Was
Was that deficit a "black hole"?
So you think austerity was good then under the Tories but bad now under Labour?
Vic, let me spell out what I think for you:
- I don't like austerity
- I don't like tax rises
- i don't like increased borrowing
But when everything is not all fine and dandy, you have to do something about it. I hope you would agree with that at least.
In 2010, the economy was in a dire state. We can debate how and why and whose fault it was, but not whether it was. On the back of the crash of 2008 and the bailing out of the banks, our economy had tanked and we had to do something about it. We had options 1,2 & 3. We could not do 3 because due to our reliance on Financial Services especially, and the impact on our economy of bailing out our banks, and a loss of tax revenues, our deficit was sky high and our debt levels also perilously high. We risked our credit rating being trashed if we did not address the deficit. We had no capacity to just borrow more and more. That left us with eiher 1 or 2. We tried to balance it and there was *some* - not much - scope for squeezing public services which were in much better shape than they are now since Blair and Brown had splurged on them for the previous 3 terms. There were some modest tax rises. Neither of these things were desirable, but IMO there were necessary.
**Maybe** The markets would have accepted increased borrowing and no austerity, so maybe austerity was not necessary. I don't think that is the case. We will never know. No-one can.
Today, we find ourselves in a different situation, I am sure you agree? The economy is also not in great shape - although contrary to Labour's claims, the economy is in FAR better shape today than when Labour left in 2010. We have growth - predicted to be higher than our major competitors over the next 6 years, low inflation and low unemployment. But our public services are on their knees - we can all see that.
So I can only assume you are not advocating more austerity. We cannot do 1. So we have options 2 and/or 3.
Being a fan of neither, we have to pick the least worst option. In my estimation, today, there could be some scope for relaxing of fiscal rules to allow some more borrowing, in the short term, to get the economy growing more quickly, to raise tax receipts (not tax rates) and plug the funding gaps. In my estimation, at the moment, given the extremely high levels of taxation we are already facing, that would be preferrable to increasing taxes even further.
I do not believe increasing taxes is remotely compatible with any kind of growth agenda. Certainly not big tax increases - you may get away with it in the margins. But take significant amounts of money off people and they spend less and it depresses the economy. There is a flawed argument that the government can spend that extra money more wisely and use it to grow the economy. That argument might have been true if they didn't waste large chunks of it on red tape and bureaucracy and utter bollocks, but unfortunately they do. I still cannot get my head around Millibrain willingly giving away £11bn to overseas climate change projects whilst at the same time bleating about a £20bn black hole, £9bn of which was Labour's pay awards. Governments make idiotic spending decisions with our money.
