£30bn cuts – has anybody actually READ the Charter for Budget Responsibility?

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Why do anti-Labour cultists keep ranting on about assumed crimes against the people that have never taken place?

Last night, This Writer had to endure the ravings of SNP cultists who were adamant that Labour signed up to £30 billion of Tory austerity cuts when the Party supported the Charter for Budget Responsibility. This simply isn’t true, as an examination of the Charter itself will prove. It’s only 20 pages long, and many of them are blank, so it isn’t exactly hard work.

The trouble is, the critics are as this blog has defined them – cultists. They’re not interested in the facts; they want to publicise the lines they’ve been fed by their leaders. Nicola Sturgeon said in last week’s televised leader debate that Labour supported £30 billion of austerity cuts, so to the cultists it must be true.

They are like the Catholic Church, when it imprisoned Galileo for claiming the Earth revolves around the sun. Fortunately for their sanity, the Catholics realised their mistake; it is doubtful the cultists ever will.

Last night, one of them claimed (wrongly) that in the Scottish leaders’ debate, Labour’s Jim Murphy had admitted that Labour has accepted the disputed amount of cuts: “OMG you obviously didn’t see tonight debate they admitted it ! Live on TV Jim Murphy had to admit it because LiBDEms And tory leaders made him… He got pulled up by all parties on his lies.”

This Writer hadn’t seen the debate (was at band practice instead), so had to check the news media for the facts – and found them in the Irish Times: “The Irish Times says he pulled Sturgeon up for lying about it: ‘You might get away with that in England but not here in Scotland.'”

Another cultist then took up the baton and tried quoting from the debate on the Charter for Budget Responsibility – the source of the claim that Labour supported £30 billion of austerity cuts (the claim is that, in supporting the Charter, Labour supported the Tory cuts). It is impossible to bring you a direct quote from this person as they have now blocked This Writer – a common tactic among those who can’t accept their mistakes.

This writer’s response was: “Try reading the charter instead… no mention of ‘£30 billion’ or ‘cuts’… The £30 billion does not exist outside of George Osborne’s own plans… If you read the Charter, you will see that is absolutely correct to say the charter could be supported with no problem.”

The Charter itself – in the version debated in Parliament on January 13 – is available on the web here. It states:

“The Treasury’s objectives for fiscal policy are to:

  • ensure sustainable public finances that support confidence in the economy, promote intergenerational fairness, and ensure the effectiveness of wider Government policy; and  
  • support and improve the effectiveness of monetary policy in stabilising economic fluctuations.

The Treasury’s mandate for fiscal policy for this Parliament, announced in the Budget on 22 June 2010, is:

  • a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.

At this time of rapidly rising debt, the Treasury’s mandate for fiscal policy is supplemented by:

  • a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16, ensuring the public finances are restored to a sustainable path.

To ensure that expenditure on welfare remains sustainable, the Treasury’s mandate for fiscal policy is further supplemented by:

  • the cap on welfare spending, at a level set out by the Treasury in the most recently published Budget report, over the rolling five-year forecast period, to ensure that expenditure on welfare is contained within a predetermined ceiling.”

No money figures are mentioned at all.

Shadow Chancellor Ed Balls capitalised on this in his speech during that day’s debate: “Let me explain what is going on here. It is a three-year rolling target, so in 2015the three-year target presumably refers to 2017-18, but in 2016 it is rolled forward to 2019 because that is three years later. In 2017, it rolls on to 2020 and in 2018 it rolls on to 2021.

“It is a three-year rolling target, so it rolls on, which means that the Chancellor could come back to the House in 2020 and say, ‘It is okay. Consistent with the charter, I am meeting the aim because I am balancing the current budget in 2023.’ That is what this says and it is utterly ridiculous. It does not even sign him and his party up to balancing the current budget by the end of the next Parliament.

“The fact is that for all the boasts, the rhetoric and the talk of traps, in this new charter before the House it is not targets but aims; it is not balancing the overall budget but the current budget; it is not an absolute commitment to deliver a surplus in the next Parliament, but an absolute commitment to a three-year rolling five-year target.

“The Chancellor has spent all of the past nine months telling everybody what a clever wheeze this is and, once again, it has totally backfired. It is less of a trap and more of a load of complete pony and trap.”

A “load of complete pony and trap” is exactly what all the talk of Labour supporting £30 billion of cuts is.

So what is Labour’s plan? This blog has already outlined it, but for clarity here’s the relevant information from the Vox Political article:

“The ‘Charter for Budget Responsibility’ is highly elastic: it’s not based on a firm commitment to reach balance in 2017-18,” states the Resolution Foundation… “Instead it represents a rolling ‘aim’ of planning to reach current balance three years down the road.” The article adds: “Most economists are sceptical about how much difference it (the charter) will make.

“So what if Labour targets a current balance in 2019-20 instead? Based on current OBR assumptions this could be achieved with as little as £7 billion of fiscal consolidation in the four years to 2019-20 (including the cost of extra debt interest).”

Labour has made it clear that it plans to make only £7 billion of cuts. As this coincides exactly with the Resolution Foundation’s figures for a 2019-20 budget balance, logic suggests that this is most likely to be what Ed Balls is planning.

So now you know. Anybody suggesting Labour is planning huge, Tory-size, austerity cuts should be sent to this article and told to get a clue.

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30 thoughts on “£30bn cuts – has anybody actually READ the Charter for Budget Responsibility?

  1. reddeviljp

    I’m glad you brought this up. I was reading through the Hansard notes on the debate and Ed Balls makes it so clear that Osborne’s ruse is in fact an obvious bit of trickery and that Labour would be voting on a set of proposals that matched Labour’s plans for the economy.

    The Hansard pages are here in which Ed Balls puts Osborne firmly back in his box. It pays to avoid the media spin and read it for yourself.

    http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm150113/debtext/150113-0002.htm

  2. Daniel

    The economic illiteracy (or, more likely, untruths) quoted by ALL the political leaders leaves me despairing, though less for the left-leaning parties, which includes Labour, than the right. Last night, I watched the ITV Leader’s Debate. Cameron, Farage and Clegg all used terminology designed to equate the Economy to household debt (Cameron stating UK was almost bankrupt by the previous Labour government, Farage stated “Labour over-spent on the credit card”, Clegg spouted randomisms constantly. flip-flopping between attacking Labour and the Tories at different times). However, all of them talked of “Eliminating the deficit”!

    Now, I’m not an economist by any stretch of the imagination, mostly getting a rough idea through reading economic blogs and some research of my own, but isn’t a government deficit actually beneficial in a balanced economy? (bear with me – I’ve based this idea on this model https://petermartin2001.wordpress.com/2013/11/03/a-simple-four-sector-model-of-an-economy/ )

    Based on this, the three factors adding money to the economy are Government spending, private debt and exports, whereas taxation, savings and imports take money out of the economy. If we consider domestic money circulation only (i.e. ignore imports and exports), decreasing Government spending will result in increased Private Debt – and THATS what’s currently wrong in the economy! Accumulated private debt contributed to the financial crash of 2008, yet current Government policy is aiming to increase PD further?

    Of course, reducing income tax can also be used to increase the money flow in the economy, but that wouldn’t be as effective in today’s climate, since the main beneficiaries of tax cuts (the wealthy) simply remove the extra capital as savings, rather than investing! (take note neo-liberals – increasing the tax-free allowance doesn’t only benefit the poorest in society, it reduces tax for ALL of society. The poorest would then spend their gains in the economy (bonus), the wealthy would save it, since they are not reliant on additional cash for essentials!) Reducing VAT would be another matter, but who’s even talking about that?

  3. Harry

    This new face of the “Janus” profession: Politics, is not at all what she is trying to sell herself as. This woman supports and has committed to the “Guardianship” scheme, whereby every child is allocated a state appointed Guardian. Doesn’t that make you feel safe?

    This Brave New World brought to us by people of this ilk is manifesting and solidifying into something none of us want. We neither want there “secret” courts” or privatised medicine, prison, Justice, Police, Defence, and the rest of the corrupt power edifice masquerading as democracy. There no longer exists a demos. Re-Presentation is lying on the floors of Parliament bleeding to death, under the flencinc knives weilded by Corporate lobbyists and controlled puppet “legislators”.

  4. Andy

    Just today were in the argument about ‘non-dom status’. Another soundbite taken out of context to try and rubbish another Labour policy. Although I feel that non-dom status should be abolished full stop and if the 100 thousand or so of them don’t like it they can F*** off! Don’t forget these are rich people we are not causing them any great hardship. And the Tories just churn out the same old rubbish about “talented entrepreneurs” and “wealth creators”.

  5. hstorm

    You are correct of course, but changing the focus slightly, I do think Labour made a mistake by signing up to the Charter at all, as they wound up getting the worst of both worlds. Having described it as “utterly ridiculous” and “a load of complete pony and trap”, it then sounds utterly perverse to vote in favour of it, as it implies that Labour approves of ridiculous baloney and cr*p.

    But also, it *did* open the gates to other people, honestly intended or not, accusing them of co-operating with the Tories over Austerity as well. Such accusations are misleading, but I really don’t think Labour would have lost anything much by voting against it. It might open them up to accusations of being economically reckless, I suppose, but that can easily be shown up for the false dilemma it is.

    1. Mike Sivier Post author

      I think Ed Balls was describing George Osborne’s attempt to use the Charter as a trap against Labour when he said it was “utterly ridiculous” and “a load of complete pony and trap”. That’s why Labour did not see any problem with voting in favour of it.

      Your second point is certainly true, though – even though this does indicate a lack of clarity in the perpetrators’ thinking. Either way, Labour was going to be accused of some wrong by Tory sympathisers and people who hadn’t thought the issue through (to be charitable about them).

  6. skarp

    “Catholic Church, when it imprisoned Galileo for claiming the Earth was not flat”
    Only it didn’t and he didn’t..Oh the irony. Please use facts when criticising others for not using facts.

    1. Mike Sivier Post author

      You’re half right. His claim was that the Earth revolves around the Sun, so I’ve corrected that. The memory cheated me momentarily, that’s all, but I’m grateful for the opportunity to correct myself.
      The Catholics really did imprison him, though – unless you think “house arrest” is anything other than imprisonment?

      1. skarp

        I wish people would read what I actually write. I never said anything about house arrest, I said it didn’t imprison him for claiming the earth was flat, and Galileo didn’t claim it was either. That’s 100% right.

        Whether you wish to consider house arrest imprisonment is another matter entirely, but it’s not the image of dungeons, rats and chains many people would call up when thinking of imprisonment in that era.

      2. Mike Sivier Post author

        Now you’re nitpicking. I admitted the mistake, which is all it was, and thanked you for pointing it out. Could you at least try to accept it graciously?

  7. Steve Grant

    The SNP will say or do anything to get into power in Scotland….true to form they play one side against another….They use intimidation against any voter who “might” vote any other way which Is what one would expect from third world countries.The same tricks they used against voters able to cast a vote in the Independence poll….and it backfired then and will do so again.A rum lot indeed.

  8. Gary

    Perception is everything. It seems that all the parties except Labour think that Labour have voted for cuts. It also seems that Labour members themselves were unhappy to file through the lobbies with the Conservatives. Perhaps more unhappy when a Conservative Whip shouted “This way for the cuts!”. The policies and principles don’t, of course, give a cash amount. It is fair, though, to say that cuts are and will be made and that the Shadow Chancellor has supported them. He has confirmed he will not overturn anything either. All parties exaggerate but it would be disingenuous to say there will be NO cuts. So if not £30bn then how much?

    Another issue raised in this episode is that even accepting that this has NOTHING to do with ANY future cuts does not help engage the electorate. What the public sees is to parties (well, three I suppose) all voting the same way on policy. This leaves nothing with which to differentiate themselves. Can we blame them for disengaging, deciding not to vote or turning to other parties?

    Instead of shouting them down, calling them liars or being defensive it would benefit the Labour Party to actively engage voters. The current situation has been a long time coming and Scotland’s strong support of SNP did not happen overnight. The chances to win back votes were missed time and time again.

    So, if Ed Balls had free rein in a Labour landslide how much WOULD he cut?

    1. Mike Sivier Post author

      No. None of the parties think that Labour voted for cuts. They’re just saying Labour voted for Tory-size cuts in the hope that somebody will be gullible enough to believe them. That’s why it is important to keep reminding people that Labour didn’t vote for Tory-size cuts.
      It is fair to say that both sides have plans involving cuts, and the Shadow Chancellor supported his plan, not that of the Tories.
      You should bear in mind that even the SNP plan involves austerity; just much less than that of the Tories.
      He won’t overturn George Osborne’s budget because, if Labour is elected, he’ll be making his own budget speech in a couple of months.
      You ask “If not £30bn then how much?” as if Labour’s £7bn over the entire Parliament hasn’t been mentioned before. It’s been all over the news.
      Don’t confuse the Charter with government policy. It is merely a document detailing a method of carrying out whatever policy the government decides.
      The Labour Party has not, to my knowledge, shouted any voters down. To politicians in opposing parties who have uttered the lies, it has pointed out their mistakes. To supporters of those other parties, repeating those lies, it has pointed out that they have been misinformed and are repeating a lie.
      Your final question is unanswerable until Labour get to see the full state of the nation’s finances. Short answer is: Not as much as the Tories, LDs or UKIP; debatable with regard to the others.

  9. Daniel

    I’ve just read a very good article on one of the other blogs I frequent, I’d be interested in your opinion of it!

    https://originofspecious.wordpress.com/2015/04/09/a-new-full-employment-policy-making-politics-matter-again/

    When reading this, it reinforced with me why politics is so important, but at the same time, why so many people are disillusioned with the current status quo. I kept hoping for Ed and Ed to stick their heads above the parapet and actually risk a backlash from the right wing press by announcing real changes, rather than just tinkering round the edges of the system. Yesterday’s announcement about Non-Doms, and the way they’ve weathered the Right-wing storm gives me hope!

    1. Mike Sivier Post author

      Logically, nowhere. The NHS is supposed to be ring-fenced and immune from the public spending cuts suggested here. It is a shortfall in funding that is expected to open up due to Conservative mismanagement of the health service – not providing what’s necessary – rather than mismanagement of the economy as a whole.

  10. Gary

    Daily Politics Mon 13th April 2015 1230hrs Chuka Umanna states there WILL be cuts. This contradicts both the ‘explanation’ for Charter for Budget Responsibility and the statement by Scottish Labour leader Jim Murphy on Sunday Politics. This was Murphy saying Labour would not cut but SNP would (in Scotland) despite the fact that the Barnett Formula is not set by Holyrood. Mr Umanna said of Murphy and his statement “he is the Scottish Labour leader but he does not make the decision, Ed Milliband is in charge of the Labour Party”. (he was being interrupted by Andrew Neil as he spoke)

    This quite clearly states Labour policy on this, more cuts, £billions more cuts. As Ed Balls had already said he would make NO CHANGES to the Tory budget plans. This means cuts, unequivocally..

    1. Mike Sivier Post author

      You’re mistaken. Labour always said there would be cuts totalling around £7 billion in the next Parliament. However, it may be that Labour can make up the money from increased taxation of those who can afford it; that won’t be known until after the election, if Labour gets in. The Barnett formula has nothing to do with it.
      Ed Balls said he’d make no changes to George Osborne’s March Budget statement. Why should he? He’ll be making a new Budget statement in June if Labour gets into office.
      You seem extremely confused. The Tories have got you right where they want you.

      1. Gary

        The plan, as stated by Chuka Umanna today, is to increase the total tax take by growing the GDP generally and that this will cut the deficit on a percentage basis. Of course its impossible to put figures on this, isn’t it?

        Ref the Barnet Formula, Jim Murphy accused Holyrood of planning cuts whilst saying there’d be no need for further cuts after 2015/16. Chuka stated there’d be cuts throughout the term of the parliament and, of course, Scotland would not be immune. So, via the funding method (Barnet Formula) it will be cuts made by Labour, not at Holyrood that hit Scotland. Again Murphy is wrong.

        NB although funding for Scotland is changing the codicil is that there should be no benefit or loss by any taxation now being set separately in Scotland. So overall funding amounts will not change.

        So, signed up for Osborne’s budget, signed up for the Charter and confirming cuts throughout the term. Deficit cuts confirmed as being, hopefully, GDP grow rather than repayment.

        This is all from the horse’s mouth, no confusion.

      2. Mike Sivier Post author

        The only plan that could ever work is to increase GDP, thereby increasing the tax take and making it possible to cut the national deficit. Some economists would say it is possible to put a figure to this, as the economy grew by an average of two per cent per year, even taking recessions into account, before George Osborne slapped his grubby austerity plan on us all. I forget whether the figure comes from Tax Research UK or Mainly Macro but it should be fairly easy to verify. Labour’s plan is also to put the extra money in the hands of those who will use it to boost the economy. You will of course understand what I mean if I refer to fiscal multipliers, therefore you will appreciate that the economy will improve much more quickly if more cash is given to people who really need it; they will pass it on to other people who also need it, and so on up the system, adding value to the economy with each exchange.

        Your comment about the Barnett Formula remains impenetrable. Jim Murphy said Labour would not be planning any cuts beyond what the party has already announced – around £7 billion maximum, as I understand it, between 2016-2020. See https://www.politicshome.com/party-politics/articles/story/sturgeon-and-murphy-clash-over-scottish-spending-plans – this suggests £6 billion but I’ll stick to the £7 billion suggested by the IFS. These are the cuts that Chuka Umunna mentioned, happening throughout the term of the Parliament.

        The claim about Holyrood was that it would face a funding black hole of £7.6 billion if it had fiscal autonomy, as the SNP wants – the Barnett Formula would have no bearing on such a situation. Holyrood doesn’t have fiscal autonomy; the point is that the SNP’s figures are fantasies – or at least, not correctly worked-out. A Labour spokesperson told the Herald that Labour was planning to invest an extra £800 million in Scotland – http://www.heraldscotland.com/politics/wider-political-news/opponents-claim-jim-murphy-has-been-hung-out-to-dry-by-uk-labour-party.123110131 – this, of course, would be provided using the Barnett Formula.

        So what’s been said is that fiscal autonomy creates a £7.6 billion funding gap, while the Barnett Formula provides an extra £800 million for Scotland, albeit amid a background of £6-7 billion cuts across the whole of the UK between 2016-20. I’m glad to have cleared that up for you.

        Funding for Scotland is indeed changing, but your comment – that overall funding amounts will not change – is only relevant at the point of changeover. Once taxation powers have been handed over to Holyrood, it can vary those amounts as much as it wants; the aim is not to unfairly disadvantage taxpayers in the rest of the UK.

        So Labour rejected Osborne’s budget – oh, didn’t you check your Hansard? The budget debate ended on March 23 with all Labour members there present voting against George Osborne’s budget. Labour DID agree to the Charter for Budget Responsibility, as it posed no threat to that party’s own fiscal plans, involving cuts of £6-7 billion, maximum, in budgets totalling around £1.2 trillion over the four-year period, 2016-20.

        It seems you were more confused than you thought.

  11. Gary

    Said Javid now on Daily Politics. He says that they (Tories) voted for £30bn of cuts and that Labour voted with them. To be fair, the Tories should know what and why they put the bill through. His criticism was that Labour had not properly outlined how they would make these cuts.

    EVERYONE, Tories, LibDems, SNP, Plaid, Greens say that this means £30bn cuts. Labour, despite not introducing the bill, are telling everyone different!

    Either the Labour leadership are misrepresenting themselves or they have made a terrible error by voting for these cuts.

    1. Mike Sivier Post author

      Labour voted for the Charter, not the cuts. The Charter is just a plan for how the parties can deliver their plans – whatever those plans may be – responsibly. That’s all. It doesn’t tie anybody in to another party’s plans.
      Sajid Javid’s comments were, therefore, nonsense.
      Labour has not voted for £30 billion of cuts. If the Tories, Lib Dems, SNP, Plaid and Greens are saying Labour did, then the representatives of those parties are lying.
      Have YOU read the Charter? I have. The article explains the situation.
      Don’t bother us with this silliness again.

      1. Gary

        I have read the charter. I have listened to the party who proposed it and I have listened to the interviews today on TV. Given that and the fact that Ed Balls has stated he will not change anything in Osborne’s budget, the fact that Jim Murphy has been expressly slapped down for ‘cuts denial’ I can only conclude that these cuts ARE going ahead.

        But maybe Ed Balls, Chuka Umanna, Tories, LibDems are lying about their own intentions. Maybe SNP, Plaid and Greens are wrong to believe what has actually been said?

      2. Gary

        Governments put bills before the house. Although they have enough votes in the coalition to pass it anyway Ed Balls decided it would be supported and the vote was whipped for Labour to support it. Labour has done what it did prior to gaining office in 1997. It has agreed to follow on with existing economic policy for at least the early part of the next parliament. So this should not be a surprise.

        From all sides, in the GE campaign, we see the parties refusing to say where and when cuts will be, how the NHS will be funded and whether and where taxes will be increased to pay for shortfalls.

        However the public vote it seems it will be on trust rather than policy. Once you’ve lost the trust of the public you can’t buy it back. Still, this should be food for thought, not an argument..

      3. Mike Sivier Post author

        Now you’re mixing up two completely different things.
        Labour has agreed that it will follow Coalition spending plans for the first financial year of the new Parliament, if it takes office. The SNP would do the same, by the way (as tacitly admitted by Nicola Sturgeon in the fact that all SNP fiscal plans date from 2016-17 onwards). This is because it will take until the end of this financial year for Coalition contracts with outside organisations to end and for any other financial arrangements to reach their conclusion. After that, the new government will have free rein.
        That is a completely separate issue from the Charter for Budget Responsibility. Take your time over this, because it is important. The two are not linked. The Charter is a framework within which governments of whatever colour can ensure that their fiscal plans are having the desired effect – no more than that. It can be applied to the Conservative Party’s planned cuts of £30 billion or more (much more, if some sources are to be believed) – and it can also be applied to the Labour Party’s expected cuts of £7 billion or less.
        So you see, agreeing to the Charter for Budget Responsibility does not tie Labour to any cuts planned by the Conservatives, and it has nothing at all to do with the necessity to continue with Coalition spending plans for another financial year. Even arguments that they are tangentially connected must fail, because the vote on the Charter post-dates the agreement on 2015-16 spending.
        Labour has stated exactly how the NHS will be funded and which taxes it plans to increase.

        I think you are right that the vote will be based on trust rather than policy. If it was based on policy, Labour would win a landslide.
        However – as you yourself demonstrate – people seem to be believing hearsay, and trusting those who have been spreading it, rather than the information being put before them by the political parties.
        I do not understand why they are doing this, beyond the possibility that the public are being induced to place their trust in the wrong places.
        Depending on the result of the election, it seems likely there will be an enormous amount of disillusionment – not the least of which may take place north of the border.

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