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,

    Just £6 billion this year, as I understand it. Not as radical as it has been portrayed in the media.

  2. @Matt,

    Sorry I disagree again…. :(

    Brown and Balls hate cutting. Balls’ infamous ‘so what’ is testament to that. I would not have surprised me had they run up a few hundred more billion of debt.

    You’ll always pin reddies on busting your bank

    But to say they would have cut is not as straightforward as one would assume.

  3. @Eoin,

    “Sorry I disagree again…. :(”

    No worries. That is what politics is about. :D

  4. Surely the Brown approach was more focussed on growth paying down the debt? With cuts that didn’t include front line services?
    It seemed to work fairly well as the deficit reduced by 11 bn initially? We were predicted to be the strongest European country coming out of the recession.

    Matt – if 6bn is written in stone, what is the point of an emergency budget?

    I know people will never agree – if the economists can’t agree, how can we, but I was quite concerned nonetheless.

  5. @Sue,

    I agree. Growth is the best way to ease the deficit. In fairness to blue their 0.5% NI cut might help achieve that.

  6. @Sue,

    I might well be wrong about the £6 billion. That was my understanding anyway.

    As to the question of why there will be an emergency budget – it is common for any new government to have a budget within 30 or so days of being elected anyway.

  7. @Eoin,

    What if growth doesn’t occur? Bankruptcy would surely be inevitable?

  8. @Matt,

    We have had growth for the last 8-9 months! growth is occurring alright :)

    oil, banks, houses and cars it i sall good! :)

    Also claimant count is falling so dole payout is undershooting forecasts :)

    I won’t deny the deficit is big and fair play to blueys for trying to srt it out. If reds are brutally honest they don’t mind running up a deficit :)

  9. “We have had growth for the last 8-9 months! growth is occurring alright :)”

    At a very low rate. A lot lower than even independent economists forecast. It’s not going as well as they predicted. The recent situation in Europe has also been a set-back.

  10. @Matt,

    They reckon GB/UK is moving along sharpish- faster than everyone else in G7 bar Canada I think.

    Those little 0.4s/5s dont seem like much but you do not be long getting to an annual 2% growth with them. Growth is also accelerating….

    If the sun would just shine then it might grow even quicker!

    I agree though that nothing is uncertain- we have a precarious economic environment….

    Expect an upward revision in the latest quarterly forecasts :)

  11. The main problem with relying on growth to pay off the deficit is that if it didn’t happen – which is still a distinct possibility given the inherent uncertainty and volatility in markets – it would almost certainly result in the UK going bankrupt.

    Therefore, the only question IMO is whether you are going to pay it off by raising taxes or cutting spending. Given the current unprecedented levels of debt in this country, there is only one option IMO – to raise taxes and cut spending.

    By sacrificing things in the short-term, we will have healthier, more sustainable, finances in the medium and long-term.

  12. Anyway, I’m off for the day now. Will post again soon no doubt. :)

  13. Regarding NIC – does anybody know if it is true that the Employer rise will not be implemented but the employee rise will?

    Regarding marriage tax – are the Dems really going to abstain so that the Cons can vote it through? Then the Dems will say, “A big boy did it & ran away.”

  14. @ Matt

    to raise taxes and cut spending

    _________________________________________

    Agreed.

    But we must be careful in rasing taxes. Yes VAT is the easiest but the most likey to affect growth. A increase to say 20% now would IMO be a mistake.

    I think they should announce that VAT will increase incermentally by 0.5% every 6 months to a ceiling of 20%. However should conditions allow this could be halted at any point.

    This would not cause a dramatic cut in growth, it would gradually increase the tax take, it would not hit peoples pockets immediately and would send the right messages to the market.

  15. I’m not sure Matt. certainly your party seem to think so, but Labour were supporting growth with some of their spending….

    Oh I don’t know, I do know this new Office for Budget Responsibility (!!) are going to be providing the forecasts now and it was suggested they would be LOWER – how does that benefit the ConDemNation?

    Trouble with politics is you need a degree in economics, sociology, philosophy, history and psychology to understand it all. My little old English Lit is often inadequte!!

  16. Amber – Confirmed, tax break for the businesses but the worker’s still pay. “Tax on Jobs” still very much alive.

  17. So my very fuddled economic understanding tells me it will help businesses OFFER jobs, but won’t put any back into the economy as growth (ie no workers spending it????)

  18. @Eoin
    Sorry for tardy response but work got in the way.
    I do agree with your concerns that the fixed term Parliaments are being foisted upon us. However there are many laws passed that were not in anyone’s manifesto to take account of changing circumstances. Many manifesto commitments get shelved in government.
    The fixed term should have been a cross party agreement with the 55% agreed before we voted if that is what the parties wanted. As I understood it, manifesto commitments can not be voted down by the HoL. I don’t know if there is anything binding about them otherwise. Maybe internal party rules dictate matters.
    Re: Cameron going on and on after being defeated by a 50%+1 vote. I understand that he cannot be made to resign under the present sysytem but this new alliance can enact laws with or without the PM. They can put through a law to remove him. We put people under house arrest for less.
    Re: Scotland. I draw your attention to the mechanisms of the Scotland Act 1998 Section 3(i) and sections 45 and 46. This relates to extraordinary elections and the first minister. My brief reading suggests that when the First Minister falls under a simple no confidence motion the Scottish parliament has 28 days to elect a new FM or failing that hold a dissolution vote requiring 66%. This has been the law in Scotland for some time and has weathered majority, coalition and minority governments with seemingly no fuss. I am not a lawyer so maybe I got it wrong but that is how it reads to me. This law was brought in by Labour but I would be surprised if the 1997 manifesto had all the procedural details in it. To be fair I haven’t got a copy.

  19. I think there’s a terrible amount of naivity about this cut issue. They will do exactly how Thatcher did: giving orders to the managers of various public bodies of “efficiency savings”, then they recognise that there is none (the stuff about NHS management, for example, is pure demagogy – the proportion of managers in the NHS is 3%, in the large UK companies it is around 15%). Most of them have been squeezed by now to avoid tax cuts during the Labour government. So these managers then will cut services and people. This is what was done in the 1980s. There will not be differentiation between frontline and backoffice (it’s completely impossible to separate anyway. Beyond a certain level back office cuts will affect frontline anyway), but how the target cuts (sorry, efficiency savings) can be achieved. This is why the number of hospital beds fell by almost 40% in the 1980s.

    The 6 billion is a lot: it’s this year’s growth.

    I have looked through Vince Cable’s speeches in the last five years for a paper I’m preparing. He has absolutely no idea about economic policy – all his speeches were about state budget and in general he is in favour of global (that is undifferentiated) cuts. So, he could make immense damage to the British economy if he is allowed – he will actually do the same as Osborn in the Treasury. So the economy will be in double squeeze.

  20. @lazio

    Are you really saying there are no efficiency savings in the NHS at all ?

    Well i worked for a year in the NHS, i needed a 4 socket extension plug, £4.99 in Argos. i’ll get one at lunch time thoguht I. Nope, I was immidiatly told that I had to put a wroks request in, so i did, £35 off my budget, it arrived in bits, i’ll get my screwdriver out, but no I had to submit another works request for its construction, a week later 2 electricians turned up….

    Now if that isn’t wast I don’t know what is. i have countless other examples I could quote.

  21. I could give you some classics from the MoD or from education, small things that just don’t happen in business because there are cheaper more efficeint ways of doing the work……

  22. Re: enhanced majority

    Christopher Chope on [email protected]: ‘Parliament is sovereign… this has not been discussed with parliamentarians… they are confusing stability with strength…’

    From The Guardian:
    Jeffrey Jowell QC (UCL): ‘…a statute providing for a 55% majority could be annended next year with a simple majority.’
    Vernon Bogdanor (Ox): ‘…this legislation could be repealed by a simple majority.’

    Meanwhile from the FT:
    Merkel/Sarkosy will insist on a Tuesday vote regarding regulatory framework for hedge funds and private equity (GB persuaded them on postponement)

  23. Other than managers, one thing that definitely needs to be cut in the NHS is doctors’ salaries. A 10% cut all round, and if they refuse to be on call at night, a 20% cut.

  24. Amber “Regarding NIC – does anybody know if it is true that the Employer rise will not be implemented but the employee rise will?”

    The initial coalition document says:

    The parties agree that the personal allowance for income tax should be increased in order to help lower and middle income earners. We agree to announce in the first Budget a substantial increase in the personal allowance from April 2011, with the benefits focused on those with lower and middle incomes. This will be funded with the money that would have been used to pay for the increase in employee national insurance thresholds proposed by the Conservatives… The increase in employer national insurance thresholds proposed by the Conservatives will go ahead in order to stop Labour’s jobs tax. We also agree to a longer term policy objective of further increasing the personal allowance to £10,000, making further real terms steps each year towards this objective.

  25. @Sue M

    “Amber – Confirmed, tax break for the businesses but the worker’s still pay. “Tax on Jobs” still very much alive.”

    Sorry but no. Obviously a “jobs tax” must refer to the employers’ bit of it – i.e. whilst that remained there was a definite disincentive for employers to create more jobs as they were paying more for helping the economy in this way.

    The employees’ bit is clearly not the “jobs tax that will kill the recovery” – what employee is going to say “No, I’ll go on the dole thanks, rather than pay the extra NI contribution”?!

    On the face of it, it looks like employees could be worse off by the changes – but not on balance (although, as with any re-balancing of the tax system, you have losers as well as winners) because the Conservatives/Libs are lifting the lower earners our of a lot of tax with other policies. So, a very fair redistribution favouring the least well-off without sacrificing jobs – it should appeal even to you “class war Labourites” on the left there! :)

  26. Funnily enough, Mike N’s quote just posted above mine above actually confirms what I have just posted, although the quote he gives needs to be read about 3 times before you understand what it’s saying.

  27. So combined with the probable hike in VAT, a general transfer of taxation from business to the individual. Any word on the plans to lower the rate of corporation tax?

  28. @P.BROWN

    “So combined with the probable hike in VAT, a general transfer of taxation from business to the individual.”

    A misguided interpretation. May I point you to the previous 3 postings to yours, which may help you uinderstand there is significant gain for many individuals, especially those who need it most?

    Regards

  29. As for the “hike” in VAT (which, incidentally, affects businesses as well as individuals – i.e. it affects everyone alike, whether employers or employees or neither!), well let’s discuss that when it actually happens!

  30. Aleksandar,

    I typed you a long reply but the code did not read. Grr…

    Essentially, you are englecting the failure ALSO of the opposition to form a gov. The gov. having failed a no confidence vote can challenge the opposition to try and form a gov. as Salmond threatened at the last budget. Once neither can form a gov. then an election is triggered. Beleive me, the 66% need never be required.

  31. Laszlo,

    A lot of very accurate comments. This type of stuff goes over peoples heads, particulalry the blurring between front and backroom staff. What a 1950s concept!

    A human in a job should be the same consideration regardless if they are employed in the lavatory (not a joke since many are now employed in lavatories the length and breadth of England).

    Regarding VC- it is easy to create an air of competence when one is being populist.

  32. Now that the election is over, can I suggest that this non-sense tax on jobs is stopped? The proportion of wage in the UK GDP is less than half, thus the 1% NI reduces profits by about a third of a percent (after deducting depreciation from the GDP). So, the argument of the job tax is that we have so rotten employers who choose laying off people rather than accepting a third of a percent reduction in profits and also they would not take on people, even if there is capacity shortage if they have to take this burden on.

    Those who argue that 1% NI means tax on jobs, by definition would have to argue against minimum wage. So they have to advocate that it was fine, when in 1997 6 million people earned less than 2 pounds an hour and 2 million of them less than a pound. If anything, the minimum wage is tax on jobs – but it is a price of living in a decent society. The minimum wage did put pressure on recruitment of unskilled employees and to some degree youth. Having said that most of the private sector jobs created in the UK since the last recession were actually unskilled and semi skilled. True economics is highly complicated…

    The 1% NI paid by employees is reduction in wages – as it will presumably go to finance debt service (please, do not come with the 10,000 pound thing – with cutting public services, it will be rendered meaningless).

  33. BT

    I’m not sure there’s anyone who genuinely believes there won’t be a VAT rise. VAT has a greater proportional affect on consumers than businesses, there’s no denying that. And the effect of a rise to 20% will more than cancel out the relief provided to those on lower incomes by the tax band reorganisation. So assuming the rise in VAT, my analysis holds true.

    I actually want this coalition to succeed, believe it or not. I’m not tied to any one party or even any one ‘side’ of any debate (yes, I have voted Conservative before). However I think they’re doing things back-to-front here.

  34. @Lazlo,

    The £10,000 tax free allowance is rendered useless in several ways.

    1. They only propose to work towards it…
    2. They are not even going to begin until the next financial year…..
    3. If the current Tax free allowance c.£7,000 rose with inflation year on year we will be close to £9,000 by 2015 anyway.
    4. Thus the remaining c£1,000 tax free allowance only makes a difference of £200 to a wage packet per year because the £1,000 would only be liable for a 20% tax anyway.
    5. Given that this £200 will only benefit a tax payer for the financial year 2015-6, it actually £40 benefit per person per year over the life term of the parliament.
    6. Given that 20% vat will add £506 per person per year over the life term of the parliament and effects those beneath £10,000 proportionately the same as a millionaire then over the coruse of parliament it is expected to cost an average person £2530 pounds…. deduct the £200 saving a punter will make in 2015-6 from the PTA threshold of £10K then the poorest in our society will be £2330 worse off on those two calculations alone.

    I would absolute dread to have to be the one to factor in all the other changes that will most likely come our way…

    Labours 1% rise in NI would only have cost the average worker £100 per year… x 5 years = £500 over the course of parliament.

    Arguably, this is much fairer on those worse off…..

  35. @P Brown

    Correct. And VAT increase will affect consumers very differently, as you said, it will disproportionally affect people on lower income. The funny/tragic thing is that historically liberals fought for replacement of consumption tax with income tax (proportional taxation), while consumption tax was advocated by the then Tory Party.

    I actually think that the government, if they think they can get away with it politically, would put VAT on food rather than increasing the 17.5%, partly because a significant hike would encourage hand-to-hand payments.

  36. @Eoin Clarke

    Nice calculation. Fully agree. Quite frightening, isn’t it?

    Plus the change in spending habits as a result of reduced public services (welfare to work, skill formation courses, etc.).

  37. I would like to see basic rate income tax abolished altogether, and a high rate of VAT put in place instead.

  38. “And VAT increase will affect consumers very differently, as you said, it will disproportionally affect people on lower income”

    Not necessarily so. Food is still zero rated, as are printed papers and children’s clothes. As long as the most basic thing, food, is zero rated, the poor will cope fine. I do not favour increasing VAT on utilities, by the way.

  39. What rerally hits the poor is council tax, because it hits everyone regardless of income. This is another tax that should go.

  40. @P.Brown

    “BT

    I’m not sure there’s anyone who genuinely believes there won’t be a VAT rise.”

    Including me, as it happens! There are too many unknowns with this though, e.g. when, how much, exemptions etc.

    Of course, I agree we need to be realistic and accept that every single person will have to take a share of the burden of our awful debt.

    I genuinely believe, though, that the current government wants to protect the poorest – whilst at the same time helping businesses to lead US ALL out of recession and into prosperity.

    It is a fine line to tread, and some on the left will miss this point and accuse the government of “a sop” to big business every time they make it easier for them to prosper AND THUS HELP US ALL.

    Of course the government will not get every decision right, and will have to undo some, perhaps.

    I guess we are all agreed that EVERYONE will notice some pinch – if this government is popular after 3-4 years it will be a miracle, whatever they do meanwhile.

  41. Laszlo,

    Frightening it is to be sure.

    I expect an employers reduction in NI contribution soon
    I expect a freezing on minimum wage (a real term decrease of 2.7% P.A.)
    The unemployment, child benefit, WTC + CTC will not rise with inflation, thus that is a 10-15% real term decrease over the course of parliament (roughly £3,000 per lower income family on the latter to Credit alone) The Child benefit freeze will only mean about £150 over the course of parl per family. The child Trust fund abolition is a further £250.

    VAT really is the deal breaker…. if it goes on food it will put about 250,000 back under the poverty line. :(

  42. @Mark LV,

    VAT is a tax on children, pensioners, unemployed and sick…. it takes no account of whether or not you are economically active…. (The categories I mentioned I hope satisfy the criteria for the less well off)

  43. @Laszlo
    “I think there’s a terrible amount of naivity about this cut issue. They will do exactly how Thatcher did: giving orders to the managers of various public bodies of “efficiency savings”, then they recognise that there is none (the stuff about NHS management, for example, is pure demagogy – the proportion of managers in the NHS is 3%, in the large UK companies it is around 15%). Most of them have been squeezed by now to avoid tax cuts during the Labour government. So these managers then will cut services and people. This is what was done in the 1980s. There will not be differentiation between frontline and backoffice (it’s completely impossible to separate anyway. Beyond a certain level back office cuts will affect frontline anyway), but how the target cuts (sorry, efficiency savings) can be achieved. This is why the number of hospital beds fell by almost 40% in the 1980s.”

    I can see your point but why has the ratio of backroom staff to frontline services shifted so much the wrong way the last 13 years?

    So there must be something in the logic of the government. I mean, seriously, you can’t think that no-one’s actually told the Conservatives what you’ve just said above?

    Or are you just thinking that there’s not as much opportunity for protecting frontline services as we’d all been hoping?

  44. Mark LV, Re – Doctor’s salaries. I completely agree.

    @Matt – “The main problem with relying on growth to pay off the deficit is that if it didn’t happen – which is still a distinct possibility given the inherent uncertainty and volatility in markets – it would almost certainly result in the UK going bankrupt.”

    Great, simple thought Matt. Ridiculously, that hadn’t occurred to me!

  45. @ LASZLO

    I actually think that the government, if they think they can get away with it politically, would put VAT on food rather than increasing the 17.5%, partly because a significant hike would encourage hand-to-hand payments.
    ——————————————————

    I doubt if they will put VAT on food – that would not be well received by their letter writing chums at Tesco & M+S ;-)

  46. BT, 3.28pm

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

  47. BT says,

    You would be amazed at th eamount of back room staff (or so called at least) who are indespensible… in some cases moreso than the front line staff ( or so called at least)

    The concept strikes me as very 1960s back in the old ear of demarcation…..

  48. @Eoin

    “@Mark LV,

    VAT is a tax on children, pensioners, unemployed and sick…. it takes no account of whether or not you are economically active…. (The categories I mentioned I hope satisfy the criteria for the less well off)”

    But surely Mark’s point is that these groups will be less affected because they tend to rely more upon the commodities which are (at the moment, anyway) exempt?

    I mean, of course no-one’s saying that the vulnerable or anyone else are exempt from VAT hikes. Everyone will feel pain – and, like it or not, it’s the party you support that created the conditions for such a ballooning deficit which is going to cause the pain (I refer to the fact that they created a ‘high spend’ environment PRIOR to the global recession – which is why, in spite of our alleged financial position in the world, have a much bigger debt threatening to bring us all down now.)

  49. Laszlo, 3.59pm

    You made those points brilliantly, thank you.

  50. BT says, MArk Lv,

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

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

    companies pass prices on guys surely you both know that?

    I wont go into more detail because I am going to give you the benefit of the doubt that you have just ill-thought your statements :)

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