Tax credits / USC - Pretty big loss to the economy

mwpt

Graham_Devon wrote: »

It's being removed from the economy in that it can't be spent in the economy.

Another example is if the government simply axed housing benefit. While the money hasn't dissapeared (it's being saved to pay down the national debt), the economy would suffer hugely as thousands simply wouldn't be able to pay their rent.

This reminds me of the Greek argument. Greece obtains rates of borrowing they would not have otherwise, and instead of prudent investing, they simply ramp up public sector wages, pensions, etc. When this 'money' was removed from the economy, the economy naturally contracted. People then took this as a sign that austerity didn't work, while missing the point.

So, the logical extension of your argument above is that the government should just hand out more money to make the economy grow. Sounds hyperbolic but if they cannot remove gifted money from the economy, then why can't they just add more?

Generali

Graham_Devon wrote: »

It's being removed from the economy in that it can't be spent in the economy.

Another example is if the government simply axed housing benefit. While the money hasn't dissapeared (it's being saved to pay down the national debt), the economy would suffer hugely as thousands simply wouldn't be able to pay their rent.

If the Government got rid of HB then there would be turmoil in the short term. Ultimately rents would come down.

Graham_Devon

mwpt wrote: »

So, the logical extension of your argument above is that the government should just hand out more money to make the economy grow. Sounds hyperbolic but if they cannot remove gifted money from the economy, then why can't they just add more?

I wasn't really making an argument that they can't remove the money.

Simply stating that the money is being removed which will obviously see less money spent in the local and wider economy as people will have to cut back.

CLAPTON

Graham_Devon wrote: »

I wasn't really making an argument that they can't remove the money.

Simply stating that the money is being removed which will obviously see less money spent in the local and wider economy as people will have to cut back.

no, it means that different people will spend money in the local and wider economy

Graham_Devon

CLAPTON wrote: »

no, it means that different people will spend money in the local and wider economy

Maybe you could explain a little further?

Are you personally going to alter your spending habits and spend more in the economy as someone on tax credits has seen a reduction in disposable income?

Not sure why I'm having to argue this one out in truth. It's clear as mud that if you remove £5bn from citizens (and don't replace it), less will get spent in the economy.

wotsthat

Graham_Devon wrote: »

Simply stating that the money is being removed which will obviously see less money spent in the local and wider economy as people will have to cut back.

The money is not 'simply' being removed from the economy. It doesn't cease to exist just because you have a preference for who spends it.

CLAPTON

Graham_Devon wrote: »

Maybe you could explain a little further?

Are you personally going to alter your spending habits and spend more in the economy as someone on tax credits has seen a reduction in disposable income?

Not sure why I'm having to argue this one out in truth. It's clear as mud that if you remove £5bn from citizens (and don't replace it), less will get spent in the economy.

Once I know my share, I will let you know how I will use it: a few things need doing to the houses so that should provide useful income to worthy artisans

Graham_Devon

CLAPTON wrote: »

Once I know my share, I will let you know how I will use it: a few things need doing to the houses so that should provide useful income to worthy artisans

Share of what?

cells

Generali wrote: »

If the Government got rid of HB then there would be turmoil in the short term. Ultimately rents would come down.

By how much?

It would be good to see a breakdown of how much of the HB bill goes to the social stock vs the privately rented stock.

The majority must surely be to the social stock which has a higher percentage of unemployed and also a higher percentage of pensioners.

Graham_Devon

cells wrote: »

By how much?

It would be good to see a breakdown of how much of the HB bill goes to the social stock vs the privately rented stock.

The majority must surely be to the social stock which has a higher percentage of unemployed and also a higher percentage of pensioners.

About 32% of housing benefit claimants are under private landlords. Just over 1.5m households.