Thursday, April 23, 2009

Tough Gig

To Lingfield Point yesterday lunchtime, where I was part of the panel on a post-Budget Northern Decision Makers special. You can see the full programme here.

The audience included a high proportion of members of the Institute of Directors, and the session was expertly chaired by local IoD chief Alistair Thompson. In a budget that the Telegraph felt heralded the return of "Class War", and in the midst of the most difficult economic conditions since WWII, it was always going to be a hard sell.

Graham and I did our usual turns for our respective parties, and there were thoughtful contributions from the 2 other panellists - John Orchard from Marchday (responsible for the fantastic Lingfield Point development), and Alan Cook from Arlington Financial in Hartlepool.

In truth, I was slightly disappointed that a question about the so-called 'class war' element of the Budget didn't turn up. It's surely right to ask those earning in excess of £150,000 to take their fair share of the burden the country is now facing - particularly those in the financial sector where executives have been pocketing huge bonuses during the good years, and now bear a fair amount of responsibility for the situation we now find ourselves in.

And it remains the case that 1% of our population earn 21% of the national wealth, and that's after 13 years of Labour Government. So the Jacobins are hardly at the gate. Even if I am now sounding like Tony Benn. You should see the chopping hand movements here.

The measure raises important revenue to help address the country's deficit. And what has been the Tories principal tax promise over the past 18 months? - giving £200,000 away to the richest 3,000 estates in the country via a loosening of Inheritance Tax.

The Tories opposed many of the measures in the Budget to help the people suffering most during the downturn - young people without work, for example, pensioners and homeowners facing repossession. The priorities of the country's two principal parties could not be clearer. Voters ahead of the next General Election should take note.


Ian W said...

6 weeks Nick, but whos counting.

Any reason why comment moderation is still turned on?

Anonymous said...

Gordon Brown has secured my vote with this budget. The labour party has always been a party about redistribution of wealth. A bold move but a sure fire vote winner.
Good luck with your own election.

Anonymous said...

The class war is always going on, big businesses outsourcing jobs to low wage economies, small businesses being squeezed by the big banks. The capitalist class is still going to be in power, even if the highest earners are taxed a bit more, it's not as if the government is about to force big corporations to become workers' cooperatives (not a bad idea, incidientally!)

This whole "class war" talk from the Tory press is a little ridiculous. Even Thatcher tolerated a 60% top rate of tax for eight years in power! (Where were the headlines about class war when the govt doubled the rate of tax paid by low earners? The media didn't notice until months after it was announced!)

I think this will be the dividing line at the next general election: would we sack doctors, dinnerladies, nurses, teachers, firefighters, prison and police officers, etc. before we make the richest pay a little bit more?

Anonymous said...

Alan Macnab writes....

Middle income earnes and the retired are finding things very tough at the moment. I would have liked to have seen more help given to these categories. To, in effect, to put money into people's pockets and allow them to spend their hard earned money the way then want to.

It is inevitable there will be severe and deep public spending cuts because the Government does not have the money to fund all its commitments. Revenue is falling because of unemployment which it is predicted will be 3 Million by the end of the year and the loans taken out by the Government to pay for its commitments will have to be repaid a punitive rates of interest.

The bedrock of our economy is not the public sector. It is the private sector which provides jobs and the money which allows public services to be provided.

It is indeed a mistake to assume that by injecting vast sums of money into the public sector all will be well and the economy will suddenly come out of recession.
Providing new schools, hospitals and roads to be built by the private sector is a short term solution. What happens when they are built? The private sector may well have empty order books. The running costs for these public works will fall on the taxpayers whose numbers are falling in terms of being in employment and in population terms. Remember the problem two or three years ago over paying for the pensions of older people? That hasn't gone away.

I amn sorry Nick but we face a very long and a very deep recession. The outcome is uncertain. I am afraid the Government does not have a route map to get us out of this mess nor do they command the confidence of the people of this country and the private sector that they can do so. The Budget, like the cut in VAT at Christmas, has 'bombed.'

I learn this morning that Alastair Darling wanted to institute immediate public spending cuts but he was overruled by Gordon Brown.

Borrowing is not the answer and burdens my children and yours and quite possibly their children with having to repay the debts accumulated by the present Government. That assumes, of course, that they get jobs.

The public sector will not lead us out of the mess. The private sector will.

Darlington Councillor said...

Thanks, Alan.

The question posed by the Chancellor is - do we want to grow our way out of recession, or should we (as the Tories patently want to do) cut our way out?

We had plenty of experience of this in the 1980's and 90's - the result was recessions which were longer, deeper, and where the most vulnerable in society suffered disproportionately.

I appreciate that people from middle incomes are bearing pain right now - in fact evidence from recessions world-wide suggests that the most effective way of stimulating an economy is by providing relief to the least-affluent in society - because they are far more likely to spend than those on middle incomes.

That doesn't mean of course, that that the plight of anyone can simply be ignored as Cameron's Tories would do - hence for example the Government's support for homeowners who can't meet their mortgage payments.

I completely agree that the private sector will play a pivotal role in helping us grow out of the recession - hence for example the real help the Chancellor gave for developing green industries like those involved in carbon capture and wind eneregy. The point I was trying to make was that slashing jobs in the public sector will simply bolster unemployment, and lead to a marked deterioration in public services. For sure, further efficiencies have to be found, however.

Finally, I have to disagree with you when you reject the idea of building schools and hospitals as one way of finding us out of recession. Frankly, it's the Tories who tend to see spending on key public services as "waste" rater than investment in all our futures. After the debate on Friday, I spoke to someone who represents civil engineering in the North East - they are crying out for big public sector projects to keep their firms going during the downturn. Waiting for the private sector alone to come out of recession will be too late for them.

Anonymous said...

Alan Macnab writes....

Thanks Nick. My worry is the Government's debt mountain which is being built up.

I am not in favour of stopping major public sector projects.

Paul Cain said...

Morning Councillor

Welcome back, and thanks for your replies on an earlier thread.

Your response fails to take into account that the McBride/Draper mails were not one-offs. The last 12 years have been built on bullying, intimidation and falsehood - mainly, according to what I've read, against members of the Labour Party who dared step out of line.
You say McBride was a lone-wolf figure in Downing Street.
Surely, Brown must have known about the antics of his closest adviser. If he didn't, he's just as guilty.

As for the Budget: I should declare an interest - if I was a UK taxpayer (I live overseas) I'd fall into the new tax bracket. I spoke to my UK-based accountant on Friday and he just laughed. Hardly anyone will end up paying it.

It'll raise $1.1bn in its first year. That used to be a lot of money - about a year ago, raising a billion on any tax would be seen as major. Not now.

The deficit will be more than $600 billion in the next three years.

Your government will borrow in the next two years more money than every British government before it borrowed, combined.

The IMF this weekend calculated that it will be 2032 before the British economy returns to where it was a year ago. And that's based on Mr Darling's own predictions for growth which are, by common consent, fantasy.

That's 23 years' time.

I'll be retired and you, Councillor, will be nearly so.

My kids will be nearly 40. I'll probably be a grandfather by then.

All of this to pay for your party's grotesque social experiments of the last 12 years.

You, personally, may well end up being elected to the European Parliament in June. This is the North East, after all, where 70 per cent of the economy relies on New Labour largesse.

Elsewhere, you'll be annihilated.

I hope you enjoy the Gravy Train in Brussels. Back in the UK, no-one will have the proverbial pot to p*** in.

Mait until Moody's and Standards and Poor downgrade the UK's credit rating, which should happen any time soon.

That'll spark a real gilt strike. Either you won't be able to fund our debt, or you'll end up paying loan-shark levels of interest on the debt.

We're in a worse position now than when Healy was forced to call in the IMF, and that's before the poo really hits the fan.

New Labour has screwed up on an historic scale.

Your party is a danger to our country and its social fabric.

It's time to go. Call an election.

Anonymous said...

JD writes...

Healy wasn't forced to call in the IMF - it was very much a political decision made by the Labour leadership at the time, in defiance of the party.

When capital goes on strike, you either cave in or move in. Rather than take the toys away from the super-rich, they chose to give in - rather like the response to Brown and co in not totally nationalising the banking sector, without compensation to shareholders, on the basis that if it went under, so would everything else.

You'd be forgiven for thinking, on the basis of what the corporate media and some commenters here are saying, that the govt has run up a record deficit on a whim!

Rather than borrow from the super-rich in order to bail them out - and then pay them interest for decades to come - we should make them pay for their crazy economic system.

I don't care about the top rate of income tax, it's a sideshow as everyone knows - I care about the legal structures (banks, corporations, trusts) that allow wealth created by the many to be concentrated in the hands of the few.

Paul Cain said...

JD. Interesting comment.

You say we shouldn't cave into the super rich, but 'move on'. But you don't say how we should 'move on.'

If there's no-one to fund our debt in the form of gilt purchases, then how are we going to pay the bills?

Seriously: I'd like to hear how you'd keep the country going without foreign money.

It wouldn't be so bad that Labour had run up historic deficits if they'd delivered the utopia they promised (something so many gullible fools, including me, believed) in 1997.

Take a look around you, JD. Hardly the Garden of Eden, is it?

I don't accuse Labour of running up the deficit on a whim. I accuse them of historic incompetence and, with regards to their social engineering, malicious intent.

I don't expect you to agree with me on that: but I'm genuinely interested in your take on running the economy in the event of a capital strike.


Charlie Marks said...
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