No case to cut more than Labour


The Office of Budget Responsibility predict that growth will come in lower than forecast in the March Budget but that borrowing will also be lower. With the coalition government intent on cutting a range of taxes, we should be in no doubt about the justification for spending cuts above and beyond the £38 billion mooted in Alistair Darling’s final Budget. They are driven by ideology not necessity.

According to the OBR report presented today by Sir Alan Budd, compared to the March Budget, total managed expenditure is £2.8 billion lower while receipts are up £5.6 billion for 2010-11. This has contributed to the estimate of the current budget deficit falling from £124 billion at the Budget to £114 billion.

Meanwhile, reporting from the OBR’s press conference, Newsnight’s Paul Mason writes:

There is only a 0.3% of GDP difference (maybe 5bn) between Darling’s structural deficit forecast and Budd’s. This means there is no prima-facie ammo in the Budd Report for a significant tightening in order to eliminate “the bulk of the structural deficit”.

As Left Foot Forward showed last week, the coalition government plans – over the course of this Parliament – to cut income tax, employer national insurance, corporation tax, freeze council tax, and “recognise marriage in the tax system”. These are all discretionary decisions which will need to be paid for by additional tax increases or spending cuts above and beyond the £38 billion of spending cuts that Labour set out would be needed in its final Budget (Paragraph 2.57).

With the Government preparing a “climb down” on raising capital gains tax, there are growing suspicions that they will pay for their tax giveaways by raising VAT, which is urged by business, or cutting additional public services.

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  • winston k moss

    as we have seen before the election mr osbourne is not reading the same script as the rest of us.they are dismissive of many things,this will be their downfall,let them fall.labour made mistakes but they knew where they went wrong.CONDEM(us all)NATION PARTY are already imploding due to own greedy ideologies.they have even tried to hoodwinking electorate on voting reform what else belies us all from this unelected party?

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  • Mr. Sensible

    Will, I fully agree with you. This Office for Budget Responsibility is turning in to an absolute Own Goal for the coalition.

    The coalition made a big thing of sexing up how bad our financial problems were, but given that the report shows that the defecit is forcast to be not as bad as Labour said (for example, Darling predicted in his budget that public borrowing would reach 11.1% of GDP in Financial Year 2010-2011, but the OBR predicts it will be 10.5% of GDP this year), and given also that, as you have identified the coalition is embarking on a series of tax giveaways along with the accademies nonsense, do you agree with me Will that this is a case of George Osborne, in his own words, ‘Fixing the Finances to Fit the Budget’, not ‘Fixing the Budget to Fit the Finances?’

    What is more, as the Chartered Institute for Personele and Development said, these cuts are going to force 725000 people out of work, thus pushing unemployment up towards 3 million and having it stay there till 2015 (Chartered Institute for Personele and Development) ; so much for cutting the deficit! And, there is a very real risk that the economy could go back in to recession as a result of these cuts, thus, again, not helping the public finances.

    Also, in London this afternoon, Nick Clegg will be speeking in favour of cuts which he opposed during the election campaign.

    Isn’t it the case, Will, that we’ve got a Chancellor who’s an absolute hippocrit, and a Deputy Prime Minister who has sold himself for a seat in power, thus questioning the credibility of the New Politics?

    David Cameron said before the election that any minister who came to him proposing to cut a frontline service would be shown the door. In which case, if the government wants to stick to its word for once, resign, and call an election.

  • Mr. Sensible

    Indeed, all the figures in that table come in lower than the Treasury’s forecasts.

  • http://billyblofeld.wordpress.com Billy Blofeld

    Is the OBR expected to take into account our true debt, i.e. to include PFI commitments, or will it continue to use totally dodgy fantasy figures?

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  • Fat Bloke on Tour

    The OBR report shows that AD was right on the money.
    At worst 2 months early regarding growth moving up a gear but then he was talking 3 months ago before AM and all the continental dog boilers took Greece and the Euro to the brink with all their kitchen table conservative economics and narrow national self interest.
    Fair wind of low’ish pound, import substitution and export growth and the GB/AD plan would have worked. Add in a bit of backbone for a comprehensive re-alignment of tax / CGT / Corp tax and some good old fashioned HMRC activism and things would be moving forward in a progressive manner.

    Now what have we got, the lunatics have taken over the asylum and their cheerleaders in the media are making sure that their agenda has prominence no matter how barking their ideas are. With Sniffy and the ghost of the poisoned dwarf firing up the chain saw for some slash and burn then unfortunately all bets are off.
    The poor and the unemployed, well if you get hungry then you will be forced to consume the family pet for sustenance. The right wing, upper middle class establishment have no intention in putting up their own tax bills to help those more unfortunate – we are all in this together – aye right as they say in G1.
    As has been noted by some of the more inquiring media, what is Plan B if it all goes badly wrong, the spectre of 1937 hangs heavily over the recent pronouncements of the EU / G20. The daily spectre of immediate collapse is now of the agenda so now all the political pygmies are reverting to type – self interest, national stereotypes and beggar thy neighbour policies are now the order of the day. I fear GB will be missed on the global stage very soon.

    They are using the credit crunch to generate a panic to dismantle the TB/GB welfare state. Dave the Rave first had thoughts to use the environment as his weapon of choice. You know he would love to help the poor and the needy but the cost to the environment would be too much for the planet to support. Better to look to non monetary measures to calibrate “progress”, out goes the concept of relative poverty and in would have come the concept of the happiness factor. Cuddly conservatism to take the focus away from GDP growth and redistribution, you bet. The only question would have been how many of media establishment would go along with all this mumbo jumbo.

    Now the Credit Crunch is upon us, dog boiling is the new orthodoxy and a good old fashioned slash and burn of the welfare state is the only game in town. The cuts being put forward are not primarily focused on sorting out the deficit they are being put in place to prepare the ground for the low tax nature of the upturn when it comes. Thatch 2 — The Sequel is the order of the day much to the delight of the Orange bookers who are reverting to Liberal type, Tories without their kicking boots on, saying sorry as they reduce the life chances of the poor.

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  • Anon E Mouse

    Mr.Sensible – Irrespective of what this office says why do you disagree with more open government?

    Fat Bloke on Tour – Why don’t you want to dismantle TB/GB welfare state?

    These old fashioned, control freak authoritarian views are really not welcome in any political party – especially after 13 years of Labour failure on inequality etc. Quite frankly if the pair of you can’t see how unattractive it is go and join the Socialist Party and start selling the Morning Star on street corners because your views will do the Labour Party no favours.

    And Fat Bloke on Tour, I don’t know what a “dog boiler” is or who “sniffy” is but your “Thatch 2 – The Sequel” shows a complete lack of both financial and political knowledge about this country.

    Apart from the fact more affordable homes and comprehensive schools were built under Thatcher, her lowest increase in public service spending was a yearly increase of 1.1% – never a reduction.

    Not a single penny was cut under Thatcher. Why don’t you know that ya numpty?

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  • Fat Bloke on Tour

    Anon E … @ 10.03

    Just where are all the right wing mentalists getting all their little political factoids?

    If true I will add them to the following:

    1) Which Education secretary shut the most grammar schools?
    2) Which Energy secretary shut the most pits?

    All very interesting in their own little way but strange things happen in politics, however to base your approach to the future suggests you deal in anecdotes not facts.

    Increase in public service provision = 1.1%
    Please define public service spending?
    Does it include increasing debt interest, inflation or unemployment costs?
    Individual departments and programmes were cut no matter the overall number

    Anyway, how does that compare with health inflation, teacher shortages and the post Falklands defence investment?
    Increasing waiting times in the NHS would suggest Thatch did not put in enough to keep the show on the road.
    And all this at a time of North Sea oil and selling off the family silver? Some legacy!

    What Labour failure on inequality?
    How does Thatch’s record compare?
    Any thoughts on the global context?

    Finally why don’t I want to dismantle the TB/ GB welfare state?
    Why because it has worked and the people at the bottom have seen a significant improvement to their financial wellbeing and the quality of state services they receive.

    As noted previously the issue with the deficit shroud waving is not anything to do with the nation’s finances, the private sector surplus balances out the public sector deficit. However it has everything to do with the right wing, upper middle class establishment’s unwillingness to pay for the welfare state as it now stands and their desire to generate tax cuts for themselves when the recovery gets going for real.

    They are all dog boilers now.
    For the record — what is a dog boiler?

    A dog boiler is a member of the upper middle class establishment or one of their media / gullible fellow travellers who if asked, would rather have the poor and the unemployed consume their family pet for sustenance than have the state offer a decent level of support in economically troubled times.

    The viewpoint was very popular in the Great Depression and has been revived by a desperate Tory Party all at sea after the complete failure of Casino Capitalism and its hedge fund equivalent, Coin Clipping.

  • SJ Chandos

    The latest figures only confirm what I said on this site some time ago. The so-called deficit crisis is a convenient smoke screen to mask the Conservative’s ideological imperative to attack public sector provision and the vital services upon which the majority of the population rely. We are ‘not all in this together,’ as Cameron claims. His class have no fear of the consequences of the massive cuts packages being prepared.

    Cutting expenditure is the ‘first nature’ of conservatism and they are returning to it. The need to appease the financial markets seems to be the overiding objective of their economic policy. However, its effects will increase unemployment, take money out of the economy and plunge the weak UK economy in to a double dip recession.

    Unfortunately, the rest of Europe seems to be accepting this austerity nonsense and planning cuts of their own. This could be significant in undermining the world capitalist upturn and plunging us in to depression.

    Socialists should organise in their workplaces, trade unions, communities and social networks to build active resistance to the ideological assault upon jobs, services and pensions that is being prepared. Defend the public sector, defend jobs and promote class politics that places the blame for this crisis squarely where it should be, with the capitalist system, the cheap and nasty wide boys that run the markets and their political representatives!

  • SJ Chandos

    The Thatcherite period demonstrated the bankruptcy and irrationality of capitalism. It was a counter-revolution against the post-war consensus on social welfarism and corporatism. It consciously increased unemployment, destroyed the UK’s manufacturing base and unfettered the markets to achieve its class objectives. In the process it inficted untold hardship and misery upon whole sections of the population, blighted lives and created many of the social-economic problems that we still suffer.

    The Tory ‘Broken Britain’ mantra is perverse. Thatcherism broke Britain, destroying much of the decency and cohesion of post-war UK society. As for public expenditure not decreasing under Thatcher, yes well they had to pay for all that irrational waste and economic inactivity that they created. How much did the introduction of the Poll Tax cost in total? Lambeth and Liverpool Councillors were surcharged and disqualified for small public losses. Yet, the Thatcherites got away scot free with wasting millions on a ideologically driven scheme. Although thankfully it proved to be the political straw that broke the Thatcherite back!

    Also, Thatcherism was fundamentally undemocratic, abolishing democratic institutions and replacing them with unaccountable quangos and regulatory bodies. Mr Cameron, who began the move towards government by quango, why the 1980s Tories of course.

    Some very inconvenient truths!!!!

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