We’ll cut the deficit, not the NHS

 

Today i was fortunate enough to be invited to the West Midlands ‘Cut the deficit, not the NHS’ poster launch with Francis Maude. All across the country various members of the Shadow Cabinet were present in target seats to unveil the poster which can be seen in over a 1000 different sites. More than half a dozen Conservative prospective parliamentary candidates for seats in Birmingham were in attendance as well as candidates from across the region and the media.

I was quite impressed with the actual poster itself and believe that the large image of Cameron, a strong and popular leader will stick in the minds of the electorate. It is difficult to imagine the government doing something similar with the Prime Minister for a number of reasons including how he is seen as weak, incompetent and a liabilty to their campaign. In fact it seems that Labour are undecided about what sort of campaign they want to run and are stuck between targetting their core vote; Gordon Brown’s comments about Eton is an example of this or rely on the swing vote and target the same group which helped them win in 1997. What using the image of Cameron symbolises is that the Conservative Leader is personally committed to protecting and investing in the NHS and it remains his top priority.

Labour were quick to react to this, with the Chancellor stating that a £34 billion hole existed in the Conservative plans. However quite rightly it was described as ‘complete junk from start to finish’ as the dosier includes apparent pledges from the Tories which have not been made. Perhaps we should remember that it is this government responsible for our huge deficit of £178 billion and this government who have crippled the finances of this country . Although the election may not have been formally announced, there is no doubt the pre election point scoring has begun.

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43 thoughts on “We’ll cut the deficit, not the NHS

  1. “Perhaps we should remember that it is this government responsible for our huge deficit of £178 billion and this government who have crippled the finances of this country.” So what your saying is that we should have left the economy to ‘run its course’? Have the banks collapse and unemployment peak at the very minimum of 3 million?

  2. Max – take a look at a country like Australia which was run on conservative principles for most of the last decade.

    Firstly, they regulated their banks properly so they didn’t have to bail them out.

    Secondly, they had run surpluses during the good years which gave them flexibility in the downturn.

    They didn’t enter a recession. The recession is Labour’s fault. The size of the deficit is also Labour’s fault. The consequences of Labour’s mismanagement are everybody’s problem.

  3. Fair enough with the example Praguetory, but unfortunatly that really doesn’t work when applied to the British Conservatives.

    Firstly, wasn’t Osbourne, prior to the recession, calling for greater deregulation of the banks?

    And “The recession is Labour’s fault”, so if it is Labour’s fault, that obviously means with “Tory logic”, that EVERY single country that went into recession in the world was brought about by Labour?

  4. Ok I don’t know how my original question was diverted to that, lol!

    Yes it’s in recession (unless you count Spain, lol) but it has proportionally one of the lowest unemployment figures out of the G20, it hasn’t suffered a severe wealth crunch unlike countries like Germany and Japan and contrare to what many leading Tories are saying, the deficit is proportionally lower than many other G20 countries.

  5. “Secondly, they had run surpluses during the good years which gave them flexibility in the downturn.”

    Gordon Brown delivered more budget surpluses than any other Chancellor since the second world war.

  6. Have any of you lot had a look at the draft manifesto yet? Some of their policies on health look very promising but I can’t help thinking that some of them are so obvious that Labour should have thought of them. Most of the population surely can see that having endless numbers of pen-pushers and targets is a bad thing?

  7. How new, lol! So what your saying is that you would deny the people a generic minimum standard across the country? With even the Shadow Health Minister saying “I think there have been deffinate improvements in the NHS since 1997.”.

  8. ‘The Prime Minister is seen as weak, incompetent and a liabilty to their campaign’. It seems as if Geoff Hoon and Patricia Hewett would agree. Do members of BULS think the same Max?

  9. Re. Jack; “Gordon Brown delivered more budget surpluses than any other Chancellor since the second world war.”

    I’ll take your word for that, I’m not sure that running a surplus, that is to say receiving in tax more than is spent, in and of itself is the most useful figure.

    I do recognise however that, at least until 2002, public indebtedness fell as a percentage of GDP. Although for the most part the actual £££ value stayed constant.

    We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.

    It’s really the last 2 years where public debt has – to my mind – got out of control. However this is only a portion of the story (always the case with economics). The government ‘take’ as a share of GDP has increased alongside public spending. And a lot of the surplus’ that the government ‘enjoyed’ were relatively small.

    The point I’m meandering towards is that whilst it may have been sensible to take on some additional debt (operative word being some) post 2002, combined with an already high tax / high spend (again I appreciate it’s a subjective comment) government we were left with no room to respond to the ‘real’ recession.

    If I was being generous I’d acknowledge that the government could not have foreseen the extent or even occurrence of the financial difficulties it would face. Nonetheless it was still the policies it chose to follow which left us so vulnerable. If I was being less generous I might liken it to not wearing a seat-belt because I don’t foresee the accident.

    Purely speculative of course but I can’t help but feel the problem was that Labour believed too much in it’s own rhetoric – that it really had ended the business cycle, that massive spending (often called “investment”) could continue forever and having largely committed themselves to this were rather lost when it came to responding once the wheels had come off.

  10. Max; “That’s strange I thought we were talking about the Conservatives new poster…who am I to judge.”

    Quite. Clearly your not one to judge. At least I think we’re talking about the post – that’s the usual way of things – which is the SOURCE* of the quote that was given to you. I’ll even copy it again so you needn’t scroll up to read it:

    “it is difficult to imagine the government doing something similar with the Prime Minister for a number of reasons including how he is seen as weak, incompetent and a liability to their campaign”.

    For future reference I’m sure someone will let you know if things get off topic.

    *Just being clear since I don’t know how to put italics or underline.

  11. I think from a fiscal point of view, the UK was not in bad shape two years ago. I suppose you could argue that from 2002 the public finances deteriorated. But I think the deterioration was fairly moderate.

    Though I’m not entirely familiar with the figures, the accusation that the government didn’t save for a rainy day, is pretty weak (though not completely baseless).

    I am more critical of the government’s tripartite system for regulating macro-economic policy. It seems that the Bank of England’s dependence on general prices to determine interest rates was too narrow, disguising a major asset bubble . This was, in part, the government’s own fault, which determined the Bank’s new remit after 1997.

    I also think that some of the government’s more recent attempts to regain the political initiative have not helped matters. Putting the frighteners on companies such as Goldman Sachs and raising marginal income tax will not help our recovery.

  12. Dan,

    Well it seems we are broadly in agreement – on the facts if not the emphasis at least.

    I’ll merely add that the increase in debt as a portion of GDP post 2002 was indeed fairly moderate, at least year on year, but by the time the financial recession hit had crept up from it’s low in 2002 to the mid 90’s level – Which was a result of dealing with the early 90’s recession when we were just about to enter ours ..

    To be clear I did not and am not suggesting the Government ought to have saved for a rainy day – at least not in anything like the sense you or I might save.

    Rather I suggest that had we had a government who, to borrow a phrase (now defunct, often maligned and to me rather New Labourish) ‘shared the proceeds of growth’ then we could have enjoyed real increases in spending at the same time as reducing it as a portion of GDP.

    This would have brought all sorts of benefits – the most relevant being relatively less concern about further tax rises required to service the debt and a greater ability to weather the recession.

    I also feel that spending less would have been positive for New Labour even on there own terms by forcing a more constructive approach than was undertaken.

    Anyway I’ll stop before this turns entirely to alternative history fiction.

  13. Oh and re. your comment about Goldman Sachs – I just want to add that I find it peculiar that the party of Gordon ‘I sold all the gold’ Brown then seeks to blame bankers for poor decisions.

    Completely different situation of course ….

  14. “Although for the most part the actual £££ value stayed constant.”

    In most developed economies, the debt will rise over time in both nominal and real terms. It’s the debt/GDP ratio that counts. A reduction in nominal debt is a rarity.

  15. Jack

    yes I realise that, it was just an aside to point out that it was economic growth – not repayments – that caused debt to fall as a portion of GDP until 2002 …

    Richard

  16. “We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.”

    There was also a deliberate fiscal tightening. Departmental underspending left TME 3.1% lower in 2001 than in 1997, and much of this concerned Brown’s third budget (as well as Clarke’s spending plans).

  17. And in 2002 TME was 2.007% high than in 1998 and increased every year from 1999.

    1999 would have been Brown’s 3rd budget? When TME started increasing again?

  18. And what impact did Labour sticking to Tory spending plans have to reducing TME at the start of their time in office? Spending plans which would of covered the first few budgets until say, the 3rd budget, when TME started increasing…

    Care to hazard a guess on what the increase in TME from say 1999 to coming financial year projected will be ?

  19. Richard,

    Just on the point about Goldman Sachs, I think Labour are bent on turning the election campaign into a class war. This isn’t particularly helpful from an economic point of view.

    Fortunately their is wide expectation in the City that the Tories will win the election and sort out the deficit. Otherwise our situation would be even more precarious.

  20. Re the debate re state indebtedness, the elephant in the room is the antiquated method of recording state liabilities. PFI/’investment’ spending/pensions are all examples of unrecorded liabilities – and they are gargantuan. John Redwood estimated a figure of £3 trillion in the House yesterday at a debate on the fiscal responsibility bill which had precisely zero Labour backbenchers in attendance when I tuned in.

    In my next comment I will put a link (I know it takes time to moderate comments with links)

  21. The IFS figures show TME falling in every financial year up to and including the year 1999-2000 suggesting reductions in spending in three budgets: 1997,1998,1999.

    After that TME did increase and rightly so, but Labour did work to clear up the wreckage of the previous recession. (we should also remember the windfall tax on privatised utilities).

    We’ve had several discussions on PFI liabilites and in reffering PT back to those I would add that PFI began in 1992, not 1997. I would also say that our competitors have followed similar paths and that the measures of UK debt I have given are consistent with various accounting standards.

  22. Ok last post for today lest I start deterring all BUCF’s many and beloved readers!

    Dan;

    Simply put, agree entirely – the £1m donation from PWC appears to me indicative of city thinking.

    PT;

    w/o googling it guess which genius defends increased government borrowing thus:

    “There was a time, early in the last decade, when Government borrowing was going down, but then we started to hear concerns from the pensions industry that the Government were not borrowing enough-the pensions industry actually requires borrowing.”

    … It’s from the debate you mentioned.

    … He’s a senior figure.

    … It’s Alistair Darling.

    No joke. The reason for all this borrowing? Supporting the pensions industry. good grief.*

    With fine minds like that at their disposal for the front bench its probably a good job Labour back benchers stay well away with anything todo with “fiscal” anything.

    *I’m being a bit sarcastic I know, it’s a Tory blog so live with it =P

  23. “The IFS figures show TME falling in every financial year up to and including the year 1999-2000 suggesting reductions in spending in three budgets: 1997,1998,1999.”

    So it fell following 3 budgets – 2 of which were under Tory spending plans, then started to increase. For several parliaments. Ok. Glad we agree.

    It’s not really relevant to anything anyway.

  24. It’s relevant to the fact that labour did fix the roof while the sun was shining and every step of the way we had calls for major tax cuts from the opposition benches. What a relief that we ignored those calls and entered the recession with the second lowest burden of debt in the G7.

  25. “It’s relevant to the fact that labour did fix the roof while the sun was shining”

    A far more generous characterization than I would give.

    To the extent that the 1st three years were spent fixing the roof then it follows the next nine were spent letting the repairs fall into decay.

    but look no-ones disputing that until 2002 there wasn’t really a problem in public finances. It’s pretty much what I say in my first post. Beyond that it was a gradual but persistent decline. I’ll even be more generous and say that, whilst it might not have been my preference, within the context of labours goals then even post 2002 things were manageable ( even if ultimately not ideal) for quite some while.

    The problem is that ‘Labour’s goals’ were themselves wrong, being too focused on increasing (later simply high) state spending. Only the very start of the 1st Labour term avoided this and I think it was largely due to the commitment to Tory spending targets.

    “every step of the way we had calls for major tax cuts from the opposition benches. What a relief that we ignored those calls and entered the recession with the second lowest burden of debt”

    Unless you’re envisioning some sort of false dichotomy then this is beyond my wit. Supposing Labour had cut taxes and debt? There may be some constellation of preferences which your statement appeals to but personally I’m not sure I follow.

    “entered the recession with the second lowest burden of debt in the G7.”

    Different countries are in very different circumstances, account for debt in different ways and have different historical backgrounds.

    Australia’s public debt by comparison is tiny (for example), I’m not sure why Australia is any less viable a comparison than say; Canada.

    Most people in this country are in far more debt than, say, my parents – are my parents doing better or worse than the others ?

  26. Sorry hit post too quick needed to add (for it to make sense)

    But supposing my parents couldn’t afford their debt* and it was risking making them bankrupt? Or you were indirectly being made liable for it. would the fact that others have relatively more debt make a difference?

    If other countries want to hamstring future generations with debt that is their call.

    *to allay any fears you may hold my parents are mercifully debt free and envisaging retirement rather than bankruptcy.

  27. Post 2002, we had calls for tax cuts both from the conservative party and from some conservative commentators on this blog. We would have borrowed more if we’d let the conservative party have its way in 2005.

    We needed to make investments in public services and we did, once we had reversed some of the damage of the recession of the early 90s. And while doing so we kept borrowing lower in every financial year than it had been in 1996-1997. Until the world financial crisis we kept the PSNCR/PSBR lower than under John Major.

    Debt, on the other hand, was never going to fall far below 32% of GDP without a much more dramatic reduction of the long-term deficit; due to the lessening of the effects of inflation and growth as debt burdens are reduced. (This is partly why the previous conservative government had such a bad record on debt reduction).

    ‘Supposing labour had cut taxes and debt?’

    We went through the Tory plans for cuts in 2005 and the numbers just didn’t add up. The tax rises in the early years combined with the spending reductions in the third budget (hardly ‘the very beginning of the first term’) led to a budget surplus earlier than the conservatives had predicted. I’m glad we made that choice and I’m glad that we loosened the fiscal screws in the wake of the post 2000/2001 slowdown.

  28. Sorry for the late response.

    Most of these points have already been covered or seem rather tenuous –

    “Post 2002, we had calls for tax cuts both from the conservative party and from some conservative commentators on this blog.”

    Yes, and again good thing…

    “We would have borrowed more if we’d let the conservative party have its way in 2005.”

    Who knows, if so I wouldn’t condone it.

    “We needed to make investments in public services”

    or we could say you wanted to make “investments” and instead managed to fritter one of the biggest opportunities public services will have in a generation.

    “once we had reversed some of the damage of the recession of the early 90s.”

    You mean you followed Tory spending plans and continued their reversal before defaulting back to type.

    “and while doing so we kept borrowing lower in every financial year than it had been in 1996-1997.”

    So from 2002 Labour grew debt to a recession level while not in recession. Why not keep it nearer to it’s 2002 low. Also TME was growing etc. Why is 1996-1997 the most relevant year for comparison.

    “I’m glad we made that choice and I’m glad that we loosened the fiscal screws in the wake of the post 2000/2001 slowdown.”

    Worked out well for us and the Pensions industry.

  29. On the issue of your calls for tax-cuts, we discussed those at the time and none of them were feasible without massive cuts to public services: cuts that your party continually disavowed.

    We were fiscally tighter during our first term than the Tories intended to be. If that’s not the case then why did Clarke predict a balanced budget in 2000 while labour delivered a surplus a year earlier? You keep trying to pretend that fiscal responsibility is about spending alone, when in fact it has to be taken into consideration with taxation.

    You talk about reverting to type. Well you do have something here: Labour has delivered more surpluses since the war than the conservatives.

    From 2002 debt was allowed to rise as we made the long-term investments and dealt with the slow-down. Tax cuts alongside these investments would have lead to greater borrowing and a faster rise in the debt. I’m glad that you admit that the conservatives left debt at ‘recession levels’.

    “Why is 1996-1997 the most relevant year for comparison.?” Because it was the year you left government without the excuse of a recession for the size of the deficit.

    The fact is we have had more room to respond to the recession than we would have had with the debt levels and deficits inherited in 1997. After 1997 we reduced the deficit faster than the conservatives planned.

    This recession is being extremely tough on the nation’s finances, and it’s a good thing that we invested* and a good thing that we kept the burden of debt low by both international and historical standards.

    *I understand that you feel that the money could have been better spent but I take it that you accept that the money did need to be spent.

  30. Sorry again for late response, coming back to uni etc.

    “On the issue of your calls for tax-cuts, we discussed those at the time and none of them were feasible without massive cuts to public services: cuts that your party continually disavowed. “

    You seem to be interchangeably moving between my criticisms of labour, my opinion on what I would like to have seen happen and Tory party proposals. Given that the later two were never tested any comment on them is pure speculation. I’m not going to rehash a debate from 2005, but lets assume what you say is true; that in no-way validates labours approach. Unless you’re suggesting all tax cuts = massive cuts in public service then I don’t see how this is really relevant – maybe interesting – but no more.

    “We were fiscally tighter during our first term than the Tories intended to be. If that’s not the case then why did Clarke predict a balanced budget in 2000 while labour delivered a surplus a year earlier? “

    To the extent that this is true, again, so what. It’s post 2002 that I said things started to go wrong.

    “You keep trying to pretend that fiscal responsibility is about spending alone, when in fact it has to be taken into consideration with taxation.”

    I’m not pretending anything; at least I’m not trying to. It just happened we were discussing spending. Labour could have increased spending, cut taxes and maintained national debt at or around a 2002 level.I discussed my view on taxes etc briefly above.

    “You talk about reverting to type. Well you do have something here: Labour has delivered more surpluses since the war than the conservatives.”

    Another historical “analysis”, but one that fails to give any context to the situation in which those surpluses were delivered.

    “From 2002 debt was allowed to rise as we made the long-term investments and dealt with the slow-down. Tax cuts alongside these investments would have lead to greater borrowing and a faster rise in the debt.”

    You chose to spend money, which you term ‘investment’. You didn’t need to spend that much, and as an “investment” I think we’ve generally seen a poor return. Allowing debt to rise slightly post 2002 wouldn’t have been so bad, but it kept on creeping up year on year. That is what I object to.

    “The fact is we have had more room to respond to the recession than we would have had with the debt levels and deficits inherited in 1997. “

    Sooo, when was the recession again? 1993? in 2007 after 14 years of growth we were in a better position than in 1997 after only 4. Only we weren’t really in a better position, or at least not much better. When we should have been fantastically well placed.

    “After 1997 we reduced the deficit faster than the conservatives planned.”

    You also raised it quite quickly again.

    “I understand that you feel that the money could have been better spent but I take it that you accept that the money did need to be spent.”

    Some money, on some things.

  31. Well I’m glad that you agree that our record prior to 2002 was better than that of the conservatives. “We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.” We now agree that it was prudent and not just a case of allowing tax receipts to grow. After all if it was the case of the latter then the only explanation for the conservatives not planning a surplus until this century has to be their own planned imprudence.

    In any case the actions of the government after 2002 have to be seen in the context of the preceeding decade. Brown needed to invest and he did so. And every step of the way he was fiscally tighter in approach than the conservatives called for. After admitting that debt would have been at a higher level in 2002 under the conservatives, you then suggest that it should have been held at its 2002 level of about 32%. Assuming trend-growth of 2.5% and inflation of 2.5% (roughly 5% nominal gdp growth) we would have had to reduce the budget deficit to an average of 1.6%. How specifically would that have been achieved?

  32. Well I’m glad that you agree that our record prior to 2002 was better than that of the conservatives. “We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.” We now agree that it was prudent and not just a case of allowing tax receipts to grow. After all if it was the case of the latter then the only explanation for the conservatives not planning a surplus until this century has to be their own planned imprudence. Turning to post 2002: We needed to make significant investments and I should point out that all the ‘so-called efficiency savings’ were either illusory or dwarfed by some of the extra spending commitments of the conservatives. I also find it interesting that it never occurs to people on the right that you can make improvements in efficiency while increasing funding. We were near the very bottom of the EU league table in health expenditure, lagging behind our competitors in education and I always find it hilarious when people like Dan O’doherty talk about reigning in public spending before calling for a few extra billion for defence. “Labour could have increased spending, cut taxes and maintained national debt at or around a 2002 level.” No. They could have not made serious increases in spending, cut taxes and maintained that low level of debt. We obviously disagree on this and I’m interested to know how you think we could have achieved that without pushing growth unhealthily above trend. How should the deficit have been reduced? The problem of 2005 was nicely summed up by George Osborne: “We have tended to produce tax cuts like white rabbits out of the magician’s hat just weeks before polling day, so they just look and feel like election gimmicks. “When you find yourself in the heat of an election campaign on television trying to explain the minutiae of how you are going to save £5 million here and £10 million there, then you are losing the argument. I know, I have been there.” Post 2002, we kept a tight grip on taxation so that we could fund our investments; cutting taxes an a large scale was not an option. Now you concede that debt would have been higher in 2002 had the conservatives been in power. Post 2002 we chose to invest while keeping the debt and the deficit lower than it was under the conservatives (the so-called ‘golden inheritance’). Meanwhile the Tory tax cuts were unfundable and your failure to explain how they would have been funded is very revealing. If Howard, Hague, Letwin, Portillo, Lilley, Maude and the rest of the crowd had ever been serious about keeping the debt lower than it was under labour they would have torn up their tax plans and faced the fact that if your going to invest, you have to pay for it.

  33. Well I’m glad that you agree that our record prior to 2002 was better than that of the conservatives. “We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.” We now agree that it was prudent and not just a case of allowing tax receipts to grow. After all if it was the case of the latter then the only explanation for the conservatives not planning a surplus until this century has to be their own planned imprudence.

    Turning to post 2002: We needed to make significant investments and I should point out that all the ‘so-called efficiency savings’ were either illusory or dwarfed by some of the extra spending commitments of the conservatives. I also find it interesting that it never occurs to people on the right that you can make improvements in efficiency while increasing funding. We were near the very bottom of the EU league table in health expenditure, lagging behind our competitors in education and I always find it hilarious when people like Dan O’doherty talk about reigning in public spending before calling for a few extra billion for defence.

    “Labour could have increased spending, cut taxes and maintained national debt at or around a 2002 level.” No. They could have not made serious increases in spending, cut taxes and maintained that low level of debt. We obviously disagree on this and I’m interested to know how you think we could have achieved that without pushing growth unhealthily above trend. How should the deficit have been reduced?

    The problem of 2005 was nicely summed up by George Osborne: “We have tended to produce tax cuts like white rabbits out of the magician’s hat just weeks before polling day, so they just look and feel like election gimmicks. “When you find yourself in the heat of an election campaign on television trying to explain the minutiae of how you are going to save £5 million here and £10 million there, then you are losing the argument. I know, I have been there.”

    Post 2002, we kept a tight grip on taxation so that we could fund our investments; cutting taxes an a large scale was not an option. Now you concede that debt would have been higher in 2002 had the conservatives been in power. Post 2002 we chose to invest while keeping the debt and the deficit lower than it was under the conservatives (the so-called ‘golden inheritance’).

    Meanwhile the Tory tax cuts were unfundable and your failure to explain how they would have been funded is very revealing. If Howard, Hague, Letwin, Portillo, Lilley, Maude and the rest of the crowd had ever been serious about keeping the debt lower than it was under labour they would have torn up their tax plans and faced the fact that if your going to invest, you have to pay for it.

  34. “Well I’m glad that you agree that our record prior to 2002 was better than that of the conservatives. “

    Record from when till when? The Conservatives weren’t in power 97+ so what on earth are you using as a comparison. More to the point why are you still rehashing pre 2002? Do you mean that according to your Clarke quote the Conservatives predicted that they would be in surplus a year later than Labour? Who knows what would have happened if Tories won the election, and even if they had gone into surplus a year later – so what? The point repeatedly made to you was that it was subsequent increases in borrowing that I object to.

    “We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.” We now agree that it was prudent and not just a case of allowing tax receipts to grow.

    Not only is this a cheap shot but also it doesn’t even mean anything. The question I posed was a genuine one and referred to the motivation behind the action. Was Labour ideologically signed up to prudence, or merely lucky to be in government at a time when prudence was easy? Judging Labour in 2010 I know what motives I would ascribe to them, but perhaps to do so would be unfair.

    I honestly have no idea where your inspiration for the 1st and 3rd sentences even comes from.

    “After all if it was the case of the latter then the only explanation for the conservatives not planning a surplus until this century has to be their own planned imprudence. “

    But no-one ever said Labour was actively imprudent prior to 2002. I suggested that prudence occurred as much by accident as by design in that as soon as prudence became more difficult so Labour became more imprudent.

    “Turning to post 2002:”

    Excellent !

    “We needed to make significant investments “

    Needed? Does this go for every Item of expenditure? Some might say you ‘invested’ like a drunken sailor in a whore-house on pay day. No-ones saying you couldn’t increase spending a bit, had you been more restrained you might well have spent better too. Alternatively you could have cut welfare payments.

    “and I should point out that all the ’so-called efficiency savings’ were either illusory or dwarfed by some of the extra spending commitments of the conservatives.”

    Well which? If they were illusory then they must have been dwarfed by any additional spending commitments I suppose. You realise that hypothetically If the conservatives had won in 2005 and continued to run up debt and spending then that would just make them wrong as well, not make labour right.

    “I also find it interesting that it never occurs to people on the right that you can make improvements in efficiency while increasing funding.”

    I promise you that it does occur to us, it’s in reality that it rarely occurs.

    “We were near the very bottom of the EU league table in health expenditure, lagging behind our competitors in education “

    Kind of sounds like what I thought, Labour rather loved expenditure for it’s own sake too much. The concerning issue was the quality of care provided. Still truth is we’re well behind on Health spending anyway – roughly half what the USA spends. Japan spends less than us and tends to get better results with it. Then again we have schemes like the £20b NPfIT, which is no doubt necessary investment – just a shame it had “little clinical functionality”.

    “and I always find it hilarious when people like Dan O’doherty talk about reigning in public spending before calling for a few extra billion for defence. “

    I guess we just have very different senses of humour then. It’s possible to reign in overall public spending while increasing some department’s budgets. For more information I suggest you ask Dan.

    “Labour could have increased spending, cut taxes and maintained national debt at or around a 2002 level.” No. They could have not made serious increases in spending, cut taxes and maintained that low level of debt. “

    So No actually means yes with you? Oh wait you modified my statement by talking about what you call (but otherwise don’t define) ‘serious’ spending increases now. Presumably by serious you mean very large. It is true that they didn’t maintain that low level of debt, which is the point I’ve been making for quite awhile.

    “We obviously disagree on this and I’m interested to know how you think we could have achieved that without pushing growth unhealthily above trend. How should the deficit have been reduced? “

    ??????????

    My opinion: Spending Less. Cut welfare payments, etc. I assume your not asking me to draw up an entire budget while waiting for my dinner to cook?

    “The problem of 2005 was nicely summed up by George Osborne: “We have tended to produce tax cuts like white rabbits out of the magician’s hat just weeks before polling day, so they just look and feel like election gimmicks.”

    I agree it’s tangentially relevant in that the conservative party wasn’t exactly sure footed in making the arguments many wanted it to, but I’m not really sure how this part of the quote really helps develop the argument at this point.

    “When you find yourself in the heat of an election campaign on television trying to explain the minutiae of how you are going to save £5 million here and £10 million there, then you are losing the argument. I know, I have been there.”

    I agree with George, I’m not sure how this really sums up the problem of 2005 as we’re discussing it however?

    “Post 2002, we kept a tight grip on taxation so that we could fund our investments; cutting taxes an a large scale was not an option.”

    It was an option just one you chose not to take. Of course I have to allow that ‘large scale’ could mean just about anything.

    “Now you concede that debt would have been higher in 2002 had the conservatives been in power.”

    No. Firstly, I don’t know either way, you’ve given 1 quote suggesting that would be the case and since it was only a forecast and liable to be wrong who knows. Because I don’t know off the top of my head and it being barely relevant to anything it hardly seemed worth looking into. Secondly I’m not even aware I ever specifically denied this (in which case I can hardly concede it)

    “Post 2002 we chose to invest while keeping the debt and the deficit lower than it was under the conservatives (the so-called ‘golden inheritance’). “

    You seem very concerned with comparatives with the conservatives – even when not entirely appropriate. There was no need to increase debt the way you did, and the fact that it was lower than at some other historical point is really neither here nor there.

    “Meanwhile the Tory tax cuts were unfundable “

    Even if true, how does that validate Labours position?

    “and your failure to explain how they would have been funded is very revealing.”

    Well I would do it through the proceeds of growth, spending less and cutting some aspects of welfare. That’s just me mind.

  35. “Record from when till when? The Conservatives weren’t in power 97+ so what on earth are you using as a comparison. ”

    Two things; first the record of the previous conservtaive governemnt that failed to keep deficits as low and failed to produce surpluses despite claiming that we were living through some kind of economic miracle.; second what the conservatives had planned in their budget of 1996.

    “Who knows what would have happened if Tories won the election, and even if they had gone into surplus a year later – so what?”

    The imbecility of that statement is amazing. First there’s the fact that the prediction was fairly short-term without any major economic crisis to have shifted things suggesting that the Tory prediction would have been fairly accurate. Second, for you to stand by your implication that we might have moved into surplus at the same time under the Tories you must either accept that the Tories would have sent growth far above trend (thus pushing revenues higher than where they were heading) OR that they planned a fiscal tightening in which case their manifesto was a pack of lies. Which is it?

    “So what” suggests a complete failure to grasp that actions before 2002 were obviously going to influence events after 2002. If we’d reduced debt at the Tory rate, we wouldn’t have had the room for maneauvre after 2002.

    “Was Labour ideologically signed up to prudence, or merely lucky to be in government at a time when prudence was easy?”

    I see we have shifted from a debate about whether labour was prudent to a debate about why labour was prudent. Again if it was so easy to be prudent why didn’t the conservatives plan to be prudent? Could it be that the right of your party was ideologically fixated on unfunded tax cuts?

    “…prudence occurred as much by accident as by design in that as soon as prudence became more difficult so Labour became more imprudent.”

    The windfall tax on privatised utilities was no accident. I would also point out that Bank of England control over interest rates allowed lower interest rates which in turn allowed lower interest payments on the national debt. This would not have happened under a Major government.

    On the issue of spending, there is no doubt that some of these investments were mishandled. However, for every saving that can be found there are bigger areas where extra funding is needed. There’s been no shortage of spending commitments from conservative front-benchers and no shortage of calls for money on a wide range of fronts on this forum.

    “Well which? If they were illusory then they must have been dwarfed by any additional spending commitments I suppose.”

    Well we can start with the proposed abolition of the IR35 rules and then point out that in the relevant policy document, the Tories promised to abolish several institutions (such as the small business service) and move their functions to other organisations. The document did not explain which organisations would assume these extra duties and how that would be paid for.

    “Alternatively you could have cut welfare payments.” We did. Spending on social security and benefits fell after 1997 and you might be interested to know that the conservatives left it much higher than they found it. (as a share of GDP)

    “It’s possible to reign in overall public spending while increasing some department’s budgets. For more information I suggest you ask Dan.”

    I’m afraid that it’s no good finding £10 million here and there and then calling for an extra £6bn for defence. No conservative on this forum has ever put forward serious proposals that add up or even come close to cutting government expenditure.

    “No. Firstly, I don’t know either way, you’ve given 1 quote suggesting that would be the case and since it was only a forecast and liable to be wrong who knows”

    It wasn’t one quote it was a budget projection. For it to have been wrong would have required an unsustainable boom.

    “Well I would do it through the proceeds of growth, spending less and cutting some aspects of welfare. That’s just me mind”.

    Where exactly? This kind of Reagenite politics doesn’t work anymore. Which aspects and how much would it save?

    “…the fact that it was lower than at some other historical point is really neither here nor there.”

    To what should we compare Labour’s record? We need to have some basis for comparison otherwise it’s very hard to make sensible judgements. When we started this recession we had a fairly strong position by both historical and international standards:

    -2nd lowest debt in the G7
    -Lower deficits in every year than in 1996-1997
    -more budget surpluses than any government since the second world war.

    The proposals that the conservatives made at the time is relevant. It demonstrates that the Tories called nearly every economic decision wrongly over the last 15 years.

    Wrong before 2002 on debt reduction and wrong after it with sums that just didn’t add up. of course there are things that could have been done better; that’s true of any government. But every step of the way we kept debt lower than it was under the conservatives and deficits lower than it was under the conservatives; and we were reducing borrowing in the run-up to the recession.

  36. “Two things; first the record of the previous conservtaive governemnt that failed to keep deficits as low and failed to produce surpluses despite claiming that we were living through some kind of economic miracle”

    Comparisons may be possible where suitably specific and considered however the need to account for exogenous factors makes them exceedingly difficult. The sort of blasé generalised comparison you suggest is meaningless.

    “second what the conservatives had planned in their budget of 1996.”

    But budget forecasts are static predictions based on a certain set of assumptions. Change one of those assumptions and the predictions would need to be revised.

    However the figures you want to compare aren’t even forecasts – they’re projections which are even more subject to the vagaries of the economic climate.

    Clarke anticipated in his 1996 that PSBR would be ‘broadly balanced’ in 1999-2000, and move into surplus the next year. Labour revised this prediction in 2007, largely due to higher than anticipated tax receipts. These figures were then subject to further revision over time.

    “The imbecility of that statement is amazing.”

    A compelling argument powerfully made.

    “First there’s the fact that the prediction was fairly short-term without any major economic crisis to have shifted things suggesting that the Tory prediction would have been fairly accurate.”

    We are talking about shifting a small deficit into a small surplus across one accounting period. The figures involved are not (relatively) large. Small changes in assumption could account for this. The double use of the term ‘fairly’ is instructive.

    If the prediction was short term, why is it described as a projection and ‘assumptions’ and not a forecast?

    “Second, for you to stand by your implication that we might have moved into surplus at the same time under the Tories you must either accept that the Tories would have sent growth far above trend (thus pushing revenues higher than where they were heading) OR that they planned a fiscal tightening in which case their manifesto was a pack of lies. Which is it?”

    Far above trend? – oh please. A 1% difference above anticipated growth over the period should suffice, which is interesting since I believe the growth forecast in 1996 was more cautious than that which would have been achieved. 80% of the planned reduction in borrowing was to be achieved through tighter spending controls – which were largely followed by labour. The greater than anticipated tax receipts would account for most of the rest of the difference.

    Of course we hit the very problem I’ve been trying to explain to you – at this point it becomes very speculative, which is precisely why we should be careful with these comparisons.

    ““So what” suggests a complete failure to grasp that actions before 2002 were obviously going to influence events after 2002. If we’d reduced debt at the Tory rate, we wouldn’t have had the room for maneauvre after 2002.”

    Actually it would have made little material difference. Why? Because the choice to start increasing debt is exactly what I am objecting to – or at least the way it was continually increased. In consideration of that decision the year in which government first ran a surplus really isn’t terribly relevant.

    “I see we have shifted from a debate about whether labour was prudent to a debate about why labour was prudent.”

    This is my original quote:

    “We can call this prudent or say simply that in a time of growth – and growing tax receipts – there was little need for additional borrowing.”

    I then expanded on it in response to you saying:

    “The question I posed was a genuine one and referred to the motivation behind the action. Was Labour ideologically signed up to prudence, or merely lucky to be in government at a time when prudence was easy?”

    I don’t see any inconsistency. The 1st quote gives a choice between two possible ways of describing labours behaviour, and the second quote simply fleshes out that distinction.

    The action quite clearly remains the same however it was described, I would definitely say that prudence in the context of the 1st quote referred to intention rather than an inherent quality of the action. I don’t see what more can be said beyond arguing semantics. It’s really not relevant when you consider the earlier comments which quite clearly were aimed post 2002 anyway.

    “Again if it was so easy to be prudent why didn’t the conservatives plan to be prudent? Could it be that the right of your party was ideologically fixated on unfunded tax cuts?”

    They did.

    “The windfall tax on privatised utilities was no accident.”

    That’s true and it contributed somewhat to labours ability to move into surplus a year earlier (not all that much mind). But taxing more isn’t by itself an act of prudence.

    “I would also point out that Bank of England control over interest rates allowed lower interest rates which in turn allowed lower interest payments on the national debt. This would not have happened under a Major government.”

    The 1996 and 1997 budgets both had the same target for inflation; 2 ½ % or less. There had been comparatively low inflation and low interest rates for 4 years before 1997 – interest rates for example were higher in 1999 than at any time in the year 93,94,95,96. Of course interest rates are not set in isolation and comparisons are difficult.

    That said giving the bank of England independence was a sensible move, but we should be careful also to credit the reforms in monetary policy made by Clarke which gave brown the stable framework he inherited.

    “On the issue of spending, there is no doubt that some of these investments were mishandled. However, for every saving that can be found there are bigger areas where extra funding is needed. There’s been no shortage of spending commitments from conservative front-benchers and no shortage of calls for money on a wide range of fronts on this forum. “

    This is of course very general but in some ways true, although I strongly disagree that it’s more money that is always the answer. A lot of public services would benefit far more from proper reform than from more money. I admit that I am sometimes uncertain whether the conservatives are really engaged with providing these reforms, that said at least it’s not a taboo subject to raise the matter as it appears to be in many labour circles.

    Despite this it doesn’t change my criticism of Labour one bit. In the pre-election budget of 2001 Brown predicted borrowing of £12b over 6 years. He was out by an order of magnitude – in fact borrowing was in excess of £112b despite significant increases in tax take; for example; NI. This borrowing was already driving the need for higher taxes long before the recession hit and the need to service this debt was starving public services in the long run.

    In 2004 to be borrowing 3% of GDP despite having enjoyed a long (and continuing) period of growth was unnecessary and the increased spending failed to achieve ‘value for money’.

    “Well we can start with the proposed abolition of the IR35 rules and then point out that in the relevant policy document, the Tories promised to abolish several institutions (such as the small business service) and move their functions to other organisations. The document did not explain which organisations would assume these extra duties and how that would be paid for.”

    I’m a little confused since you refer to a relevant policy document but give no more details. There was the 2004 report as well as one produced in 2007.
    The latter contained a broad list of specific deregulation measures and many more general suggestions. Abolishment of IR35 was one such deregulation measure. It didn’t specifically mention the SBS however and I don’t believe was ever actually adopted as party policy.

    The 2004 James report states rather bluntly that the SBS was to be ‘absorbed’ not abolished. Presumably in the context of the review it means absorbed into the DTI itself as opposed to existing as a separate business support program. The cost saving was predicted based on a resultant reduction in employees and effectively given ‘net’. I’ll agree the report is seemingly designed for general rather than technical consumption but then it was developed for an election campaign. However the 2004 report makes no mention of IR35.

    That said let’s look at the two policies and see if they are at all desirable.

    The IR35 rules were introduced in 1999 not post 2002. They are a terrible mess and deeply unpopular within the industry; being thought to drive many I.T. specialists overseas. They were also estimated to be extremely cost-ineffective in terms of enforcement and raised only approx £1.5m per year for the treasury as a result.

    The wider impact on the industry is not included in this figure (ie the costs of people leaving the UK, increased insurance costs as against revenue investigation etc and the subsequent opportunity cost of foregone revenue). They have been extensively criticised by industry groups and experts for their lack of clarity, high costs to benefits ratio and for penalising freelance workers. Since taxation isn’t a zero sum game and this tax is almost comically detrimental I would suggest abolishing it makes sense.

    The Small Business Service is a nice idea but poorly implemented and as such poor value for money in its then form. I think this was somewhat recognised when in 2006 the DTI stripped the SBS of it’s status as an executive agency, removed much of it’s purpose and essentially reformulated it as a policy unit within the DTI. In 2007 a public accounts committee said the original incarnation of the SBS had not justified its existence and had had only limited influence on policy. It went on to say that the SBS was not generating enough new business under its loan guarantee scheme and was failing to tackle problems of business bureaucracy. Given this I would suggest that conservative plans to absorb the agency may well have been more sensible than you have intimated.

    “Alternatively you could have cut welfare payments.” We did. Spending on social security and benefits fell after 1997

    (Subject to comments I’ll make below (and it’s a big proviso) yes it decreased although later started to edge its way back up. The 1999 Welfare and Pensions act did seem to do some good though. Nonetheless, and it’s my fault for my original flippancy, but there was still scope to make certain specific and ‘necessary’ investments without the additional debt. You could have cut other areas or been more targeted and spent less.

    “and you might be interested to know that the conservatives left it much higher than they found it. (as a share of GDP)”

    The proviso I mentioned earlier is that comparing welfare spending (seemingly especially welfare spending but I’m sure not exclusively) over time is incredibly difficult. Accounting reclassifications make ‘headline’ figures very hard to use as comparatives. I’ll illustrate this with an example for you:

    Class 10.7.0 Spending, which accounted for approx. ¼ of welfare expenditure in 1996 and almost as much in 1998, disappeared entirely from the welfare figures from 1999 to 2003 when it re-entered at a substantial level and began to grow. Once you account for this single change the figures look far less flattering to labour. Now I’ve not been able to trace this through, it is possible a portion of it was diverted to Class 10.4.0, but substantial amounts could be in different accounts not included under ‘welfare’. Thus discussion of headline figures becomes a nonsense.

    “I’m afraid that it’s no good finding £10 million here and there and then calling for an extra £6bn for defence.”

    Well I can hardly speak for Dan so once again discuss his proposals with him. Real spending on defence has remained constant over the period despite engaging in 3 wars. I think that’s wrong and that cost saving should be found elsewhere.

    “No conservative on this forum has ever put forward serious proposals that add up or even come close to cutting government expenditure.”

    Assuming that’s true there is a likely reason beyond laziness or impossibility. Specific cost savings may be readily identifiable to the bystander – the £10 million here or there as you put it, but identifying accurately and specifically the larger cost savings require the sort of internal, functional and systems audits which are dramatically beyond the possibility of anyone except the government itself – including beyond the opposition to undertake with any real accuracy. I could identify for example the duplication of work by the various levels of government – local, regional and national, but not cost any savings to be made or put forward technically useful presentations on how it might be implemented.

    Could you talk expertly on how budgeting is worked out in a large firm – say PWC – and how they go about maintaining efficiency? I would struggle because the information available is insufficient. Do you therefore assume PWC is maximally efficient? I would suggest the difference between a large corporation and most government departments is as between night and day, despite struggling to identify in both instances precisely what processes are involved.

    If your next question is how then can I assert that the UK could be far more inefficient? – the answer is through evidence. Eg. the paper by Afonso, Schuknecht & Tanzi “Public sector efficiency: An international comparison” which I believe has been reproduced in various journals.

    ‘It wasn’t one quote it was a budget projection. For it to have been wrong would have required an unsustainable boom. ‘

    No it wouldn’t it would have required minor changes in economic performance as against assumptions.

    “Where exactly? This kind of Reagenite politics doesn’t work anymore. Which aspects and how much would it save? “

    That’s an incredibly broad statement, if you’d care to be more specific vis-à-vis ’Reaganite’ politics I could answer. Are you saying the economic model worked but doesn’t anymore or that the language is politically ineffective. If the former please demonstrate, if the latter then the recent report from the ‘British Social Attitudes Survey’ seems to suggest changes in the publics perception of government spending.

    “To what should we compare Labour’s record? We need to have some basis for comparison otherwise it’s very hard to make sensible judgements.”

    This is quite simplistic and I’d reject the premise. It’s possible for something to be wrong even in the absence of any hard and fast comparative. Judgement can be made objectively based on outcomes, in this instance the high debt levels just prior to the recession were unnecessary and left us poorly positioned to respond. I appreciate the attraction of seeing two numbers side by side and trumpeting the higher or lower as the case may be, but sometimes it’s not possible.

    “When we started this recession we had a fairly strong position by both historical and international standards:
    -2nd lowest debt in the G7 & -Lower deficits in every year than in 1996-1997”

    We’ve already discussed this – the fact that after a period of constant economic growth, having got debt levels down in 2002 they were allowed to rise back up again is exactly what I am criticising labour for, in my very first post. Other countries may have had lower debts but that might well just make them wrong too.

    -more budget surpluses than any government since the second world war.

    We’ve already discussed this.

    The proposals that the conservatives made at the time is relevant.

    Many conservatives were calling for the taming of debt – including your favourite K. Clarke. Truth was at the 2005 election the public didn’t really want to listen and the conservatives tied themselves in knots trying to appease everyone, but that’s doesn’t justify anything.

    “It demonstrates that the Tories called nearly every economic decision wrongly over the last 15 years. Wrong before 2002 on debt reduction and wrong after it with sums that just didn’t add up. of course there are things that could have been done better; that’s true of any government. “

    Such a general comment it’s impossible to respond beyond what I’ve already said. I’ve addressed some specific claims you’ve made already.

    “But every step of the way we kept debt lower than it was under the conservatives and deficits lower than it was under the conservatives; and we were reducing borrowing in the run-up to the recession.”
    Were we best placed to weather the recession as well? Leading the world? If high debt is not a problem why would labour have sought to reduce it? You kept debt lower than the conservatives, but the conservatives were trying to get debt down – and keep it there – debt which had a risen under circumstances very different to those enjoyed by labour.

    What frustrates me most about the spending splurges of recent years is that if they really were investment then we should be able to cut back dramatically without ill effect – investments by their nature continue to pay out long after instalments have ceased.

    For all the additional money spent on, eg. Education, I doubt any of it was so effective as would have been solving the discipline problem in our schools, however announcing ever greater spending was a lot easier I guess and appealed more to those like yourself.

  37. “Comparisons may be possible where suitably specific and considered however the need to account for exogenous factors makes them exceedingly difficult. ”

    Which factors did you have in mind? The Asian financial crisis of 1997 or perhaps the revenues from north-sea oil should be considered. If you want to consider these factors then we can discuss them. The rise in oil prices and rise in the cost of raw materials is another issue. If you don’t like the comparisons then perhaps you called also tell Prague Tory to stop making them with regard to Australia which after all has had a boom in natural resources. It was he who made the initial comment about surpluses and whatever the external factors, we delivered those surpluses and you didn’t.

    “Labour revised this prediction in 2007 (sic), largely due to higher than anticipated tax receipts.  ”

    I should also point out that labour made a fiscal tightening after 1997 that’s roughly equivalent to 2% of GDP (on a cyclically adjusted basis). (IFS) In fact the fiscal stance was tighter by 2000 than at any time since the days of Roy Jenkins’ chancellorship at least. (IFS) The increase in tobacco and fuel duties was accelerated by Gordon Brown (which was heavily criticised by William Hague), repayable dividend tax credits were abolished and every step of the way the conservatives called for tax cuts or opposed prudent tax rises; without saying how the money would be saved: “An incoming Conservative Government will follow a tax-cutting agenda. ” (Portillo, March 2001). Public sector net investment was lower in 2000-01 than at any time under John Major; and incidently about 25% lower than it had been while we were following Tory spending plans. Most of these ‘tightening policies’ were opposed by the conservatives.

    Even in 2005, UK government spending was just 0.7% higher than in 1997 (as a share of GDP). It was also 1.2% lower than in 1992. Before anyone suggests that this was the result of the recession, it should be said that UK government spending was at 43.6% of GDP in 1987 during the so-called Tory ‘economic miracle’: higher than any year between 1997 and 2007. Moreover, UK government spending was a lower share of GDP in 2007-2008 than in 14 of the 18 years of conservative government.

    To put this in an historical perspective, the average annual government spending as a share of GDP was as follows:

    1964-1970 41.6%
    1970-1974 42.9%
    1974-1979 47.5%
    1979-1997 43.5%
    1997-2008 38.9%

    You might like to pretend that these figures don’t mean anything and dismiss them as ‘surface data’, but even if we add the last two years of spending you will find that this government has spent less as a share of GDP than any government since at least 1964. Even though it was falling in the years preceding 1997, the excuse of inheriting high levels of government spending from Jim Callaghan simply doesn’t wash: government spending as a share of GDP fell between 1976 and 1980. After that it increased in every year until 1984, and didn’t return to its 1979 level until 1986.

    “…the 1st quote referred to intention rather than an inherent quality of the action.”

    You seem to be trying to imply that Labour’s prudence was just an ‘act’ to con people. I’m not sure how convincing that is considering that we kept spending lower for a full 8 years of government. To suggest that the record over those years was a grand conspiracy is to make David Irving appear comparatively credible.

    Labour’s revisions in the deficit projections were not only concerned with higher than expected revenues. You claim that “The figures involved are not (relatively) large.  ” and that “We are talking about shifting a small deficit into a small surplus across one accounting period.  ” when the reality is that we are talking about the largest budget surplus since 1970; 1.6% of GDP (roughly £17bn in today’s terms) above a balanced budget.

    “Far above trend? – oh please. A 1% difference above anticipated growth over the period should suffice, ” I’m afraid that you are still avoiding the issue of the 2% fiscal tightening which was further than the proposals made by Clarke. In fact the two-year ahead 1998-99 prediction had a was out by a margin that was above the post 1980 average.

    You then make a rather misleading statement: “80% of the planned reduction in borrowing was to be achieved through tighter spending controls – which were largely followed by labour. The greater than anticipated tax receipts would account for most of the rest of the difference. ”

    But what about the remaining 20% of the planned reduction? Was that to take the form of the tax rises that the Tories opposed? You talk about higher than expected tax-receipts but there’s still an anticipated 20% missing from your claim.

    Of course I appreciate that there is a lot of speculation here, but the evidence that we have suggests that the Labour government was fiscally prudent compared with the stance of the conservatives.

    “Because the choice to start increasing debt is exactly what I am objecting to – or at least the way it was continually increased. ”

    I’m afraid that any rational person would want to consider levels of debt alongside the direction that it’s heading in. Assuming trend growth of 2.5% and inflation at roughly 2.5%, it would require the deficit to be held to 1.8% of GDP to retain that level of debt. no post war conservative government has held the deficit at that level and on inspection Of Michael Howard’s manifesto in 2005, this wasn’t going to change.

    “There had been comparatively low inflation and low interest rates for 4 years before 1997 – interest rates for example were higher in 1999 than at any time in the year 93,94,95,96. ”

    I think you’ll find that the Bank of England MPC was pushing for higher interest rates for much of this period. Advice that was disgarded by the conservatives. The fact that the inflation target was the same makes little difference. Bank of England Independence over the setting of interest rates made it possible to achieve those targets with lower rates; that’s half the point.

    “He was out by an order of magnitude” This is highly misleading. Brown’s forecasts over those six years were on average more accurate than the post 1980 average.

    “Thus discussion of headline figures becomes a nonsense. ” I’m afraid that even if we make the adjustments that you describe we can see that the trend of inexorably rising social security costs was at the very least halted under Labour.

    “the larger cost savings require the sort of internal, functional and systems audits which are dramatically beyond the possibility of anyone except the government itself – including beyond the opposition to undertake with any real accuracy. ” Perhaps you can explain why the opposition has claimed to be able to do so? Are you now rubbishing previous Tory attempts to make specific pledges regarding savings as beyond the realms of the possible? Or were the aforementioned Tory ‘efficiency savings’ accurate? I would love to know which of your claims is untrue, because it has to be one of them.

    The paper: ‘Public sector efficiency: An international comparison’ uses a very limited range of performance indicators, many of which are subject to such a wide range of factors as to make the conclusions of that paper meaningless. At best the paper states the obvious of the law of diminishing returns which is not a sound argument for lower spending.

    “…if the latter then the recent report from the ‘British Social Attitudes Survey’ seems to suggest changes in the public’s perception of government spending.” Actually most of the evidence suggests that people want more detail over proposed cuts. This is a million miles away from Reagan’s empty promises of a ‘balanced budget in three years’. (LMAO)

    “It’s possible for something to be wrong even in the absence of any hard and fast comparative. ” So we’re now suggesting that Labour is wrong but the Tories were more wrong. Would you like to start your own party?

    “the conservatives tied themselves in knots trying to appease everyone, but that’s doesn’t justify anything. ” It justifies defeat for the conservatives in that election. Calling for debt reduction and then advocating unworkable fiscal policies is like calling for weight loss with a side-order of 12 Big Macs and a kebab.

    “is that if they really were investment ” Current spending at the beginning of this recession was lower than the 1979-1997 average. A much higher proportion of spending has been capital spending under this government.

    Turning to IR35 which was implemented in 2000, the figure of £1.5 million is highly misleading as it ignores the money raised through the deterrent effects of those rules which is very hard to estimate. Suggesting that IR35 only raises £1.5 million a year is like suggesting that a system of fines for fair dodgers on the railways only yields the sum of the paid fines; which is simply not the case.

    The Small Business service had a customer satisfaction level of around 90% and has played a role in preventing some of DEFRA’s more stringent regulatory proposals. Michael Howard seemed to go further than suggesting absorption and instead stuck with elimination as the fate of the SBS.

    You suggest that the Tories were trying to reduce debt, but they reduced debt by less than any preceeding post war government. (To be fair, this has a lot to do with changes in the bond market and the lessening effect of inflation on debt.) I’m afraid no one believes the conservatives were seriously prepared to keep debt down when their fiscal commitments strongly suggested otherwise.

    The reality is that holding debt down at 32% of GDP would not only have been difficult but would have been unnecessary and would have been at the cost of investment in public services. Investment that was sorely needed even if money had been spent more efficiently.

    Returning to what started this discussion, the £34 billion hole is a real problem. Questions have been raised over which commitments have been made but when you look at the flip flopping on the national insurance rise and freezing of council tax, it’s hardly surprising.

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