A report from the government's own Office of Budgetary Responsibility has said the government is going to have pay out £1.5bn more in benefits next year than they thought due to their public-sector job cuts and increase in VAT. This proves what people like myself, Tyron and Scott have been saying all along - not only are the cuts unfair, they're not even going to bring down the deficit, as throwing people onto the dole only means more benefits paid out and less tax paid in from people.

 

From the Guardian:

 

http://www.guardian.co.uk/politics/2011/ja...ition-austerity

The increase on the VAT is going to hurt a lot of people

A report from the government's own Office of Budgetary Responsibility has said the government is going to have pay out £1.5bn more in benefits next year than they thought due to their public-sector job cuts and increase in VAT. This proves what people like myself, Tyron and Scott have been saying all along - not only are the cuts unfair, they're not even going to bring down the deficit, as throwing people onto the dole only means more benefits paid out and less tax paid in from people.

 

From the Guardian:

 

http://www.guardian.co.uk/politics/2011/ja...ition-austerity

 

In a nutshell... WTF is the point in cutting jobs, putting a potential of 3.5- 4 million on the dole, who wont be paying taxes or contributing to the system... It's the "economics" of the braindead IMO... And this whole supposition that the private sector can absorb this is absolutely bogus, we've just had news that high street retailers have taken an absolute dump in terms of sales over the Xmas period, and HMV are actually looking at closing down 60 stores, so the Private/Retail Sector appears to be in pretty bad shape too... This is exactly the $h!te that happened in the 80s - Tories closed down the factories, steelworks, pits, shipyards, etc, and very, very few of the people made redundant in these industries ever worked again... History repeating itself....

^ Indeed... and it's worth pointing out that, during the Thatcher era, government spending actually ROSE in real terms - even though funding for schools and hospitals plummetted... the reason for that rise was because they had to massively increase benefit payments due to their policy of mass unemployment - and the ConDemalition is repeating the mistake. Trying to cut deficits by axing jobs is always going to be a self-defeating vicious circle.

A lot of companies seem to have realised that mass redundancies often don't make sense in the longer term. The cost of redundancy payments plus the cost of training new staff when they start to recruit again can outweigh the cost of keeping people on - possibly working fewer hours - through difficult times. Cameron and Osborne clearly don't take the same view.

I dont really get politics but but surely its Labours fault as well we are in this mess as they were in power throughout the last 10 years and were $h!t?

I dont really get politics but but surely its Labours fault as well we are in this mess as they were in power throughout the last 10 years and were $h!t?

 

We're in nowhere near as much of a mess as the current government pretends - they just want an excuse to cut spending and cut help for the poor so that they can go into the next election promising to cut the taxes of their rich friends, like the Tories always do. If you look at America, they're in proportionally more debt than us, yet Obama has said sensibly that he's not even going to start cutting spending or raising taxes for atleast two years (although the idiot Republicans might have something to say about that), and their not going into Greece-style meltdown.

A lot of companies seem to have realised that mass redundancies often don't make sense in the longer term. The cost of redundancy payments plus the cost of training new staff when they start to recruit again can outweigh the cost of keeping people on - possibly working fewer hours - through difficult times. Cameron and Osborne clearly don't take the same view.

 

And on the subject of redundancies... my flatmate's dad who is pretty high up in a primary care trust is about to be given a big fat pay-off as part of the government's NHS reorganisation privatisation at the taxpayer's expense, while he's already being contacted by local GPs about doing the exact same job as he's doing now when they set up their "consortium"... meaning the government will be paying out a lot more money to him than if they just left the damn thing alone. I'm sure that'll help bring down the deficit.

I dont really get politics but but surely its Labours fault as well we are in this mess as they were in power throughout the last 10 years and were $h!t?

Of course Labour aren't entirely blameless but the fact that many other countries are in a similar situation shows that it isn't all their fault.

 

I dont really get politics but but surely its Labours fault as well we are in this mess as they were in power throughout the last 10 years and were $h!t?

 

Put simply - we're totally up America's and the International Financial Market's collective arse, and have been since the 80s.. Broon and Co didn't help, but NEVER forget this financial crisis had its origins in the International banking system and financial markets...

 

You would be shocked by how little room for manoeuvre there is for democratically elected, mainstream governments to actually break free from being held hostage to the Capitalist system.. Its really quite disgusting actually and it just proves to me that a vote every four or five years is a waste of time...

 

Which is why, in my opinion, this country needs to reject mainstream "democracy" in favour of more radical, revolutionary politics... Wont happen though, because too many people just want to be "safe", even though the Capitalist system doesn't represent their best interests... The media also lied to us daily that taking power back from the politicians or taking to the streets and taking direct action is somehow "anarchy" or is a bad thing....... Bollocks it is... People taking to the streets and taking direct action was the only method by which working classes and women were emancipated into the political process in the first place. ..

 

 

 

This article by Michael Burke in the Guardian is probably the best demolition of the government's various claims about their economic policy: it's succinct and to the point, and manages to expose as lies the government's claims that VAT was unavoidable, that they should get credit for the relatively strong economic recovery, and that slashing spending is the best way to bring down the deficit:

 

The Tory-led coalition attempts to justify its regressive decision to hike VAT by claiming that Labour would have to increase either income taxes or national insurance (NI) as alternatives to its policies.

 

This disguises the fact that the government is simultaneously cutting income taxes in real terms by freezing thresholds and the upper earnings limit as well as cutting national insurance contributions – but only for employers, not employees. In the next financial year the Treasury estimates that the VAT increase will yield an extra £12.1bn in revenues. All of this is cast in the name of a vital contribution to deficit reduction. But the income tax measures, which disproportionately benefit the higher paid, as well as the NI cut represent an estimated loss to the exchequer of more than £6.6bn. There are also a host of additional tax cuts or freezes, including a cut in corporation tax, small business profits and council tax which together will amount to just under £12.6bn in the financial year 2014/15, according to official estimates. This is almost exactly the same as the expected yield then from the VAT hike of £13.45bn.

 

Therefore these policies choices are not about deficit reduction at all. They constitute a reordering of the tax system in favour of high earners and companies at the expense of middle income earners and the poor. Even David Cameron and Nick Clegg accepted this is true of increasing VAT, or at least they did before taking office. But the regressive cuts in taxes on profits and higher earners have gone almost unnoticed. Combined with ferocious cuts in benefits and services on which the poor and vulnerable depend, they represent a huge transfer of wealth and incomes from the poor to the rich. One key beneficiary of the tax cuts will be the banks, where the cut in corporation tax will more than outweigh the bank levy.

 

The question arises as to whether these policies represent such a threat to the recovery that they will produce a double-dip recession. Double-dip recessions are extremely rare, with economists prone to confusing a mid-recession rise in unwanted factory stocks for a recovery and then expressing shock when the recession continues. The very fact that most economists concede this extremely rare event is a serious risk because of current government policy confirms that this is an extremist government.

 

The survey's consensus is that the main reason the government would probably escape a new recession was that the recovery had sufficient momentum to avoid a deep double-dip. The source of that momentum is a modest increase in government spending in the March 2009 budget, the Labour government's response to the crisis.

 

It is absurd for the government to claim credit for the stabilisation of the economy because the recovery was nearly a year old before the ink was barely dry on its own June 2010 budget. Further, because of the time lag that occurs between government decisions and their implementation, government spending was still rising in the latest data. Although output remains well below its peak before the slump, total government spending directly accounts for 60% of the recovery which began in the last quarter of 2009, and had the effect of inducing a modest private sector recovery. Job losses were much lower than both economists' and official forecasts. It is routinely asserted that the deficit is deteriorating, with Simon Jenkins today arguing that the deficit is "rising this winter to its highest peacetime level". The truth is that public sector borrowing in the first eight months of this financial year is £4.9bn lower than the same period a year ago, reflecting a rebound in tax receipts.

 

This highlights the effectiveness of government spending to revive the economy and close the deficit. It is highly improbable that the coalition's diametrically opposite policy will also work. But economic recovery and deficit reduction are not the real priorities at all. Taking from the poor to help the rich is the guiding principle – operating like Robin Hood in reverse.

 

http://www.guardian.co.uk/commentisfree/20...ional-insurance