I was dismayed, but not in the least surprised at the way the Tories and their supporters in the media have seized on Labour's proposed rise in National Insurance.
The last PMQ's before the election was a stormy affair, with all three main party leaders attacking each other.
David Cameron accused the Government of attempting to kill economic recovery by introducing the NI increase, saying it will force us back into recession. However in a TV interview, Minister Yvette Cooper was quick to deny this.
Crucially, what he and his media friends have ignored, is that this policy will not come into force until 2011, by which time the economy will have been out of recession for many months and therefore completely recovered.
This makes a complete nonsense of the Conservatives' argument and is political opportunism at its worst.
"until 2011, by which time the economy will have been out of recession for many months and therefore completely recovered."
ReplyDeleteGoodness. That's the most confident economic forecast I've yet read.
We're teetering on the brink of a double dip recession here. Sterling is suffering a crisis of confidence - the only thing that is propping it up is that the Greeks are dragging down the Euro so there is some relative balance. The state is spending four pounds for every three pounds it brings in. The current annual interest payments from the national debt are costing more than the schools, the police, and the roads put together - and that is while interest rates are at an all time low - any hike in interest rates and I'm sure the world will go full circle and student groups in Latin America and Africa will be asking their Governments to 'forgive the first world debt' with placards showing pictures of dole queue's in the UK. We're not going to get out of this mess any time soon. The way we'll get out of this mess is by working our way out it. A tax on jobs (NI increase) will harm our ability to do that.
What will put us most at risk of a double-dip recession is if the Tories come in and immediately cut £6bn from the economy. That will be far more damaging than a piffling 1% rise in NI for those earning over £20,000 a year.
ReplyDelete"Cut 6bn from the economy"? The point of stopping the NI state cash grab is that it keeps an extra 6bn IN the real economy. To describe a 1% rise as "piffling" is a very cavalier approach to macro-economics.
ReplyDeleteDespite what the Tories may say, we all know that they are very anxious to make cuts in spending on public sector projects they see as unnecessary government waste.
ReplyDeleteTheir thinking is governed by basic Tory ideology that it is the private sector that is best-placed to sustain the economy.
Any savings that will be made by the Conservatives to reverse the increase in NI will profoundly hit the essential public services, such as health and education. David Cameron may say he is committed to the NHS but it is all talk to get him and the Tories elected.
If you read Business Editor Robert Peston's analysis of the situation on the BBC's Election website, he says that any decision by the Tories to cut spending will be a political, rather than an economic one.
I think they are entirely upfront about cutting projects that are vanity projects or wasteful. That is good government. As I understand it they have earmarked for the chop:
ReplyDelete- The National ID Card Scheme
- Numerous huge government IT Projects
- (sadly but necessarily) Numerous Back office public sector jobs
Seems sensible to me.
"Their thinking is governed by basic Tory ideology that it is the private sector that is best-placed to sustain the economy."
History tells us this is simply true. Over time those economies that allow a greater private sector involvement (e.g. USA, Britain, Canada, Japan etc.) bring far more prosperity to their people than those who allow a greater state involvement (Albania, Soviet Union, North Korea etc.)
Clearly, you need a mixed economy and there is absolutely a role in the state providing services. But we should always challenge at every point if it is the state who is best placed to deliver each particular service rather than assume the starting point is that it is.
"profoundly hit the essential public services, such as health and education."
Whoever wins there are incredibly tough choices ahead - the Conservatives are upfront that frontline NHS is protected. Given reality I suspect that savings may need to be made on programs like 'Building Schools for the Future' (something that affects me). But that is going to be the same whether Labour or the Conservatives win. At least the Conservatives are more honest that some tough choices will need to be made.
Let's be clear about this. I also agree that a mixed economy is best, and that to finance our public services, it does not matter whether the money comes from the public or private sector. I have supported this Labour Government's Private Finance initiative.
ReplyDeleteBut I do think that the starting point should be the State when it come to the larger services, like the NHS.
NHS Spend is ring-fenced and guaranteed to increase year on year under a Conservative government. Difficult choices will be taken but it will not be in the NHS.
ReplyDeleteJay it strikes me that your objection to the current Conservative party is less ideological on their manifesto and direction and more that you just fundamentally don't trust that Cameron means what he says.
Yet you do trust the party who told us categorically at the last election that it was not a case of 'vote Blair, get Brown'?
I guess I understand why people don't trust Cameron - after Blair it may be a case of once bitten...