It’s official and it’s a shocker. Cameron’s first Budget puts VAT up to 20%. It cuts company tax cut from 28 % to 24%. Govt dept spending is cut by a staggering 25%. Capital gains tax is up from 18% to 28%.
A budget suplus in 3 years? – dreaming. The social dislocation will be too awful to describe.
This is an uber-Tory Budget that relies on neoliberal economic ideology.
Given that Brown had already cut spending by GBP 72bn and this cuts another GBP 40bn it contains real risks of stagflation/deflation. If that spreads through a Europe bound together by linked currencies, it could contribute to a double- dip recession that mayaffect us.
And of course we are now more vulnerable after Mssrs Key anad English borrowed more for unaffordable tax cuts.
For now, here is David Milliband’s reaction:
The Tory-Lib Dem Budget is a hammer blow to families and business across the country – and to the future of the British economy. George Osborne’s measures are driven by ideology not economic reality. And the price will be paid in higher unemployment and lower living standards for the poorest and those on middle incomes.
When they asked for your vote at the last election, David Cameron and Nick Clegg said they would reduce the deficit without hitting the frontline or hurting the poorest – but they have already broken that promise.
…
Below I set out what I would do differently – read on and then sign up to my Broken Promises campaign – help me show David Cameron and Nick Clegg that we will expose and oppose their Broken Promises every step of the way.
- I would make reducing unemployment a top priority. We must oppose the Tories’ decision to scrap Labour’s job guarantee, which provided work to the long term unemployed. The Tories are making the same mistake they made in the 1980s, of letting unemployment devastate lives and communities.
- I would not increase VAT, which is a regressive tax that hits the poorest hardest. Don’t take my word for it, David Cameron said it. And the Lib Dems promised to fight against a VAT rise until they decided to support it.
- We should be supporting the industries that will drive jobs and prosperity in the future – like Sheffield Forgemasters who have been robbed of a loan that offered world-beating jobs for Britain.
- The Tories’ four pounds of spending cuts for every one pound of tax rises is extreme. Even Mrs Thatcher went for a pound of spending cuts for a pound of tax rises. I would strike a fairer balance between reductions in spending and tax rises to reduce the deficit. If we need more tax let’s look at measures like a Mansion Tax on £2m homes not VAT rises.”
Sound familiar?
I think Rebecca is Ok with that Spud, IIRC her opinion of the Budget was that it is excellent.
Can’t blame Brown for it all; it seems the ole Tory Iron Lady and her free market policies that Brown largely continued with might be at fault or so says history…
“Thatcher’s growth model was to promote privatisation of public assets and deregulation of the private sector, particularly the financial sector, its encouragement of the financial sector to ‘create new ways of spreading risk and expanding credit’. The financial revolution in London in the 1980s meant that among the large economies none rivalled Britain for the relative size of its financial sector”
OOps
http://en.wikipedia.org/wiki/Margaret_Thatcher
Its an interesting read.
No what I refuted was that bailing out the banks was the main cause and biggest part of the deficit problem, what I assumed Dorothy was meaning by “mess”…
It’s not, poor spending across the board is, the GFC has just made the problem worse and I think bankers and the UK and US governments must share the blame for that…
DC – Tracey’s comment was in respect to something I had said. I don’t believe politics is real work in that you get to walze in meet people/see their circumstances very briefly but you don’t actually experience it or live it therefore, that makes you somewhat unqualified to judge what is best for them (generally speaking).
I believe the best MPs are those who have had plenty of real life experience beforehand – worked in all kinds of jobs before politics/have done more than mere study, travelled and understand the pressures of having a family and owning a home in today’s economic environment in a real and meaningful way rather than looking down at us from the lofty self-righteous perch cushioned by high level education, high paid/high level positions that followed then moving on (perhaps down) to a $100k plus salary with $14800 in allowances and unlimited domestic travel……
They tell them things and show them stuff, they get a lot more knowledge than Joe average.
One could say the same thing about Rich business men or people from rich farming families.
Of course, I prefer to judge people on how well the run the country rather than questioning that person’s right to have the job that they were elected for. Even to get on a party list you have to pay your dues and get chosen.
I think the Labour bunch are a very fine bunch indeed. With a great leader and I can’t wait for them to get back into power
“One could say the same thing about Rich business men or people from rich farming families.”
How did they get rich Spud? Money fall out of the sky?
I know the communist theme on here riches only come from the sweat of the labourers is very popular on here but I doubt it holds much weight in the real world….
Graeme Hart would be the first to disagree with you given that he started out as tow-truck driver and as a panel beater after leaving school at 15….
And then of course there is John Key, Sir James Fletcher (senior)…..
“DC – Tracey’s comment was in respect to something I had said. I don’t believe politics is real work in that you get to walze in meet people/see their circumstances very briefly but you don’t actually experience it or live it therefore, that makes you somewhat unqualified to judge what is best for them (generally speaking). ”
As opposed to Key and Brash who met such a variety of Nzers in their careers, c’mon. What was it they experienced and/or lived that is so different to an MP?
I also think you have a pretty jaundiced idea of MPs and the work they do.
Some inherited their wealth, but my point was that the pollies who you think have no experience have worked very hard to get to where they are, and to call them out of touch because they have a good income is to call your rich business ministers the same. – to me I’m just interested in how the country is being run
- I actually do respect richies who have worked their way up, such as Bob Jones
I don’t doubt that a lot of work has gone into acquiring wealth 
Please don’t use the name “Fletchers” around a leaky home owner
No, I’m not talking about all richies!
Some richies are not worth mentioning 
Rebecca, I think this would be true of the GP or medical specialist that you see for all of 10 minutes (except you are the one doing the waltzing in and out); it s a mistake to think that someone has to “live” in someone else’s shoes for a while to “get it”, that’s why humans have the capacity for empathy.
Richard Shaw – we can blame Brown for it all. I would have thought Blair had more of a thing for Thatcher. Good point raised about North Sea oil but all that was easy money and too easy to spend. I know Scandinavian countries have saved this money. It was Brown’s failure to even acknowledge he had done anything wrong (e.g selling off gold reserves at a fraction of what gold is now worth, when he didn’t have any reason to do so in the first place) that played a part in his downfall.
Go those mirror neurons
(High enough brow for you Simon? Huh? Huh? 
).
“I would have thought Blair had more of a thing for Thatcher.” Shudder
Of all the chicks you could fancy 
That gold reserves selling thing sounds bad
David Milliband’s comment : George Osborne’s measures are driven by ideology not economic reality, is correct, but he put it back to front. George Osborne followed correct ideology which is reflected in economic reality. Here is a take from economist Prof. Kevin Dowd.
Keynesian policies have brought Britain to the brink of ruin
David Cunliffe, does it occur to you that that economic reality (data/observation must be judge & jury) should drive policies, instead of the other way round? Because that’s exactly what Physicist Josepth McCauley (which I mentioned on the other thread) quoted in a paper he wrote a few years ago:
J McCauley quoted:
…empirically based modelling where one asks not what we can do for the data (give it a massage), but instead asks
what can we learn from the data about how markets really work.
Anyway, I recommend Kevin Dowd’s book to any reader here who works as a financial analyst, because the methods/algorithms covered in there are very useful.
Measuring Market Risk (2nd Edition)
I bought a copy of this book about 3 years ago and I recommend it as a must have to any analyst who is working in finance.
Loota you don’t have to personally live things to ‘get’ it, but if you don’t make real efforts to at least attempt to understand what a mile is like in their shoes then you will never get it.
Hence my earlier comment – how many MPs have either truly experienced life, had friends who have or even spent the day with NGOs, a frontline WINZ office etc etc.
Ironically I would argue I have far more empathy and understanding that most of our MPs…including your friends in the red camp. But it’s also not just about empathy, it’s have the nouse to make a difference.
Thus, I would like a cabinet that had at least included (in no particular order & by no means an exhaustive list) John Key, DC, J.A, Phil Goff, Simon Power, PB, Steven Joyce, Charles C, Judith Collins, Trevor Phil Tyford, Nikki Kaye, Helen C…another words, a grand coalition of those who I think are honourable people, CAPABLE of being honourable MPs and have the intelligence & foresight to lead this country into the future.
“Thus, I would like a cabinet …. John Key (ARRRRGH! – Minister of waving)., DC –
($$$$$$) , J.A – 
, Phil Goff – AS PM! 
, Simon Power -:? , PB (NOOOOOOOOO), Steven Joyce (Maybe for his work in optics) , Charles C (:-D), Judith Collins (WAAAAAAAA), Trevor Phil Tyford (You mean sew them together to make a scary hybrid? 
), Nikki Kaye (Minister of biking), Helen C…(Goodluck luring her back from her glamourous job in the Big Apple”
Oooooh Rebecca, you are a woman of true vision!
A grand National-Labour (Labour-National) coalition which consistently captures 70% plus of the vote.
We might get some long term planning and execution for this country at last. Wowsers.
You’ve left my head spinning.
Not that I expect the Tories to take any notice but:
The reason I say that the Tories won’t take any notice is because of an inherent belief in the survival of the fittest philosophy, one which is so much admired by the Right = “sink or swim”.
That a few extra people end up sinking = not a big problem, it is natural after all and maybe even a good thing since they were obviously benefit bludgers who didn’t take sufficient personal responsibility in the first place.
The ultimate socialist society – the USSR – didn’t have a problem with alcohol, did it Loota..?
@Becks and Loota – can you imagine the factions?
Question time would have a lot of in fighting and barbed questions from fellow ministers…
@Jeremy it’s was only a problem to the people who didn’t like their drinking, to the people themselves it was great!
JMH what school of economics do you follow? Seriously, I’m asking. And you must follow history too, in reference to the collapse of the Soviet Union in 1991, in order to make your remarks?
Because I take it that you are referring to the period after the collapse of the USSR. The resulting destruction of communist social structures and loss of state benefits and state pay in the mid’90’s caused the life expectancy of males to drop by a rapid and catastrophic 6-7 years to less than 59. Rates of alcoholism skyrocketed.
In contrast, in the early 80’s under Soviet communist rule life expectancy had been gradually climbing and reached ~65.
Thanks for (inadvertently) making the point of the news article.
Oh and as a further reference for you, a 1995 article from the British Medical Journal website
http://www.bmj.com/cgi/content/extract/310/6980/648
Again thank you very much for making my point.
Spud, they could learn to get along. Maybe.
Gag, gag,
OK, ok, its oil and water I’ll admit that.
Loota – you’re welcome. Glad to provide some inspiration (finally!) on this site….
Aah but alas it will never happen as expecting MPs to put aside their individual quests for power is I’m afraid, expecting far too much..
Ha ha Loota, learn to take a joke my friend…
Did you happen to compare Alcoholism rates between the USA and the USSR for the 80s..? When a full third of your residents are alcoholics a small drop is nothing to be proud of…
I have to say that if I were in a communist country and things were that grim I’d be tucking into the home made vodka too!
Spud in that case you must have been quite the alcy over the last 10 years!
Whatever JMH, loss of social structures in the transition from the USSR to Russia greatly worsened alcoholism and greatly worsened life expectancy and survival rates – just like the research reported on by the BBC showed happens when you worsen the societal conditions that people live within.
Your kidding around, and irrelevant comparisons with the United States aside of course.
I’ve had my moments Rebecca – from hardly drinking at all spells to real drinking in the day good times
At the moment I’m drinking about 3 times a week 
Why is a comparison with the States irrelevant..? Because you did a google search and found it was many, many times higher in the USSR..?
Don’t you think that says something about communism vs. capitalism..?
I don’t know myself, I think there is a lot of truth to what you say about radical economic transistions leading to alcoholism, I don’t doubt many people turned to the drink when Rogernomics and ‘87 crash happened and things got bad at end of the 80s, possibly a lot of the drinking culture we see today became inbedded back then and is hard to break now just a feeling/theory – maybe a good argument against rapid economic transistion, maybe the quite radical reform England is going to go through (IMO) might be a good case study (although can binge drinking get worse there?), maybe the rise in drinking would happen in the rapid transistion from a free market economy to a protected one..?
I don’t know the truth or answers but I think there is no need to get hostile about an innocent jibe…
@pdm – “It is now time for John Key and Bill English to take note and take similar actions in NZ”
Sure – do it – right before an election – we could do with a ’smile and wave’, ‘blinglish”, ‘Pulla Benefit’, ‘trolly’ move like that – then we could be sure of a red victory. Bring it on I say.
As for the UK – sure someting needed doing – but this is a bit over the top, and what the public should have expected – the brits have been played as well as the kiwis were with the stupidity of ‘time for a change’ slogan Key brandished. Now we all pay for it.
“Pulla Benefit’,” LOL
Suckers!
JMH said:
The research indicated that rates of death, alcoholism and other socially related diseases go up when benefits are cut, and when social structures collapse.
This mirrored what happened in the USSR.
The US comparison is irrelevant to the findings of the research because your comparison is between nations and between national populations. In comparison, the research applies to any nation, it’s population and changes which occur to that population. The research does not make any observations about East versus West etc., merely about the changes social support and $ benefits as apply to each population.
Hence I described your US comparison as ‘irrelevant’ since it was between populations with many other differences not just benefit levels or societal support levels.
Not hostile JMH just enjoy pulling you up on a few of your points.