Tuesday, 23 April 2013

An end to cuts?

There is some very good journalism in The Times today (paywall, so no point with a link!) discussing the new spending round the Government is about to embark up on and how much ministers are trying to fight off the coming cuts.

As always the Treasury gets the blame and the Ministries decide that the only cuts that can be made are to the Alzheimer's clinic and the Hospital.

The thing is, can the UK really hack this austerity thing? I don't think so, the need is for wholesale privatisations - selling the BBC would be top of my list along with a chunk of the specialist health services and bigger infrastructure. That along with stopping the Government from doing big chunks of what it currently tries to do.

However, there are no votes in this approach from a populace used to the Nanny state; so what to do? I can see the default position being minor cuts, more tax rises and a slow Japan style death with the national debt slowly climbing towards Italian and then Japanese levels whilst politicians hand out the treats to harvest votes.

23 comments:

Anonymous said...

Sadly, I can see no evidence that you're wrong; the era of rational debate on the size and nature of the State is over, and until the whole thing becomes less hysterical...

Mark Wadsworth said...

Problem is that when UK governments privatise stuff, they end up spending even more than they did when stuff was nationalised (PFI, Work Programme, Royal Mail pension fund) and then things go wrong they pay even more to re-nationalise it (HBOS, RBS, Rover).

The only notable exception here is refuse collection.

And if they privatised the BBC (cost £3 bn per annum) then they'd lose the TV licence (£3 bn per annum) so how does that save the government money?

PS, of course, the deficit in not being incurred because of true public spending or welfare and pension payments, it's all down to corporate subsidies, which increased from 20% to 40% of UK government spending since 2008.

Diogenes Sinope said...

There are 2 large elements to the debt - Housing and pensioners. Strip those 2 out and you're sorted.

Pensioners are particularly protected but if you have had 40 - 50 years to provide for yourselves why should anyone expect to be taxed so you can glory on. Same goes for the NHS. Pensioners again.

And who continues to vote for abusing the younger generation with high taxes and high housing costs?

Time they were put under the spotlight - or sent to Bugaria / Romania as a gesture of solidarity. We get the hard working ones and the spongers get shipped off.

I may be being provocative!

Clive said...

Yes, I agree with Mark's comment. Look at the energy industry. Okay, the government of the day got the revenue from the sale of the grid, the generating assets and the supply businesses. But overall, the economy has suffered through rent extraction, the lack of anything resembling a free market and stifled innovation because there's basically just monopolies or oligopolies.

Not only do you have the same heavy hand of bureaucracy (this time it's private, not state) but you also get to be screwed over on pricing. It's not even as if the government can keep its hands off the industry (phase out of large combustion, green energy nonsense which is good in principle by awful in execution, nuclear shenanigans etc.)

Do we think the NHS, to take an example, would benefit our pockets if run under the tender ministrations of the private medical insurance industry ?

And as for pensions, haven't we already seen that movie before ? Eventually the private operators (some of them anyway) succumb to incompetence, fraud or plain old fashioned greed and fail. What government, in the face of 70 year olds going hungry in cold houses would not be able to resist a bailout ?

Sorry, this is yesterday's solutions to today's problems.

Bill Quango MP said...

MW: I think CU means that the £5-10bn raised from a BBC sale will shave some of the debt.
And possibly future bidding of a few billion every few years depending on the sell off model.

And HMG can continue to collect the telly tax if it wishes.


Electro-Kevin said...

Vote Labour at the next general election.

We'll have a viable right wing opposition within 4 years I assure you.

I'm afraid we need to go really broke before we can begin to get better. So that all options are put back on the table and the 'nanny' state is put to death by her own hand.

Perhaps the better option is the Japanese (Osborne) one.

Seppuku. Not to be confused with that other game, Sedoku.

Take every day as it comes and enjoy while you can.

----

Diogenes' comment was indeed provocative. Why single out pensioners when there are so many shysters in our midst ?

Except, of course, the previously unemployed (non NI contributing) people reclassified as 'retired' at the end of their 'working' life. Perhaps those administering the welfare system ought to be put in that accounting column too.

Electro-Kevin said...

The privatisation of the BBC might be economical if it means that socialist politicians are no longer made to look laudible in every news bulletin and current affairs programme.

Blue Eyes said...

The energy industry is now less efficient than under the CEGB and local Boards?

Wow. Just wow.

So by that token the government could solve its debt problem by renationalising the railways and opening the pits back up?

Blue Eyes said...

And while we're at it, why not sort out the housing market by letting democratically-elected councillors decide where we should all live?

Oh for those healthier days when bread was still rationed!

Mark Wadsworth said...

Blue Eyes says:

"why not sort out the housing market by letting democratically-elected councillors decide where we should all live?"

That's exactly what we've got, because the NIMBYs want it. I'm not sure what relevance that has to a debate on government deficits.

As it happens, building council housing is a great money spinner for the government. And selling it off is an act of madness. We could add to my above list of crap the following:

"Flog off the council housing at undervalue and then rent it back for above market value from 'private' landlords"

Whatever you think about it politically, it was a shit deal for the taxpayer (or for people wanting to be housed).

Anonymous said...

Bill Quango 1:30 pm -

The sale will provide a sum of money that can be applied to reduce current year borrowing and thus possibly reduce the deficit, but it will have no impact on the debt other than stopping it going up by the amount that wasn't borrowed.

As to the idea that having privatised all broadcasting the government could still levy a licence fee, well good luck with that one -

Bob E

edam said...

anon - it does with trains. Franchise bidding. Virgin trains anyone?
and it does with telecoms - 3g licences.

But, in all likelihood a sell off would be a once only, BT /BA style asset sale and forever rights to the limited free to air tv and radio bands.

Nick Drew said...

am squarely with BE, and not (I'm afraid) with Clive

the costs driven out of the gas and electricity industries have been very great indeed

don't confuse subsequent regulatory failings (allowing the re-forming of vertical integration) and dumb 'environmental' legislation for a market failure

Diogenes Sinope said...

@ND

"regulatory failings" These two words seem destined never to be apart.

When I harangued about pensioners not providing for themselves I was being obtuse. They do on the whole provide but the state through the BoE trash the currency by engendering inflation to make it's (the state's) debt much less. This then makes us all in our old age dependent on the state, creating more debt and the cycle goes on.

Pensioners have been robbed for years and will continue to do so unless we get a grip on the BoE. Proposed by Patterson and them implemented by Montagu, the BoE has been at our throats ever since.

And Patterson's other claim to fame - the Darien expedition - which led to a Scots Banking crisis and the Union.

Blue Eyes said...

It's all about competition. The BoE does not trash your pension investments, regulations trash your pension investments. If we were allowed to invest our pension savings as we liked and buy annuities from wherever we wanted then QE would not be a problem - we wouldn't be putting so much into government bonds (thank you Gordon) and we'd buy annuities from Austria or China or wherever had good offers at the time. We are already perfectly free to start demanding our salaries in gold or Renimbi, unlike our libertarian cousins on the other side of the Atlantic and nobody forces anyone to save up in cash ISAs.

Likewise the criticisms of the energy market lead to the obvious conclusion that we should have more competition and less state diktat over what new capacity is built, not renationalisation.

In a functioning free-market system the government's role need only be competition, H&S and some people might say a spot of employment law.

Going back to privatisation, the reason that Mrs T sold off the water companies is that she didn't want the taxpayer to be on the hook for all the inevitable investment.

Get the stuff off the national books and let the state concentrate on providing the things that the market cannot.

Anonymous said...

Selling off the BBC would provide a capital sum to reduce the National Debt. The taxes that privatised broadcasting would generate would go towards necessary government current spending. An end to the BBC's incessant promotion of the parasitic-leftist end of the public sector would improve the sanity level of our national discourse. And the TV Licence Fee would be abolished, which would allow people to keep more of their own money to spend for themselves.

The object of "cuts" is not to find other ways of handing over more money to the government. It is to reduce the role of the government altogether.

Anonymous said...

Anon 10:04

"Selling off the BBC would provide a capital sum to reduce the National Debt".

OK, I am wrong at 5:31 and you are right, only please explain to me how "that capital sum" will genuinely "pay down the national debt" when the day after if not the same day, seeing as at present government revenues are less than government spending - you know, that "deficit thingy" they'll go out and borrow again, increasing the debt by probably more than they had just "reduced it" ....

Bob E

CityUnslicker said...

nice comments all.

This stuff od privatisationi s just plain wrong. British Airways, British telecom anyone and as ND says, British gas.

How are these bad? They raised money and LOWERED COSTS. De regulation lowers costs. EU and recent government INCREASE regulation which raises costs.


Things go bust in the private sector, that is the point. You take risks. in the public sector he subsidies continue forever at an expanding rate.

MW- where is this nonsense about corporate support from?

As for the BBC, of course it saves money, its saves tax raising and reduces the debt and reduces subsidy to an already thriving industry.

Weekend Yachtsman said...

"...if you have had 40 - 50 years to provide for yourselves... "

Ahem.

If you have had 40-50 years of handing over half (or more) of everything you earn, against a firm promise of a worthwhile pension, you don't expect to be told "sorry, we spent the money on something else, pay all over again" when you're already too old to do anything about it.

They took the money. It's their problem.

Of course, I realise that the money IS gone, they DID waste it all on nonsense, and something else has to happen, but fer Chrissake don't blame the pensioners - they're the victims here.

hovis said...

CU, surely the NHS is one of the biggest corporate subsidies there is?

Scrap it.

Anonymous said...

yachtsman.

Give half your wine to a drunk, it's your fault when you don't get it back.

hovis said...

Anon 2.13: Tp stretch your anology, the drunk had a kinife at your throat and you have half "willingly".. of ocurse its your fault for giving ...

assurance info said...

""" The thing is, can the UK really hack this austerity thing? I don't think so, the need is for wholesale privatisations - selling the BBC would be top of my list along with a chunk of the specialist health services and bigger infrastructure. That along with stopping the Government from doing big chunks of what it currently tries to do.""