Budget

[Mick Mac]

The pounds already tanking...I can see our credit rating getting downgraded and it's back to the IMF for a Labour Chancellor again...we need a massive cut in Public Sector spending wether we like it or not.......

Yes Quids - well said again..

We needed a massive cut in public sector spending. But we did not get it, so we are still spending tax monies....

I think this is an awful Budget. I have always voted Labour but I'm beginning to lose the faith.

[Huguenot]

Where would the massive cuts in public sector spending come from?

Figures are billions of pounds National/Local (Total)

Pensions 106.7/0 (106.7)

Health Care 110.8/0.4 (111.2)

Education 28.1/52.6 (80.7)

Defence 37.4/0.1 (37.5)

Welfare 51.6/42.6 (94.2)

Protection 15.8/16.8 (32.6)

Transport 10.2/9.7 (19.9)

General Government 13.4/13.5 (26.9)

Other Spending 49.8/34.9 (84.6)

Interest 30.3/0.8 (31.1)

Balance 7.0 0.0 -5.4 1.6

Total Spending 461.1/165.9 (627.0)

What would a massive cut be? 25%?

Perhaps we should close all the hospitals and schools - that would be 25%?

Or maybe stop paying pensions and close the welfare state - that would be about 25%?

Or maybe stop quantitative easing (although it would make no difference this year, it'll be paid back in another decade), in the meantime we can eat our own words for nourishment, because the entire nation would shut down.

Nothing else is going to make any difference.

Please don't say 'increase efficiencies and cut management and administration', as that might be a great idea, but it would need to be a 15 year plan against vested industries on whom we rely and are already militant.

[louisiana]

Mick Mac Wrote:

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> Mick Mac Wrote:

> --------------------------------------------------

> -----

> > Switzerland, Luxembourg and Ireland are the

> normal

> > choices.

> >

> > The UK, and people working here, are I believe

> not

> > responsible for this sub prime led disaster.

>

> So AIG Mayfair was actually operated

> from...Timbuktu?

>

> I'm sorry I honestly don't know what this means

> Lou.

AIG: the largest insurance company in the world

--------

AIG Mayfair: shorthand for AIG's London fiancial products operation, reportedly responsible for more than 90% of their worldwide losses owing to their crazy deal making, which was unlike anything the organisation did anywhere else.

"AIG Financial Products Corp. (AIGFP) is a subsidiary of American International Group, based in London. AIGFP is considered a key company in the global financial crisis of 2008?2009."

"The AIG Financial Products division headed by Joseph Cassano, in London, had entered into credit default swaps to insure $441 billion worth of securities originally rated AAA. Of those securities, $57.8 billion were structured debt securities backed by subprime loans.[20] CNN named Cassano as one of the "Ten Most Wanted: Culprits" of the 2008 financial collapse in the United States."

"On March 2, 2009, AIG reported a fourth quarter loss of $61.7bn (?43bn) for the final three months of 2008. This was the largest quarterly loss in corporate history at that time."

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[Huguenot]

This seems to be useful: personal budget calculator

If I'd have stayed in the UK I'd be up 700 quid a year under this budget. :)

[casper]

the comment that i have just read from the Spectator website neatly sums up the budget:

This government needed to show some contrition, admit the public finances were in crisis and produce a realistic, year-by-year plan to bring them back under control, based on dramatic cuts in spending. Instead, it tried to spin itself out of trouble yet again, concocting over-optimistic growth and revenue forecasts, launching a spiteful, economically destructive yet fiscally irrelevant attack on wealth creators while entirely failing to tackle the over-bloated public sector and embarking on the greatest pre-election spending binge in 18 years. It was truly a shameful budget from a shameless government.

[Marmora Man]

The government must cut spending now and into the future. If an individual were made redundant tomorrow they would review their spending and adjust outgoings. Businesses that see their revenues fall cut costs. Neither, unless very foolish, would increase spending and cover the shortfall with borrowing. Why should government be any different?

Propose:

1. Pensions 106.7/0 (106.7). No change as it's current spending - but reduce public sector pension schemes in the future. Where based upon 60th's (ie 60th of final salary for every year worked) base them on 80ths. Over time this will reduce the cost of public sector pensions.

2. Health Care 110.8/0.4 (111.2). Freeze all growth for 5 years. The NHS has seen real increases for 12 years. It is time for it to work more efficiently. I work in this sector and assure you frontline services could e delivered more effectively if there were less managers, less meetings, less committees, less working groups, less reviews, less diversity awareness training - and I could go on. Over 5 years a freeze would save ?11.3bn

3. Education 28.1/52.6 (80.7). Again freeze all growth for 5 years. Saves ?8.25bn

4. Defence 37.4/0.1 (37.5) . As a retired military man I'd like to see more spent on the Armed Forces - mainly because they have see no real growth in spending over the last 10 years but have seen a massive growth in their overseas commitments. However, it is time to trim the commitments to match the budget and reduce the budget. Bail out of Afghanistan or - get the non participating Nato countries to subsidise the costs. So - disband the RAF - merge the Maritime element with the Royal Navy, merge the land element with the Army - make senior RAF officers redundant. Do not replace Trident (?20bn capital and 2.5% of annual budget). Do not buy anymore Tornado aircraft (?45bn capital cost 3% of annual budget to run). Savings - ?65bn over 20 years + 5% of budget annually = ?9.5bn over 5 years.

5. Welfare 51.6/42.6 (94.2). This is a cyclical cost and will rise with unemployment and, one would hope, fall when economy recovers.

6. Protection 15.8/16.8 (32.6). I assume this is police, MI5 & MI6 and similar. Freeze for 5 years. Saves ?3.3bn

7. Transport 10.2/9.7 (19.9). Reduce Train operating company subsidies. ?? Saves ?2bn a year ??

8. General Government 13.4/13.5 (26.9). This government's advertisng is reported to be costing several hundren million a year. Cease all government advertising. Saves ?1bn a year

9. Other Spending 49.8/34.9 (84.6) . A useful black hole - I wonder what it covers. Reduce by 10% saves ?20bn over 5 years.

10. Interest 30.3/0.8 (31.1) Will only fall as government debt falls. UNless action is taken it will continue to grow.

11. Balance 7.0 0.0 -5.4 1.6no action.

I estimate this would save, over 5 years, ?50.6bn + non Defence spending of ?65bn. Which is well on the way to closing the black hole created by this government. It would hurt - but it's better than yesterday's budget which was a fantasy land exercise topped off with political gamesmanship.

[SeanMacGabhann]

There is so much wrong with that paragraph (edit: from the Sepctator)

But they are correct about over-optimistic

It's no stretch of the imagination to imagine the speccie having a negative spin regardless of content

If the government showed contrition (for what exactly remains unclear) they woudl have been called weak

Calling over 150k earners are wealth creators is farcical given the lack of wealth they have created

As Huguenot points out - where exactly would you trim the public sector?

[????]

Emotive crap Hugenot- YOU said 25% and then made your ridiculous suggestions - there are massive inefficiencies in the publc sector but the bottom line is unless we cut some of these no-one will buy up our debt and we will go bust! There is no choice but an increase in tax and a significant cut in the public sector. Our finances and this governemnt are a shamblers still your nice low tax rate in Singapore must be tough to take for a 'socialist' such as yourself, why don't you send your excess back rather than lecture us on what we need to do with our economy over here.

[macroban]

Singapore income tax

[Huguenot]

Fair comments, Quids, but no need to make it personal old thing.

If London was a country in isolation, then you'd be paying no income tax at all (I average around 7%), it's one of the benefits of city states - all that corporation tax (18%).

I didn't come here for tax issues, so much as for a progressive socially minded environment that had a good industrial infrastructure and market opportunity.

Strictly speaking I'm a Blairite socialist, I don't believe in redistribution of wealth, I believe in equality of opportunity and meritocratic rewards.

I'm not saying that public sector isn't bloated, I'm just observing that you don't suddenly turn it over in one budget. Marmora Man's ideas are desirable and workable in principle (although I can't guarantee that private companies don't have similar levels of administration).

I don't know how easy it is in practice. Both teachers and healthcare workers have seen above inflation rises in recent years, but both are threatening to strike unless that continues. The latest NUT conference are balloting to strike unless they get what amounts to a 15% rise on average.

A budget that fixes expenditure may well be perceived to be either reducing pay in real terms, or shutting hospitals or schools. You may get a strike which damages the economy more than the benefits accrued (don't forget public sector is 45% of GDP).

I continue to argue in the main that governments have very little control over the 'big budget' elements, which is why we get so excited over nominal issues like quangos and MP's expenses.

[casper]

the tax take from the higher rate of tax is infinitesimal when placed alongside the budget deficit. all it does is destroy incentive. no government should have the right to take more than 50% of a persons earnings. the government was happy to take tax receipts from city bonuses and bank earnings during the good times, its politically motivated attack on this sector now will only slow recovery and force jobs/investments abroad. its all very well saying good riddance if higher paid people leave for lower tax juristictions but the economy as a whole will suffer for it and make everybody poorer.

the lack of spending restraint in the budget is stupid and dangerous. the assumption being made is that we will have a budget defecit in 2011 of ?140bn assuming completely unrealistic growth forecasts of 3.5%. this deficit will end up being far larger than the governments figures and will throw into doubt the governments current AAA rating on its sovereign debt, increasing the cost of borrowing and making it almost inevitable that we will have to go to the IMF for funding and they will not be so generous on the spending restictions that they will lay down for the loan!

[AllforNun]

well the other thing is that if RBS and Loyds get back to making the kind of profits that they made in 2006 - about 14billion combined then considering we/government own 88% of one and 55% of the other then we would share that profit. That will help to bring the debt levels down ! Add to that the profits from Iraq oil over the next ten+ years which we will get a big part of and if we strike a deal on the pipeline through afghanistan then things will be looking pretty rosy.....funny how none if this gets mentioned in any of the paper's.

[Mick Mac]

1. Pensions 106.7/0 (106.7). No change as it's current spending - but reduce public sector pension schemes in the future. Where based upon 60th's (ie 60th of final salary for every year worked) base them on 80ths. Over time this will reduce the cost of public sector pensions.

2. Health Care 110.8/0.4 (111.2). Freeze all growth for 5 years. The NHS has seen real increases for 12 years. It is time for it to work more efficiently. I work in this sector and assure you frontline services could e delivered more effectively if there were less managers, less meetings, less committees, less working groups, less reviews, less diversity awareness training - and I could go on. Over 5 years a freeze would save ?11.3bn

I'd agree with all your suggestions MM - I think we pay too much money into the NHS and public sector pensions are too generous. I would not cut back on primary and secondary education but would cut back on university education - its open to too many people and devalues university degrees.

Going back to some earlier points:

I'd agree with the Spectator article, we will drive away some wealth creators. Labour is now reverting to a party of tax and spend. I thought that was gone for good.

the tax take from the higher rate of tax is infinitesimal when placed alongside the budget deficit. all it does is destroy incentive. no government should have the right to take more than 50% of a persons earnings. the government was happy to take tax receipts from city bonuses and bank earnings during the good times, its politically motivated attack on this sector now will only slow recovery and force jobs/investments abroad. its all very well saying good riddance if higher paid people leave for lower tax juristictions but the economy as a whole will suffer for it and make everybody poorer.

Casper - I agree. I can't quite believe Labour have done this - they keep shooting themselves in the foot on tax.

Sean - as you probably know many UK companies have moved to Ireland over the last few years to avoid UK corporation taxes. More money leaving the economy. These personal tax increases only make Ireland look more attractive, along with many other jurisdictions - these countries employ people to go to conferences selling their country's tax advantages to high earners, they actively promote the idea and people will be more willing to move now.

[SeanMacGabhann]

but will that continue Mick? Won't companies learn lessons from the Irish debacle?

[MrBen]

macroban Wrote:

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> Singapore income tax

Did I read this right? A top tax rate in Singapore of 20%....and thats only if you earn more than ?145,000 GBP ($320 SIN)??

Must be a tough life Huguenot! ;-)

[Mick Mac]

International companies can base themselves in Ireland without depending on the Irish economy. Internationally mobile employees are the same.

[snorky]

Ireland is bankrupt

hardly a good example to use

[snorky]

given that anyone who has HNW will hardly be naked when it comes to tax planning, then this top rate increase will make little difference & will not see a mass exodus of talent to the overrated shithole of the free state

Even that shit coated wanker Bono has decamped his tax affairs out of ireland

[Mick Mac]

That's missing the point - they still have a lower tax base.

[SeanMacGabhann]

But will that be the case after their next budget?

[snorky]

Mick Mac Wrote:

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> That's missing the point - they still have a lower

> tax base.

and that is a contributory factor - a celtic bubble based on huge EU subsidy - now there are more deserving cases, such as the tranche of new EU members, Ireland will have to think of new ways to raise cash . Its miniscule manufacturing abse & focus on hi tech ( and easily dissasembeld & rebiult elsewhere ) financial services / Technology / coms, means that it will be seeinga net outflow of business in the coming years.

Irelands mailaise is deeper than just the present crisis & there does not seem to be a long term plan in the pipeline. Ireland is more likely to morph to the Danish model of higher taxes than retain its present low ones to compete

[Mick Mac]

They have a beneficial system for non Irish domiciliaires, resident in Ireland but not Irish, which may well not change even if taxes go up.

Anyway Ireland is only one option, there are many others. We will lose high quality people, most people seem to accept that. Some say good riddance, I think its bad for the country.

[SeanMacGabhann]

I'm with snorky on this. Many of the arguments presented (brain drain, taxes too high etc) seem to suggest that the world hasn't changed that much and once we correct this blip it's business as usual. When it was business as usual that brought us here

[SeanMacGabhann]

Anyway Mick, it'll make for lively discussion when we hit the golf course, wha?

[Mick Mac]

No fighting on the golf course.....