Where is all this money going to come from?

HelpWhereIcan

all those 'safe gilts' that investors pile their money into when the stock market looks rocky

http://www.incademy.com/courses/Gilts-and-bonds/What-are-bonds/3/1067/10002

oh the irony

Gorgeous_George

neverdespairgirl wrote: »

£23 for every single person in the country sounds like a hell of a lot to me!

Me too - but it isn't money lost. It's spent on trying to help people and the country out of a mess made largely by World events.

I know it's in vogue to bash the Government (any Government) but the truth is, something needs to be done. I believe it is better to do the wrong thing for the right reasons than to do nothing.

Many Governments would do nothing and lose a lot more than £1,400M. I'm not saying the plans outlined today will work and I'm not saying I support them but, I support the Government's right to try to help a large number of its people.

GG

Generali

neverdespairgirl wrote: »

£23 for every single person in the country sounds like a hell of a lot to me!

As at 31st December 2007, the national debt was £618,800,000,000 which equates to about £10,500 for every man woman and child in the country or about £20,500 for every person currently working in the UK.

Last year the national debt rose by ~£40,000,000,000. This year (excluding Northern Rock and any other bank bailouts) expect it to rise by more like £45-50,000,000,000. That's about 750 quid for each man, woman and child alive today. My eldest is 3 years old. He could expect that to be worth maybe £3k in a savings account by the time he's 23 and perhaps looking to buy a little flat.

If you include unfunded liabilities the National Debt is closer to £1,500,000,000,000 (a conservative estimate not a Conservative one though) which is £25k or about a full year's gross income for the average working man.

Californication

fiodyl wrote: »

So far today I have read the government will be spending

• £300 million on loans for FTBs
• £600 million on a stamp duty break
• £200 million for councils to buy repossesions
• £400 million on new council housing
• £100 million on ISMI payments

Where is the money for all this spending going to come from? Did Gordon Brown win the Euromillions Lottery?

• £300 million on loans for FTBs
• £200 million for councils to buy repossesions
• £400 million on new council housing

These three come from the social housing budget which is already accounted for. The spending is being brought forward.

The 600M is based on the government's previous projections for house sales so is wildly over estimated.

The mortgage interest payments changing from 39 to 13 weeks appears to be unfunded.

The govt estimates of the tax take over the next few years look wildly optimistic anyway..... we have a problem

Generali

Californication wrote: »

• £300 million on loans for FTBs
• £200 million for councils to buy repossesions
• £400 million on new council housing

These three come from the social housing budget which is already accounted for. The spending is being brought forward.

Have I missed something or is that a euphemism (sp?) for borrowing?

Next time I say to Mrs Generali, "It's ok, we're only going out for a quick pint" and I roll in at 1am I'll tell her that I brought my drinking forward from the office Christmas party.

Californication

Generali wrote: »

Have I missed something or is that a euphemism (sp?) for borrowing?

Next time I say to Mrs Generali, "It's ok, we're only going out for a quick pint" and I roll in at 1am I'll tell her that I brought my drinking forward from the office Christmas party.

But it would always have had to be borrowed, so there's no net increase in future borrowing due to the proposal, assuming that the govt wouldn't have cut back on the social housing budget in a future downturn.

It may not be socially efficient, since the money would have been spent on social housing and will now be used for headlines ahead of the next election.

Compared to the scenario in which the govt committed themselves to additional billions of unfunded borrowing, today's news would seem to be the minimum that an unpopular govt would do. I still think there's a good chance they'll announce much larger unfunded borrowing in the pre-budget report.

--C

Generali

Californication wrote: »

But it would always have had to be borrowed, so there's no net increase in future borrowing due to the proposal, assuming that the govt wouldn't have cut back on the social housing budget in a future downturn.

It may not be socially efficient, since the money would have been spent on social housing and will now be used for headlines ahead of the next election.

Compared to the scenario in which the govt committed themselves to additional billions of unfunded borrowing, today's news would seem to be the minimum that an unpopular govt would do. I still think there's a good chance they'll announce much larger unfunded borrowing in the pre-budget report.

--C

My experience is that the Government will spend this money today and the money again tomorrow. It's our money, not theirs.

I agree that there are likely to be huge amounts of unfunded spending commitments put forward in the next budget or 2. The worst thing is that the Tories will almost certainly say, "We'll match Labour spending plans".

Generali

While I'm thinking of it, how is the ISMI increase going to be £100 million when many estimates are that a million more people will be on the dole pretty soon, the majority of whom will be looking for the taxpayer to cover their mortgage payments? That works out at £100 in mortgage interest for each new welfare recipient.

harbinger13

Gorgeous_George wrote: »

Many Governments would do nothing and lose a lot more than £1,400M. I'm not saying the plans outlined today will work and I'm not saying I support them but, I support the Government's right to try to help a large number of its people.

GG

Would differ here - lets compare US and UK.
Both have faltering house markets - what has US done; it has NOT subsidized the housing market by throwing in Free loans as UK did now. Instead it drastically threw in money, via interest rate cuts. So who borrowed the cheap money - mostly it were the banks and investment banks to shore up their ends. However the common man is still waiting in the side lines to borrow - probably in sometime for a house. Those people who were in debt - jingle mailed and got a bad credit history in their name and left. The Tax cuts which the Govt gave went directly into the pockets and thus the economy survived for sometime at least. There is no huge loss for the Govt - the loss is for the banks who got the jingle mail or those individuals who still own the houses and are paying into a negative equity. So in effect the loss is borne by the sinners and the house prices continue to deflate. After a while it is good for everyone.

Moving to UK. Firstly the BoE governor is too old fashioned. He took a stance to kill inflation rather than shore up the economy. So interest rates remained where they are, piling misery on the strained highly leveraged house owner to continue to pay higher mortgages. He is still following Keynes rather than following Ben. Next the Govt wants to prop up the fledgling house sales to save the ... donno whom, probably the EA's/Mortgage agents and House Builders. So they are trying give sops to current owners of part own and part rent - which means when the council buys the part of the house, they have to pay money to the current owner - some part of the house equity. So that money is coming out of the tax pocket. Next the Govt is planning to 30% free loan - though there is less details - here is what I guess will come out in the fine details. Already the interest is free, but there will be NO principle collected either; essentially it is HELICOPTER MONEY. That money for 5 years will neither collect interest nor collect itself. It is TAKE HOME ONLY loan (THO) - in similar light to Interest Only (IO). Brilliant. As Deep Throat says in 'All the Presidents Men' (Watergate scandal), 'follow the money' to solve the mystery. So an average household earning less than 60K will hopefully in sane borrowing terms, sticking to the 3x LTV, take a 180K loan. Now the EA/Mortgage Agent will say - look the Govt is giving 30% free loan, so that would mean 30% of 180 is free - 54K, so why dont you add that part to your home affordable limit - so the FTB is going to search for a house of 180+54 = 234. Why this calculation - the EA/Mortgage Agent justifies that he did not do any predatory lending - all he did was instead of subtracting the sop by the Govt from sane LTV of 3x - he added it to sell a better house *at the same money* - money which is free can be either added or subtracted, its value is still 0. This equates 54K is worth 0pounds. So who gains this 54K - as it would go as mostly downpayment, it will reach the Builders who are strapped of cash and loaded with Rabbit holes called flats. This way they get a lot of money - which they would NOT have to borrow from BoE, paying top interest. They get out of Jail free - and watsmore they put the Tax Payer in Jail.

Fastforward to 5 years - those FTB's who bought the houses during this Govt sponsored Free loan period - would have probably NOT saved the 30% either - because they would have seen the false equity of the house rise and when the Govt asks for Money they will put up an angel face and smile and if the Govt tries to act tough they will show their ire in Polls. It will NOT matter which Govt is in power Labor or Conservatives - the 30% is GONE WITH THE WIND.

It just goes to show what governance is - US is supporting its economy with good solid timber by slashing rates, yet letting the house rates fall - while UK is trying to hold an economy with two chopsticks high above the ground - by not slashing the rates and not letting the house rates fall. One can only hold for so long - after that ..... crash.

fiodyl

Is it an extra £100m on top of what there is already a budget for?

Also at the moment they only pay on he first £100k but if you are already on it and have a £175k mortgage will they start paying the extra after april?- or is it just new claims after april?