Tory cuts could be mighty unpleasant

Sir_Humphrey

Thrugelmir wrote: »

One of my grandfathers worked for Tate & Lyle on the Isle of Dogs for nearly 30 years. If you saw him today, as he looked then, he would look 90 rather than the 64 when he died. He never saw retirement........

My grandparents worked in factories. One of my grandfathers died at 65 (at least he was able to take voluntary redundancy a couple of years before). The other suffered a major disability before retirement, although that was consequence of smoking rather than work. I also had coal mining relatives, although they passed away before I was born (in one case due to blacklung).

If you look at footage from the pre-Welfare state days, it is shocking how aged relatively young people looked.

Spiv_2

Martin Wolf's view on the timing of cuts

In sum, the UK is right to plan for a structural fiscal tightening of at least 8 per cent of GDP. But it is unnecessary – and almost certainly a huge error – to implement such a tightening in short order. What is needed instead is a set of structural reforms that are sure to deliver the tightening over an extended period.
Mr Osborne insists that a recovery will only follow when “you show the world that Britain can pay its way”. But with 10-year UK government bond rates at a mere 3.4 per cent, it is perfectly possible that much of the tightening can be delayed until the recovery begins. What matters is the credibility of the new plans, not the urgency of their implementation.

FT


So who does think Cameron & Osbourne are right

Thrugelmir

Spiv wrote: »

So who does think Cameron & Osbourne are right

This is merely the opening sparring rounds. The real policies are yet to follow. At least they've created a debate. Something which has been sadly lacking.

LauraW10

Spiv wrote: »

Martin Wolf's view on the timing of cuts

FT


So who does think Cameron & Osbourne are right

Well - none of these!

Opinion on cutting now is stacked against Cameron and Osborne:

• Paul Krugman (Economics Nobel Laureate): “Renouncing a fiscal stimulus when private spending is contracting is strange. Governments have very few tools at their disposal, and Cameron wants to not use them.” [asked if our recession will be much worse if we follow Cameron's advice] “Yes. For sure.” (Independent, 30/01/09)
• David Blanchflower (former member of the Bank of England’s MPC): “It is not hard to work out that, with unemployment rising fast, it isn’t the right time to cut public sector jobs, wages or public spending for that matter. These are automatic stabilisers. Mr Osborne, I really don’t know which economists are advising you on this brilliant strategy to increase unemployment…” (New Statesman, 24/09/09)
• Dominique Strauss-Kahn (MD of the IMF): “Unwinding the stimulus too soon runs a real risk of derailing the recovery, with potentially significant implications for growth and unemployment […] Exit policies should only be launched once there are clear indications that the recovery has taken hold and that unemployment is set to decline.” (Times, 4/09/09)
• Richard Lambert (CBI Director General): “One thing is clear. Rapid moves to cut spending or raise taxes would be a big mistake – the economy is still much too weak for strong medicine.” (Speech to CBI summit, 16/06/09)
• Angela Merkel: “We must do everything to avoid repeating what the Americans did at the end of the 30s – namely to wreck the small upturn then visible by retrenching too soon.” (Telegraph, 28/09/09)

Thrugelmir

LauraW10 wrote: »

Well - none of these!

Angela Merkel: “We must do everything to avoid repeating what the Americans did at the end of the 30s – namely to wreck the small upturn then visible by retrenching too soon.” (Telegraph, 28/09/09)

Um...... lets at least keep everything in context. I'm sure that Ms Merkel was referring to the German economy which is in a far better position to the UK's.

Those no real substance to the Tory policies yet, so how the full impact can be assessed yet is interesting.

Lets have facts not spin.

kennyboy66_2

Old_Slaphead wrote: »

Who's to say some of these charges won't be brought into the net.

Anyway, domestic heating VAT - although it is currently 5%, currently affects poor more. Adult cloths are taxable - we all need them. Household repairs, car servicing etc are similar whether you've got a big/small house/car. Entertainments - same for both groups.

Poorest should benefit from little or no income tax - same can't be said for VAT which is imposed on many essentials.

I think you're arguing against perceived wisdom here that indirect taxation is "fairer" than direct tax.

Perhaps "fairer" was the wrong word, however the real poor don't own cars, don't normally own a house (some elderly may be the exception) and don't have much to spend on non-essentials at the end of the week & don't sepnd much on entertainment.

If they are working & have children, they have been made miles better under Labour with child and working tax credits. The problem is that the benefit system means that additional earnings through overtime or a pay rise are effectively taxed at a ridiculous rate as benefits withdraw. Cameron used a hypothetical example which I imagine applies to very few of a marginal "tax/benefit" rate of 96%.
There are probably up to 2 million people whose marginal rate falls somewhere between 65% and 90%.

Which is fairer, those kind of marginal rates or an increase in VAT ?

kennyboy66_2

carolt wrote: »

And let us not forget sanitary protection! - tampons/sanitary towels are charged VAT. Because they are, apparently, 'luxury' items.

I don't think so.

Labour did at least reduce the rate to 5% in 2001.

I suspect it might have been EU rules that prevented them zero rating.

StevieJ

Thrugelmir wrote: »

One of my grandfathers worked for Tate & Lyle on the Isle of Dogs for nearly 30 years. If you saw him today, as he looked then, he would look 90 rather than the 64 when he died. He never saw retirement........

My grandad served in the Marines, he was shot in Gallipoli, gassed on the Somme, run over on his bike, stoked a foundry for 50 years and died at 78, still looked pretty healthy late on. They got him in the end though.

StevieJ

Thrugelmir wrote: »

Um...... lets at least keep everything in context. I'm sure that Ms Merkel was referring to the German economy which is in a far better position to the UK's.

Those no real substance to the Tory policies yet, so how the full impact can be assessed yet is interesting.

Lets have facts not spin.

I thought you were admiring Tory substance as opposed to Labour (in another post)

StevieJ

Sir_Humphrey wrote: »

lung).

If you look at footage from the pre-Welfare state days, it is shocking how aged relatively young people looked.

Even the footballers looked ancient, maybe more to do with fashion and the quality of the film