The strange death of Labour “realists” who thought Osborne was a genius


8:45 am - February 26th 2013

by Sunny Hundal    


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You don’t hear that phrase being bandied about much any more. I’m almost starting to miss being called a ‘deficit denier’. Sometimes I was a ‘flat earther’ – which was funny too.

The UK’s AAA downgrade wasn’t just a nail in the coffin of Osbonomics, it was also a much-needed kick in the groin to those on the right of the Labour party who thought opposing austerity was political and economic madness.

The fearless Dan Hodges, the man willing to tell the truth to the Left (a truth usually also echoed by the Conservatives), was a vigorous soldier within the pack. He was scathing – ‘Time for Labour’s flat earthers to get real‘! He was unrelenting – calling Polly Toynbee “High Priestess of Flat-Earthism” and me “editor of Flat Earth Times“!

How we laughed. You know, those were fun days. All this shouldn’t come as a surprise – Dan Hodges knows less about economics than Lib Dems do about managing allegations of sexual harassment. Nowadays he’s reduced to poking a stick at Nick Clegg.

There were others too. Rob Marchant similarly criticised me on the grounds that the most likely outcome of Osbornomics would be a bit of pain and then back to normality. Someone else also needs to pick up an economics text-book I think.

But those two strategy geniuses weren’t alone of course – others who should know better also joined in.

Let’s not forget Black Labour – who published a pamphlet in 2011 saying Labour should ‘place fiscal conservatism at the heart of its message‘. How’s that working out for you guys?

Since Osbornomics has comprehensively blown up, Black Labour have avoided answering two key questions:

1) why should Labour sign up to the kind of austerity now shown to be choking off our economic recovery, and keeping millions of people jobless?

2) if you think deficit reduction is important when times are good (agreed, with caveats), why were you promoting that message at a time when the focus should have been on growing the economy, not more cuts?

I’ve not seen an answer to either of those questions.

That Osborne’s economic plans have blown up isn’t just a tragedy for this country, it also undermines George Osborne and those in the Labour party who endorsed his strategy. I admit, I’ll miss their childish jibes though.

Update: Both Anthony Painter and Hopi Sen now claim they haven’t actually called for cuts. Which is bizarre given Painter’s own words earlier:

Hard realism is essentially the position outlined in the In the black Labour paper and variants. You have to be clear about your fiscal approach in 2015 with rules attached, specify the cuts you would make in the meantime and beyond as clearly as possible, and be clear about your priorities in a constrained fiscal environment.

One of these days I want to write a short pamphlet and make it so vague that I can keep claiming others haven’t read it when they point out inconsistencies.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


Sadly I suspect that Ed Balls is still one of these “realists”. The problem for Labour right now is that their economic policy consists mainly of Ed Balls saying “you see that crappy austerity policy enacted by the tories that isn’t working, well we’re gonna do more or less the same”.

It isn’t credible, it sounds as stupid as it is and the voters aren’t buying it. Especially as they know the stupid twerp actually believes it

I suspect that Ed Balls numbers amongst these realists. Labour economic policy seems to consists mainly of Ed Balls saying “you see that austerity policy enacted by the tories which isn’t working, well we’re gonna do more or less the same”.

It isn’t credible, it sounds as stupid as it is and the voters aren’t buying it. Especially as they know the stupid twerp actually believes it

Well I’m sure that any In the Black Labour type would tell you that your interpretation ignore’s the sophistication of their message which was more about medium term deficit reduction.

What they might not mention is that their paper was a more than a bit vague on the whole “pace of deficit reduction” thing.

Nice try, but “deficit denial” is separate. You don’t have to be a “denier” to disagree with Osborne.

“2) if you think deficit reduction is important when times are good (agreed, with caveats)”

“Agreed”? Really? Not what you’ve said before.

Dan Hodges is just writing what the Telegraph readers want to hear. I suspect if he started using his blog to praise Labour he’d find himself out of a job. He’s a British equivalent of a Fox News Democrat.

The trouble with Sunny’s view of economics is that he only ever considers fiscal policy. He usually ignores the equally as important, if not arguably more important, monetary policy.

Of course not cutting government spending, even increasing it, will have a positive effect on the economy, assuming it has no other impacts.

However it does have other impacts. Unfortunately having a too expansive fiscal policy means monetary policy inevitably tightens.

We don’t tend to talk much about interest rates because it has been the one clearly successful part of Osborne’s tenure. Ten year gilts yield about 2% today, having nadired at 1.5% a few weeks ago. This is very much lower than back in 2009. This means that companies and householders and mortgagees all pay relatively low interest rates compared to where we would be with gilts yielding 3-4%.

So, yes, reducing some of the cuts, or even borrowing an extra £10-20bn on top of existing £120bn borrowing requitrements will have an effect on the parts of the economy they are spent on. However what is the negative effect on the rest of the economy that sees it borrowing costs rise 50-100 basis points ?

Osborne was clearly foolish to set his stall by the AAA rating, what he should have said is that he intended to “maintain as low an interest rate environment as possible.” Which he has.

Also after 4 days since the AAA downgrade and Osborne’s humiliation Guido has yet to write anything on his blog. This is rather strange considering Guido likes to boast he has the finger on the pulse.

You know Guido, the libertarian warrior who hates all politicians and names himself after a 17th century Catholic terrorist. As has been obvious for some time, Guido is just another brown nose tory arsewipe.

1) why should Labour sign up to the kind of austerity now shown to be choking off our economic recovery, and keeping millions of people jobless?

It shouldn’t

2) if you think deficit reduction is important when times are good (agreed, with caveats), why were you promoting that message at a time when the focus should have been on growing the economy, not more cuts?

Because the fiscal horizon doesn’t only last one year.

The two major parties are offering the British working class a false and seemingly dichotomised choice between Plan A Austerity or Plan B Borrowing or a mixture of both. Either plan or a combination of them will turn the UK economy very quickly into a basket case from which it will never recover.

The only sensible plan now is Plan C for Socialist Consolidation. A plan that defends necessary and desirable public spending and imposes austerity where it is due: on the banksters, the rich and the cash-hoarding monopolies. A plan that includes full employment, nationalisation of the profiteering monopolies and a single state bank lending at base rate and facilitating social investment in accordance with a democratic plan. This is the only way to defend the economic gains of centuries before it is pissed away by the financial oligarchy that is liquidating all national assets, destroying the balance sheet of the state, debasing the currency and robbing the people via inflation to pay out the losing bets of the counterfeit bond-buying speculators. Absent growth captialism is revealed as mere robbery whereby every pound in the rich man’s pocket is taken directly out of those of working people and growth will never return to a sclerotic, monopolised system of wage slavery that has nothing left to offer but the very unedifying spectacle of the film of globalisation being wound off backwards. Violence will not cover it. Even if it were possible to give global capitalism a new lease of life which it is not it would take unprecedented global violence to replace the current batch of thieves at the head of our political economy with a new lot of thieves. Socialism is the only realistic and desirable option.

@ David Ellis

“Socialism is the only realistic and desirable option.”

You do realise that this was tried before, and was an utter and complete failure. You do also realise that capitalism has done more for raising living standards of people around the world than socialism has, right?

“The UK’s AAA downgrade wasn’t just a nail in the coffin of Osbonomics, it was also a much-needed kick in the groin to those on the right of the Labour party who thought opposing austerity was political and economic madness.”

Sometimes, Sunny, I wonder what planet you live on.

Firstly, as shinsei1967 @ 6 says above:

“Osborne was clearly foolish to set his stall by the AAA rating, what he should have said is that he intended to “maintain as low an interest rate environment as possible.” Which he has.”

Indeed. But nowhere near as foolish as Brown and Balls when they claimed to have abolished boom and bust.

Secondly, Moody’s actually warned of a second and more devastating downgrade if it detected any “reduced political commitment to fiscal consolidation”. In other words, any attempt by Labour to borrow more money would lead to a further downgrade. So opposing austerity is still very imprudent and foolish – you could call it madness, if you like.

Dave Spart @ 9:
*yawn* Cont’d on p.94, I assume…

12. Keith Reeder

“Secondly, Moody’s actually warned of a second and more devastating downgrade if it detected any “reduced political commitment to fiscal consolidation”. In other words, any attempt by Labour to borrow more money would lead to a further downgrade. So opposing austerity is still very imprudent and foolish – you could call it madness, if you like.”

So you’re OK with Moody’s defining UK economic policy?

I’m bloody sure I’m not..!

I’ve never really been able to accept the binary pro-austerity/anti-austerity, pro-Osborne/anti-Osborne terms in which people try to frame this debate.

The idea that Labour should be matching Osborne spending cut for spending cut and tax rise for tax rise, on his own timetable, has never really been on the table. Neither has the contrary idea that Labour should oppose any and all moves to close the deficit by reducing spending or raising taxes at any time whatsoever. Pretty much everyone – barring a few wishful thinkers and ‘structural deficit’ sceptics – has accepted all along that what we need to do is eliminate the deficit in the medium term through some optimal combination of growth, tax rises and spending cuts, implemented in the right way at the right time.

It’s become painfully clear that Osborne’s cut-early, cut-deep approach is far from optimal, but that’s not to say no cuts will ever be necessary or desirable. A Labour person who accepts some spending cuts is no more an Osborne-aping austerity junkie that a Tory who accepts some tax rises is a spending-crazed leftie.

” You do realise that this was tried before, and was an utter and complete failure.”

And you do know that the deregulated free market, low tax , no welfare system you want to recreate, has also been tried before?

It created socialism.

After nearly 200 years of free market capitalism by 1920 90% of the wealth was owned by just 10% of the country. (If trickle down was going to work it would have by then) It took 2 world wars and redistribution to create a meaningful middle class. And the 1% have been trying to return us to the 19th century ever since.

KR @ 12:

“So you’re OK with Moody’s defining UK economic policy? I’m bloody sure I’m not..!”

Moody’s aren’t “defining” UK economic policy. They are spelling out the consequences of not continuing to reduce the budget deficit. A further downgrade would increase borrowing costs sharply…with all that entails.

Tyler@10 – Ok, let’s stick with some variation of capitalism, but let’s not pretend that’s incompatible with rooting out the various forms of corruption, rent seeking and general inequality that we see in our current incarnation.

Shinsei@6 – Monetary policy does not “inevitably” tighten in response to expansionary fiscal policy, it is a separate decision based on maintaining the inflation target. It’s also worth pointing out that with interest rates at 0.5% and hige amounts of QE the monetary dials are already turned up to 11, a little loose fiscal policy might be handy at this point.

I’ll also point out that the yields on UK 10 years have moved almost in tandem with those of US 10 years despite divergent fiscal policies, the claim that our current low long term interest rates are due to austerity doesn’t hold much water.

TONE@11 – First off, are we treating Moodys as gospel now, I think it was Osborne rather than Labour/the left who did that. Second, the situation we want to avoid is that of a signifigant rise in long term interest rates to the point that our debt becomes unsustainable in a Greece type way, it’s hard to see that happening with the Bank of England there as a backstop.

Also when you consider the costs of delaying austerity, what you need to consider is the peak level of government debt and how the spending decisions affect that. Even if you assume the austerians are correct and there is zero spare capacity in the economy, the cost of delaying cuts does not lead to the kind of debt levels that look particularly worrying. It seems a small price to pay for what seems like a pretty safe bet on economic growth.

@13: Quite so.

And you do know that the deregulated free market, low tax , no welfare system you want to recreate, has also been tried before?

It created socialism.

Where?

@Anderson Paterson

1) But we aren’t maintaining our inflation target. We have been missing our inflation target for years, as a nation we have a history of high inflation and the Labour party is regarded as being weak on inflation. We have so little inflation credibility that opting for an expansionary fiscal policy with the promise to cut spending “in the future” (what, just before a general election ?) is almost certainly likely to lead to higher interest rates and/or a weaker pound (and that equals higher inflation).

2) You’re right that monetary policy is turned up to 11. And it’s true that this still isn’t generating growth of 2-3%. However I’d wager that if monetary policy were turned down to 7 or 9 we really would be entering depression territory.

3) US fiscal policy/austerity has been very similar to UK. Obama’s “stimulus” has increased spending at the Federal level however the individual states have been cutting spending even sharper. Overall US “government” spending is as austere as in the UK.

Great points Andreas – said all I wanted to say.

Moody’s are just reflecting what the “markets” are already saying about the UK economy. Now you can dismiss their policy analyses (and they can ane are wrong sometimes) but they do reflect the views of the people who determine UK borrowing rates and the level of the currency. That’s just a fact of life.

Sally. Pretty sure GDP per capita in the UK has risen 100x from 1700 to 1920. Whatever economic system was extant during that period (not sure “free market capitalism” is strictly accurate as protectionism was rife, look up the Corn laws) seems to have none a decent job.

@ 12 Keith

Moody’s are backward looking, and the bond market had already anticipated a downgrade. They will also anticipate a government loosening the fiscal reigns and spending even more, increasing the deficit and the net debt. Specifically, they will anticipate a time when the debt dynamics and interest payments start to swamp the ability of growth or increased taxes to keep up with that growing debt. Which will mean much higher interest rates. Ratings agencies are fairly peripheral to that process.

@ 13 G.O.

“It’s become painfully clear that Osborne’s cut-early, cut-deep approach”

In reality, Osbourne’s cuts are actually back-loaded into the end of this parliament and beyond….so he’s cutting, but the pace has actually been very slow.

@ Sally

Under socialism, most of the wealth ends up being controlled by a small cadre of poltical elites. More importantly though, it has been capitalism which has made economies and the people in general richer.

@ 16 Andreas

I’m all for rooting out corruption etc….but I’m not sure how this is relevant to the article.

“Monetary policy does not “inevitably” tighten in response to expansionary fiscal policy”

This is true, but if increased fiscal spending is seen as unchecked, especially if it becomes structural (like much of Brown’s spending binge) with no real plan to reduce spending or deficits, interest rates will go up.

DO remember that the BoE only directly control short term interest rates. The market determines long rates.

“it’s hard to see that happening with the Bank of England there as a backstop.”

Have a look at the current worries around the FED and their QE program, specifically surrounding their QE bond holdings and what happens if rates go up. Their net interest margin (how much rates have to go up before the FED loses money, is technically bankrupt and needs to be bailed out by government) is really very small. You can use the central bank to backstop bonds through QE< but at some point it needs to be unwound, and the process can store up massive problems for the future.

"the cost of delaying cuts does not lead to the kind of debt levels that look particularly worrying."

Yes it does…debt/GDP is likely to reach the 80-90% level where Reinhardt and Rogoff have shown debt levels adversely affect GDP growth. That 80-90% debt/GDP ratio also fails to take into account massive off balance sheet liabilities or private debt. Add it all up and the UK is one of the most indebted nations in the world.

Tone @11: `Dave Spart @ 9:
*yawn* Cont’d on p.94, I assume…’

Do people still troll threads with crap like `yawn’? Clearly they do.

Britain can no longer be trusted to pay its creditors and is in fact ripping them off as anybody who is paid in £s will tell you. QE is a monstrous robbery pepetrated by the City and its Etonian class mates in government. The final curtain is coming down on British finance capitalisim but it seems determined to take as many young, sick, old and disabled with it to the grave instead of gracefully slipping away as the vicious ideologues of captialism commenting here are demonstrating nicely.

@Anderson Paterson

“Second, the situation we want to avoid is that of a signifigant rise in long term interest rates to the point that our debt becomes unsustainable in a Greece type way, it’s hard to see that happening with the Bank of England there as a backstop.”

You’ve caught the Sunny disease of only looking at an economic issue from one direction.

Sure, there is no reason why UK gilts should ever get up to Greek levels as the Bank of England through QE can just buy as many gilts as are needed to drive the price up and the yield down.

However what is the impact on sterling ? It would crash. No one would accept sterling in payment for oil or gas or food or iPads. We effectively bankrupt ourselves, not the Greek way via the bond markets, but through the collapse of our currency.

“Secondly, Moody’s actually warned of a second and more devastating downgrade if it detected any “reduced political commitment to fiscal consolidation”.”

Well, the downgrade is inevitable in that case because the austerity measures taken are not reducing and cannot reduce the debt. They are making it worse. Further austerity measures would bring more of the same.

Many left-wingers within the Labour Party (and the Green Party too) were ridiculed for saying this from almost the very start of the recession; and they have basically been proven right.

Austerity measures focused on benefits and services remove money from the hands of those in society most likely to spend it and fuel economic growth. Meanwhile, fearful of further recessions, those people and companies who are well-off enough to do so (quite logically) use the proceeds of supposedly growth-creating tax cuts to hoard more money and often store it in tax havens, awaiting a better climate for investment.

Tyler: “More importantly though, it has been capitalism which has made economies and the people in general richer.”

As I’ve pointed out on numerous occasions, this argument is ludicrous. It can be used by anyone in charge who presides over any kind of improvement, regardless of the reasons for it. In the Soviet Union in 1985, what did Russians have to thank for their improved standard of living since 1905? Communism! Yet obviously that isn’t really the case. We got improved living standards too.

Saying that we should all be thankful for capitalism because without it we’d still be in the 18th century and have no lightbulbs is silly. Something else would have happened instead. We can’t know what that might have been.

Jungle

You are partly right.

It does seem ridiculous to say that without capitalism we would have been stuck living the life of a 1700′s person today. But then most people throughout feudalism lived much the same life in 1066 as they did in 1347. The Black Death in 1348 was what shook things up.

We also have actual example to show how different economic models worked.

Almost “lab condition experiments” (by the standards of economics): North v South Korea. North Korea started with all the advantages and resources and was rapidly economically overtaken. West v East Germany.

Or just a simple comparison of western European standards of living with those in the east over the course of the C20th.

In tory la la land conservatism must never fail, it can only be failed. So Osbourne’s austerity has failed, and has made things worse. So the tories plan b is da da da………even more austerity.

More tax cuts for the rich and more spending cuts for the poor. Even though if the rich were going to spend us out of recession it would have happened already. Osborne pulled the figure of 5 years to pay off the debt out of his arse. There is no reason to pay it off in such a short time span and to do it at a time of the worst global recession sine the 1930s is either madness or political selfishness.

It’s hilarious to see the tory faithful use Osborne’s abject failure as a reason to increase the austerity circle of doom. Austerity leads, to more austerity. It’s what the global elites demand, and Tories are just puppets of the 1%.

Reducing public spending to pay down debt will contract the economy and bring on a recession. Taxing the rich to pay debt will contract the economy and bring on a recession. Borrowing money to stimulate growth will eventually put up interest rates in a downturn and cause a recession or a Weimar style inflation frenzy. All these national recessions are merging into one world-wide depression from which global capitalism not only cannot ever escape from but is making worse every day. The thirty year Thatcherite credit bubble turned Ponzi Scheme was launched to prop up an already dying system. The treatment has killed the patient. No more boom or bust is now no more economy.

Stimulus or austerity: the choice is a false one because the patient is already dead. The real choice is between an historically defunct, monopolised, bankrupt, sclerotic economic system based on slavery and tiny national and global elites or socialism. A new Dark Ages or socialism. Barbarism or socialism.

Repudiate the counterfeit claims on the social wealth fraudulently created by the financial oligarchs and criminally recognised by bought-and-paid-for politicians. Down with the bail out. Tax the wealthy and seize the gigantic surpluses of the monopolies not to pay counterfeit fraudulent debt to the drug gang organising, sanction busting, Libor rigging banker and their gambling super rich creditor scum but to pay for public spending, welfare for the sick, old, young and disable, hospitals, schools and to balance the budget.

Tyler@22 – Corruption and the like, was intended as a brief aside on the capitalism/socialism debate.

When I read the Reinhart/Rogoff paper, I did think it was a tad iffy. The 90% figure was plucked out of the air rather than anything more specific and I remember thinking that there were some countries that did very well in spite of high debt levels. Other people have written some more detailed criticisms. The ultimate takehome from looking at the data is there aren’t really enough data points to justify with any certainty the view that higher government debt is a greater evil than austerity.

Not quite sure what you’re getting at with the Feds losses and so on, got a link?

Shinsei@24

I’ve only ever met Sunny once (he was drunk) so I hope I haven’t caught anything. Anyway, what you seem to be putting forward a rather extreme interpretation on what I said. I’ll happily accept that central bank intervention is a dangerous business and there is always the extreme possibility of a loss of confidence in the currency, but that’s at the extreme end. There are plenty of policy options available before such a drastic scenario, there’s a decent amount of room to manoeuvre and it shouldn’t be difficult stopping short of the doomsday picture you paint.

@ Andreas Paterson

I was just using the doomsday scenario as a rhetorical device to explain the process. It’s obviously clear the BoE/Treasury would step in before that happened.

The central point remains though that the risk of loose fiscal policy is not necessarily higher bond yields but sterling falling 10%, or even 20%.

Being ever increasingly reliant on imported oil and gas (and these being priced in dollars & Euros), let alone many basic foodstuffs, this just puts a lot of pressure on inflation and causes household earnings to collapse.

The story of the stagnant economy of the last 12 months is one of most people having less money to spend as wage rises (1% or so) lag price rises (3% or so). Imagine how much worse things would be if inflation were nearer 10%.

jungle @ 25:

“Well, the downgrade is inevitable in that case because the austerity measures taken are not reducing and cannot reduce the debt. They are making it worse. Further austerity measures would bring more of the
same.”

The austerity measures are reducing the deficit, though the national debt is increasing. Austerity will be part of any solution to our present economic difficulties, but it very much depends how it is handled. The devil is in the details. GO @ 13 puts it neatly:

“Pretty much everyone … has accepted all along that what we need to do is eliminate the deficit in the medium term through some optimal combination of growth, tax rises and spending cuts, implemented in the right way at the right time.”

Growth is inhibited not so much by austerity – which has hardly started yet – as by the huge debt-overhang (public, private and corporate)that is deterring consumption and investment, by the £21bn of tax increases, and by the problems in the Eurozone. Growth will return as the debt-overhang is paid off by consumers and businesses.

33. Luis Enrique

playing devil’s advocate here … I reckon left wingers ought to care more about jobs than just about anything else, certainly more than GDP growth. So should we be calling Osborne performance miraculous?

http://www.themoneyillusion.com/?p=19583

older:
http://cmpo.wordpress.com/2012/10/24/employment-miracle/

of course perhaps the second thing left wingers ought to care about after employment itself is the wages from employment, so if higher employment has come at the cost of lower wages, it’s not clear we ought to applaud.

34. Charlie Mansell

Osborne is a tactically and strategically inept Chancellor, however that does not mean its in the bag for Labour – especially around economic competence. The Labour Ed’s team still trail the Tory team a little. In the year before the elections we will see a bit more media unity by the right -wing press to scare the more emotionally fearful voters back into the Tory camp, thus leaving those voters ‘who like to be on the winning side’ (not surprisingly The Sun has an above average group of them and they will not be understood at all by ideologically committed activists who read this website) will be worked on nearer the time once the fearful group have been scared back.

The debt is so fantastically large that if you increased taxation to 100% of all income for 100 years and reduced public spending to zero for the same amount of time it would still be relatively untouched.

When the US banks went under they owed their creditors that we know of $35 Trillion which is a laughable sum but nevertheless Congress and the President agreed to pay these debts $1 for $1 on top of the state losing the tax income that was being generated by the credit bubble turned Ponzi Scheme. Since then they have been cutting spending and thieving off the people through reckless QE to bail out the bankers’ creditors. The monetarists Thatcher and Reagan told us when they privatised the money supply that englightened self interest would prevent the private financiers from allowing a disequilibrium between the supply and demand for money to emerge but in reality they have robbed us blind printing trillions of worthless bonds backed by sub-prime loans and mortgages in a counterfeiting operation of unprecedented magnitude. All this to keep people buying the junk pumped out by the monopolies so that they could compensate themselves for an ever decreasing rate of profit with an ever growing mass of profit. Result: huge overproduction, the collapse of the thirty year credit bonanza and the end of capitalism as a system capable of reproducing itself except as an ever contracting barbarism.

Austerity, Stimulus, these are both lies designed to distract whilst the financiers and their political chums organise the asset stripping of the UK in the deluded hope they can take their hoard and live unmolested in some gated community somewhere.

My piece, Sunny, goes as follows:

“it is often not so much the economic policy itself, which is essentially right, but our positioning on that policy – the politics – which is risky.”

Hardly thinking the government right and Osborne a genius, is it? But don’t let the pesky facts get in the way, eh?

Dave,
The world economy is still growing though. Any thoughts on why that is?

Jack C: as the spending power of the West disintegrates further under austerity, QE and currency debasement and the fact that nobody will lend to it anymore, global growth even in the so-called BRICs will come to a crashing halt. That is globalisation for you. It takes time for these things to work themselves through especially when governments are doing all they can to pretend nothing has really happened (spending up, borrowing up, printing up: Japan had largest trade deficit ever last month all paid for with fantasy money) but I’m afraid it is a capitalist ideologue’s fantasy that there is another US waiting in the wings in the form of China or India as there was in 1945 ready to re-establish the capitalist dynamic (with the help of its Stalinist pet). No, the mighty US, the mightiest imperialist power the world has ever or will ever know took globalisation as far as capitalism could take it.

I thought Anthony Painter was going to post a more substantial response but he doesn’t seem to want to have that debate.

It shouldn’t

Oh that’s good! So you’re opposing the government’s cuts now are you? Because I distinctly remember you saying something else not long agi.

Hard realism is essentially the position outlined in the In the black Labour paper and variants. You have to be clear about your fiscal approach in 2015 with rules attached, specify the cuts you would make in the meantime and beyond as clearly as possible, and be clear about your priorities in a constrained fiscal environment.

http://labourlist.org/2012/01/the-lefts-new-divides/

So you DO want some cuts (although you guys never specify any) – but are now claiming you don’t. Very amusing… and confused.

Dave Spart @ 33:

“The debt is so fantastically large that if you increased taxation to 100% of all income for 100 years and reduced public spending to zero for the same amount of time it would still be relatively untouched.”

I see you are never knowingly understated!

You are beyond parody…are you a troll?

More importantly, your statement above is trivially true, because:

(a) if income is taxed at 100%, tax receipts will be zero (because no-one will declare any income or they will leave the UK or…etc) and

(b) if public service expenditure is cut to zero, the deficit will disappear, and therefore

(c) all that will remain is the debt, which will be unchanged.

`Dave Spart @ 33′

If anyone is trolling it is you my friend. Please desist from such childishness and debate in a fraternal manner or don’t bother at all.

Yes I exaggerated for effect and of course it is trivially true. The substantive point is that the debt is of a size that makes it unrepayable and crippling and it is and can only get worse. That is called bankrupty and refusing to recognise bankruptcy is the key the destruction of everything.

David: the point is, you are still totally wrong. The debt is around 80% of GDP. That’s equivalent to someone who earns GBP50,000 a year having a mortgage of GBP40,000. It’s easily and readily serviceable. The only people who pretend otherwise are ridiculous polemicists.

I have to admit that I’ve never regarded Osborne as a genius. Rather the opposite, in fact

I think the problem with the headline is that Sunny put the inverted commas around the wrong word.

My Russian wife has read this with interest and is laughing like a drain!

Good luck with finding the “right” type of socialism guys.

Naieve individuals, desperate to feel a sense of individuality by denying the truth and deliberately taking opposing views to satisfy some ego trip of some sort, or indoctrinated by such with similar views but lacking in independent thought.

No matter which way you paint it, your ideology failed and should be confined to the same dustbin of history as Nazism and feudalism. I have read Stormfront before and it’s only there and here I read such unwillingness to face facts and cling to dogma, and also such hatred for certain. marked members of society.

Tyler@44/45 – Thanks, will give them a read.

Whoever@46 – And your comment is relevant to a discussion of austerity, interest rates, government spending and so on how exactly? Do you plan on graduating to pointing out how us socialists are hypocrites because we like coffee or some such.

The debt is around 80% of GDP. That’s equivalent to someone who earns GBP50,000 a year having a mortgage of GBP40,000. It’s easily and readily serviceable. The only people who pretend otherwise are ridiculous polemicists.

You mean like David Greenlaw, James Hamilton, Peter Hooper and Frederick Mishkin?
http://research.chicagobooth.edu/igm/usmpf/download2.aspx

Or Carmen M. Reinhart and Kenneth S. Rogoff?
http://www.bloomberg.com/news/2011-07-14/too-much-debt-means-economy-can-t-grow-commentary-by-reinhart-and-rogoff.html

Their views need addressing rather than dismissing as ridiculous (also, there’s a bit of an ad verecundiam point. Youy’ve got a chief economist at Morgan Stanley, an econ professor at UCal, the head of Deutsche Bank economics team, and a former governor of the Fed on the Chicago team, and two Harvard professors on the Harvard team – they need a bit more rebutting than dismissal with a wave of the hand).

Try Martin Wolf in Wednesday’s FT on:

The sad record of fiscal austerity

51. gastro george

@48 Tim J

Wonderful piece of appeal-to-authority – when the authority is the Chicago School, who got us where we are today, and Reinhart, funded by the Peterson, the debt-hysterics Abramovitch.

I read the ‘In the Black Labour’ pamphlet and to be fair, I do not recall them calling for Labour to repeat Osborne’s approach or for the kind of austerity that we have at the moment. I do remember ‘In the Black Labour’ calling for a ‘zero-base budget spending review’, something that was backed by Stella Creasy and Howard Reed in Compass’ ‘Plan B’ pamphlet and is now Ed Miliband’s economic policy. Are they both rightwing, pro-austerity Osbornites? Because of the failure of Osbornomics, the deficit is likely to be about £100bn come 2015. How would you reduce it?

“How would you reduce it?”

Try Martin Wolf in Wednesday’s FT on: The sad record of fiscal austerity

With the governments of most west European countries focused on fiscal austerity, the overall result is to depress all as the effect is to reduce the demand for each other’s exports. Another consequence of depressed demand is to depress government tax revenues.

With Osbornomics, government borrowing in Britain is rising year-on-year, not falling. Really. The only hope of escaping this impasse is to increase spending in the short term – financed by extra borrowing – in order to get the economy back on a path of self-sustaining growth of GDP and tax revenues once more. With current trends, there is a serious risk of a triple-dip recession. Least any think I’m exaggerating, try this:

“(Reuters) – Britain’s economy contracted by 0.3 percent in the last quarter of 2012 as first thought, keeping alive the danger of a third recession since 2008, although yearly growth was revised up, data showed on Wednesday. . ./ ”
http://uk.reuters.com/article/2013/02/27/uk-economy-gdp-idUKBRE91Q0BR20130227

@ Bob B

Two points:

1) Why the focus only on Europe as a source of growth. There is a world out there growing at 3% pa, even if Europe is somewhat stagnant.

2) You talk of borrowing to create “self sustaining growth”. Well, we are already borrowing £130bn this year, and have borrowed almost £300bn in the previous two years. How much more do we need to borrow to create this “self sustaining growth” ? Another £5bn, £10bn, £20bn or £50bn ? It’s a difficult argument to make that borrowing £150bn is the route to economic salvation, but only borrowing £130bn is the road to ruin.

Have you ever considered that at a certain level borrowing money to create growth actually becomes counter productive.

“1) Why the focus only on Europe as a source of growth. There is a world out there growing at 3% pa, even if Europe is somewhat stagnant?”

Because EU economies are more tightly integrated through mutual dependence in trade than they have trading links with the rest of the world.

Britain is the least integrated of EU countries with “only” c. 50pc of Britain’s exports going to other EU countries. With time, EU countries could reduce their mutual dependence but the fundamental objectives of firstly, the Common Market, and, secondly, introducing the Euro, were to promote mutual inter-dependence through trade. Promoting EU trade with the rest of the world means changing the EU vision of “ever closer integration”.

“2) You talk of borrowing to create ‘self sustaining growth’. Well, we are already borrowing £130bn this year, and have borrowed almost £300bn in the previous two years. How much more do we need to borrow to create this ‘self sustaining growth’ ? ”

I don’t have access to an econometric model of the UK economy to test out policy options but Osbornomics demonstrably isn’t working.

Year-on-year, government borrowing is rising, not falling, and there is a real risk of a triple-dip recession, which will bring more business failures and lower tax revenues. Hence all the recent pressures reported in the media for some “relaxation” of monetary policy, either by more Quantitative Easing (an option defeated at the last meeting of the BoE’s MPC despite Mervyn King voting for it) or the recent call by Paul Tucker for “negative interest rates”, which would mean savers having to pay interest to banks according to their savings accounts.

I’m reminded of Keynes’s perceptive comment that attempting to boost a recessed economy through monetary policy was like pushing on a piece of string.

The important step to take is to recognise that Osborne’s policy isn’t working – as a matter of fact, not opinion – so something has to change.

@Bob B

1) Europe is only 40% of UK’s exports. Obviously still sizable but less than half and on a diminishing trend.

2) Inded Keynes said that monetary stimulus “eventually” was like pushing on a string (though tightening monetary policy would certainly be contractionary) but neither did he say just borrowing ever more until trend growth was reached was also a good idea.

@TimJ – Reinhart & Rogoff have already come up in this thread, so it’s worth making a few points. The conclusions to be drawn from their study is a weak assertion that high debt levels have an adverse effect on growth. The 90% threshold was chosen because had they taken it much higher there would simply not have been any data to work with. John B’s point is about the sustainability of debt and I believe it stands.

@Shinsei1967 “but neither did he say just borrowing ever more until trend growth was reached was also a good idea.” – Although I could also point out that while he didn’t say that it was a good idea, he certainly didn’t say that it was not. Personally it’s exactly what I’d advocate right now.

If you think this is a bad idea then you need to answer a very important question: Where will the demand come from?

I see falling demand from government, a british consumer who is already strapped for cash and falling exports to Europe. There is of course the great hope of exports to Asia but I see this as a long term thing, expecting a massive increase in out exports to India and China in the next few years is crazy. Personally I the only place I see fresh demand coming from is the government.

Wonderful piece of appeal-to-authority – when the authority is the Chicago School, who got us where we are today, and Reinhart, funded by the Peterson, the debt-hysterics Abramovitch.

Well, that’s why I said there was an ad verecundiam point. That said, it’s slightly ironic to try to deal with a watered-down appeal-to-authority (as in, these people have earned the right to be listened to by dint of their positions) with a flat-out ad hominem.

Year-on-year, government borrowing is rising, not falling, and there is a real risk of a triple-dip recession, which will bring more business failures and lower tax revenues.

“Will the triple-dippers please acknowledge their mistake, or else make clear that their phantom recessions reflect weak North Sea production, bank holidays and the impossibility of hosting the Olympics every quarter?”
http://www.telegraph.co.uk/finance/economics/9897571/Britain-never-had-a-double-dip-recession-says-top-economist-Simon-Ward.html

O.k so the tories haven’t done a great job, but it never occured to you that the reason they had to make the cuts (all be it too quick) was becuase the likes OF Toynbee had supported gordon brown in the first place,

@Andreas Paterson

I think the trouble with most of Osborne’s critics is that they think there is an alternative economic policy that would deliver 2.5-3% growth. Hence all the complaints when growth flat lines.

I happen to believe that in an environment of the corporate and household sectors deleveraging substantially after a 15 year boom then there is very little anyone can do to boost growth much.

The suggestion that government therefore needs to step in to boost demand is sound but only if you think that this will have no further impact on depressing the household or corporate sector even further. People realise that ever more borrowing now (and it’s hardly as if the government isn’t already borrowing a lot) just leads to higher taxes or reduced demand in the future and thus thet retrench every further today.

So although it sounds defeatist I would say there is nothing much to do to boost demand apart from patience and in the interim try and rebalnce the economy or set in place the framework for a more productive recovery in the future.

So Osborne was probably wrong to cut infrastructure spending. Transport spending should have been maintained at the expense of politically more painful cuts elesewhere.

UK companies are sitting on (what is it) almost £1 trillion in cash. There are ways for the government to unlock this (capex tax breaks for spending in depressed regions). There’s probably more to be done in boosting employment through Nat Ins cuts. invest some more money in university R&D etc. Do whatever is needed to get UK industry to focus more attention on selling to Asia and the BRICs.

But none of these are likely to have much impact on the economy over the near term.

62. gastro george

@Shinsei1967

“People realise that ever more borrowing now (and it’s hardly as if the government isn’t already borrowing a lot) just leads to higher taxes or reduced demand in the future and thus thet retrench every further today.”

That’s Ricardian Equivalence, which has been soundly debunked. Osborne’s initial policy was based on this – the population had every expectation of lower taxes in the future and responded not by a flowering of the economy but by retrenching.

@gastro george

Well, Ricardian Equivalence hasn’t been soundly debunked.

And people didn’t expect lower taxes in the future thanks to Osborne’s austerity because they knew perfectly well that even if his austerity plans happened as the OBR predicted the national debt would be substantially higher in the future and therefore taxes higher.

In 2007 we had debt/GDP of 40% or so. In 2015 OBR predictions were for this to have more or less doubled.

64. gastro george

@Shinsei1967

For somebody who thinks they know what people think – you don’t get out much, do you. I don’t think I’ve ever met anybody whose main concern was the possibility or not of higher taxes in 5 years time, rather than the state of the economy and their bank balance over the next few months. Unless they were already stinking rich.

And nice use of 2007 as your baseline. If we start at 2010, which I think you will agree is more reasonable as that’s when the Tories took over and the OBR was created, their prediction was for net debt to be falling after 2013.

Osborne’s explicit line was falling debt in the future = falling taxes in the future = investment today.

@gastro george

I used 2007 for the very obvious reason that that was the last year before the banking crisis.

For the 10-15 years before the banking crisis the UK ran debt/GDP of 35-40%. That was what “we” considered normal. The effects of the banking crisis were to double debt even under the most propitious economic scenarios.

” and the OBR was created, their prediction was for net debt to be falling after 2013.”

Not even close. Net debt was to continue rising to at least 2015.

“Osborne’s explicit line was falling debt in the future = falling taxes in the future = investment today.”

You clearly don’t know the difference between debt and deficit. Debt was always forecast to rise throughout the whole Parliament, as the only intention was to eliminate the structural deficit (not even the whole deficit) over 5 years. By definition if you are running a deficit greater than GDP growth debt will increase. It’s a mathematical fact of life.

Osborne’s whole economy policy hasn’t been to decrease debt or lower taxes, it has been to slow the rise in debt & taxes.

@gastro george

“I don’t think I’ve ever met anybody whose main concern was the possibility or not of higher taxes in 5 years time,”

People taking on mortgages think more than six months ahead. They think about their job prospects (will they still have one, will they get promoted), they think about family commitments (can we afford this if one of us stops working to look after kids), they think about whether interest rates are likely to rise in the future.

And then there are companies. They think more than six months ahead. Everyone from the restaurant on the HIgh St (do we buy a new coffee machine) to Vodafone or Unilever.

67. gastro george

@Shinsei1967

“You clearly don’t know the difference between debt and deficit. Debt was always forecast to rise throughout the whole Parliament”

Nicely patronising. Look at the forecast debt figures in http://budgetresponsibility.independent.gov.uk/wordpress/docs/junebudget_annexc.pdf, Table C1: Fiscal forecast overview:

10-11 11-12 12-13 13-14 14-15 15-16
Public sector net debt 61.9 67.2 69.8 70.3 69.4 67.4

So falling after 2013.

68. gastro george

@Shinsei1967

You may be the last person alive to believe in Ricardian Equivalence. Of course people and companies look ahead, but do you really believe that they think make a rational connection between government spending, future taxation and their financial future? When compared with other effects that are much more tangible – like unemployment?

@gastro george

Peaks at March 2014 at 70.3%. Falls marginally throughout 2014 to March 2015 (at 69.4%). Which is what I said.

@gastro george

Ricardian Equivalence doesn’t work insuch a mechanistic approach as you portray.

But you have the general “wisdom of crowds” whereby most people have a pretty good idea that the years pre 2007 were a bit of a boom (110% mortgages etc) and that the years post 2007 (austerity, EU crisis daily on the news, realisation that everyone has too much debt, realisation that public services all need more funding, realisation that their employer is retrenching) will be difficult and that they are likely to have smaller pay rises than in the good years and the government is likely to be trying to raise taxes.

Unemployment comes into this too of course. But many people, if not most, are actually pretty secure. And we’ve had 18 months of rising employment.

The real day-to-day problems that I hear from my circle of friends and from what the media shows is one of making ends meet. Prices have gone up a lot and wages haven’t. It’s the unpleasant surprise when gas bill lands on the mat or the shock when it costs £80 to fill up the car.

56 Shinsei1967

“1) Europe is only 40% of UK’s exports. Obviously still sizable but less than half and on a diminishing trend.”

OK but the important point – which you have evaded – is that 40pc is LOW by EU standards thereby showing the extent of trading inter-dependence between EU countries because of the Single Market and monetary union. What follows from that trading inter-dependence is that a recession in one country tends to be transmitted to other EU countries and the Eurozone is currently recessed.

This is why Martin Wolf is saying that the effect of the current austerity focus in EU economies is mainly to depress economic activity, as well as tax revenues, not to resolve budgetary deficits. It will take time to reorientate EU export markets to rest of world countries and in the EU that will run counter to the fundamental purpose of the EU, which was explicitly intended to promote trading inter-dependence.

“2) . . but neither did [Keynes] say just borrowing ever more until trend growth was reached was also a good idea.”

But I – and Martin Wolf – are NOT suggesting “unlimited” borrowing, only a rephasing of spending and borrowing to boost aggregate demand in the immediate future to prevent Britain’s economy from continuing to flag.

The fact is that with Osbornomics, government borrowing is rising year-on-year, not falling. The austerity focus in Europe has put Britain’s economy teetering on the edge of a triple-dip recession and pushed the Eurozone into recession, which impacts on Britain’s exports.

Continuing to harp upon how crucial it is to cut public spending without taking account of what is happening to aggregate demand isn’t solving the budget deficit problem. It is making it worse – on the evidence: government borrowing is RISING while business investment and exports are falling.

We need a policy change to get the economies of Britain and the Eurozone growing again. The recent proposals in British politics for relaxing monetary policy are clearly intended to boost aggregate monetary demand. But there are valid reasons for doubting the effectiveness of monetary policy in achieving that objective when the economy is recessed or nearly so and the BoE’s base interest rate has already been cut to ½ pc.

The worry about more Quantitative Easing (QE) through the BoE buying government gilts in the market is that the banks and other financial intermediaries will simply add the money from gilt sales to their liquid assets until business prospects look more optimisitic – when a push to lend could create inflationary pressures. I suspect that is the reason some BoE’s MPC members voted against more QE. I see the Daily Wail has already damned Paul Tucker’s proposal for “negative” intererst rates.

The bottom line to all that is that prospects for a more relaxed monetary policy to boost aggregate demand are looking bleak – which reopens the question as to what policy change by the Treasury is necessary to get Britain’s economy growing again instead of flatlining at best.

72. gastro george

@Shinsei1967

“Net debt was to continue rising to at least 2015.”

“Peaks at March 2014 at 70.3%. Falls marginally throughout 2014 to March 2015 (at 69.4%). Which is what I said.”

Duhhh.

“Ricardian Equivalence doesn’t work in such a mechanistic approach as you portray.”

“People realise that ever more borrowing now … just leads to higher taxes or reduced demand in the future and thus they retrench every further today.”

But that’s exactly how you describe it.

You then describe a list of conditions of bad public morale that I would agree with. But there’s no definitive causal link between those conditions and borrowing and possible future taxation. You may make that connection. But “people” don’t.

“But many people, if not most, are actually pretty secure. And we’ve had 18 months of rising employment.”

More alternative universe.

@ Bob B

1) Sorry, I wasn’t evading your point about the EU. I fully accept that the EU economy is weak and shows no sign of improving and that this will impact on the UK. I was just highlighting that the majority of our trade goes to countries not in recession and that we shouldn’t be too downbeat about UK prospects based on poor performance of our nearest trading neighbours (who hog all the news headlines).

2) I’m just not convinced that say £10-20bn of extra government spending will have an significant impact on the UK economy. And risks doing more harm than good (if it was through a VAT cut, which would be spent on “un-needed” consumer durables). Far better to spend on infrastructure etc but the delays implicit in that (planning etc) mean it will have no impact in the near term.

@gastro george

You make two unsubstantiated points.

Ok, you don’t think people consciously or unciously make a connection between a weak economy, government debts and future tax rises. I do. Can we agree to disagree.

I also happen to think the vast majority of people aren’t unduly concerned that they will be made unemployed. They’re worried about real pay cuts, fewer hours and higher prices.

It is you who seems to be in an alternative universe. There are almost 30 million people at work in the UK. Highest female employment ever. Jobs have been created consistently over the last 18 months. The announced job losses in the public sector are mostly done. You are going to have to find some evidence to back up your assertion.

So net debt/GDP peaked in mid-late 2014. I said 2015, you said 2013. Can we agree that we were both wrong !

‘Osborne was clearly foolish to set his stall by the AAA rating, what he should have said is that he intended to “maintain as low an interest rate environment as possible.” Which he has.’

That’s called the Texas Sharpshooter fallacy.

I’m sure you can always find one indicator to turn a massive failure into a success.

“I don’t think I’ve ever met anybody whose main concern was the possibility or not of higher taxes in 5 years time, rather than the state of the economy and their bank balance over the next few months”

Absolutely – indeed even without a short term mindset, the possibility of tax cuts worries me far more.

Everyone knows tax cuts will mean service cuts. Saving to cover periods of unemployment becomes critical, for example, because otherwise I might be forced into menial unpaid labour which leaves no time for job-hunting and wrecks my CV. Similarly health-care; if cuts and privatisation continue to make state-funded hospitals ever more ineffective and inhumane, then I’ll have to save up in case I need to pay for my own care.

77. gastro george

@Shinsei1967

“I also happen to think the vast majority of people aren’t unduly concerned that they will be made unemployed. They’re worried about real pay cuts, fewer hours and higher prices.”

All of those.

“There are almost 30 million people at work in the UK. Highest female employment ever. Jobs have been created consistently over the last 18 months. …”

Sounds like Nirvana. So why is everybody so worried and unhappy?

“So why is everybody so worried and unhappy?”

High inflation and falling real living standards. Having less money to spend than they did last year or the year before and not seeing any light at the end of this particular tunnel.

However if you look at the Consumer Confidence data confidence is improving, though still negative. There are evidently many people out there who don’t share your pessimism.

http://www.gfknop.com/pressinfo/releases/singlearticles/010775/index.en.html

Shinsenei1967: “Far better to spend on infrastructure etc but the delays implicit in that (planning etc) mean it will have no impact in the near term.”

I’m doubtful about the regular ‘planning delays’ narrative.

Planning delays are obviously an important factor for major infrastructure projects such as HS2 – the supposed net benefits of which are contentious – or building a new London airport in the Thames estuary at the cost of c. £50 billion in a decade or so but looking around I’ve seen lots of empty office blocks and vacant shops on high streets and read even more about that while there is a manifest shortage of affordable housing, especially social housing.

The Town and Country Planning Assocation reports that, in fact, there are several years’ worth of supplies of land with planning permission for housing in developer landbanks.

How come we have too many shops and offices but too little housing? I rather suspect that what is holding housebuilders up from building more houses is the risk that they won’t be able to sell what they build because of the difficulties that new home-owners have in getting a mortgage they can afford when real incomes are depressed and prospects of real earnings growth are so bleak.

“Individuals had less disposable income to spend on average in the first three months of the year than during any quarter since 2003. Disposable income per head, taking inflation into account, fell by 1% on the previous quarter, the Office for National Statistics (ONS) said.” [BBC website July 2012]
http://www.bbc.co.uk/news/business-19060716

@Bob B

“How come we have too many shops and offices but too little housing?”

Isn’t it because local authorities are reluctant to grant change of use permission for shops & offices. They have an (understandable) reluctance to change the character of a High St by allowing shops to be turned into flats or houses.

I partly agree with you about the difficulty people face, especially first time buyers, in getting a mortgage having a depressive effect on housebuilding. However there are also plenty of cash-rich buy-to-letters (whether rich individuals or pension funds wanting to invest in residential property) out there who could fund more housebuilding but they don’t.

I assume the reason they are holding off is that they don’t think house prices have bottomed yet. Once that happens (and low interest rates and QE are postponing that day) housing starts should increase rapidly.

I live in London, where house prices are still buoyant, and there doesn’t appear to be any slowdown in building activity at the moment. Battersea Power Station & Nine Elms project is going to be a few thousand flats. Over the river at Lots Road Pumping Station another few thousand. The Olympia/Earls Court site another few thousand.

TimJ: the Reinhart-Rogoff paper has been pretty seriously problematised by quite a few people, more or less since it appeared: or at least, the 90% zombie idea has been. I’m fairly sure you know this.

More generally, I’m having a bit of a Princess Bride moment with this thread. People keep saying ‘socialism’. I don’t think that word means what you think it means, since what everyone so far has apparently meant when they say it is Soviet communism. One of these things is not like the other. For a start, one of them is true of quite a few UK policies, and the other most certainly is not.

Shinsei1967:

“Isn’t it because local authorities are reluctant to grant change of use permission for shops & offices”

I don’t believe it – that is just another urban myth concocted for political reasons. In the London borough where I live as well as the neighbouring borough, I’ve seen several conversions or conversions underway of both medium and substantial office developments to residential developments.

The possibility of conversion greatly depends on the architecture of the offices. With open plan offices around a central service core and glass window curtain walling – a once popular and low-cost form of office development – the costs can be prohibitively expensive.

I don’t believe the failing was the fault of local planning authorities. Greedy developers believed it would be much easier to make money by building offices and shops than the troublesome business of building and managing housing to let. Their enthusiasms and greed led them astray and planning authorities didn’t stand in their way for fear of being labelled obstructive.

@Bob B

I specifically talked about local authorities being reluctant to give planning permission to convert shops into housing. There’s far less reluctance to give permission to turn office blocks or industrial space into flats (I used to live in one in central London for years).

I do question your views on property developers though. Some property developers are geared up for buying a half acre of the City and building a 30 storey tower for bankers or lawyers. Other developers buy 100 acres on the outskirts of a town and build 500 houses. However the role of local authorities in formulating a long term development plan for an area is clearly key.

Look at somewhere where planning permission was eliminated and developers could build what they wanted – the Docklands. Developers built a series of skyscrapers for bankers and also tens of thousands of houses and retail space (malls & large supermarkets).

@Bob B

Also most of the increase in retail space over the last 10-20 years hasn’t been built by developers it’s been built by retailers themselves, mostly the big supermarket chains.

The small town I grew up in in Cambridgeshire twenty years ago has no more “normal” shops on the High St than it did in the 80s. What it doe shave though is a massive Tesco, Waitrose & Sainsbury on sites that were largely derelict. All of these sites were developed by the supermarkets to meet a need, not by speculative developers out for a quick return.

I’d also point out this town had a population of 10,000 in the 1980s and now has 25,000. They’ve built an awful lot of houses in the last 25 years. What used to be fields half a mile outside of town are now all housing estates. And these were all built by the major developers (Barrett, Persimmon etc).

3:55 pm, February 28, 2013
40. Bob B

I repeat: the obsession with Oxbridge entry is misplaced and silly.

There are far more urgent educational priorities affecting the life chances of the young than going to Oxbridge instead of another university.

“Fewer teenagers scored at least five Cs at GCSE this year – the first time the numbers have dropped in almost a decade. Official figures show that 58.6% of pupils in England gained five A*-C grades, including English and maths, this year – down almost half a percent on 2011.”
http://www.independent.co.uk/news/education/education-news/first-fall-in-gcse-ac-grades-recorded-8216095.html

The chances of getting to any university, let alone Oxbridge, without 5 GCSEs at A*-C grades are slim.

We need to focus on getting more 16 year-olds through their GCSEs with A*-C grades.

I don’t know how the post at 85 got there – please delete


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