Why State Finances are in a 2s8d, why the ConDems won't fix it & why it's your fault

Generali

From the FT:

http://www.ft.com/cms/s/0/257181e6-726c-11df-9f82-00144feabdc0,s01=1.html

2 things really stood out for me in this article. The first was why the State finances are in a complete state:

In round numbers the government wants to take about £80bn (€96bn, $116bn) – or more than 5 per cent of national income – from the deficit by the end of the present parliament. This is in addition to any natural erosion of the shortfall through economic growth.

A large slice of the gap can and should be closed by increases in taxes. For all that the last Labour government was accused of forever turning upwards the tax ratchet, the share of national income paid in taxes has hardly risen since 1997.

At present it stands at 37 per cent [of GDP]. As the Institute for Fiscal Studies has pointed out, that compares with an average level of 40 per cent [of GDP] under the Conservative governments of 1979 to 1997.

At the same time, Government spending is approximately 50% of GDP.

The second is what the current Government is unlikely to do to fix the mess (and why this mess is partly your fault if you are among the vast majority of British people that think the cuts or tax rises should fall on others):

I heard the other day that anything up to three-quarters of FTSE 100 board directors are in receipt of fuel allowances and free bus passes. That sounds about right since the payments are made to everyone above the age of 60.

The annual cost of providing these benefits, alongside free television licences, prescriptions and eye tests is now £4bn and rising fast. Most of this could be saved by limiting payments to those in most need through the pension credit system.

Wookster

Generali wrote: »

vast majority of British people that think the cuts or tax rises should fall on others

Typical NIMBY attitude that!

StevieJ

It would seem logical to limit the freebies to those on the [STRIKE]MIG [/STRIKE] sorry pension credit(if PC still exists under the Tories :eek:) with some sort of arrangement for those just above PC (to make sure they dot not receive less income than those on the PC).

Generali

StevieJ wrote: »

It would seem logical to limit the freebies to those on the MIG (if MIG still exists under the Tories :eek:) with some sort of arrangement for those just above MIG (to make sure they dot not receive less income than those on the MIG).

Or (better IMO) get rid of the freebies and give people the cash so they can decide their priorities for themselves. For example, Granny Generali walked to the shops every day for health and recreation (she's in her 90s now and is still like a mountain goat). I would imagine she would have qualified for the MIG and she would have been better off with a new pair of shoes than being given a bus pass she very rarely used.

A._Badger

That's a bit rich coming from the FT - the 'business' newspaper that backed Labour throughout its last reign.

boyse7en

Generali wrote: »

Or (better IMO) get rid of the freebies and give people the cash so they can decide their priorities for themselves. For example, Granny Generali walked to the shops every day for health and recreation (she's in her 90s now and is still like a mountain goat). I would imagine she would have qualified for the MIG and she would have been better off with a new pair of shoes than being given a bus pass she very rarely used.

It may be better for her to get the cash, but some people would fritter the extra payments away on Werther's originals and then complain that they're so poor they can't afford shoes to walk to the shops.

By giving away services for free to all, the government appears to be even-handed and generous. And then if they don't use those services, then it doesn't have to pay out for them.


That's the dichotomy of benifits.

Wookster

boyse7en wrote: »

It may be better for her to get the cash, but some people would fritter the extra payments away on Werther's originals and then complain that they're so poor they can't afford shoes to walk to the shops.

Isn't that their fault? People must bear personal responsibility for their choices.

Generali

Wookster wrote: »

Isn't that their fault? People must bear personal responsibility for their choices.

I agree. Further than that, if you live to be 80 or 90 then you should bloody well get to choose between sweets and shoes! (Please don't tell the Generalissimos I said that).

Wookster

Generali wrote: »

I agree. Further than that, if you live to be 80 or 90 then you should bloody well get to choose between sweets and shoes! (Please don't tell the Generalissimos I said that).

I think the softening of personal responsibility will go down in history as one of Labour's "great" legacies.

Generali

Wookster wrote: »

I think the softening of personal responsibility will go down in history as one of Labour's "great" legacies.

I agree. Why take responsibility for your income during your working years when you need to make £25,000pa (apparently) to make more than you would on benefits? Why save for your retirement when you need to scrape together £250,000 (apparently) to have an income higher than the MIG?

I don't want people to be poor but I feel that the alternative as currently seen at least is worse.

Wookster

Generali wrote: »

I agree. Why take responsibility for your income during your working years when you need to make £25,000pa (apparently) to make more than you would on benefits? Why save for your retirement when you need to scrape together £250,000 (apparently) to have an income higher than the MIG?

There will be much resistance to changing this mentality, but it must be done and hopefully the coalition will sort this out in this parliament.