Tag Archives: deficit reduction

Nick Clegg on the “utter nonsense” of Tory spending plans

In another strong demonstration of the differences between the Liberal Democrats and the Conservatives, Nick Clegg went on the Today programme yesterday to talk about deficit reduction and fiscal policy in the next parliament. While the Tories want to reduce the deficit by cutting spending alone, Liberal Democrats want to raise taxes on the wealthy.

From the Guardian:

Nick Clegg insisted taxes would have to rise in the next parliament. Speaking on Radio 4’s Today programme, he said: “What the Conservatives are saying is a complete and utter nonsense. There is not a single developed economy anywhere in the world that has balanced the books and only done so on the backs of the working-age poor, which Osborne has now confirmed several times he wants to do.”

As he set out his party’s plans to remove tax breaks for wealthy pensioners, Clegg also accepted that the public finances were not improving as fast as planned due to tax receipts failing to match forecasts, but he refused to say if this would require the coalition to put back its deficit plans.

He said: “If tax receipts are not as buoyant as predicted then of course that has an effect. Time will tell if that is a semi-permanent effect or a temporary blip, but it means it comes down a little less than predicted.”

Posted in Op-eds | Also tagged , and | 39 Comments

Could it really not be any clearer than this?

Ed Balls MP, Denton - (Labour Leadership Campaign) - 2010Defending the clarity of his party’s position on the deficit after forgetting to mention it in his speech, Ed Miliband said

Ed Balls talked this week about our approach on the deficit. I have talked about our approach on the deficit. No one should be in any doubt about my approach on the deficit.

My approach is clear – we are going to get the deficit down, we are going to get the debt falling and we could not be clearer about that.

photo by: Harry Potts
Posted in Op-eds | Also tagged , and | 34 Comments

Uncomfortable truths from the IFS on public spending and tax cuts but cautious optimism on economic growth

Last week, the highly-respected Institute for Fiscal Studies produced its annual “Green Budget”: its attempt to inject some realism into the national debate on the economy ahead of the chancellor’s actual budget in March.

The document makes for uncomfortable reading in parts, particularly as we head towards another general election in which the complicity of silence on deficit reduction is likely to be as deafening as it was in 2010.

IFS borrowingDeficit reduction: significant progress, but some way to go

Starting with the deficit, the IFS’s conclusions are stark. Had the government not taken steps to increase taxes and cut spending in the years since 2008, they estimate that the deficit would have reached 10% of national income by 2018-19. Because of the estimated 16.7% permanent reduction in economic capacity caused by the crash of 2008, 98% of that deficit would be “structural” – i.e. would not be expected to reduce naturally once growth picked up:

For an economy such as the UK, this level of borrowing would have been unsustainable on an ongoing basis. Public sector net debt would have increased markedly year-on-year, likely surpassing 100% of national income before the end of the current decade, and 200% within the next two decades.

Posted in Op-eds | Also tagged , , and | 30 Comments

Opinion: Son of Plan A – why are we supporting?

Economic policy is always a mixture of fiscal, monetary and political policy.

“Nick, George has come up with another of his jolly good wheezes. You remember that Plan A malarkey ..?”

Well, dear reader, you do remember Plan A, don’t you?

Eliminate the deficit by 2015; keep fingers crossed Expansionary Fiscal Contraction (EFC) works; use a 20:80 ratio of tax increases to spending cuts; provide monetary stimulus; flush out the Labour Party, and keep Vince and the ‘SDPers’ in their box.

Well, it put a spanner in the recovery-works and, with no sign of EFC or King’s stimulus working, it was pretty soon shelved …

Posted in Op-eds | Also tagged | 29 Comments

Lib Dems should aim for a budget surplus not because the Tories want to, but because it is right

All parties have a mixture of deficit hawks and doves – those who believe in balanced budgets and those who aren’t too bothered. The Lib Dems are no exception, but I think we are different in the motivations underlying these positions.

Many Tories often seem to see deficit reduction as an end in and of itself, not even necessarily because they want to see a smaller state and lower taxes, but simply because their ideology teaches that budget deficits are Bad Things.

And in recent years, some Labour figures have begun to sound like their ideology teaches that budget deficits are inherently …

Posted in Op-eds | Also tagged , and | 57 Comments

As economy begins to recover, Lib Dem members swing in favour of Coalition’s strategy

Lib Dem Voice has polled our members-only forum  to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. More than 600 party members have responded, and we’re publishing the full results.

Lib Dem members swing in favour of Coalition’s economic policies

Thinking of the current state of the economy and the Coalition’s approach, which of the following statements is closest to your own view?
(Comparisons in brackets are with the last time we asked this question in March 2013.)

    15% (-5%) – Cutting the deficit isn’t enough: alongside public spending cuts,

Posted in LDV Members poll | Also tagged | 7 Comments

5 points on Clegg’s admission that Coalition was wrong to cut capital spending

Nick Clegg in DublinNick Clegg has sparked a flurry of excitement with his admission in an interview for The House magazine that the Coalition cut capital spending ‘too far, too fast’ to coin a phrase. Here’s what he said to Paul Waugh and Sam Macrory:

“If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the Coalition Government. I think we comforted ourselves at the time that it was actually no more than what Alistair Darling spelt out

Posted in News | Also tagged , , , , , , , and | 45 Comments

Eliminating the structural deficit is aiming for the wrong target

HM Treasury logoThere is an appealing simplicity behind the idea of having a zero structural deficit. It is the policy the government is committed to, with its plans to eliminate the structural deficit. And it’s also wrong.

For all the problems in measuring the structural deficit accurately, the concept is a useful one – to measure what the deficit is, once you have allowed for where we are in the economic cycle. Or, as the FT puts it, “A budget deficit that results from a fundamental imbalance in government receipts and expenditures, as opposed to one based on one-off or short-term factors”.

Posted in Op-eds | Also tagged , and | 19 Comments

Opinion: The Conflicts of Economic Policy

Nick Clegg’s conference speech committed Lib Dems to manage debt out of the economy and implement a fair tax regime. But the objectives of economic policy often conflict with each other.

Let’s take it that there are three objectives for current economic policy:

  1. to reduce deficit and the debt it accumulates
  2. to inject demand into the economy
  3. to have a fair tax system

In the following table, I’ve had a try at evaluating recent and proposed economic policies against these objectives.

Posted in Op-eds | Also tagged and | 53 Comments

Nick Clegg says no to Tory plans for more welfare cuts

Newspapers have been reporting for months that the Liberal Democrats were not prepared to sign up to Tory plans for £10 billion of welfare cuts in a spending review that would draw up plans for spending into the next Parliament. Today’s Independent says that Nick Clegg himself will ensure that this Government only produces spending plans for 2015-16. The electorate will then decide in the 2015 election whether they want to pursue further cuts in welfare or a heavier burden of tax on the wealthy.

 The report says;

The Liberal Democrats’ opposition means the review will have to be watered down. Before the

Posted in News | Also tagged , , , , and | 10 Comments

LibLink: David Laws MP writes about the Lib Dem ambition for fairer tax

David Laws has argued at the Guardian’s Comment is Free site that the Coalition should accelerate Liberal Democrat tax cutting plans.

The government’s previous plan was for the allowance to rise in steps of £630 over the next few years, to reach £10,000 by April 2015. Clegg and chief treasury secretary Danny Alexander are rightly insisting that we look to bring forward those tax cuts. This week they seemed to attract the unlikely support of Labour’s Ed Balls. But his plan for a totally unfunded tax cut is as unlikely to convince the deputy prime minister as it is the chancellor.

The

Posted in News | Also tagged , , , , and | 28 Comments

Opinion: The Coalition are winning the economic argument

It’s a dark winter night in Westminster but the building from which a group of men emerge is still wreathed in light. The men clamber into a sleek car, which streaks away through the emptying streets. Their journey is short in physical distance, but it’s long on significance for all of them. They are serious of face and purpose as the vehicle stops by one of the quieter spots on the riverbank.

The heaviest of the men is the first to get out, he flashes a look along the river bank, and seeing it deserted, nods quickly to his companions, all of whom

Posted in Op-eds | Also tagged , , and | 30 Comments
Advert



Recent Comments

  • User AvatarJohnTilley 19th Dec - 6:02pm
    The headline " By-election update: Gains on the year " comes straight from the new book entitled simply ' 2014 '. The handwritten version turned...
  • User AvatarHelen Dudden 19th Dec - 5:58pm
    Actually I read the report and thought about it. It makes sense to settle things. An apology would still be acceptable to me. I don't...
  • User Avatarsimon 19th Dec - 5:55pm
    @ Matthew "As someone who is passionate about getting rid of Clegg and winning back the Liberal Democrats for what they used to stand for"...
  • User AvatarJenny Barnes 19th Dec - 5:49pm
    I was the "someone" who proposed an amendment about citizen's income. One of my reasons for doing so was that I see no possibility of...
  • User AvatarPeter Chegwyn 19th Dec - 5:47pm
    Glenn Andrews beat me by four minutes in pointing that out! And before anyone says that another massive dent in our local government base is...
  • User AvatarPeter Chegwyn 19th Dec - 5:43pm
    So, to flesh out the figures a little more: i) There were no Lib. Dem. candidates in just over a third of the 274 principal...