Post Austerity - what are the priorities?

So, great news, the UK public borrowing has finally reached the point where, though still in deficit, public borrowing is growing at less than the rate of inflation times GDP growth - i.e. the share of debt is finally falling. As an aside, it is so good to see that much of this benefit is from big jumps in corporate tax, paying far more as rates have been reduced in a real life laffer curve example.


So, building on Mr. Drew's post of yesterday, what should the Government increase spending on? The NHS, already eating a huge amount of government spending, has already been promised more money. There will be a contingency for Brexit too no doubt, given the Chancellor is a complete eyeore on the subject.


But, for the few pennies left over what is in most urgent need of more central funding. If Labour come to power, the splashing of loot all over the place will mean no priorities at all and the rather pleasing graph above will head back northwards once more. But, for the next 4 years, what should the focus be?


Home Office - crime fighting, law and immigration
Education - more schools and teachers or early learning (even to restore the EMA), student loan reductions
Trade and Industry - an industrial policy, or space
Infrastructure - renewal or roads and large water/power projects or social housing projects
Local Government - starved of revenues the most due to austerity
Defence - especially against cyber and counter-terrorism


So many choices and so little extra money, it needs to be spent wisely and with a view to helping those who may choose to vote Tory at some point. To me this means perhaps something on student loans and also law and order. Student loans have proved fatal for the Lib Dems and if the Tories ignore it perhaps they will catch a cold too. Law and Order is crucial to an advanced civilisation, failure to both control crime, administer justice and control the borders is on a par with failing to have an army to defend the realm. For me these would be the most propitious, but what do I know - far more interested in what you think in the comments

Austerity! Austerity! Austerity!

We have finally reached and inflection point in our economy. After the horrific crash of 2007-8, it has taken exactly 10 years to get our national finance back into some kind of order. Predictions for the future are not worth much, but we can at least believe the Tory Government when it says it will stick to controlling spending until the election; look at the track record above.


Whilst there could be a big quibble about how fast we could have cut spending in 2009-10, it will remain academic forever. Unlike Labour's current incarnation of blaming the Government for all the ills of the world and hysterically shouting "Austerity! Murderers!" at anyone sober enough to see reality.


The sad irony to all this is that, as it often the case in the UK, now that Government has control over its finances, the keys will be handed over in a couple of years to reckless Labour to start all the cycle all over again.


Also though Government is struggling with what to do now. It's whole mantra has been controlling costs, how can it slowly turn the taps on and if so where. Certainly many of the bloated public services we had in 2008/9 are now reduced to a level which delivers poor returns. The Government will be hounded to spend money on the NHS above all - but politically this is a mistake, Tory Governments never get any credit for health spending. Better would be to localise some of the gains and re-invigorate local government which felt the worst of the cuts of the past decade, people seeing improvements in their local areas across the country would surely be best. Or, if they were braver than they are, cutting some headline taxes like VAT. It is about time people were reminded of what it is like to keep more of your money to counter the socialist noise currently being made about handing over more and more to the'benevolent' state.


What would you do with a limited budget  for change in the next 4 years?

Apparently now even the Tories say austerity policy is dead

..very unpopular this austerity lark, so it is to be binned for a small splurge of spending instead.




 Look at the numbers though - Austerity was begun in 2010 just after the election May.


'tis a funny old world.

Austerity, again and again

An interesting piece of politics from the Chancellor today. Of course, as in any business, the finance director should always be the naysayer and the one with the most negative view of the future. This leaves others in the business, or in this case the Government, to think more optimistic things and yet have their view tempered by reality.

Today though George Osborne's target is Ed Milliband and also the British public. From the recent run of good economic data people could be forgiven for thinking always sorted. However, as the Chancellor is keen to point out, we are not even half way there to clearing the deficit - never mind trying to actually lower the national debt!

The Labour reply is non-sensical, something about economic failure which does not wash with the current facts and waffle about sorting out the cost of living crisis, with funds from the magic money tree.

The Tories though also face a quandary the largest spending departments of the Government are social security and health care. Both of these could provide the £25 billion we need to cut, yet neither can be touched. Some areas are already creaking, lawyers are on strike today as legal aid has been slashed - rightly for some, but for others justice will be harder to come by now with no funds. The Tories too have ruled out further tax hikes, sensible given the already huge tax burden placed on Country.

So its an interesting positioning and good politics to remind the people of the UK of the difficult situation being faced at a macro-economic level and also the lack of choice that there really is about future budgets.

Labour Party plan to ape Tory "austerity-lite"

By the standards of June, when nothing much can tends to happen as people start to enjoy the weather in the UK and stop thinking of ways to upset everyone else, there is a small political bomb being planted today.

Led by the combustible Ed, a speech is being made now at Reuters that suggests an incoming Labour administration in 2015 will be an austerity government. With a pitch that seems to clash badly with previous positions, Labour are to note that there won't be any money left and most departmental spending will have to continue to come down.

Furthermore there are gimmicky ideas on tax raising such as reducing winter fuel payments for elderly relatives and also increasing the whole bankers bonus tax. These two idea raise in the grand scheme of things next to nothing in real revenues, but help to position Labour firmly on one side of the class war they are so intent on continuing.

It is far from certain that Mr Balls will ever get any economic credibility. It is a strange world in that both Osborne and Balls are in dire need of replacement by their party leaders, yet neither one has the courage or political capital to act.

In the longer term, this is quite a shrewd move by Labour. For on most other policy fronts they lead the Tories by a healthy margin. If they can get some ground back by promising Tory economic policy only from them, just as they did in 1997, then this could prove to be a turning point in their fortunes.

The Tories though will be able to point to their flip-flopping (whilst carefully ignoring their own implementation of plan B rather than A). Interestingly the truth is that both leading parties have almost the same ideas on the economy now, both seeking an austerity-lite package. The opportunity for the Liberals and UKIP to offer a different package is their for them to seize.