Thursday, December 10, 2009

Darling's Sleight of Hand Unravels

I have rarely seen a budget or PBR unravel so quickly and be received so badly by virtually every conceivable audience. It's not surprising that very few Labour MPs were in the chamber to hear the PBR - and very few have been out on the airwaves defending it. I am not surprised.

How can you put up child benefit 6 months before an election and then say you will cut it afterwards? They really think people are stupid, don't they? Alistair Darling has now denied that is the case.

He also says that NHS is ringfenced from cuts and yet the NI increase leaves it with a bill of an extra £446 million. Where is that money to be found?

Darling said on TODAY this morning that the non ringfenced departments' budgets would be "broadly flat" in the years after 2011. So, how, exactly, does he intend to cut borrowing by half? The answer is that he intends to do it by the extra tax proceeds which will be raised by the economy growing at 3.5% a year. The only trouble with that hypothesis that no serious economist agrees with the Chancellor that growth will be at that level. Indeed, you don't have to look too hard to find economists who believe there will be very little growth at all.

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.

33 comments:

psychotrader said...

people ARE stupid. Can you blame the government for doing these dirty tricks, when they have worked so well, for so long for them???!!! I am suprised a smart guy like you can't see that they won three elections on this kind of bullcrap, and will probably earn themselves a hung parliament on the back of these and other stunts. It's wrong, it's shocking, but it's true: people will indeed notice and remember morew money in their pocket at the bottom end of the financial ladder.

Lallands Peat Worrier said...

Mixing your metaphors here just a smidgeon, Iain?

trevorsden said...

Even when we had growth, Brown ran deficits once he stopped following Tory spending plans.

Now we have the spending genie out of the bottle and it is asinine to pretend that growth alone will cut the deficit, since in the past it was inadequate.

PS
I have just has a heating engineer tell me I would be wasting my money changing our 25yr old but otherwise sound (solid cast iron heat exchanger) boiler for a new allegedly more efficient one (mickey mouse aluminium and rickety innards).
The supposedly efficient new ones are only efficient on start up, precious little in it otherwise. (plus you would be required to spend say £250 on largely pointless thermostatic red valves)
You may save a little on gas but once the rickety new boiler packs up you would be lumbered with yet more expense.

The man could have taken me for upwards of £2000+, so I take his points seriously.

Browns latest big idea is to therefore waste our own taxpayers money to encourage us to throw out our decent but old boilers, all based on duff science and duff engineering and duff economics.

Yet another in a long list of duff ideas from Brown.

psychotrader said...

Just to reinforce my point, read this ft.com post. One of the most brutal critiques of Alistair Darling and Gordon Brown i have read:

http://ftalphaville.ft.com/blog/2009/12/10/88066/alistair-in-wonderland-believes-in-santa-claus-bnp-paribas-says/

Emergency Jim said...

He also says that NHS is ringfenced from cuts and yet the NI increase leaves it with a bill of an extra £446 million. Where is that money to be found?

Out of the extra revenue from NI contribs?

tapestry said...

Irish PBR is a desperate attempt to save the Euro in Ireland forcing pay cuts on public sector staff to match the wage cuts already happening in the private sector.

If Ireland cannot become competitive, she will crash out of the Euro. We (UK) are Ireland's biggest market, and we are falling progressively against the Euro, and courtesy of Darling, could see a Sterling crisis.

A Sterling crisis would translate quickly into an Irish Euro crisis, as Ireland would simply be uncompetitive.

Ireland's plight is even worse than ours as her currency is locked up.

At least we are free to carry on bingeing until the IMF show up. Ireland has to buckle now, or find herself thrown out of the Euro by severe unemployment.

Maybe Brown wants Sterling down to 1 Euro. Then they can restart all the nonsense about Britain joining while it's at parity.

javelin said...

What worries me is the credit agencies who say they will not downgrade the UK Government credit rating until after the election.

The Credit Default Swap rates (i.e market rates) are already diverging from the Credit Rating agency rates.

The worrying issue is that the credit rating agencies have done a deal with the Government. After the Collapse of the banking system the credit agencies came under a lot of pressure (quite rightly) for not pricing the Mortgage Backed Securities correctly. The Government was banging on about hwo they would be more tightly regulated. At the same time the Governmant was also promoting the QE stimulus. There were words of warning from the market that we were running the risk of lossing our AAA status.

Then at about the same time the Government stopped criticising the Credit Rating Agencies and the Credit Rating Agencies stopped questioning the Government.

It appears to me the same mutual-backscratching that went on between the banks and the credit agencies is now going on between the Government and the credit agencies.

It goes like this "You don't downgrade us (UK Gilts) until after the election and we won't bring in draconian measures and encourage investors to sue you."

I'm not a political watcher - so I don't have the timeline of the Chancellors credit-agency bashing. But I would bet when he stopped bashing them was within a few weeks of them saying they wouldn't revise the UK Government risk until after the election.

I simply find it very, very, strange that reality has been suspended by both parties (1) The Government not bashing the credit rating agencies [who did get it wrong] and (2) The Credit rating Agencies imposing this artifical timeline for revising the Governmenrt risk ratings.

Fausty said...

Might we assume that Brown's proposed law to force fiscal responsibility onto governments will not be enacted?

Will Darling be immune to it? Or does Brown wish to see Darling indicted?

Mark Senior said...

Usual treasonous posts from the usual suspects in the last couple of days running down the government and this country's economy and it's currency .
Meanwhile in the real world the FTSE is up , the £ is up against the dollar and euro .
The one certainty to ensure that Britain's growth rate is well below 3.5% is to ensure a double dip recession , 5 million unemployed and even bigger public borrowing requirements by following the policies of Messrs Guido and Dale .

Gerry57 said...

psychotrader, I agree with you that people are stupid. They were conned 3 times by Blair to elect and re-elect Labour. How 30% can still support Labour is beyond me.
This budget is not only a pre-election 2010 budget but it is designed to screw the Tories for 2014/15 election as well. If Labour go down at the next election, which still seems likely, then the Tories(possibly with a minority government) will inherit a terrible deficit. they will have to make 'savage cuts' and will be labelled with cuts just as Margaret Thatcher was when she had to clear up the last Labour mess. Labour has betrayed the Country in order to try to damage the Tories.

FireForce said...

"They really think people are stupid,,,,
Well they are stupid they have voted for this lot three times so far.
Last time I voted was 1992,
stupid, incompetent, useless labour are what is the point of voting for wind-bag Cameron, he has not said or acted any better to give me confidence to vote for him.

trevorsden said...

"Where is that money to be found?
Out of the extra revenue from NI contribs?"

This is woolly thinking. The NHS has a budget that is fixed and will have to pay the increase out of that (otherwise spending will rise). The whole of govt will have to pay the NI increase.
And of course the whole purported point of the NI increase was to PAY OFF THE DEBT ... remember??

not an economist said...

Regardless of the internal inconsistencies and general economic ignorance of this PBS I still think it will work well for the govt in terms of its impact on voter intentions. In the aftermath of the financial crisis its populist appeal will be very strong as will the rhetoric of class war that is accompnaying it. Unfortunately, it may very well be the first stage in a process that will win Labour the election albeit with a very slim majority.

As for cutting the deficit well yes they will do that - at least in real terms. Double digit infaltion will result from all this nonsense which will cut the real term value of Public Sector debt. Problem is our savings will dissappear aswell and economic growth along with them.

not an economist said...

Emergency Jim,

"Out of the extra revenue from NI contribs?"

Could be but we dont have the detail. I should imagine the intention at this stage is that that extra revenue will be used to help reduce the deficit.

Darsalon said...

The Daily Mash's comment on this is the best I've seen....

"But of course this is really all about Gordon Brown. He tries to make it look as if he's doing something while at the same time revealing that he's actually doing nothing at all. Like some idiot magician with a confused rabbit on his head."

Class

cookinghedgehogs said...

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.
Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.
LORD WOODHOUSELEE

North Briton Hunter said...

But they are not withdrawing child benefit next year. That is just a lie.

Cjjones27 said...

Oh yes, the Irish Budget is what we need. Lets make the poorest and those who are a victim of the recession pay the price of the recession. That makes perfect sense.

Are you of sound mind, selfish, or just stupid?

Sceptical Steve said...

Surely the elephant in the room is the Climate Conference in Copenhagen, where our government is expected to agree further restrictions on manufacturing business? We're in a deep hole and yet they seem intent on removing all the potential means of escape.

Dave H said...

Satire had already died, Darling's

‘Mr Speaker, We Take These Decisions From a Position of Strength...’

finally buried it and put it beyond use.

How the hell can they have the chutzpah to thuink they can get away with trying stuff like this on us?

jbw said...

trevorsden said...

"PS
I have just has a heating engineer tell me I would be wasting my money changing our 25yr old but otherwise sound (solid cast iron heat exchanger) boiler for a new allegedly more efficient one (mickey mouse aluminium and rickety innards). "

Very true.

My local plumber has been busy this recession exchanging boilers as people want to be 'green' and save money. As he said - it takes 10 years to get your money back at which point the boiler will have to be renewed anyway.

Twig said...

@Gerry57
How 30% can still support Labour is beyond me.


It's the public sector workers with their gold plated pensions.

Also, the welfare class who don't even know what a recession is, their benefits keep rolling in come what may and VAT went down too - win/win for them.

Added to that there are the champaign socialists who have their IHT planning in place and continue to live off of lucrative consultancy fees from various quangos and government projects.

In addition there are other assorted dyed in the wool socialists who have a pathelogical dislike for any kind of self reliance or self determination.

And then there's in excess of 20,000 people working for the BBC.

I think that about covers it.

trevorsden said...

laughable defence of labour ... 'treason'? to speak the truth??
In any event Labours supertax on bankers is totally shafted in a Times article repeated in CoffeeHouse ....

“What leaps out is that an exception has been made for guaranteed bonuses. In other words, the supertax may not apply to the very people to whom it is meant to apply, including the very top earners.
Even more incomprehensible is the fact that the tax will only apply until April 5, 2010. This allows banks to engage in ‘complex’ planning, such as waiting until April 6 to pay out their bonuses.”"

My thoughts are its Treason when a govt minister lies at the Despatch Box.

Labour = Liberal Democrat said...

I think Gordon Brown was Certifiable not going for an election on the 31st December 2009. The market reaction to the PBR was completly predicable months ago - Gordon Brown really is a prize fool!
He could have won Labour an additional 30 seats on what will be a big defeat in 2010 now. VAT going up 2.5% in January must be the biggest own goal ever by a government! lol Glad I dont own a car anymore!

All the ground work had been put down from realeasing information about post office strikes being called off to the Climate summit producing any strong commitments on Bonfire night. I noticed it!

Likewise the release of the PBR dated buried under unemployment figures and an exceptionally heavy news date full of government press releases and ceromonies.

All the Labour websites being updated, regional co-ordinated visits by ministers around the country for instance Yorkshire had masses of Cabinet visits one week. Indeed I saw somewhere that Labour had co-ordinated the use of the communication allowance in marginal seats to use taxpayer funded propoganda and yet it was bottled!

Brown = Chicken 2009! lol

Labour = Liberal Democrat said...

Mark Senior = The supporter of Gordon Browns Goodbye Poison chalice.

Gordon Brown should be shot for treason and I am not talking about the time he leaked defence details to the press in the 1990s.

If Mark Senior had been sent to the concentration camps no doubt he would have asked for the soap on the way into the shower?

Victor, NW Kent said...

Mark Senior

It is not yet treasonous to run down the Labour government.

It is not treasonous to point out the decline in value of sterling.

I will, however, agree with you that it is treasonous to run down our economy. You should call for Brown to be tried in court for that crime.

Before you tell me that every economy in the world is suffering I will save you the trouble by pointing that no other large economy is so severally affected and none are taking so long to turn towards recovery.

Before you tell me of Darling and Mandelson's illusory signs of recovery I will tell you that recovery is signalled by an absolute reduction in unemployment, not by a slow-down in the rate of joblessness.

Mirtha Tidville said...

Twig you are sadly so right......God its depressing....Bloody Socialists..

trevorsden said...

jbw - but does it get publicity?
My boiler is a decent one and can be kept going for years with any luck and is not really that 'real world' less efficient than a fancy new one.
Brown speaks the thoughts of the last idiot to speak to him.

Dear Sceptical - Copenhagen may well end with us committing to billions of pounds a year given to someone - to some odd body - to some foreign dictatorships. Never to be seen again of course. But is this included in the govts figures?

PS
if the IFS are right and major cuts (approx 40 billion) are coming for the areas the govt are not ring fencing - not only will those benefiting from the services suffer, but the people providing them will suffer, because they will lose their jobs (otherwise there will be no cuts) -- so cjjones is really missing the point. Darling is not protecting anybody- and its clear the majority of bankers will avoid this crass extra tax.

no longer anonymous said...

Mark Senior, why are you not in the Labour Party?

jbw said...

trevorsden said...
"jbw - but does it get publicity?
My boiler is a decent one and can be kept going for years with any luck and is not really that 'real world' less efficient than a fancy new one. Brown speaks the thoughts of the last idiot to speak to him."

Sadly no, but worse than that, customers still go ahead with the new boiler, even after the economics are explained to them.

You can lead a horse to water...

Fragmeister said...

PBR 10 December 2010 (in the reshuffle that followed Gordon Brown's successful re-election in April 2010, Ed Balls in now Chancellor):

Mr Speaker, I'd like to explain how the Government intends to fill the hole left in the nation's finances by that evil ex-public schoolboy Ken Clarke and his Scumbag Comprehensive educated John Major in 1992. They left this country in the worst state ever and it has only been because of the endless borrowing and printing Monopoly money by my right honourable friend, the Prime Minister, that we have managed only to be £250 billion pounds in debt.

But, as I say, I'd like to say how the Government intends to address this issue. But I think first we should ask how the Tory party intends to address it. How does the new leader of the opposition, Nadine Dorries, propose, with her shadow chancellor, to reduce this deficit, which her party helped to create. She has not once said that she will cut the tax on whist drives and Over 60s Club tombolas. She has not said that she will raise the duty on duck houses. She prefers to duck the issue (pause for laughter).

No, this Government has waited in vain to hear what the Tories will do, despite the fact that they outlined it in detail in their manifesto, and on party political broadcasts and in interviews, and despite the fact that whenever they came up with anything remotely popular we stole the idea, they still have to explain how they will reduce the £400 billion pound deficit that was created by Thatcher (pause for applause) and only reduced by the swift intervention of Boris Obanker's bestest friend, the Right Honourable Gordon Brown with his tax on anything given to a banker over £25 unless it was given before we brought the law in or after election day by which time the point of tryng to buy a few votes was over.

Now, to raise some money we are going to introduce a tax on voting. Anyone visiting a polling station will now have to pay £25,000 pounds for the privilege. Voting will be compulsory. The voting age will be reduced to the thirty-fourth week of pregnancy. The only exceptions to this are those who are insane, so that's everyone who voted for Michael Foot in 1983, oh and the current Government in 2010.

As a result of this executive order coming into effect at midnight, the Prime Minister will be leaving this House any time soon to seek the dissolution of Parliament and a General Election on 25 December.

I commend this statement to the house.

Mark Senior said...

Back in the real world ,
FTSE continues rising today , £ continues rising , Conservative support well down everywhere in all yesterday's council byelections but you Tory trolls continue to run down this country and it's economy .

Twig said...

@Mark Senior
"...£ continues rising..."


This may seem potentially treasonous, but are you comparing it to Zimbabwe dollars?