Tag Archives: Autumn Statement 2012

What’s wrong with the Chancellor’s Autumn Statement?

There are three huge defects in the Chancellor’s autumn statement

1 Technical

The Chancellor fundamentally believes that the government budget can and should be balanced, or even run in surplus. This basic accounting assumption drives his whole thinking. But facts prove him, and the traditional thinking of the whole financial establishment, wrong on this. He has been unable to eliminate the deficit. He will not be able to eliminate it. In modern high technology, high productivity economies, deficit is inevitable, and manageable.

There’s a huge problem in thinking here. The Chancellor approaches economic policy like an accountant, rather than as an economist. Books should balance. He talks about what we can afford, purely in financial terms. But it’s not money which gives value to the real economy, but rather it’s real economic activity which gives money its value. Economic activity creates financial value, and not the other way round. What we can afford has to be measured in real resources of people, skills, natural resources, technology and capital assets. A thought experiment demonstrates this. If it were possible to plug a machine into the earth to produce the whole GDP without labour and therefore without wages, then the money vouchers the government would have to allocate would all be a total financial deficit each year. Money does not have to be backed either by gold, or by the sale of government bonds, but only by output GDP. Deficits are here to stay. Facts support this hypothesis.

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Passing the buck for the cuts

George Osborne, and the Tory Party for that matter, are lucky so and so’s – even jammy, as they used to say where I come from. The goings on in Parliament yesterday illustrate perfectly why the government can make itself virtuous by not doing what it said it would only a few weeks ago. Not only are Tax Credits safe for the time being (although how long we the tax payers should continue to subsidise employers is debatable); but also Police Budgets are to be protected, thanks to the £27bn the Chancellor has suddenly found from somewhere.

We can speculate about the wheels eventually coming off the Tory wagon; but don’t hold your breath. Even with a slim majority it is unlikely that there will be enough by elections between now and 2020 for the balance of power to shift decisively, and, in any case, at 42% in one recent opinion poll, it’s unlikely the Tories will lose the plot.

What worries me more is how local government is going to cope with the cuts still to come its way over the next five years unless another non U turn might be in the pipeline. My authority, which has responsibility for Adult Social Care, can now, in theory, raise its portion of the Council Tax by 3.99% without the need for a referendum. That increase works out at about 83p per week for a Band D property in Lincolnshire and would raise around £9 million of which around £4 million would be ring fenced for Adult Social Care. However, as government grants will continue to be reduced that means that, as far as my county is concerned, things will, at best, more or less stand still.

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Susan Kramer responds to the Autumn Statement in the Lords

New Liberal Democrat economy spokesperson responded to the Autumn Statement in the Lords yesterday. Here’s her speech in full.

It is always a pleasure to follow the noble Lord, Lord Davies of Oldham, but I confess that he disappointed me today. He did not throw anything, so we have missed out on the drama of the other place. I was also somewhat disappointed in the Budget. It is less generous than it appears on first viewing: we still have a £12 billion cut in welfare. If I understand it correctly, that will now happen as people transfer into universal credit. I am sure that the Minister will advise noble Lords about that—it would be good to understand how it will work. Of course, I am absolutely delighted that the Chancellor reversed his plans to cut tax credits for poor working people. I think, with some interest, that had the Chancellor been a Member of this House a couple of weeks ago, when the relevant statutory instrument was debated, he would have supported neither the Conservative nor the Labour Motion, but the Liberal Democrat fatal Motion.

We are also pleased with the up fronting of money for the NHS in this Budget, especially the investment in mental health. That is welcome, but can the Minister confirm whether that £600 million is new money for mental health and does not contain any former promise within it? We are supportive of stamp duty on buy to let and very supportive of the increased spending on infrastructure. We note that the Chancellor partially explained that that was because borrowing is now cheap. That is what we have been saying for weeks, so we are very glad that he has listened to that argument.

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Baroness Floella Benjamin writes…Tax break for children’s programmes is great news

I am overjoyed with the wonderful news that the Chancellor has extended tax breaks to children’s television productions. This is something I have campaigned on for years as Chair of the All-Party Parliamentary Group for Children’s Media and the Arts. I have asked questions and spoken on this issue in the House of Lords, supported by Pact (Producers Alliance for Cinema & Television) and the Children’s Media Foundation.

I always say, ‘Childhood lasts a lifetime’ and we can all remember our favourite children’s television programme, they hold fond memories, which are part of our formative years.

But even though children’s programmes are much loved, they are often undervalued and those who contribute to this sector of the creative industries are rarely credited.

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Opinion: Time for Lib Dems to change the debate on welfare

autumn statementOn Friday evening, a page entitled “We’re interested in your views about the fairness of our benefit reforms” popped up on the Conservative party website. It invited people to comment on the decision announced in the Autumn Statement that the Coalition want to limit increases in most welfare benefits by 1% for the next three years.

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Michael Moore MP’s Westminster Notes

Every week, Liberal Democrat Secretary of State for Scotland Michael Moore writes a column for newspapers in his Borders constituency. Here’s this week’s version. 

Autumn statement

The Chancellor gave his Autumn Statement last week which outlined the decisions the Government is taking to boost growth, cut taxes for those on low incomes and ensure the richest pay their

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What Lib Dem members think of the Chancellor’s Autumn Statement announcments

Lib Dem Voice polled our members-only forum recently to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Over 500 party members have responded, and we’re publishing the full results.

Lib Dem members back every single measure — but split over cuts to real-terms benefits

LDV asked: Do you support or oppose the following measures in the Autumn Statement:

Increasing the basic income tax threshold by a further £235 to £9,440

    Strongly support 76%
    Support 21%
    97% Total Support
    Oppose 2%
    Strongly oppose 0%
    2% Total Oppose
    Don’t know

Posted in LDV Members poll and News | 35 Comments
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Recent Comments

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