[Squiffy]

Originally Posted by la gran siete

Looking at that graph its interesting to note that until the banking crisis Labour's budget deficit was manageable in the same way the Tory's was under J Major, and their surplus years were better than the anything the Tories managed.So much for the Tories being better at managing economies.If it hadnt been for those blasted bankers we would NOT be in the position we are in today

The Labour surpluses in the first years of Brown as chancellor. You do remember they followed the Tory spending plans? It was a manifesto commitment.

As to the position now. How much of the current budget deficit is spent on bank bailouts?

[la gran siete]

Originally Posted by Squiffy

The Labour surpluses in the first years of Brown as chancellor. You do remember they followed the Tory spending plans? It was a manifesto commitment.

As to the position now. How much of the current budget deficit is spent on bank bailouts?

as i have often said it was not just about the bailouts but about trying to stave off the worst effects of the recession

[Squiffy]

Originally Posted by la gran siete

as i have often said it was not just about the bailouts but about trying to stave off the worst effects of the recession

Do you understand what a structural deficit is?

[johntheexpat]

Originally Posted by tapzilla2k

. The bill is a mess but it passed into Law last week.

.

How ? How did anyone pass a bill like that, no matter how bad the economic 'crisis'
Shame on them all.

Originally Posted by sidicks

It would be more effective to target the complex tax code which charges income and gains at different rates and effectively encourages (legal) avoidance.

Sidicks

I can't see that ever happening. The people with real influence over politics and strategy are those who are beyond PAYE and who would suffer most. Or so it seems. What would be a very good start would be for HMG to stop senior managers being employed by their own companies. It should be law that anyone who has serious amounts of power in the Civil Service, or local government, must be employees of HMG or the council. Private Eye is full of examples of people who are basically very senior civil servants, but actually are self employed tax avoiders. If the great and powerful of this country are flaunting their tax avoidance, what hope is there for Joe Public to take tax matters seriously?

Originally Posted by dovercat

The Bill removes the Secretary of States "duty to provide or secure the provision of services"

It retains the Secretary of States "duty to promote the comprehensive health service"

It removes "The Secretary of State must for that purpose provide or secure the provision of services in accordance with this Act"

Replacing it with " For that purpose, the Secretary of State must exercise the functions conferred by this Act so as to secure that services are provided in accordance with this Act"

The Secretary of State becomes only responsible for setting the strategic direction and regulatory framework for the NHS.

The Secretary of State can use their powers of oversight and intervention under the act to ensure that services are provided in accordance with the NHS Act.

But the Secretary of State is not liable if services are not provided. It is no longer his duty to provide or secure the services.

I don't see how that can be seen as anything other than the end of the NHS. The Government is no longer responsible for seeing to it that everyone has free and equitable health care.

The NHS, RIP. It was a fabulous concept, universally popular and possibly Britains greatest asset.

[Cloverleaf]

Originally Posted by johntheexpat

I don't see how that can be seen as anything other than the end of the NHS. The Government is no longer responsible for seeing to it that everyone has free and equitable health care.

The NHS, RIP. It was a fabulous concept, universally popular and possibly Britains greatest asset.

Oh do behave.

If only

[GAZBEROTTEN]

Originally Posted by sidicks

Except if you honestly believe that the government could just cancel that debt without any adverse consequences, then you really don't understand economics!

Lets see

1. They are the government
2. They are the government
3. They are the government

They probably have a lot more power and can get round things easily than you think.

[sidicks]

Originally Posted by GAZBEROTTEN

Lets see

1. They are the government
2. They are the government
3. They are the government

They probably have a lot more power and can get round things easily than you think.

As usual, you miss the point by a country mile...


I suppose that because they are 'the government', the normal rules of physics also do not apply (as well as the normal rules of economics....)


Sidicks

[dc8900]

Originally Posted by GAZBEROTTEN

Lets see

1. They are the government
2. They are the government
3. They are the government

They probably have a lot more power and can get round things easily than you think.

are you advocating that we adopt a Mugabe style Economic policy? Might be fun to carry a £1 Billion banknote in my wallet.....

[icstm]

Originally Posted by dovercat

Figures in £ are meaningless. No accounting for inflation or rising GDP.
How about showing the figures as a percentage of GDP. Actual size of debt relative to national income.
How about showing the debt interest payments as a percentage of GDP.
Actual affordability of debt relative to national income.

Originally Posted by la gran siete

Looking at that graph its interesting to note that until the banking crisis Labour's budget deficit was manageable in the same way the Tory's was under J Major, and their surplus years were better than the anything the Tories managed.So much for the Tories being better at managing economies.If it hadnt been for those blasted bankers we would NOT be in the position we are in today

you are both missing the point in the boom years labour were not saving for a rainy day. so how can the UK be considered in a good place apart from the financial crisis - it went in on the wrong trajectory.

Neither party is doing that much different that what the other party actually suggested or would have done in the same position. But that does not change the fact that we are not in a good place even without some of the direct government interventions.

[Sonic67]

Originally Posted by icstm

Just in case anyone thought that Labour had anything under control in the boom years 05-07 they could not save for a rainy day...

And before you say but want about 97-01 well that followed the Clarke projection, just like today we are following the Darling projection.

Oh my God. What a disaster Labour was.

[tapzilla2k]

Originally Posted by Sonic67

Oh my God. What a disaster Labour was.

It's now the turn of the Tories to create their own disaster with the help of the Liberal Democrats. The political classes are all the same, they just wear different rosettes at election time. Tories, Liberal Democrats and Labour do not have a clue about how to solve our Economic problems. Tis party politics as usual.

[Cloverleaf]

Originally Posted by tapzilla2k

It's now the turn of the Tories to create their own disaster with the help of the Liberal Democrats. The political classes are all the same, they just wear different rosettes at election time. Tories, Liberal Democrats and Labour do not have a clue about how to solve our Economic problems. Tis party politics as usual.

Perhaps you should start your own party then if you think you can do better ?

[pandemic]

Originally Posted by icstm

Just in case anyone thought that Labour had anything under control in the boom years 05-07 they could not save for a rainy day...
image


And before you say but want about 97-01 well that followed the Clarke projection, just like today we are following the Darling projection.

There is a slight flaw in the graph, it should be deficit as percentage of GDP.

The average person who looks at that graph would think things were under control till 1991, then a 'new' culture of spending starting started under Major and continued hence forth.

This is far more useful and tells a different story (deficit as percentage of GDP):

[johntheexpat]

I don't wish to be pedantic, but shouldn't the last bit of the line be dotted, as its a projection?

[pandemic]

Originally Posted by johntheexpat

I don't wish to be pedantic, but shouldn't the last bit of the line be dotted, as its a projection?

All of the blue bit is a projection, it was created around the general election year.

[sidicks]

Originally Posted by tapzilla2k

Tories, Liberal Democrats and Labour do not have a clue about how to solve our Economic problems.

I'd be interested to hear your solutions....

[sidicks]

Originally Posted by pandemic

There is a slight flaw in the graph, it should be deficit as percentage of GDP.

The average person who looks at that graph would think things were under control till 1991, then a 'new' culture of spending starting started under Major and continued hence forth.

This is far more useful and tells a different story (deficit as percentage of GDP):

I can't see the attachment, but does it include all the off balance sheet debt? I assume not and if so, is therefore a misleading picture.

Sidicks

[dovercat]

Originally Posted by sidicks

I can't see the attachment, but does it include all the off balance sheet debt? I assume not and if so, is therefore a misleading picture.

If you are going to include off the balance sheet debt. What do you include and what do you exclude?
Nuclear power station decommissioning for example include or excluded, etc...
It is a mine field of predictions and estimates.

[pandemic]

As far as I'm aware the chart shows figures as stated by the UK National Statistics, so no it will not contain off balance sheet debt. However, it pretty difficult to attain that figure in the first place some think it's £4 trillion which for most is unimaginable.

Still the chart shows (no idea why you can't see it), the deficit as percentage peaking in 1977, 1995 and 2010 (partly projected). Which is a lot more accurate than figures in £s, as it doesn't take into account inflation, growth, etc.

[sidicks]

Originally Posted by pandemic

As far as I'm aware the chart shows figures as stated by the UK National Statistics, so no it will not contain off balance sheet debt. However, it pretty difficult to attain that figure in the first place some think it's £4 trillion which for most is unimaginable.

Still the chart shows (no idea why you can't see it), the deficit as percentage peaking in 1977, 1995 and 2010 (partly projected). Which is a lot more accurate than figures in £s, as it doesn't take into account inflation, growth, etc.

But if it ignores £200+ billion of (hugely expensive ) PFI contracts then it's a fairly meaningless comparison.

That's like me saying I'm a millionaire because I own a £1m pound house (I don't, by the way, it's just an example) and ignoring the fact that I have a £750k mortgage!!

Sidicks

[pandemic]

In which case no charts can ever satisfy you, as those figure cannot be accurately projected. As we cannot know, which PFI will be sitting there doing sweet FA and which will be providing something beneficial, if any.

[sidicks]

Originally Posted by pandemic

In which case no charts can ever satisfy you, as those figure cannot be accurately projected. As we cannot know, which PFI will be sitting there doing sweet FA and which will be providing something beneficial, if any.

If PFI debt was treated as normal debt then that would be a good starting point for a 'fair' comparison (we don't differentiate between published debt used to fund education and debt used to fund welfare, so why should we do the same for PFI debt )

The amount of PFI projects undertaken is available (I obtained a spreadsheet online with the information), so the valid comparison could easily be made.

Sidicks

[dovercat]

Originally Posted by sidicks

If PFI debt was treated as normal debt then that would be a good starting point for a 'fair' comparison (we don't differentiate between published debt used to fund education and debt used to fund welfare, so why should we do the same for PFI debt )

The amount of PFI projects undertaken is available (I obtained a spreadsheet online with the information), so the valid comparison could easily be made.

Sidicks

PFI stands for Private Finance Initiative. How is it normal Public Sector Debt.

In some cases the government lent the private sector money at commercial rates to fund schemes. That is money owed to the government, which will only be lost become debt if the private sector fail to pay.
In many cases the government underwrote the private sector borrowing money of banks, etc... That is money that the government will only lose, become debt if the the private sector fail to pay.

Or do we count the future spending commitments agreed to, like the rents to private sector built hospitals. That is a future spending commitment being paid for a service, a future liability but not a current debt.
If those are included then what about the maintenance costs of hospitals directly owned and run by the NHS, our they too not future spending commitments. Is the idea that NHS directly owned hospitals can be allowed to fall into wrack and ruin or abandoned but the NHS private sector rent payments for hospitals are agreements that have to be honored. Even so they are a future spending committment, future liability not current debt. We do not count future spending commitments as current debt, such a a figure for things provided directly by the state would be infinity unless the date of the end of world is known.

[icstm]

Originally Posted by pandemic

There is a slight flaw in the graph, it should be deficit as percentage of GDP.

cannot see the picture, but all the point I was trying to make is the binary case. Which years were in surplus and which were not.
You can clearly see years with strong economic growth before the crash (05-07) the books were not balanced. This was a major part of the problems we have today.

Originally Posted by sidicks

I can't see the attachment, but does it include all the off balance sheet debt? I assume not and if so, is therefore a misleading picture.

I think others have explained that though this is very useful, there is no clear picture of deficit by total debts (there are some of debt including these elements.

Originally Posted by dovercat

Is the idea that NHS directly owned hospitals can be allowed to fall into wrack and ruin or abandoned but the NHS private sector rent payments for hospitals are agreements that have to be honored.

I am no accountant, but problem with PFIs is their design and their design was to get around the problems you mention and which are real.
For some short-sighted reason it became trendy no just to not buy your own buildings, but to actively sell them and rent them back. If you get the sale price wrong, which the government and some companies did - then you lost real value. The other problem with PFI is the the length of the contract is much longer than for a standard rent, so there is a long tail liability. However this is no different to the public sector pension, which is also "off balancesheet".

[sidicks]

Originally Posted by dovercat

PFI stands for Private Finance Initiative.

Thanks for telling us what we already know!

Originally Posted by dovercat

How is it normal Public Sector Debt.

Say for example the government wants to build a hospital - in the past it would have borrowed money by issuing Gilts and repaid that money over time (with interest).

Under PFI the same hospital gets built by the private sector (the government does NOT lend the private sector the money - this happened in a few cases where sufficient capital could not be funded privately, but this simply adds more risk for the public sector with the profits going to the private sector, so makes even less sense!! ) and then the government rents the hospital back from the private company. Of course the cost of this route is much greater than the conventional approach because:
- The private company has higher borrowing costs than the government which need to be covered
- The private company is taking the all the risk and hence needs to include a risk margin in its rates
- The private company needs / aims to make a profit so charges 'rent, accordingly

Given the above, the only reason for using the PFI approach is to hide the true debt!

Originally Posted by dovercat

In some cases the government lent the private sector money at commercial rates to fund schemes. That is money owed to the government, which will only be lost become debt if the private sector fail to pay.
In many cases the government underwrote the private sector borrowing money of banks, etc... That is money that the government will only lose, become debt if the the private sector fail to pay.

I think you totally misunderstand how the bulk of PFI works - you are effectively claiming that PFI is an asset, which is certainly not the case!

Originally Posted by dovercat

Or do we count the future spending commitments agreed to, like the rents to private sector built hospitals. That is a future spending commitment being paid for a service, a future liability but not a current debt.

That's exactly what PFI is and as explained above, why it is misleading to ignore these debts!

Originally Posted by dovercat

If those are included then what about the maintenance costs of hospitals directly owned and run by the NHS, our they too not future spending commitments. Is the idea that NHS directly owned hospitals can be allowed to fall into wrack and ruin or abandoned but the NHS private sector rent payments for hospitals are agreements that have to be honored. Even so they are a future spending committment, future liability not current debt. We do not count future spending commitments as current debt, such a a figure for things provided directly by the state would be infinity unless the date of the end of world is known.

You are getting carried away!

The point is important - you can't simply ignore these liabilities if you are trying to compare levels of debt in an economy!

There is a huge difference between future spending being funded by future income and current spending being funded by future income! By your logic, the government need never borrow using stilts ever again - we could simply PFI everything and one how pay for it in the future!!!

PFI was used by the Labour government for one main reason - to hide the amount of debt they were adding to the economy.

Sidicks

[tapzilla2k]

Originally Posted by sidicks

I'd be interested to hear your solutions....

It's called ruling with an iron fist via Robot Monkey Minions.

Or alternatively we need to reform the Economy so it's not so South East/City of London centric. Properly cost new policy so it can be paid for, rebuild infrastructure, come up with a proper energy policy and so on. We also need to generate robust growth so we can actually pay the debts off. Which means creating confidence for Banks and the Private Sector to invest and thus get the economy moving.

What the political parties are doing is tinkering around the edges and engaging in the same old electioneering. When they should have come together to solve the nations problems.

[dovercat]

Originally Posted by sidicks

Given the above, the only reason for using the PFI approach is to hide the true debt!

That's exactly what PFI is and as explained above, why it is misleading to ignore these debts!

It still strikes me that is like saying someone who signs a rental agreement to live in a house should list all the rent they have agreed to pay in the future as personal debt. Just like if they had instead bought the house with a mortgage, they should list the outstanding mortgage as debt.

PFI future liabilities should in my view be put in context of future income to pay those liabilities. Affordability. It is not current debt. Can we pay off the PFI and take ownership of say the hospital, like someone paying off their mortgage early. With a mortgage that would be a good idea, avoiding future interest charges, if even possible with PFI would it be financially advantageous.

[damo_in_sale]

I don't think we'll see much in the way of sustainable growth for maybe a decade, maybe more. I could be wrong of course, but I think in this case that is unlikely.

We are not as rich as many people believed during the bubble years, and I think more and more people recognise this.

The fact is that the general public are trying to deleverage on mass. And for good reason- they are too indebted.

I think this will continue, regardless of government policy.

[johntheexpat]

Originally Posted by damo_in_sale

I don't think we'll see much in the way of sustainable growth for maybe a decade, maybe more. I could be wrong of course, but I think in this case that is unlikely.

We are not as rich as many people believed during the bubble years, and I think more and more people recognise this.

The fact is that the general public are trying to deleverage on mass. And for good reason- they are too indebted.

I think this will continue, regardless of government policy.

So bang goes any hope of retirement. Thanks Damo, haven't seen you post for a while and then you come along and in one go thoroughly depress me

[Cloverleaf]

Originally Posted by tapzilla2k

Or alternatively we need to reform the Economy so it's not so South East/City of London centric. .

Never going to happen pal. London's GDP is massive compared to the rest of the UK, you can't physically uproot the Capital and The City to Hull, or some other God-forsaken northern hole.