Cuts what cuts?

Governmnet spending this year in real times will be more than in 2005; Sky's Jeff Randall makes the point, when will anyone on the BBC?

Two articles on 'the Tory CUTS'

I'm off today so here's a few linked articles about the Tory CUTS that I think you should read.

Tom Montgomerie at Conservative Home wonders

'If the BBC employed a few more Conservatives, it might occasionally run stories that examined the wastefulness and inefficiency of the bloated state'

Here's an extract:

'If the BBC employed more people who thought as taxpayers, rather than as public sector employees, this is the kind of question they would ask...

* "Where are the BBC investigations into why health outcomes in Scotland are no better than at hospitals in England and Wales, even though the Scottish NHS gets more money?
* Where is the report on the Ten O'clock News that tries to understand why French suppliers get more profit out of their contracts with the British state than they receive from their own government?
* Where are the Newsnight interviews that explore why some local authorities are able to deliver exactly the same, or even better, public services at a much lower cost than others?
* Where is the Today programme outrage at the fact that public sector workers are now better paid than their private sector counterparts, and have retained greater job security, more generous pensions and shorter working hours?
* Where is the Five Live survey into why businesses and entrepreneurs are leaving the UK because the taxes necessary to pay for the wasteful state are making Britain internationally uncompetitive?"'

Meanwhile Jeff Randall in The Telegraph writes

'The unions are squealing, but the so-called spending cuts are nothing of the sort... Think back to the spring of 2005 – just five years ago. Britain's social infrastructure did not seem so bad then. I do not remember the place falling apart. In Mr Brown's election-winning budget of that year, he promised to spend £519 billion, boasting of the triumphs all that lovely lolly would deliver.

In those days, debt interest was £26 billion a year, so there was a net spend of £493 billion. Was that an example of Mr Brown penny-pinching? He did not think so.

Now fast-forward to Mr Osborne's June Budget and his spending forecast of £696 billion for 2010-11. Deduct £44 billion debt interest, and that leaves a net outlay of £652 billion.

Lots of tricky numbers, I know, but stick with me, because this is a horror story worthy of a Victorian "penny dreadful".

Let's compare £652 billion in 2010 money with £493 billion in 2005 money. That is, adjust the former for five years of inflation. Which is bigger?

According to my friends in the economics team at Deutsche Bank, £652 billion today would have been worth about £561 billion in 2005.

You get the drift. The Coalition is spending more in real terms than Mr Brown, the darling of Labour's tax-and-waste brigade, did in an election year.

How is it that we managed to cope nicely then, but are now, according to TUC doom-mongers, facing a public services apocalypse?

First, because the NHS and foreign aid have been ring-fenced from cuts by the Coalition, the pain of retrenchment will fall disproportionately elsewhere.

Second, it's remarkable how, when it comes to government spending, the maximum quickly becomes the norm – and then the minimum. For recipients of government largesse, yesterday's luxuries are quickly redefined as today's necessities.

Third, the welfare bill has jumped sharply in nominal and real terms.

And finally, bereft of ideas for responsible budgeting, Labour and its union paymasters are reduced to the politics of fraud. '

Jeff Randall's words not mine.

Jeff Randall is not alone in pointing out this cuts fallacy and it is one that I remember from the early 1980s as well.

Pity the BBC

After a day of claim and counter claim the BBC now have to report that:

'Business groups back Tory National Insurance plans

Britain's main business groups have waded into the row over Labour plans to increase National Insurance.

The British Chambers of Commerce, the CBI and five other organisations said the Tories "deserved credit" for their opposition to the planned increase.

Earlier, 23 company bosses had spoken out in favour of the Tory position.'

Of course the BBC have to shoehorn Peter Mandelson's earlier accusations that "Mr Cameron and Mr Osborne are peddling a deception."

For the first time in ages I switched onto Sky News and the Jeff Randall program is somewhat different in emphasis. It reports the original letter and Peter Mandelson's claims but then has Labour's Lord Desai all but siding with the Conservatives before interviewing a business spokesman who pointed out that the business leaders are not the naive fools that Peter Mandelson seems to portray them as but sophisticated leaders of commerce.

Meanwhile back on the BBC Robert Peston is doing his best to portray the businessmen as Conservatives, Conservative donors or 'chummy with... the leadership clique around David Cameron' and explaining that 'None of which is to say this letter of endorsement of an important Tory policy from some business heavyweights is trivial - just that it isn't terribly surprising.' and that 'it's worth noting that the interests of business and the interests of the country are not identical. '

Maybe I'll leave the last word to sandy winder in Robert Peston's comments:

'It's a bit of a dilemma.

Should we believe the Labour party, who have been wasting billions every year even by their own admittance, who have deceiving us for thirteen years and who did not foresee the recession or what was happening in the banks?

Or should we believe relatively honest business leaders who have provided wealth creating jobs for millions and been responsible for growing their businesses and pouring billions into the Treasury coffers?

Tough one that.

I think I'll plump for the one who has got the least debt.'

Hasn't Gordon Brown changed his mind on the scale of debt he will allow

"Interest payments on the national debt are £25 billion a year. We're spending more on national debt repayment than on schools or law and order, and that is a situation I don't want as a hallmark of a Labour governmente... The public borrowing requirement was £23 billion last year. We plan to get it down very substantially."

Then, turning on the Tories, Mr Brown barked: "In 1992, they [the Conservative government] predicted the deficit would be eliminated, and by 1996 it had become £50 billion. I will not allow the country to get into that state again... We're not going back to that sort of situation where imprudent decisions, based on a misreading of the cycle, lead us to make spending apportionments that we cannot afford."

For more have a read of Jeff Randall in The Telegraph as he recalls a meeting with Gordon Brown in 1998.

What's the difference between Gordon Brown and Bernard Madoff?

Jeff Randall in The Telegraph thinks that the difference is that one has drained fortunes from gullible victims, plundering their income and savings to create an illusion of prosperity. The other is going to jail.

The article that Jeff Randall wrote should be compulsory reading for all politicians, journalists and voters. Here's a few extracts:

"Five trillion, to be precise – that's £5,000,000,000,000 – which is how much Labour has taxed and spent since it came to power. In 1998-99 its Budget was £333 billion. By 2008-09, the Government's annual expenditure had grown to £618 billion. Every year, the sums required to shore up the house of cards became bigger and bigger. But while the good times rolled, too few cared to notice what was really going on."

"Though the scale of their operations was very different, the sales techniques of Mr Madoff and Mr Brown were remarkably similar. Mr Madoff persuaded clients that he owned the secret of everlasting growth, a way of defying financial gravity. His unique selling points were, yes, stability and prudence.

So, while the returns of rivals bounced about in line with economic conditions, Mr Madoff kept producing a steady, above-average performance. Or so it seemed. He never claimed to have abolished boom and bust, but invited punters to infer that, thanks to his genius, this was indeed the case."

"When the elastic finally snapped, so did Mr Madoff's resolve. Rather than conjure yet more elaborate excuses to cover the hole where his clients' investments were supposed to be, the old rogue confessed. He could no longer bear the strain of living a lie. Coming clean, it seems, was a relief.

It's at this point that comparisons to Mr Brown come to an end. For not only is there no prospect of the Prime Minister pleading guilty, he refuses to acknowledge any aspect of his catastrophic mismanagement. It may seem impossible to believe, but Mr Brown, far from recognising that he has ruined Britain, still has plans to save the world.

The astonishing element of Mr Madoff's magic is that, by all accounts, he made the money disappear....

For the victims of Mr Brown, it's worse than that. Much worse. His legacy is not an empty box. If only it were that simple. What he will leave behind is a dysfunctional state, stripped of sovereignty, up to its eyeballs in so much debt that not even our children's children will be free from the burden."

"Bernie Madoff got away with it for so long because his clients wanted to believe in reward without risk, something for nothing. He told a US district judge: "I'm deeply sorry and ashamed for my crimes. I am painfully aware that I have hurt many, many people."

Here, in the Court of Public Opinion, Mr Brown will show no such contrition."

Now read the comments that follow the Telegraph article, I am not sure which are scarier the doom-laden prospects for the UK and world economy ones or the ones from people who "believe" that Gordon Brown knows what he is doing.