Worse off than you were in 2005

Beer Moth

Economy?

It's immigration, stupid.

denis cooper

The government could turn this round to say that thanks to the steps they took, against Tory opposition, the average Briton has only suffered a small loss of income - £281 a year.

And while of course any drop is regrettable that is a very remarkable achievement by the government, considering how close the world came to a complete financial and economic meltdown, which was only averted by the international actions proposed and co-ordinated by Gordon Brown.

And there'd be some truth in that, as the Guardian article about this speech compares per capita GDP of £20,883 in the third quarter of 2005 with a figure of £20,602 in the second quarter of this year, and the difference of £281 is a drop of only 1.3%.

What isn't being said is that average income would have dropped much more dramatically if the government hadn't been prepared to borrow massively in order to maintain public spending.

Taking a figure of £180 billion a year, and dividing that by 60 million, comes to £3000 a year; so roughly speaking about £3000 of that £20,602 can be identified as borrowed money. Take off that £3000, and the drop would have been more like 17%.

So if the government wasn't running that massive budget deficit the drop in per capita GDP, or average income as it's being misrepresented, would be at least an order of magnitude greater - at least, because if public spending had been drastically curtailed then the economy would have been sent into a (possibly irrecoverable) nosedive.

Nor is it being said that the government has only been able to borrow so much because the Bank of England has used £198 billion of newly created money to prop up (rig) the gilts market, buying up previously issued gilts as fast as the Treasury has been selling new gilts.

So an alternative back of the envelope calculation is to take that £198 billion spent on gilts:

http://www.bankofengland.co.uk/markets/apf/results.htm

and divide it by 60 million, and the answer is that since March the Bank has printed £3,300 per head, which the government has borrowed through the gilts market and spent on paying state employees and contractors, so preventing a much more dramatic and potentially disastrous fall in average income.

Then the question arises: what would the Tories have done if they had been in government?

JohnOfEnfield

Mr. Cooper. Any Tory Government would not have run a deficit in every year of the economic cycle. To run up a debts which in absolute & percentage terms (of GDP) vastly exceed those in peacetime and will inevitably under a Labour government exceed even our wartime debts, is criminal. Even treasonable.

Brown's legacy is appalling and is his alone - it not caused by issues beyond his control.

paulg

@dennis cooper
the tories would not have been in this position, Mr Brown fuelled a credit boom and turned a blind eye to it so he could tax the profits,
We have allreaped what he sowed

toco

Just think how much better off we all would have been had it not been for swarmy Blair and bully boy Brown-no dismantling of our regulatory system leading to the biggest personal per capita debt on record,no planned covert mass immigration,no massive increase in non performing jobsworths,no Iraq war due to WMDs and many,many more.....Bully boy Brown should vacate public service and let us get on with clearing up the mess he has created.

HFC

What's this ticker thing all about? Is that relevant to my pocket, too?

http://www.spectator.co.uk/coffeehouse/3564956/the-coffee-house-debt-counter-information-and-sources.thtml

John Wilkes

There is an additional way in which Dennis Cooper appears to be talking b*****ks - his calculation takes no account of inflation. It may well be that the reason the decline of per capita GDP is so unusual is that inflation would, presumably, raise it even when growth was relatively modest. There has been a lot of inflation over this parliament and that is why the figure is so dismal. Can no one make Brown correct his "Brownies" - this one or any of the others?

Liberty

Mr Cooper.

That's nonsense. If costs exceed income and you borrow to bolster income you will eventually have to cuts cost in addition to repaying the debt plus interest on it so the final cost will be much greater and drop in your net income greater. It is the same for the nation. Printing money does not help. The nation's wealth remains the same, it is just spread over more money causing inflation. The government is either economically illiterate or they are hoping that when the inflation kicks, debts have to be repaid, there is nothing in the kitty and the bankers have gone to Zurich they will be long gone and cuddling up with their pensions ans sniping from the sidelines, saying that the wicked Tories have done it again: Labour does the spending and the Tories have to pay the bills, just like in 1979.

Bob Frost

Listening to the blessed Frank Field on the Today programme this morning he was foreseeing an inevitable lowering of standards of living in the UK. He's right. We have been living high on the hog on borrowed money which we are about to have to pay back. Worse off? You ain't seen nothing yet! Get used to it......

TrevorsDen

Cooper seems to think that the borrowing is free money.

"average income would have dropped much more dramatically if the government hadn't been prepared to borrow massively"

So what will happen to incomes when that money has to be paid back.

oh I get it under socialist economics we do not pay it back. we just take out another credit card. Watch out for brown and darling (and Cooper) walking round in shell suits.

TrevorsDen

Dear Frank ... he should defect to the tories. Wonder if he will?

Meantime the Telegraph reports

http://www.telegraph.co.uk/news/newstopics/politics/7309716/Sir-Gus-ODonnell-I-did-tell-Gordon-Brown-to-be-nice-to-officials.html

"The head of the civil service has admitted discussing with Gordon Brown how he should treat his staff. "

Game set match to Rawnsley. Brown, No10 and the entire Labour party and movement shown to be proven liars.

And for further proof the Telegraph also reports ...
"Samantha Cameron is to be the new target of a Labour smear campaign.
“Briefing against her has already begun,” discloses my man in Gordon Brown’s bunker.
Astonishingly, Labour officials claim that David Cameron’s wife, who transformed the fortunes of the Mayfair stationer Smythson while raising three children, is “lazy”. "

What a nice man Brown is and what a nice party he leads.

2trueblue

denis cooper,
yes they could turn it round ( and are trying to do so) and expect even the village idiot to agree with them. The reality is that when Gordons debt is still being paid off in 25yrs time, I will be dead but my children and grandchildren will be paying it back.

My childrens prosperity has been stolen, my retirement that I saved for has not been enhanced. Thanks to Gordon Brown and Liebore we are all worse off. When Liebore took over in 1997 they inherited the best set of books since the war. What have they done? They have spent it all, and before the current financial crisis they had pushed our public debt to an unprecedented level for any government in peace time, whilst allowing a boom situation to occur unchecked, and personal debt to rise to a new high. We have a population that has grown to a level that no one can put a true figure on.

We have schools where 150 languages are spoken, a health service where translators are earning more that our young doctors, and I can not think of any other country that does so. We are governed by a Scottish elite who gave their own countrymen their own parliament and have been busy destroying England.

What would the Tories have done?

You would not be starting from the same spot, so difficult to say. The thing is, we do not actually know how bad it really is. Liebore have all sorts of 'off-line' PFI and PPE and other little scams that we do not have figures for.

So, having ruined the future by his past actions I can not see a way of putting his stewardship of our finances in a positive light. Those in part-time and full time employment in the private sector are in real terms earning less, whilst all in the public sector are earning more. If the private sector does not grow the country will not grow, so whether you print money or increase the number of public sector and borrow more to do so, how do we go forward into positive territory? The figures we are given for inflation do not have any relation to the reality of rising costs of fuel, food, rent, council taxes, NI, and taxes that we have had inflicted on us by Liebore in thee past 13yrs. They have also destroyed our democracy and given it to the EU, which will cost us more and more each year. The EU has accentuated the problems of all of the weaker members of the union because it has removed any wiggle room they could have taken to improve their situation , ie Ireland, Spain, Italy, Greece.

They can indeed turn words around, but the reality is, we are all worse off, will continue to be, and it is a direct result of Liebores mismanagement of our finances.

jaybs

It is fine for George to borrow one word from Regan, but the main problem is, does George Osborne connect with voters? I have my doubts.

TGF UKIP

At this point I've only heard about but not yet had a chance to read your piece in this week's mag which, from what I've heard, is a Speccie hack, for the first time, having the gumption to stand up, say the obvious and name names. Hooray, hooray, hooray! I hope you are now going to share your piece with all CHers.

Meanwhile, prepare yourself for the avalanche of wailing protest that will be coming your way from Wolverhampton.

denis cooper

@ JohnOfEnfield & paulg & 2trueblue - The question "what would the Tories have done if they had been in government?" refers to how they would have dealt with the crisis situation if they'd been in office at the time, for example after winning a general election in the autumn of 2007.

Saying that a Tory government would never have allowed the situation to develop in the first place does not answer that question, and in any case it may not even be true as the Tories had so little to say about the risks which were developing during the preceding years. Hindsight is a wonderful thing.

When the crisis hit, the impression I got was that Osborne was out completely of his depth and didn't have the faintest idea what he would do differently to the government.

Even now, it's not clear whether he approves or disapproves of the Bank of England creating £3300 of new money per head over the past year, or whether he comprehends how that money has been passed to the Treasury via the gilts market.

Nor, as far as I know, has he said anything about when he would aim to actually balance the budget, rather than just halving the annual deficit.

@ John Wilkes - The figures of £20,883 and £20,602 came from the Guardian article trailing Osborne's speech:

http://www.guardian.co.uk/uk/2010/feb/23/george-osborne-voters-worse-off

"George Osborne says voters are £281 each worse off in 'broken economy'"

and

"The figures are at 2005 prices adjusted for inflation."

So you're the one who's talking b*****ks.

@ Liberty & Trevorsden - Of course borrowing to supplement income is fraught with risk and generally a bad idea, which is why I've questioned the political consensus that the British government should routinely do it, eg here:

http://www.spectator.co.uk/coffeehouse/5747198/number-crunching-cuts.thtml

and called for an entrenched constitutional law, a Budget Deficit (Prohibition) Act, forbidding the government from running a budget deficit without express permission, which would only be given under exceptional circumstances, eg here:

http://www.spectator.co.uk/coffeehouse/5702583/memo-to-brown-before-boldness-comes-unity.thtml

I don't know whether the Tory party is still the Nasty Party, but from the comments here you're certainly the Stupid Party.

You're offered a warning that your man is exposing himself by running with this nominal figure of £281 per head, a decline of only 1.3%, without backing that up by highlighting that the decline would have been an order of magnitude greater without the Bank printing and the Treasury borrowing £3300 per head, but you're just too stupid to see the point and reply with knee-jerk rants.

JONNY

Will they ever go for the jugular one asks?
Is it is indeed true that the Coulson-Hilton line is to avoid anything negative or nasty?
All I can tell them is that if this is true they are up the bloody creek. Playing softball while Labour work the smears will lose them the Election.
Just concentrate on 2 killer points.
1.Brown will tax you (Middle England) out of existence. He has a track record there. Next time it'll be far worse. Trump their TORY CUTS card with our more lethal LABOUR TAX one.
And go for the UKIP vote by playing hardball on Immigration.
Anyone listening out there?

2trueblue

Denis Cooper. you are a tad arrogant. I only have one man, thats the one I married, so you can cut that out.

You failed to specify that you wanted your argument to begin from AFTER Liebore had wrecked everything. Right now you appear to see only that the Tories have problems seeing how to mend the massive deficit. Liebore have indeed changed their mind about when, if, how, what, they will actually do, so I think that you are a bit blinkered. Liebore do have the knowledge, well they have the books and are in a better position to make judgements about what exactly they will do. What is their great plan? WE have had more chatter from Darling (shom I think is a Decent Man), Brown, Mandy and frankly it is not all joined up. We have the seen that Liebore are incompetent and monitarially incontinent when it comes to managing the economy. The result is that we will pay dearly in the coming decades for their total mismanagement whilst other countires will grow and recover.

You can call it ranting but the fact is you can turn words whichever way you want, one of Liebores rare talents, but we have been left with a massive debt and unless you do not live in the UK, will cost us all dearly in higher taxes, slower growth and a lower standard of living for decades. Debt is debt and the only way to get rid of it is yo pay it back.