Archive for the ‘Economics’ Category

An invitation to West Cheshire residents to influence how the authority spends their Council tax over the next decade has had a record response.

The public interest, over 700 replies so far, has been so encouraging that Cheshire West and Chester Council is to extend the consultation for a further fortnight.

Originally due to end on Friday, 10 September, the Capital Vision consultation is now to run until 24 September.

Have Your Say forms went to every household across the borough in July this year, as part of the Council’s Talking Together publication.

And the initial response from residents has indicated that schools, roads and social care facilities are among their top priorities.

The first three priorities from partners and stakeholders are schools, housing and technology.

Stage two of the consultation involves discussions with private sector partners and stakeholders and stage three – meetings with local residents on the Council’s 2,500-strong Citizens’ Panel.

Final results will be analysed in detail by Cheshire West and Chester’s Research and Intelligence Team at the end of November and the results will help the Council plan its expenditure over the next 10 years.

The Have Your Say document can be accessed on the Capital Vision consultation page.

Leader of the Council, Cllr Mike Jones, said: “We are delighted with the response so far – I think it could be something of a record in the time involved – and I hope that more residents will take advantage of this consultation over the next couple of weeks.

“We all face challenging times financially which makes it extremely important that the Council spends its money wisely… and with the backing of our residents.”

So if you want lower spending/less services provided by your Council, and lower rates of council tax, say so!

According to Ed Balls the Government should spend more.

By borrowing more.

Yes, that great beacon of socialism thinks Britain should both increase its deficit AND debt.

As Margaret Thatcher once famously said:

“Socialist governments traditionally do make a financial mess. They always run out of other people’s money.”

According to Ed Balls this isn’t a problem, as you can easily acquire more.

He believes that the most important thing to concentrate on economically is growth. On its own, this is something I would welcome – however he seeks to create artificial growth.

Running up a higher debt/deficit for a short-term boost would simply create a stronger, deeper recession. Think of the cuts in certain areas of public spending that are currently planned – imagine how much more severe these would have to be if we borrowed and spent even more.

In context, imagine you’re in £10,000 of debt. You then borrow another £20,000 to pay this off and generate your own ‘economic growth’. You’ve now got a greater disposable income, so naturally spend more. You then borrow another £40,000 and repeat the above.

Ed Balls believes that tightening your belt when you owe £10,000 is infinitely worse than when you owe £40,000 and are more inclined to spend more.

Real economic growth would take place through paying off the £10,000 and developing a greater disposable income (i.e. Increase the tax threshold to £10,000) in reducing your debt repayments to £0.

That is what the Coalition Government seeks to achieve, and I support them.

Has Ed Balls learnt nothing?

Ed Balls says that as a result of the IFS’ report into the emergency budget that:

“The government’s ideological assault on our welfare state and public services is not simply economic vandalism, I fear it will damage the very fabric of our society too.”

Right, so Labour don’t ideologically believe in spending more and taxing more, like, you know, the abolition of the 10p tax rate?

Getting people dependent on the state, rather than cutting taxes so that they can have more responsibility and control over their own life? Yes, they did that too.

Also, Labour attacked the Conservatives for having the audacity to offer £2.83 per week as tax relief for married couples, calling it an insult. They have also attacked the Coalition for taking a maximum of £2.13 per week away from families.

As for damaging the fabric of our society, why, under 13 years of a ‘progressive’ party, did the gap between rich and poor widen – and by so much?

Labour vandalised the economy – The Conservatives and Liberal Democrats are fixing it.

Local Government

• Government will work with local authorities to freeze Council Tax for one year in 2011/12 if local authorities keep increases in spending to a minimum. The terms under which authorities will be compensated for a commitment to freeze or reduce Council Tax will be outlined by the Government in “due course”.
• The Government will monitor lending from the Public Works Loans Board more closely to “ensure the fiscal risks around local authority borrowing decisions are better understood”.
• There will be a two-year public sector pay freeze in 2011/12 and 2012/13 for those earning more than £21k per year, with a £250 flat rate pay rise each year for those earning less than that threshold.
• Local authorities will have a role in working with business to lead local economic development, further details of which will be outlined in a Government White Paper later in the summer. In addition, Regional Development Agencies will be abolished by through the Public Bodies Bill.
• Action will be taken to ensure that top public sectors workers earn no more than twenty times more than the lowest public sector earners.
• Housing Benefit will be capped at a maximum of £400 per week for a four bedroom house, saving £1.8bn by the end of this Parliament.

The Economy
• The UK economy is predicted to grow by 1.2% in 2010, 2.3% in 2011, 2.8% in 2012 and peaking at 2.9% in 2013.
• Consumer Price inflation will increase to 2.7% by the end of 2010, before falling back to target (2.5%).
• Public sector net borrowing will be £149bn this year, £116bn in 2012/13, £89bn in 2012/13, £60bn in 2013/14, £37bn 2013/14, falling to £20bn in 2015/16. Current Government borrowing as a share of GDP is 10%.
• According to OBR predictions, the structural current deficit will be eliminated by 2014/15, with a projected surplus of 0.8% of GDP in 2015/16.
• Unemployment is forecast to peak this year at 8.1% and then fall for each of the next four years, to reach 6.1% in 2015.

Public Spending
• There will be an average 25% reduction in non-protected departmental spending (i.e. all budgets except NHS and international development) over the next four years.
• No further reductions in capital spending were announced, although capital spending will be reassessed in the upcoming Spending Review.
• Detailed spending totals for each government department will be reviewed in the Spending Review and announced on 20 October 2010.
• Current spending will be reduced by £32bn per year by 2014/15. As part of this, £11bn will come from welfare reform savings.

Tax
• VAT will increase from 17.5% to 20% on 4 January 2011.
• The higher rate of Insurance Premium Tax will also rise from 17.5% to 20%, while the standard rate will increase from 5% to 6%.
• The personal income tax free allowance will rise to £7475.
• Capital Gains Tax will increase to 28% for higher rate payers.
• Corporation Tax Rates will be reduced by 4% to 24 pence in the pound by 2014/15 and small companies’ Corporation Tax will be cut to 20% next year.
• From January 2011 a levy will be imposed on banks, and the UK operation of banks from abroad.
• The Employer National Insurance contributions threshold will be raised by £21 a week above indexation in April 2011. National Insurance rates are available here.

Benefits and the Elderly
• A review of the increase of State Pension age to 66 will be accelerated.
• New and existing receivers of disability allowance will be required to undergo a medical assessment from 2013 onwards.
• The link between the State Pension and earnings will be reinstated from April 2011, and there will be a guaranteed annual increase of at least 2.5%.
• Benefits and tax credits will be linked with the Consumer Price Index, rather than the Retail Price Index, which will save £6bn per year by the end of this Parliament.
• Child Benefit will be frozen for the next three years.

I’ll offer my own thoughts on this later.

Yours?

Courtesy of Old Holborn:

£850bn bailing out banks… and £107.1m on financial advice

£76bn To purchase shares in RBS and Lloyds Banking Group

£200bn Indemnify Bank of England against losses incurred in providing over £200bn of liquidity support

£250bn Guarantee wholesale borrowing by banks to strengthen liquidity in the banking system

£40bn Provide loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme

£280bn Agree in principle to provide insurance for selection of bank assets

£671bn Total Government spending in the financial year 2009-2010

£32.9m Slaughter & May – Commercial legal advice

£15.4m Credit Suisse – Financial advice on a range of measures, including Bank Recapitalisation and the Asset Protection Scheme

£11.3m PricewaterhouseCoopers – Advice on APS

£8.7m Ernst & Young – Due diligence on APS, Northern Rock

£7.7m KPMG – Due diligence on APS

£7.4m Blackrock – Valuation advice on APS

£5.3m Deutsche Bank – Financial advice on a range of measures

£5m Citi Financial – Advice on Aps

£4.9m BDO Stoy Hayward – Valuation of Northern Rock

£4.5m Goldman Sachs – Financial advice on Northern Rock

£1.5m Morgan Stanley – Financial advice on Bradford & Bingley

£2.5m Other advisers – Financial advice on a range of measures and proposals to revive Britain’s ailing economy

add £7 billion for the WORST GOLD TRADE EVER IN THE HISTORY OF TRADING!!!!!

And now it transpires the banking meltdown wasn’t caused by mismanagement. It was caused by a deliberate fraud. An awful lot of pockets were lined at YOUR expense. Guido has more.

UPDATE: Govt Borrowing from £27 bn to £163 bn
Govt Debt from £347 bn to £799 bn
Growth from +3.3% to -5.0%
Inflation from 1.9% to 3.0%
Personal Debt from £492 bn to £1,460 bn
Health Spending from £43 bn to £119 bn
Education from £38 bn to £161 bn
Unemployment from 2.23 mil to 2.45 mil
Average House prices from £55k to £161k

It’s only your money after all….

£850 billion?? That’s almost £200 billion more than Government spending this fiscal year!

My problem with the bailout: if you do it once, you’ll do it again; it’s along the lines of the boy who cries wolf – the Government will do it once, twice, thrice… First time – the public are glad their money is safe, but angry at the banks for messing up. Second time – the public know the Government will save their money, but are starting to question why they’re having to do it again. Understanding and frustration towards the Government, anger at the banks. Third time – all bets are off.

The Government, as has been shown in other areas, should not get involved. If a business fails because of bad choices, tough.

Thoughts?

Daring title I know, but run with it…

This year, the Government will spend approximately £655 billion pounds. This same year, the Government is scheduled to pick up £140 billion (gross) in income tax, so if you abolished income tax, the Government would have £515 billion.

Here’s the kicker: that’s £13 billion more than they spent in 2006-7.

Are public services at least 25% better now than 3 years ago? How about twice as good as 9 years ago? (Yes, the Government only spent £340 billion in 2000-01)

Before you say it’ll kill the economy, that would mean £140 billion more in disposable income for people to spend on what they see fit… and could attract non-doms back, and non-doms from other countries.

Thoughts?

(Don’t ask me what exactly should be cut – I’m not going through the full Government budget!)

Politics & politicians are at their lowest place in society ever. (29% believe politicians will tell the truth, and 4% that MPs put the Country before themselves) From sleaze in the mid-90′s, to the Iraq War and the expenses over the last decade, people have had enough; they want change (this isn’t a Conservative election broadcast, so hear me out!) – but do they think they will get it? More to the point, why should simply replacing MPs do anything? Are the public being consulted/asked by MPs about what reforms they want?

For politics & politicians to be taken seriously again, something has to give; that should be the state, and the power weilded by Government and Parliament AND ‘external bodies’. By ‘external bodies’ I mean Quangos: there are nearly 1,200 unelected bodies with power over our lives. The cost of these Quangos? £64 Billion. That’s £2,550 per household. Think about how much income tax you pay in a year; remove Quangos, and that’s how much better off you would be. A full list of Quangos can be found here.

Why the mention of Quangos? Think about it, whenever something goes wrong, ministers feel they ought to do something; this is very likely because they believe they are in charge, so should do something, but it often results in a new task force or quango, which then provides new guidelines, regulations, recommendations, surveys, paperwork, lengthening the time it ought to be in place… all for what? Watch Yes, (Prime) Minister. Sir Humphrey is the embodiment of the State today, and the reasons people feel politicians are out of touch.

The problem with this, is that in doing so would not only upset the apple-cart, but the entire orchard with it. Politics would never be the same again, and Town Halls would have the power and authority to let the residents they represent DECIDE things.

In 1994 the American Republican Newt Gingrich realised that the public were disenfranchised; that they too were fed up of politics and politicians. That the people saw politicians as a self-preserving society. An elite that knew best, so that people didn’t need to worry about things because the Government would take care of it like it often did. The problem was that people WANTED a say in how things were run. Gingrich introduced a ‘Contract with America’.

Below is my modern-day take, a 21st Century Contract for Britain of 12 Points (several are simply adapted from the ’94 model):

In the first month of the new Parliament, hung or otherwise, hold votes on the following reforms of Government operations:

* Require all laws that apply to the rest of the country also apply to Parliament – (Parliamentary Privilege aside)
* Select a major, independent auditing firm to conduct a comprehensive audit of Parliament for waste, fraud or abuse;
* Cut the number of committees, and cut the number of special advisors;
* Have fixed-term, 4 year Parliaments, and allow any MP to be subject to removal at any point during the Parliamentary session;
* Ban the casting of votes in Parliaments by MPs/Lords if they did not attend the debate leading up to it;
* Require all Parliamentary meetings, cabinet aside, to be open to the public (factoring in legalities!);
* Require all Local Authority meetings to be open to the public (factoring in legalities!);
* Publish full budgets online and in libraries within a month of announcements. People should see EXACTLY where their money is going (to the penny).
* Require a 60% majority vote to pass ANY tax increase;
* Make each budget start from scratch every year – this will reduce unnecessary expenditure, and make departments work more efficiently, reducing waste.
* Replace VAT with national and local Sales Taxes.
* Allow local authorities to set business rates, thus encouraging competition.

Thoughts?