Wednesday 30 June 2010

Labour know the value of everything and the price of nothing

Newsnight last night and an hilarious interview with Ed Balls. The Government are going to cut back the regional development agencies that spend so much for so little. In these recessionary times surely these are very close to the top of the list of things not needed.

In case anyone is in doubt, people don't (or rather shouldn't) start and grow businesses because of regional grants. A better way to help would be to reduce the costs of employment and the business rates. With less outgoings business will stand a better chance if turnover is a struggle.

Still, all of this is well beyond the denial bubble of Labour. Still strong in their mantra, as Guido pointed out yesterday of David Milliband, that cuts are wrong, spending is right and the state is the only thing keeping us together.

It could not be more wrong, the state is what has delivered unto us huge debts. Personal debts are our own fault, national debts is someone else's burden inflicted upon us. A real retrenchment is here but Labour see only a utopia where the money is endless for its client state voters and there is no cost. They see value, but not the price. It proves once and for all that the delusion was not just Gordon Brown, but the whole Labour party.


sobers said...

They're socialists, of course they don't value money. They always take it from someone else who earned it and spend it on themselves, and others, who haven't earned it. Its in their very DNA.

Budgie said...

The statists have two mantras at the moment. One is "cuts are wrong, spending is right" as you say. The other is that the UK government debt is all the fault of the bankers and no other.

However, only the intention to cut has been stated, the reality awaits the departmental reviews. You can be sure that the departmental managers will cut in the most painful way possible, to cause the most outrage. They have no incentive to do otherwise.

This is also true of the RDAs. Only by axing will the cuts actually be cuts. That is why I am doubtful that the Cleggerons will succeed.

Bill Quango MP said...

Of the £2.9 billion paid out by England’s nine RDAs, £1.8 billion ended up in the public sector.

Trade unions received more than £3 million in grants in 2008 and 2009, while funding was also given to major international companies including the Newcastle Building Society, JP Morgan and BAE Systems.

RDAs were introduced by John Prescott, the former deputy prime minister, in 1999.

Matthew Elliott, Chief Executive of the TaxPayers' Alliance, called for George Osborne, the Chancellor, to use this week’s Budget to abolish them altogether.

Steven_L said...

I'm not sure about the theory that public sector managers will cut things that hurt just to make their point budgie.

It's more like that Sir Humphrey line about there still needing to be government from the bunker after a nuclear holocaust - when there is nothing to govern.

The sort of people that rise up the ranks of government actually believe their own propaganda about how the world would fall apart if they didn't have all these partnership meetings and strategis plans.

Because of the way that spending is allocated (per department) you can't see how much is being spent on intra-departmental networking and the like. So the budgets that get cut will all fall under the headline of a service people can relate to.

The people who make the decisions on how to cut are the same middle managers that spend all their time writing strategies and attending partnership meetings. To some extent they are all just trying to leech from each other's budgets at these things.

I might find you a few grand a year from my budget if you delegate me something that looks good on my CV etc.

CityUnslicker said...

I am generally with Budgie, slicing does not work. Stopping does. RDA's must be stopped, the Department of business must be stopped. Polytechinc of low quality must be closed. Costly wars must be stopped.

That is the only way it is going to work - however an odd benefit of the cuts being so deep is that this will HAVE to be attempted, whereas a say 5% cut will never achieve anything.

not an economist said...

"the state is what has delivered unto us huge debts."

Labour would argue that the recession is the consequence of irresponsible behaviour on the part of commercial banks. This is well documented. I grant you that expansion of govt hasn't helped but the priamry cause does seem to be the banks. How is that the fault of the Labour Govt?

CityUnslicker said...

not an economist

um..where to start.

The government was running a 3% budget deficit annually at the top of the cycle. This is the crucial point, we were already getting ourselves into a deep hole just at a time when prudent government would have been paying down debt. If you look at the late 90's this is what Tory policies (even Brown followed them) did to recover the nations finances from the 90's recession.
Also the banks went under due in large part to poor regulation - the Government's fault.

the recession exposed what was a terrible position. Many in the EU etc had told us to stop. clver Gordon ignored them all, instead boasting he had ended boom and bust.

Even some of the bank bailouts were foolish and expensive like Northern Rock.

Finally, with massively collpasing productivty in the public sector for 10 years, all the money was wasted. 90% went on wages and pensions, never to be recovered and not something a business would get away with calling 'investment.'

Anonymous said...

not an economist said...

Clearly you are not an economics. I am unconvinved that you are not straight out of Anna Racoon's lefty rant generator.

if you do just one, tiny, miniscule piece of research before thrusting your ill-informed opinion on the world, I would suggest that you look up the difference between tax receipts, and government spending over the past 13 years.

A practical demonstration of the effect of this could easily be had by attempting to run your own ship, commune, head-sized sand bucket, in a similar manner and report back...

not an economist said...


Thanks for the reply . Very informative. I wish govt front benchers were as articulate as you when they are dealing with the likes of Balls and the Millibands.

Mark Wadsworth said...

As ever, let me point out that the two worst taxes are VAT and Employer's NIC (with possibly higher rate income tax in third place).

If you cut Business Rates, all that happens is that landlords put the rents up or selling prices go up - elastic demand, inelastic supply and all that.

And any owner occupying business that can't even make enough to cover the Business Rates is effectively running at a loss and the owner would be better off shutting his business down and renting the premises out to somebody else.

CityUnslicker said...

so by your logive then Mark business rates could be 90% of turnover or profit and it would not matter; it would only increase property prices and those passed onto consumers?

That is way to osimplistic

Steven_L said...

I think he's saying it would decrease property prices (and rents) and increase consumer prices.

Agree it's too simplistic, but he does have a point if you remove all the other factors that influence the price of leasing or renting business premises.

Then again, MW is famous (in the blogosphere) for his support of across the board simplification!