Yesterday the OECD issued a statement endorsing the UK’s comprehensive spending review.
OECD Secretary General Angel Gurría said:
Budgetary consolidation is never easy but the timing and scope of the measures balance concerns for near-term growth with the need to stop the snowballing of debt and to preserve credibility. The measures are tough, necessary and courageous. Acting decisively now is the best way to secure better public finances and bolster future growth.
Sounds good to me.
In spite of Alistair Darling halving the capital budget George Osborne has just announced £15.8 billion to build or refurbish 600 schools. The over-complex BSF programme is dead but we will have new schools.
The back up documents say:
The capital settlement will allow £15.8 billion over the Spending Review period to maintain the schools estate. Although reduced by 60 per cent over the Spending Review period, the decision to end Building Schools for the Future (BSF) will allow new capital spending to be focused on providing new places in areas of severe demographic pressure and addressing essential maintenance needs. The Government will meet the commitment to rebuild or refurbish over 600 schools from the BSF and Academies programme.
It demonstrates how bloated and lopsided BSF was. After cutting the capital allowance for schools by 60% a mere four years of education capital is still the same size as Crossrail which is one of the biggest one-off capital projects that this country has ever undertaken.
Given that in Ealing the previous administration was successful in securing and funding a site for a new school for the borough in Greenford the new administration should be well placed to make a claim on this £15.8 billion fund which is specifically tied to “severe demographic pressure”.
Listening to the Chancellor’s spending review statement. He has just confirmed that Crossrail wil go ahead. A good point in an excellent speech. We are in good hands.
Today the TUC have published a report looking at banking profits and claiming, essentially, that the banks have diddled the public out of £19 billion. It is all total nonsense of course. They are complaining about companies being able to offset losses in one year against profits in another year to lower their corporation tax burden. This is the way corporation tax has worked for decades and without it you would tax companies for profit they did not make.
In their background the TUC talk about the £850 billion bank bailout. Again this is nonsense designed to baffle the unwary. In his last budget (Box C4, page 213) Alistair Darling’s own estimate of the total loss to the UK taxpayer as a result of the bank bailout was £6 billion. He said then:
At current market prices the cost of the financial sector interventions net of fees and other income would total £6 billion …
At today’s market prices the UK government is well into profit on the transaction I would think. The £850 billion figure made the assumption that everything would go wrong and nothing would go right. Luckily life is rarely like that and the bailout was well handled.
In their press release TUC General Secretary Brendan Barber said:
Banks caused the global financial crash and triggered the recession that produced the deficit. Yet not only did they take almost a trillion pounds from taxpayers to bail them out, they are now using the losses caused by their irresponsibility to cut their tax bills for years to come.
I think that makes him bare-faced liar.
This is the letter that appears today in the Telegraph from 35 business bosses backing the Coalition’s economic plans.
SIR – It has been suggested that the deficit reduction programme set out by George Osborne in his emergency Budget should be watered down and spread over more than one parliament. We believe that this would be a mistake.
Addressing the debt problem in a decisive way will improve business and consumer confidence. Reducing the deficit more slowly would mean additional borrowing every year, higher national debt, and therefore higher spending on interest payments.
The cost of delay would result in almost £100 billion of additional national debt by the end of this parliament alone. In the end, the result would be deeper cuts, or further tax rises, in order to pay for the extra debt interest.
The cost of delay could be even greater than this. As recent events in some European countries have demonstrated, if the markets lose faith in Britain, interest rates will rise for all of us.
There is no reason to think that the pace of consolidation envisaged in the Budget will undermine the recovery.
The private sector should be more than capable of generating additional jobs to replace those lost in the public sector, and the redeployment of people to more productive activities will improve economic performance, so generating more employment opportunities.
So, each writing in our personal capacity, we would encourage George Osborne and the Government to press ahead with his plans to reduce the deficit.
In the long run it will deliver a healthier and more stable economy.
Will Adderley
CEO, Dunelm Group
Robert Bensoussan
Chairman, L.K. Bennett
Andy Bond
Chairman, ASDA
Ian Cheshire
Chief Executive, Kingfisher
Gerald Corbett
Chairman, SSL International, moneysupermarket.com, Britvic
Peter Cullum
Executive Chairman, Towergate
Tej Dhillon
Chairman and CEO, Dhillon Group
Philip Dilley
Chairman, Arup
Charles Dunstone
Chairman, Carphone Warehouse Group
Chairman, TalkTalk Telecom Group
Warren East
CEO, ARM Holdings
Gordon Frazer
Managing Director, Microsoft UK
Sir Christopher Gent
Non-Executive Chairman, GlaxoSmithKline
Ben Gordon
Chief Executive, Mothercare
Anthony Habgood
Chairman, Whitbread
Chairman, Reed Elsevier
Aidan Heavey
Chief Executive, Tullow Oil
Neil Johnson
Chairman, UMECO
Nick Leslau
Chairman, Prestbury Group
Ian Livingston
CEO, BT Group
Ruby McGregor-Smith
CEO, MITIE Group
Rick Medlock
CFO, Inmarsat; Non-Executive Director lovefilms.com, The Betting Group
John Nelson
Chairman, Hammerson
Stefano Pessina
Executive Chairman, Alliance Boots
Nick Prest
Chairman, AVEVA
Nick Robertson
CEO, ASOS
Sir Stuart Rose
Chairman, Marks & Spencer
Tim Steiner
CEO, Ocado
Andrew Sukawaty
Chairman and CEO, Inmarsat
Michael Turner
Executive Chairman, Fuller, Smith and Turner
Moni Varma
Chairman, Veetee
Paul Walker
Chief Executive, Sage
Paul Walsh
Chief Executive, Diageo
Robert Walters
CEO, Robert Walters
Joseph Wan
Chief Executive, Harvey Nichols
Bob Wigley
Chairman, Expansys, Stonehaven Associates, Yell Group
Simon Wolfson
Chief Executive, Next
You have got to admire the new shadow Chancellor Alan Johnson. His chutzpah is quite astounding. On the Andrew Marr Show this morning and in the Observer he has been talking about an alternative Labour plan to increase investment on infrastructure – he is talking about £7 billion. See Observer piece here. He fails to mention of course that it was his predecessor, Alistair Darling, who halved the nation’s capital programme in the first place in December last year in the Pre-Budget Report. If you go to table B13 on page 189 of the December 2009 Pre-Budget Report you can see how public sector net investment was due to be halved by Darling, see below (click to enlarge).
Darling made such a shocking cut to the country’s capital spending programme that during George Osborne’s budget speech he said:
We have faced many tough choices about the areas in which we should make additional savings, but I have decided that capital spending should not be one of them.
There will be no further reductions in capital spending totals in this Budget.
But we will still make careful choices about how that capital is spent. The absolute priority will be projects with a significant economic return to the country. Assessing what those projects are will be an important part of the autumn spending review.
There has already been the announcement of the severe curtailment of the Building Schools for the Future programme. This week as part of the spending review we will no doubt hear about severe curtailment of investment in social housing whilst key strategic transport schemes, such as Crossrail, which should feed through to step changes in economic performance, will be retained.
Today on the Andrew Marr show Johnson showed himself to be a total scuzz. He said:
Well I think Alistair Darling’s prescription was right. Alistair Darling incidentally took this country through the most difficult, horrendous global economic downturn that we’ve faced. His prescription for how we reduce the deficit whilst focusing on jobs and growth and without having the kind of economic masochism that I think many in George’s party would like to see – i.e. let’s take this opportunity to shrink the state, which I think is a large part of the philosophy here. So Alistair’s plan was about concentrating on jobs and growth at the same time as you bring the fiscal deficit down.
Johnson wants to have his cake and eat it. The Darling plan was predicated on cutting investment spending yet Johnson wants to boost it. Darling bought his credibility at the cost of halving capital spending. Johnson is a snakeoil salesman.
Ed Miliband proved himself a lightweight this afternoon.
Back in May the new Coalition published its coalition agreement. After a 70 odd word preamble the first issue it pointed to was deficit reduction, see here. It said:
The parties agree that deficit reduction and continuing to ensure economic recovery is the most urgent issue facing Britain.
Meanwhile, Ed Miliband, who has had the best part of five months rather than a matter of days to decide his priorities, spent 2,350 words of his leader’s speech this afternoon rambling around his personal history and recent Labour failures before he got to the biggest issue facing our country, the deficit.
He mentioned the word generation 41 times and used the phrase “new generation” 15 times. Miliband wants to have his cake and eat it. On the one hand he refers back to his parents’ wartime experiences which makes him a rather late baby boomer. Then he talks repeatedly about being the new generation. Unless I am missing something the boomers have been running the country since John Major was prime minister. Ho hum.
Today the old chancellor, Alistair Darling, has been trying to hold the Labour line on the deficit – his proposal was that the governmnet should aim to halve it over four years. Deficit deniers such as Ed Balls, who thinks we should keep adding to our bills at the current rate of £150 billion a year for another couple of years, and Ken Livingstone, who is totally wedded to the evil Tory cuts fantasy story, keep trying to pull Labour in the other direction. History will record that Darling was a man of honour.
Economic recovery is underway, unemployment has stabilized, and financial sector health has improved. The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability. The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery. Fiscal tightening will dampen short-term growth but not stop it as other sectors of the economy emerge as drivers of recovery, supported by continued monetary stimulus.
The new Labour party line of the deficit will be a key test for Ed Miliband.
There is a stunning graphic in the Sunday Times today showing how close the Labour leadership really was.
David was ahead in the first round 34.3% to 37.8%. The gap was 3.5%. When Abbott dropped out David was stayed ahead 38.9% to 37.5%. The gap was down to 1.4%. Although Abbott only picked up 7.4% of the overall vote a big majority of her supporters must have marked Ed second to make this size of change.
When Burnham dropped out David was ahead 42.7% to 41.3% – the gap held at 1.4% so we know that Burnhamittes were evenly divided between the Milibands.
When Balls dropped out David lost his lead 49.35% to 50.65%. The David lead goes from 1.4% to a lag of 1.3%, or 2.7% in total. So the Ballsittes were into Ed but not as much as the Abbottittes.
It was all very close and all three of the minor candidates had to drop out to get a winner. But, in the Labour leadership contest not all are equal. In the Conservative and LibDem parties it is one member, one vote. With Labour the rule is one ordinary member, one vote but one Leftie activist, many votes.
Take Labour Acton councillor Mik Sabiers. He tweeted some days back:
Is casting his votes for the Labour leadership election – Ed Miliband is my first choice
Note votes, not vote. As I have noted before Sabiers claims membership of three unions plus the Labour party. His register of member’s interests entry lists him as being a member of three unions: Unite, GMB and NUJ.
The voting results for Labour MPs and MEPs are all here. I am not sure how anyone in the Labour party thinks there is any benefit in publishing these. They are quite fascinating though for a political nerd like me.
The real hard nuts just ranked their favoured candidate first and did not vote for anyone else.
Diane Abbott voted for herself and no-one else. Excruciatingly she only got 7 first preferences including herself. All of these came from members of the hard left Socialist Campaign Group of MPs.
The only person to give her his one and only first preference vote was fellow left-winger John McDonnell. Two other hideous lefties, Jeremy Corbyn and Linda Riordan, voted Abbott first and Ed Miliband second.
Left wingers always fight like cats and dogs. Although half of the 14 strong Socialist Campaign Group ranked Abbott first, 4 gave her no ranking at all. One marked her 5th, one 4th and one 2nd.
As a result Ed Miliband actually picked up more points from the Socialist Campaign Group than Abbott. If you weight 1st place with 5 points, 2nd place with 4 points, etc. You get Abbott with 42 out of a possible 70 points from the Socialist Campaign Group against Ed Miliband’s 48 points. Ed really is the lefty’s fave. He got five first votes, five second votes and one third vote.
Phil Taylor 