Georgy Porgy Porkie Pie

George Osborne is reported, in the Telegraph, to be "shocked" that rich people employ expensive accountants to avoid paying their share of income tax.

Mr Osborne told The Daily Telegraph: “I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right."

But of course rich people avoid tax...... that's what they do, that's how they stay rich and that's how they can afford to be above the modest concerns of the other 99%. Mr Osborne is one of them, so it is passing strange that he seems to be the only person in the country who wasn't in on the secret.....  

People drink blood? Eeeeuuuugghh!

However, if Georgie Boy really didn't know that the rich play tax games, then the question has to be: "How did such a fool ever become Chancellor of the Exchequer?

Two bald men fighting over a comb

The blessed Vince wants "mansion tax" on houses over £2million value. Gideon George Osborne wants to cut tax for the rich.

The compromise seems to be a tax rise for the rich via the mansion levy and a tax cut for the rich via cutting the 50p level on those who earn over £150,000/year.

Probable result? No real change... but still this gargantuan struggle between titanic forces (Vince and Gideon) leads the news and smothers the budget discussions.

Jorge Louis Borges, the Argentinian novelist and thinker, described the Falklands War as "two bald me fighting over a comb". He could have meant the prize, the Falklands Islands, was not worth the effort.

                              YOU STOLE MA COMB!!!

In the case of the Vince -v- Gideon it means to me, that, whoever wins, the outcome is meaningless. It's a fake battle with a predicted outcome. The aim is to look antagonistic and busy for the benefit of the two party's followers.

In reality it's a pointless waste of energy.

Where's Gordon.....? Where's Gideon...?

Yesterday and today global markets plummeted. Down like a stone... and no "dead cat bounce" to be seen. This particular cat is a dead cat and it ain't bouncing any time soon.... the outlook is bleak and the future is dark...

The economies of Europe and the USA are tanking. Confidence drains away like a summer downpour... not much left, it'll soon be gone...

And our leaders? How are they handling this dreadful situation?

Obama speaks words of reassurance. Merkel speaks. Sarkozy speaks. Merkel and Sarkozy speak together. They all speak in unison. But who is listening...? Not the markets. Not the investors or the financial analysts. The more our leaders speak, the worse the situation becomes.... (BTW, where's our Finance Minister in all of this? Gideon George Osborne is nowhere to be seen).

Here's a quote from Liberal England;

"For all Gordon Brown's faults, he was a considerable and reassuring presence on the international stage and would have been in his element in the current crisis. When it comes to international finance, our current prime minister has been the invisible man."

Halelujah! Absolutely true. If Gordon was in charge he would be calling summits, banging heads together, brokering deals, making a case, convincing markets, bolstering banks, exuding confidence, outmanouvreing hedge funds and, at least, attempting to control the crisis.

Where is he now? Well the UK public bought the Murdoch line that Gordon was difficult, Gordon was mulish, Gordon , the dour Scot, was somehow limited and not fit for leadership (unlike James Murdoch......).

And the public believed Murdoch, but not enough to vote for Dave, so the Lib Dems, when it came to the choice, chose Dave.... and his Bullingdon mate and economic illiterate, George

Where are they now that we need real leadership from really mature politicians? They are nowhere to be seen.

And where is Gordon when we need him....? Out of office and out of power.

Is that the real tragedy of the 2011 financial crisis?

Osborne's Moody Swings...

George Osborne has now had three tries, in less than a year, at addressing the problems in the economy: the June  2010 emergency budget, the autumn statement and yesterday's full annual budget statement.

Whereas the economy that Osborne took over was clearly the legacy of Alasdair Darling and Gordon Brown, the Chancellor has scorned the efforts of his predecessors and progressively put his own stamp on the economic situation: the economy of today is George Osborne's, and no-one else's.

The economy that Osborne took over was going through a slow and halting recovery with some growth in activity and a slowing of unemployment. Osborne took control with the vow to concentrate on growth. But since he has been in charge growth has stalled and unemployment has increased. Osborne also used the fear of the UK losing its "AAA" rating from the credit agencies as a prime reason for "cut fast and deep" strategy. We were in danger of losing our AAA rating, Osborne warned, and that would severely hamper any recovery by making debt more expensive to service, said George, so we had to be ruthless..

It is therefore ironic in the extreme that both the main credit agencies, Moody's and Fitch, have chosen today to issue warnings about the forecasts for growth that accompany Osborne's budget.

Moody's is clear about the problem:

"Although the weaker economic growth prospects in 2011 and 2012 do not directly cast doubt on the UK's sovereign rating level, we believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with a AAA rating," 

Yesterdays' budget was seen by commentators as being broadly neutral: in other words, there would be no noticeable stimulus to the economy and there were no identifiable measures that would provide that growth, and it came on the back of weakening economic figures and pessimistic forecasts.

Osborne told parliament on Wednesday that the UK economy would grow by 1.7% this year, and by 2.5% in 2012, predictions which are still more optimistic than the latest assessment from the OECD, which  predicted last week that the UK would expand by 1.5% during 2011, and 2.0% in 2012.

Fitch, a rival credit rating agency, has already warned that Osborne may have to impose further austerity measures if GDP growth is slower than expected, or if inflation continues to run much higher than official targets.


Standards & Poor, the third main ratings agency, made noises in May 2009 about reducing the UK's credit rating, much to George's approbation.

Wouldn't it be ironic if all of George's efforts to appease the markets were to result in the very rejection by the markets that he has been using as the excuse for his extreme cuts strategy in the first place...???

The Institute for Public Policy Research (IPPR) has produced a paper entitled;

"Why did growth slow in the second half of 2010?"

And they don't blame the snow! (well not entirely).


By their analysis it was...

Not a weakness in the global economy. 

Not the banks imposing tougher lending conditions. 

Not a strengthening exchange rate.

Not higher interest rates.

Higher oil and food prices played a part.

What did change dramatically during 2010 was fiscal policy.

Osborne's cuts led to a decline in consumer and business confidence

Turning confidence around now is going to prove very difficult. 

And rising inflation has also raised the spectre of an early increase in interest rates

The need for action (on growth) is all the more apparent now....

So Osborne's cuts and the lack of a plan for growth are the real resons for the drop in GDP. Unfortunately we will have to wait 'til the March budget to see how the Chancellor plans to address these matters....

The wrong type of economic snow..

Just saw George Osborne on TV tryng to explain away the 0.5% shrinkage in the economy over the last quarter. If he had mentioned the weather one more time you would begin to believe he was Thomas Shafernacker.....

A few years ago the management of Railtrack had much derision heaped on it when it tried to explain away train delays by claiming that "the wrong type of snow" had fallen...

It's a ridiculous excuse for a rail company, but for the Chancellor to claim the economy shrank because of "the wrong type of snow.."

The mind boggles...

George's "Age of Austerity" Debunked.

This Video is just brilliant at exposing the falacy that "austerity" is the answer to our economic problems.

It takes (at least it took me) a while to load. But stick with it it's worth the effort.

Look and learn from across the Irish Sea....

In the Commons yesterday George Osborne introduced a £10 billion loan to the Irish Government by saying that he had "told us so", and that he was finding the money for "a friend in need".

Not strictly true, Georgey boy....


In February 2006 the then Shadow Chancellor had an article in the Times under the heading 

"Look and learn from across the Irish Sea". 

In the article, in which looked longingly at the economic performance of our nearest neighbours, he asked adoringly; 

"What has caused this Irish miracle, and how can we in Britain emulate it?"

 Mr Osborne extolled the peformance of the Irish economy and applauded in particular the policy of extremely low corporation tax. 


Since then of course other things have happened, what Harold MacMillan called "events dear boy, events".


And what events. Banking collapses, industrial collapses, economic collapses and national bankruptcies. The world economy shaken and received ideas reversed and turned upside down.


In Ireland, where the problems were amongst the most severe, the neo-liberal recipe for national "success" had been most firmly followed, the neo-liberal curative medicine has been taken willingly and in giant doses. You want austerity? We'll give you austerity. You want welfare cuts and a smaller state? We'll give you all of that and more. Lower taxes and bigger cuts and faster cuts: we got 'em! Sound familiar? In fact it's all of the recipe that George Osborne and Vince Cable tell us we in the UK need to swallow as well.


Ireland has already taken the medicine, and where has it got them? Catastrophe is where it's got them. Disaster squared and cubed again. The worst possible outcome for a fledgeling tiger. It's teeth have been drawn and its roar has been silenced.


No wonder that George Osborne is willing to find £10 billion to help the Irish economy recover: if the Irish go under (assuming they're not under already), Osborne's policies will have failed and have been shown to have failed. Spectacularly.


So when you here Mr Osborne say the he "told you so", he didn't. And when he says he's lending the money to "a friend in need", take all of that with a pinch of salt.


George Osborne is wedded to the Irish and neo-liberal economic strategy, and its failure will be his failure. And, unfortunately if and when it comes (and let's hope it doesn't), it will be our failure too.

P.s. Liberal Conspiracy has a good post on how all the right wingers got Ireland wrong...

Political choices....

Reports this morning that the UK Government is about to give Ireland a £7 billion loan. Fair enough, the Irish economy is in tatters, they need the money, it's only a loan and we'll get it back, (eventually) says George Osborne.

So why did he refuse a measly £80 million loan to Sheffield Forgemasters? The company needed it, it was only a loan and we would get it back. In fact the country would benefit by having a company at the forefront of turbine manufacturing, a key export industry.

And why are our cuts in public spending to be so severe and so swift? If there is £7 billion to lend, there must be similar amounts to keep vital services going and people in jobs.

Politics is about choice. The real crime of theTorydems is that the consciously and deliberately choose to cut jobs and services when they could make other choices. Choices that would be better for the UK economy and the British people.

.

Lord Young sacked .... for what?

So Lord Young has been sacked...

...who cares? ...who even knew he had  a job?  I didn't...

Anyway, the fact of his sacking is less interesting than the reason for his sacking.

He was sacked because he told the truth, or at least a truth, one the Conservatives do not want exposed. Where George Osborne claims the recession is so deep that we were in danger of bankruptcy, our economy is as shaky as Greece or Ireland and that we have to destroy the public sector to survive, Lord Young believes that it's a "so-called recession" and that people have "never had it so good".

So, by Lord Young's analysis, it's not as desperate as George Osborne is saying, we do not have to cut so deep and so fast, and we do not have to attack public services with such enthusiasm in order to survive.....

Thta's not what the Tories want you to believe...

...so he has to go....

Cuts "Regressive" - Official!

Here's a couple of quotes "

Nick Clegg Apr 2010 IFS... "concluded that the Lib Dems’ plan is the most credible." 

Nick Clegg Oct 2010 IFS..... "distorted and a complete nonsense"

The Institute for Fiscal Studies (IFS) has been the Lib/Con coalition's think-tank of choice: Nick Clegg thinks (or thought, see above) that it was wonderful when it endorsed his plans. It is certainly one of the most respected organisations commenting on economic matters in the UK.  George Osborne was so impressed that he even poached Andrew Dilnot, the chair of the organisation, to take charge of his own creation, the Office for Budget Responsibility.

So when the IFS says George is lying, you have to sit up and listen. In the IFS presentations on the cuts, the IFS acting director, Carl Emmerson says that the claim by Osborne that the cuts are, at 19% of departmental budgets, less than the 20% Labour was committed to, is untrue. To quote;

"...But the new Government has already implemented cuts to spending in this
year, thereby reducing the base for Mr Osborne’s comparison. So, by 2014–15 departmental spending is forecast to be below the level implied by the plans set out in Labour’s last Budget. And because this is true, any like-for-like comparison of spending in “unprotected areas” would also be higher in 2014– 15 under the last Government’s plans than under the new Government’s plans.."

He also points out that the cuts are regressive

"....The Treasury’s modelling shows that the benefit measures announced yesterday will hit those in the bottom half of the income distribution more as a share of their income than those in the top half...."

and hit the poor hardest particularly poor children

"...benefits will be focussed more on pensioners and less on families with children....".

None of this is a surprise: I have no doubt that the cuts are as much idelogical as economically driven, they are too deep and too quick and the aim is to end the Welfare State as we know it. It appears more than two thirds of the population agree with me.

But there is one aspect I have found particularly hard to bear...and that is the unseemly gusto with which George Osborne announced the cuts and the cheers with which Tory/Lib Dem MPs greeted them. It is one thing to believe (wrongly IMO) that you have to make savage cuts: it’s quite another to do so with unbridled enthusiasm and little apparent thought for the practical result of your actions.

When hundreds of local authority social workers or care assistants are sacked and their clients suffer because of these cuts, and when benefits are denied the poorest and most deserving, we will remember those whoops of delight from the Lib/Tory coalition and understand the kind of people to whom we have given control of our society.

By then, unfortunately,  a lot of damage will have been done, damage that a future Labour Government will have to addresss and fix.....just as they had to salvage civil society after the savagery of Thatcher....... plus ca change...

Let them eat promises...

The coalition promised that their cuts would be "progressive" and that the poorest "would be protected". Various Lib Dems have been trumpeting how the managed to soften the Tory stance and get the cuts to be more humane, less vicious...

A survey from Age UK finds evidence to dispute this rosy scenario......

"In cash terms, the poorest over-75s will lose an average of £2,030 worth of services by 2014-15 – which works out at a third (33.7%) of their household income.

Things don't look much better for the 65-74 age group either - they will miss out on £1,870 worth of services by 2014-15; just under a third (29%) of their net income.

Taken across the whole society, the research for Age UK shows that there will be serious losses for all households, but particularly for younger families with children and for older pensioners. "

Nobody I know ever actually believed that George Osborne's cuts would be so sensitively targetted and that the Conservatives would suddenly find a deep well of compassion for the poor in their traditionally hard souls.
 
These findings (and other figures published recently by the IFS)  show how right we were.
 
The big and unanswered question is, as ever, about the Lib Dems and how can they find it in their supposedly "liberal" conscience to go along with the Osborne cuts and the effect they will undoutedly have on the poorest people in our country?

Don't be disappointed, George...

For weeks now the Conservatives have been painting as black a picture of the economy as it is possible to envisage: the UK is in as big a hole as Greece, the deficit is unprecedented and unsustainable, we are all off to hell in a handcart if we don't cut public services and cut deep and cut soon. George Osborne claimed in the Commons yesterday that an "independent" forecast provided "damning evidence that the UK's public finances were even worse than thought".

It has to be said that the "independence" of the source, the Office of Budget Responsibility (OBR), is not a given: Sir Alan Budd's organisation was set up as a Tory think tank and was already producing reports and analysis for the Conservative Party before the general election. Even so, and "independent" or not, the OBR has not endorsed Mr Osborne's claim the things are worse than previously thought. In fact the deficit is confirmed as much lower than previously forecast. The OBR report also confirms that decisions already taken by Alasdair Darling are sufficient to meet George Osborne's aim to "substantially reduce" the deficit by 2015, without the necessity for any further savage cuts. UK debt is mostly incurred at low rates over a long period, and should prove more sustainable than the debt of most other countries. The UK is not Greece, or anything like it.

One of the more astonishing aspects of the affair is that George Osborne seemed peeved and disappointed at the (relatively) good news produced by the OBR. It seems that our Chancellor would rather claim some party advantage from a gloomy forecast than accept that things are not as black as they could be.

The suspicion grows that the Conservatives wish to use the excuse of the recession to achieve the Thatcherite aim of repealing and dismantling the post-war consensus on the Welfare State. Maggie failed in her aim. But she did much damage in the process, drivin up unemployment, dividing the nation, selling off the family silver and wasting the oil bonanza on city booms and busts that ended in the ignomonious destruction of the UK economy on Black Wednesday.

David Cameron was a young adviser to the then Chancellor, Norman Lamont. If Mr Cameron really still does harbour the dreams of the Tory right of his youth, of  a neutered state, mass privatisation and a decimated public sector, then it is fortunate for us, the people of the UK who depend upon these essential public services, that the Tories' own "independent" consultants have failed to provide the cover for the savage cuts that this strategy implies.

Nightmare on Treasury Street

Oh Dear.

Gordon has put his foot in it good and proper. His side-of-the-mouth comments on Mrs Duffy in Rochdale were wrong, wrong, wrong. Not to mention disrespectful and hurtful. From his appearance after the event he is truly repentent, but the damage is reflected in today's newspapers, with a pretty unanimous flogging for the Prime Minister.

So, is this mistake the end of the road for Mr Brown and Labour?

In my opinion, and from the unsolicited comments I have picked up from friends and neighbours, not quite. Not yet. While nobody discounts the comments, there is a general feeling of "there but for the grace of God....". Who, after all, hasn't put their foot in it with unguarded comments? There is also a strong  feeling abroad that GB has been the target of an unrelenting and unfair press campaign, and that he is a better man than he is being given credit for. 

Where do we go from here?

Luckily for Gordon Brown, the third and final Leaders' Debate is taking place tonight, giving him the chance to move on and to play to his strengths. There is no doubt that the Labour team of Brown and Darling is stronger, and is generally seen as stronger, than the competing economic teams from the other parties. It is also clear that Labour has the best plan to address the recovery, and that the Conservative plans to reduce the economic stimulus as soon as they can is exactly the wrong tactic, more likley to cause a "double dip" recession than keep the economy on the current path to recovery. It is also clear that Cameron and Osborne do not have the strength of character or depth of experience to steer the country and the economy through the choppy waters of recession and recovery.

Gordon should repeat a simple mantra...

There is a Nightmare on Treasury Street and it is this:

Scene, Whitehall, May 7th, 9am.

Enter Chancellor of the Exchequer, Mr George Osborne  ...

Mr Osborne "I say, could you turn my desk the other way please. And I don't really think I like some of the paintings in my office. I like them a bit bigger, with more blue in them, if you can. Thank you. Now, cut the economic stimulus... That should do it, I'm off for a stroll round the grounds".

 Distant echo from the money markets....."sell sell sell...."

Distant sound of economic indicators going though the floor..THUD!!

Increasing crescendo of rolling thunder as the economic storm approaches.....

Distant and increasing cry of regret from the British electorate... "AAAARRRRGGGGHHHH!!!!. What have we done?!!!"

So there is a plan....

Channel 4 has revealed that there is a secret Tory document which shows what they will cut to "save" the extra £6billion to limit the NI tax rise.

Tory adviser Dr Martin Read told Channel 4 News: "Let me assure you this is a very serious piece of work, behind each of those 5 points there are detailed numbers, and I am 100 per cent convinced that with the right political will and managerial motivation those savings can be got in the first year"

He said the party had been provided with detailed numbers, but said "the Tories have the numbers and it's for the Tories to disclose them".

Which makes you wonder: why will George not tell us what he knows..??

Clear Blue Water...? or Policy U-Turn?

Until today, the Conservatives had made a great priority of the need for deep and quick cuts to the deficit, indeed they plan to cut more deeply and more quickly than many economists and the IMF think is wise. Now they have announced that they would only partially implement the proposed 1p NI increase. This is a traditional Tory tax-cutting move if not an open bribe, and the opposite of deficit cutting: it will increase any deficit calculation. So, whither cutting the deficit? Has the Tory strategy changed? Are we back in buying votes mode?

Tories are claiming that this produces "clear blue water" between the main parties. Now, I'm no economist, and  Faisal Islam has a good analysis on his blog, but it seems to me that Osborne has made, if not a U-Turn, at least a right-turn off the previously mapped out Tory highway.
 
The claim is being made that seven out of ten workers would be better off if Osborne's move is implemented, but that seems to ignore a number of factors.

1. The move will cost £5billion, and that money has to be found somewhere. The most likely target will be public sector jobs and wages. So, if you are a doctor or nurse or teacher and you find yourself out of work, or has your contract hours cut, or suffers a wage freeze, would you be "better off"? Probably not.

2. If the real need, as the Conservatives have told us constantly and insistently, is to cut the deficit deeply and quickly, then there will be adverse effects to the recovery. And if the recovery is delayed or goes into a "double dip", will seven out of ten be better off? Seems unlikely.

Another issue that Faisal Islam touches on is credibility: not just with the public, who will see this as a u-turn but still might buy the bribe, but with the markets. A lot of Tory confidence has been in the belief that the markets would welcome, or at least not oppose,  a Tory government. But if the Conservatives are so willing to abandon a long-held strategy for a few headlines and a tax bribe, what then? Will they be willing to give the Tories support, grudging or otherwise, now?

And if not, could Osborne's tax U-Turn be a turning point in the election, even before the campaign is under way?