Explain Government Cuts to the layman.
Discussion
I am reasonably well educated, I have a job, so does my wife, I am not eligable for any benefits nor tax credits, I do not have children and we life moderatly.
All around me I hear friends/the public moaning about Govt. Cuts Saying they might lose this credit or that benefit.
Can someone please tell me how any cuts will affect me ? I pay tax and get nothing back out except my bin emptied once in a while, the road surface outside my house is third world, the grass is growing high in the kerb stones and I have not seen a street sweeper since february.
Seriously, what cuts will reduce my standard of living ?
All around me I hear friends/the public moaning about Govt. Cuts Saying they might lose this credit or that benefit.
Can someone please tell me how any cuts will affect me ? I pay tax and get nothing back out except my bin emptied once in a while, the road surface outside my house is third world, the grass is growing high in the kerb stones and I have not seen a street sweeper since february.
Seriously, what cuts will reduce my standard of living ?
Getragdogleg said:
Seriously, what cuts will reduce my standard of living ?
A large part of the UK is pretty much proped up by government spending at the moment, though .gov jobs and contracts.When this is cut back the country will slip into a deeper recession, this will put your job at risk, raise prices (through inflation and money printing and weaker £ for imports) reduce house prices (putting you into negative equity possibly) and reduce the services you get (hosptials, schools, council etc).
Even if your working .gov belt tightening will affect you somewhat.
I run my own business, we do lots of things in order to survive here in Cornwall, I (among other things) buy and sell shipping containers, run self storage, collect and sort scrap, deliver anything (except livestock and bulk fluids) in a variety of trucks, including a crane lorry, a box van a 7.5 ton flat lorry and a year old transit luton which I do removals and courier work with, I own all my property and trucks except my house which was bought for £120,000 and is worth about £165,00, I owe about 80k on it.
My wife runs the office and we only take £18,000 a year out between us.
I fear the VaT increase stifling our work, I fear tax rises.
My wife runs the office and we only take £18,000 a year out between us.
I fear the VaT increase stifling our work, I fear tax rises.
I think that the most direct way the cuts will get me is if any of the more regular customers go under, I have noticed the number of times this year i have been caught out by firms going under while owing us money has been much higher than previous years, 3 have had me this year, only normally about one a year.
Less people buying from the Art galleries will affect me as will people not moving house.
Still, variety is the only way to survive in cornwall.
ETA, Actually, Interest rate going up gives me a bit of fear, I pay peanuts on my mortgage right now, i don't fancy it going up !
Less people buying from the Art galleries will affect me as will people not moving house.
Still, variety is the only way to survive in cornwall.
ETA, Actually, Interest rate going up gives me a bit of fear, I pay peanuts on my mortgage right now, i don't fancy it going up !
Edited by Getragdogleg on Thursday 7th October 23:48
Getragdogleg said:
I am reasonably well educated, I have a job, so does my wife, I am not eligable for any benefits nor tax credits, I do not have children and we life moderatly.
All around me I hear friends/the public moaning about Govt. Cuts Saying they might lose this credit or that benefit.
Can someone please tell me how any cuts will affect me ? I pay tax and get nothing back out except my bin emptied once in a while, the road surface outside my house is third world, the grass is growing high in the kerb stones and I have not seen a street sweeper since february.
Seriously, what cuts will reduce my standard of living ?
They'll stop emptying your bin. All around me I hear friends/the public moaning about Govt. Cuts Saying they might lose this credit or that benefit.
Can someone please tell me how any cuts will affect me ? I pay tax and get nothing back out except my bin emptied once in a while, the road surface outside my house is third world, the grass is growing high in the kerb stones and I have not seen a street sweeper since february.
Seriously, what cuts will reduce my standard of living ?
And put taxes up.
In terms of 'cuts' it is worth bearing in mind that in cash terms there are no cuts.
Spending will rise from £697bn in 2010 to £737bn in 2014. It is only when you adjust for inflation that there is a cut, from £697bn to £671bn.
As to what will be hit, well in some areas like public sector pensions, the 'cuts' are an opportunity to put the public finances on a stable long term footing rather than be anything to be concerned about.
The figure of '25%' cuts in real terms is often heard, but that is only in activities that make up a third of government spending.
Spending will rise from £697bn in 2010 to £737bn in 2014. It is only when you adjust for inflation that there is a cut, from £697bn to £671bn.
As to what will be hit, well in some areas like public sector pensions, the 'cuts' are an opportunity to put the public finances on a stable long term footing rather than be anything to be concerned about.
The figure of '25%' cuts in real terms is often heard, but that is only in activities that make up a third of government spending.
Edited by JagLover on Friday 8th October 09:11
Think of Britain as having been been run by the family that live on the credit card rather than paying cash for everything and only buying something when they need it and can afford it.
Effectively that family came into money in 1997. They burnt through the savings and then didn't want to lose face with the neighbours so they kept using the credit card. But they were able to remortgage a few times and still exist acceptably enough before their accountant finally told them that they needed to stop spending money like drunken sailors or they'd go bankrupt.
Effectively the 'family' has two options - earn more money (taxes) or tighten their belts (Government cuts).
If there are more taxes then what revenue is generated will likely be spent in as equally irresponsible a way as it ever has. And corporations such as Wolseley are leaving because they don't like paying the corporation taxes that currently exist - so asking for more tax will only create a mass exodus.
By cutting spending to only the higher priority items in theory the government can work adequately.
In just the same way, those that are having benefits reduced will have to tighten their belts.
It will mean the end eventually of the crazy situation where the guy with a wife and two kids who does an honest job and pays taxes actually has a better lifestyle than the equivalent family who live entirely off benefits.
In theory if you flog Sky TV, booze and cigarettes to people who live on benefits you will immediately go bankrupt because these are non-necessities. If you sell holiday packages to the middle class it's not going to be a bumper year. If you sell real stuff that real businesses and people NEED then you should not be adversely affected.
Clearly theory and practice are always a little different but this is more than economics - it's also about upholding a point of principle.
Effectively that family came into money in 1997. They burnt through the savings and then didn't want to lose face with the neighbours so they kept using the credit card. But they were able to remortgage a few times and still exist acceptably enough before their accountant finally told them that they needed to stop spending money like drunken sailors or they'd go bankrupt.
Effectively the 'family' has two options - earn more money (taxes) or tighten their belts (Government cuts).
If there are more taxes then what revenue is generated will likely be spent in as equally irresponsible a way as it ever has. And corporations such as Wolseley are leaving because they don't like paying the corporation taxes that currently exist - so asking for more tax will only create a mass exodus.
By cutting spending to only the higher priority items in theory the government can work adequately.
In just the same way, those that are having benefits reduced will have to tighten their belts.
It will mean the end eventually of the crazy situation where the guy with a wife and two kids who does an honest job and pays taxes actually has a better lifestyle than the equivalent family who live entirely off benefits.
In theory if you flog Sky TV, booze and cigarettes to people who live on benefits you will immediately go bankrupt because these are non-necessities. If you sell holiday packages to the middle class it's not going to be a bumper year. If you sell real stuff that real businesses and people NEED then you should not be adversely affected.
Clearly theory and practice are always a little different but this is more than economics - it's also about upholding a point of principle.
GavinPearson said:
Think of Britain as having been been run by the family that live on the credit card rather than paying cash for everything and only buying something when they need it and can afford it.
If you believe Lord Keynes was correct, that explanation isn't going to carry much weight.http://www.telegraph.co.uk/finance/financevideo/80...
Fittster said:
GavinPearson said:
Think of Britain as having been been run by the family that live on the credit card rather than paying cash for everything and only buying something when they need it and can afford it.
If you believe Lord Keynes was correct, that explanation isn't going to carry much weight.http://www.telegraph.co.uk/finance/financevideo/80...
He certainly did not say governments should be operating deficits in boom times. In an ideal world the government would have responded to the 'great recession' with a massive counter-cyclical fiscal policy that would certainly not be being withdrawn yet.
But in order to be in that ideal world Labour should have been running surpluses in the boom times, sizeable ones too given how much of tax revenue was dependent on the bubble in the economy. They would then have moved from say a position of debt of 30-40% GDP, surplus of 2% GDP, to a large deficit that could be sustained in the medium term.
We aren't in that position and, as Greece and other countries have found, growth via fiscal stimulus has to take a back seat to keeping the confidence of the markets who finance your debt.
Edited by JagLover on Friday 8th October 10:20
Tax you pay doesn't nescassarily go on things you use every day. So yes you may think its all about your bins or policing but it is other things too which affect your daily life.
Transport in general gets a subsidy in one way or another from the taxes you pay. Train fares could go up again and so too could tube fares to cover a decline in subsidy. If you have a legal dispute and fall into the legal aid category this could be reduced and you may have to drop the case.
Museums for the kids may well be something you have to pay up front for, which if New York is anything to go by will cost a lot for a day out. And so on.
All of these sorts of things are paid for in taxes. And thats before we get onto capital projects like schools and the military.
Transport in general gets a subsidy in one way or another from the taxes you pay. Train fares could go up again and so too could tube fares to cover a decline in subsidy. If you have a legal dispute and fall into the legal aid category this could be reduced and you may have to drop the case.
Museums for the kids may well be something you have to pay up front for, which if New York is anything to go by will cost a lot for a day out. And so on.
All of these sorts of things are paid for in taxes. And thats before we get onto capital projects like schools and the military.
GavinPearson said:
It will mean the end eventually of the crazy situation where the guy with a wife and two kids who does an honest job and pays taxes actually has a better lifestyle than the equivalent family who live entirely off benefits.
Haven't you put this the wrong way round???!!!
Getragdogleg said:
I am reasonably well educated, I have a job, so does my wife, I am not eligable for any benefits nor tax credits, I do not have children and we life moderatly.
All around me I hear friends/the public moaning about Govt. Cuts Saying they might lose this credit or that benefit.
Can someone please tell me how any cuts will affect me ? I pay tax and get nothing back out except my bin emptied once in a while, the road surface outside my house is third world, the grass is growing high in the kerb stones and I have not seen a street sweeper since february.
Seriously, what cuts will reduce my standard of living ?
Did you not watch The Cuts Are Coming on last night? Was a good show.All around me I hear friends/the public moaning about Govt. Cuts Saying they might lose this credit or that benefit.
Can someone please tell me how any cuts will affect me ? I pay tax and get nothing back out except my bin emptied once in a while, the road surface outside my house is third world, the grass is growing high in the kerb stones and I have not seen a street sweeper since february.
Seriously, what cuts will reduce my standard of living ?
JagLover said:
In terms of 'cuts' it is worth bearing in mind that in cash terms there are no cuts.
Spending will rise from £697bn in 2010 to £737bn in 2014. It is only when you adjust for inflation that there is a cut, from £697bn to £671bn.
As to what will be hit, well in some areas like public sector pensions, the 'cuts' are an opportunity to put the public finances on a stable long term footing rather than be anything to be concerned about.
The figure of '25%' cuts in real terms is often heard, but that is only in activities that make up a third of government spending.
Interesting point though isn't government spending only rising because of the increased interest payments on the national debt? I though that actual the money for government services was set to be reduced.Spending will rise from £697bn in 2010 to £737bn in 2014. It is only when you adjust for inflation that there is a cut, from £697bn to £671bn.
As to what will be hit, well in some areas like public sector pensions, the 'cuts' are an opportunity to put the public finances on a stable long term footing rather than be anything to be concerned about.
The figure of '25%' cuts in real terms is often heard, but that is only in activities that make up a third of government spending.
JagLover said:
Fittster said:
GavinPearson said:
Think of Britain as having been been run by the family that live on the credit card rather than paying cash for everything and only buying something when they need it and can afford it.
If you believe Lord Keynes was correct, that explanation isn't going to carry much weight.http://www.telegraph.co.uk/finance/financevideo/80...
He certainly did not say governments should be operating deficits in boom times. In an ideal world the government would have responded to the 'great recession' with a massive counter-cyclical fiscal policy that would certainly not be being withdrawn yet.
But in order to be in that ideal world Labour should have been running surpluses in the boom times, sizeable ones too given how much of tax revenue was dependent on the bubble in the economy. They would then have moved from say a position of debt of 30-40% GDP, surplus of 2% GDP, to a large deficit that could be sustained in the medium term.
We aren't in that position and, as Greece and other countries have found, growth via fiscal stimulus has to take a back seat to keeping the confidence of the markets who finance your debt.
Edited by JagLover on Friday 8th October 10:20
Have you watched the video in the link?
Fittster said:
I think the expert in the video might agree with you about the UK not being in the ideal position but he is certainly against cuts and believes more stimulus is incorrect. He also laughs at the idea that you can compare credit card debt to the national debt.
Have you watched the video in the link?
Keynes's biographer is an expert is he?Have you watched the video in the link?
Pupp said:
What, cuts as effective as these? 
At least they are one off and final costs, and soon enough a proportion of those people should actually be contributing something. The alternative of keeping all that rubbish open and having people employed in these quangoes (basically lobbying for more money full time) would mean that over 10 years they would probably double in size and cost.
ZondaMark said:
Fittster said:
I think the expert in the video might agree with you about the UK not being in the ideal position but he is certainly against cuts and believes more stimulus is incorrect. He also laughs at the idea that you can compare credit card debt to the national debt.
Have you watched the video in the link?
Keynes's biographer is an expert is he?Have you watched the video in the link?
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