Does this mean Just for the record for those of us who don’t know how these things work, is it still Labours policy to halve it over a term of office, or less than half ,more or what?
Labour do not have an official policy on reducing the deficit.
I dont think they have any actual policies at all yet - apparently they are 'coming'
So if you take longer to pay down the deficit it means that you will be borrowing more to cover the shortfall.
Exactly. The key point Labour and their supporters on here seem to ignore is; how would the financial markets and credit rating agencies react to their 'alternative'?
If they don't think it's credible (which is a fair assumption given the current cuts plan has been largely supported) then that'll blow one almighty hole in Labour's 'alternative'. What's going on now would be nothing compared to what would result from that.
We don't live in a bubble, and like it or not, we rely on these people to fund our country.
Exactly. The key point Labour and their supporters on here seem to ignore is; how would the financial markets and credit rating agencies react to their 'alternative'?
If they don't think it's credible (which is a fair assumption given the current cuts plan has been largely supported) then that'll blow one almighty hole in Labour's 'alternative'. What's going on now would be nothing compared to what would result from that.
We don't live in a bubble, and like it or not, we rely on these people to fund our country.
You can't have your cake and eat it, either New labour's cuts are 80% of Coalition ones, making little difference to the markets, or they would have cut significantly less
The yield on five-year gilts - taken as the benchmark interest rate for Government borrowing - has slipped to around 1.44%, the lowest level since at least the 1980s.
The yield is around 0.2% lower than the equivalent bond in Germany, Europe's strongest economy and traditionally a beneficiary of much lower interest rates.
It suggests that Government bonds are regarded as a relatively safe bet and implies confidence in the coalition's plans to slash the deficit.
I never seem to recall Mr Osbourne calling for more regulation of the banks & until the crash wasnt he telling anybody who'd listen that he'd match labours spending commitments pound for pound on the NHS & education?
There needs to be cuts, nobody is denying it, the moot point is how you go about it. Slashing & burning everything in your wake in the idea that if you hack it down enough it will save money is flawed. By not frontloading the cuts the pian could have been eased, with natuaral wasteage & by getting the economy to grow, which was happening under Darlings stewardship. The growth figures dont lie , under Osbourne its dropping , under Darling we where on the upward turn.
The tories are taking a sledgehammer to crack an eggshell. Their approach is purely dogmatic , they are using it to make the changes they want to make, but know they couldnt if the circumstances where different.
The way the tories are using divide & conquer again to justify the changes is also wrong. Turning the nation on each other is not the way to tackle the defecit.
But this is patently and entirely wrong, 80%. How do you cut 80% of what the coalition are planning on cutting over the same time frame without doing most of what they're doing?
Cutting is cutting, you seem to be suggesting these magical labour cuts wouldn't have hurt and would have been easy.
Alistair Darling said before the election that the cuts he would have to impose should he win would be worse than those in the 80's under Thatcher.
You can't have your cake and eat it, either New labour's cuts are 80% of Coalition ones, making little difference to the markets, or they would have cut significantly less
Markets rely on confidence. If they perceive any sign of lack of resolve, or inability to keep to the cuts, or instability, they will severely punish the government, no matter what flavour, with a loss of credit worthiness and a corresponding raising of bond yields, which for the UK in its current position would be disastrous.
We are actually in a worse debt position than Portugal when you take into account our debt to GDP ratio. We are paying 3% interest, they are north of 8%. The difference is merely the fact that they now have political uncertainty, even negotiating an EU bailout is frought with problems for them.
The markets will react negatively to any sign of the cuts being reduced, or taxation levels, especially on companies, being raised. They will also set a level, above which confidence would be lost and rates will automatically rise. With our record debt, we are flying very close to that level even with the coalition cuts.
Does this mean Just for the record for those of us who don’t know how these things work, is it still Labours policy to halve it over a term of office, or less than half ,more or what?
You can't have your cake and eat it, either New labour's cuts are 80% of Coalition ones, making little difference to the markets, or they would have cut significantly less
When Labour was in power it had no plan to reduce the deficit. That in turn led to disquiet in the markets, a reduction in the value of sterling and an increase in both the interest and insurance payments on the countries debt. This is an issue because the debt is not priced in Sterling - but in a combination including Euro's and Dollars - meaning a reduction in the value of sterling increases the sterling price of the debt (a bit relevent when you think that it is payments to people's salaries; which are taxed and pay this debt off, and are in sterling)
There is also the issue of how fast you cut. Labour have complained that the coalition is doing it too fast and too soon. Part of this is a belief that cuts in public spending reduces the money in the economy, but that is only true if you think the public sector is the economy - I don't.
Now in opposition Labour is having a go at the coalition - because while in opposition they will not have to implement these cuts - it therefore will not have to justify if they are enough and what the market reaction would be.
Having now produced this plan it's cuts are little different - which makes it's position of the cuts even more hypocritical.
What is all this structural deficit and deficit as a whole stuff that Ben in post #8 is talking about?
The structural deficit is the difference between what you would normally spend (excluding things like bank bailouts, increased benefit payments during a recession) - and the income you have. (via taxes in this case).
The deficit is the amount you loan.
Over simplification but lets say you have an income of £1,000.
If your normal spending is £999 then you have no structural deficit.
If your normal spending is £1,001 then you have a structural deficit of £1
Lets say you wanted to buy a new sofa at the DFS sale and take out a loan of £300 then you have a deficit of £299 ( £999 + £300 - £1000)
You can't have your cake and eat it, either New labour's cuts are 80% of Coalition ones, making little difference to the markets, or they would have cut significantly less
My comment is based upon Miliband and Ball's claims about how things could be so different under them compared to the current government. I agree that their cuts would have to be little different to what we already have - it's sheer hypocrisy and misrepresentation on their part.
What is all this structural deficit and deficit as a whole stuff that Ben in post #8 is talking about?
Very basically you take out the extra costs of the downturn (higher welfare bills, less tax receipts etc) and what you are left with is the extra spending needed to cover the level of services we have.
In theory it should be in balance, but for roughly the last 10 years we have been spending more on services than our income allowed - that is the structural deficit.
But my concern is if you still support Labour and their idea to only half it over a term of office, so that its done slower and longer marking it easer for people to bear, does this still make it Labours policy to be able to do this or not?
But my concern is if you still support Labour and their idea to only half it over a term of office, so that its done slower and longer marking it easer for people to bear, does this still make it Labours policy to be able to do this or not?
That was Labours policy going into the election, under a different Leadership.
At present there is no official Labour policy on the economy so people are reduced to guessing that their past policies would still apply. But it is only a guess.
But my concern is if you still support Labour and their idea to only half it over a term of office, so that its done slower and longer marking it easer for people to bear, does this still make it Labours policy to be able to do this or not?
I think the point is Net Nut that "halving" does not mean 50% of of the coalitions cuts. It's not 50% of what the coalition are doing or half as bad.
Labour would have had to do 80% of what the coalition are doing they might have chosen to raise taxes more and cut less but still 80%?
Perhaps the cuts would have been a bit slower, perhaps not quite as deep, but frankly it looks to me like they would have been substantially similar.
I think Labour are overselling how different their cuts would have been compared to the coalitions, I think Labour supporters are willfully ignoring what labour actually promised to cut because they hate the idea of cuts and somehow believe that Labour wouldn't have done it even if they said they were going too.
I think Labour supporters are willfully ignoring what labour actually promised to cut because they hate the idea of cuts and somehow believe that Labour wouldn't have done it even if they said they were going too.
Quite possibly - I see that Labour have refused to commit to reversing any of the proposed cuts.
But my concern is if you still support Labour and their idea to only half it over a term of office, so that its done slower and longer marking it easer for people to bear, does this still make it Labours policy to be able to do this or not?
It is the reaction of the markets that might cause a problem (there were rumblings).
If our credit rating went down or people percieve that we are too indebted - then the cost of loans goes up. That was always the issue with Labour - everyone was asking for their plan - which they kept putting off - eventually the election intervened and they never had to - but all through that time our Credit Rating was at risk.
The trouble is you do not deal with the Structural debt - then our level of debt will always increase - bit like going into your overdraft - if your level of spending does not go down - then you need more overdraft, and need it sooner.
We were looking like having the same problem as the so called PIGS (Portugal, Ireland, Greece and Spain). That would have rapidly increased our loan payments and reduced the money available for spending (as it is the debt is either 4th or 5th highest amount the government spends).
They would have made 100% of the coalition's cuts. It is all BS on Balls's and Milband's part. Don't forget that before the election Mandelson cut higher education funding, Balls talked of school mergers, Darling talked about : "Having to cut further than Thatcher ever did", plus now he has admitted they would have raised VAT to 20%.
That makes no sense, how do the fit able people get more benefits than the struggling ones?
Because they lie and they are never means tested once their initial forms are filled in. Then they produce children, then they produce more children.
People who need genuine help are, unfortunately far too honest when applying for benefits so because of their honesty often they are preventing themselves from obtaining all they entitled to.
A lot of people have a real desire not to be a burden (especially the older people), or don't want to appear like they've failed in society - and don't claim what they're entitled to. When I worked for a local authority, it was so depressing to see some council tenants living without working heating, but never called up to complain, but when they did, they were always given priority over the other type that were causing untold damage within 'their' property and demanding it was repaired/replaced, always saying 'it was like that when we got here'.
Very sad, but those who shout the loudest usually get their way - and get away with murder.
Believe it or not, most people who work in the professions of giving out benefits and support actually do want to help. It's just that they always have to deal with the problem people, which is why they can seem so demoralised. The fact is, they see - day in, day out - what really goes on.
However, this isn't a recent thing. I worked for the council in 1993/4, so it was the Tories in power (albeit my council was Labour run).
Because they lie and they are never means tested once their initial forms are filled in. Then they produce children, then they produce more children.
People who need genuine help are, unfortunately far too honest when applying for benefits so because of their honesty often they are preventing themselves from obtaining all they entitled to.
That makes even less sense, surely if they're honest they get all the benefits they're entitled to?
And doesn't explain how there's bigger benefits for liars. You painted this completely illogical picture of the undeserving being rich on benefits but the deserving being poor on the same benefits.
Many people don't even try to claim what they're entitled to, which is why the Government will sometimes have to use our money to advertise benefits to people.
The people who claim anything and everything are surprisingly wise to all the things you can claim, and how to qualify. You don't even need a mate down the pub to tell you, as it's all in the public domain for those who care to look.
I'm not against a good percentage of my taxes being used to pay those who cannot work, or have fallen on hard times and are actively seeking work, but not those who lie and sit at home (or more likely do actually work but cash-in-hand, say no more) and become a drain of my money AND YOURS.
Comments
Labour do not have an official policy on reducing the deficit.
I dont think they have any actual policies at all yet - apparently they are 'coming'
Exactly. The key point Labour and their supporters on here seem to ignore is; how would the financial markets and credit rating agencies react to their 'alternative'?
If they don't think it's credible (which is a fair assumption given the current cuts plan has been largely supported) then that'll blow one almighty hole in Labour's 'alternative'. What's going on now would be nothing compared to what would result from that.
We don't live in a bubble, and like it or not, we rely on these people to fund our country.
You can't have your cake and eat it, either New labour's cuts are 80% of Coalition ones, making little difference to the markets, or they would have cut significantly less
http://news.sky.com/skynews/Home/Business/Govt-Borrowing-Costs-Fall-After-Spending-Review-Plans-Five-Year-Gilt-Yields-Lowest-For-Generation/Article/201010415766846?f=rss
But this is patently and entirely wrong, 80%. How do you cut 80% of what the coalition are planning on cutting over the same time frame without doing most of what they're doing?
Cutting is cutting, you seem to be suggesting these magical labour cuts wouldn't have hurt and would have been easy.
Alistair Darling said before the election that the cuts he would have to impose should he win would be worse than those in the 80's under Thatcher.
http://news.bbc.co.uk/1/hi/uk_politics/8587877.stm
But now apparently the coalition are evil for cutting 20% more than labour planned and labour can't offer a single alternative. Not a single policy.
Markets rely on confidence. If they perceive any sign of lack of resolve, or inability to keep to the cuts, or instability, they will severely punish the government, no matter what flavour, with a loss of credit worthiness and a corresponding raising of bond yields, which for the UK in its current position would be disastrous.
We are actually in a worse debt position than Portugal when you take into account our debt to GDP ratio. We are paying 3% interest, they are north of 8%. The difference is merely the fact that they now have political uncertainty, even negotiating an EU bailout is frought with problems for them.
The markets will react negatively to any sign of the cuts being reduced, or taxation levels, especially on companies, being raised. They will also set a level, above which confidence would be lost and rates will automatically rise. With our record debt, we are flying very close to that level even with the coalition cuts.
What is all this structural deficit and deficit as a whole stuff that Ben in post #8 is talking about?
It is a sizable difference.
When Labour was in power it had no plan to reduce the deficit. That in turn led to disquiet in the markets, a reduction in the value of sterling and an increase in both the interest and insurance payments on the countries debt. This is an issue because the debt is not priced in Sterling - but in a combination including Euro's and Dollars - meaning a reduction in the value of sterling increases the sterling price of the debt (a bit relevent when you think that it is payments to people's salaries; which are taxed and pay this debt off, and are in sterling)
There is also the issue of how fast you cut. Labour have complained that the coalition is doing it too fast and too soon. Part of this is a belief that cuts in public spending reduces the money in the economy, but that is only true if you think the public sector is the economy - I don't.
Now in opposition Labour is having a go at the coalition - because while in opposition they will not have to implement these cuts - it therefore will not have to justify if they are enough and what the market reaction would be.
Having now produced this plan it's cuts are little different - which makes it's position of the cuts even more hypocritical.
The structural deficit is the difference between what you would normally spend (excluding things like bank bailouts, increased benefit payments during a recession) - and the income you have. (via taxes in this case).
The deficit is the amount you loan.
Over simplification but lets say you have an income of £1,000.
If your normal spending is £999 then you have no structural deficit.
If your normal spending is £1,001 then you have a structural deficit of £1
Lets say you wanted to buy a new sofa at the DFS sale and take out a loan of £300 then you have a deficit of £299 ( £999 + £300 - £1000)
Well that is how I understand it.
http://www.bbc.co.uk/i/zs7vk/
Fast forward to 11:00.
My comment is based upon Miliband and Ball's claims about how things could be so different under them compared to the current government. I agree that their cuts would have to be little different to what we already have - it's sheer hypocrisy and misrepresentation on their part.
Very basically you take out the extra costs of the downturn (higher welfare bills, less tax receipts etc) and what you are left with is the extra spending needed to cover the level of services we have.
In theory it should be in balance, but for roughly the last 10 years we have been spending more on services than our income allowed - that is the structural deficit.
But my concern is if you still support Labour and their idea to only half it over a term of office, so that its done slower and longer marking it easer for people to bear, does this still make it Labours policy to be able to do this or not?
It's not 20% of the total income being discussed here. It's 20% of the reduction in income which isn't quite so sizable.
That was Labours policy going into the election, under a different Leadership.
At present there is no official Labour policy on the economy so people are reduced to guessing that their past policies would still apply. But it is only a guess.
I think the point is Net Nut that "halving" does not mean 50% of of the coalitions cuts. It's not 50% of what the coalition are doing or half as bad.
Labour would have had to do 80% of what the coalition are doing they might have chosen to raise taxes more and cut less but still 80%?
Perhaps the cuts would have been a bit slower, perhaps not quite as deep, but frankly it looks to me like they would have been substantially similar.
I think Labour are overselling how different their cuts would have been compared to the coalitions, I think Labour supporters are willfully ignoring what labour actually promised to cut because they hate the idea of cuts and somehow believe that Labour wouldn't have done it even if they said they were going too.
Quite possibly - I see that Labour have refused to commit to reversing any of the proposed cuts.
It is the reaction of the markets that might cause a problem (there were rumblings).
If our credit rating went down or people percieve that we are too indebted - then the cost of loans goes up. That was always the issue with Labour - everyone was asking for their plan - which they kept putting off - eventually the election intervened and they never had to - but all through that time our Credit Rating was at risk.
The trouble is you do not deal with the Structural debt - then our level of debt will always increase - bit like going into your overdraft - if your level of spending does not go down - then you need more overdraft, and need it sooner.
We were looking like having the same problem as the so called PIGS (Portugal, Ireland, Greece and Spain). That would have rapidly increased our loan payments and reduced the money available for spending (as it is the debt is either 4th or 5th highest amount the government spends).
Well they won't be able to for another 4 years at least so it doesn't matter what they say at the moment.
Because they lie and they are never means tested once their initial forms are filled in. Then they produce children, then they produce more children.
People who need genuine help are, unfortunately far too honest when applying for benefits so because of their honesty often they are preventing themselves from obtaining all they entitled to.
Very sad, but those who shout the loudest usually get their way - and get away with murder.
Believe it or not, most people who work in the professions of giving out benefits and support actually do want to help. It's just that they always have to deal with the problem people, which is why they can seem so demoralised. The fact is, they see - day in, day out - what really goes on.
However, this isn't a recent thing. I worked for the council in 1993/4, so it was the Tories in power (albeit my council was Labour run).
That makes even less sense, surely if they're honest they get all the benefits they're entitled to?
And doesn't explain how there's bigger benefits for liars. You painted this completely illogical picture of the undeserving being rich on benefits but the deserving being poor on the same benefits.
The people who claim anything and everything are surprisingly wise to all the things you can claim, and how to qualify. You don't even need a mate down the pub to tell you, as it's all in the public domain for those who care to look.
I'm not against a good percentage of my taxes being used to pay those who cannot work, or have fallen on hard times and are actively seeking work, but not those who lie and sit at home (or more likely do actually work but cash-in-hand, say no more) and become a drain of my money AND YOURS.