As I’m sure everyone will know, Gordon Brown has resigned as Prime Minister and Leader of the Labour party (making Harriet Harman leader until a permanent replacement is elected), and David Cameron is now Prime Minister at the head of a coalition government. Cabinet appointments appear to be emerging tonight – Conservative Home is already reporting unconfirmed appointments of Hague as Foreign Secretary, Osborne as Chancellor, Cable as Chief Secretary, David Laws as Schools Secretary and Andrew Lansley as Health Secretary. Other rumours buzzing about are Danny Alexander to be Secretary of State for Scotland (that job must almost certainly go to the Lib Dems), and Paddy Ashdown as Defence Secretary (though Sky say Paddy Ashdown is denying it, so who knows if that one is true. Update – everyone seems to be backtracking on that one, ConHome says it is Liam Fox after all).

I’m putting up this thread for discussion of the change over, please try and keep it within the comments policy, so try to avoid dancing on Labour’s grave, gnashing your teeth over the horrors of Tory government, or berating the Lib Dems for what they’ve done or not done.


1,540 Responses to “Prime Minister Cameron”

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  1. @Sue

    “BT, 3.28pm

    Actually, I thought afterwards that the 10k threshold would probable benefit workers more anyway, so all good here.”

    Thanks Sue – appreciate your willingness to consider fairly the opposition’s policies!

    Eoin/Laszlo et al

    I hope the minimum wage actually goes up – the green party policy of a “living wage” was the one concept they had that appealed to me.

  2. @Eoin Clarke

    I think it’s a good prediction. In the 80s there was an overall reduction in employers’ contribution. In fact, NI contributions (employer, employee) exceeded health and pension spending during Thatcher. This with the cuts in public services (and the North Sea oil revenue) was the financial basis of the redistribution to the rich (tax cuts for the rich and then later to middle income families). Oh, and the fourfolds increase in public debt (in real terms)…

    Since the private sector is in trouble, the public sector is under the chop, the only way to balance the economy is a significant reduction in the aggregate demand (NB: this is the standard economics of the Tory Party and a significant proportion of both LibDems and Labour, I’m afraid. It is actually true only if it the two preconditions are held. The coalition agreement seems to suggest that they want to state that premises are correct).

    There is also another favourite way of the conservatives to deal with the aggregate demand: inflation (another form of tax that falls disproportionally on wage earners and pensioners) – and it could also reduce the debt service. On the other hand it could send interest rates up (savers will be pressing for this anyway) – another source of poverty.

    Three miles from where I live, the majority of the people in an estate rely on tax credit to manage every week and every month. With a freeze on benefits, they will go under.

  3. BT – I’d be interested to see your info on public sector “backroom staff” increasing – do you have a link please?

    Many thanks in advance

  4. @ Sue & Matt

    The UK would not go bankrupt – unless there was a war or some other catastrophe.

    Government used QE to bail out the banks – they could do the same for public sector spending; which is why the ‘right-wingers’ were having hysterics about it. They were afraid that socialist governments would create money to fund the public good!!!

    Fractional reserve fine for the banks & QE fine for socialising losses but both are “forbidden” for public services!

    Also, UK has some of the lowest tax rates in Europe. If growth didn’t provide the necessary funds, tax increases or new taxes would do the same job. They would not be popular – but they would be preferable, IMO, to severe cuts in public spending.

    It is easy to increase/ reduce taxes – it takes years to replace public services that have been cut to ribbons.

  5. Just to confuse things even more re employee NICs, the Lab gov had in mind that the earnings threshold for employee NICs would be increased substantially from April 2011 at the same time as the 1% increase in rates occurred. (The plan was to align broadly the annual earnings threshold level with the annual income tax personal allowance. Currently the former is £5715 and the latter is £6475.) The idea of this was that those on low to medium (median?) earnings (uo to about £21k) would therefore be spared any reduction in their take home net pay.

    The Cons had proposed that the earnings thresholds should be even further increased.

    Clearly the Cons manifesto proposal re the employee threshold is being dropped but this raises the question of whether the substantial increase ‘pencilled in’ by the outgoing Lab gov will also be shelved.

  6. @Laszlo,

    One of the great failings of the 1980s left leaning economists was to deny the black market, ‘doing the double’ or also ‘tick’ as it is known.

    economic petty crime is sure to climb… although people will not be able to change prices like they once did, what with these barcodes. Contraband etc. will no doubt become common place.

    I think this time round, more honest academia about the black market and the under-classes dependance on it might bring some of the ills out intot he open more quickly.

    I recommend Leo Howe’s work :)

  7. @Eoin

    “It is quite frightening that all we expect of these people is that they eat.”

    Don’t be daft! Read my comments properly. :)

    “Home furniture,
    Childrens toys/presents
    Educational equipment
    Transport
    Camera/ TV/ Fridge etc etc
    Clothes
    Beauty products
    Entertainment]
    Lesuire facilities
    recreational pursuits
    services”

    Many of the above “essentials” our household have bought successfully 2nd hand – I say without pride or shame. It’s not all junk if you look properly, 2.5% rise in VAT (which, if I am correct, equates to a real price increase of 2.1%) will not affect 2nd hand prices much at all.

    Many of the other items are non-essential in times of dificulty.

    People will still be hit by increases in fuel/energy etc and other essential purchases – as already said, everyone will notice a tightening somewhere, although Mark L V has correctly pointed out that food is often the biggest single bill of the onth and hopefully won’t be affected.

  8. @Sue

    “BT – I’d be interested to see your info on public sector “backroom staff” increasing – do you have a link please?”

    No but I’ll research it – would like the accurate figures myself if you find out first.

  9. @BT Says @4:42

    Of course, they do know. Most people know it who dealt with the public service and the NHS in particular. However, they have to play the political game, while they have to find cuts.

    Back office and front office is not separated really. In a well run hospital, for example, the reciprocal relationships between different departments, including administration, is so complex that you cannot just cut administration. One of the reasons for the bureaucracy in the NHS is actually the “efficiency savings”. They have extreme cost control in place (overtime for example has to be authorised by senior managers). The “front line staff” then have to go around it: “it’s a question of life and death” argument and hence breaking the cost control. I have not seen a large private company that has been under so much “efficiency pressure” than the NHS. An example: they have to have high bed utilisation (value for money). But high bed utilisation means long waiting list (to have sufficient number of beds is prohibitively expensive). You cannot have long waiting list (service quality), you move patients about. Cost, infection and organisation implications: you need managers.

    So, the civil service knows all this (the first evidence-based publication on efficiencies versus service was done in the 1980s). I think politicians know it too. What politicians will do: “Hospital X needs 8% efficiency saving. There is slack in the system. Hospital manager: I have to meet this. Let’s delegate it to each department or bring one department under the chop.” Out goes all the nice promises about protecting frontline services. And everybody is happy (politicians did not say that front line services have to be cut, managers keep their jobs), except for the patients and those who lost their jobs.

  10. @Amber

    “Government used QE to bail out the banks – they could do the same for public sector spending; which is why the ‘right-wingers’ were having hysterics about it. They were afraid that socialist governments would create money to fund the public good!!!

    Fractional reserve fine for the banks & QE fine for socialising losses but both are “forbidden” for public services!”

    One of the most hilarious posts I have seen for ages.

    Why don’t those nasty rightwingers just stop mucking around and command the Bank of England to print billions more money and give us all we ever wanted?!

    LOL

  11. BT,

    Are you telling me you expect children to have second hand toys and to go without recreational facilities?

    My god we are in for a rough five years….

  12. @Sue Marsh @4:50

    My pleasure. I wish it was not necessary…

  13. @Amber

    “Regarding marriage tax…”

    You mean the proposed reduction in the “married couples penalty”?

    Sadly, even if it goes ahead, it will still leave quite a large penalty. £150 p.a. is only a gesture in the right direction.

    I trust the Lib Dems won’t prevent this, mediocre though it is.

  14. @Amber Star

    Although I don’t think they would do it (QE), it is technically possible (BoE becoming the final lender). The post-RBS authority of BoE allows this. I’m quite sure if there was a serious borrowing problem, it would be done (in spite of the monetarist roots of Cameron and Co).

    The difficulty with it that although the government can decide how much money pumps into the economy in this way, it cannot decide the value of it. So, it would not work…

    The analogy with the banks is interesting though. The proper (and lawful…) way of doing it would have been declaring the banks insolvent, thus declaring the existing shareholder value nil and then recapitalising the banks from government borrowing.

  15. @Laszlo

    “If anything, the minimum wage is tax on jobs – but it is a price of living in a decent society.”

    I wholeheartedly agree with the minimum wage, maybe it should go up a bit more.

    However, isn’t your comparison with Labour’s proposed “jobs tax” a bit bizarre? An increas in minimum wage helps the employee sector so balances out the pain of the employer (sorry, not very weel- put there, but u know what I mean).

    On the other hand, NI rise for employers hurts them and doesn’t help employees at all.

  16. @BT says

    I don’t think so. NI is part of the wage, even if it is considered to be a kind of tax as it finances services that otherwise should be bought. Thus the increase in employers’ NI is (ok, indirectly) and increase in wage. Just as the minimum wage and its increase.

    You are right on the other hand – if the NI increase is used to pay off debts, it reduces the aggregate demand, while it is not the case in the increase in minimum wage. But paying off debt (except through inflation) means reduction in the aggregate demand. One way or another it has to be done, or, better, through economic growth. However, there is no competence for this in the government and putting Vince Cable to this position suggests that there is not even an intention for this (whatever negative opinion I have of Lord Mandelson, he did have pretty decent economic policy ideas).

  17. @Eoin

    “BT,

    Are you telling me you expect children to have second hand toys and to go without recreational facilities?”

    Well if you take what I say to extremes, then yes – I was making a point as a man of your brain (:)) very well knows!

    My son has 2nd hand toys and he is very happy with them. He’s only young, of course, but I am very happy for him to grow up thinking 2nd hand is not the same as rubbish (I assume you think this).

    Recreation facilities: there are quite a few that don’t cost much, or perhaps even nothing at all. Nor will people really facing hardship consider paid recreation as a necessity – that’s not hardship.

    The funny thing is, that you are trying to be a standard bearer for the working class but at the same time making the comment above. I think people who REALLY know hardship would find this kind of attitude incredible.

  18. @Laszlo

    “@BT says

    I don’t think so. NI is part of the wage, even if it is considered to be a kind of tax as it finances services that otherwise should be bought. Thus the increase in employers’ NI is (ok, indirectly) and increase in wage. Just as the minimum wage and its increase.

    You are right on the other hand – if the NI increase is used to pay off debts, it reduces the aggregate demand, while it is not the case in the increase in minimum wage. But paying off debt (except through inflation) means reduction in the aggregate demand. One way or another it has to be done, or, better, through economic growth. However, there is no competence for this in the government and putting Vince Cable to this position suggests that there is not even an intention for this (whatever negative opinion I have of Lord Mandelson, he did have pretty decent economic policy ideas).”

    OK, you make some good points there. I don’t think every business (including the small one I help run) would reflect the 1% NI increase in future pay changes but i can see there’s more than one way of looking at it, fair point.

    I also agre about VC’s incompetence, and have said as much before. I agree Mandelson is clever, but rate his genuine care for the working-class lower than Osborne to be honest (and much lower than DC’s, thoough I know some won’t agree with that).

  19. Sorry to anyone who may be responding to my posts above, but I am gone for the evening now.

    Apologies to anyone whom I have annoyed with my impassioned remarks!

  20. @ BT & Laszlo

    The difficulty with it that although the government can decide how much money pumps into the economy in this way, it cannot decide the value of it. So, it would not work…
    ————————————————————-
    Government can – to a certain extent – decide the value of it. As fractional reserve lending decreases, so the money supply is reduced. Provided government QE increase is less than fractional reserve decrease, the money supply stays balanced & its value remains broadly the same.

    It would mean that the banks & government would need to work together re: the money supply; at the moment, banks can & do increase the money supply via fractional reserve lending & the government could but don’t use QE for funding public sector investment.

    @ BT
    You can ‘rubbish’ this information all you like; it is absolutely correct. People can make up their own minds whether our banks or our government should control the money supply & investment.

    Make no mistake – it is a choice. And we have now seen government use the monetary powers available to them – this was exactly the mechanism used to allow government investment in the banks & banking system.

    The same mechanism could be used to fund public investment.

  21. BT,

    As a member of the itinerant community, I understand hardship very well thank you. :)

    If we wish to promote active citizenship amon gour underclasses then unfortunately that costs money. Prom in parks, garden gourmets, charity fun fairs all promote cohesive community relationships and actually tie in with DC’s big society idea rather well. If one wishes to invovle their child in the local community association that will involve a weekly token memebership fee or indeed small sums for daily trips. :)

    I am not purporting to have these kids fully paid up to five star brat camps, I am simply advocating for them the choices and opportunities that I was not able to avail of. :)

  22. “DC now has to give details on this (55% etc) or risk a rebellion in the first few days of his parliament”

    Channel 4 News

  23. Sue,

    Daily Mail is reporting that David Davis is leading the revolt

  24. Sue Marsh,

    “… a rebellion in the first few days of his parliament.”

    You obviously didn’t you hear Dave say: “I am making friends wherever I go.” :-)

  25. @Amber,

    “Also, UK has some of the lowest tax rates in Europe.”

    I don’t agree with this, I’m afraid. UK is one of the most taxed nations on the planet.

    “The UK would not go bankrupt – unless there was a war or some other catastrophe.”

    Think Greece. We would end up in a similar situation. Some other European countries, like Spain, are close to a similar outcome.

    Even the Governor of the Bank of England, Mervyn King, who is totally independent of government, said that massive cuts would be needed to sort the deficit crisis out. All independent economists say the same – that a combination of tax rises and spending cuts are needed.

    The Labour Party doesn’t agree with the need to cut spending massively and raise taxes, they only dispute when such changes should occur (i.e. they say that we shouldn’t start this year as it would hurt the recovery).

  26. Essentially the only difference between the three main parties on the issue of tackling the deficit is the timing of such changes, as well as where they are going to come from. They all agreed that massive cuts would be needed by 2015, but didn’t spell out where they would come from!!!

  27. Don’t forget some of the quotes from Mervyn King himself:-

    ‘It is imperative that our own fiscal problems are dealt with sooner rather than later.”

    “The financial crisis is far from over. As debt has moved from the financial to the public sector, the banking crisis has turned into a potential sovereign debt crisis.”

    “whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be.”

    This is good news for Labour undoubtedly. :-)

  28. @Amber,

    Having run a quick comparison of tax rates around the world, it seems that the UK has a relatively low rate of tax compared to many other Western European countries, but a higher rate compared to non-Western European countries. Tax rates are higher than non-European countries.

    It therefore seems that the UK does have a compartively lower rate of tax compared to the ‘richer’ EU countries. You are, broadly speaking, therefore correct, and I stand corrected on that point. :-)

  29. Within Western Europe itself, the Scandanavian countries pay more tax than the UK, but France and Germany’s tax rates are roughly equivalent.

  30. @ MATT

    Thanks for checking & pretty much agreeing with me about the tax rates.

    I think French & Germans may be faced with increases given the scale of the support thrown behind the Euro.

    They ought not to have done it. Never feed the ‘trolls’ or they will keep coming back for more. Lamont learned this the hard way on Black Wednesday.

    Always be prepared to allow your currency to fall through the floor. Propping it up will only encourage the speculators to play you like a two dollar banjo.

  31. @Amber,

    “Thanks for checking & pretty much agreeing with me about the tax rates.”

    No worries. :-)

    “I think French & Germans may be faced with increases given the scale of the support thrown behind the Euro.”

    You’re probably right. :-)

  32. Please don’t look at headline tax rates, even if it’s tempting. The real question is the proportion of tax in the value added (i would like to compare it to profits, but many companies report depreciation as profits). In this case, the UK is a quasi tax heaven for large and most of medium sized companies, while it is a tax monster for some medium sized and most small companies, who, therefore live on tax dodging.

  33. @Laszlo,

    Please keep posting……. it is refreshing :)

  34. @Simon Kidd sometime in the afternoon

    I’m terribly sorry, I missed your comment.

    Yes, these things do happen, but what you are missing is that it is the direct consequence of the budget control. It is a common occurance in large businesses too (Jack Welsh once advocated getting rid of all budgets, yet GE was one of the most budget driven business). If you want to abolish such awful practices, you have to abolish budget controls (I don’t know how you would sell it to the general public), and use other controls with their own trade offs.

    The whole point is that all these events and anecdotes are completely irrelevant. These are the downside risks of a particular control mechanism. It does not matter if something is cheaper if the behaviours are adjusted to certain expectations (actually NHS looses out on decentralised purchasing, so following the logic of the “standard” perception, the problem is decentralisation, thus centralisation would help, when the problem is the way control is implemented after decentralisation, thus centralisation would not solve anything).

    It is sheer fantasy that you can have only the good bits of a “system”. If you make low levels responsible for costs (purchases) then you need supervision (cost), if you make them “profit centres”, you have to make sure that they have only one function, otherwise they will switch resources between aims depending on the targets, etc.

    In all these respects public services are absolutely no different from businesses. They have exactly the same problems – controlling human behaviour.

    It’s another thing that everybody who deals with it knows about public services, but nobody voices it. Thus the legitimasing function of “efficiency savings” come into force through anecdotes, which is not valid (even if the anecdotes are true and repulsive).

  35. We also have to make the distinction between business (corporate) taxation and personal taxation. Some countries have relatively high levels of corporate taxation but relatively low levels of personal taxation, and vice versa. :)

  36. @Eoin Clarke

    Thank you. Your comment feels good. I will try :-).

    For a few weeks only watched the comments – learned the etiquette here and learned in general – a lot :-). So, I thought it’s time to contribute, especially as I recognised (OK, much earlier) that without contributing the learning is limited.

  37. @Laszlo,

    “For a few weeks only watched the comments – learned the etiquette here and learned in general – a lot :-) . So, I thought it’s time to contribute, especially as I recognised (OK, much earlier) that without contributing the learning is limited.”

    I’m glad you did decide to contribute. Your posts have been very interesting and informative thusfar. :-)

  38. Decent performance by Ed Miliband. Not boxing himself in too much on the left is a smart idea. He was very blunt about Labour’s mistakes. A hard act to follow.

  39. Laszlo – I love your posts too.

  40. Surely Cruddas has the only realistic chance now that other non-divisive figures have gone?

    Ed’s candidacy has effectively sabotaged his brothers, and is merely a bid for a higher profile in the party.

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