| Topic: | Re:Re:Re:Re:Re:Re:Re:Mansion Tax and Bedroom Tax | |
| Posted by: | Sam Hearn | |
| Date/Time: | 20/04/15 12:00:00 |
| At the crux of Labour's financial mismanagement of the public finances is what is known as "running a structural budget deficit". To try and explain this simply, almost all economists and central banker agree that in times of economic recession governments should spend more they receive in tax revenues - some of this happens "naturally" as benefits paid to the unemployed and the low paid increase. However when the recession is past governments should aim for balanced budgets and even surpluses to repay the debts incurred in the bad times. This was the fiscal plan that Gordon Brown inherited and actually stuck to for two years. However Gordon Brown, Canute like in his arrogance, came to believe that he had banished boom and bust and could keep on running deficits even when the economy was growing and the UK could actually have afforded to repay debt. When the World economy hit the buffers in 2008 the UK Government was spending money like it was going out of style and there was a structural budget deficit. Even worse, Gordon had promised to spend even more and by 2010 the situation was completely out of control - one in every four pounds that Government was spending was being borrowed. Yes its a good idea for Governments to run deficits during recessions but there are limits! Budgetary control had completely broken down in some departments. in Defence for example spending commitments had been entered into that were £37bn greater than the Department's budget. The World's number one super power (the USA) has nine aircraft carriers and Gordon thought that we should have two even though he had made no provision for the aircraft to sit on them. Just before he left office orders were placed for two aircraft carriers in Scottish Ship yards ..... Yes Labour did leave an economic mess and had no plans on how to resolve it other than wishful thinking. |