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””
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:
http://www.guardian.co.uk/politics/2010/jun/04/coins-database-government-spending-consultants
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’.
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Simon
RT @OtherTPA: RT @leftfootfwd: Leading economists question Osborne's definition of "intergenerational fairness" http://bit.ly/av7Ln2
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!!!