To stay credible, the charities and community groups need to be clear and honest about spelling out, in open debate, where the Big Society notion is falling short of social needs.

Governments in the 19th century pushed out with the idea of the minimalist state and then found by stages from experience that state intervention was necessary to ensure acceptable working conditions, local government structures to provide infrastructure, a stable banking system, universal primary education and, with the Trade Boards Act of 1909, a floor to wages in low-pay occupations.

Credit for starting a national welfare state must surely go to Count von Bismarck, first Chancellor of the German empire (1871-90), who launched not only state pensions for the aged but, in 1883, a social insurance scheme to cover personal healthcare costs:
http://en.wikipedia.org/wiki/Otto_von_Bismarck#Chancellor_of_the_German_Empire

Bismarck was not renown for his socialist tendencies.

@Chaminder

I don’t think the Labour shadow cabinet will be finalised by 30th September, because that’s today. Surely they need some time to allow MPs to, um, vote? Noms just closed yesterday.

there is no way to avoid “different sectors competing against each other for funding” because that’s reality

‘ We in the anti-cuts movement have to be ready to suffer some defeats over the next year, as the government will be able to drive through much of its agenda through at first – so we will have to be able to maintain people’s confidence during these setbacks in order to win the long game. ‘

The problem as Luis alludes to is any victories for one group will be at the expense of another group. They are aiming for cyclically-adjusted balance by 2015, so if you convince them not to cut pensioners winter fuel they will cut something else.

@1 – if I remember correctly from A-Level History (I assume said subject was taught properly), Bismarck’s ‘state socialism’ was an attempt to try and head off rising support for the left-wing SPD. It didn’t work – the SPD grew and grew. Anyway, minor academic point.

@2 – fair enough. I simply scribbled down what someone said at the meeting; I have no particular knowledge of the schedule myself. But even so, with the Labour leader elected, the point pretty much stands unaffected.

@3,4 – if one takes the line that the deficit must be cut by cutting public spending and There Is No Alternative, then yes. But if, like pretty much all of us who oppose the cuts agenda (as opposed to simply a specific cut here and there), one takes the view that there is an alternative (put very simply, cutting the deficit through growth) then that doesn’t hold. If the various charities (etc) that are concerned about specific cuts, or cuts in specific sectors, unite against the entire public sector cuts agenda, then that can play a part in beating back the cuts agenda (there will be charities and community groups that are unwilling to take such an overtly political stance)

For as long as the government sticks with its current spending plans, then yes, any protection for one sector or service is likely to be recouped by taking more from another. That’s not the point that’s being made here. The point being made is that while different campaign groups will lobby as hard as they can to protect their own specific area, what we need to avoid is that they do so by openly telling the government to cut someone else’s sector instead. To give an example – the British Association of Social Workers has publicly called on the government to cut arts funding in order to protect social work funding. Now, I happen to think that funding for social work is more important than arts funding – but if everyone starts operating this kind of cutthroat defence, pointing at other sectors to cut instead of their own, what the British Association of Social Workers will find is that some other sector points at social workers, spouts something about Baby P to remind the government that the tabloids don’t give a toss about social work funding cuts, and before you know it social workers are taking the hit for some other sector. That’s the point.

The meeting was off the record

erm, so, on what basis is it being reported?

I would imagine that the reason it was off the record was because reporting this sort of tactical dialogue is extremely damaging to those having that dialogue. It creates suspicion in the minds of the public and hostility among the government.

Chaminda @5,

With respect, that’s wrong. There is no magic growth fairy to ensure that whatever extra money department A manages to secure, growth will provide so that some money doesn’t have to be taken from department B. You might prefer not to publicly acknowledge that, but that’s just politically expedient denial of reality. Even once you factor in the idea that there is feedback from spending to income*, and that it might be possible to cut the deficit through growth, however you think that works, you’re still left in a situation where money being spent in one place means it’s not being spent in another.

You may even end up running a more effective campaign by ignoring the fact that governments do not have limitless funds, but that won’t change the fact that’d you’re ignoring reality.

* we know that whatever feedback there is, it’s not enough to ensure that government spending pays for itself.

Or, you could stop viewing this as a pissing contest with the Government and just slightly consider how demanding that the public sector continue to be funded beyond the ability of the country to pay makes you comes across as greedy and selfish.

You seem to have it in your head that we can continue with no cuts at all, that all you need to do is “derail the cuts agenda” and somehow money will rain down from nowhere. No one, no party campaigned on that in the election. Even Ed Balls is backing off from that position now that he wants to be Shadow Chancellor. Because it is the worst kind of lie – you promise people something that you simply cannot deliver.

You want to address the cuts: make positive suggestions. Dammit, the government asked for submissions, did you make any?

IF you make positive suggestions THEN you can say the government is not meeting you half way; if you insist on this “no no no” strategy you will look like reactionary, militant morons and lose any chance of making a contribution.

@5: ” if I remember correctly from A-Level History (I assume said subject was taught properly), Bismarck’s ‘state socialism’ was an attempt to try and head off rising support for the left-wing SPD. It didn’t work – the SPD grew and grew. Anyway, minor academic point.”

I doubt Bismarck was ever motivated by impelling sentiments of human benevolence. It is said that his proposals for a state pension scheme were political bait to secure unification of the German states in the 1870s under Prussian hegemony.

I don’t have data to hand on average life expectancy in the German states at the time of unification but I doubt that many folk then were expected to live to pensionable age so the fiscal cost of pay-as-you-go pensions was considered affordable. In Britain, by 1900, average life expectancy at birth was only 50 years – about 10 years higher than it was c. 1800. By European comparisons at the end of the 19th century, average living standards in Britain were relatively better.

That said, Christian Democrat and conservative parties in much of mainland Western Europe have maintained “social market economy” traditions – the so-called Rhineland model established by the (Christian Democrat) Adenhauer governments in West Germany after WW2. It’s a mistake to attribute welfare state traditions in west European countries exclusively to Social Democrats.

Try this news report about a study by André Sapir for the Bruegel think-tank and presented at the ECOFIN Informal Meeting in Manchester on 9 September 2005. This argued that there is not one European social model, but rather four – the Nordic, Anglo-Saxon, Mediterranean and the Continental:

• The Nordic model (welfare state, high level of social protection, high level of taxation, extensive intervention in the labour market, mostly in the form of job-seeking incentives)
• The Anglo-Saxon system (more limited collective provision of social protection merely to cushion the impact of events that would lead to poverty)
• The continental model (provision of social assistance through public insurance-based systems; limited role of the market in the provision of social assistance)
• The Mediterranean social welfare system (high legal employment protection; lower levels of unemployment benefits; spending concentrated on pensions)
http://www.euractiv.com/en/socialeurope/eu-debates-european-social-model/article-146338

Welfare benefits for pensions, sickness and unemployment in many west European countries are often more generous than in Britain and overall tax burdens are often higher. In public debates about the NHS, it is often claimed (correctly) that the percentage of national GDP spent on national healthcare systems out of taxes is often higher in many west European countries than in Britain:
http://lysander.sourceoecd.org/vl=11232921/cl=31/nw=1/rpsv/factbook2009/10/02/01/10-02-01-g1.htm

It’s a cultivated myth that Britain’s welfare state is especially indulgent.

I think that if the anti-cuts movement is to get any success, it needs to focus on outcomes as much as inputs. It is not true that spending less money has to harm services. However, it’s also true that you can’t become more efficient in perpetuity – at some point, lower spending will impact service.

From a tactics point, if you want support for the anti-cuts you need to find areas that are less able to absorb cuts and highlight how he service is being hit. This doesn’t mean saying “£1bn cuts will mean 20,000 teachers sacked” or the like. The arguments need to be more cerebral if they’re to not sound like every other ‘anti-cuts’ line throughout the ages.

The government is going to look for areas where spending cuts haven’t affected services, in order to continue to sell the idea. If the opposition to cuts wants to win, it needs to find areas where cuts have hurt service.

I agree with all of this, and I think point 9 is especially important – Ed M and other would do well to highlight George Osborne’s £6billion*[1] tax gift to Vodafone, f’rexample…

*over fives times more than is lost to benefit fraud, remember.

[1]http://www.private-eye.co.uk/sections.php?section_link=in_the_back&issue=1270

@5 -> “pretty much all of us who oppose the cuts agenda (as opposed to simply a specific cut here and there), [take] the view that there is an alternative (put very simply, cutting the deficit through growth)”

Can I ask on what figures this view is based?

Chaminda,

I doubt you see it this way, but what you are calling for is effectively a rejection of democracy in favour of interest groups.

In evidence I present the following from your post:

With the coalition’s cuts set to impact all areas of public spending, many civil society organisations, community groups and charities are growing increasingly concerned about the effect they will have on the people and causes they represent.

It is telling that the organisations, groups and charities are portrayed here (I was not at the meeting or privy to any communication, so I cannot say if this represents their point of view or yours) as representing people and causes. There are two seperate issues with this: firstly, and less importantly, we champion causes, not represent them. That is to say, a cause is not the sole property of one organisation – just because Cancer Research UK are concerned about eliminating cancer, they do not ‘represent’ this, merely champion it and seek funds to help it happen. The ‘representation’ of causes is a means of taking ownership, of a group identifying the cause with them. It is a natural process, but needs to be resisted as it confuses causes with the ideology and aims of the ‘representative’ group.

Secondly, representing people. This is a democracy – we elect our representatives. The various organisations you deal with can champion the cause of individuals or groups, but unless they are specifically asked or elected to do so by the individuals/constituency concerned (and I doubt this is generally the case) they do not represent their clients/service-users etc. This is the language of patronage – that people are represented by groups that can attract funding and services so long as the people stay loyal. It is not the language of charity or community service (a one-sided relationship).

<ILegal challenges to elements of the cuts agenda (judicial reviews etc) could be an important tool. Austerity programmes rely on making a lot of headway in the first year or two – if the austerity programme gets bogged down in the first couple of years, people start losing patience and the programme is in trouble. Judicial reviews and other forms of legal challenges could help put a spanner in the works, and drag things out. Unison have clearly adopted this approach with regards to Andrew Lansley’s NHS White Paper.

This worries me. Like it or not the government we have is democratically elected. To try and use the courts to subvert the government’s programme of reform is simply undemocratic. If you want to oppose it, demonstrate and protest, sign petitions, lobby politicians and stand for election. But do not presume you have the right to try and override the will of the people.

More to the point, if charities, voluntary organisations and the like start aligning themselves against government in this way, they become political organisations by definition. By signing up to a union idea, they lose their impartiality. If you seriously believe these non-elected organisations are worthy of public funding, how can you maintain that argument if those seem organisations are set on wasting public funds by challenging democratic power in their own interests (or the supposed interests of those they represent).

Oppose the cuts by all means, but be careful how you do this, and on what grounds. If your only grounds are that your causes and the ability to provide for your clients are threatened, this sounds like politics by non-democratic means. And that way lies obliteration of your cause, however just it may actually be.

Hmmm. Total html failure – the paragraph “Legal challenges…White Paper” should be in italics. Sorry.

Luis, I take that point to mean that one sector isn’t going to take a “don’t cut us, cut them instead – they are less valuable” approach.

I think to have success the sector as a whole needs to also spell out the alternatives, so rather than just adopt a “don’t cut housing benefit” slogan, the housing sector needs to spell out in detail what alternative system of housing support to poor people it would do (no sane person thinks the current system is adequete), explain why the proposed cuts will merely harm people and not solve the underlying issues, and finally also point out the savings intended won’t come up – i.e because every person who loses housing benefit costs the state money in some other way – prison, health costs, social costs, increased policing etc. Basically – to put it in terms matt munro would understand – it needs to explain that £X in housing benefit is a cheaper way of dealing with the underclass than spending £Y on policing, courts, prisons etc, not to mention the private sector costs of increased security guards, insurance against theft etc.

Chaminda,

A couple of points.

Co-operation between campaign groups may work best on the basis of mutual support rather than a formal coalition.

Sure, but a central “meeting place” will be important. Whether that is a page on Facebook or a dedicated website forum, the important point is a location where topics can be discussed and (importantly) information is shared.

For example, today I found out that, contrary to the government narrative, private sector pay settlements kept up with the public sector in 2009, but now is running at more than twice the rate of public sector rises. This information is vital to counter the arguments that the government is spinning that the private sector took the pain of the financial crisis and that the public sector was cushioned.

The C1C2 group of middle income voters is a very powerful block that isn’t being engaged properly

remember the words of Brendan Barber:

“The poll tax was defeated when government MPs returned to Westminster to report that their constituencies were in revolt. The poll tax offended the British people’s basic sense of what’s fair. So will the spending cuts. Every coalition MP with a small majority and every coalition MP who fought an election to oppose deep early cuts needs to feel the pressure from their constituents to change course.”

He’s basically saying that C1C2s will defeat this government’s cuts.

George Osborne’s £6billion*[1] tax gift to Vodafone, f’rexample…

I think you mean David Hartnett’s decision to cut a deal with Vodafone. Individual tax cases aren’t determined by the Chancellor of the Exchequer. Hartnett looks like he’s on borrowed time as it is.

Planeshift

yes … that’s what I mean by politically expedient. The campaigners don’t want to get involved in the problem of who else to cut (too much potential for in-fighting) so they leave that problem to the government and pretend it doesn’t exist.

Lunch hour at Lib Con = troll ‘o’ clock

@6 – it was off the record in that who-said-what was off the record. Therefore people could speak freely. I haven’t identified who said what in any of the above.

“I would imagine that the reason it was off the record was because reporting this sort of tactical dialogue is extremely damaging to those having that dialogue. It creates suspicion in the minds of the public and hostility among the government.”

No. If the dialogue was ‘Here’s how we’re gonna make stuff up to fool the public’, maybe. But it wasn’t. Engaging with the middle income bracket is hardly smeargate.

@8 – I think you’ll notice in the above list – and elsewhere – references to clamping down on tax avoidance as one alternative means of reducing the deficit. There were plenty who suggested it to the government. The government responded by bringing in Sir Philip Green as an advisor.

@7 – the government’s entire economic strategy is based on the growth fairy. ‘We’re going to take a giant axe to government spending, and little Tinkerbell will magic up some new source of growth in its place.’ You lot haven’t the faintest, foggiest idea where this growth will come from. You just blurt out ‘private sector’. Yes, but which parts of the private sector? Selling what? To whom? You don’t need top-down control but some kind of strategy wouldn’t go amiss. When the Bank of England is telling savers to start spending to save the economy, excuse me for finding little cause for confidence.

There is, as you say, no growth fairy. Believe it or not, we get that. There is no guarantee that any response to the deficit will work. But there is more logic, and more chance of success, in an approach that seeks to maintain, not cut, economic activity, so as to bring in higher tax receipts and reduce benefit claimants, than the government’s approach of sacking hundreds of thousands of staff and just waiting for the private sector to form an orderly queue to run public services with no public subsidy. Except they won’t, so there will still be a public subsidy. Oops.

Oh sod it. Look at Ireland. And then waste an hour of everyone’s life telling us why Ireland is compleeeeeeetely different to Britain and how our economy will magically react completely differently.

@10 – yes, you’re quite right, and a lot of charities will be in a very strong position to monitor the impact of these cuts on service delivery, as they generally represent the service users rather than the service providers. We shouldn’t neglect 20,000 teachers being sacked (a hypothetical example, I trust), as it’s rather difficult to see how this would happen without an impact on service delivery. And by the time the impact of all the cuts is clear, it’ll be too late to stop them – so some educated forecasting, based on early examples, common sense, and past experience is necessary. That’s why Kate Belgrave’s back catalogue of local cuts and their subsequent impact is so important.

@17

Young George’s hands are far from clean in this murky affair:

http://www.telegraph.co.uk/finance/globalbusiness/7911178/Osborne-kick-starts-India-visit-with-Tata-talks-and-Vodafone-launch.html

…and as a Chancellor who sees fit to slag off people on benefits he should really be taking more responsibility over decisions like the Vodafone gift. If he’s so keen to slash benefits for those out of work or too sick to work and wants to cut housing benefit that will cost people their homes then why the hell isn’t he stepping in and doing something about this £6billion? “Individual tax cases aren’t determined by the Chancellor of the Exchequer” – but apparently it’s ok for individual benefit cases to be determined by him?

@watchman

This worries me. Like it or not the government we have is democratically elected. To try and use the courts to subvert the government’s programme of reform is simply undemocratic. If you want to oppose it, demonstrate and protest, sign petitions, lobby politicians and stand for election. But do not presume you have the right to try and override the will of the people.

Define “democratically elected”? In our system the Conservatives did not have a majority and hence did not get a mandate. In terms of “coalition” what there was about the NHS in the “Coalition Agreement” was soundly rejected by Lansley: he basically had his plan and is determined to implement it come what may. So the white paper policies, which were not debated at the election and were not in the Coalition Agreement are being rammed through by Lansley in a most undemocratic way.

If you are passionate about democracy (as I am) then you will agree that Lansley has no mandate to continue with these damaging changes to the NHS. If you want to take the high ground, then why not campaign for another question be added to Nick Clegg’s vanity project next May (the AV referendum) asking the electorate if they want to see NHS hospitals taken out of public ownership?

In addition to the above, I think what is necessary is for campaigners to distinguish between the deficit (what the conservatives want us to think about) and the structural deficit (what we really do need to think about). The latter requires cuts (or tax rises, growth, combination of) but of a smaller nature, and thus easier to achieve. This is where the charities can avoid in-fighting by focusing on the areas of spending where -to put it bluntly – there aren’t other charities or socially concerned organisations lobbying to keep the spending. So obviously trident goes, the big IT systems that don’t really work go, some of the unnecessary business support/fat cat subsidy can go. Then after this, argue for clampdowns on tax avoidance and evasion, plus some tax rises for the rich.

@16 – re a central ‘meeting place’ – there is work going on around something like this at the moment. Shout if you want to know more – the research you’ve been doing on the White Paper is very interesting and something I personally think needs to be tapped into.

I’m aware of Brendan Barber’s comments – all our talk has not yet filtered through into strategy. But it will, as things progress – it’s easy to forget that things are still at an early stage.

@15 – I agree with the gist of that, but one thing I’m wary of is when everyone starts coming up with highly speculative figures of how much this or that knock-on impact would cost. First, the figures involved are, as I say, always necessarily speculative, often to the point of being meaningless. Second, public services shouldn’t be measured solely in monetary terms. We can argue about how much NHS cancer treatment saves the taxpayer when factoring every other possible impact. Or we can argue about how many lives its saves as the end in itself; there is a balance to be struck.

@13 – I know what you’re saying, but here’s why I think you’re wrong. Much of what is being announced – and plenty of what will be announced – was not specified in the election manifestos (nor indeed in the coalition agreement) of any of the coalition parties (Labour was similarly vague). So their political expediency at election-time (as I say, from all three parties) now denies them the opportunity to play the election mandate card. Sorry, but if they wanted to claim the mandate, they should have been open about their specific plans before the election.

But beyond that – which I regard as a pretty fundamental point – it’s well established in any democracy that minorities and minority interests can campaign to defend their rights, or the rights of those they (yes, ok then) champion. We don’t have some ultra-direct form of democracy where we elect on each individual issue; we elect on the basis of the whole picture and we have the right to influence parliamentary democracy on individual matters. Parliamentarians can judge the democracy argument on a variety of factors – the strength of their electoral mandate, how clearly the policy was committed to in their manifesto – but most of all it should be judged on the strength of the arguments. But the right to make representations on such matters is clear, regardless of election results – power remains in Westminster, but is subject to influence from electors at any point in time on any issue. Or at least that’s how it’s supposed to work.

Regarding the courts. If a case is brought that is entirely without legal merit, it won’t get very far and won’t succeed as a delaying tactic in the first place. I’m sympathetic to the view that frivolous cases shouldn’t be allowed to block implementation of democratically-enacted legislation. But they can’t. However, if by contrast there is sufficient evidence that the government etc is acting illegally for it to reach court, then of course this should be heard. I doubt we’d differ on that latter statement.

Regarding politicisation of charities. There’s no doubt that many charities are instinctively aware of this due to ultra vires issues, the need to be able to work with government, and simply the views of their members/trustees. But spending money to defend the cause that they exist to champion would hardly count as wasting money – it is simply another form of championing that cause.

@18 – Right, ok then. Every single sector, group, union, charity etc etc facing a cut, all rise as one and say: “Don’t cut us, cut everyone else”. And how exactly does that help the government, let alone everyone else. Many of those campaigning against the cuts are making suggestions of alternatives – at an international level, the Robin Hood Tax; at national level, clamping down on tax avoidance; at union level, one example is the Royal College of Nursing taking members’ suggestions on how savings can be made as part of their Frontline First campaign against nursing job cuts. Now, we can quibble about the relative merits of these alternatives, but to pretend that no-one is suggesting them is simply incorrect.

@21 – yes, absolutely. Lansley’s White Paper is a perfect case in point.

@22 – in terms of your suggested alternatives, most of that is already being said by many anti-cuts campaigners, and has been said by the Left for years. I’m interested by your comments on the structural deficit. My understanding – and I stand to be corrected – is that the structural deficit is calculated so as not to take notice of variations in benefits claims and tax revenues generated by the economic cycle. So, it is resistant to being cut through economic growth because tax revenues and reduced benefits claims through economic growth is simply a legacy of the economic cycle. In other words, it can only be cut through reduced spending or higher rates of taxation (how convenient). This strikes me as a fallacious distinction – of course economic cycles are relevant to improving the country’s balance sheet. What would perhaps make sense would be to stimulate economic growth (govt spending seems to be the only way at the moment, unless someone strikes oil somewhere near Harrogate in the next fortnight), enjoy the benefits in reduced benefits claims and higher tax revenue, use this to gradually pay down the actual deficit, avoid the economy overheating (unlike Labour), and yes, keep some money safe for a rainy day like Bachelet in Chile. That strikes me as more sensible than the current obsession with the structural deficit, which though it may be smaller is also quite restricted in how it can be tackled. But I’d be interested to hear your response to that.

Define “democratically elected”? In our system the Conservatives did not have a majority and hence did not get a mandate.

“Can command a majority in the House of Commons”. In our system the Conservative Prime Minister can command a majority in the House of Commons, and thus has a mandate. That’s the way representative democracy works I’m afraid.

Chaminda @19

I think you have me confused with somebody else. None of what you write there applies to me. You wrote:

… there is an alternative (put very simply, cutting the deficit through growth) then that doesn’t hold.

Where the ‘that’ in question is the idea that more spending for one sector means less spending for another. I was explaining why ‘that’ does in fact hold, whether or not you believe it’s possible to close the deficit through growth (the only way it wouldn’t hold was if a magic fairy always increased income to match increases in expenditure).

Chaminda @23

well quite – it wouldn’t be very effective for each union/charity each to suggest cutting each other – that’s what I meant @18 by political expediency. You seem to think you’re disagreeing with me. It still doesn’t change the fact that there are trade-offs. By all means suggest ways of raising revenue – if you want to avoid cuts that is the way to go, but again I don’t know why you are addressing those points to me. All I’ve been arguing is that it’s false to suggest there are no trade-offs when allocating spending under a budget constraint.

http://en.wikipedia.org/wiki/Deficit#Structural_deficits.2C_cyclical_deficits.2C_and_the_fiscal_gap

So yes, under these defanitions we can’t eliminate the structural deficit through simply cutting unemployment. But we can use ‘growth’ (and I may be using the term incorrectly here) in the sense of increased tax revenues occuring naturally (people having higher wages etc) to do some of the work, but this will probably only occur over the long term. However we do have to deal with the strutural deficit – you cannot run one indefinately. It is a case of timing, and choosing how to deal with it.

Chaminda @ 24

some arithmetic, simplified for sake of illustration, might help.

the deficit = tax revenue – expenditure (so it’s a negative number). Y is GDP, t is tax rate (say 0.4), X is expenditure.

deficit=t*Y-X

now, if you think it’s possible to “stimulate growth” that means you think increasing X (government expenditure) will increase Y. In normal times, some people might dispute that, but in the current situation, I agree with you it’s probably the case.

If you think it’s possible to reduce the deficit by doing this, that means you need the increase in tax revenues t*Y to be greater or equal to the change in X. If t=0.4 that means you need every £1 increase in expenditure to achieve a £2.5 increase in GDP, otherwise the deficit will increase, not decrease.

I think you need to think about how realistic that is.

Some research that will weaken the case for cutting summarized here

(is that gated to non-subscribers?)

you can read it, but with an ad on your screen.

@28 Luis, you assume that spending (X) has no effect on GDP (Y). It does, though not in a simple way.

Also, I don’t see why you assume that tax rate (t) is constant. The proportion of our income taken by tax fell over the labour years, and arguably this is the reason why there was a “structural deficit”: the government were taxing too little, not spending too much.

If public spending is kept the same and used to keep the economy afloat and tax nudged up to ’97 levels you may well find that GDP will go up and hence the deficit will go down.

The alternative (there is always an alternative) is to slash public spending (X) and raise tax (t) in a way that will restrict growth (eg VAT) and inevitably you’ll find GDP will go down (Y) and the deficit will go up.

Ireland, anyone?

Richard @31

try reading it again – specifically “increasing X … will increase Y”

feel free to extend my simple story by increasing the tax rate too, if you push it up to 0.5, you’d only need £1 of X to increase Y by £2, for example.

I don’t think slashing X is a very good idea either.

@ Chaminda

7.Since bailiffs coming to evict non-payers were a major focal point of anger at the poll tax there was a suggestion of holding protests at county courts when there are eviction hearings of people forced out of their homes due to housing benefit cuts.

Bailiffs didn’t evict non-payers of the poll tax, they turned up at properties to seize assets (a property would be worth many times the amount of a poll tax bill owed). The large extent of non-payment did cause havoc in the legal system, and the idea of protests in this case is a good one.

The poll tax analogy could be taken a little further. It was the Tories flagship policy after the 1987 election and at first the only opposition came from the left. However, as time passed Tory voters came to realise it was going to affect them adversely, something they had not anticipated. So they played merry hell with their Tory MPs, who came back to Westminster complaining about the tax.

Eventually, the combination of the protests of poll tax payers who would not normally protest, the MPs representing them, the non-payment campaign, the demos and riots reached a critical mass and the Tories had to ditch their flagship.

We are not being asked to financially pay anything for the deficit reduction (except in higher taxes) but a parallel could be drawn with those who did not anticipate being hit by the poll tax and those who face being hit by cuts in 2011 & 2012.

These will include a lot of the notorious “middle England” who at the moment perceive the cuts as being something that will only affect those on benefits, faceless bureaucrats and quangos, i.e. they think the cuts will hardly affect them directly. But as 2011-12 passes they will come to realise the cuts will affect them too, their kids can’t get into university, the middle-class welfare payments will be cut etc.

As these people, many of them Tory voters, feel the squeeze alongside a campaign against cuts the pressure on the ConDems will mount. Tory & LibDem MPs fearing for their seats will start complaining and the Coalition may be forced to retreat from its present scorched earth cuts policy to something much less radical.

The ConDems will become incredibly unpopular (something some admit already), they are attempting something unprecedented in a major advanced western economy. It is alright them talking about it now, we’re in a sort of phoney war like 1939, but 2011-12 will be 1940 and the Coalition’s hubris now could well be facing its nemesis in a year or 18 months time.

Good analysis, Captain. I hope you’re right. It’s depressing how many arseholes there appear to be out there who really do just see voting as a way of maximising their income.

@33 Captain Swing: “Bailiffs didn’t evict non-payers of the poll tax, they turned up at properties to seize assets…”

I believe that to be incorrect historically too. The majority of non-payers declined to fill in the form that registered their tax obligation. That is the derivation of it being a poll tax: individuals could register a vote on the September/October RPA forms but decline to fill in the residential tax form.

If an individual filled in the residential tax form and declined to pay the poll tax, the bailiffs were sent in.

If an individual did not fill the residential tax form, it was up to the collectors to establish residence and pursue the debt.

@ Chaminda

Ah the old “grow our way out of debt” argument again. What total nonsense it is.

Firstly, let’s ignore the assumption that you have implicitly made; that all government spending adds to GDP.

Let us also ignore the fact that the main aim of this government spending is to keep people in jobs, to keep them consuming…..and that much of that consumption is not of UK origin, so the effective stimulus flows offshore and aids some other economy.

Let’s just look at a rough calculation. To cut the ~12% deficit in GDP terms you need about a compounded 2.8% annual growth over the next 4 years.

In itself that could be possible. Unfortunately, you are ignoring the drag effect increased interest payments have on growth, as they have to come directly out of taxation.

Total tax reciepts run at around 1/3 of GDP. So the extra 30bn of interest payments we will be paying by 2014 thanks to Labour’s deficit is going to be about ~2% of GDP, but will need GDP growth of ~6% to actually pay for it.

The net effect is that the extra interest payments (at what are currently very lwo rates, but might not be in the future) will knock off about 2% of what could be spent on other things, directly reducing real growth. That is before you consider that you will only be reducing the debt/GDP ratio by doing that, not the total debt stock itself. This can easily lead to a debt trap.

Japan is a great example of where contiunuous deficit spending and stimulus has left the country with little growth over 30 years, but a massive mountain of debt, now approaching critical (and unnaffordable) levels of taxation needed to support it. Only super low rates have allowed them to shamble on for so long but the day or reckoning for that economy comes ever closer.

THe long and short of all this;

You simply can’t grow your way out of this much debt.

All this talk about not cutting spending is wishful thinking – especially given how so much of the money was simply wasted. Labour presided over massive spending increases and in most cases there hasn’t been commensurate increases in performance….my personal experience suggests many services have got worse.

Just a note of caution for all you optimists expecting the cuts to public spending to act like the poll tax on public opinion (other than the obvious remember who won the post-poll tax election?).

The poll tax was a tax. The clue is in the name. People get worked up about taxes, because they see them affect them directly. The money taken off pay is in fact itemised on the payslip, or presented as a bill. (As a side note, one of my objections to VAT is that it is not obvious, and therefore people do not see the effect.)

The government cuts are cuts. The clue is again in the name. People see cuts in different ways depending on how they are affected, and whilst they may not like headline figures, they may not see themselves affected directly. The cuts to police may be unpopular, but unless you suffer from a crime, you do not feel directly affected by them, for example. Whereas tax is a universal, the effect of cuts is not, and therefore the reaction will differ. The anger from groups dependent on state funding is not a popular reaction remember: it is protests from those who find their existence or functions threatened. As with the unions, it is easy to portray this sort of anger as limited and vested in interests, which one could not do with protests about taxes (or about wars or banning foxhunting for other examples).

@37 – “The government cuts are cuts. The clue is again in the name. People see cuts in different ways depending on how they are affected, and whilst they may not like headline figures, they may not see themselves affected directly. The cuts to police may be unpopular, but unless you suffer from a crime, you do not feel directly affected by them, for example. Whereas tax is a universal, the effect of cuts is not, and therefore the reaction will differ”

I didn’t include it in the above article for reasons of space, but that difference from the poll tax was mentioned at the meeting.

@36 – and if the deficit is cut to a greater extent through taxation and clamping down on tax avoidance than is currently planned by the government? Does that not reduce the interest payment by reducing the deficit? Try and get through at least ten words before mentioning the Laffer Curve – we’re not talking about 80% tax rates here.

In my view, much of the public sector waste that does exist (its extent is regularly overstated, but it is there) was the result of Labour trying to crowbar ‘private sector principles’ into the public sector. So in came massive public sector executive pay (to compete with ‘market rates’). In came expensive management consultants. In came whizzbang IT projects (often recommended by said consultants). In came an obsession with PFI with all its associated expense (thanks for the Tube PPP, Gordon). In came an attitude that you could quango a problem out of existence. And out went lots of money. Of course, any private company that ran like this wouldn’t last very long. Labour took the wrong approach and then implemented it wrongly. Sadly the double negative didn’t produce a positive.

Now, there was money that was well spent – you may have forgotten the endless beds crisis and crumbling classrooms of the Major years, but that’s only because they have largely been eradicated. But yes, there was waste.

The trouble is that the PFI expenditure is locked in, much of the IT money has been spent, public sector fat cats will cost a lot to make redundant (see Sheffield City Council), the management consultants don’t amount to a significant proportion of expenditure in and of themselves, and nor do the quangos. So cutting out the waste either doesn’t actually save you much, or involves tearing up a bundle of contracts.

Pretty much all of those examples of waste, by the way, were opposed at the time by the Left.

So the idea that you can achieve the scale of cuts the government is planning just by reducing waste is fanciful. Wasn’t the government going to make its in-year cuts entirely through efficiency savings? That one didn’t last long.