Thursday 29 April 2010

What should be said at the economy debate

Due it it being on the BBC, the election nearly being at an end and a search for someone other than Gordon Brown to be our leader, the TV Election debate tonight might well get the highest viewing figures. The first half of the debate is on the Economy.

Now, as we know from reports this week, none of the Parties are coming remotely close to telling the electorate the truth about what is to come. Whilst this may seem a clever electoral strategy it is of course the worst thing you can do long term. When the cuts come despite the promises not too then the electorate is going to get very grumpy.

So what should the answer be? I think it can be put in a few points quite succinctly;

- Look at Greece, that is where we are headed, we need to attend urgently to the need to stop the national debt rising so quickly. Once is gets to 100% there is no way back.
- To stop this we need to cut borrowing to zero over the next parliament
- This means saving about £100 billion a year spend in real terms.
- To do this we need to cut social benefits by 10%, scrap all Child trust Funds, credits etc.
- We need to cute the payroll of the civil service by 3% per year; a pay freeze in the public sector for the full term of the parliament, and a commitment to only replace 1 job out of every tow where people leave or retire. MP's and senior government officials will have a 10% pay cut.
- A big cut in the international aid budget for this time period.
- To help the private sector create jobs for the ex-public sector workers, we need to scrap the planned rise in National Insurance
- The tax credits system will be abolished and personal rates raised to reduce the cost of administration.
- We need to align public sector pensions with the private sector pension system.
- We will stop investing in inefficient green technologies and focus on developing nuclear power for the UK.
- We will enter negotiations with the EU to reduce our annual payments in line with our new straightened circumstances

The above measures are only going to get us half way to our target. A comprehensive spending review will take place immediately post the election to looking into the departmental budgets. Expected programs that will be stop include: NHS computer system and other large IT projects, ID cards, Aircraft Carriers, Future fighter aircraft.

Its not pretty, but it is what has to be done. What have I missed?


Ratbag said...

hear hear.....
CU gets my vote!

Nick Drew said...

nuclear power ... hmmmm

if you can manage that without a subsidy CU I shall be impressed !

(BTW for IMF purposes levies on consumers for such things count as tax, and what they are spent on = govt spending)

Old BE said...

There also needs to be a longer term plan to reduce the national debt to zero. There should never be a deficit while the economy is growing and a promise to limit the deficit during a recession.

Bill Quango MP said...

The social benefits. Need to freeze, not cut. Child benefit, tax credits etc.
Cuts will cause the very anger you are trying to prevent. Not increasing in real or unreal terms is safer. Over the 5 years there is a saving.
But on Unemployment benefits there is scope to turn the anger to a positive.
Look at work histories for example. People who have worked for 'x' number of years receive higher level of benefit, reducing over a number of months. People getting tax hikes are going to look for someone to blame.
Criminal behaviour = suspension of benefits until fines are paid. Repeat offences warrant further actions. It won't raise much but will help the injustice felt by the taxpayers.

Disability payments cannot be touched. Political death. And they are what the welfare state is for. The governments 'fit' notes are probably a method to be used to separate the deserving real from the chancers.

A strong narrative of Safety Net, not lifestyle choice..Medical care, not social engineering was the original aim our welfare state. A state to serve the people, not people paying taxes to serve the interests of those employed by the state.

Antisthenes said...

The answer of course is to do nothing, eventually call in the IMF so they can take the blame for the savage cuts, increased taxes and escalating unemployment.

Nothing simpler, government and parliament can concentrate on enacting laws to further erode civil liberties. Martial law will have long since been introduced to control social unrest.

roym said...

good post, but agree with what BQ said. i would also stop all overseas aid for the next 5 years. we wont be helping anyone if the IMF are at the treasury, so we should right our own ship first.

how about immediate withdrawl from afghanistan? and scrapping 50% of non utility related quangos

Budgie said...

Leave the EU and save around £100 billion in the medium term (1-3 years). Pink book figures (2008) show £13.3 billion paid out to the EU, of which £8.5 billion was "paid back" for things the EU wants, not what we want. Since we have to match EU spending some of the time, leaving the EU would generate an immediate cash saving of around £20 billion.

I would scrap DfID entirely, saving £9 billion plus whatever it costs to run. The FCO already has an overseas aid budget (much smaller) that is sufficient. What we should do instead is trade with the poor countries fairly instead of, say, engaging in the EU style fisheries imperialism.

Anonymous said...

The biggest thing you've missed is the public sector unions going batshit and the mass social unrest

Budgie said...

What is the point of working and child tax credits when the government is taking the money off people in income tax? Far better to scrap these credits entirely and compensate lower earners with a higher i/t threshold. The few who are in work and completely below the threshold could then be compensated in other ways such as a negative income tax.

Edward said...

And if the deficit forecast is based on sensible growth projections rather than Darling's ........

CityUnslicker said...

All a few points -

The social unrest is going to happen. These cuts are going to happen, these are not choices. These are least worst options.

CityUnslicker said...

I am with Budgie re social spending. You could leave unemployment benefit untouched - it is 3% of the £100 billion spend.

Insidious are the tax credits and income support. These have to be gotten rid of with higher earnings threshold instead. This is genuine reducing the size of the state and the handouts.

There has to be billions saved here. Of course the unions will go batshit - if you have seen them preparing over the past few months this is a foregone conclusion. But when the Govt takes on Unions strikers don't get he support - hey even BA strikers did not get support.

Withdrawal from Afghanisatan would make my review list for sure. i think we shoudl stay, but the costs may outweigh the benefits.
Also evetn trident would be on my list, not convinced we can't piggy back off the French and US deterrent. has not done germany much harm.

Dark times call for tough measures.

I wrote to be provocative, but the sad truth is in the debate tonight none of this will come out. By lying to the electorate whoever wins the election will destroy themselves for the next parliament. it is quite possible Labour are throwing the election on this basis.

Sebastian Weetabix said...

Amen to all that stuff. Here's an additional idea. We start using the coal that's under our feet and make electricity with it. We could even put those poor benighted northern sods back to work to dig it all out. Win-win!

Based on my back of beer mat calcs, it'll be cheaper than nuclear and we'll reduce dependence on imported gas, not to mention benefit bills. As for CO2 no one in his right should give a shit after the failure of the climate to follow the inadequate computer models. (WV: "diardmi" - die hard me, geddit?)

CityUnslicker said...

SW - one caution, have you seen the results of UK Coal this past year or two - not happy reading.