Nick Clegg

[????]

I know he's joke of the century for many but his illustrations of our levels of spending and debt were interesting

- We spend ?1bn every 3 days just paying the interest on our debt, over a year that's more than our education budget

- over the past 50 years our economy has trebled in size, our welfare budget has gone up seven fold.

Has the angry but no answers brigade in fact got any answers for dealing with this?*

*taxing bankers and money trees not accepted as real world answers

[DJKillaQueen]

It's a very good question quids with no easy answer. I have some views but by no means any view that would cure the present ills of the system we live in.

If we take the first point...

- We spend ?1bn every 3 days just paying the interest on our debt, over a year that's more than our education budget.

...there's no getting away from that. It tells us that as a nation we are not productive/ efficient enough to cover our running costs. I get a bit confused when we talk of global national debt because I can never quite figure out who underwrites it all. Who is lending the money? The World Bank? And who owns the world bank? Who is taking all that profit from the interest and what are they using it for?

It's a bit like Lloyds being the biggest under writer of insurance. Who under writes them? In that case we know it's shareholders, who were very happy to take the dividends in the good years, but not so happy to cough up when Lloyds hit trouble in recent history. With banking it is usually underwriten by government bonds but here's the irony. The US has national debt but also it's own federal reserve underwrites loans to other countries. So the banking institutions and those who really profit from them are having the best of both worlds......and brings me back to the question that I've always asked - is fractional reserve banking really the best system for a capitalist economy?

Sure the UK has national debt...but we also have countries paying the interest to us on debts we have underwritten to them.

- over the past 50 years our economy has trebled in size, our welfare budget has gone up seven fold.

This is where we can really get to the crux of what is failing economically for us.

We don't have enough of a percentage of the population working and earning enough to pay the required taxes to look after everything. We are living longer, the burden on the state of the growing number of elderly members is a huge challenge for the immediate future, and a growing population in certain places (namely large cities) is stretching everyday resources in those areas.

We have to get more people into work, but before we can do that, we have to get private enterprise creating jobs, and they have to be decent enough jobs....with some stability of employment on offer. They also have to be a range of jobs, and they have to be widespread across the country. Young people are being particularly poorly aerved by the employment market at the moment, along with the over 50's.

The hard part is finding industries that we can compete in globally. We can't compete on most manufacturing levels, with the far east, India and China, and that is a problem for all of the Western economies.

Unemployment aside, the cost of housing is a major burden on the Welfare state. 700,000 people in FULL TIME work need Housing Benefit to pay part of their rent. House and rent prices have become totally unrelated to salaries and this I think is a major challenge for the future.

The coalition changes to HB have saved nothing. The number of families housed in expensive B&B accomodation by local authorities has shot up by 40% since those changes came in (and as a direct result of those changes) for example. But there is also no quick fix to this problem. Filling the pockets of private landlords with taxpayers money through benefits has never sat comfortably with me. I think the coalition felt that by reducing the caps, some landlords would be forced to reduce rents, but the opposite has happened. Rents are at an all time high and many landlords simply removed themselves from LA housing schemes. The result is even more pressure on LA's to magic non-existent affortable housing out of thin air.

I find it all quite depressing but I've never been niaive enough to think that taxing the rich heavily is a solution to all of it either. I said it before, but tax avoidance by the rich, is the issue we should be looking at if anything.

The answer is simple enough....in a capitalist economy we need x percentage of people in work and paying x amount of taxes, to create x amount of GDP, to cover x amount of outgoings. The hard part is figuring a way to achieve that.

[silverfox]

Okay, I watched his closing speech at the Conference. He's not an idiot and I suspect quite a well-intentioned guy.

My problem with him is he is totally out of touch with the political mood of the country - alternative voting, constitutional reform, gay marriage etc.

It's okay to make a stirring speech to close conference but everyone knows he's toast.

I was bemused by his talk about the liberals being the party of education and that less able pupils would get ?500 extra tuition. No mention of course that most students now need to get into at least ?45,000 debt (plus interest) to go to university.

He'll be fine in some EU obscurity job with a pension of more than ?100,000 a year.

Don't be fooled by the likes of Clegg and the EU gravy train.

Never done a decent day's work in his life.

[DJKillaQueen]

I wouldn't say that supporting gay marriage puts him at odds of the political mood of the country SF.....most people in random surveys support it. And constitutional reform, including the reform of the House of Lords is something that many people have a view on also. What puts him at odds is his lack of affinity with anyone outside of the privilaged bubble he was was born into.

You are right in that his inexperience of constituent politics shows. Basically he is just too young. I would say the same too of Cameron, who strikes me as being only of average intelligence. Affluence and privilege are why he is where he is also....not talent. Niether of them has ever had to really work for anything.

[El Pibe]

No, I think Silverfox has it.

Nick's priorities are at odds with the political mood, rather than the political will, of the country.

THe prevailing sense is that it's all turned to shit and something needs to be done.

Whilst the majority may werll go 'gay marriage, yeah fair enough' they would probably also wonder why this is absorbing parliament's time and energy whilst the economy is still broken.

As for lord's reform I don't think it even makes it on to most people's radar at all, and I agree that it's absolutely a waste of time. Ill thought out reforms are the last thing we need right now.

[LondonMix]

DJ to try to answer your question on government debt. For each country its different. Most countries central banks hold foreign reserves of key currencies for various reasons. They normally hold these in the form of other countries gov't debt so central banks around the world own UK gov't bonds. Our own central bank also holds UK gov't bonds as buying gov't bonds is one of the way central banks manage interest rates and is the cornerstone of QE (intermediated via the private sector and commercial banks). Our commercial banks along with foreign commercial banks also are large buyers of gov't debt (historically gov't debt had the same risk weighting as cash for capital adequacy calcs and gov't bonds play a key role in access to certain liquidity facilities offered by central banks). Lastly, bond funds, particularly pension funds (domestic and international) are also major investors in gov't debt. For most countries, its domestic banks are the most significant holders and play a significant role in financing the budget deficit.

The number of players and how interconnected they are, is why people are terrified of a major country like Italy or Spain defaulting. It?s almost analytically impossible to predict how bad it will be given the inter-links.

[????]

...and the Pension bit is why QE (which deflates Bond prices) is causing real problmes for those retiring with private pensions.

I think we've years of this austerity to come to right this situation plus a bit of inflation to cheat. Overall incomes are going to stagnate which eventually will make our economies more competitive with the developing ones whose citizens are now by and large getting richer and with greater incomes this good thing is generally ignored by the lefties such as Hutton who don't see that globalisation has dragged million out of poverty but been a shock to us overpiad/overindulged/westerners, less income disparity between the west and elsewhere is painful for us but more 'equal'.

Interestingly the Boston Consulting Group published a report last week saying the US is likely to have a manufacturing recovery spurred by a willing workforce, low labour costs by western standards and cheap energy (Shale fracking). Meanwhile the EU stifled by everything - bureacracy/labour laws/he Euro/Demographics/Debt will decline globally.

Politically, Careful for what you wish for Labour voters if they get in next time they will be deeply unpopular too within months. You watch what happens to Hollande.

[Marmora Man]

You watch what happens to Hollande - Or better still see what has already happened to Hollande, his approval ratings are the pits, lower even than Sarkozy

[LondonMix]

Given there isn?t enough money to fund our current rate of expenditure, what are your spending priorities?

For me it is:

? Programs directed at the most vulnerable / disadvantaged including educational subsidies

? Education programs that improve skills / quality of the workforce

? Infrastructure investments

? The environment

? Measures to tackle the shortage of housing as efficiently as possible

? Front line public services that have an impact on health and safety

? Security

? Any spending necessary to prevent collapse of the financial system more broadly

With cuts to:

? Most universal benefits should become means tested

? Public sector pensions ? demographics and longevity make this necessary

? State pension --retirement age / system

? Setting public sector pay based on local wages

? Removing certain tax breaks for well-off seniors

? Tax increases that will genuinely raise worthwhile amounts more tax. I wince as I right that since as a high rate tax payer my take-home post tax income has fallen by 10% over the last couple of years (loss of the personal allowance has hurt the most)

[????]

I'd add a proper review of our energy policies (including shale gas/oil - politically toxic based on shouting loudly as far as I can see), ditto transport especially air.

Pensions is the massive one - huge numbers of healthy, VOTING, used to reasonable affluenct lifestyles 1960+ born boomer private sector workers are going to be hitting retirement with didly squat to retire on in 10-15 years

[????]

Where I am optomistic is that we have had several years of baby boom, almost uniquely in western Europe (though I think France has too), spurred to somme extent by immigration . Whilst this has caused enormous pressure on housing and education and health, this means taht we will have far more younger people and tax base to service and pay for our growing number of oldies in the future. Places like Gernmany and Italy will be crucified by their ageaing populations combined with negative trending birth rates in the future. I also think we are still significanytly more of an open society than Germany, France and Italy for example.

[Ridgley]

Like some of you have already said I don?t think he really knows the mood of the public, and he presumes the Liberal Democrats I going to be in coalition again. The voters may decide to go with just one party next time round.

[LondonMix]

Agree. Perhaps in future state pension will be linked to how naby children (with jobs) you'ce raised!

???? Wrote:

-------------------------------------------------------

> Where I am optomistic is that we have had several

> years of baby boom, almost uniquely in western

> Europe (though I think France has too), spurred to

> somme extent by immigration . Whilst this has

> caused enormous pressure on housing and education

> and health, this means taht we will have far more

> younger people and tax base to service and pay for

> our growing number of oldies in the future. Places

> like Gernmany and Italy will be crucified by their

> ageaing populations combined with negative

> trending birth rates in the future. I also think

> we are still significanytly more of an open

> society than Germany, France and Italy for

> example.

[Brendan]

???? Wrote:

-------------------------------------------------------

> - over the past 50 years our economy has trebled

> in size, our welfare budget has gone up seven

> fold.

Is this the 50 years ago when there were council houses for all and you could actually afford to eat food if you were forced to live off the dole? Is the lot of someone relying on welfare today any better? I?m no expert but it would seems not.

So if the spend on welfare is proportionately higher now then why? Could it be because there is less money available to people to live off so there is a proportionately higher percentage relying on welfare? If so how can that be?

What else has happened over the last 50 years? The wealth of the very top few percent of people in the economy has increased at an exponentially higher rate than the rest. Logically that would leave a large portion at the bottom with less and consequently a higher welfare bill.

How much the economy has grown is not that relevant as economies generally don?t grow without the population growing as well.

This all leaves you with a conundrum. Do you:

a) Take the money away from the rich to fund the welfare budget essentially just patching a broken system.

b) Do nothing and watch the ghettos grow and the crime rate skyrocket while you put an electric fence around your house.

c) Try to cut to the bottom of it by legislating against the activities which allow the more powerful to exploit the less powerful financially, enforcing equitable employment laws and forcing profit to be pushed back into the economy.

Chances are whichever government is in power will do a bit of each to try to keep the whole house of cards from falling down without upsetting their financial backers.

They will of course be telling us that they are doing all and none of these things depending on what they think we want to hear.

So where does that leave middleclass conservative like your good self? Well you can either;

a) Blame everyone else except yourself, they obviously don?t work as hard as you and are deserving of your scorn or,

b) be a ?realist? about it. It?s terrible but some people are going to have to suffer. This will make you feel very clever while maintaining a moral high ground. After all chicks dig a man who knows how to make the tough choices just so long as he isn?t living in a hostel with his 3 children.

[????]

Up until the last paragraph all fine

Yeah whatever Brendan, bored of the libtard personal attacks on here from the likes of you. Who said I was a middleclass conservative? What's your answer? Bail out to Surrey and pretend you're a caring liberal? Asd I've said a zillion times you and many other know nothing about my circumstances so stop making HUGE assumptions and putting words in my mouth that I wouldn'T say based on your prejudices. Okay?

In the meantinme, I'm trying to scratch my head and see who has got the answers not just give it a load of liberal rhetoric from a priveliged position whilst it all falls apart, bt at least I sound good, which I could make an assumption is your position, if i was in the game of making assumptions about tpeople that I don't really know. Rude, arrogant hypocrite.

[Brendan]

Quids that entire post was just an excuse to call you a middleclass conservative. It was meant in fun take it that way.

[El Pibe]

Did someone actually just use the phrase 'libtard'?

Please don't allow this expression to be normalised this side of the Atlantic!!!!

[Brendan]

Typical pampered liberal snobbery.

[????]

Oh that's okay then............it's just a joke, making out that i'm a selfish arrogant, uncaring wanker, on a public forum. Yeah great....you're such a josher brendan, silly me, must take my sensitive hat off. At least you haven't called me a bigot this time.

[New Nexus]

How can you tell when Mr. Clegg is lying?

Answer: When his lips are moving.

[BrandNewGuy]

???? Wrote:

-------------------------------------------------------

> ...and the Pension bit is why QE (which deflates

> Bond prices) is causing real problmes for those

> retiring with private pensions.

>

> I think we've years of this austerity to come to

> right this situation plus a bit of inflation to

> cheat. Overall incomes are going to stagnate which

> eventually will make our economies more

> competitive with the developing ones whose

> citizens are now by and large getting richer and

> with greater incomes this good thing is generally

> ignored by the lefties such as Hutton who don't

> see that globalisation has dragged million out of

> poverty but been a shock to us

> overpiad/overindulged/westerners, less income

> disparity between the west and elsewhere is

> painful for us but more 'equal'.

>

>

> Interestingly the Boston Consulting Group

> published a report last week saying the US is

> likely to have a manufacturing recovery spurred by

> a willing workforce, low labour costs by western

> standards and cheap energy (Shale fracking)...

Agree with much of this, but there's precious little evidence that shale fracking / shale oil / tight oil are ever going to be 'cheap'. They're only being exploited because energy prices are high and their poor EROEI rates mean that increased production will be unlikely to lead to a reduction in price - certainly compared to the good old days when Saudi Arabia could turn on or off the tap at will depending on the world price of crude.

[DJKillaQueen]

I think everyone's making good points and let's not spoil what could be a really interesting discussion with digs at left and right this and that. We are stuck with the same economic system and it's consequences whether we have a left or right government.

To backtrack a lttle to Quids point regarding birthrate and how perhaps we are in a better shape for the future than some other European countries, I agree with that. And expansive immigration has played a role in that. I would say though that we still need employment for that increased workforce (for obvious reasons) but quids is right in that the short term pain, whilst the current baby boom raches adult age, leads to a perhaps better balance of population demographic in the longer term future, which is a good thing.

Not sure about LondonM's idea that pensions might be linked to offspring in the future, especially when many women forfeit family life for careers......

'Is the lot of someone relying on welfare today any better? I?m no expert but it would seems not.'

In a word Brendan....no. The cost of living proportionate to the value of base benefit has risen (and in all areas - from food and utilities to rent). It's an interesting thing to point out that when Governments 'cut' benefits that they only ever cut the benefits that are in addition to base levels of benefit and not the base level itself. This is because the base level was originally set by judicial review with an annual linked increase set in stone. To change this would require another judicial review which may well decide that the base level of benefit needs to actually increase (in line with increased costs of living) and no government wants to risk that. That ?64 or so a week base level (with its automatic annual increase) is what the law says a person needs at least per week to live on. It can not be changed at will by any government.

The higher cost of welfare is a combination of things. Higher unemployment and remember that most people not in employment are not counted in unemployment figures, hence the tendancy to move people from Incapacity Benefit to Employment Support Allowance and not Jobseeker's Allowance. Moving them to the latter would significantly increase the offical unemployment figures. But also, the astronomical cost of housing, has produced a massive welfare bill through Housing Benefit.

Your conundrum Brendan is a valid question. I don't think any of your abc proposals are the answer though, or would make that much of a difference. The answer lies in employment and enterprise, and I'd also say better education.

[LondonMix]

My comment re-pensions was joke- though clearly not a very good one!

Another reason why the welfare state is larger don't forget is pensions, which when they were first brought in were only set a few years short of average life expectancy...

[DJKillaQueen]

I think last time I looked at figures, approx one third of all welfare spending went on the over 60s.....but don't quote me on that.....will go check :)

[DJKillaQueen]

Oooh it's worse.....from a 2010 repor on welfare spending....

'The main areas of expenditure on welfare are on elderly people and families. Only 12 per cent

of welfare expenditure is spent on the major out of work benefits, while 42 per cent (?80 billion)

is spent on the elderly and 21 per cent (?41 billion) is spent on working families. In 2008,

60 per cent of households were in receipt of at least one benefit; that figure rises to 93 per cent

for households with children.'

Full report here....

http://www.reform.co.uk/resources/0000/0320/Welfare_briefing_FINAL.pdf

The crucial question here is, why do so many working families receive benefits? We know that tax credits go to some families who don't need them, along with child 'family' allowances etc.

Look particularly at table 2 on page 4 for some interesting spikes in welfare spending that may merit discussion. Ask why of all the reforms, child tax credits (and some families with incomes of 50k are eligible for tax credits btw) and other generous non means tested benefits have not been attacked in the way those benefits of the truly poorest have.