Am rushing out in a minute but just wanted to post an extract from this morning’s Labour Party media monitoring brief, which they still kindly send me by email every morning. It is self-explanatory. And just because one of the ‘business chiefs’ in the headline is a banker, and a RBS banker to boot, doesn’t make them wrong.
‘UK business chiefs attack govt growth plans’ (Tele business splash) – Two of Britain’s leading businessmen have raised serious questions over the Govt’s growth plans just as ministers gear up to deliver next week’s Budget, writes Peacock. Willie Walsh, chief executive of British Airways owner International Airlines Group, and Stephen Hester, chief executive of the Royal Bank of Scotland, have warned that UK companies lack the confidence to invest. Walsh mocked the Coalition, saying it changed its policy for growth “every other week”. He accused ministers of being more “Norse than Inuit” – referring to the Greenland community which failed to adapt to environmental changes – with ministers refusing to recognise the power shift from West to East. Walsh: ‘It’s little wonder we have such poor growth when we do so little to make it happen … When I say that we don’t have a plan for growth, I need to be a little more specific. We don’t have a single plan for growth. We have one every other week… The words are always warm but they go cold waiting for action.’ Hester: ‘Time and again, we hear claims that banks are not lending. Let me say upfront, there are reasons behind this – on some we shld strive to do better, some we can do little about. We have the balance sheet, funding and capital to lend, and indeed the future success of RBS requires that we do lend more … One of the issues we all have to confront right now is that businesses don’t have confidence. And when businesses don’t have confidence, they don’t invest, they save more, they pay down debt. Clearly a circuit-breaker is needed to restore confidence and drive the lending and investment that is so vital to the economic recovery.’ (Tele)
Another thing that caught my eye in the media brief was the Guardian story that George Osborne is planning to cut the top rate of tax from 50p to 40p. This may be one of the many stories written before the Budget that turn out to be ‘speculative’, but it is interesting that the argument being used to do so is as much about the failure to bring in expected revenues as it is about boosting enterprise and growth. In other words, well-off people who employ clever lawyers and accountants to get them off paying what they should are rewarded; compare and contrast the approach of the government to so-called benefit cheats.
If you’re right that the suspect ’50p tax rate about to be cut’ is just engineered scaremongering, all well & good, but if it is true there is one salient point that should not be missed, and that is that such a callous and self serving move would help clarify just what this coalition government really stands for.
Osborne has no plan for growth.
The whole point of the so-called plan A was that by cutting public spending private sector would have confidence to invest. But the exact opposite has happened.
British businesses are sitting on £70bn to invest but lack confidence because plan A (expansionary fiscal contraction) has killed the economic growth.
Recent IMF paper Expansionary Austerity: New Evidence proves beyond doubt that plan A does not work.
George Osborne believes that by balancing the budget the rest of the economy balances too. But Keynes said that take care of unemployment and the budget takes care of itself.
Mr Osborne will now have to borrow £158bn extra because of his wrong macroeconomic policy.
Under Alistair Darling plan Britain would have cut £40bn less, but still would have managed to borrow less than the Tory-led government is now doing!
Osborne is cutting too much and too fast as Labour (and I) have been telling since 2010.
Plan A will lead to double-dip recession.
Mr Osborne is cutting capital spending. This will do long-term damage to Britain.
He is only shifting the debt from public sector to private sector again as taxpayers must now borrow more.
This does nothing to rebalance British economy.
Homelessness is up. Real incomes down.
Where are the private sector jobs Mr Osborne promised? He promised 2.5m new jobs during this parliament.
Hayekian austerity of Osborne has meant that 270,000 jobs in public sector have gone. 30,000 NHS workes. 71,000 in education.
Public sector workforce has been reduced by 7% to 5.94m.
At the same time only 226,000 new jobs were created in the private sector. Many new jobs are part–time.
Number of 16-24 year olds out of work is 1.04m.
Yet George Osborne will say in his speech that plan A is on track. It is not!
Unemployment is 2.67m, or 8.4%.
There has been NO GROWTH in Britain for six years. Output will recover to pre-crisis level in 2014.
This is the slowest recovery since the 1930s. British exports have been doing well, so the eurozone or world economy is not to blame.
Plan A is the reason.
Osborne killed the business and consumer confidence by comparing Britain to GREECE and saying that the UK was “bankrupt”. But Greece had double the amount of debt.
Britain´s debt in May 2010 was only 53.5% of GDP, still under the Maastricht treaty level of 60%.For the past 200 years of 250 Britain´s debt has been on higher level.
The reason why Mr Osborne lied was to get support for his ideological cuts in order to achieve small state.
He also started cutting too early out of political consideration. He wanted to be able to cut taxes before the next general election.
Mr Osborne wants to cut the structural part of the deficit. By cutting taxes or increasing capital spending he could generate growth without harming his target.
Britain now needs to increase aggregate demand. Taxes should be cut for the poor.
When businesses and consumers are not spending, only government investment can help.
Mr Osborne must abandon NEOLIBERALISM.
The model of lightly regulated capitalism caused the crisis.
Amid falling wages and rising inequality democracy itself is in danger.
Globalisation in the west has only benefited the super-rich.
If the 50p tax rate was such a good idea why did Gordon Brown wait until the last ten weeks of his long reign to introduce it?
Osborne falling at the feet of the plastic gods of finance yet again, and giving something for their collection boxes. They can do no wrong, in his eyes, it obviously seems.
But one supposes he has got to think of the tory HQ campaign coffers, too, indirectly.
The coalition partners are a case of the blind leading the blind. Why can’t they see the damage they are doing?
Osborne and co are on a different planet to the rest and that it why they don’t seem to care, it won’t affect them or their children. They need to be stopped!!!!
I wonder why Gordon Brown left it until the last ten weeks of his 13 years in power to introduce the 50p tax rate.
There is no growth plan, that is true.
There are simple economic solutions to all this, but difficult politically so thats how it will stay.
Supply side reform would get us moving again but would cost the government the election so nothing will happen.
For anyone who buys the “businesses are not investing, they are sitting on piles of cash but not using it” argument so widely held, remember that its often ended with “they are paying down debt instead.” Ie they are not really sitting on cash as we would understand it – they are sitting on debt.
For the 50p tax rate, I know that the evidence shows that if you lower the tax rate, you actually increase the tax revenue.This is because more people invest, more people take jobs etc.
However even I find this hard to believe in relation to the 50p rate in this country. If I earned over 150,000 I cannot see how dropping the rate from 50p to 40p on the portion after that would make me invest.
Likewise I cannot see the opposite if I was paying 40p (on the portion above 150k) I couldn’t see how I would then leave if they changed it to 40p or employ more tax avoidance measures than I already was? If the rate was 80 or 90p then yes I could see that.
Anyway Vince Cable says we should have the 50p rate for moral reasons even if it doesn’t make money. I sort of agree.
There is no way Osborne will drop it in this budget.
I am not and never had the good fortune of earning £150000+/annum
However I can (I think) understand the feeling of resentment of perhaps most of these high earners of working for half the week for the exchequer. It also has to be acknowledged that expenditure has the tendency of growing to match income.
However in this era of “being in it altogether” (remember that?) those on £150000+p.a. are more able to help to carry the burden of reducing the budget deficit than single mothers, families with children with cancer and families on minimum wages
The 70bn that you say companies are sitting on – these companies owe way more than 70bn. This is an example of how someone can state a fact, but still be deliberately disengenious.The companies do not “have” 70bn.
Osborne is not Hayekian.
How do you explain this: Obama has had a recovery. Cameron has not.
Cameron has steadily increased overall government spending throughout his reign.Obama has cut overall spending throughout his reign.
This is at least the third time I’ve raised this on the board, still waiting on a reply… anyone?
I see Ed Miliband has officially endorsed Kommandant Cameron’s election strategy today.
Old Labour and New Labour are gone, Forced Labour is here.
Miliband, recognising as I have that Cameron will win the election with Workfare, has now decided to outworkfare cameron “8 weeks forced labour? Pah! How about 6 months! Beat that Dave!”
Except of course that Dave has more chance of achieving his (8 weeks of artificial work is easier to create than 6), the voters believe it was Dave’s idea and Labour are just following.
A bad day for libertarians. And the leftwing and righwing libertarians in labour and the tories are silent.
I have been informed that the Green Party are anti workfare. If I can confirm this, I will be voting for them, even though I consider them the 2nd most ridiculous party in Britain (BNP are the most ridiculous.)
Otherwise I’ll vote for noone.
The Welfare State is mostly kept going by all the millions of taxpayers on low and middle incomes getting out of bed most mornings and doing what are usually routine, taken-for-granted, boring jobs. They- we – are the real wealth creators, not compulsive gamblers in the Square Mile. Let’s not get taken in by all this Kelvin MacKenzie-style crap about how we need these relatively few, wonderful and unbelievably talented high earners to make a ton of money so that they can fund the Welfare State from that proportion of their taxes that they don’t manage to avoid or evade, and, like blonde-haired Boris, give some of their ‘chickenfeed’ to charity.
Because Gordon Brown was New Labour and New Labour was formed out of a recognition that if Old Labour did not reposition itself relative to the Thatcher-induced retro-fashion for Neo-Liberalism, into which the electorate had mostly been persuaded to buy, it would never be able to form a government and would remain an opposition party. That retro-fashion should have ended in 2008, but the Conservative Party knows little else, so it continues to apply it regardless of the obvious damage it is doing to the country. New Labour were caught between a rock and a hard place – fat capitalists on the one hand and Essex Man and Woman on the other. ‘Fair shares for everybody’ had been made to sound sentimental. It’s the old battle between idealism and pragmatism.
As usual, Olli sums up Osborne’s catastrophic error perfectly, though to call it an ‘error’ is too generous. Osborne and Cameron have seized the opportunity presented by the economic crash and are using it to force through what would, in different circumstances, be unacceptable ideological changes. The whole economic narrative of ‘Labour’s mess’ and ‘as bad as Greece’ was to facilitate swingeing cuts to the public sector and to carry on what Thatcher failed to finish.
It says a great deal about their true motives that they appear indifferent to the damage they have done to our economy with their completely irresponsible talk of being on the verge of bankruptcy. Like Thatcher before them, poor economic indicators and unemployment will be minor political embarrassments, as their real objective is the fundamental rebalancing of the economy in favour of the market and the elimination, as far as possible, of the public sector. From their point of view they are on track.
Labour have rightly made these points from the outset but the media rarely reflects their viewpoint. High profile media presenters and economists are failing to interrogate Osborne, Cameron and co. to expose their fundamental direction of travel and underlying motives. I am still waiting to hear Paxman, Neil et al challenge their Labour’s mess mantra, given its importance to the Tory argument. It would be perfectly reasonable to ask if the Conservative Party would have bailed out the banks or why they backed Labour’s spending plans up until the crash.
As a nation we are being badly let down, not just by politicians who lied about our economic situation to gain power and impose an unpopular ideology on the country, but also by the media, in particular the BBC, which is avoiding its responsibility to convey all political viewpoints impartially. Labour politicians are being repeatedly challenged aggressively either on their actions in government or on their plans for the future. Government news releases are dutifully aired without question. Unbelievably, given the controversy surrounding so many of their policies, there is very little detailed domestic political coverage at all. The BBC seems to be trying very hard to avoid discussion of things that really matter to people. I’m sure Cameron and co are very grateful.
In the interests of accuracy, could you spell out the amount of remuneration available under Cameron’s versus Labour’s policy?
Let’s build a new The City? God forbid!
“I am still waiting to hear Paxman, Neil et al challenge their Labour’s mess mantra, given its importance to the Tory argument. It would be perfectly reasonable to ask if the Conservative Party would have bailed out the banks or why they backed Labour’s spending plans up until the crash. ”
This is quite true, I agree with you. However it cannot simultaneously be true along with Cameron and Osborne being austerity ideologues or “Hayekian” as Olli described them.
In terms of individual remuneration, Cameron’s policy will pay nothing on top of benefits, Miliband’s will pay minimum wage, as far as I know.
In terms of numbers of people this will be paid to Cameron’s is, probably deliberately, hard to work out due to its 5 categories.
Milibands will apply to everyone out of work for more than 1 year.
There is no way that he can just “create” enough productive jobs to pay for all that, to the extent that I will almost be inclined to back this as it has a more certain chance of failure than Cameron’s plan.
Ed’s plan cannot possible succeed. I know these things. When I was told that Ireland paid 200 euro per week dole I said that this was impossible, their economy would collapse if it were true. People laughed. Then their economy collapsed. Same with this. But it doesn’t matter it will never get implemented, Cameron has won the election on workfare. The nasty people who want scroungers to be forced to work, care not if they are paid.
I am opposed to forced labour whether it is paid or not, whether it is for commercial organisations or community ones. Forced labour should be reserved as punishment for criminals.
Anybody else think it’s weird that this weekend of all weekends Radio 4 allowed no questions on the NHS bill on Any Questions?
And there were none on QT this week either. There was no coverage of a sizeable protest in London last week and I believe another one today. Andrew Lansley was pursued through a hospital a couple of weeks ago by a doctor of 30 years challenging him and condemning the bill. Thousands have seen this on YouTube but none via the TV even though a BBC cameraman was present on the visit. What a contrast to the Duffy affair!
From the outset the BBC has been primed to ignore or play down this issue. The government knows they have no mandate for this and it is deeply unpopular; they could not have forced it through without the cooperation of the BBC.
This has been an appalling abuse of our democracy and I hope that when the Labour Party returns to power we will investigate why and how they have managed to disregard the BBC Charter with such ease.
The BBC won’t show you these so I will:
It is increasingly clear how out of touch the bulk of the (non-home counties) Westminster Tory’s are with the rest of Britain, despite the smokescreen created by the most favourable overall media coverage afforded to any Government since WWII.
RE: the Osbourne move to local pay bargaining. While there are ideological currents within the Tory party that would lead them to want public service pay outside the South East to be vastly reduced, they must realise the incoherence of their own economic policies as a way of achieving this.
On the one hand, the Government are supposedly making council house transfers between regions easier by use of a national home swap system – a laudable aim in freeing labour market mobility… if the replacement affordable home provision is made, which seems unlikely to happen under any Government, let along a doggedly free market laissez faire one with housing policy headed by a shiny suited used car salesman wannabee like Grant Snapps!
But on the other hand they are moving towards localised pay bargaining, which mitigates against the very same labour market mobility they claim to want to create via the social housing market.
Localised pay bargaining will reduce overall take home pay & with it the ability of public servants to move posts within all parts of Britain & to access the best rewarded jobs available, based on merit.
All Labour, & principled social democrat MP’s like Southport’s John Pugh, need to expose this for the anti-family & anti-British policy that it is.
Please, please, please, if this goes through – hammer home in all the messages we send & comments we post from now, until the election, that the Tories have ensured that there is one rule for ‘Cameron’s Class’ & one rule for everyone else in Britain!!!
The Beeb is ruled by Chris Patten now, we can’t hope for objectivity or balance although we have till now funded in hopes of that.
Paxo ….. hasn’t he become little more than continuity?
Nick Clegg, in the maelstrom of a truly confusing election outcome, went with the flattering sham, gave ‘him’ a majority of 100+ (totally at odds with what voters had decided) and …. we are where we are, with an Opposition that need not bother voting (so most don’t).
The country did not give an unbeatable overall majority of 100+ seats, Nick Clegg did.
If his constituency don’t chuck him out pdq I don’t think I’ll be voting again, I’ll be too ashamed of my near-Sheffield origins.
………. “I know these things.
When I was told that Ireland paid 200 euro
dole I said that this was impossible,
their economy would collapse if
it were true
There was so much blarney about the ‘Tiger Economy’ I can’t believe that many people laughed, no need for you to feel so martyr-ish.
The single good outcome of Tiger-ism might be that the rest of the UK won’t be being blamed any more for where RoI is after nearly a century of self-rule.
But if he’d introduced it earlier wouldn’t you also be ‘wondering’ about that just as much ….
or hell’s teeth …. do yu think he had a reliable crystal ball so it was all a set up for Osbo?
Well when I say “people laughed” I mean the small group of friends I was discussing it with! Yes I had friends, this was before I started talking economics!
I’ve got Irish and Scottish blood, friends, relatives – do you think RoI blames UK for its economy? I hear more blame for oppression, 800 years and all that, not so much economic stuff. In fact I think even a lot of NI nationalists believed economically they would be better under UK, but still wanted ‘freedom’.
Certainly I think Ireland is country that Scottish independence supporters should be studying.
I think Scotland has better traditions of politics, economics, law, and could do better, but I think Salmond would take them down the path RoI has followed in its stupider years.
Okay, how about this…
Obama has used many stimulus packages to encourage growth (he has spent money). Add this to the FOMC has a mandate to control both inflation and unemployment.
As a result, the unemployment in America has been smaller (comparatively), thus social security expenditure has been smaller (comparatively).
In the UK by comparison, Cameron has been incredibly lax on unemployment (a price worth paying).
The BoE does not have a specific mandate about unemployment.
As a result, unemployment has been higher here, unemployment benefits higher, leading onto higher public spending.
If that alone doesn’t make in obvious that austerity doesnt work, I cant imagine any more convincing examples.
Well one is called “Tax planning” and the other is called fraud from the benefit system
Like the rioters who stole a telly and the “MINISTER “who claimed (suspectly) a telly for her 2nd(?) home – who went to jail?
I heard Ed Vaizey whinge about Peter Hain having mentioned the NHS in an answer where it was completely appropriate to be used as an example and heard J Dimbleby advising PH not to upset Vaizey later.
I understood it all to be jokey banter but if indeed there was some condition that mention of the NHS was out of bounds during the programme (and QT too) I’d be livid.
The Beeb needs to realise it is funded by tax payers, I have always done so willingly but if such conditions are being made I would stop.
BBC is surely aware that we can all watch almost any TV programme we want to on iPlayer and not need to pay for a licence at all, the only ‘disadvantage’ is not being able to do so in real time.
I’ll be missing controversy about this as am going away soon and up to my neck glug glug but will try to listen to the full programme again
I have a family member who is spitting tacks about the civil service deal so I must type quietly…
But I don’t see how this will negatively affect civil servants moving based on merit – the opposite is true.
At the minute if you were on 30k in the civil service in newcastle but offered 35k to do a better job in London you’d be mental to take it, or even if you wanted to do the same job in London to get 30k for it in London would see your living standard drop hugely.
Living costs and wages are higher in London and SE than north and elsewhere for every other kind of jobs, and to get manufacturing going we need even lower costs in north.
However I don’t agree with cutting salaries, but freezing them in some places and increasing them elsewhere.
Rob none of those things change the basic facts. If Cameron had cut 50 billion from the NHS but spent 10 million building new roads, would you call that “stimulus”? This is basically what Obama has done.
Real stimulus is when you increase overall spending. Austerity is cutting or at least not increasing spending.
Cameron has increased overall spending. Obama has cut overall spending.
Those are the facts and nothing you have said has countered them so far.
Dunno what you seem to be disagreeing with.
I believe oppression contributed to RoI not being ‘even’ as prosperous as most of the UK was from 1917 onwards and that’s partly why they enjoyed their Tiger-ism so much after so long.
Don’t ‘get’ this latest wheeze about stamp duty; can there really be millions going astray?
If there is and if people are being apprised of the loophole by estate agents or conveyancers that’s a whole ‘nother clubful of professionals to be scrutinised.
There was a huge demonstration for the NHS in London saturday but no news coverage at all and all the police were heavily armed ,why for god’s sake?
Armed? As in batons out of holsters etc?
Let’s not turn this in to anything other than what it is; the Police are used to control marches etc for the safety of all concerned and as we all know marches can be infiltrated by trouble makers with no real political interest in their purpose. It has always been so (and resented by genuine marchers understanding what’s going on).
It’s the same for any other instance where a bandwagon can be mounted. Drunks are best-controlled by an officer to a limb for the idiot’s safety as well as their own, high numbers have come to be seen as proactive and preventative in themselves.
Let’s not pretend Police are autonomous (or, fhs, not forget that NHS changes affect them too), let’s not allow the stinking coalescence to deflect blame for their damage.
Tut …… rush rush ….. guess where
‘that history of’ needed to be?
13 years was a long time to take to reposition.
No I wasn’t disagreeing, just asking if you found many of them saying that, in my experience I haven’t really (as far as I can remember) heard Irish people blame British people for economic problems in RoI. Maybe in NI but everyone blames everyone there.
I have Indian friends/colleagues who certainly blame Britain for stealing India’s wealth.
I had wondered the same thing about forced labour (mandatory workfare) if this was such a good idea with cross party support, why now?
So you don’t attribute the birth of the IRA and the long long battle for independence in 1917 to a resistance to anything?
I’m sure it was about something called oppression and colonialisation, especially the repression of Catholics (which continued in NI till 70s)..
Yes there are Indian people that resent the Raj, I know many that don’t.
Some even realise that it wasn’t much better here for members of the working … no ….. serf classes. We all need to know more history as well as have regard for the eventual good out of bad.
New Labour represented a repositioning that took place before the thirteen years. If it kept the ‘chickenfeed’ party out for thirteen years it did some good, whatever compromises it had to make.
Big misunderstanding here Michele!
Yes I do attribute the birth of the IRA to oppression!
More at top.
Reply to Michele from below.
Think we have crossed wires – I was just saying that people I’ve spoken to from RoI have never (as far as I can remember) blamed their recent economic woes (and when I say recent I mean in 70s / 80s too) on Britain. That doesn’t mean noone from RoI feels that way, I just haven’t come across them.
Obviously the time period you then mention, from 1917 and for quite some time after that, Britain could be blamed for a lot. And yes the resistance movements including the “Old IRA” did arise from oppression.
You also mentioned repression of catholics in NI which continued till 1970s (and onwards), I think thats a separate issue than the RoI economy and culprits, but yes I think there was oppression perhaps more from NI Unionists than GB government, but then GB govt was in overall control so should carry the can too.
Don’t think we are disagreeing on anything?