A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left. Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Thursday, December 10, 2009

The PBR and the warning of Ireland

I thought the PBR was a good social democratic response to the current phase of the economic crisis i.e. protect frontline services; concentrate on growth and recovery in the short term; and fund the protection of frontline services with extra taxation focused where possible on the best off.

Personally I would have added to the three frontline services the government is ringfencing (police, schools and hospitals) two others - the armed forces and children's social services. You can't get much more frontline than our troops fighting the Taliban or the people trying to stop another tragedy like Baby P, so it seems odd these were not given equal status to the three picked.

Economically I think Darling is right not to withdraw the whole stimulus package yet and to have one more year of deliberately not prioritising deficit reduction. My local Labour Party heard a very interesting speech a couple of weeks ago by Larry Elliott, the Guardian's Economics Editor, where he warned that even with what Labour is doing to stabilise the economy through maintaining public spending there is a serious risk of a W shaped recession - a second dip in the economy in Q2 of 2010 as people and businesses panic that they have overextended themselves during the current early recovery phase and rein in spending. He warned that the Tory plans for retrenchment on spending turn a W shaped recession from a high risk to an absolute certainty. Then we really would see the deficit spiral because tax take would fall again, benefit payments would rise again and even the most draconian cuts wouldn't cancel these changes out.

I'm alarmed by the way that the Tories and the media discuss public spending as though it was purely an economic tool to be switched off in order to reduce the deficit. Actually all the things government spends money on have a primary purpose which is intrinsic i.e. delivering services for citizens. Their economic effect is secondary. There seems to be some kind of fantasy that there are areas of public spending that are so unnecessary that taking an axe to them is actually desirable. Whilst there are undoubtedly a few percent efficiency savings that could be found in any government organisation, reining in public spending to the extent advocated by the Tories or even by the Government is very soon going to lead to the switching off of services that citizens feel they are entitled to and value.

If anyone wants to know what a Tory budget and a Tory approach to deficit reduction could look like they need only look at Ireland where the budget was delivered yesterday. Guido helpfully summarised it as his libertarian take is that it looked great. It included cutting welfare payments back to 2006 levels, cutting unemployment benefit and cutting public sector salaries by 5% for the lowest paid workers. So in Ireland the right's response to the recession is to make the poorest and those that are actually victims of it pay the price, along with the people who deliver public services. I'd describe that as evil, as well as economically insane. The political attractiveness of this slash and burn strategy is shown by recent opinion polls in the Republic which show Fianna Fail in third place behind Fine Gael and Labour when historically it has had a 20%-ish lead over the next party in most elections.

UPDATE: Iain Dale has posted: "Guido is right. The PBR the British Chancellor should have delivered, was delivered yesterday in Dublin. Hopefully George Osborne is studying it in great detail."


Anonymous Douglas said...

Darling is targeting cuts at residential care for the elderly; legal aid and prisons. Yup, vulnerable sectors of society that can hardly stand up for themselves, can they?

Me thinks we should cut the bloody Olympics for starters!

1:15 pm, December 10, 2009

Anonymous Anonymous said...

But it's not those who can pay who will have to pay under the PBR. It's actually pretty regressive, and we see some banks have rushed to pay bonuses so as to avoid paying tax. The NI increase will not hit 'the rich' in the same proportion as those on £20-20k.

It was appalling. Great headlines though.

6:43 pm, December 10, 2009

Anonymous Anonymous said...

My brother's employer was commited to paying him a £1.25 million bonus. Actually, it has already given him access to the money, in the form of a loan, attracting an interest rate of 0.0001%. When Darling lifts the cap, my brother will pay the loan back and get his bonus! The same deal applies to his colleagues' bonuses too!

Darling's cap will have no impact, the horse bolted from the stable ... months ago!

8:38 pm, December 10, 2009

Blogger kris said...

This is why Labour will win - everyone will be scared shitless what the Conservatives will cut.

My dad always used to say, "wait for the other shoe to drop". People think we've largely gotten away with this recession. It'll be back next year and there is still more medicine to take (jobs to be lost).

12:08 am, December 11, 2009

Anonymous Anon E Mouse said...

Kris - Labour won't win, no one listens to anything any of these crooks in government say.

The electorate reads The Sun newspaper, never watches Question Time and doesn't care about Carbon Credits and the like.

All they care about is if Jordan is going to win in the jungle.

As a fully paid up member of the working class (and happy to be so) I can tell you the only unifying opinion of people in that demographic is their hatred of Gordon Brown and the Labour Party.

In a South Wales valley pub last Wednesday, the lunchtime conversation was about how "It's a shame we can't get Maggie back - she'd sort this mess out".

When I pointed out that she had destroyed the mining industry locally, they actually said that having Gordon Brown as Prime Minister was worse. Really.

Come the election the Labour vote will collapse and the Tories will get in by a landslide - not because they're good but because of the incompetence of Labour ministers.

People go on about the backgrounds of the Tories but the electorate aren't listening - why would they?

Where I do agree with you on the cuts is the fact the Tories haven't said where they will make them.

So we all know the Labour tax rises will stay, cuts will be made and nothing will be done by the Tories on inheritance tax - they'll say "We'll change it when we can afford to blah blah"

Because of the higher taxes and big cuts the country will get the deficit cut more quickly and the Tories will spend the next decade in power running down the mess Labour left this country in.

I used to be a Labour voter but never again - remind me exactly what real job Ed Miliband has ever done?

9:36 am, December 11, 2009

Anonymous Anonymous said...

The Tories policy on IHT is already that they would do it if and when able to. It's Labour who pretend it's some kind of priority for the Tories.

Quentin Davies eh. Brilliant. I think he's overtaken Shaun Woodward as my favourite champion of the working class.

11:50 am, December 11, 2009

Anonymous Anon E Mouse said...

Anonymous - Of course IHT won't change - I wish it would I HATE the idea that governments can tax you when you're dead, it's obscene.

The Tories are playing a blinder at the moment not saying what they will do, leaving Labour floundering about unable to attack them over anything.

Come the election Gordon Brown and Labour will realise the general public hate politics and if their campaign goes on class they will be trounced for the Quentin Davis etc type of stuff.

As a former Labour voter I know it's over and it serves us right.

What rises from the ashes is anyones guess but it won't be this.

The Will Straws and Luke Ackhursts of the world would do well not to align themselves too closely to this dishonest bunch of crooks.

3:51 pm, December 11, 2009

Blogger kris said...

Anon E

Tell me what real job any of these elected cockroaches has ever had.

5:31 pm, December 11, 2009

Blogger E10 Rifle said...

Two things that aren't protected from cuts but are absolutely vital - for economic and social reasons - are housing and transport. And yes, we should be reducing expenditure on, and ending involvement in, an unwinnable war in Afghanistan.

But the Tories' ongoing response to the crisis remains stupid and alarming, so should focus minds.

9:36 pm, December 11, 2009

Anonymous Dirty Euro said...

Anon E Mouse Non one believes your lies that people in south wales want Thacther back you are a joke of the highest order. The tories collapsed in Wales due to Thatcher.
You are a southern tory talking a load of BS.
The tories cut taxes for the rich, they cut public services for the working class, and actually because they believe redistribution is evil they actually increase taxes for the working classes. You don't care though.

9:51 pm, December 11, 2009

Anonymous Anonymous said...

Is it me or did the Tories about a year and half ago look towards the Republic of Ireland as a Capitalist paradise?? Look at it now!!! You can't and never can trust the Tories!!!

12:11 am, December 12, 2009

Anonymous Rich said...

QE policy of this government is completely flawed. It is flawed because the tax payer will be made to pay this back through taxes and spending cuts.

Since the banks caused this whole economic mess then why isn't the government turning on the banks to resolve the spending black hole. After all they are the root cause of our economic problems.

Unfortunately there isn't one political party willing to beat the banks with the naughty stick because they are too scared of the finanical institions that run the city.

There should be no bonuses paid over £10,000 in the banking sector at all. And all the banks should be made to repay the total cost of the QE programme plus 9%. On top of this a £1 trillion tax should be levied on the banks over the next 10 years to bail our the poor tax payer that stepped in to bail them out originally.

I find the attitude of bankers very unpatriotic and selfish. There attitude sends a very poor example to our children and displays how some people are only motivated by money. God help this country if everyone had their attitude, nothing would ever get done. Those that work in these financial casinos have a duty to the people of this country.

As for Ireland, well what a mess. Virtually bankrupt now and the cost of health care is soaring. If people think our NHS is bad then take a trip to Ireland where a trip to the dentist will cost you over £60.00 for for a checkup. Even a trip to the GP will hit your pocket.

Who ever wins next year, expect big cuts everywhere. The only way to avoid this is to hit back at the banks in a big way.

9:53 am, December 12, 2009

Anonymous Anon E Mouse said...

Dirty Euro - It's called wistful thinking on their part, not a serious point by them. As most people now agree, compared to Brown she seems normal!

I'm from the North West btw and have lived in South Wales for 20 years - never voted Tory in my whole life - but I want Labour to lose now with a passion.

The reason people round here, which now has a Tory MP nearby is that the Labour Party tried to force a female candidate on them - the Peter Law thing in Blaina - and that has really gone down badly.

Add unemployment and the deception and ruthless way this government attacks the poor into the mix and it can hardly be a surprise.

It's over Dirty Euro - the fact you can't see it I simply don't believe - no one could be that stupid.

Kris - Alun Johnson was a postman and John Prescot (despise the man) was a steward - neither are cockroaches there mate!

2:19 pm, December 12, 2009

Anonymous Anon E Mouse said...

Kris - Second thoughts - irrespective of their employment history they are all cockroaches!

2:21 pm, December 12, 2009

Anonymous Anon E Mouse said...

Dirty Euro - You clearly don't live in South Wales.

If you remember the Euro elections you'd realise the Tories got the popular vote in Wales - first time since Lloyd George.

People like you with your narrow minded views are the reason ordinary people despise Labour at the moment.

Since you obviously can't offer anything positive for our party why don't you clear off and sell Socialist Worker or the Morning Star - unrealistic dinosaurs like you will finish us Dirty Euro.

8:02 pm, December 13, 2009


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