Source: BOMJust a quick post to point out a scandal that has yet to break properly. Future Private Finance Initiative liabilities, according to the latest edition of Private Eye (I'll scan the article when I have a moment), are now estimated to stand at a truly terrifying £246 Billion. This is expensive (privately) borrowed money, not the cheap government kind, so the interest alone on this vast, hidden debt will be monstrous.
Any attempt to tackle the debt crisis by any future government is likely to be scuppered by these numbers, unless they are taken into account too and the pay-down rates recalculated accordingly. As the Eye says:
"As with any dodgy pyramid scheme, the day of reckoning of course eventually arrives. And now it has done, with cuts demanded from public service budgets already crippled under the weight of 640 PFI deals signed since the mid-1990s - most of them under the "Enron Chancellor", Gordon Brown." (Eye 1247, p.5)Clearing up Brown's cataclysmic shambles will be no mean feat for any future government. But two things have to happen before the rebuilding can begin: 1) Brown and this criminally awful Labour regime must be eliminated - quickly, and 2) The next government must be absolutely honest about the scale of the problem.
My own view is that nothing short of a thorough, no-holds-barred "national audit" is required after number one has been achieved, in order that number two can be possible. Interesting times.
I would favour a 'Domesday' budget with everything laid on the table, nothing spun or kept off balance. The encouraging thing is that Osborne seems keen on this as it also will provide his chancellorship with a bit of a political safety net. He can go out and say how bad it really is and then won't have to put up with the 'baby-eating tory' crap when it comes to cutting public spending (and increasing the basic rate of tax for a few years)...though Labour and the Mirror will try their best on that front.
ReplyDeleteExcellent ref. to the "Domeday" book, UB. That is exactly what is required - a total, transparent assessment of the state of the nation's wealth (such as it is), followed by genuine action on the structural deficit, not just the national debt.
ReplyDeleteAs you say, some hard-nosed decisions will have to be taken vis-a-vis tax. Much better the Tories take them, as I believe, you agree ;)
The neo-Keynesian morons in Labour, the Daily Moron and Grauniad (and everywhere else) can bleat all they want - just before they go f@*& themselves. It's their bloody fault, no matter what they say.
It never would have happened under the Tories - AND LABOUR KNOWS IT! (Excuse the shouting, but it winds me up somewhat :)
I've no doubt there would still have been a recession had the tories been in power but the defecit and national debt levels would have been substantially smaller allowing a decent stimulus to be applied to the PRIVATE (A dirty word in labour circles) sector and with a stronger recovery. Hell, if Blair had shown some sac and replaced Brown after the first term we may not have been in as much trouble. Had they continued to largely follow Clarke's spending plans (with modest real-terms increases in certain area's though only with the accompanying reforms) then they could have had the healthiest economy on the planet. But no, not for them...and now we're all paying for it. It's about making the smart choice, not the one that'll look good in the budget day leaks.
ReplyDeleteTake tax credits for example. I'm waiting for the revenues assessment to come back with regards to me and my new job. I'm certainly eligible and no doubt will receive quite a bit from it (will effectively negate any income tax I pay) but surely it would make more sense to raise everybody's personal tax allowance (The one libdem policy I actually liked) and make savings on the beauraucracy of administering this system. Obviously they'd probably have to rejig the basic rate and higher rate to make sure the better off didn't suddenly get over £3,000 extra in their back pocket. But it's a simple, practical and more cost effective solution than the present one.
Also, the tax cerdit is a dis-incentive to hard work. Why toil away when you can do the bare minimum and get the same amount back? It's all part of labour's construction of the client state.
Well said.
ReplyDeleteI think you're right, Brown's Big State tax system must indeed be the other target of the new Treasury. But while the Toynbees of this world are calling for a Thirties style supertax on the "the rich" (as if the Laffer curve is some sort of myth), it's essential that the Tories don't forget that high earners pay the most tax *only if they're actually here to pay it* (!) and that targeted tax relief, such as for mortgage holders (Crash Gordon abolished MIRAS in 2000, we all remember), is socially positive, anti-clientist and aspirational. It also pays for itself because of the subsequent increased activity in a non-overheating housing market.
That's just one example. Dismantling the ludicrous current, centralist arrangements and targeting tax breaks where they'll have the best effect has to be the principle.
I still expect rises in the basic rate, though. That's the only way enough money can be raised to start to pay down the debt and save the economy long term.
Whichever way you look at it, we're all going to feel the hurt for the next few years, but that hurt will managed by the Tories and chaotic under Labour.
I just hope people never forget who's responsible for this disaster when the Tories have to start taking these decisions: Gordon Brown.