George Osborne's Plan B

[Undesired Walrus]

So as George Osborne is set to announce a multi-billion pound development package building up the rails, bridges and roads in order to avoid the OECD's prediction of a double dip, can this be seen as his Plan B?

Sounds awfully like a stimulus package to me.

 

[richardm]

Well, it is a stimulus package isn't it. Despite the Chancellor being insistent that we'd never have one of those, because that would mean extra borrowing. There's no way to have a stimulus package without extra borrowing because where would the money come fro -

What's being labelled a new National Infrastructure Plan also aims to encourage large British pension funds to use £20bn of their savers' money to invest in infrastructure projects.

Uh-oh.

 

[Giz]

So the Chancellor reacts to the bad economic news from the EU which is throwing his previous economic forecasts off. Big deal. (Honestly, you would have thought that responding to changed facts would be popular on JREF).

It doesn't mean that, on the facts available before Greece started to boil over, that he wasn't right to try and cut the deficit (all the way back to 2008 spending levels - the horror!). Heck, the only reason that Britain continues to have reasonable borrowing costs is that the UK govt is seen by the markets as being resolute in dealing with the deficit. A lack of political will bring on a downgrade (see the US) and the UK will probably not weather a downgrade as painlessly as the USA did.

 

[Undesired Walrus]

There's nothing wrong with changing course. There is something wrong, however, with changing course while insisting you are sticking to Plan A.

With regards to borrowing, it's my impression that the latest figures showed the highest borrowing on record. Not reasonable at all.

It's also comical to hear the coalition blame the recent growth figures on the eurozone crisis, when for years we heard the Liberals and Tories snort and scoff at Brown blaming the last recession on the crisis in the US. And if Labour were so reckless and addicting to spending, why return to 2008 spending?

It seems to me that if the government hadn't been so quick to abandon certain programs designed to reduce unemployment we'd have more people in work right now paying income tax and a lower welfare bill as a result.

 

[Giz]

There's nothing wrong with changing course. There is something wrong, however, with changing course while insisting you are sticking to Plan A.

With regards to borrowing, it's my impression that the latest figures showed the highest borrowing on record. Not reasonable at all.

- Yes. Government spending is higher. Because:
A) The cuts haven't fully kicked in yet
B) There is a big economic slump; that leads to higher government spending (i.e. on dole payments) regardless of spending plans

It's also comical to hear the coalition blame the recent growth figures on the eurozone crisis, when for years we heard the Liberals and Tories snort and scoff at Brown blaming the last recession on the crisis in the US.

My recollection is that:
A) Brown had claimed (ludicrously) that he had abolished 'boom and bust'. Some scoffing over that seems reasonable.
B) The Tories claimed that Brown had left us vulnerable to a US crash because:
1) He hadn't abolished boom and bust
2) His high spending in the good times had left less flexibility for high spending in bad times (and we therefore couldn't spend our way out of recession)*

And if Labour were so reckless and addicting to spending, why return to 2008 spending?

- The amount of end-is-nigh shrieking by lefties over the existing cuts was deafening. I imagine that the coalition didn't cut more as:
1) Even more shrieking would have erupted (which might have upset the Lib Dems)
2) Too sharp a cut being disruptive and risking double dip recession

It seems to me that if the government hadn't been so quick to abandon certain programs designed to reduce unemployment we'd have more people in work right now paying income tax and a lower welfare bill as a result.

- There are different ways to view the world. One way is that, when (largely) left to their own devices, people will naturally generate a recovery. The other is the the 'big state' should act as fairy godmother and bestow largess (at the expense of our grandchildren) until we are all fat and happy. Broadly speaking, the 'big state' party was in power from 1997 to 2010. Now the other viewpoint gets a chance to screw things up in the other direction.


* Note: I am prepared to be all for a Keynesian fiscal policy (i.e. increased government spending in bad years), as long as the government has been running a surplus in the good years. I have issues with simply increasing the deficit in BOTH boom and bust years.

 

[richardm]

Let me check I've got this right:

- The amount of end-is-nigh shrieking by lefties over the existing cuts was deafening. I imagine that the coalition didn't cut more as:
1) Even more shrieking would have erupted (which might have upset the Lib Dems)

Left wing not wanting heavy cuts is shrieking!

2) Too sharp a cut being disruptive and risking double dip recession

Right wing not wanting heavy cuts is prudent!

Gotcha.

I'm quite surprised you didn't have any comment about your pension fund being raided to pay for these things. Speaking personally I don't have any confidence that we're ever going to see it back, unless the government is planning to guarantee that it is and presumably with a healthy dividend - which will mean more borrowing but of course that's quite alright or is it...?

 

[Skepticemea]

Was Gideon's Plan B due to Hard Times?

Landspeeder for Skepticemea!

 

[Skepticemea]

So the Chancellor reacts to the bad economic news from the EU which is throwing his previous economic forecasts off. Big deal. (Honestly, you would have thought that responding to changed facts would be popular on JREF).

It doesn't mean that, on the facts available before Greece started to boil over, that he wasn't right to try and cut the deficit (all the way back to 2008 spending levels - the horror!). Heck, the only reason that Britain continues to have reasonable borrowing costs is that the UK govt is seen by the markets as being resolute in dealing with the deficit. A lack of political will bring on a downgrade (see the US) and the UK will probably not weather a downgrade as painlessly as the USA did.

There are other metrics for how well the British economy is doing other than how much it costs Gideon to continue to borrow.

 

[Darat]

I've been listening for months now that the "deficit mess" was a direct result of Brown and Darling's policies and had nothing to do with the international markets tanking from apparently unwise lending and reselling practices by international financial institutions. So why would a problem in the international economy cause problems for Osborne?

My slightly more serious comment:

Why do we bother listening to forecasts and so on? They are never right.

 

[richardm]

Why do we bother listening to forecasts and so on? They are never right.

Could it be the case that for things like financial predictions, if a report predicts result A we can change our course to effect a result B. It's not like the weather where nothing we do can change what's going to happen.

Or is that giving far too much credit - I quite often feel that handling the economy is actually rather like the weather in that it's largely unpredictable. A butterfly flaps its wings on the trading floor in La Défense and the wheels fall off in Greece.

 

[uk_dave]

I dunno how Clegg can sit on that front bench and call himself a lib-dem.

WTF is the purpose of selling social housing off at a discount?

During the early 90's I worked with someone who did mortgage valuations for building societies. When the **** hit the fan, the biggest price drops were in former council houses, mostly it seemed due to their locations, but also because so many of them had been repossessed by the mortgage companies. You think: "How come, since they were so cheap to begin with?" and then you discover that they had been re-mortgaged up to the hilt to finance all sorts of other spending, and now we were in a recession my colleague was having to go back through many years of valuations to justify each one to the lender who had now got their fingers burnt.

Stop selling them off and instead make it easier to build new houses for private sale.

 

[andyandy]

Yikes, public sector is being savaged by Gideon:

pay freeze for 2 years with inflation at 5% ( = 10% pay cut)

a further 2 years (likely below inflation) rise of 1% (= anything from a likely 2% - 5% cut)

Everyone on more than £21,00 paying about an extra 3-5% NI contribution

Retiring later

getting less pension

700,000 job losses

I reckon that's got to be at least a 20% real cut in total salary package. Still it'll please the Daily Wail idiots who think everyone's a diversity officer.....
let's enjoy the race to the bottom - everyone there's a loser.

[That's not even considering the poor unfortunates who graduate with £40,000-£50,000 of debt and who have to pay an additional 9% of income over £21,000 for life....]

Still, plenty of spare cash to slash capital gains tax, bring back weekly bins, continue building multi-billion pound aircraft carriers and renew trident to keep the right wing happy.

 

[uk_dave]

Still, plenty of spare cash to slash capital gains tax, bring back weekly bins, continue building multi-billion pound aircraft carriers and renew trident to keep the right wing happy.

And according to the Today prog this morning, they've screwed this up too.

 

[andyandy]

And according to the Today prog this morning, they've screwed this up too.

yeah saw that. A forecast £12 billion total spend, to build two (one of which will never be used) and the other which will only be able to be at sea for half the year. And we'll have none for 9 years. And the Tories lied about it costing more the scrap than to continue.

Still I'm sure it'll keep the defence contractors in champagne and truffles for the next decade.....

 

[andyandy]

and it was good to see Gove find a spare couple of hundred thousand pounds down the back of the sofa to send every school in England a limited edition King James bible (complete with foreword from God His Goveness).

 

[richardm]

There must be an argument that if you can manage without any aircraft carriers for twenty years, then you probably don't need any aircraft carriers.

and it was good to see Gove find a spare couple of hundred thousand pounds down the back of the sofa to send every school in England a limited edition King James bible (complete with foreword from God His Goveness).

I hope you're joking

 

[uk_dave]

There must be an argument that if you can manage without any aircraft carriers for twenty years, then you probably don't need any aircraft carriers.

No, you just have to be really nice to other countries, try not to piss anyone off and if all else fails....go cap in hand..... to...........

........ the French.

 

[andyandy]

There must be an argument that if you can manage without any aircraft carriers for twenty years, then you probably don't need any aircraft carriers.

You would have thought that - apparently not. Over 200 countries in the world manage perfectly well without them too - I guess it's one of those Big Willy Waving Clubs the military boys like to be in.

I hope you're joking

Alas, Gove is beyond parody (and I underestimated the costs....):

Every state school in England is to receive a new copy of the King James Bible from the government – with a brief foreword by Michael Gove, the education secretary, to mark the 400th anniversary of its translation. In a move intended to help every pupil access Britain's cultural heritage, every primary and secondary school will be sent a new copy of the 1611 translation by next Easter.

The initiative has been criticised by secular campaigners as a waste of money. The National Secular Society said that schools were already "awash with Bibles". It urged Gove to send out a copy of Darwin's On the Origin of Species instead.

Gove, who is proposing to write a two-line introduction for the bibles sent to schools, said of the 1611 translation: "It's a thing of beauty, and it's also an incredibly important historical artefact. It has helped shape and define the English language and is one of the keystones of our shared culture. And it is a work that has had international significance."

The National Secular Society said that Darwin's writing is "much harder to find in schools", while evangelical groups are keen to donate bibles.

The Department for Education estimates the cost of the scheme at £375,000, and is seeking philanthropic sponsorship. A spokesman said: "As many people have noted – from former Poet Laureate Andrew Motion to the director of the British Museum, Neil MacGregor – the King James Bible continues to shape our culture. Understanding the story of its publication and the impact it has had on today's English-speaking society is an important part of the teaching and learning of history and language."

http://www.guardian.co.uk/politics/2011/nov/25/michael-gove-king-james-bible

 

[The Don]

http://www.guardian.co.uk/politics/2011/nov/25/michael-gove-king-james-bible

My local radio station (JackFM) parodied this with one of their inter-song announcements

The government is spending £375k sending bibles to all the schools, there can't be that many wobbly desks

 

[commandlinegamer]

You'd have thought they could have done it as an e-book.

W.r.t. the carriers, has the Ark Royal sale been finalised, yet? I wonder how much it would cost to recommision.