The Great fiscal debate

Its been well known for a while now that some honesty about fiscal policy was needed. Everybody is aware that we are in masses of debt. But no party has been truly willing to step up and tell voters that spending must be cut or taxes must go up or both.

Today we could have triggered that debate, but instead it was used as Labour for electioneering instead of trying to be honest with voters. Labour now intend to dub the Tories the '10% party' because supposedly that is how much would be cut if the Conservatives win the next election.

The government will now face massive interest payments on the loans that they have taken out in order to fund their fiscal stimulus, not to mention the increase in spending that occurred through automatic stabilisers.

Gordon Brown and Alistair Darling cannot try to kid people into thinking if they win the election in 2010 then they will not cut spending or raise taxes, they would have absolutely no credibility. What is needed is honesty from our politicians, at a time when they are already mistrusted by most because they are thought of as crooks.

The electorate are clever enough to understand that spending is going to need to go down. Gordon Brown will have to demonstrate honesty about what he would cut, or if he does not want to cut anything how he would pay for it. One can only assume this would be through further taxes on the rich. If that's the case then be upfront about it, just for once. I would have thought that might be quite a vote winner!

The slur against the Conservatives is also quite unfair. Healthcare spending would be ringfenced, for example, so that we did not see the quality of that falling. So how would it actually be achieved? Well, the Conservatives are big on their efficiency savings, so we can probably assume that would make up some of it. Defence spending is an obvious cut, we've pulled out of Iraq and are not deploying everybody to Afghanistan. Savings may therefore be possible here. Outside of that departments such as transport can expect some pretty tough cuts despite having to cope with rising passenger numbers.

As a country we've benefitted from a decade of overspending compared to what we should have been doing (easy to say now). Now we have to pay the penalty. Its estimated that we may now have a decade of austerity. Unfortunately it will be what is necessary in order to get us back into a sustainable fiscal position.

I couldn't help but mention the Harvard MBA programme with management students now taking an oath, similar to the hypocratic oath, promising to act morally and in the long term benefit of a firm that they work for.

Presumably this will be known as the hypocritic oath.

European elections

Today Britons are voting in European elections and the biggest shame in it all is that the one issue that hasn't been debated once is Europe.


The BBC's Question Time program is the best debate on issues that is really available through the media, certainly in terms of seeing a reaction from the public, and what was so disappointing was that on a broadcast specifically about the European elections the only matter to come up was MP's expenses.


Unfortunately this is entirely understandable. Voters feel completely separated from what happens in Europe. Most of them couldn't tell you what is debated in Brussels or what legislation has been passed down recently. Fewer still could tell you whether their Labour, Conservative, Lib Dem or other party candidate was in favour of this or not.


What's more, in Britain many parties are campaigning on the domestic problems as well. None of the big 3 parties have bothered to send me any kind of propoganda about the European vote, deciding instead that council elections are more important. Therefore all the information I have is from UKIP, The Jury Team and No 2 EU, Yes 2 Democracy. I didn't really need 3 parties telling me that the government is incompetent.


Europe does very important things for us and as such it is a huge shame that Britain is not able to have a good debate about it. In the rare debates there have been the pro-EU campaign has been very poor at getting its message across, therefore the scaremongering of the anti-EU brigade has been overwhelming. As such it is not surprising that so many people want nothing to do with Europe. But the benefits are massive.


Thanks to the EU we have labour migration that benefits all countries, despite what many would like you to believe. The EU is one of the few bodies seriously willing to try and tackle climate change that also has the ability to achieve something, especially with the Scandinavian countries pushing it forward. Much of the legislation brought in from Brussels is fairly small and adds little improvements to our lives, such as things about food labelling. By coordinating it through the EU the fiscal stimulus needed for Britain should even have had more effect.


The argument used to scare people that Westminster is losing all of its power is nothing more than a lie. The major legislation passed applying to Britain is almost solely still determined by our MPs, the EU does not impose privatised healthcare or determine our curriculum, it didn't introduce top up fees or force us to build a new runway at Heathrow. It certainly isn't making us privatise the Royal Mail.


If you're one of the minority that will vote in the European election today then please make it on the issues in Europe and not about scandalous MPs in Westminster. MEP's expenses do need reform as well, but there are many important issues. The Conservatives are becoming less pro-EU, though they do at least not have visions of withdrawing from it or any of this nonsense. Labour and the Lib Dems are flying the flag for Europe and just this once I have to agree with them.

The expenses scandal scandal

So it makes complete sense, of course, that the first post on a blog intended to be about finance should be entirely about politics.

Of course it does have some meaning to the City. Before the public had realised they were bored of villifying bankers left, right and centre, the Daily Telegraph presented them with a new object for their anger.

At least those working in the City had not been trying to rip off the taxpayer, but here we have a bunch of people we already knew were crooks, acting even more like crooks. Its the perfect headline:

We confirm what you already knew

Until of course we look at some of this in detail. Yes, the Conservatives have been shown to still have many remnants of the snooty party that had no link to the real world that most like to think of it as. But, when we analyse some of these claims in detail we have to realise that it has not been worth day after day of front page headline and TV time. Take today's "relevation", Alastair Darling claimed for the service bill at the flat he was living in, which is paid 6 months in advance. 2 months later he got a promotion and so the remaining 4 months he wasn't living in the flat.

We are outraged! How dare he not predict that he would land such an awful job?! What about rational expectations? Surely he had taken this into account when he calculated his permanent income (I felt we were lacking on some economics)? Or maybe he is very smart, realised he would have to pay back the service charge and thus that his permanent income was unchanged.

Did the company he was renting from pay him back his service charge? I doubt it, so why should he have to? What's more, how is such a tiny some of money worthy of front page news? Speak to people from nearly any other country and they'll tell you they think this entire tribulation is hilarious, then wish that they lived in a country where this was the worst thing we can find to be outraged about. Let's put this into perspective; its £700. He did nothing wrong.

So, imagine my shock to find a Liberal Democrat MP on my television screen saying that Darling should lose his job. Edmund Blackadder himself couldn't have come up with a better plot to get him out of power. Poor old Darling has been left to deal with the consequences of Gordon Brown's profligacy, the last thing we should be doing is distracting with him with useless stuff like this. If he gets anymore stressed his eyebrows might start going grey too.

It is undeniable that the House of Commons needs reform, that's been acknowledged since before this scandal. This really isn't the time to be making rash, appeasing decisions while people are in a state of perma-outrage. The sensible ideas are the smaller ones being thrown around, independent audit of expenses and a look at what is fair to be claimed and what isn't. This could be instituted quickly, easily and with minimal fuss.

More and more, the true villains in this story are the press, especially the Daily Telegraph. Newspapers, and the press in general, have a crucial role to play in informing the public, who based on this information become informed and can hold their government to account. Sensationalist reporting might be what is needed to sell broadsheets nowadays but it is abusing their responsibilities as journalists. Of course its right that we are told when our representatives have acted wrongly, but let's be sure they actually have and not desperately scraping the barrel just to try and keep a story going.

One of the biggest losers in this will be the European elections. I'll cover this more next time but its safe to say that the one issue people won't be voting on is Europe.