George Osborne to abandon financial target

[northwichcat]

Chancellor George Osborne has abandoned his target to restore government finances to a surplus by 2020.

It had been the chancellor's most prized goal and had been driving austerity measures in previous budgets.

However, Mr Osborne said the UK must be "realistic about achieving a surplus by the end of the decade".

The UK economy is showing "clear signs" of shock in the aftermath of the vote to leave the European Union, he said.

In a speech on Friday, Mr Osborne said: "As the governor [of the Bank of England] has said: the referendum is expected to produce a significant negative economic shock to our economy. How we respond will determine the impact on jobs and growth.

"We must provide fiscal credibility, continuing to be tough on the deficit while being realistic about achieving a surplus by the end of the decade. That's exactly what our fiscal rules are designed for."

http://www.bbc.co.uk/news/business-36684452

Not surprising given the money saved through spending cuts and raised through the VAT increase has been used to cut business rates, lower inheritance tax and cut income tax.

 

[SS4]

This has nothing to do with the EU much as Osborne would like otherwise. The deficit would never be cleared by 2020.

To me this proves that the austerity drive was only tangentially at best to cut the deficit and return the country to surplus. The core of the cuts are ideological - those councils in deprived areas (and vote not-Tory) have had their budget slashed to basically inoperable levels but those more affluent councils (Tory controlled) have barely felt a thing. Austerity has been used to stamp on worker's rights ("You're lucky to have a job"), trade unions (a level of stringent not required to elect politicians and just fine to elect the totally-legitimate PCCs) and real wages.

Cynically, the Tories are now able to claim that they're on track to keep on reducing the deficit in the 2020 campaign.

 

[northwichcat]

but those more affluent councils (Tory controlled) have barely felt a thing.

Really?

My town is in Cheshire East (Conservative controlled) in Osborne's constituency and the following has happened since Osborne has become chancellor:

• One subsided bus service completely withdrawn
• Two subsided bus services replaced with less frequent commercial services with much higher fares (£3.50 return fare to local hospital becoming £4.80 overnight in one case.)
• Rail improvements postponed and a potential project possibly cancelled altogether.
• Suspension of garden waste collection outside summer months.
• Street lighting turned off/removed on some rural roads and out-of-order street lights not being fixed promptly.
• Withdrawal of funding for Sure Start centre.
• Closure of Tourist Information Centre.
• Many worn out roads and pavements not being repaired or getting bodged repair jobs.
• Removal of school crossing patrols.
• Staff reductions at local library.
• No maintenance of footpaths not next to roads meaning many are overgrown with weeds including nettles.

Possibly other things I missed as well.

 

[DarloRich]

Really?

My town is in Cheshire East (Conservative controlled) in Osborne's constituency and the following has happened since Osborne has become chancellor:

• One subsided bus service completely withdrawn
• Two subsided bus services replaced with less frequent commercial services with much higher fares (£3.50 return fare to local hospital becoming £4.80 overnight in one case.)
• Rail improvements postponed and a potential project possibly cancelled altogether.
• Suspension of garden waste collection outside summer months.
• Street lighting turned off/removed on some rural roads.
• Withdrawal of funding for Sure Start centre.
• Closure of Tourist Information Centre.
• Many worn out roads and pavements not being repaired.
• Removal of school crossing patrols.
• Staff reductions at local library.

Possibly other things I missed as well.

my goodness - suspended garden waste collections! How will the people of Cheshire cope?

 

[northwichcat]

my goodness - suspended garden waste collections! How will the people of Cheshire cope?

They won't empty your general waste bin if it contains garden rubbish either so you have to find your own way of disposing it - I once saw a man get on a local bus with a bag of garden rubbish!

I was listing everything I could think of off the top of my head, obviously some are bigger problems than others.

 

[Harbornite]

Compost heap. That's one way of dealing with your garden waste.

 

[northwichcat]

Compost heap. That's one way of dealing with your garden waste.

Too much grass cuttings in a compost bin results in poor quality compost.

Can we change the conversation back from rotting rubbish to George Osborne?

 

[radamfi]

The main point to take away here is that Chancellors of the Exchequer can now blame Brexit for pretty much anything and can do anything regarding taxation, spending and cuts without political consequence and the leave crowd will have to say it is worth it to get out of the EU.

 

[Mojo]

Theresa May already said yesterday that she would dump the target if selected as leader.

 

[Xenophon PCDGS]

Is there still a faction of the Brexit campaign who still cannot understand the financial and trade implications of their success?

Regardless of any political points-scoring, let us just concentrate on the period from 2016 to 2020 and of the totally new scenario that is a matter of fact that Britain will have to see new trading patterns re-emerge and no-one at present, not even those of the George Soros financial methodology school, who can forecast how matters will eventually unfold, whilst future trading relationships are not even at a point in which thoughtful discussions can take place.

That matter would be one for a British government of any political hue would now have to face. Ignoring the implications of the reality of the situation and just harping on about their own personal particular view of politics might well give a sense of gratification to those people, but it seems to me to be a very shallow view of the situation that has now ensued.

 

[SS4]

I knew it wouldn't take long but the speed at which Osborne has pledged to cut corporation tax has surprised me.

http://www.bbc.co.uk/news/business-36699642

George Osborne has pledged to slash corporation tax to encourage businesses to still invest in the UK following the EU referendum vote.

In an interview with the Financial Times, the chancellor said he would cut the rate to below 15% - some 5% lower than its current 20% rate.

That would give the UK the lowest corporation tax of any major economy.

Mr Osborne said the cut was part of his plans to build a "super-competitive economy" with low tax rates.

A Treasury spokesperson confirmed the Financial Times's story was correct but said they did not know when the cut would happen.

In March, the chancellor said corporation tax would fall to 17% by 2020.

 

[tbtc]

I knew it wouldn't take long but the speed at which Osborne has pledged to cut corporation tax has surprised me.

http://www.bbc.co.uk/news/business-36699642

This is going to mess up the SNP plans, since lower corporation tax was one of their Independence plans (to undercut "rUK", as they call it).

Osborne's "surplus" plan was only ever a political target. He's failed to meet previous targets - we were supposed to be in surplus by now, if his 2010 plans were remotely accurate.

The real reason for the "target" was to get Labour to agree to it. If they did agree then that tied Labour to the same kind of austere public spending in the short/ medium term.

If Labour didn't agree then the Tories could paint them as "Spending beyond their means" and tell us that Labour's overspending on SureStarts was the reason for the 2008 crash.

But Osborne abandoning his own target doesn't make so many headlines, especially with everyone distracted by "Brexit"

 

[northwichcat]

Osborne's "surplus" plan was only ever a political target.

Osborne forced a budget surplus law: http://www.bbc.co.uk/news/business-33074500

 

[WelshBluebird]

Really?

My town is in Cheshire East (Conservative controlled) in Osborne's constituency and the following has happened since Osborne has become chancellor:

• One subsided bus service completely withdrawn
• Two subsided bus services replaced with less frequent commercial services with much higher fares (£3.50 return fare to local hospital becoming £4.80 overnight in one case.)
• Rail improvements postponed and a potential project possibly cancelled altogether.
• Suspension of garden waste collection outside summer months.
• Street lighting turned off/removed on some rural roads and out-of-order street lights not being fixed promptly.
• Withdrawal of funding for Sure Start centre.
• Closure of Tourist Information Centre.
• Many worn out roads and pavements not being repaired or getting bodged repair jobs.
• Removal of school crossing patrols.
• Staff reductions at local library.
• No maintenance of footpaths not next to roads meaning many are overgrown with weeds including nettles.

Possibly other things I missed as well.

And compare that to what has happened in other areas:

• Landfill waste collections being reduced even further in frequency.
• Closure of local community centres.
• Heavy rationing of adult social care services.
• Closure nurseries.
• Closure of local libraries.
• Changes to school bus boundaries so more families now have to pay.

There has been some talk about if Labour run councils have specifically hit front line services hard in comparison to Tory run councils, in an attempt to make the idea of Tory government cuts seem even worse. Though that does sound a little too tin foil hat for my liking!

 

[northwichcat]

And compare that to what has happened in other areas:

• Landfill waste collections being reduced even further in frequency.
• Closure of local community centres.
• Heavy rationing of adult social care services.
• Closure nurseries.
• Closure of local libraries.
• Changes to school bus boundaries so more families now have to pay.

There has been some talk about if Labour run councils have specifically hit front line services hard in comparison to Tory run councils, in an attempt to make the idea of Tory government cuts seem even worse. Though that does sound a little too tin foil hat for my liking!

Like I said I listed the things off the top of my head that affected my town. Withdrawal of funding for school bus services is something that happened here too but I didn't think of it at the time. Many now travel by train instead which has led to already busy trains becoming very crowded a few years ago, with extra capacity not being made available until the end of 2017.

The next nearest library is 7 miles away so unlike some more metropolitan areas it's not as easy for people to go to an alternative library, which is probably why closure wasn't considered. Waste collections are inconsistent between areas, my area was already fortnightly collections when other areas had weekly collections. Closure of local community centre? It would be nice if we had one in the first place! Like I said funding for a Sure Start centre has been withdrawn, that was the only publicly funded facility for children of under 5 - the other facilities only exist due to private company funding.

Don't forget some councils have changed hands since 2010. Cheshire West council is one and since Labour have taken control of it they decided to cut funding for a redevelopment project in Northwich so there is more funding for public services in the area. Cue the former Conservative leader jumping up and down about Labour deciding that the redevelopment project should get a funding cut.

 

[Xenophon PCDGS]

Not surprising given the money saved through spending cuts and raised through the VAT increase has been used to cut business rates, lower inheritance tax and cut income tax.

All those three examples that you cite have my wholehearted support (especially the second one).

 

[northwichcat]

All those three examples that you cite have my wholehearted support (especially the second one).

My view on inheritance and income tax is pretty much exactly what the Lib Dem policy was.

Increasing the income tax threshold to £10,000 and beyond was common sense - New Labour left us with a system where many part time and low paid workers were paying income tax and then getting their tax refunded through working tax credits. However, working tax credit was only available to over 25s meaning younger employees lost out due to their age.

On the other hand decreasing the 50p income tax threshold (the Conservatives wanted to scrap the 50p threshold, the Lib Dems wanted to keep it which resulted in the 45p compromise) and cutting inheritance tax weren't the right things to be doing when the economy is vulnerable.

With regards to cutting business rates that could result in more people in work or better paid employees but then it could just result in businesses making more profit. Maybe Osborne should have come up with an idea where the businesses who increased the number of employees at the same time as increasing the average pay got rewarded for doing so?