'Colossal' spending cuts to come, warns IFS

padington

There is still is a lot of waste, we could do without half the police force if we tagged prolific offenders properly. We could make a fortune if we allowed the nhs to sell narcotics to addicts rather than give that business to the m-a-f-I-a (banned word !!!!!! ). We could raise much more taxes from the monarchy, Amazon, facebook, Starbucks and Google if there was the will. We could stop giving benefits to rich people. We could charge a small nominal fee once per visit to the doctor once you've drained your quota payable at death if you're poor. We could chase up tax avoiders much better. We could cut the expenses tab for the politico's and civil servants further. We could fine business that collude to criminal acts of a grand scale much more than we do . We could fine individual criminals that have the money more than we do. We could also expect everyone on benefits, within reason, to work the hours they are getting paid, its not rocket science.

There is tons of slack. It's just that we have a bunch of !!!!!! in charge or waiting to be in charge who have no backbone, that's the problem.

If you used 75% of that money to pay the national debt and 25% to offer free grants to innovators who pledge to keep their business in the UK we would be laughing.

purch

michaels wrote: »

The pension issue is a biggie, the triple lock with such low inflation really is an unnecessary burden but unfortunately having promised it to a group who vote no party dare take it away.

If we just slashed spending on the NHS the pension problem would disappear overnight.

tincans6

purch wrote: »

If we just slashed spending on the NHS the pension problem would disappear overnight.

Kills two (old) birds with one stone ?

Linton

Simply slashing spending doesnt actually help a lot. Most government expenditure eventually ends up being paid to people in the UK. Lets say 15% of that goes in income tax back to the government. Then the people spend money - apart from food 20% goes in VAT to the government. The rest goes to companies who make profits and pay corporation tax, employ staff who pay tax, buy things from other companies etc etc.

All money flows in circles. Slashing spending has a large effect on the tax take, which leads to more slashing and eventually mass poverty. Some people here think they have it tough, suggest they read about life in this country in the 1930s when there really was mass poverty.

CLAPTON

Linton wrote: »

Simply slashing spending doesnt actually help a lot. Most government expenditure eventually ends up being paid to people in the UK. Lets say 15% of that goes in income tax back to the government. Then the people spend money - apart from food 20% goes in VAT to the government. The rest goes to companies who make profits and pay corporation tax, employ staff who pay tax, buy things from other companies etc etc.

All money flows in circles. Slashing spending has a large effect on the tax take, which leads to more slashing and eventually mass poverty. Some people here think they have it tough, suggest they read about life in this country in the 1930s when there really was mass poverty.

so does all increase in government spending lead to good things- higher tax take, higher company profits, higher employment and greater riches for all?
is the solution to all economic problems, simply an increase in government spending?

Linton

CLAPTON wrote: »

so does all increase in government spending lead to good things- higher tax take, higher company profits, higher employment and greater riches for all?
is the solution to all economic problems, simply an increase in government spending?

No.

Excessive government spending can lead to wage inflation if there arent sufficient people to do the work the spending is paying for. At present wage inflation doesnt seem to be a problem.

It can also lead to balance of payments problems if the population starts using their increased wealth on imports which need to be paid for in foreign currency. Again not a problem at the moment as there isnt the increased wealth in general.

The interest on borrowing needs to be paid for. At the moment this is not a problem, one could say there is a case for increasing short term borrowing as rates are very low. However interest rates will rise at some time and so the situation needs to be controlled.

So in my view its a matter of light control, not panic.

At the moment the government is trying to get more money circulating by making it easier for companies to borrow money to invest on capital projects. Unfortunately they dont seem very interested in investing and the banks arent very interested in lending.

CLAPTON

Linton wrote: »

No.

Excessive government spending can lead to wage inflation if there arent sufficient people to do the work the spending is paying for. At present wage inflation doesnt seem to be a problem.

It can also lead to balance of payments problems if the population starts using their increased wealth on imports which need to be paid for in foreign currency. Again not a problem at the moment as there isnt the increased wealth in general.

The interest on borrowing needs to be paid for. At the moment this is not a problem, one could say there is a case for increasing short term borrowing as rates are very low. However interest rates will rise at some time and so the situation needs to be controlled.

So in my view its a matter of light control, not panic.

At the moment the government is trying to get more money circulating by making it easier for companies to borrow money to invest on capital projects. Unfortunately they dont seem very interested in investing and the banks arent very interested in lending.

I accept the general Keynesian case for government borrowing and spending in a worsening recession and that cutting state spending can be counter productive.
However, that's not really how I see the current state of the economy.

The economy is growing.
government debt is still increasing.
balance of trade is in deficit, funded by the reduction in the net foreign assets and increase in foreign debt.
government investment has been massively cut while benefits etc have been protected.
both wage inflation and general inflation is indeed still low, in part because of the large increase in low cost immigrant labour supply
productivity has flatlined for several years now reflecting on the low levels of investment (both private and state)
little has been achieved in reforming the benefits system and in providing strong incentives to work rather than live on benefits.

There seems good reasons to try to reduce government spending on the current account and spend more on infrastructure

Tromking

I`m genuinely interested to see what our non ring-fenced public services will look like after the bulk of the cuts have been made by 2020!
The prison service in England and Wales is already a basket case, I dread to think what a further 30% in cuts will do to it.
Interesting times!:)

ruggedtoast

Graham_Devon wrote: »

It was said last night that in order to do what he's suggesting he will do, AND increase pensions etc, he'll have to do something like cutting the NHS, in it's entirety. That's the sort of saving he'd have to find.

So where you'd find those cuts with the NHS and pensioners ring fenced..... well, no one seems to know.

Its inconceivable to see where it can come from based on current tack. Not a penny of the debt has been paid off, they have only managed to lower the amount that we usually borrow a bit.

The fact is that we just cant afford to give every boomer a gold plated pension,a winter fuel allowance, a free bus pass to go whereever they want at no cost, and completely free health care. Much as we might like to they haven't paid in themselves anything like enough to fund these things, and its unfair to expect younger people to fund them when they won't receive anything like that when they retire.

Boomer age related benefits need to be means tested. That is all there is to it.

Meanwhile they can axe trident and every employee of a bankrupt state owned bank can get a living wage and no bonus. That should help.

System

Whenever I see the word "boomer" I know it signals another rant probably based on jealousy and a deliberate selective picking of alleged facts to support a preconceived theory.

It's as if all boomers lived a life of luxury in gated communities, and everybody under 40 lived in squalid shanty towns outside the walls.

It isn't even a particularly UK phenomenon anyway, mainly applying to the USA.