Forum Topic

Cuts. Who is to blame?

Kew Gardens isn't just a fabulous "A List" place to take our relatives and visitors. By various means Kew works hard to understand plants and thereby support communities that depend on them throughout the world. Is this reference/research/information work now to be cut? We are in increased debt due to the collapse of the banking sector. The government now owns a fair chunk of that sector. It has a value and if sold would conveniently remove almost all the increase in debt the government is continuously quoting as an excuse for cuts. Why is the Coalition not directing its reforming efforts towards the banks and bankers and leave rather successful institutions like Kew, our libraries and the NHS alone?

Arthur Breens ● 5413d46 Comments

TonyNot a bad read. i hope you weren't asking me to defend Heath. Having said that, it would be easier to do than to defend Wilson. As Peter has said, you have to strike a balance. It is all very well saying good riddance if someone ups sticks and takes their money with them, but that gap has to be filled. heath had that problem as business's invested heavily abroad so he had to increase taxes on the working class. that could happen again if you go after the rich, who might up sticks and then we have to find the money elsewhere. the evidence suggests that if you tax rich people more heavily, this causes them to think, who am i working for here, myself or the state. If they believe it is the latter, they work less or move abroad, and then the tax take suffers. if you tax them less, they see the benefit to them and work harder, earning more and paying more tax. that is what I believe happens. you can mock or play around with that if you like but you have to demonstrate how taxing them more works out better. Where is the evidence. If there isn't any, then don't do it.

Colm Costello ● 5409d

There has to be a balance. when the tax authorities chase it contractors and let billionaires go free it all seems unfair. a balance of tax yes. so 50% on top earners not so bad. they should be proud of what they contribute rather than trying to avoid tax. they are still earning more than us anyway.

Peter Chadburn ● 5409d

Colm  I still don't really understand,what did the rich do when we had those absurdly high tax rates,move abroad,tread water or fiddle their taxes? If the later then why at 40% did they start paying and make the country a better place?  In my limited experience rich people are fond of staying that way,generally at the expense of the worker bees,did they have a twinge of concience?  I don't think it's "popular" to bash the rich,rather I feel that Joe Soap would like to see a level playing field.    Why for instance should a self employed person get subsidised travel to his/her workplace whilst worker bees have to fork out for outrageous season tickets year in year out...it seems unfair to me.  You mention (surprise!) the state that Labour left Britain in 1979,you must have those blue tinted glasses on again,our decline started way before that. If you have time read this please,it's a fairly factual paper on what actually happened as I recall it(10 and a bit pages).If you could read the bit about Heath adding £2000 million to the worker bees tax burden a couple of times it'd be good.  From this you'll have assumed that I'm rabidly leftwing,I'm not, I doubt that socialism will ever work,it depends on human nature you see,and everyone wants to be rich,don't they?    I'd settle for that level playing field.    http://www.stewartmorris.com/essays/14Ingham2.pdf

Tony Wood ● 5409d

TonyA. When the Conservatives last had to clean up after Labour left the place on the verge of bankruptcy at the end of the 70's, they cut the top rate of tax from 98% on unearned income and 83% on earned income to 40%. What happened, the rich paid a lot more tax, and ended up paying a higher proportion of all income tax collected. In other words, they were incentivised by the lower rates of taxThe coalition has increased CGT to 28% and have had to report that they expect a temporary fall in revenue from this source. Might CGT payers feel they are being punished here and sit on their hands and do nothing. Putting up taxes on the rich may be popular, but it often has the opposite effect to what was planned.Labour and the union movement have a record of going after the rich and failing miserably. We have a record of trying to incentivise them to do more and in the long run pay more in taxes. The evidence is there and not just in this country.

Colm Costello ● 5409d

A...I don't understand your logic?B...This is a great example of condescending spin."When socialists are in charge **they put up the rates of tax charged to the rich** and the result is proportionally they pay less of the total tax take.When Conservatives are in charge we ***tend*** to cut the higher rates of tax on the rich, and hey presto, they end up paying proportionally more of the tax take.You nearly had me suckered for a nano second.

Tony Wood ● 5409d

Colm you either obey the tax laws, go to prison or to Belize.Simple.

Arthur Breens ● 5409d

Eric When socialists are in charge they put up the rates of tax charged to the rich and the result is proportionally they pay less of the total tax take.When Conservatives are in charge we tend to cut the higher rates of tax on the rich, and hey presto, they end up paying proportionally more of the tax take. We incentivise people Socialists punish themYou shouldn't be surprised by the results

Colm Costello ● 5409d

1) John you asked what is happening to Kew Gardens. I am afraid I jumped too quickly. We'd had a letter asking for money. I assumed wrongly that it was to make up a funding shortfall.The Coalition have in fact given the Seed Bank £3,000,000  a year for the next four years and continued funding for Oak Processionary Moth containment. Kew costs around £50,000,000 to run part met by Defra grant-in-aid of about £27,000,000.I think the funding shortfall predicted at 25% will come next financial year.The big problem it seems is the cost of maintaining 51? listed buildings and this maybe what the request was for.Kew haven't come back yet John but when they do I'll let you know what they say.2)Eric there appears to a be a impossibility of taxing people "considerably richer than yow" (Harry Enfield).I was amazed to see that every Revenue compliance officerreaps a harvest of £650,000 p.a. The so called "Tax Gap" (that lost by evasion and avoidance) is estimated at around £100,000,000,000 p.a. If collected is that the "right sort of money" Phil? I form the impression that most of the rich and their corporations would go off to Belize or the Cayman Islands. My feeling is Bye bye.

Arthur Breens ● 5410d

Colm,Oh what a relief to know that it's me that's mad and not Tories like you.I can go to bed happy that if you are rich then you don't have to pay more (proportionally) to the State than if you are poor.And you are proudly Irish - a country that have shown us all the way with your national fiscal 'intelligence'.Maggie Thatcher? Strong, assertive....and wrong.Tony Blair? Strong, assertive...and wrong.I have little respect for both Tory parties. And it's early days for you to claim any fiscal success with your party in charge.You need to get away from the moral high ground of taxing people more heavilly because they are poorer than you....

Eric Alan Leach ● 5410d

EricIt's you. there is shed loads of evidence to show that when you reduce tax rates for the higher earners, they end up paying more tax. When you increase them, they end up paying less as has already been pointed out earlier in this thread. As the risk of sending you into a rage, when Maggie Thatcher inherited the last financial disaster that a Labour government left us, she cut the highest rates of tax substantially, and guess what, higher earners ended up paying more in tax. You need to get awsay from taxing people more heavily because they are wealthier than you

Colm Costello ● 5410d

I wonder if Ed is familiar with the actual process of the Medical assessement, whether he thinks the questions are pitched and what he thinks of the approach adopted by some of the medical assessors and whether their enquiries are sufficiently probing.If some one like Ed had a serious mental health problem suddenly, then without help he might be refused because at the time of application he might have insufficient resources to fend for himself; but by any normal standards as seen by say the Disability Alliance he would undoubtedly be entitled. Combine such a weakness with the inabilty to speak English and the/or the inabilility to articulate (e.g. on account of poor education) then how many more lose out in the face of an oppressive inquisition? He should use the word "masquerading" far more discreetly unless he wishes to court accusations of bigotry.Where I do agree with him is that people on IB and ESA should have encouragement and support to return to some form of work - but not primarily from DWP so called advisors.DLA is going to be more difficult to obtain but this week the coalition did some U turns - I was glad to note. Again some of these people should receive " encouragement" but a lot more DLA decisions are made just for a period rather than for life.

George Knox ● 5410d

Ed,Well I'm not a medical expert and I suspect you aren't either but I'm afraid the 'pull your socks' up approach to mental problems is way out of date.Chronic obesity is a disability. The idea that it's a choice is naive.So let me get this right. You want to tax very wealthy people and companies much less than we do now. So presumably any deficit after that would be made up by taxing poor, disabled, unemployed and disadvantaged people more and more.One of us is seriously disturbed on this topic . It could be me. What do others think?Who are these flourishng countries with enlightened tax regimes? I know Ireland is one, and possibly Virgin Islands and Belize are two others. But enlighten us please.

Eric Alan Leach ● 5410d

Eric,I've got plenty of experience thanks - certainly enough to know that paying a disability benefit to people with substance misuse problems without requiring them to do something about it (with support) is a waste of time. Likewise the obese - obesity isn't a "disability" for most people it's a choice.You write that "we're well rid" of companies like Shire and WPP but are complaining about the impact of cuts. The more companies that leave, the greater the need for cuts. It's precisely this "logic" that has resulted in living standards in the UK reducing whilst other countries with more enlightened tax regimes flourish.

Ed Yelland ● 5410d

So Ed can we deduce that you do not have direct experience of dealing with physical and mental disabilities?Substance abuse is often a function of mental illness or mental disability - and not the other way around as uninformed people perceive.80% of people in prison have mental problems and that's just one reason why we need to increase support and treatment of the mentally ill and the mentally disabled. The cuts - specifically in benefits and the NHS - will decrease support and treatment for those with mental problems. This will lead to more self harm and violence to others.And with regards companies like WPP, Shire and Wolseley - we just can't have corporations trying to blackmail the UK Government. We are well rid of them.You'll find that the list of large corporations not leaving the UK is many more than those who have left.

Eric Alan Leach ● 5410d

"So Ed - how would you deal with the incapable? How would you deal with people physically and mentally disabled? Have you ever had to deal with such problems."In the recent pilots, 2/3 of people invited to attend a medical assessment for their "disability" chose to withdraw their claim for the benefit. If you can't draw a sensible conclusion from that, perhaps you can explain how the number of "disabled" suddenly tripled - a time in which conditions such as obesity, drug and alcohol misuse became classed as disabilities?Apart from anything else, the significant number of people masquerading as disabled is an affront to the many people living with disabilities who continue to work - as the numerous serviceman in the forces have proved.... despite very serious injuries e.g. multiple amputations, they return to work while the MoD's office staff retire on workplace injury grounds e.g. the recently covered cases in which staff have been classed as "disabled" having suffered from RSI from keyboard use.

Ed Yelland ● 5410d

Shire and WPP didn't receive any incentives for moving their headquarters for corporation tax purposes other than the lower rate of tax. Both had previously warned the then Chancellor, Gordon Brown, that if corporation tax was not reduced this would result in them moving their headquarters. He told everyone they wouldn't do it but they subsequently did.Wolseley Plc moved to Switzerland - again, no incentives were offered other than lower corporation tax.To put this into perspective, the full year reported revenues for the most recent year of trading for these three companies is £24Bn. Their profits were c£1.48B on which corporation tax of £384m would have been paid - all of which now needs to be made up from additional taxes on the public.

Ed Yelland ● 5410d

Yes chasing low tax makes you bend over backwards for people who do not give a stuff!! we need realism. why when i work bloody hard should i pay more tax than some rich person. it is wrong. i saw blairs comments in the sun and we are well rid of him. he is definately to the right of cameron!! we need a labour party to represent the people. current one is still representing scumbags, bankers and parasites.

Peter Chadburn ● 5411d

So Ed - how would you deal with the incapable? How would you deal with people physically and mentally disabled? Have you ever had to deal with such problems.I have.Please tell me to what extent you have had to deal with them.

Eric Alan Leach ● 5411d

"Exactly the same has happened with Corporation tax - when it rose, big companies such as WPP, Wolesey and Shire Pharmaceuticals all moved abroad."It is true that Shire Pharms. are based in Dublin and registered in Jersey,it's also true that WPP are in Dublin,Wolesey (Sp.building supplies?) are based in Reading registered in Jersey.Now it may be that Shire and WPP are in Dublin due to lower corporation tax,but I suspect that it has more to do with the huge incentives that Eire gave to big companies to relocate there.That's got them precisely where? The country is completely stuffed financially,relying on handouts from the EMF and worse (from our POV) Us !! Not exactly an advert for low corporation tax is it?

Tony Wood ● 5411d

Eric, you seem to overlook the rather obvious fact that "the poor" aren't generally taxed at all - they derive almost all of their income from benefits, and receive things like housing free of charge. It's the growth in the number of people on benefits e.g. incapacity benefit rose from 1m to 3m claimants under Labour that contributed to a doubling of welfare spending during a period of economic stability, and now requires deep cuts to restore it to an affordable level.

Ed Yelland ● 5411d

And as for you Phil, I'm no fan of a capitalistic economy and many of these economies are close to collapse.I know you don't like debating big issues (your reference to War and Peace) but that's  what grown ups do.

Eric Alan Leach ● 5412d

Well I'm no expert on taxes as you appear to be. The data you quote is certainly not easy to find. If the rich do not want to live here that's fine by me - they can leave.  Also are you suggesting that we should tax the rich much, much less?Ireland offered low taxes to attract large corporations but I can't see how that has helped, with Ireland being now a financial basket case.A financial banking transaction tax has not been attempted here to my knowledge. Sucessfully stopping tax evasion is needed - but the Government must clearly have the will to want to do this. Getting out of Iraq, Afghanistan, Crossrail, HS2, and Trident will raise/save £billions.Taxing the poor to excess will lead to a General Strike and riots in the streets. More people will be unemployed and homeless and the disabled will suffer horribly. Is this what you want?

Eric Alan Leach ● 5412d

"Certainly bring in higher taxes for the personally and corporate rich"Eric, you're living in fantasy land. Labour were warned that increasing the top tax rate to 50p would decrease tax revenues and that's exactly what's happened. By penalising the "rich" with a marginal tax rate of 62% in the 100K - 114K band (50% tax, no basic rate allowance, 12% NI up to the the high rate threshold and 2% above it), all that's happened is less people are now paying tax, with many having moved domiciles for tax purposes. Exactly the same has happened with Corporation tax - when it rose, big companies such as WPP, Wolesey and Shire Pharmaceuticals all moved abroad.The high tax approach you advocate was tried and found to fail in the 70s, was tried again by another Labour government in 2009 so are we seriously to believe that against this, you still think it's a good idea to raise tax even more? And when the tax receipts decline again, are you happy that further cuts to public services should be made as a result, even when this was completely avoidable?

Ed Yelland ● 5412d

PhilI think you do pay for the economically unproductive people in the private sector. It would be incorporated in the price when you buy the goods.I would suggest the private sector spends much money on advertising or communications or whatever you would like to call it and yes, you pay for that too for it is incorporated in the price.Communications in this borough hit heady heights when you were in power with banners on street furniture and Perceval House and monthly magazines. We had to pay for that and you were responsible for it.With all the people losing their jobs I would say trade union expenses are necessary unless you want strikes and unrest. You seem to have made senior management and union facility time scapegoats for all the so-called 'public sector waste' you keep on about. So what waste is out there in Ealing council beyond that?

John Holt ● 5412d

Eric,You are widening the subject.  A sure sign that you are losing the argument I think.  The banking crisis is irrelevant to a discussion of the cuts/deficit.  The current spread between savings and borrowing rates is a little wider than normal but if savers are to have higher rates this would require interest rates to go up at a time when the economy will not stand it. We might not like the fact that this process is repairing the banks but it is not possible to run a capitalist economy without a healthy banking sector and we know from experience that the alternatives do not work.  There is not much room for tax increases, even if they were desirable.  Did you not notice the VAT increase?  Like I say the IMF recommended tax cuts NOT spending increases as a plan B.  You are right about HS2.  It has a terrible business case.  Crossrail is half built so it would not be sensible to stop that.  I haven't got time to get into matters of war and peace.

Phil Taylor ● 5412d

John,I am sure that there are economically unproductive jobs in the private sector.  I don't have to pay for those so they don't concern me to be frank.  I would suggest that much of the communications industry that has grown up in the public sector is waste.  We have little choice about selecting public services.  There is little need for a lot of the expensive communicating that is invloved in the public sector.  Ken Livingstone's The Londoner freesheet cost Londoners £3 million per annum.  This was one of the first things cut out when Boris Johnson was elected.  Our own council has a comms budget of £1.5 million which is due to be cut by a relatively modest 17%.  See here:http://philtaylor.org.uk/?p=4473Another area I might challenge is union facility time, paid time for union activists.  Currently £250K per annum.  Being cut by a modest 20%. See here:http://philtaylor.org.uk/?p=4449I might suggest that the council's senior management team it too expensive and could be trimmed down.  Essentially Ealing spends £10 million per annum employing 100 people who cost £100K each.  See here:http://philtaylor.org.uk/?p=4437

Phil Taylor ● 5412d

Phil,Your ability to completely ignore the massive unfairness of and breakdown in the UK financial sector is breathtaking.The banks are not irrelevant. Interest on investment is 0.5%. Try and borrow from a bank and it's 6% interest. This is very relevant.A 'solution' which punishes those who are not responsible for the deficit and can least afford to bale the country out is intrinsically wrong and dangerous. If this policy is continued I can see it leading to a General Strike.If we are running the country on the basis of keeping the IMF happy we really are in trouble. Greece and Ireland are cutting deeply and are getting much close to national bankrupcy than we are.It doesn't have to be a binary choice between cuts or taxes. We can have some of both. Certainly bring in higher taxes for the personally and corporate rich. Scrapping our presence in Afghanistan and scrapping Trident would save us £billions.Stopping Crossrail and HS2 would also save us £billions. OK it might mean that Hedge Fund managers in Maidenhead and Birmingham would spend more time on the train travelling to and from Canary Wharf - but this is hardly life threatening.I'm afraid your governemnt is losing crediblity fast. The so-called NHS reforms are a shambolic mess. You have even just done a U turn on trying to insist on the regularity of emptying rubbish bins!

Eric Alan Leach ● 5412d

Phil. You made a point earlier and you haven't clarified what you meant although I have asked you.Please could you clarify exactly which jobs are you saying are economically unproductive and why do you link these to the public sector exclusively? You say there are many such jobs in the public sector. So what jobs are you referring to then? Give us some local examples, for instance, in Ealing Council.

John Holt ● 5412d

Eric,I thought that I had shown that the banking crisis resolves to a relatively small (maybe even positive) capital account matter.  The deficit is a large revenue account matter.  We agree who caused it.  The banks are irrelevant.  The solution.  Cut spending or raise taxes.  Raise taxes?  I don't think so.  Remember the IMF said if there was a plan B it should be to lower taxes NOT reduce the spending cuts as tax cuts are more credibly short term and have a quicker effect on the economy. 

Phil Taylor ● 5412d

I don't have a problem with this except that it's an incomplete answer to another question. The question it attempts to answer is who/what caused the deficit?. The incompleteness of the answer is that it fails to acknowledge the government's failure to control/regulate the UK banking and financial sector. The latter failure applies to both NuLabour and the current ConLib Government.Who is to blame for the cuts?Well of course the ConLib government is to blame because the cuts are its way of dealing with the deficit.

Eric Alan Leach ● 5413d

Eric,Gordon Brown, with help from Ed Balls and Ed Miliband.  From Telegraph 11th June:A confidential Treasury analysis prepared for Tony Blair’s Cabinet said that public spending should only increase in line with inflation between 2007 and 2010. It listed areas where billions of pounds of taxpayers’ money were being squandered and savings could be made. The leaked document from the Ed Balls files, dated January 2006, sets out “four challenges for the Cabinet”. “Public sector productivity needs to start improving more rapidly: we’ve spent all this money, but what have we got for it?” the document asks. Mr Brown, who was poised to take over the Labour leadership from Mr Blair, over-ruled the advice and sanctioned a spending spree. The government failed to stop virtually all the wasteful spending that had been identified. http://www.telegraph.co.uk/news/politics/labour/8569399/Labour-spending-how-Gordon-Brown-cast-aside-warning-on-public-spending-levels.html

Phil Taylor ● 5413d

Phil,Who is to blame?

Eric Alan Leach ● 5413d

Changing the subject? The one you raised in your submission last paragraph of enty No 4

Arthur Breens ● 5413d

Arthur,You are changing the subject.  We were talking about debt.  The capital account.  Not revenue.  Your second operation was not free.  Your family paid in a different way, through increased taxes.  That is beside the point.  I am very happy with the basic principle of the NHS.  To get back to debt - it is a lie to suggest that the NHS just rustled up a health infrastructure from nowhere when it was created.  The state nationalised an existing system.  Ever since it has been really bad at building hospitals and only really started building them with PFI.  Before you go off on one I am not an advocate for PFI.  I am just saying that the state has been consistely rubbish for 60 years at providing capital for hospitals.  As you well know the NHS has spent 60 years selling off assets that got appropriated from charities to fund itself.

Phil Taylor ● 5413d

Phil, "Know your history" indeed. Three years ago it was the 60th anniversary of the NHS. The BBC ran a series of programmes recounting those times back in 1946. One was the memories of a surgeon who worked very hard for a long time to clear an enormous backlog of hernia sufferers and prolapsed wombs that had built up due to poverty. Have you ever seen a truss Phil? So there was a little more history than you imagine eh? I had two major operations one before the NHS and one after. My mother recalled the cost of the GP's visits in 1947 and how they absorbed most of the family income for a fortnight. It would have been worse had our GP not considerably rounded down his fee. Ordinary people had no savings in those days and they probably had little debt either so there was a real problem when medical fees came to be paid. My second operation (1963)and the night call out were free. Well I reckon that to be an improvement. Don't unestimate the advances made possible by this brilliant idea.

Arthur Breens ● 5413d

Phil never got me but you did John. DEFRA has had to accept cuts like all other government departments and they make a contribution to Kew's funding. I thought I had chapter and verse. So I am looking. Sorry John

Arthur Breens ● 5413d

Phil.  Exactly which jobs are you saying are economically unproductive and why do you link these to the public sector exclusively? You say there are many such jobs in the public sector. So what jobs are you referring to then? Give us some local examples for instance in Ealing.Give us some credible proof,i.e not the Daily Mail, that public sector wages are higher than private.Adverts don't make me buy the goods I mentioned earlier because, as I said, I need those goods. It's true I have a choice to buy petrol from private sector Shell or Tesco etc... but I also have a choice over which public sector dentist or doctor to go to or which public sector library, park or swimming pool!

John Holt ● 5413d

To answer Arthur's question, Japan's debt as a percentage of GDP is way over 100% and the US, Germany and France are all over 80%. The UK's is just over 50%.Make no mistake I don't like debt. In the UK We have around one third of all the personal debt in Europe. The banks and national government must take most of the responsibility for allowing this to happen. And in response to Phil, the more you remove services and jobs from the public sector the more you remove what could be key services from any local, democratic accountability. On your watch when your Party was in power in Ealing you took traffic wardens out of the private sector and put them on the Council payroll. No doubt one reason for doing this was that they then came under local democratic control.Taking care homes out of the State sector has not proved a roaring success. The largest private care home provider - Southern Cross - is likely to go bust after asset strippers ripped £millions out of the company.There's something clearly wrong for 100s of bank and financial sector workers to receive $1 million bonuses when the average wage in the UK is around £24,000/year.There's billions of cash in the UK it's just that it's in the wrong place!The gap between the highest and poorest paid workers in the UK has consistently grown in recent years. This really isn't a good thing either.The Greens certainly have my sympathy in wanting to tax the rich; tighten up tax evasion; introduce a financial transaction tax; and abandon the hugely expensive PFI approach. All this rather than public service cuts.

Eric Alan Leach ● 5413d

John,Don't twist my words.  I said: "... the dole is cheaper than paying someone a proper salary to do something that is not economically productive".  There are still too many jobs in the public sector that most people would agree are economically unproductive.  Public sector wages are provably higher than private sector wages, for instance:http://www.dailymail.co.uk/news/article-1384963/Public-sector-pay-gap-widening-Staff-43-better-private-workers.htmlI suggest you re-read your last paragraph and think again.  What do you think advertising is about?

Phil Taylor ● 5413d

Arthur, what is happening to Kew Gardens?

John Holt ● 5413d

Arthur,If we are to have a debate I would appreciate you doing some of the work.  The net cost of the bailout is likely to be very small, it might even end being a profit.  Follow a couple of links:http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a23RcIcba8jA#http://www.metro.co.uk/news/839511-bank-bailout-earns-government-30billionLike I say the Swedish experience in the early 90s was that the state’s loss was very small, and might even have been a profit overall.  Of course some big upset with the euro might cause further banking problems but there is a good chance we will get past the banking crisis in good order.  In terms of banking reform read about the Independent Commission on Banking here:http://www.telegraph.co.uk/finance/comment/damianreece/8021648/Banking-review-is-a-chance-to-improve-not-destroy-the-system.htmlLet's forget banks.  Follow this link:http://www.statistics.gov.uk/cci/nugget.asp?id=206The picture on the right shows that, yes, debt (excluding interventions, ie the bank bailout) was less than 40% only three years ago but has since shot up to 60%.  The steep bit of the graph is what happens when you add £150 billion a year of deficit to the debt when the economy is in recession.  Most of this is structural.  It is not the banks.  It is too much spending out of proportion to the economy’s ability to write the cheques.  Please don’t keep repeating the socialist lie that the post-war Labour government did anything other than nationalise an existing health infrastructure when it “created” the NHS.  No new hospitals were built – they already existed in the hands of local authorities and charities.  Revenue funding for this infrastructure transferred from insurance schemes, patient payments and charity donations to the state, paid for by an expansion in NI.  Know your history.

Phil Taylor ● 5413d

So are you saying that those people who produce public goods and services are not economically productive?It seems to me that the highest wages are mandated within the private sector. Take footballers' wages for a start. And what about the private bankers inflated wages and bonuses?I don't see how the private sector has to persuade me to buy their goods.  We all need food, heat and shelter and we don't have much choice about whether we buy these private sector produced goods.  Petrol prices don't vary too much in a private market and the private market isn't persuading me to buy petrol. I just need to and the private sector petrol industry has got me and others over a barrel so to speak.

John Holt ● 5413d

John,The glib response is to say that the dole is cheaper than paying someone a proper salary to do something that is not economically productive.  The serious answer is that high government expenditure crowds out the private sector.  The public sector can mandate unrealistically high wages and take the money to pay them by fiat.  The private sector has to persuade people to pay for things.  It is an unfair competition.  By voluntarily releasing labour the state sector gives the private sector room to grow and replace the jobs.  The employment figures indicate that this rebalancing of the economy is in fact happening but perhaps not at the rate we might all wish.

Phil Taylor ● 5413d

So how does it help the public purse's deficit to put thousands of workers on the dole?

John Holt ● 5413d

Phil, The UK debt accelerated after the banking crisis. For the 3 years before that it had been around 35% of GDP. Some clever spark will tell us the percentages in the Thatcher and Major governments. However from 1920 to 1960 debt had been over 100% of GDP yet during that time we had built council houses, launched the NHS, built libraries and expanded education. You can't ignore the £1.3 trillion bailout of the banks Phil and how this has contributed to our deficit.Unlike Greece our interest rates are fixed and for long terms so we don't find ourselves in quite the same "suddenly looking for money" soup. And by the way how are banks being reformed? They aren't doing the lending they promised , they aren't paying me above inflation interest rates on my savings and they are still paying bonuses. Your buddy IDS wrote that "... we are spending £120,000,000/day serving the interest on a deficit as big as the one run up by Greece". But Greece ain't the UK. No Phil it doesn't wash there is another agenda. Look up the tables of debt as a percentage of GDP for the UK, Germany, France and the US. Then come back and tell us what they are.

Arthur Breens ● 5413d

Arthur,Keep up!  Our debt (total amount we owe) will be reduced when we sell off the government owned bank stakes.  If we are lucky we will get most if not all of our money back.  We might even make a small profit (the Swedes got out of their early nineties banking crisis which was of a similar magnitude to ours with little impact on government finances).  Our problem is the deficit (the annual rate at which we are adding to our stock of debt).  The run rate is about £150 billion per annum.  This must end.  The UK's structural deficit, that part of the deficit that is due to our living beyond our means in the long term, was the biggest in the OECD BEFORE the crisis hit.  The coalition plan is to eliminate the structural deficit by the next election.  This plan has been widely endorsed by everyone from the Bank of England through to the OECD, IMF and EU.  If we hadn’t got this international confidence in the Coalition’s approach we would be suffering from much, much higher interest rates.  The banks are being reformed.  We might want them to be "punished".  This really is a separate debate from the structural deficit - our society living on the never, never and blighting our children’s future.  Think of the bank bailout being a one-off capital item and the deficit being a recurring revenue item and it might make more sense. 

Phil Taylor ● 5413d