Left Foot Forward's Will Straw and Paul Staines, of the Guido Fawkes blog, debated debt on the BBC's Daily Politics show today.
Today’s Daily Politics featured a debate between out very own Will Straw and Guido Fawkes, aka Paul Staines. The debate was generally friendly despite Staines asking Straw to apologise for working for the Treasury under Gordon Brown.
Staines is one of the few who have criticised the coalition government for not cutting further. He said:
“The Tories plan under this deficit reduction plan to have the structural deficit eliminated by the end of 2015 that’s not good enough we want the debt to come down. The Tories ran with posters saying that every baby born is born with £17k of Gordon’s debt well they will have £19k of debts by the end of the Chancellor’s term…
“What we are looking for is expansionary fiscal contraction so the private sector expands while the public sector is shrunk. The productive sector of the economy cannot support this amount of non-productive.”
Staines argument appears to assume that Britain’s public sector is bloated. But as Straw pointed out, public sector spending prior to the recession was 42 per cent, the same as in much of the 1980s. In addition, Britain’s net interest payments on its debt are now lower than under the Thatcher government, as the graph below shows:
Reversing the Tory talking point about household budgets, Straw said:
“There are businesses and households all round the country who borrow either to invest or because they are borrowing for a mortgage. What’s important, and anyone who’s got a mortgage will tell you this, is not the stock of the debt it’s your ability to pay it back.
“And the debt interest payments that Britain has are lower than in the entire period when Margaret Thatcher was in power.”
Straw did criticise Labour for not stating exactly where the £40 billion they would like to see cut would come from:
“We have to be realistic about the cuts and where they would fall.”
Staines, on the other hand criticised the Conservatives for not cutting further and admitted that putting up VAT had damaged demand in the economy and even went as far as to say:
“It was regressive, it hit people on low incomes harder.”
He went on to say said that recent local election results show there is a mandate to cut faster and further, and in a final flourish of hawkishness he said it was also immoral to have a 52 per cent tax rate.
Staines will be a guest speaker at the ‘Rally Against Debt’ tomorrow, described on its website as “a great networking opportunity” – presumably because you will have the undivided attention of many of the speakers, and they might have yours. Only around 3,000 are expected to attend.
The rally’s website also advises that journalists will be present at the event, giving you an opportunity “to get your face out there”, and so requests placards and gimicks from attendees to make the event more media friendly. The website recommends placard lines including “I understand economics” – though if you are holding this sign tomorrow you may wish to move away from those who brought the “UK credit card is maxed out” signs; here’s why.
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17 Responses to “Straw v Guido: The debt debate”
John77
Actually VAT does NOT hit people on low incomes harder because it is zero on food, children’s clothing and public transport and 5% on household fuel. That assertion is based on misinterpreting data that claims that the bottom decile of the “equivalised income distribution” spend *more than 100%* of their income on VAT-rated items. How do they do that? Well, it’s because they are not poor – they pay stamp duty on purchase of expensive houses (you don’t pay stamp duty on cheap houses), they pay Employer’s NI on their household servants, they not only pay air passenger duty but also customs duty on the stuff over the customs allowance that they bring back from their foreign holidays, they get less income-based benefits (housing subsidy, school meals and welfare milk) than the second third fourth fifth sixth or seventh deciles, less tax credits than any of the second to ninth deciles. Most of the genuinely poor are in the second decile.
How does this happen? Because the way New Labour ordered the survey that includes students from richer families (or put out for one year of three) living in flats but excludes poor students living in halls of residence (a large chunk of said first decile by numbers) and excludes redundancy pay so the first decile includes “investment bankers” on “gardening leave” (a large chunk of the spending). Student grants don’t count as income so Will straw reckons that VAT takes an infinite percentage of student income.
Guido needs to do some extra homework. Will Straw needs to tell the truth (I have already explained this to him, twice).
matthew fox
@John77, remind me why there is 5% on household fuel.
VAT is a conservative tax, Ted Heath brought Vat to the country, Mrs T increased it, as did Major. Labour cut VAT.
Kevin Mole
UK debt repayment lower than all of the 1980s Thatcher Govt RT @leftfootfwd: Straw v Guido: The debt debate http://bit.ly/leL2UM
John77
@ matthew fox
So are you arguing that Conservatives introduce progressive taxes that are very difficult to avoid and Labour reduces them while introducing/expanding tax breaks for the rich (film investments that give Wayne Rooney tax relief on three times his investment, expanding stock-and-share ISAs that only make sense for higher-rate taxpayers)? Next you’ll be telling us that the gap between rich and poor expanded under New Labour.
Richard
And since when has Staines, whose company is headquartered in a tax haven, been concerned about the morality of taxation?