The Condem Spending Bonanza
Passing Shopper | 13.09.2010 08:04 | Analysis | Public sector cuts | World
The Condem Coalition want to cut public spending but seem to be going around it by increasing public spending.
The Condem Coalition have an unrealistic ideological commitment to spending cuts. This might seem like a good idea to people until you begin to examine the costs of those cuts.
By selling the Royal Mail, the Government hopes to raise money. But, a privatisation costs up to a billion to achieve. This would not include the eight billion in pension shortfall. Thus the Government needs to cut nine billion just to stand still. By standing still, we mean being in the same mess as we were before the cuts (which will surely cure all) take place.
Then there is the abolition of the regional development agencies. The cutting of these - surely - saved the two billion in quango money. Sadly, by cutting that two billion, the government loses three billion in matching funding from the European Union. So that takes five billion out of the economy. Taking the total to thirteen billion in additional cuts just to stand still.
Of course, those schools cuts should have saved billions. Just to announce that the building program was frozen - not even cut - cost £220m to stand still. But surely that saves £55Bn. In fact, that is £55Bn over 20 years. At most, that cut saves £2.75Bn in this year - which is the important year for the purposes of the budget deficit. At last, a real cut. However, that cut needs to be seen in the light of the contracts already signed which will cost two and a half billion in legally binding exit costs. At best, the education cut is neutral.
Then, there is the order for two new aircraft carriers at up to three billion. True, this will create a few jobs. Unless the Condems put it out to competitive tender and give the contract to Korea or Japan - both have better shipbuilding capacities than the UK, although the UK can do better fitting...
Already, the Condems have announced about £17Bn in increased spending. Which puts the deficit at £173Bn instead of the £156Bn claimed. Not one bit of that budget balancing improves anything for anyone - except the banks. Because of the increased deficit the electorate are paying more to sustain the debt.
This is the same tactic that has reduced Greece to semi-perpetual unrest. The same tactic that led to many Latin American countries to repudiate their IMF debts. Even if you are a tory voter, the current government are demonstrably idiotic: increasing public expenditure while saying they need to make cuts.
By selling the Royal Mail, the Government hopes to raise money. But, a privatisation costs up to a billion to achieve. This would not include the eight billion in pension shortfall. Thus the Government needs to cut nine billion just to stand still. By standing still, we mean being in the same mess as we were before the cuts (which will surely cure all) take place.
Then there is the abolition of the regional development agencies. The cutting of these - surely - saved the two billion in quango money. Sadly, by cutting that two billion, the government loses three billion in matching funding from the European Union. So that takes five billion out of the economy. Taking the total to thirteen billion in additional cuts just to stand still.
Of course, those schools cuts should have saved billions. Just to announce that the building program was frozen - not even cut - cost £220m to stand still. But surely that saves £55Bn. In fact, that is £55Bn over 20 years. At most, that cut saves £2.75Bn in this year - which is the important year for the purposes of the budget deficit. At last, a real cut. However, that cut needs to be seen in the light of the contracts already signed which will cost two and a half billion in legally binding exit costs. At best, the education cut is neutral.
Then, there is the order for two new aircraft carriers at up to three billion. True, this will create a few jobs. Unless the Condems put it out to competitive tender and give the contract to Korea or Japan - both have better shipbuilding capacities than the UK, although the UK can do better fitting...
Already, the Condems have announced about £17Bn in increased spending. Which puts the deficit at £173Bn instead of the £156Bn claimed. Not one bit of that budget balancing improves anything for anyone - except the banks. Because of the increased deficit the electorate are paying more to sustain the debt.
This is the same tactic that has reduced Greece to semi-perpetual unrest. The same tactic that led to many Latin American countries to repudiate their IMF debts. Even if you are a tory voter, the current government are demonstrably idiotic: increasing public expenditure while saying they need to make cuts.
Passing Shopper
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