It was a strange decision
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It was a strange decision
Mucca Mad Boys
Well-Known Member
Rachel Reeves has been a disaster chancellor, she’s done. She’ll be asked to make more difficult decisions that would break a manifesto pledge, such as increasing VAT, income tax and/or NI and then get the sack down the line.
She undermined confidence in the economy before the budget by talking down the inheritance from the Tories. The budget itself was a disaster, with the employer NI increases, closing of non-dom status has pushed wealth creators out of the country and undermined private sector investment by taxing jobs. Played fast and loose with the ‘fiscal headroom’ with large increases in borrowing for things like in public sector pay… we’ve ended up borrowing more than expected because tax receipts are less than forecasted (shock) and debt costs are increasing and gilt yields have surpassed the high point when Truss ‘crashed the economy’.
Hence we have a Chancellor scrambling for pennies on the pound and a ‘Spring Statement’ that is another Budget in all but name to correct course. This is pretty unprecedented.
To be a broken record on this, the implications for Liz Truss ‘crashing the economy’ over £45bn of tax cuts, was that a Labour government wasn’t going to be able to come in and make ‘unfunded’ spending commitments.
Mucca Mad Boys
Well-Known Member
When you need cash to fund your spending plans and you’ve ruled out raising income tax, VAT and NI… you box yourself in and that’s exactly what this Labour government did.
The way they needed to spin this as ‘not a tax on workers’, of course it was. If businesses need to cut back on bonuses, filling vacant positions or raise their prices, it continues stagnating wages and stokes inflation so the outcome is a tax on workers.
Brighton Sky Blue
Well-Known Member
Well, not quite. Taking revenge on the civil service appears to be next.
Mucca Mad Boys
Well-Known Member
The civil service has a lot to answer for. Headcount has swelled by 21% since COVID, median salary has also increased by 27% in the same period (2019-2024) and to top it off, productivity is still below pre-pandemic levels.
So why should taxpayers tolerate an expanding bureaucracy that delivers less for us, especially the quangos.
Brighton Sky Blue
Well-Known Member
Who is responsible for deciding the CS needs more workers?
Mucca Mad Boys
Well-Known Member
That’s not the important issue. 45% of our economy is government spending and this isn’t a pathway to prosperity. The state is just too overstretched and needs to fundamentally be cut down to size. We just cannot afford to keep raising taxes to pay for a public sector that delivers less and less.
chiefdave
Well-Known Member
Didn't know Elon was on the forum. Are you going to take over the club? Can give all the players cybertrucks
Mucca Mad Boys
Well-Known Member
Is this supposed to be an insult?
If the state was the best vehicle to achieve ‘redistribution of wealth’ or prosperity, the Cold War would’ve been the Soviet Union.
At what point is government spending too much? 45% of the economy? 50-60%?
shmmeee
Well-Known Member
Says who?
Which economy should we be emulating in terms of govt expenditure as a % of GDP?
duffer
Well-Known Member
It's always worth thinking about what these seemingly abstract cuts mean to people's lives at the bottom of the pile...
www.theguardian.com
In the meantime, there's seemingly no plan to redistribute from the relatively small proportion of the population who have done very well indeed over the last few decades.
equalitytrust.org.uk
In a town far from Whitehall, I saw how devastating Labour’s cuts will be. When will ministers wake up? | John Harris
A day with a care worker in Bury showed me the intolerable pressures of her life – and then I heard the news of a new squeeze on benefits, says Guardian columnist John Harris
In the meantime, there's seemingly no plan to redistribute from the relatively small proportion of the population who have done very well indeed over the last few decades.
Equality Trust Finds a 1000% Increase in Billionaire Wealth - Equality Trust
Today, The Equality Trust releases Billionaire Britain 2022: Inequality from the top down. This briefing demonstrates how, over the last four decades, changes to the UK economy have consistently funnelled wealth upwards to the very wealthy, to the detriment of the rest of us – starkly...
equalitytrust.org.uk
shmmeee
Well-Known Member
It's always worth thinking about what these seemingly abstract cuts mean to people's lives at the bottom of the pile...
In a town far from Whitehall, I saw how devastating Labour’s cuts will be. When will ministers wake up? | John Harris
A day with a care worker in Bury showed me the intolerable pressures of her life – and then I heard the news of a new squeeze on benefits, says Guardian columnist John Harris
In the meantime, there's seemingly no plan to redistribute from the relatively small proportion of the population who have done very well indeed over the last few decades.
Equality Trust Finds a 1000% Increase in Billionaire Wealth - Equality Trust
Today, The Equality Trust releases Billionaire Britain 2022: Inequality from the top down. This briefing demonstrates how, over the last four decades, changes to the UK economy have consistently funnelled wealth upwards to the very wealthy, to the detriment of the rest of us – starkly...
You can’t get that wealth though. Ending capital controls meant you just can’t tax extreme wealth in any useful way. All the wealth taxes tried raise far far less than the ones proposed. Sadly it’s easier and more effective to get £10 from 10m people than £100m from 1.
Sick Boy
Super Moderator
Starmer is warned against ‘appeasing’ Trump with tax cut for US tech firms
Labour MP and Lib Dem leader express concern social media companies could be let off hook just as benefits are cut
Keir Starmer says he ‘likes and respects’ Donald Trump
PM agrees with US president that Europe must bear greater burden for its collective self-defence
"You just love to see it."
shmmeee
Well-Known Member
Starmer is warned against ‘appeasing’ Trump with tax cut for US tech firms
Labour MP and Lib Dem leader express concern social media companies could be let off hook just as benefits are cut
Keir Starmer says he ‘likes and respects’ Donald Trump
PM agrees with US president that Europe must bear greater burden for its collective self-defence
"You just love to see it."
Probably a good time to attract tech talent from the States TBH.
Don’t disagree with a fair bit of this but I was responding to wingys question about the X thread I posted. A lot of the issues in it are more legacy stuff/structural. Reeves hasn’t helped and may well have made some things in the short term, but hard to pin the underlying issues on her and the current government after a few months. Only time will tell whether decisions will help/or hinder longer term.
Sky_Blue_Dreamer
Well-Known Member
Cutting down the public sector was a massive part of the austerity measures - how did that go? Just cutting jobs leads to people out of work and increased welfare costs against reduced tax revenues. It makes the situation worse.
As for how much the public sector as a % should be, that depends on the state of the economy. During times of hardship and recession it will be high out of necessity so as to provide employment and money to workers which they can then spend in the economy, creating further jobs.
Mucca Mad Boys
Well-Known Member
Sometimes, you need the shock therapy. We’re arguably already in a death spiral of raising taxes continually to fund a public sector that is no longer delivering basic services to a good standard. The tax burden is being shifted onto the productive sectors of the economy (private sector & wealth creators). This invariably hollows out the tax base and this will impact ordinary workers to pick up the bill.
Even during the period of ‘austerity’ total government spending increased. Many cuts were ‘real term cuts’ i.e. actual spending increases, just not in line with inflation. If government revenues aren’t increasing because the economy is stagnating, then the costs of running everything just gets higher which is what precisely happened.
Brighton Sky Blue
Well-Known Member
Which public sector workers do you want sacked?
Mucca Mad Boys
Well-Known Member
Labour has identified 10k jobs at NHS England that can be scrapped. The civil service has increased by 21% and productivity has flatlined which probably means there’s either a lot of duplication of work or the roles just aren't productive.
OFGEM, for example, has increased its headcount 163% since COVID… does this seem proportionate? There’s plenty of quangos that have swelled their headcount and the taxpayer foot’s the bill and diverts money away from frontline services.
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chiefdave
Well-Known Member
So lets go with that and say we cut 20% across the board. That's around 1.3 million people who no longer have jobs.
Lets ignore the fact that we've been through years of cuts and austerity and that hasn't led to some miraculous improvement in services, in fact quite the opposite, and assume everything keeps running to current levels as a minimum.
What impact does 1.3 million people now being unemployed have on the economy? Not like they will be the type of roles where there is much work going in the private sector.
Lets ignore the fact that we've been through years of cuts and austerity and that hasn't led to some miraculous improvement in services, in fact quite the opposite, and assume everything keeps running to current levels as a minimum.
What impact does 1.3 million people now being unemployed have on the economy? Not like they will be the type of roles where there is much work going in the private sector.
Brighton Sky Blue
Well-Known Member
As posted just below, what do you suggest the tens of thousands of extra people you’ve decided to sack go on and do?
Razzle Dazzle Dean Gordon
Well-Known Member
I don't know why 'Pre-COVID' staffing levels are held up by some as being the point to aim for. We've had decades of public services being underfunded and chipped away at, it's not like everything was going fine until COVID came along, maybe those staff were needed then and are needed now?
SBAndy
Well-Known Member
Worth also remembering Covid coincided with the full exit from the EU, so there was always going to be an increase in civil servants as a result of the latter.
Mucca Mad Boys
Well-Known Member
Is this more important to front line public services to you?
You keep parroting that we’ve had austerity and ‘deep cuts’. The reality is that government spending steadily increased during this supposed era of austerity. The share of GDP that is government spending has gone up to 45% and this is not sustainable whilst the economy is flatlining. To reiterate a point here, ‘real term cuts’ are not spending cuts.
This 1.3m people has come from nowhere, there’s about 500-550k civil servants, for a start. Frankly, if a job is taxpayer funded and it’s not needed/productive, it needs to be cut. Many of these people have the qualifications to do well in the private sector and there are 816k job vacancies according to the ONS.
That’s beside the point. The first question should be ‘is this job worth taxpayers money?’ Rather than ‘what will they do if they get cut?’
We’re a high spending, high tax economy that’s cannibalising the tax base by taxing private sector jobs and driving away top earners who pay the highest % of tax receipts to fund a bloated public sector.
You can’t have your cake and eat it, something has to give. The tax burden is reaching WW2 levels, the economy is stagnating and government spending demands ever increasing. At some point, difficult decisions that will inflict pain need to be taken.
You need to look at the growth of public sector workers is coming from. Hint: it’s not frontline service staff like healthcare or teaching staff.
Unfortunately, the headcount and salaries of the civil service have increased by 21% and 27% respectively but their productivity hasn’t grown past pre-pandemic levels. If that’s not evidence of waste, what is?
Again - which country should we be emulating in terms of share of GDP that goes on government spending?
Mucca Mad Boys
Well-Known Member
It probably needs to drop to around 35-39% which is closer to Japan and The USA than someone like Germany or France. What is the purpose of this question exactly?
As a sovereign currency issuer, if your borrowing panics markets, our currency gets devalued by them. So we can’t get away with playing fast and loose on the public finances, particularly when interest rates are not longer 0-2%.
The latest figures from the IMF show that Japan (57%), Germany (48%) and France (57%) all spend more on government spending as a percentage of GDP than the UK does. So I suppose the purpose of the question is to ask if such levels of govt spending are a disaster waiting to happen, or simply a reality of operating a major western economy. I assume you have an ideal level of government spending in mind?
chiefdave
Well-Known Member
I think we've found the root of the issue. You seem to fundamentally not believe that austerity was, and still is, a thing or that inflation has any impact on budgets.
The 1.3m hasn't come from nowhere. It was you who suggested 20% of civil service workers were adding nothing to productivity and not required. As I said if you apply that across the public sector then you're taking about 1.3m people losing their jobs. Do you think there's no cost to the taxpayer or impact on the economy if that happens?
What level of spending do you deem acceptable and how do you propose to reach that target without it having any impact?
chiefdave
Well-Known Member
I don't see how you can make that level of reduction in government spending without it having a huge impact. You assert that we have seen no reduction in spending yet we have seen services absolutely decimated. How do you propose this level of reduction could be achieved with no noticeable change for the average person?
shmmeee
Well-Known Member
This is just ideological nonsense 'shock therapy' 'death spiral', have a break.
There's not evidence government spending in and of itself is a BAD THING. Mature economies shift spending towards social insurance, that's a democratic choice. We're pretty middle of the pack compared to other G8 nations for example.
Mucca Mad Boys
Well-Known Member
No, I said the civil service increased its headcount by 20% from 400-ish thousand to 550-ish and productivity hasn’t increased so clearly there is some wastage there. So the number I’m referencing is closer to 110-120k and nowhere near the 1.3m you reference. Hypothetically, if that many roles
Inflation tracked at 1-2% until post-COVID so when inflation runs 5-10%, it will obviously have a big impact. Less so when inflation is 1-2% which was the case for the era of austerity.
Not what I’m getting from the IMF.
As for France, Macron is trying to reduce this because it is equally untenable. Germany has similar problems to ourselves. The fundamental difference between ourselves and the eurozone countries is the currency. If markets rally against the pound, that has a significant impact on us and for Eurozone countries, the risk is shared by all its members.
First and foremost, you need pro-growth policies and a record high tax burden will have the opposite effect and always will. This is a realisation that even the Labour Party made before winning the election, it just doesn’t know how to promote growth.
Services have been decimated not because of cuts, but the demand (i.e. population) to access services has increased beyond the states’ ability to keep up.
Argentina went from a high inflation, high tax economy and after some deep, painful cuts is now in a budget surplus, inflation sharply reducing and has its growth rates forecast at 5% this year.
Mucca Mad Boys
Well-Known Member
How sustainable do you think the post-WW2 settlement is in the UK, Japan, Germany, France, Canada and Italy? All low growth economies with worsening public services.
My answer is consistent across the board: no. All 6 of those countries have population time bombs and have identical issues with low income mass migration being an additional strain on public services and the welfare state.