Remember this recent headline from the BBC?
‘Colossal’ spending cuts to come, warns IFS
When Osborne made his Autumn Statement the BBC went into overdrive to undermine any perceived good news. We know of its blatant comparison of the 1930’s depression to what they predict will be the outcome of his policies but they also hyped the IFS’s ‘revelation’ of those ‘colossal spending cuts’ after the election.
But hang on…isn’t that very old news? Haven’t we known for a long time that the majority of the cuts would come after the 2015 election? So why the hype from the BBC?
This was the New Statesman in 2013:
Austerity after 2015: why the worst is yet to come
This was the BBC itself in March 2013, reporting the IFS’ words….which have a familiar ring to them:
Budget 2013: ‘Cuts deferred’ until after elections
Or this from Politics.co.uk in 2012:
Never-ending austerity? More cuts to come after 2015
Nothing new there then…so why make such a song and dance about these cuts now in the run up to the election as if they are something new and terrible to be inflicted upon us completely unuspecting victims?
The IFS itself seems a bit confused as to what caused the slow reduction in the deficit….this is their analysis:
It is important to understand why the deficit hasn’t fallen. It is emphatically not because the government has failed to impose the intended spending cuts. It is because the economy performed so poorly in the first half of the parliament, hitting revenues very hard.
Oh right….poorly performing economy at the beginning of the Parliament…or is it? Here is the other explanation…from the IFS in the same analysis by Paul Johnson:
The relatively modest fall over this parliament is largely explained by increased spending on social security, especially pensions.
So is it a poorly performing economy or welfare spending caused by low wages, caused by immigration, and pension raises that kept the borrowing figures up?
You might look at Robert Peston’s honest appraisal of our economic situation…..note in particular these words which have long since been forgotten… ‘The clean up will take years. And there is no quick fix…. What became clear in 2008 is that we will have to find a way of paying much of that debt back.
That will take at least a decade.’
A decade…so by 2018…..as per the latest budget statement.
It is a very enlightening and honest look at the problem and consequences of debt, government spending and how it is funded….unfortunately it is an analysis that the BBC has always ignored, presumably as its diagnosis and prescription are a direct challenge to the BBC’s favoured narrative of high government spending on public services, welfare and infrastructure projects regardless of where the money comes from.
Here are Peston’s thoughts from his book ‘How do we fix this mess?’…..
How do we fix this mess? I don’t know. But don’t stop reading now. Perhaps if we have a clearer understanding of what went wrong, we’ll have a better idea of what needs to be done.
We will be right in the middle of the jungle, observing how bankers, regulators, politicians – and, oh yes, most of us – were by turns greedy, gullible lazy and short-sighted, and how we wilfully refused to see how our improving living standards were not being earned in a sustainable way.
We failed to rise to the challenge of globalisation.
We did not work harder and smarter.
Instead we borrowed.
And now as a nation, we have to pay back much of the debt, which inevitably makes us feel poorer, and will continue to do so for years to come.
The clean up will take years. And there is no quick fix.
We have allowed others, our governments and the so-called authorities, to take us from boom to bust.
I confess, during much of the journey, I had little idea we had taken a wrong turning….but as we headed for the swamp I succeeded in spotting the looming disaster and shouted out a warning: I was largely ignored and was even asked to shut up.
I am not going to pretend there is a road to Shangri-La, where we will suddenly find ourselves becoming richer and richer again.
We tried that road in the late 1990’s and early years of this century, and it was the road to ruin.
Boom and bust will be with us forever.
It was our foolish conviction that the smooth road to sunny uplands would go on forever which got us into such trouble.
The Future’s Overdrawn
Whether we own up to it or not, we can’t go on forever living on China’s credit.
What became clear in 2008 is that we will have to find a way of paying much of that debt back.
That will take at least a decade.
And when we repay debt, we’re spending less. Which means economic activity slows down, growth grinds to a halt.
It is reasonable to assume that growth will be as little as 1% in the coming 10 years….which wouldn’t look so bad after a contraction of 6.3% in output during the 2008-09 recession.
Cuts in public spending, including in benefits and tax credits, were almost certainly inevitable and have indeed followed.
Since 2008, the UK’s aggregate debt has been shuffled, not repaid.
The government kept spending to prevent recession turning into an extreme slump while tax revenues were shrinking.
When essential public services start to be financed through borrowing rather than tax, it is immensely difficult to cut the borrowing.
Little of this is a surprise. The same Tory team who promised in the past to match Labour in ‘sharing the proceeds of growth’ have no intention of making significant spending cuts. Labour don’t intend any spending cuts. One is better than the other but neither intends to be fair to savers or the prudent.
If you define austerity as spending more this year than you did the last then we’re well and truly in it. What we have is a spending problem and too many sacred cows. I like to call it ‘faux-sterity’. No doubt the BBC will be hitting up the thesaurus again after draconian, colossal, monstrous etc have all been used up.
Clearly revenue is not the issue. If any family in the UK had to reduce their spending, by say 5%, they could have it all sorted before lunchtime.
http://www.statista.com/statistics/275325/government-revenue-and-spending-in-the-united-kingdom/
‘No doubt the BBC will be hitting up the thesaurus again..
Forgive an OT on the comment (bar this fine observation), thread, and even site focus, but I just had my latest Snowjob from Ch4, and they seem to be cranking it up too….
Jon here,
UK storm warnings as ‘weather bomb’ hits
So it’s arrived – and it’s rough. The north-west of England, Northern Ireland and much of western Scotland is being lashed by strong winds and heavy rain triggered by the “weather bomb”. Waves off the Scottish coast near Oban were reported to be the highest in the world at one point today.
Is any of this verified?
I constantly follow wave heights, as my sport depends on ocean conditions. It’s not rare at all for open ocean swell heights in the north atlantic to be the highest on the planet at this time of year.
http://forecasts.surfingmagazine.com/#place=0_179.5_1_1092_period_none_satellite_-1
Watching this rubbish on Channel 4 news last night, they tried so desperately to hype it all up, for ages. It just didn’t wash – nothing, really, to see. They are awful, as bad as, if not worse than, the BBC
If the sodding bbc like rehashing old news perhaps they could remind all of us of the vileness of the previous labour governments; not just the 13 years of the blair and brown destruction.
Even Balls has admitted that spending cuts are required. If Cameron has a decent team he could make some use of the split between what the rich posh boys at the BBC are saying and what the rich posh boys on the Labour front bench are saying.
Of course once in power don’t expect Balls to cut anything except the military and the police. His plan to balance the books is to call any spending over income investment and move it to a different set of books.
Actually some economists were saying that the damage to our economy was so severe, the recession, so deep that it would take a generation to put things right…and they were talking of 2030.
Newsnight was put in its place tonight when an economist told La Maitlis that the Government were employing the right approach, running with a deficit in the early years (of recovery and there is a recovery) to stabilize the economy. Worse for Newsnight he declared that the Government’s approach had crediblity.
I bet Maitlis won’t sleep tonight…or she might do a Gordon…’Who put me with that economist?…was it Sue?’
This morning on Radio Five Live, Nicky Campbell was interviewing Ed Balls about the spending cuts that a future Labour Government would impose in order to cut the deficit. To his credit Campbell did argue that the last Labour Government was responsible for the deficit, a situation not helped by Gordon Brown’s spending spree in the run up to the last election, when he knew that he was unlikely to have to deal with the problem in the future. Balls was his usual disingenous self and tried to argue that it was entirely the fault of the then world recession! Balls seemed to think that a future Labour Government would ensure that wages would rise, without explaining how this would be accomplished, thus increasing the amount of tax revenue going to the government, which would wipe out the deficit! When Adam Parsons argued that Britain’s economy was already the best performing one in Western Europe, Balls had to fall back on his usual bluster and hyperbole. It was only Rachel “please teach me some manners” Burden who tried to lay the entire balme on Nigel Lawson’s stewardship of the economy! Judging by the questions asked by Campbell and Parsons, it would appear that some of the journalists at the BBC are beginning to have second thoughts as to the potential impact that a Balls/Milliband economic policy might have on the future growth of this country.