Tuesday, April 27, 2010

IFS spending cuts worst since the 1970's shocker!

The main news, and rightly so, is that the well respected Institute of Fiscal Studies has produced a report that says that all the main parties are not telling the truth about spending cuts. The BBC has this.

At best we have the worst spending cuts since the 1970's (worse than Thatcher) and at worst, since the Second World War (It is not clear how much worse the latter is than the former however).

In defence of the Conservatives and Liberal Democrats, the IFS does point out that they have no numbers to work from in terms of detail because there has been no spending review. Labour have said that this is because public finances are uncertain. True. However as the IFS point out, that will continue.

What is the biggest lesson of this?

Well there are two.

One is that we need more honesty in political debate, without the "they want to murder babies" sort of debate that we get especially with Ed Balls talking.

The "They want to murder your babies" style of debate really hinders honesty, and is currently best exemplified by the cancer scare Labour party political broadcast ripped apart here. In essence it is a very narrow pointless scare story over a stupid target which achieves nothing.

The other thing it really does say is that the increases in public spending by Labour over the last 13 years have been unsustainable and irresponsible.

Labour started in government with doctors who were well paid by OECD standards, and finish it with doctors being the best paid in the OECD. I never thought doctors were on the poverty line.

Lastly though, there is thankfully for you, the main three political parties and I, a "hole" in the IFS's figures, and that is the dividend payments from our shares in Lloyds TSB and indeed RBS as well as the potential profits from the sale of those shares. That could be worth a few billion a year. After all Lloyds TSB expects a profit this year.

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