to print money and buy some of it back: i.e. do some QE, and if necessary, counteract any inflationary effect of QE with increased taxes. That will cut interest on the debt.
January 2, 2015
serial cutting of rates prices out all capital financed at the previous higher rates ie ALL capital up to that point. The result is a decimation of productive industry.
but Keynesians show no sign of understanding that, so onward we plough to oblivion.
if the road to nirvana was as simple as cutting rates and printing money, then we can all celebrate the end of economics. There would be no economic problems left to solve. Keynesians cannot even fathom the absurdity of their diktats.
January 3, 2015
I’m baffled as to why interest rate cuts result in the “decimation of productive industry”. If a widget producer can make X widgets a year when paying 10% on money borrowed to fund his factory, then he’ll be able to sell even more if rates drop to 5%.
January 3, 2015
I can’t recall Keynes ever saying printing or creating money way in excess of the growth of the economy was a good thing.
Nor did Keynes ever suggest running a permanent deficit was a good thing.
I can recall Keynes talking a lot about the need for balanced budgets.
January 3, 2015
Re your first sentence, I agree: Keynes indeed never said (far as I know) that “creating money way in excess of the growth of the economy was a good thing.” To be more accurate, he doubtless approved of such an “excess” for a short period (in a recession) but not for an extended period.
Re your final sentence, a budget that balances EXACTLY over an extended period just doesn’t add up. Reason is that given growth and inflation, the monetary base and national debt will shrink relative to GDP. And if the two latter are to remain constant relative to GDP (which they do roughly speaking in the long term), then they have to be topped up via a deficit. There’s no other way of topping them up. I.e. small non-stop deficits are unavoidable.
January 3, 2015
Sounds like a recipe to bankrupt savers and benefit borrowers, encouraging all to consume but nobody to invest. Why not work the other way round? Reduce taxes to the point where increased investment in the private sector provides full employment, but still allow those services which can best be run on a communal basis (maybe rubbish collection, national defence and police) to be supported from tax.
January 2, 2015
And failing to eliminate the deficit is something to be proud of? I am inclined to be supportive of the Conservatives on this point as I would be of a morbidly obese person who is proud to state that they are only now consuming half a bucket of fried chicken a day. John why have you got a rid of the green tree logo on the poster? Have you finally realised Cameronism was putting the voters off?
January 3, 2015
No, I am sure the magic money tree lives on, called Liblabcon policy.
January 2, 2015
Creative accounting by both sides I am afraid.
This is why the Country is in such a bloody financial mess, constant manipulation of the figures to best advantage to suit who is in power, or who wants power at the time.
Quite honestly any Government/opposition should be above such nonsense, but we are where we are.
As they say we have lies, bloody lies, and so called statistics.
No wonder that the General Public have a huge distrust issue with politicians, and thus do not vote at all.
January 2, 2015
Apparently 37% of statistics are made up!!!
January 3, 2015
and the other 65% of statistics are wrong!
January 2, 2015
Billions must be being spent (by the whole of the UK government) just trying to “massage” figures, spin & issue propaganda – on crime stats, the NHS waiting times and performance, schools, prisons, finance, inflation, growth ………
The public might far prefer this money to be spent doing something useful rather than trying to deceive them. They are not deceived anyway. Better still for the money to be left with the tax payers who would use it far better.
January 2, 2015
The government budget deficit is the difference between the government’s expenditure during a year and its revenues during that year, with all three of them being reported in cash terms, pounds, and the Tory party claim that the budget deficit has been halved since 2010 is therefore incorrect and misleading. That’s really all there is to it, no matter how much Tory supporters try to spin it otherwise. Oh, and likewise Cameron did not qualify the “cast-iron guarantee” of a referendum on the Lisbon Treaty that he gave in his signed article in the Sun on September 26th 2007, no matter how many times Tory supporters try to pretend that he did, and that treaty has not ceased to exist as a treaty, no matter however often Tory supporters try to pretend that it has … etc.
January 2, 2015
“Applying their own latest logic” – Labour and the left do not work by Logic they work with only envy and raw (usually totally irrational) emotions.
It would however be far better for the Tories not to incorrectly use statistics and phrases like “repaying the debt” or pretending they got a “50% reduction” on the EU surcharge, were “repaying the debt”, “had halved the deficit”, or were aiming to be “in the black” by 2018.
Perhaps they could just tell us their new plans for IHT after the ÂŁ1M threshold promise of six(?) years ago. Is the ÂŁ325k threshold just going to reduce over time with inflation and the government take 40% of everything?
Reply The Manifesto will reveal the answer I trust.
January 2, 2015
Using science to back up deluded opinions the rights pitch as we have seen with yourself and you selection of facts to suit you personal arguments and inabilities.
Laughablely telling us that most live on a salmon and steak diet being a corker and a failure to justify how payment by non earners of doctors fees will be made.
The envy exists with the rich thinking they are somehow hard done by. It is not envy to want a decent standard of living. Tax cuts for 4% of the population via IHT tax cuts tells us all we need to know about Tories and their followers as they increase taxes for everyone else in particular regressive VAT increases. IHT is a just tax and this is your problem with it.
January 2, 2015
The rich are indeed hard done by. They might pay perhaps ÂŁ200K PA in tax, generally use private schools and medicine and get virtually nothing of value back from the state at all. Total public spending per head is about ÂŁ11,400. This might not be too bad if the government spent the money sensibly, but they largely waste it.
January 3, 2015
They get nothing back from the state just their bins emptied? Really is this the crux of another of your deluded argument this time?
We live in democracy and the rich benefit most from this and should pay the most is the simple answer for the benefit of themselves in paying for and protecting these institutions. Third world countries such as you would like to see here via apartheid for the rich or an financial apartheid have great poverty for the many and vast wealth for the few ethnic and tribal groups.Needing little skill and wages to plunder mineral wealth and send it to rich countries on the other hand if you depend on building and developing high tech industries such as jet technology you need the whole country behind you. You find it acceptable that the poor should just remain poor and are responsible for their own poverty, but when you are caught in the open just go silent. What does that tell you? Watch and learn.
January 4, 2015
Bazman “You find it acceptable that the poor should just remain poor and are responsible for their own poverty”
No I do not think they should remain poor. They (the fit to work ones) should be trained and should have to get a job. The government should stop paying them not to work – as it is totally counter productive. They will not learn to earn money sitting at home watching TV all day. Nor probably will their children get much of an example.
January 4, 2015
Most benefits are paid to working people. The working poor not the idle feckless masses you imagine.
January 3, 2015
IHT is a just tax? It sounds good but think what actually happens:
Mr Billionaire arranges for resources well away from the UK to hold his wealth, then buys up a few houses in London on debt, which pumps up prices and (helped by Osborne) keeps the young Bazmans out of being able to buy.
Mr and Mrs Bazman have their 2 bed flat in London, but their children pay 40% tax over the IHT threshold. They have to sell it when Mr and Mrs Bazman die to pay the IHT. Another non-dom, billionaire buys the flat from the little Bazmans, so that flat is lost from the Bazman family and any other bona fide UK citizens for ever.
By encouraging high property prices and high IHT, you are driving us ordinary citizens into poverty, and encouraging Osborne and Co to do the same.
January 2, 2015
The Manifesto should say they will abolish inheritance tax on 8th May 2015, if you have earned money and paid up to 45% income tax on it then the balance should be yours to spend, invest, give away or bequeath just exactly as one wishes. They take 20% more in VAT off you anyway, when it is spent (by you or your beneficiaries).
It would make the UK a far more attractive place to be for the stivers and IHT does not even raise that much tax anyway on balance. It would also release lots of lawyers, accountants, HMRC staff, tax advisors and the likes to do something rather more productive with their time.
January 3, 2015
I’d much rather a significant cut in taxes on the living – VAT, fuel duty, stamp duty, increased personal allowance etc which would benefit far more people at all levels of income and wealth as well as businesses.
January 3, 2015
IHT does of course tax the living, the beneficiaries. The dead are clearly dead, you cannot tax them as they do not reply to letters and cannot write cheques.
The point is that people should know that they can leave their money just as they wish or give it away or put it into trust for children just as they wish to. Otherwise why bother earning and saving it?
It also, as I say, releases lots of IHT experts to do something rather more useful and people can arrange their affairs far more sensibly and easily.
January 4, 2015
You can gift money or put it in to a trust well ahead of death and so minimise taxes anyway. While removing IHT entirely would undoubtedly make things a lot easier for a few though increasing number of people, I don’t think it should be as high as a priority as reducing the tax load on everyone for everyday living.
I would rather not pay VAT, stamp duty etc and so be able to spend more on my child’s education, for example, than be able to leave a bit extra when I’m no longer around.
January 3, 2015
IHT does of course tax the living, the beneficiaries. The dead are clearly dead, you cannot tax them as they do not reply to letters and cannot write cheques.
The point is that people should know that they can leave their money just as they wish or give it away or put it into trust for children just as they wish to. Otherwise why bother earning and saving it?
It also, as I say, releases lots of IHT experts to do something rather more useful and people can then arrange their affairs far more sensibly, cheaply and easily.
January 3, 2015
Strivers
January 3, 2015
The idle rich. Or the idle majority for that matter. Where do they fit in?
January 4, 2015
They can be idle if they like but most are not. Managing money well is a full time job usually.
January 4, 2015
Managing money is not a full time job and not for the guy who I was talking to in the pub last night, a very sad man by his own admission with no purpose in his life who has not worked for three years. I put it to him he was very fortunate to have such wealth and privilege, but he said he lacked purpose and any direction. I bet there is a few more like him and your idea of giving more to those who need it the least and often cause the most damage is deluded. The only boats rising are yachts.
January 3, 2015
Yes or at least allow it to go into the pensions of the beneficiaries which have been serially abused by Brown and Osborne with their extra taxes and lower lifetime limits.
January 2, 2015
Never mind the deficit, it’s the debt we should be worrying about. That is real money and needs servicing.
When interest rates rise which they inevitably will, it will mean more cuts to pay the interest.
CMD says 1.75 million more in work but tax receipts are down and in work benefits are up. Where does that leave us from a deficit standpoint.
All 3 of the main parties think we are stupid but I’m afraid you have been found out and will pay in 4 months time.
January 2, 2015
Tax receipts are down because on balance the high earners are leaving (or rearranging their affairs) and low earners are arriving (other than for those who are NonDoms with their special tax regime).
Furthermore many wages are being held down by the EU open door immigration policy. Furthermore much of the wages are then often then sent abroad and spent and taxed there.
January 3, 2015
Don’t forget they are mainly down due to low wages which is what you support via no minimum wage and no employment rights. Whether these jobs are done by EU migrants or not they are still low wage. Revolving door jobs supplemented by benefits. The workforce and in particular employers subsidised by the state.
January 4, 2015
Giving people more employment right tends to depress wages as it makes them worth less to the employer they come with liabilities.
January 4, 2015
Not below the minimum wage though and as we have seen above that many employees refuse to work under these conditions leading the jobs to be filled with migrants looking for a foothold. Some of the jobs I have been interviewed four years ago are and have been flicked off due to wages and conditions, especially conditions, are still laughably phoning me up with the same deal! WTF! Just fishing more seriously. What else does that tell you? Landlord nonsense in a housing shortage as per. I own the title deeds to my house and myself. How do employers deal with that and me just walking through fire doors when I hear the conditions of employment? Not the only one with name like Bazman.
January 2, 2015
I’m pretty certain the complaint is not that he is using the ratio of Deficit to GDP at all it’s that he has changed from previously using in solely cash terms.
The spin coming from the Treasury is that he’s alway used the ratio when he talked about the deficit being reduced by 33% in 2013 debit the fact that the ratio had actually been reduced by 40% in that year.
It’s this sort of slippery spin that tries to pull the wool over voter’s eyes – and distracts from the Gov’s original promise to eliminate the deficit this parliament.
January 2, 2015
Exactly and it is counter productive spin.
January 2, 2015
JR. ‘The Manifesto will reveal the answer I trust’. I hope you will do your utmost to ensure that the manifesto and campaign advertising are written in clear, precise terms backed up by mathematics of the same standard.
January 2, 2015
They do plan rising spending as they have done whilst at the same time cutting many other areas. Massive costs in the NHS employing nurses through agencies and other cost cutting measures that cost a fortune. Don’t forget the economy was on the up when Labour left power and the Tory obbseition with cuts to the deficit via cuts instead of growth is the real problem. Million of none jobs created, as we have found out pay little tax and are expensive for the state. It ain’t rocket science and the Tories have spent more than Labour did in 13 years on these economic fantasies. Creating a massive deficit from sa small one. Don’t forget that it was not Labour spending that crashed the economy it was the bankers. What would we have got had Labour not taxed and spent these profits. Nothing as they would all be offshore like all these dogmatic beliefs they are expensive to the average person in wages and services.
January 2, 2015
‘Don’t forget that it was not Labour spending that crashed the economy it was the bankers.’ That is not how I read it.
1. Labour set the regulatory framework for banks, and so shares culpability with them.
2. Gordon Brown sold our gold off at a low point in the market, indicating a financial crassness not usually associated with the Scottish prudence he boasted about.
3. Labour, despite the advantage of being in government, did not foresee the crash while others appear to have done so (Cable?). Labour could have taken action to prevent an escalation of borrowing but instead it added fuel to the fire.
4. Labour was at its financial best in its first term of office when it kept to the spending plans of John Major’s government. This last seems to me to be the real killer. Once Labour was let off the leash the whole thing went wrong.
January 3, 2015
Labour set the regulatory framework for banks, and so shares culpability with them. They indeed do and so does the opposition. The bankers and their supporters crashed the economy this is the point. Any attempt to stop them would have been met with screams of blue murder. Your church was wrong and its priests still play the best golf courses. Any other ideology would be laughed at by you.
January 3, 2015
Gordon Brown pegged interest rates to the retail not property price index and thus created a spending boom based on booming house prices and consumer spending courtesy of too low interest rates.
We now know that the ‘ growth’ the Labour years was paid for by borrowed money. Far from ‘ending boom and bust’ he was running the world’s largest ponzi scheme. Productivity in the public sector nose dived, spending doubled and manufacturing industries fell by the wayside.
Despite a supposedly ‘booming economy’ and selling off half of the nations gold reserves Brown even managed to run up a huge deficit based on ludicrous notions that all money spent was ‘investment’.
Despite this, some fellows continue to believe it was all the bankers fault.
There is none so blind as those that do not want to see.
January 2, 2015
The answer JR, is that politicians from Government and Opposition are primarily concerned with remaining or becoming the ‘government’ The truth is not important.
Facts don’t win elections, scare-mongering does.
January 2, 2015
GDP is a funny number, it includes government expenditure. HMG could inflate it by throwing money down a hole.
I am a lot more interested in the impact of the deficit upon interest re-payments by the State, and upon the scale of the task any future government may face in paying down the UK’s debt. Unless tax receipts are closely correlating with GDP growth, a % of GDP figure is irrelevant to me.
There is also something a bit Brownish about the “Let’s stay on the road..” poster. A bold statement with small print to read (elsewhere). I wonder if it wouldn’t be better for the Conservatives to sound a little different to the former Great Leader, given you are about to contest an election with his apprentices. Time will tell I suppose.
January 2, 2015
The present day Labour Party are useless. What they really should be asking is why 35% of GDP, or any other figure, either expressed in terms of cash or GDP, has any special significance? It doesn’t. If the Government alight on arbitrary figures, as did the EU with their nonsensical Stability and Growth Pact, it just creates a ‘hair shirt’ for itself which itches all the more as targets cannot be reached.
If inflation becomes too high then taxes need to be raised and government spending needs to be cut. If businesses are failing, and unemployment is rising, then it doesn’t. That’s about it. How much more simple can it be? The key is to fine tune the economy to produce the desired result.
A healthy economy can support debt. In a healthy economy people wish to save. They bank their money and the bank buys government bonds/gilts. The big exporters wish to send us stuff and save the pounds they get in return. Their central banks are savers too and buy up the gilts. What’s the problem? The only problem is in our heads.
January 2, 2015
Apparently when Mr Osborne says he has halved the deficit as a percentage of the economy …
Sorry, John – have another look at the poster.
No qualification about the deficit being halved as a percentage of anything. Simply the statement that it has been halved.
Look at the poster.
You twist the words by pretending that the statement being touted makes the qualification clear.
You twist the meaning, which we have all now become accustomed to the Conservatives doing, enured to by them doing, and now come to expect is what they will do whenever they speak to the electorate.
Which is why your party can no longer be trusted.
January 3, 2015
Matthu
All of the Party’s twist the words and figures, this is not the exclusive right of the Conservative Party.
That is why it is difficult to believe any of them.
January 3, 2015
Exactly.
Come on JR, you’re supposed to be above this dishonesty and misrepresentation, not becoming a cheerleader for it.
Just because Labour and George Osborne have manipulated figures doesn’t mean you should be doing it too. I can’t imagine why anyone would want to base his standards of honesty on Gordon Brown, Ed Balls and Osborne.
Reply I am not a cheerleader for dishonesty!. I always make clear the basis of the figures I use. In this case you can either present it as cash or as a percentage of the economy. I have been trying to get all parties to use cash for spending without much success!
January 3, 2015
The Cameron group have taken a solid achievement in reducing the defecit and negated it entirely by trying to make out it is greater than it actually is through spin, something that was supposed to have been abolished by Cameron’s government.
The issue is the crass attempt at deception over what was promised at the time, no debate is needed over that. All this does is reinforce in people’s minds that Cameron is more concerned over how he appears than the reality which impacts the electorate and taxpayer.
The question is what is the Conservative Party going to do about it … perhaps that is the key subject for debate
January 3, 2015
This isn’t a debate about the deficit- it is about the Conservative party being so desperate for a good news story that it is willing to deliberately mislead. Ofcourse we had plenty of this from Labour – now that the Conservatives have been falling over themselves to copy Labour we shouldn’t be surprised they are up to their old tricks.
We all know that the term deficit is measured in cash terms – to then switch without qualification to a ratio of GDP is just laughable…but nothing surprises me anymore.
January 3, 2015
Silly attempts to deceive do Cameron and Osborne no good. This is not the first time they have tried it; previously they tried to confuse debt with the deficit. Probably they fooled some people but not all people. They need to be scrupulous in their use of language and definition of terms. Otherwise people will, and do, doubt whatever they say. As a pair they are not much better than Blair and Brown.
January 3, 2015
All numbers including GDP can be arrived at in various ways. Quite impossible for anyone not steeped in financial jargon and indeed inside knowledge to have any idea who is telling the truth.
Labour will be fighting “on the ground ” which in their terms means bombing neighborhoods with intrusive door-knocking attempting to frighten the old, the vulnerable, single mothers on benefits, that “The Tories Are Coming “.
In one local council by-election, the local Labour MP, the Labour MEP, the Labour Head of Council, Councillors from other towns and areas door-step campaigned seven days per week for three weeks. In this traditional Labour area, they won, increased their vote from the previous comparable election time slot by precisely ONE vote though their percentage share of the vote,- they cited as a significant increase. Labour is frightened of vulnerable, old, and unemployed voters, terrified. More voters are thinking out of the box.
In old style pay notes, showing gross wages, tax, NI, and other numbers it was “the bottom line” which was often stated by workers as being the only thing that really mattered. What money after all deductions is left.
Voters know their bottom line. They wish to hear their own story read out loud.
January 3, 2015
It’s funny how the accompanying poster shows a green empty field…..when the Conservatives have earmarked so many green spaces for ‘garden cities’, white elephant high speed rail lines and empty industrial parks . All to accommodate upwards of 200,000 extra people each year and create an impression of economic activity.
January 3, 2015
What do people expect from the team of Balls, Miliband and Brown, who left the country broke. This is what every multi-term Labour Government has always done and will do again if they get anywhere near the levers of power again!
Miliband when it comes to understanding economics seems to be on a par with Hollande in France and look what a stagnating basket case their economy has become! Make the top rate of tax 75% and surprise, surprise most of the dynamic entrepreneurs have moved elsewhere with their businesses, especially to London. How many are likely to move back now they have tasted our much more light handed business regulations and lower levels of taxation?
Lets not also forget Miliband’s disastrous Climate Change Act which is going to have to be reformed or long term it will bankrupt the country!
I give credit where credit is due where I though after 2010 that the deficit reduction should have been faster, but in reality George Osborne reduced the growth of Government spending as fast as was possible and removed 1m people from the non-product Goverment sector to the productive part of the economy, so although we had zero growth, this is the best we could have expected without making the economy worse. On the Continent where they had higher tax rises and higher levels of relative austerity the resultant recessions / depressions, left governments chasing their tails when it came to meeting deficit targets with Greece and Spain being the worst examples.
The result is that we currently have the highest growth in Europe and the second highest after the US in the western world.
IMO the FCA still doesn’t seem to be much better at financial regulation with their cover-our-backs box ticking mentality. I hope the BOE is doing a better job regulating the banks?
Your poster I took to meaning Cameron is taking us on the road to nowhere, where IMO he lacks the vision to make even an average leader.
January 3, 2015
Sad to say John, I’m not very impressed by the ‘road into the distance’ advert. I though it represented the ‘road to nowhere’; however I read that V. Cable has called it the ‘road to hell’ – a sentiment I that can also understand. Of course Cable’s road would be a shorter road to hell, but that is another matter.
For those of a more morbid viewpoint (and who know their Second World War history) it could be the road to the Eastern Front.