I don't claim any great understanding of economics but how was it that labour made all these plans for grants, schemes and so an when there was no blooody money?

[moondog]

Eh?

re. interest rates - I think it's not so much about 0.5%, more that after this budget, small businesses can feel more relaxed there won't be a major interest rate hike. Which is important, given that access to finance is a major issue for them.

Obviously they're not happy about the VAT rise/general effect on their customers, but I can't see that confidence would grow much in the knowledge that there were cuts to come, but not for 12 months.

My understanding is that GB is an out and out Keynesian.
He believes, no doubt still does, that you have to intervene and stimulate an economy with state money.

What he always refuses to accept though, is that Keyenes was writing before the advent of the bond markets and the impact of international credit ratings.

So, like beenbeta says, whatever GB believed about deficits, we would in reality, as opposed to economic theory, have eventually hit the wall of having our credit rating reduced.
You can only borrow when lenders will lend

and welfare reform can also mean the sort of thing that Madeleine Bunting talks about in this article.

Just had time to find the Krugman article you all talked about. Samuel Brittan and now him. Finally my degree in eceonomics is paying off.

Takver and Riven I agree with the two of you, but I do not really have time to post.

you don't need to claim Winter Fuel Allowance it is sent automatically

"How to get a Winter Fuel Payment

Most people who are entitled to a Winter Fuel Payment do not need to make a claim. If you get State Pension, Pension Credit, Income Support, income-based Jobseeker?s Allowance, Attendance Allowance, Disability Living Allowance, Incapacity Benefit, Industrial Injuries Disablement Benefit, Carer?s Allowance, Severe Disablement Allowance or a Bereavement Benefit, and you are getting one of these benefits in the qualifying week you do not need to make a claim. A Winter Fuel Payment will be made automatically."

from www.adviceguide.org.uk/index/life/benefits/benefits_for_people_over_sixty.htm

I get IB and DLA and have never had winter fuel allowance.

My inlaws use their winter fuel allowance as spending money on their winter cruise

Meanwhile, low income families with disabled and terminally ill children aren't entitled to it.

Utter madness.

There is an element of ringfencing with the Winter Fuel Allowance, free TV licences and bus passes.

Old people vote. Young people don't. Therefore it is usually good tactically to please old people.

However there is also a more fundamental point. Should benefits be universal or means-tested?

Universal benefits are wasteful because they go to people who don't need them. By doing so they often lock into an annoying dependence on the State.

However means-tested benefits require oodles of admin, and more perniciously, increase effective marginal tax rates. If the benefits is purely paid for compassionate reasons, these questions don'really t arise - but especially for employment related benefits, means testing acts as an active disincentive to work.

The balance between means-testing and universality is very difficult.

Sorry, I don't know how that last post got all jumbled up but hopefully the point is clear!

sorry for any confusion, the website I quoted was for Over 60's, so applicable to over 60's claiming DLA etc

In 2007 our % of debt to GDP was the 3rd lowest in Europe - which doesn't tie in with 'the Gordon Brown was an appalling spend thrift who was just buying votes' theory.

And, re universal benefits there are some very strong arguments for things like Child benefit being universal - you should look at Gingerbread for the details, but their argument is very convincing.

And re big state small state, the fundamental difference between left and right wing is that left believes that the economy should work for the people, and right believe that people work for the economy. Left invest to create jobs and wealth through the poorest sectors of society, Right contract the state so those who are able to can look out for themselves, and this supports low tax rates for the richest, but the poorest and most vulnerable are impacted the most.

It's the fundamentals of left and right wing politics.

What is happening now is exactly what a Tory Government would have done regardless of our overall economic state - they just have a nice shiny 'austerity' badge to hide behind, not to mention the numpty Nick Clegg who is going to be the fall guy for all of this.