Liberal Democrats say spend large on rail

Voodoo economics, as the Liberal Democrats want to spend £3 billion more, to reopen uneconomic railway lines (so that's more than that), to be taken from spending money on roads. Given most money spend on roads is maintenance (and £3 billion is 40% of the roads budget), it doesn't add up.

Let's expand the welfare state

So says Gordon Brown by announcing a "National Care Service" modelled on the award winning (!) NHS.

Obviously the UK is running surpluses, taxes are low and there is an overwhelming need that couldn't be met by ensuring the incentives are right for people to save for their own care.

Obviously Gordon Brown thinks the British electorate is full of idiots who can't look at record public debt and record budget deficits and think, how the hell are you meant to be able to afford a huge expansion of the welfare state?

Some think it was only the Greek government that lied about public finances.

Darling's bribe with your kids' taxes

The budget 2010, a last chance for Labour to auction off the yet to the stolen loot from future taxpayers.

The deficit was predicted to be £178 billion, it looks like ONLY being £167 billion. That's around £2780 of borrowing for every UK resident, or more like over £8000 per household - borrowed on your behalf by the government.

The government predicts 3.5% growth next year, few believe it.

What will it go on?

MORE SPENDING

- Every British citizen will be legally entitled to a "free" bank account, paid for by you;
- A "Green Investment Bank" is to be set up costing £2 billion, because the government doesn't have enough banks and there is nothing like being forced to "invest" in commercially unprofitable ventures;
- New national investment corporation to be called "UK Finance for Growth";
- Support for the mortgage interest scheme, subsiding home ownership and propping up the property market (thereby disadvantage aspiring home owners) will continue, paid for by you;
- Money not needing to be borrowed because of lower than expected welfare claims is STILL to be borrowed to pay to help those under 24 find work and training, because they aren't very good at it themselves;
- £4 billion more to support the military operations in Afghanistan;
- Public sector pay will still increase, but no greater than 1% for two years from 2011, because no doubt they still deserve increases while all others have had real reductions;
- A third of civil service jobs to be relocated outside London to less expensive locations, which wont necessarily mean net savings.
- More money for pensioners, because they haven't benefited from increased Labour spending and because their grandchildren and great grandchildren wont get angry at them for paying for it

MORE TAXES

- Stamp Duty to rise to 5% on homes over £1 million (expect homes up to £1.1 million being repriced to be sold for just under that);
- Fuel duty is to go up 1% on 1 April, 1% in October and 1% in January, instead of 3% in April. The government profit from the road network will exceed 300% after spending on maintenance and capital;
- National insurance (a form of income tax) is to go up 1% as already announced, but those earning less than £20,000 wont have to pay, the logical reason surely being because they don't impose many demands on the health system (!). Those over £100,000 will have personal allowances reduced, because we know what a burden on the state they are;
- Alcohol duty goes up 5% on Sunday, 10% on Cider. Alcohol duty will go up 2% above inflation for two years beyond 2013.
- Tobacco duty is to go up 1% above inflation over that time.
- Crackdown on evasion and avoidance, with tax information agreements to be signed with more countries
- Freezing inheritance tax threshold for three years, effectively meaning more will pay it.

LESS TAXES

- End of a small stealth tax, ISA tax free allowances to rise according to inflation;
- First time home buyers (like the sons and daughters of home owners) will be able to buy a home worth up to £250,000 with no stamp duty.
- Business rates cut for one year.

LESS SPENDING

- Changes to housing benefit so that a threshold of property values will be set so more expensive properties occupied will not be eligible for the benefit. Estimated to save £11 billion.
- The Dartford Crossing (toll bridge and tunnels) and Tote (TAB) are to be privatised to raise cash to pay debt.

So the verdict? Dithering. No serious attempt to tackle the deficit, with the main news being around incremental increases in taxation.

This is the first bid in the advance auction of stolen goods called the forthcoming election.

Borrow for the internet

Budget deficit? National debt? What are you talking about?

According to the Daily Telegraph, Gordon Brown is promising to bribe current voters by borrowing from the kids some more by promising that every citizen will have access to broadband internet services, without saying when or how much he is going to spend to achieve it.

I will wait to see when he'll promise everyone will have access to uncongested roads, public transport that goes everywhere you want, and anything else people might want, but never mind, it's good old fashioned socialism - subsidise people who live in lower cost remote areas. Given he is already taxing every landline £6 (which just encourages more people to abandon such lines in favour of mobile phones), and is already subsidising to extend broadband to 90% of homes, it's just more largesse to bribe voters dressed up as "caring".

He put forward a semi-Orwellian vision of a single website for the state for citizens, personalised, so you can pay all of its varied taxes and levies, and demand information and largesse in return.

"a single website would offer people the chance to “manage their pensions, tax credits or child benefits; pay their council tax; fix their doctors or hospital appointment and control their own treatment; apply for the schools of their choice and communicate with their children's teachers; or get a new passport or driving licence - all when and where they need it"

Given the UK government record on so many IT projects, I am sure you can't wait to see how you'll be forced to pay for the failures of this idea, rather than simply letting providers figure out how to do this themselves.

Screw the deficit, build high speed railways

Unsurprisingly, Lord Adonis has announced a plan to spend £2 billion MORE of taxpayers' money (future taxpayers, since the country is still in deficit) on building a high speed railway from London to Birmingham.

Where is the money coming from?

Most of it NOT from the business users who are primarily expected to benefit from faster travel times, but from future taxpayers.

Contrast this to the Channel Tunnel, which was financed and built by the private sector, ultimately went bankrupt, but saw the banks bear the risk and help nurse it to profitability. The train companies using the tunnel pay for it, and this is passed on in fares and charges to passengers and freight customers.

This is a blatant election bribe, a grandious big project to capture the imagination and get foolish voters starry eyed about the ludicrous claim that politicians make projects like these happen. They don't. All they do is force the money out of taxpayers, or borrow from future taxpayers, to pay those who build it.

At the very least, it should be shelved until the budget is in surplus, but preferably it should be left to private enterprise. After all, why should users of high speed trains be given a subsidy on their rail fare?

History of UK public debt in recent years

The website UK Public Spending is an invaluable resource of economic history. It enables all to cut through the rhetoric and see whether the state shrank or grew under different governments.

Let's look at public debt.

In 1900 it was (as a share of GDP, which is the fairest and easiest comparator) around 30.2%
By the start of World War 1 in 1914 it had shrunk to 25.3%. So the start of the 20th century was a period of fiscal prudence, and prosperity.

World War 1 cost though. By the time the war ended, public debt had ballooned to 135.2% of GDP in 1919. An astonishing rise, demonstrating the enormous financial cost that accompanied the human cost of that futile war.

Between 1919 and the 1929 start of the Great Depression little had been done to address the public debt, which had ballooned further to 159.6% of GDP. The UK government had its share in the overdebtedness of the time.

The 1931 election, which saw a crashing defeat for Labour saw the incoming administration facing public debt of 171.5% of GDP.

By 1939, with the economy emerging into recovery it had shrunk to 137.7% of GDP. Still, the key point is that the UK public finances did not ever recover from the devastating cost of World War 1 and the subsequent economic policies.

World War 2 understandably nearly bankrupted the UK, with public debt soaring to 215.6% of GDP. At that point, Labour was returned to power with a socialist agenda of the NHS, wider public education, welfare and nationalisation of major industries. In addition, there was much reconstruction of devastated cities and infrastructure.

By the 1950 election, the recovery of the economy helped to bring the public debt down to 194.2% of GDP, still much higher than when the war started and not helped by the nationalisation of railways, coal mines, steel and healthcare. Of course in that election, Labour won a very slim majority and its attempt to boost it in 1951 backfired, with the Conservatives led by Winston Churchill, being returned to power.

Churchill retired in 1955, by when the public debt had dropped to 138.1% of GDP, through a combination of postwar recovery and prudence.

The 1959 election had seen Harold Macmillan take over as Prime Minister for the Conservatives. Public debt was down to 112.4% of GDP. This was the first time public debt had dropped below pre World War 2 levels, but it was still frightfully high.

Macmillan lost popularity and was replaced by Alec Douglas-Home as Conservative leader in 1963, and Harold Wilson had become Labour leader. As a result he won the 1964 election. By then public debt was down to 91.2% of GDP. The first time public debt was less than GDP since World War 1.

Labour's small majority saw Wilson call an early election in 1966, which he won with an increased majority. By then public debt had shrunk further to 82.3% of GDP.

The 1970 general election was won by the Conservatives, then led by Ted Heath. Public debt had by then shrunk further to 64.2% of GDP. Labour had continued with the level of fiscal prudence of the Conservatives.

After the second 1974 general election, Labour won a slender majority under Harold Wilson yet again. Public debt had been more seriously cut by the Conservatives, now down to 48.3% of GDP.

Between 1974 and 1979, Wilson was replaced by James Callaghan as Labour leader and Prime Minister, and Margaret Thatcher replaced Ted Heath as Conservative leader. By the time of the 1979 election, public debt had shrunk to 44% of GDP. Labour had not been as prudent as the Conservatives, but it would be a lie to claim Labour increased net public debt during that time.

In 1979, the Thatcher revolution started. By 1983 public debt had dropped slightly to 41.3% of GDP. A reduction on a scale less than that of the previous Labour administration, putting paid to claims of savage cuts during her first term.

By the 1987 election, Thatcher's second term had made further moves to cut debt down to 38.6%. Finally approaching levels seen before World War 1.

The 1992 election, which saw John Major having replaced Thatcher, saw public debt down to 24.6% of GDP. Lower than the level seen entering World War 1 and indeed lower than at any other time in the 20th century. The public debt had been tackled and assaulted by the Conservative government.

Sadly, John Major frittered it away. By 1997 when he was defeated by Labour led by Tony Blair, public debt had ballooned out to 43.8% of GDP. That single term led by John Major had wasted all that had been achieved before it under the Thatcher years. Public debt was back to nearly 1979 levels.

Blair and Labour entered power during boom years. By 2001, public debt had shrunk back to 32.1% of GDP, as Labour sought to demonstrate it was fiscally prudent during the first term, and as economic growth boosted tax revenue.

However, by 2005 Gordon Brown had let things slip. Public debt as a proportion of GDP had creeped back up to 37.4%, which during a time of economic growth and prosperity (and few tax increases) meant a significant spend up.

By 2009 it had shot up further to 55.2% and is now, conservatively, projected to be 82% in 2011.

The conclusion? World War 1 crippled the UK with a level of public debt that was not properly tackled until the Thatcher administration. However, whilst all post war government did watch public debt shrink, this was accelerated till by 1992 the UK was in the best fiscal position it had been for the century.

This was sadly blown by two government. John Major bears some responsibility for trying to spend his way into an election win in 1997, and failing miserably. Since then Gordon Brown let go after 2001 to have the net public debt grow during good time, and balloon once again during the recession. Public debt is now approaching levels it was at in the 1960s. Not insurmountable, but in great need of some attention.

Gordon Brown admits the end of the recession is just on borrowed money

The BBC reports Gordon Brown has rejected claims by the Conservatives and Liberal Democrats that the Government is delaying spending cuts because of the election.

He has claimed that to cut spending now would risk a renewal of recession.

So he is admittedly, in effect, that the economy is propped up on the borrowed taxes of future generations.

With even the more left of centre Liberal Democrats proposing £10 billion less spending than Labour, it is difficult not to believe that there has simply been a naked political calculation to leave the hard decisions on cutting spending until after the election.

Gordon Brown said cuts would be in "low priority areas". Which begs the question as to why the government spends money on such things in the first place?

Labour appears to be trying to pull the wool over the eyes of voters by the claim that cutting spending would be wrong now, but then when has it ever cut spending? Gordon Brown ran deficits in almost every year as Chancellor of the Exchequer. In constant terms total government spending since 1997 has gone up by 31% from 1997 to 2007.

So you might ask whether the average UK taxpayer thinks they have gotten value from that. Public debt went up 35% in that time, in constant terms.

So the simple question to Gordon Brown is this.

If you borrow heavily when the economy is doing well and run ever larger deficits, when do you cut spending and start running surpluses to pay down the debt?

Labour confirms it is spending more on housing

Within a BBC news report that the number of "affordable homes" built could be cut in coming years because of budgetary pressure, the government has confirmed that it is going to spend still MORE borrowed cash to depress the property market.

Housing Minister John Healey said:

"Of course the public finances are tight but this government continues to demonstrate our long-term commitment to affordable housing, whether through the extra £1.5bn investment of the Housing Pledge or the pre-Budget report's boosting of support for first-time buyers," he said.

"The Tories not only opposed us, they also proposed a £1bn cut in last year's housing budget that would have seen 9,000 fewer homes built and the loss of many jobs in the construction industry.

"Taking this as a clear indication of Tory priorities, the NHF would do well to consider the threat a Cameron government would pose to affordable housing," he said.

In other words, "of course we don't have any spare money, but who cares, we'll borrow more from your kids to spend more on subsidising housing for people to buy. This while the economy remains stagnant".

£1.5 billion that they don't have that they'll take from your future taxes and children with interest, all to bribe the target group of low income people who get these homes, and the construction industry with its employees. Other taxpayers who have homes or mortgages or have done far too well to be considered as deserving of owning an "affordable home" can just damn well put up with it.

Conservatives: Cuts in administration spending on the arts

The Guardian reports Conservative Shadow Culture Secretary Jeremy Hunt saying:

The Conservatives would introduce a target for the main distributors of arts grants, including the Film Council and Arts Council England (ACE), to reduce administrative costs to a maximum of 5% of the money received from government – meaning stringent cuts.

he could not guarantee that exchequer funding would continue at present levels. "We face cuts whoever wins the next election," he admitted. "But we are committed to a mixed-economy funding model for the arts and I do believe in state funding.

So talk of cuts in administration, but the state will still be pouring money into the arts that it wants to support. A little good, but not enough.

Labour: Long term unemployed to be guaranteed "jobs"

The Times reports:

The intention is to build on the £1.5 billion youth jobs guarantee — which will be promoted nationwide in the coming weeks — for people aged 18 to 24 who claim jobseeker’s allowance for more than six months....Yvette Cooper, the Work and Pensions Secretary, has announced plans to offer “tailored support” for unemployed people aged over 50 and to ensure that claimants who take jobs would receive £40 a week more than if they stayed on benefit.


So more money that the government doesn't have, to take from future taxpayers, to cost future jobs, rather than getting the state out of the way of business.

Conservatives: Spending cuts from day one

The Daily Telegraph is reporting George Osborne saying:

"Programmes that represent poor value for money, excessive spending on things like advertising and consultants, spending on tax credits for people earning over £50,000, and spending on Child Trust Funds for better off families will all have to be cut during the financial year."

Advertising and consultants will be chicken feed.
Tax credits for those earning over £50,000 is NOT cutting spending, but effectively increasing taxes through simplification of the tax system.
Spending on Child Trust Funds will also be chicken feed.

He did note the status quo is unacceptable: "Total spending is planned to go up by £31 billion in nominal terms, or by more than 2 per cent in real terms. During a period when the Treasury expects the economy to be growing by at least 2 per cent, and with the largest budget deficit of any developed economy, that is simply not credible."

All well and good in intent, but little of substance.

Cut UK government spending!

The purpose of this blog is to highlight every day when either the Labour Government or the Conservative Party promise to spend MORE of your money, which of course isn’t theirs in the first place. Every promise or policy to spend more money, will be highlighted here. If it is a core area of state activity (law and order, defence) then it may be all well and good, but ONLY if there is a countervailing reduction elsewhere, and only if there is a clear demonstrated need. It may be positive to spend more tackling violent crime, but less on victimless crime.

The Liberal Democrats have been excluded because, although it is a party that has shown some prudence in announcing plans to cut spending (and more recently to scrap policies that can't be afforded), it wont be leading the next UK government. Anything particularly notable from the Liberal Democrats on shrinking the state will be posted, given the off chance of a coalition if neither major party can win a majority. All smaller parties are being ignored given the extremely low likelihood any will have a role in the next UK government.

What this blog aims to do is shame the two main parties into ceasing the charade that somehow there is “spare cash” coming into the Treasury that can be committed to new spending. There isn’t. The UK is bleeding £370 million a day, and borrowing from future (in many cases unborn) taxpayers as a result. This has been the norm for almost all of the years of the current government, and it is wilful blindness, as well as out and out fraud to claim otherwise.

When Gordon Brown or David Cameron talk about investment, they really mean borrow now to tax you, your children and grandchildren more in the future. They don’t invest with money THEY earnt, they invest with YOUR money, taken from you by force, and unlike proper investments, they don’t give you anything back.

Gordon Brown claims to have saved the economy, but all he has done is plundered the bank accounts and earnings of future taxpayers to pay for the mistakes of the past carried out in large part by this administration, and in part by others. He has bailed out businesses that failed, rewarding failures with the money taken from future success. He has the audacity to talk of leading a party of aspiration, whilst speaking the rhetoric and implementing policies that penalise, denigrate and decry those who succeed financially. Aspire, but don't succeed.

The Conservative Party talks about the need for fiscal prudence, except for the NHS and selected other areas. In other words, it is quite willing to continue overspending as long as it is for things that will win votes it likes. It's time for some honesty.

H.L. Mencken described elections as advance auctions of stolen goods. The 2010 UK General Election will be this on a grander scale than ever before.

I will label every single policy announcement to spend more by party and by portfolio. I will not keep a running total, because politicians tend to report the same thing more than once, so something included in the budget may be announced again for propaganda effect.

So let’s just see how Brown and Cameron can promise to thieve from us all in the future, and let it help you decide whether to vote for either of them.

In the meantime pardon me for the next few weeks as I add a blogroll and a few bits and pieces to this to get it up and running.