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Autumn statement protects the vulnerable and safeguards our economy

November 29, 2011

Just back from the House of Commons, where I praised the Coalition Government for boosting the incomes of the poor despite the terrible economic circumstances.   Prior to the statement there was speculation that the Chancellor would fail to give the unemployed and pensioners an increase that matched the current high rate of inflation.  In fact out of work benefits  will get a 5.2% increase and the state pension will go up by £5.30 a week.  In response to a question from me the Chancellor also confirmed that the Coalition will continue to raise the income tax threshold in the next Budget, giving all basic rate tax payers a tax cut and lifting more of  the low paid out of tax altogether.

It’s worth reminding ourselves that Britain fell into a deeper economic hole than any other major economy between 2007 and 2009.  It all appeared really bad at the time…but in fact we now know it was even worse than Gordon Brown claimed.  Accurate economic data lags behind events and the last Labour government published its own figures.  The independent Office for National Statistics (ONS) has now confirmed that the economy shrank by 7% in the last 3 years under Labour.   The Coalition has set up the independent Office for Budget Responsibility (OBR)  to prepare economic forecasts. The figures George Osborne announced today were not his own, they were from OBR.  The OBR have confirmed that growth will be lower than their previous forecasts but Britain is not heading f0r a recession.  

The OBR have also stated that the low growth is not a result of the government’s deficit reduction, as Labour claim.  Rather, it is a result of an external inflation shock (oil prices etc) and turbulence in the Euro zone.  The OECD have made similar points.  It is worth noting that in May 2010 Britain and Italy were able to borrow at the same interest rate.  Now Italy’s borrowing costs have soared to over 6% whereas Britain’s triple AAA bond rating keeps costs at 2%, similar to Germany’s.  This international confidence keeps down the cost of government borrowing and helps everyone with a mortgage or business loan to service.

The government has also acted to help young people who are struggling to find work.  The £1billion Youth Contract, trailed by the Deputy Prime Minister last week, will give unemployed 18 – 24 year olds an opportunity to work in the private sector.   We are also expanding child care places, helping parents to work and their infants to experience high quality early years education.

To boost economic growth there will be a splurge of capital spending.  Bristol West will benefit from the £42 million rapid transit scheme from Temple Meads, through the city centre and onto Ashton.  This will complement the electrification of the railway to Paddington. 

The econmoic backdrop is stark.  But our Coalition Government has acted to protect us from external pressures and to rebalance and strenghthen our economy.

21 Comments leave one →
  1. rosemary permalink
    November 29, 2011 8:16 pm

    This is a much better summary than Channel 4’s just now! Thank you Stephen.

    Would this be a good moment to get the Portishead rail link up and running? Most of it is already there, the engineering and argy bargy done and paid for. It would be less divisive than the BRT too, and could be a whole lot cleaner and greener.

  2. November 29, 2011 8:53 pm

    I strongly favour the reopening of the line to Portishead and the development of the lines around north Bristol. A combination of future capital from the govt and the re-tendering of the rail franchise for Wales and the West might bring this about.

  3. November 30, 2011 12:58 am

    Stephen,

    I welcome your encouraging words and much appreciate that the Coalition has done its utmost to protect the pensioners and the poorest in this appalling hole which has appeared in our financial forecasts.

    None of us should forget that it was the American Banking System which actually caused all our woes and this Banking System is utterly beyond the control of the President and Congress.

    As a result the American “Standard and Poor” investment advisers, utterly without any control, can create total chaos in Europe and the World economy by simple deciding to downgrade a whole Country’s rating!

    They did it to Greece in the middle of the most delicate negotiations within the Eurozone, and now they are systematically downgrading Countries in Europe almost, it seems, on a whim.

    If, as a result of what was revealed today in Parliament, “Standard and Poor” decide to downgrade our AAA rating, on which basis we can still borrow at 2%, then our entire economy will be blown clean out of the shattered window.

    No business should have such power to destroy the economies of hundreds of millions.

    Short of putting an atom bomb under their offices, how do we stop this American-based “Quango”??

    • rosemary permalink
      November 30, 2011 4:20 pm

      You could bomb these agencies all you like John, but as someone once said, you can’t buck the market!

    • November 30, 2011 6:14 pm

      Yes, the ratings agencies have huge power. But as Rosemary suggests, they are reflecting fiscal reality. You either don’t lend or lend with tough terms to someone who may not be good for their money. Greece isn’t in the doo-doo because of its CCC rating, it was given the CCC rating because it was living way beyond its means and was not a good investment risk. Britain is AAA because we are seen as a safe bet. That means low interest rates for the Govt, saving £billions.

  4. robertjessetelford permalink
    November 30, 2011 8:50 am

    “Rebalancing of the economy”? Is that what they’re calling it now?

    • November 30, 2011 6:09 pm

      Rob – I’ve spoken and written many times about “rebalancing” the economy. For the avoidance of doubt it means a sectoral rebalance in favour of manufacturing (which declined greatly under the last govt) and green technologies. Also a geographical rebalancing in favour of city regions outside London. We should be in agreement on this, I would have thought?
      Words are of course easy – to back them up the Coalition is introducing Technology Innovation Centres (eg the National Composites Centre at the Bristol Science Park, opened by Vince Cable last week) and to provide the engineering skills a network of University Technological Colleges – Bristol is getting one of these. There are also Local Enterprise Partnerships (Bristol has one right across the old county of Avon) and Enterprise Zones – one of the first is in my constituency around Temple Meads.

  5. Paul Bemmy Down permalink
    November 30, 2011 9:43 am

    BRT will be the most expensive bus lane ever built. All consultations and every other way of guaging public opinion, shows that the people of Bristol don’t see a glorified bus as the answer to our traffic problems. So much for the views of local people being taken into account. It does not even go to Temple Meads! It also ties us into BRT as the future of our Public Transport when most modern cities have dismissed these and gone for much more adventurous schemes like Metros. It beggars belief that a Government that claims to be the “greenest” ever, can find the money for a new road, whilst at the same time ignoring the obvious claims and far more environmentally friendly Portishead rail link. I have an email from the office of Grant Shapps, pre election, claiming a Conservative Gov. would give extra to our Greenbelt. That promise didn’t last long!

    • rosemary permalink
      November 30, 2011 4:22 pm

      Yes, Paul, agreed. We don’t need another road but we do need a metro. We also need a little hop on hop off minibus between the far flung bus stops in the centre for people who can’t walk miles. These two things would do wonders to stem the congestion and pollution.

    • November 30, 2011 6:10 pm

      Fair points. I assure you that I am keeping up the pressure with Ministers, Network Rail and FGW (as long as they are franchisee) for investment in the local rail network.

      • rosemary permalink
        December 3, 2011 8:15 pm

        When New Labour swept to power in 1997 I was deeply despondent: I feared they would be out of their depth in foreign policy (though I never envisaged those dangerous and meddlesome wars), and would once again wreck the economy and leave us bankrupt. The one ray of hope was that they might do something about transport. Alas, the Brown Boom greatly increased the volume of traffic, as well as the size of individual cars. People seemed to spend far too much of that illusory new wealth on diesel – and drink. Or so it seems to anyone walking round polluted and degraded central Bristol.

        If the Coalition could make good this particular deficit, that would be a fine bequest: some decent public transport, not just bendy buses – and some sobriety while they are about it. Our lungs and our livers could do with some respite.

  6. Felix permalink
    December 1, 2011 11:25 am

    “where I praised the Coalition Government for boosting the incomes of the poor”

    You’ve also just punched them in the face by robbing them of child tax credits to pay Mondeo Man. And the IFS’s analysis – equally as independent as the OBR – shows that the Autumn Statement will reduce the incomes of those in the bottom 30% & benefit those in the top 60%. It couldn’t be more nakedly regressive.

    • December 1, 2011 12:06 pm

      Felix – I’m not sure how you define a 5.2% increase in child tax credits as “robbery”. That would imply cutting them or abolition. Perhaps you’ll retract your inaccurate statement.

  7. Nicola permalink
    December 1, 2011 1:04 pm

    Helping the most vulnerable is good… but what we REALLY need is to close the inequality gap between the rich and everyone else.

    Have you read “The Spirit Level” by the epidemiologist Richard Wilkinson? He also recently spoke in Bristol (26 October 2011, organised by Equality Bristol) and a video is also available on TED:

    • December 1, 2011 2:49 pm

      If you have a look at yesterday’s debate (via Hansard or BBC Democracy live on line) you will see that I referred at the start of my speech to last week’s report from the High Pay Commission. I also have the Spirit Level at home and agree with its broad conclusion that a more equal society (in income and wealth terms) is a happier and more socially cohesive society. I will be writing more about this on my blog over the weekend.

      • rosemary permalink
        December 1, 2011 10:22 pm

        Please include in your own study, Stephen, the most striking differences between Japan and Finland on the one hand, and the USA and UK on the other. France is betwixt and between, but changing fast. It astonishes me that an intellectual should leave all mention of these glaring differences out.

        In considering the other Nordic nations, it will be interesting to see if Denmark, Norway, and Sweden retain their benevolent mutually supporting matriarchal societies much further into this century, as their national and religious identities and family traditions break down.

        Alienation is what he should be addressing, not income difference, and it arises where there is social instability and rapid change in the population. It tends to occur in countries with high overall GDP, the measure for which traditional civilizing influences are sacrificed. But that need not be the case, as Japan shows us.

        So it isn’t money that matters, but national identity. Portugal is a puzzle here, and needs further analysis. Possibly just too much socialist government.

  8. Paul Bemmy Down permalink
    December 2, 2011 2:54 pm

    I don’t have the advantage of an intellectual argument, so must say it as I see it. What does worry me is if a large number of mainly young people consider themselve to have little stake in society, then that will be a recipe for social unrest, and it won’t only be the “rich” who suffer. Finding them work is imperative, but also changing a culture that has basically said to people that if you don’t help yourself, don’t worry because you will be looked after in anycase. That won’t be easy. There is also the fact that 90% of jobs created go to foreign workers. Although illegal, should British companies favour those born in this country? I’m sure other nationalities look after their own first, but the good old Brits always play by the rules, to our disadvantage. And perhaps Stephen will answer a question that has always puzzled me. If Foreign workers, who I actually admire, earn money in this country and then send it back home, how does that benefit our economy? My gloomy outlook is that we as a country have had the best of our times. With the emerging markets, we will never compete on price and we can’t all work in the high value industries. We must accept a lower overall standard of living, but must work towards maintaining our quality of life. Giving our young people opportunities, and encouraging them to take them, is our best chance!

    • rosemary permalink
      December 3, 2011 12:24 am

      The answer, as I see it Paul is to have a flat rate of tax – 20%. Then things would get going again. People would stop avoiding paying tax; they would stop going abroad to set up businesses in places like hard working well educated Poland; countries in the Far East would sto[p outstripping us. The new homgrown businesses would take on our young people, train them, and just pay the tax.

      Whenever this has been tried – and it is done all over the world – it works. Unfortunately, no-one here would dare do it, though the Treasury know it makes sense. The envy and resentment of successful hardworking people is just too entrenched; and the tax system is valued too much as a method of punishment and confiscation. People would rather raise less in revenue than let other people keep more of their earnings. If only the chancellor would dare do it, it would pay for itself and more. And as he and the PM and DPM are always going to suffer from class hatred anyway, they might as well take it on the chin now and benefit their country.

    • rosemary permalink
      December 4, 2011 11:56 am

      Another point to back up what you are saying, Paul: admirers of The Spirit Level are very keen on graphs and statistics. But where do they point out that the virtuous Nordic nations, Denmark and Norway, have smaller populations overall than we have on benefits alone; and that the population of Sweden is smaller overall than the numbers of good souls we have imported to do the work here instead? The capital of Denmark has about the same population as Worcester. And how would monocultural Finns cope with administering London and its problems, imported and home grown?

      Say No to 70 Million is an urgent moral as well as political and economic cause, which is why so many people are signing the petition. Rather more I suspect than subscribe to the Spirit Level’s arguments when closely examined. Japan gets away with an uncomfortable 120 million because they are all brought up with Japanese ways of scrupulous thoughtfulness and consideration towards each other, which is absolutely essential when living at very close quarters in crowded conditions. This is apparent not just in their impeccable hygiene, good manners, and quiet mien, but also in the dignified self control and mutual help they showed during their terrible troubles this year: no-one looted or stole, not even from unidentified safes carried out to sea and back again; and people who were not directly affected were at one with those who were. On a more mundane note, if cleaning needs to be done in Japan, then it is done with pride by a native Japanese. That continuing national practice is going to keep wages closer together than importing millions of despised aliens to do “the dirty work”. In Japan, no work is regarded as dirty work: it is all done by known, trained, and trusted people. The wages reflect this, and the end result is good value for everyone, as well as a stable society. Naturally, the decadent West looks down on the Japanese for having what they call “Noddy jobs” – i.e. people in attendance everywhere, keeping up good standards of maintenance and behaviour – and for saving their money, rather than profligate borrowing and spending.

      Another thing the Japanese, Finns, Norwegians, Danes, and Icelanders all share, is a continuing diet of fish. The Spirit Levellers should consider this. Before Edward Heath gave ours away, we were probably a lot brighter and healthier, and when the counry was at its most inventive and industrious, millions of people were living largely on herring, sardines, pilchards, jellied eals, oysters – not a grand dish then – and the like. It wasn’t just cod the British liked – which few of them can afford now.

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  1. Les Bonner » Blog Archive » Stephen Williams commends action to protect least well off through tough times

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