Leading economists question Osborne’s definition of “intergenerational fairness”

George Osborne's definition of "intergenerational fairness" has been questioned by leading economists. They say, "risk should be shared out across generations".

George Osborne’s declaration that his first Budget was “fair” because it attempted to prevent debt being carried over from one generation to the next has been called into question by a group of leading economists brought together by the Bank of England.

Facing criticism about the distributional impact of the June Budget, George Osborne sought last week to include “intergenerational fairness” into his definition of “progressiveness and fairness”. In a speech to the City, the Chancellor said:

“And fairness extends across the generations, for what is fair about forcing the next generation to pay for the debts of our generation?”

But the summary of the Bank of England’s recent Monetary Policy Roundtable included a line which stated that:

“risk should be shared out across generations: a single generation should not be expected to bear all the costs of having the bad luck to experience a war or a financial crisis directly.”

Most of the increase in Government spending in recent years has been caused by financial interventions or automatic stabilisers such as increased unemployment benefits. Total spending was around 41 per cent until the financial crash. It stood at 47.5 per cent in 2009-10. (see Chart C5 of the June Budget)

The minutes of the meeting are reported in today’s Financial Times and cast doubt over the Bank of England’s stance on spending cuts. The paper reports that:

“Economists present at the event said there was less room for the Bank to offset public spending cuts with lower interest rates, because the accelerator pedal of monetary policy had already been pushed to the floor. Meanwhile, they said, leading economies worldwide were planning to take an axe to public spending simultaneously, potentially amplifying the pain…

“The average forecast for growth next year is 2 per cent among independent economists, but the Bank believes growth will be 2.8 per cent.”

29 Responses to “Leading economists question Osborne’s definition of “intergenerational fairness””

  1. Max

    RT @leftfootfwd Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2 >> wondering the same

  2. Pen

    RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  3. paulstpancras

    RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  4. Don Lands

    RT @MaximManchester: RT @leftfootfwd Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2 >> wondering the same

  5. Catherine Elizabeth

    RT @paulstpancras: RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  6. Shamik Das

    Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2 reports @wdjstraw on @leftfootfwd

  7. Peter Campbell

    RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/dfMMW0

  8. R Gordon

    RT @paulstpancras: RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  9. Trakgalvis

    Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2 via @leftfootfwd

  10. Other TaxPayers Alli

    RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  11. Anon E Mouse

    Will – But the structural deficit in this country has nothing to do with a financial crisis in this case, just government waste of our money.

    PFI hospitals cost a fortune, not including the monumental waste in the computer system and it all adds up.

    There are so many different government “projects” that should never have been approved. For example The Assets Recovery Agency was set up in 2003 and cost the taxpayer £60million to recover just £8million.

    The swine flu costs dwarf the amount that idiot John Gummer inflicted on the meat industry over CJD.

    And it never ends from £billions being spent on consultants to effectively do what we elect politicians for and on and on.

    Maybe future generations should have to pay for a financial crisis but this to me isn’t one.

    If you don’t believe how much waste that last lot have cost the country try The Guardian’s Coin database:

    //www.guardian.co.uk/politics/2010/jun/04/coins-database-government-spending-consultants

  12. Simon Landau

    Anon E Mouse – I think you will find that ‘structural deficits’ (as understood around the world) do not include project costs. Yes, I am sure the last government had a poor record in this area but so did most private companies (around 70% of all projects in the private sector overspend by a large amount and are considered to ‘fail’ in terms of their original terms of reference.) We should certainly hold the current government to account for their projects and should expect them to have a better performance. But this is not ‘structural deficit’.

  13. Simon

    RT @OtherTPA: RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  14. Chris

    @Mental Mouse

    “But the structural deficit in this country has nothing to do with a financial crisis in this case, just government waste of our money.”

    “Structural deficit” can be as big or small as the economist guessing at its size wants it to be, before the banker’s recession the deficit was a tiny 2.5%. Which was well within European limits, following the recession the deficit is 11.5%; thus the banker’s owe us 9% of our GDP. And don’t forget that in 2007 Labour prudently reduced the growth in public spending to less than GDP growth.

    Labour paid down the national debt *before* borrowing money to invest in infrastructure projects. Brown was clear about the reasons for doing this, just about every bit of public infrastructure had been neglected by the tories for 18 years, who coincidently ran a deficit for all 18 year for their last government. And the LibDems can fuck right off with their sanctimonious drivel as their manifestos in 97, 01 and 05 contained bigger public spending commitments than Labour’s. If the LibDems had been in government we’d have been grateful for a 11.5% deficit.

    “PFI hospitals cost a fortune, not including the monumental waste in the computer system and it all adds up.”

    No, while the a few of the first PFI agreements were cock-ups later ones are actually fairly good value for money as the PFI contractor has to maintain the builds and provide certain services for the money. Also, by spreading the payments over decades Labour have forced tory governments to invest in infrastructure, its no coincidence that the first project the LibCons cut was a non-PFI hospital.

    “There are so many different government “projects” that should never have been approved. For example The Assets Recovery Agency was set up in 2003 and cost the taxpayer £60million to recover just £8million.”

    Oh please enough of the tory myths.

    “The swine flu costs dwarf the amount that idiot John Gummer inflicted on the meat industry over CJD.”

    What a fucking joke, you must be mental if you think that the money spent on swine flu was a waste. We were lucky how mild the flu was for most patients it could have been an awful lot worse and I’m sure if it been and if you’d survived you’d have been first in the queue to blame the government for not preparing for a pandemic.

    CJD was and still is a national disgrace, typical tory deregulation leading to a public health disaster. Your antipsychotics must be making you delusional!!!

    “And it never ends from £billions being spent on consultants to effectively do what we elect politicians for and on and on.”

    WTF? Interesting to see the recent headlines about £300m spent by the NHS on “consultants”, out of a budget of £100bn a year it seems a tiny amount. And are the LibCons really arguing for a vertically integrated NHS that provides all its own services from IT, architecture to legal services? Nope, the LibCons moronic plans will massively increase the amount of money spent on consultants as private companies are brought in to do the commissioning that GPs don’t want to do.

    “Maybe future generations should have to pay for a financial crisis but this to me isn’t one.”

    Yawn, can’t the nurse chemically cosh you again mouse? For a supposed life long Labour voter from a Labour family, from a Labour town, from a Labour valley, from a Labour country you don’t half sound like a Daily Mail reading tory!!!

  15. Anon E Mouse

    Simon Landau – The point I was making was that the mess we are currently in has been accumulating for years and therefore the remarks about a financial crisis should not apply in this case or at best just the QE aspect of it.

  16. Anon E Mouse

    Chris – You’re being obsessional Chris and once again your compulsiveness is making you smearing and rude. Please stop it.

    Can you also try to stop the bad language. This blog often has heated discussions but most people are polite enough to avoid swearing and I would so miss your posts if the blog rules were not adhered to.

    Anyway your diatribe is as usual inaccurate; let’s just take one of your points.

    I said: “There are so many different government “projects” that should never have been approved. For example The Assets Recovery Agency was set up in 2003 and cost the taxpayer £60million to recover just £8million.”

    You said: “Oh please enough of the tory myths”

    The numbers are here: //news.bbc.co.uk/1/hi/uk_politics/5077846.stm

    Results in it being discontinued: //news.bbc.co.uk/1/hi/uk/6251339.stm

    You are clearly insulting me and telling lies at the same time and I really think you should moderate your comments in a public blog Chris.

    Don’t forget Labour lost the election for a reason – it didn’t just happen by accident you know. Oh no it didn’t…

  17. Chris

    @Mental Mouse

    Oh, yawn, Mouse your disappointing me – have they coshed you again? You can talk about smearing, I’m just taking the piss, you accused Joss Garman of being a drooling apologist for the previous Labour when he was a noted critic of their policies. I note that the only point you pick me up on is my throw away comment referring to your characterisation of government “projects” being a waste of money, while they’re examples of failures with all governments of whatever party. Your trying to smear all government spending as wasteful, it isn’t, they’re many examples of “projects” that have really helped people, communities, etc but you choose to pick on the few failures.

    “You are clearly insulting me and telling lies at the same time and I really think you should moderate your comments in a public blog Chris.”

    I’m not insulting you, nobody knows who you are! And where am I lying? If you can’t take it buddy don’t going trolling on websites.

  18. Redstar PCS NStaffs

    RT @//twitter.com/leftfootfwd Leading economists question Osborne's definition of "intergenerational fairness" //bit.ly/av7Ln2

  19. Anon E Mouse

    Chris – Well since you have been shown to be comprehensively wrong on the one point I did bring up (your “Tory myth” delusion/lie) let’s try another.

    The PFI schemes – You said: “No, while the a few of the first PFI agreements were cock-ups later ones are actually fairly good value for money as the PFI contractor has to maintain the builds and provide certain services for the money.”

    Which ones are good value for money Chris? And please note I use the present tense for a reason. I expect things to be very good value for money or they shouldn’t be done btw.

    Link to the BBC here: //www.bbc.co.uk/news/health-10882522

    So £11billion will now cost us over £65billion or are you going to say the numbers are wrong here? And what if it’s more than that?

    Your normal response is to ignore the question, let your compulsive/obsessive nature take over and you’re off being rude in blogs.

    By the way I opposed these things when the Tories invented them and was staggered that the Labour party continued the idea and here’s why. By putting the hospitals and other schemes into the hands of the private sector one immediately relinquishes full control over them and leaves them at risk with private commerce – and please don’t start screaming about contractual agreements on costs. Good lord I sound like a socialist…

    Anyway just take a second and think about what you’re typing before you press RETURN Chris and remember: Labour lost the election for a reason…

    We can do Liam Donaldson and that fiasco next time I’m sure…

  20. Chris

    @Mental Mouse

    Your endless astroturfing is growing tiresome, one minute your a LibDem next a trade unionist Labour man then using attack lines straight from central office.

    “Which ones are good value for money Chris? And please note I use the present tense for a reason. I expect things to be very good value for money or they shouldn’t be done btw.”

    You have a long way to go before you could be considered naive in your characterisation of PFI as all a waste of money, see //bit.ly/cGjD9r
    Things are a lot more nuanced than your simple brain could understand, best you go for the lobotomy instead – far better quality of life for yourself and those around you.

    “Good lord I sound like a socialist…”

    Interesting, I thought you were a trade unionist Labour man with a whole family of Labour supporters – yet more inconsistency in your arguments reveals your an astroturfing troll.

    “Anyway just take a second and think about what you’re typing before you press RETURN Chris and remember: Labour lost the election for a reason…”

    Only if you go get a psychiatric assessment before you start posting your Labour hating drivel. Its interesting that you don’t actually address most of my points, and *most* tellingly you don’t even attempt to address the points raised by the original post!!! Instead you try and turn the debate away from them. Resorting merely to spit out endless tory attack lines, it makes me very suspicious of your motives.

    Go on mouse start foaming at the mouth and give numerous examples of dead relatives and blokes you met in pubs that support your inconsistent arguments. Hopefully, doctor will cosh you for the rest of the week.

  21. Anon E Mouse

    Chris – You’re still doing it – making rude comments about things you claim I’ve said when I haven’t.

    It is quite obvious that the compulsive and obsessive side to your nature means you are unable to act or respond with reason and consequently this is a cyclic waste of time.

    The sympathetic looks people give you mean something Chris.

    Remember Labour lost the election for a reason and you need to understand why childish and delusional tribalism is a most unattractive trait and one to which all Labour leadership candidates seem to be avoiding. Take note Chris…

  22. Anon E Mouse

    Chris – And just to answer your post regarding PFI, where as usual you are comprehensively wrong – your link: //bit.ly/cGjD9r

    Has three other links in the comments. Did you actually bother to read what you posted? Although you obviously believe that opinion is more important than fact I choose this time to do the same from your very linked page:

    Sam Semoff: //www.liverpooldailypost.co.uk/liverpool-news/regional-news/2010/08/11/royal-liverpool-hospital-rebuild-plans-face-second-judicial-review-threat-from-campaigner-sam-semoff-92534-27038866/

    The Guardian Newspaper (used to support Labour Chris): //www.guardian.co.uk/commentisfree/2010/aug/16/editorial-pfi-economic-policy

    Allyson Pollock: //www.guardian.co.uk/commentisfree/2009/sep/23/pfi-construction-bid-rigging

    Those three are just from your link of someone’s opinion Chris. Personally I prefer these three opinions than the one you posted to from “Alien from Zog”…

    Now I’m off Chris – kindly move along please there’s nothing to see here… Never forget though. Labour lost the election Chris…

  23. Anon E Mouse

    Will Straw – Thanks for moderating MY comments when I am responding to his post with links from his own link and without the nasty vitriol and bad language this individual keeps posting.

    My language is moderate and at no time am I being impolite.

    Thanks a bunch Will – Just because I don’t share his “group think” I get punished – how fair is that?

  24. Shamik Das

    Anon, the comment at 3:20 didn’t get through automatically because it contained too many links, as sometimes happens because of our spam filter. It has now appeared.

    As I said before, can we please keep things civil!

  25. Anon E Mouse

    Shamik – Yeah I’m off somewhere else.

    Thanks dude – I’m loving this!!!

  26. Clegg slams “partial” IFS - yet in April he was “really delighted” with it | Left Foot Forward

    […] that the Budget was fair when examined on an “intergenerational” basis – a claim refuted at the Bank of England’s Monetary Policy Roundtable; Treasury minister Mark Hoban today […]

  27. Clegg slams “partial” IFS - yet in April he was “really delighted” with it | Left Foot Forward

    […] that the Budget was fair when examined on an “intergenerational” basis – a claim refuted at the Bank of England’s Monetary Policy Roundtable; Treasury minister Mark Hoban today […]

  28. Chris

    @Mental Mouse

    Although you did state “Now I’m off Chris – kindly move along please there’s nothing to see here…” you’ve now brought it up on another thread so I think I should reply. But do note that PFI has fuck all to do with the original story and merely the first attack line on your script which you run through each time you post.

    Like I said earlier, PFI is a complex issue which is probably beyond the limits of your capabilities. As the story in my link supported PFI isn’t all bad but imho it has two excellent characteristics that have made me enamored of it.

    i. Keeps the debt of governments books.
    ii. Makes the tories pay for infrastructure projects.

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