Where should the cuts fall?

[NormanH]

This new series in the Financial Times looks like a guaranteed source of disagreement among posters [6]

http://blogs.ft.com/westminster/2010/06/cut-of-the-day-public-sector-pensions-and-cpi/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ft%2Fwestminster+%28Westminster+Blog%29&utm_content=Google+Reader

For example a  FT analysis shows that spending cuts will hit the poorest areas of Britain twice as hard as the wealthy areas.

 

The biggest reductions come in areas with the lowest household incomes. When, for illustrative purposes, the FT envisaged a 10 per cent cut in social security payments, the result was a 3.6 per cent fall in household disposable income in Labour-dominated Merseyside, but only 2.1 per cent in Berkshire and Buckinghamshire.

In an alternative scenario, under which almost 20 per cent is cut from spending in sectors dominated by the public services – public administration, education and defence – almost the same pattern is evident. The size of the local economy in west Wales would fall by 3.3 per cent, while the same cut would only knock 1.5 per cent off the economy of prosperous Cheshire, where George Osborne's Tatton constituency is located.

[AnOther]

A disparity will always be evident as the poorest paid will inevitably have a much smaller proportion of their income available for non essential expenditure whilst the better off can cut back on them without feeling much pain if any at all.

Funny how many of the poorest areas seem to be staunch Labour [blink]

Do I detect just a tinge of personal politics in your post [Www]

[woolybanana]

Norman was treasurer of his local Concervative party until he retired.

[Gluestick]

Following political economics and current affairs fairly closely, I have found it most amusing since Dave and Nick formed a government: the world and his wife have been queuing up for air time to set out their stalls on why this aspect of government spending is essential: and why cutting the other would be catastrophe: and why the other should be sacrosanct etc.

Where the odd reporter, presenter, interviewer has had the wit and asked "did the person realise we're skint?", then they have waffled around it in typical style!

The TUC tell us the fragile recovery will collapse if spending is cut: conversely, the CBI and IoD staunchly advocate a hands off approach towards CGT: and so the carnival goes on.

The stark reality is, Britain is effectively broke: it's in a hole which is far worse than the position immediately after WWII and after the ideological depredations of Clem Attlee and his gang. Unfortunately this time around, Britain doesn't have the heavy industry and export capacity (And the Commonwealth and Empire) which managed to leverage the country out of its dire mess once Churchill returned to power in 1951...........................

So much so that by 1957, Conservative PM Harold Macmillan was able to crow, "You've never had it so good!"

The first major cuts have to come in the insane Social Security budget: getting the idle and feckless back to work and de-selecting the lead swingers from DLA etc.

Unfortunately and as much as we all hate it, we have to test pverty for Child Allowance: and scrap Child Tax Credit where claimants earn above a quite modest limit: perhaps £20K PA.

I also not that the new high speed rail link is now already on the slave blocks: so the inevitable process of selling off what's left of the family silver has already started: but no shutdown of Crossrail.

[Iceni]

1. Tax all income including lottery wins, Premium Bonds etc - tax to be deducted at source naturally at 50% for anything over £50k and basic rate if below

2. CGT extended to cover sale of all houses. Solicitor responsible for tax collection.

3. Disband all Quangos

4. Scrap IHT - no longer needed see 1 above.

5. Reduce armed forces and their equipment to a stay-at-home level required to defend the shores of GB. Not much need for a new Trident then.

6. Introduce "chain gangs" for the unemployed. Plenty of graffiti to remove or grass verges to cut.

7. Child allowance for first 2 only. Limit to be applied per father or mother.

8. Stop spending on 2012 Olympics now.

9. No more Labour Chancellors

I'm sure I can think of more if I have the time.

John

[velcorin]

Personally I'd hit the generation who got the world into this crisis.

1 Freeze all state pensions for the next 3 years.

2 100% CGT on ALL unearned income. Savings interest, home sales, shares, etc

3 Inheritance Tax to 90%.

4 3% Wealth Tax on people with Net Assets more than GBP500K (including pensions funds) 

5 Treble spending on capital projects, including the Olympics, dust off anything planned in the last 20 years. A UK New Deal, a la Roosevelt.

Why should the younger generations foot the bill for their parents, and grandparents party?

[Théière]

[quote user="Iceni"]I'm sure I can think of more if I have the time. John[/quote]

Did you really "think" of them or just post your inner most thoughts?

You learn so much about people [;-)]

[Gluestick]

[quote user="velcorin"]

Personally I'd hit the generation who got the world into this crisis.[/quote]

Quite right too.

Now let's think for a nanosecond ([:)])

Oxford Graduates with degrees in PPE; and particularly those who believed Vernon Bogdanor (Brasenose Oxford) was an unhailed genuis and the new Messiah with prescriptors for all societie's ills;

Lawyers (particularly barristers) who are politicians rather than adhere to their profession;

Heath-Barber: Thatcher-Lawson: Blair-Brown;

Investment Bankers;

Govs. of the B of  E since Leigh-Pemberton;

Spotty-faced rocket scientist whiz kids inventing arcane derivative products who conned their employers into believing that they really had invented a perpetual motion machine;

City Traders;

Barret Homes and Sir Laurie Barrett;

Major Oil and Gas corporations;

A quasi-illiterate and ill-informed electorate in charge of a vote!

[Quillan]

Absolute tosh, blame the people, the individuals, the public who's eyes were, and still are, bigger than their wage packets for borrowing money that they simply can't afford to pay back. Nobody forced them to take out these loans, they are just greedy, 'buy today, pay tomorrow' is their attitude. Remember the thread about this 18 months ago when some of the same people talking about 'pulling in our belts' now where telling us we need to borrow more. Thankfully some people ignored their advice because as we now see they were absolutely and totally wrong. Also blame the banks for selling these loans as well knowing full well that the people borrowing could not afford to pay the money back, some lenders even 'tweaked' peoples application forms to enable the loans to go ahead. Now its all come home to roost so I have no sympathy at all.

[velcorin]

According to McKinsey last month, 68% of all UK assets are held by the over 55s (report available on their website for a fee, can't attach my copy). That is the generation to which I am refering. They can keep what they have, but don't let them accumalte more, whilst the younger generations foot the bill. It's the same refrain across Europe. Younger people will have to work longer, accept lower wages, pensions, job insecurity, working conditions, pay higher taxes, social contributions, etc, than their parents. The older generations are not being touched. I hope the UK addresses that inequality.

[woolybanana]

But the younger generation will inherit the lot!

[velcorin]

In 20-25 years time. Til then they will just have to bend over, and assume the position.

If there is anyone over 55 not substantially materially better off than their parents, I will be very, very surprised. Cars, holidays, second (third) homes, pensions, etc. The inverted opposite will be true for the younger generations across Britain and Europe. Redistribute the wealth. Tax now.

[Pierre ZFP]

I was more than mildly surprised to hear someone (wish I could remember who it was) on the BBC yesterday say that instead of cuts, it is vital that consumers are encouraged to go out and spend and get the economy going again !!!!!

Wasn't that the very thing that got us in this mess anyway?  So now we are encouraged to go out and buy more stuff that we don't need and ravage the planet of resources at the same time

I'm confused

[woolybanana]

Well, Norman, you should be very happy with the budget!

[Quillan]

[quote user="velcorin"]

According to McKinsey last month, 68% of all UK assets are held by the over 55s (report available on their website for a fee, can't attach my copy). That is the generation to which I am refering. They can keep what they have, but don't let them accumalte more, whilst the younger generations foot the bill. It's the same refrain across Europe. Younger people will have to work longer, accept lower wages, pensions, job insecurity, working conditions, pay higher taxes, social contributions, etc, than their parents. The older generations are not being touched. I hope the UK addresses that inequality.

[/quote]

Yes but its all relative. My parents didn't have the job security that people have today. If you were ill and didn't work you got a free doctor but no wages. They bought the house I was brought up in for just over £450, I saw the next door neighbours house, which is identical, sold recently for £950,000. I don't know what the people earn who bought it but my parents were not earning that much when they bought theirs. They couldn't afford a car but then people didn't buy so much on HP back then, if you couldn't pay for it you couldn't have it. My parents got twice my fathers salary as a mortgage because that's all you could get, wifes wages were not included so my dad had to work as many hours a week he could to get the overtime money to pay for the house and feed us. So all in all I think people have it easier these days than both my parents and I. Many of us 55 and overs have worked all our lives and contributed to pay for our parents health and social costs and this is how it works and will continue work. I have worked hard, contributed in more ways than one so if you want to get your hands on my money and assets you know where you can go and blinking quick too I might add. Honestly, I ask you, blinking cheek [:P] [:P]

[Gardengirl]

We started with nothing (even paid for our own wedding, which was very unusual in those days, where we lived), worked hard, didn't squander what we earned on new this or that, and didn't borrow, apart from having a mortgage. I think the rot set in around the time when you weren't required to have 5% or 10% deposit for a home. We were determined to have 10% deposit towards our first little house, borrowed 2½ times salary, which was what was allowed then, and were the first in our families to own property. We bought second hand goods to start with. Our sons have grown up with a similar attitude to money as us, and have also not gone in for everything new and shiny all at once, or borrowed, apart from a mortgage.

Nobody was forced to borrow huge amounts, or to spend all they could get. I get a little tired of being told it's everyone's fault, or that baby boomers were at fault.

I'm hoping the new government will treat people fairly, and that benefits as well as taxes are looked at.

I'm also hopeful that they'll soon get round to getting rid of all those non-jobs  that are advertised at £35,000+; much cheaper to pay them unemployment benefit if they can't find real jobs. I know people who do cleaning, take in ironing, work shifts in UK to bring in sufficient money without having to claim benefits; too may people feel they must have at least the title 'manager' after their names.

Rant over.  [:)]

[velcorin]

I know. I know Quillian, I've heard it so many times from my own parents, and my wife's. So it's not just a Brit thing. However, though it's obviously a bit tongue in cheek the last couple of sentences, does say a lot. They're my assets, you can't have them. I don't want them! But, I do want a slice of the unearned cash generated when you sell [:P] I work hard 50-60 hours a week, good wage, I expect to a lot of pay tax. Chances of me even approaching my parents net wealth? Zero. My generation will be back to your parent's level.

(The banks are the obvious fallguys, for the liquidity crisis. Squirrelling away money in fixed assets, is the hidden cause, too much money locked into assets that make no contribution to the real economy until they are sold. Trillions upon trillions are frozen into bricks and mortar across the world. I know I'm talking to the wrong audience, so I'll leave it at that.[:D])

[Gluestick]

[quote user="woolybanana"]But the younger generation will inherit the lot![/quote]

Indeed, Woolly: and what seems to be totally ignored when this argument is mounted, is that the Blair Babes inherited the infrastructure bought and paid for by the very generation such as velcorin likes to excoriate. And the Thatcher "Loads er Money" and Yuppie generation the same.

To blame those whose timing was impeccable (And is the very essence of free market theory) in terms of liquidating an asset, is from velcorin, the ultimate proponent of the current insane financial system, disingenuous!

Quillan: you forget: someone did force them to obligate themselves above sensible and prudent limits.

The Mass Marketeers: who use insidious and cynical psychology to motivate the stupid. Motivational Psychologists divide consumers in to two disparate groups: those who make internalised decisions: and those who make externalised decisions: the second group are the muppets who pay £300 for a pair of shoes when Primark sell similar items for £15.

'Twas ever thus: however in times past (The Heath-Barber Boom-Bang e.g.) the B of E had the power and -belatedly - invoked "the Corset, to restrict out-of-control bank and finance house lending. Additionally, from Macmillan's time, government invoked the various Finance Acts to restrict excessive and insane HP and etc.

Unfortunately, from Thatcher's government on, PMs and ministers have fallen to the Siren's Song of "The City" and believed they possessed a golden goose.

In relative terms of socio-economic history, the rapid expansion of the "Consumer" into economic importance (Which structurally in an intelligent balanced economy they aren't: they are an almost accidental by-blow), has meant empowering people of limited powers of discretion and responsibility with a credit rating.

OK I guess if one believes one can operate a modern globally competitive economy by multiple retailing foreign goods on mainly credit and insane house priuce rises.

[Www]

[Swissie]

Yes GG,  I agree. We worked so hard- had hand me downs for furniture, made our own bean bags and furniture, made the kids clothes and camped or YHA for hols, a curry and a pint if we were lucky, took lodgers in, etc, etc, until our kids left uni.  Kids laugh and say, yeah, yeah,  blablabla!  Never bought anything we didn't have cash for- apart for house on a 90% mortgage. Refuse to feel guilty now for all the belt tightening.

[Gluestick]

Bah gum! 90% mortgage? You wer lucky!!

When I wert lad, we were lucky to find a lender willin' to advance 70%: and tha wert only over 15 year.

An' if t'house were old and had slate roof you had to put down even more!

And you tell young uns terday and they don't believe you! They don't bloody believe you!

http://www.youtube.com/watch?v=Xe1a1wHxTyo

 

[woolybanana]

He's been at the Wincarnis again!

[Gluestick]

Single Malt Woolly, please!

[:D]

[Swissie]

Brilliant sketch Gluestick - first time you made me laugh LOL LOL LOL!

We bought our first house in Stoke-on-Trent in 1972- got 90% as apparently we were a 'good' risk- whatever that means.

BTW I always felt very comfortable in Yorkshire and the Peak District, as it reminded me of my native Swiss Jura. Limestone and Dales - near here we have a bigger version of Malham Cove. (called the Creux du Van).

[Gluestick]

I've had and have some very good mates from Yorkshire: and I must say the Python sketch holds true!

Whatever I paid "Eh lad! The'se cheaper oop Leeds!"

And whatever life's misfortunes, "Eh Lad! Ther wert nought so tough as when I wert t'lad! Youve 'ad it easy down those fleshpots in't South!"

Love 'em!

[:)]

[powerdesal]

[quote user="Gluestick"]

I've had and have some very good mates from Yorkshire: and I must say the Python sketch holds true!

Whatever I paid "Eh lad! The'se cheaper oop Leeds!"

And whatever life's misfortunes, "Eh Lad! Ther wert nought so tough as when I wert t'lad! Youve 'ad it easy down those fleshpots in't South!"

Love 'em!

[:)]

[/quote] GS, your 'yorkshire-speak' is definitely phonetically flawed, only 5 out of 10 for that.