Coffee House

Danny Alexander: We’d do it all over again

28 October 2012

Danny Alexander told Andrew Neil on The Sunday Politics that even if he had known the economy would only grow by 0.6% rather than the five and a half percent plus that the Office of Budget Responsibility predicted in 2010, he would still have backed the austerity programme. ‘The judgment we made was the right one’, he declared. He cited how the deficit reduction programme had reassured the markets from which Britain still has to borrow and that the OBR’s view is that fiscal tightening has not been a major reason why its forecasts were so out.

Alexander refused to concede that a mansion tax was dead, despite the Chancellor unequivocally ruling out. He also wouldn’t comment on whether companies that are aggressively avoiding tax are ‘morally repugnant’.

Away from the Treasury, Alexander is playing a significant role in coalition’s strategy for the Scottish independence referendum. He took the chance to increase the pressure on Alex Salmond over this bizarre business of him spending public money to not disclose legal advice on an independent Scotland’s EU membership status. What makes this bizarre is that the Scottish executive didn’t actually have legal advice on this. Alexander said that its chief accounting officer had ‘questions to answer’ about public money having been spent in this way. Salmond’s defensiveness on this issue does show how weak the nationalists are on the details of what would happen if Scotland really did split away from the rest of the UK.

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  • 2trueblue

    Aleirexander is maturing and finding his own voice which is good to see. I think that there was no choice as the economy was destroyed by the previous government. Balls, Brown, Milliband and Blair refuse to take responsibility for their 13yrs of mismanagement of most aspects of life in the UK. They appeared to have no regard for the impact of their half baked programs, little understanding of what real growth is, it was all ‘written on the back of a fag packet’, and had no substance. They simply failed to provide a proper structure in any are of our lives to cater for the changes they forced on the population countrywide.
    Meanwhile they bought/rented second homes with our money and we were billed for everything. Is it normal to revamp a property you have just taken over at someone elses expense? They lived totally beyond our/their means, and we got the total bill. They all became wealthier and we have all ended up poorer. They created a client state, grew the public sector, increased immigration and none of these things grow an economy. They made provision for none of it. That is why our financial situation is so bad, you can’t fix in a couple of years.

  • Daniel Maris

    I read the “Economic Outlook” in the Business Pages of the Sunday Times. Clearly a serious column in a serious paper. It addressed all these issues and examined in detail the outlook for GDP growth. But NOWHERE did it make reference to the fact our population is growing by something like 400,000 per annum, or about 0.6%, eating up all the GDP increase of the last couple of quarters.

    Not a mention – isn’t that incredible, in a supposedly serious newspaper commenting on the economic outlook?

    Moreover it asked no questions about the economic burden we all carry in financing the housing, transport, education and health infrastructure for those 400,000 extra people. As a nation we are achieving each year the equivalent of building a city the size of Manchester with all its infrastructure. Not surprisingly per capita GDP is moribund and disposable income is being eaten away by these demands (leading to higher housing costs and a higher tax burden).

    We are becoming the post-affluent society, where middle class families struggle to cover the basics of housing, energy, transport, communications and food.

    • HooksLaw

      I take your point. I believe part of the recent problem is the fewer people are emigrating.
      But it is an important issue.
      But equally the other point is that the extra numbers will themselves create growth. Given the growth of population in the Labour years the actual official growth figures should have been higher.
      For me the big issue on immigration – or economic migrants as they really are (people who will eventually return to their own countries) – is the effect they have in putting indigenous people on to the welfare system.

      • james102

        Fewer people emigrating is not a problem either culturally or economically as they tend to be the most qualified. They are also mainly British, although nationality is not a concept accepted by our political class.

        Although most immigrants come from outside the EU we can expect an influx from Bulgaria and Romania in 2014 when they get the right to live and work in the UK.

      • Daniel Maris

        “The extra numbers will themselves create growth” says HooksLaw – on the basis of what evidence? The extra numbers may create some marginal accumulative growth but there is no evidence that they will create additional per capita GDP – quite the reverse in a small crowded island where there is little land available for development.

  • les

    the mess labour left will take a generation at least to sort out there is no easy fix like they say balls grins like a cheshire cat at any bad news on the economy does he not feel any shame he must never be allowed near the treasury again

  • James Randall

    Has the plan worked as originally expected? Not at all. Does that mean that the plan is wrong. No.

    The only way to get sustainable, long term growth into the UK economy is to get the private sector to drive it. The growth experienced prior to 2010 was being driven by the state sector. By its very nature this was not a sustainable approach as it requires either ever increasing levels of taxation or borrowing (or a combination of the two) to support it.

    We are currently on a trajectory that should reduce the economy’s reliance on the state sector to deliver growth. In time this should allow for reductions in taxation and also borrowing.

    • HooksLaw


      The two faced Labour party pretend there is some cuddly wazo-easy painless alternative to cutting spending the deficit and debt. There ain’t.
      The whole labour approach is disingenuous but the BBC sit back and allow them to get away with it.

    • oblivia

      “We are currently on a trajectory that should reduce the economy’s reliance on the state sector to deliver growth. In time this should allow for reductions in taxation and also borrowing.”

      Only ideologues care where growth comes from, or think that the government “borrows” money.

      There are only four sources of demand (ie, GDP) in the national accounts:
      – private spending
      – government spending
      – investment
      – trade

      In a period of weak private demand (which is easily the biggest source of spending), the government has only two choices: spend more itself or make a decision to allow a recession.

      This is not ideology or bullshit, just simple facts.

      And the government doesn’t “borrow” money — it owns the fricking printing press that creates money!! Do you really think it relies on a bunch of twats in the City to get its hands on more of the stuff?!?!? (Ask a grown up to explain how the world really works.)

      • James Randall

        “Only ideologues care where growth comes from” Well yes, ideology is what politics is all about. As for where growth comes from, would you rather it came via the taxation system (through state spending) or through private spending?

        Also, the Government does borrow money, generally it goes it by issuing Gilts or Government securities. The unfortunate side effect of QE (or the “printing press” as you call it) is that the Bank Of England has been supporting the borrowing.

        • oblivia

          Nope, economics is not about ideology — and that goes double when we’re in a crisis. Who cares where growth comes from (in the short term) if it averts a depression and promotes real growth (in the medium term)?

          This should not be a debate about the long-term vision for the country — it’s about getting out of crisis.

          And the government issues Gilts as a matter of convention, not necessity. This is a reality that few people have yet to grasp.

          • James Randall

            I assume you are asserting that the state should spend more, via increased “borrowing” which at some point will have to be repaid?

            • oblivia

              A combination of monetary and fiscal policy would probably be the best approach. At the moment, the two are working against each other — the BoE is easing monetary conditions through quantitative easing (though probably still not enough), while the government is tightening its fiscal belt. This is complete madness.

              Borrowing at 0% is repaid through increased economic growth, whereas the savings from austerity are more than outweighed by the loss of growth it causes.

              Austerity appeals to ideologues who fascinate themselves with thoughts of small government, but it simply doesn’t work. When there’s a lack of private spending in the economy, cutting government spending only makes things worse. There is no confidence fairy.

              • James Randall

                The problem with continuous QE is that at some point you have to extract it from the system, the more you add in the more you have to tighten by later on.

                Why do you assume borrowing is at 0%?

                • oblivia

                  This is to assume that the “problem” with austerity is a lesser one. It is not.

                  Why do I assume borrowing at 0%? Because, according to the BoE, the real cost of 30-year money is less than 0.5%.

                  That means bond markets, far from holding the government to ransom, are practically giving money away.

                  It may never again be cheaper to upgrade British infrastructure and invest in skills for the next generation. No brainer.

  • Alexsandr

    What austerity programme is that then? Debt is still rising.

    • James Randall

      Unless the deficit had been eliminated instantly following the General Election in 2010 debt had to continue to increase.

      • Fergus Pickering

        Plainly Alexotsit, along with 90% of the electorate, doesn’t know the difference between the debt and the deficit. .

        • alexsandr

          defecit is the amount of extra borrowing each year. it is the difference between income and expenditure, and is funded by borrowing.
          Debt is the total amount borrowed over the years. It increases by the amount of the defecit each year, unless you run a surplus in which case it decreases.
          It is politicians and the MSN that dont know – they say they are paying down the credit card etc. Which they plainly are not doing.
          My gripe is they are not really cutting the defecit enough and we are piling up debt still.

          • alexsandr

            spose I should have added ‘too fast’ at end of initial post.

          • ToryOAP

            The idea that any government could reduce annual spending by £150 billion plus in one go is fanciful and would have plunged us into an Irish or Greek-level depression. The issue for me is not the snail-like pace of deficit reduction, it is the lack of honesty from labour, the press, the BBC and yes, the government.

            • james102

              A greater appreciation of the size of the public sector in comparison to our economy and tax base would be useful.

              Imagine if the state sector had to be funded from current taxation rather than put on the national credit card.

            • telemachus

              In fact only labour have had the honesty to admit their (few) mistakes and chart a better route back to growth

        • 2trueblue

          Neither do a large number of members of the BBC, and the media in general. The position will not change as it is not in the medias interest to inform, just give us their ill informed and biased opinions.

          Cutting the public sector, including the Quangos, is a massively expensive exercise, as the contracts are not as simple as those in the private sector.

          • james102

            There is a difference between them knowing and wanting the public to know.

            I have written before that I don’t believe this confusion can be anything but deliberate.

        • HooksLaw

          The other point is that if indeed some 200 billion were instantly cut from public spending then unemployment would skyrocket and the economy nosedive and indeed (again) the debt would still rise.
          The thickness of a great many people is a wonder to behold.

          • alexsandr


            so borrowing to pay people to do useless jobs is a good idea? I’d start by closing down the department of Transport who have shown themselves to be completely useless. JSA must be cheaper than their salaries.
            Why the perm secretary still has a job after the WCML fiasco beggars belief.

            • james102

              Yes is it better to pay former Diversity Co-ordinators and Equality Trainers unemployment benefits rather than salaries and pension contributions? Could we reduce the number and salaries of Quangocrats without the country grinding to a halt?

              The purpose of the public sector is not to create employment opportunities.

    • Douglas Carter

      Yes, but only factually.

      If by your comments you want Politicians to start engaging with the truth, we’ll be in all sorts of trouble.

      • telemachus

        Is it possible to be more stupid than Osborne?
        Alexander so clearly is

        • ButcombeMan

          NIce to have you back telemachus, we all missed you commenting when Brillo blew that fool Balls out of the water for telling whoppers.

          If you want stupid, listen to Balls v Brillo

    • IanH

      Have you paid not attention at all for F sake. The wonderful Gordon/Balls/Milliband set us on a tragetory of ever increasing debt, the conservatives are trying to reduce the deficit, which for tossers like you, is the increase in debt. We will end this parliament with 1.5T of Gordon debt, and then hopefully start reducing it. Geesh to think people like this have a vote

      • Ruby Duck

        It is perfectly reasonable to lament the slow progress while fully understanding the reasons for it.

    • Daniel Maris

      If you can’t distinguish between services, welfare, disposable income and debt repayments then there’s no help for you. Services are being cut. Welfare payments are up. Disposable income is down. And debt repayments are up.

    • HooksLaw

      A crass comment because even as the deficit is cut the debt will still rise.

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