The Conservative Party

[bluethrunthru]

"Some" borrowing is always required, no matter how well things are going. What truth do you want telling? That spending needs to roughly match income and if not we have to borrow? How much borrowing is "some" ?

Funnily enough I am not chancellor and I haven't therefore got access to the figures - one hopes / assumes Hammond has? The truth I would like telling is when she stands up and says " we are bringing an end to austerity " to add to that the truth as to the timescale she is being given by her govt and civil servants - after all they seem to be happy to share with the FT.

So, given that you accept some borrowing is always needed and that I confess I am not in a position to know exactly how much then after 8 years of austerity are you happy for the same again allowing for the fact that the 10 years is a guesstimate - lets be generous and knock a couple of years off the expected time it will take? Do you think that transport, health and welfare will be much better or much worse by then?

 

[Chippy_boy]

Funnily enough I am not chancellor and I haven't therefore got access to the figures - one hopes / assumes Hammond has? The truth I would like telling is when she stands up and says " we are bringing an end to austerity " to add to that the truth as to the timescale she is being given by her govt and civil servants - after all they seem to be happy to share with the FT.

So, given that you accept some borrowing is always needed and that I confess I am not in a position to know exactly how much then after 8 years of austerity are you happy for the same again allowing for the fact that the 10 years is a guesstimate - lets be generous and knock a couple of years off the expected time it will take? Do you think that transport, health and welfare will be much better or much worse by then?

How has this "some borrowing is always needed" line been accepted? Some borrowing is categorically not always needed!

Well run economies, in times of growth, have budget surpluses and pay down debt levels. They don't incessantly borrow more and more. Borrowing is expected to be needed when in recession, not in times of growth.

It is not rocket science to understand that you can borrow for a while, but you cannot borrow ever more, indefinitely or eventually you go bust. It's really that simple.

 

[Henkeman]

Funnily enough I am not chancellor and I haven't therefore got access to the figures - one hopes / assumes Hammond has? The truth I would like telling is when she stands up and says " we are bringing an end to austerity " to add to that the truth as to the timescale she is being given by her govt and civil servants - after all they seem to be happy to share with the FT.

So, given that you accept some borrowing is always needed and that I confess I am not in a position to know exactly how much then after 8 years of austerity are you happy for the same again allowing for the fact that the 10 years is a guesstimate - lets be generous and knock a couple of years off the expected time it will take? Do you think that transport, health and welfare will be much better or much worse by then?

I'd argue there never really was austerity. Spending wasn't slashed at any point - that 10% deficit was brought down gradually, not all at once. But it is a fact that it HAD to come down, there was absolutely no alternative whatever. Had it stayed the same the country would have gone into Greece style meltdown.

So what else could they have done? I'm serious here, we all know that the last decade wasn't easy, but debt as a proportion of GDP rose from 50% to 85% over that time. That's about as high as it can go without starting to have material problems raising money, not least the rates charged for it - see Italy and how much of their spending goes on servicing their debt. Borrowing isn't free, it has to be paid back. It's now more or less in balance, and indeed the plan is to start bringing the debt down.

So again, the question is what you want to do here - and saying you don't have access to the figures isn't any kind of excuse, because our finances are public record.

The tax burden is the highest it has been in 50 years precisely because we have to pay down the debt accrued - it's a specific reason, that more of our money has to go to servicing debt than is healthy, rather than being spent on all the things we'd like it spent on.

Sure, we can borrow, and the result of that will be higher taxes to service that borrowing. Or you can put taxes up, but doing so for the very rich won't bring in much money and can actually lower the tax take. The only way of guaranteeing it does is to whack the middle earners, they can't escape and have to pay it. You may think that's a good thing, I don't know. But whatever you believe, money is not free, it has to come from somewhere and it has to be paid back.

So I ask you again, how much do you want? Who do you want to pay? How will you achieve that?

 

[Henkeman]

How has this "some borrowing is always needed" line been accepted? Some borrowing is categorically not always needed!

Well run economies, in times of growth, have budget surpluses and pay down debt levels. They don't incessantly borrow more and more. Borrowing is expected to be needed when in recession, not in times of growth.

No, not true. Even in times of surplus we borrow. Tax income varies across the year, and it's cheaper to borrow short term. Hence we always borrow, even if we don't strictly need to. I don't mean structural borrowing, I mean general financing.

 

[Chippy_boy]

I'd argue there never really was austerity. Spending wasn't slashed at any point - that 10% deficit was brought down gradually, not all at once. But it is a fact that it HAD to come down, there was absolutely no alternative whatever. Had it stayed the same the country would have gone into Greece style meltdown.

So what else could they have done? I'm serious here, we all know that the last decade wasn't easy, but debt as a proportion of GDP roserose from 50% to 85% over that time. That's about as high as it can go without starting to have material problems raising money, not least the rates charged for it - see Italy and how much of their spending goes on servicing their debt. Borrowing isn't free, it has to be paid back. It's now more or less in balance, and indeed the plan is to start bringing the debt down.

So again, the question is what you want to do here - and saying you don't have access to the figures isn't any kind of excuse, because our finances are public record.

The tax burden is the highest it has been in 50 years precisely because we have to pay down the debt accrued - it's a specific reason, that more of our money has to go to servicing debt than is healthy, rather than being spent on all the things we'd like it spent on.

Sure, we can borrow, and the result of that will be higher taxes to service that borrowing. Or you can put taxes up, but doing so for the very rich won't bring in much money and can actually lower the tax take. The only way of guaranteeing it does is to whack the middle earners, they can't escape and have to pay it. You may think that's a good thing, I don't know. But whatever you believe, money is not free, it has to come from somewhere and it has to be paid back.

So I ask you again, how much do you want? Who do you want to pay? How will you achieve that?

It's a bit like the Brexit debate this. You, the voice of reason - the voice of remain - saying "yes, but think about the consequences, the choices". And bluethroughandthru representing the Leave side, saying "I'm not listening, I'm not listening, spend it anyway, sod the consequences".

 

[Chippy_boy]

No, not true. Even in times of surplus we borrow. Tax income varies across the year, and it's cheaper to borrow short term. Hence we always borrow, even if we don't strictly need to. I don't mean structural borrowing, I mean general financing.

I hear what you are saying and don't disagree, but I think you are mistaken to say "not true". I didn't mean to imply that borrowing was not needed on a month by month basis, merely that in times of growth, net borrowing should be coming down and overall, economies should be aiming to pay down debt (i.e. budget surplus, no net borrowing) in the good times.

 

[Henkeman]

I hear what you are saying and don't disagree, but I think you are mistaken to say "not true". I didn't mean to imply that borrowing was not needed on a month by month basis, merely that in times of growth, you should not plan to have net borrowing over the cycle.

Oh I agree - but that's what I meant by " some borrowing is always needed". Perhaps I could have been clearer - I was referring to how all governments borrow even when there's a budget surplus.

 

[Chippy_boy]

Oh I agree - but that's what I meant by " some borrowing is always needed". Perhaps I could have been clearer - I was referring to how all governments borrow even when there's a budget surplus.

Yes, agreed.

This graph illustrates it perfectly (albeit, it's wrongly labelled: it should say "UK PUBLIC SECTOR NET SURPLUS", since below zero on the graph is borrowing, and +ve numbers are surplus).

 

[Henkeman]

You're correct but I think it's important to differentiate between short term - month to month - borrowing requirements, which may go up or down. Vs net borrowing over the course of say a year, which you'd expect to be zero or less when the economy is doing well.

This graph illustrates it perfectly (albeit, it's wrongly labelled: it should say "UK PUBLIC SECTOR NET SURPLUS", since below zero on the graph is borrowing, and +ve numbers are surplus).

We're arguing around a nuance here, but interestingly you can still bring public debt down even when there is net borrowing, because you're paying back the most expensive debt while taking on the ridiculously cheap 10, 20 and even 50 year bonds. That's pretty much where we are now - but yes, I was referring to the short term, not the cyclical.

 

[Chippy_boy]

We're arguing around a nuance here, but interestingly you can still bring public debt down even when there is net borrowing, because you're paying back the most expensive debt while taking on the ridiculously cheap 10, 20 and even 50 year bonds. That's pretty much where we are now - but yes, I was referring to the short term, not the cyclical.

Yes agreed. I edited my post above to say "yes agreed" before you replied ;-)

 

[Henkeman]

Yes agreed. I edited my post above to say "yes agreed" before you replied ;-)

I love finding random things out when you think about these things - at the end of the Napoleonic Wars the national debt was 260% of GDP. Bloody hell! Nearest it came to that again was the end of the second World War when it was 240%.

 

[Ifwecouldjust.......]

I'd argue there never really was austerity. Spending wasn't slashed at any point - that 10% deficit was brought down gradually, not all at once. But it is a fact that it HAD to come down, there was absolutely no alternative whatever. Had it stayed the same the country would have gone into Greece style meltdown.

So what else could they have done? I'm serious here, we all know that the last decade wasn't easy, but debt as a proportion of GDP rose from 50% to 85% over that time. That's about as high as it can go without starting to have material problems raising money, not least the rates charged for it - see Italy and how much of their spending goes on servicing their debt. Borrowing isn't free, it has to be paid back. It's now more or less in balance, and indeed the plan is to start bringing the debt down.

So again, the question is what you want to do here - and saying you don't have access to the figures isn't any kind of excuse, because our finances are public record.

The tax burden is the highest it has been in 50 years precisely because we have to pay down the debt accrued - it's a specific reason, that more of our money has to go to servicing debt than is healthy, rather than being spent on all the things we'd like it spent on.

Sure, we can borrow, and the result of that will be higher taxes to service that borrowing. Or you can put taxes up, but doing so for the very rich won't bring in much money and can actually lower the tax take. The only way of guaranteeing it does is to whack the middle earners, they can't escape and have to pay it. You may think that's a good thing, I don't know. But whatever you believe, money is not free, it has to come from somewhere and it has to be paid back.

So I ask you again, how much do you want? Who do you want to pay? How will you achieve that?

Please tell e again which bankers went to prison after the financial crash ... and why did Joe Public have to bear the brunt of the cuts ? Whilst the top 10% of the rich doubled their wealth since 2008?

 

[Chippy_boy]

Back on topic, I just wish more people would stop and think about how important a successful economy is. Without it, we can't have the NHS, policing, social welfare and everything else that most people value very highly.

It seems some people are so keen to bash what they regard as "the evil Tories", they never stop to think about the above. Of course the Tories are not whiter than driven snow, and sometimes make some pretty duff judgements. Sometimes they appear to unreasonably favour the rich over the poor, and that's certainly wrong.

But the general principles of living within our means, not burden people nor businesses with excessive taxes so that we can allow business to grow and people to have more personal freedom as to what they spend their money on? These are just common sense policies.

The Labour Party unfortunately is caught up with this agenda of "how terrible things are" all the time. It's fixated on spending more money on everything and punishing successful people. There's no vision for how to sustain long term growth and increase in prosperity for all.

 

[Henkeman]

Please tell e again which bankers went to prison after the financial crash ... and why did Joe Public have to bear the brunt of the cuts ? Whilst the top 10% of the rich doubled their wealth since 2008?

They should have done. But the law wasn't in place to allow it to happen, it simply wasn't a crime and damn well should have been - who do you want to blame for that? As for why the public had to bear the brunt of it, that's because the investment banks weren't ringfenced. They are now - not sure many people were calling for that before it happened, and being wise after the event is rarely useful. Are you under the impression that I'm somehow delighted by this? I was as furious as everyone else was. As for the richest, they are paying more tax while the poorest are paying less. That's the idea isn't it? What do you want to happen, slaughter the rich? It makes us all poorer, and personally my annoyance doesn't extend to making everyone else pay far more to compensate for your feelgood factor of whacking the rich.

 

[Chippy_boy]

Please tell e again which bankers went to prison after the financial crash ... and why did Joe Public have to bear the brunt of the cuts ? Whilst the top 10% of the rich doubled their wealth since 2008?

Your first point, those who broke the law and for whom a custodial sentence was appropriate under UK law. Many poor decisions led to the 2008 crash, but very very few of those poor decisions were crimes and even fewer, crimes for which custodial sentences were appropriate. You're back to "punishing the rich" again, rather than thinking about how we make everyone better off.

Second, because there's more Joe Public. And I'm not sure where you get your stats from but the markets grew very strongly from 2008 onwards. The FTSE has doubled over that period, so anyone who had money sensibly invested would have doubled their money.

 

[Henkeman]

Back on topic, I just wish more people would stop and think about how important a successful economy is. Without it, we can't have the NHS, policing, social welfare and everything else that most people value very highly.

It seems some people are so keen to bash what they regard as "the evil Tories", they never stop to think about the above. Of course the Tories are not whiter than driven snow, and sometimes make some pretty duff judgements. Sometimes they appear to unreasonably favour the rich over the poor, and that's certainly wrong.

But the general principles of living within our means, not burden people nor businesses with excessive taxes so that we can allow business to grow and people to have more personal freedom as to what they spend their money on? These are just common sense policies.

The Labour Party unfortunately is caught up with this agenda of "how terrible things are" all the time. It's fixated on spending more money on everything and punishing successful people. There's no vision for how to sustain long term growth and increase in prosperity for all.

It's because people think it's free money. Make the rich pay more and the rest of us can pay less. And you know what? If that worked, I'd be all in favour of it. I'd be leading the calls for it to happen, because bloody hell, they really can afford it. If we could increase spending, lower the marginal rate of tax for the poorest, increase it for the richest, bring in vast amounts of money for the Treasury and spend it on the common good, I'd be at the front of those marches. It would be fantastic.

Trouble is, it doesn't work.

 

[Chippy_boy]

It's because people think it's free money. Make the rich pay more and the rest of us can pay less. And you know what? If that worked, I'd be all in favour of it. I'd be leading the calls for it to happen, because bloody hell, they really can afford it. If we could increase spending, lower the marginal rate of tax for the poorest, increase it for the richest, bring in vast amounts of money for the Treasury and spend it on the common good, I'd be at the front of those marches. It would be fantastic.

Trouble is, it doesn't work.

Some of the Labour tax policies are truly ludicrous. As we enter the most difficult of periods as a result of Brexit, that we should unilaterally whack up corporation tax, at a time when maximising foreign investment in the UK should be at the top of our agenda? It beggars belief.

That we should contemplate introducing quite severe caps on exec pay for businesses supplying the public sector? What on earth does Labour imagine this will do for investment into the UK economy??? If we are to be in any way successful after Brexit, foreign investment is absolutely vital. Sure as eggs is eggs, some businesses will decamp, and we need to make sure we do everything possible to attract new investment. Labour policy could be specially formulated to do the exact opposite!

 

[Henkeman]

Some of the Labour tax policies are truly ludicrous. As we enter the most difficult of periods as a result of Brexit, that we should unilaterally whack up corporation tax, at a time when maximising foreign investment in the UK should be at the top of our agenda? It beggars belief.

That we should contemplate introducing quite severe caps on exec pay for businesses supplying the public sector? What on earth does Labour imagine this will do for investment into the UK economy??? If we are to be in any way successful after Brexit, foreign investment is absolutely vital. Sure as eggs is eggs, some businesses will decamp, and we need to make sure we do everything possible to attract new investment. Labour policy could be specially formulated to do the exact opposite!

Indeed. In fact the government should be right now telling the EU that unless they start playing ball the first thing we're going to do is cut corporation tax to 10% and watch the flood of European companies relocating here. That's by the by, but a personal frustration to me is the inability of some to understand that 10% of a lot is far better than 30% of a little.

 

[Damocles]

Question for @SWP's back and others. Is this wealth flight in response to taxes supported by research? To what degree? Any usable metrics for it?

Some of the Labour tax policies are truly ludicrous. As we enter the most difficult of periods as a result of Brexit, that we should unilaterally whack up corporation tax, at a time when maximising foreign investment in the UK should be at the top of our agenda? It beggars belief.

That we should contemplate introducing quite severe caps on exec pay for businesses supplying the public sector? What on earth does Labour imagine this will do for investment into the UK economy??? If we are to be in any way successful after Brexit, foreign investment is absolutely vital. Sure as eggs is eggs, some businesses will decamp, and we need to make sure we do everything possible to attract new investment. Labour policy could be specially formulated to do the exact opposite!

It's the same logic used by austerity. I have a similar problem with both.

I cannot for the life of me understand how the Government reducing investment is going to make others want to invest in the private sector. That's mental. If the Government aren't investing then they don't have faith in their economy and if the guys running it don't have faith then why should I?

 

[inbetween]

Some of the Labour tax policies are truly ludicrous. As we enter the most difficult of periods as a result of Brexit, that we should unilaterally whack up corporation tax, at a time when maximising foreign investment in the UK should be at the top of our agenda? It beggars belief.

What we should contemplate introducing quite severe caps on exec pay for businesses supplying the public sector? What on earth does Labour imagine this will do for investment into the UK economy??? If we are to be in any way successful after Brexit, foreign investment is absolutely vital. Sure as eggs is eggs, some businesses will decamp, and we need to make sure we do everything possible to attract new investment. Labour policy could be specially formulated to do the exact opposite!

Labour's policies are pretty simple.

Tax and batter companies so they don't employ people, said companies then leave or don't bother.

Everyone ends up on the dole so industry production and distribution is taken into the arms of the state who then employs people, gives them a house etc.

And there you have it, the classic implementation of socialism.

(By the way, the people telling you to do all this will lap it up and remain in their nice houses in their roles on £100k a year sending themselves and their children to private schools (Abbott, Thornberry) etc. etc.).