Labour spending: Gordon Brown and Ed Balls ignored warnings and wasted billions

[Joel`]

Gordon Brown and Ed Balls ignored warnings over the profligacy of their spending plans and the damaging impact of key tax policies, leaked documents disclose.

A confidential document presented to the Cabinet in January 2006 asks: "We've spent all this money, but what have we got for it?"

It warns that the efficiency of the public sector needed to improve rapidly and insisted that "spending growth will slow". The document drafted by civil servants also says that "ineffective spending" must be "closed down"

However, Gordon Brown discarded the advice and embarked on a £90 billion increase in spending when he became prime minister.

The expenditure meant that the economy was left facing a record deficit as the effects of the recession were felt.

The document is among 19 papers disclosed today by The Daily Telegraph that were obtained from the personal files of Mr Balls, the shadow Chancellor. They follow the divulgence yesterday of dozens of documents detailing Mr Balls's central role in a plot to topple Tony Blair.

Today, the Ed Balls files make public the warnings of officials and others over Labour's tax and spending plans.

The document is the first official evidence that shows the scale of concern over the activities of Mr Brown and those around him in his time as chancellor. In an analysis of spending plans drawn up in January 2006 for the following year's Comprehensive Spending Review, the document states that any increase in taxpayer expenditure should only be in line with inflation. It sets out detailed plans for cutting spending in more than 12 areas to reduce spending by billions of pounds.

However, Mr Brown neglected the advice and increased spending by twice as much as recommended. He only cut the wasteful spending in four of the areas identified.

Labour spending: Gordon Brown and Ed Balls ignored warnings and wasted billions - Telegraph
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Lolol, go Gordon go! And yet people still vote for them. ;(

 

[Andy]

Everyone on the IRC room knows how I stand on the issue. Unfortunately no matter what Labour do when in power there is still people going to vote for them and that will never change.

 

[Joel`]

Everyone on the IRC room knows how I stand on the issue. Unfortunately no matter what Labour do when in power there is still people going to vote for them and that will never change.

This. Yet every other policy by any other party is immediately called bad because of the source rather than the policy itself.

 

[curtis290]

This thread is sooooo nonpartisan.

 

[Fish Hunter]

Yes, they are socialists that is what they do?

 

[Sid]

I don't really like Labour too much but my areas a big labour thingamagig, but tbh they're always going to win seats in poorer areas (unless i've got this all wrong...)

 

[Joel`]

Yes, they are socialists that is what they do?

Lol, they're not socialist. They're just slightly more to the left. And you can be a socialist without wasting billions of tax money. They spent because the public loved it, and didn't give a **** about the consequences as long as they had power.

---------- Post added at 08:04 PM ---------- Previous post was at 07:44 PM ----------

This thread is sooooo nonpartisan.

Just 5 words. Surely your shortest ever?

 

[Fish Hunter]

Lol, they're not socialist. They're just slightly more to the left. And you can be a socialist without wasting billions of tax money. They spent because the public loved it, and didn't give a **** about the consequences as long as they had power.

Yes they are. The Labour Party is communist. They have small statues of Lenin and Stalin in their offices and are secret friends with North Korea. They have brought East German communists to England, to help them run a socialist government properly, however it didn't work out good and failed like East Germany. The UK is now in huge debt and have to sell their dominions to the USA. India is also thinking about buying the commonwealth. British scientists with a team of North Koreans, East Germans and some people from Angola is trying to resurrect Karl Marx, to build up a utopia, as Karl Marx described it. It's crazy I tell ya, we are ****ing doomed!

Don't believe this is true, but it's a frightening example of what could happen.

 

[Joel`]

Yes they are. The Labour Party is communist. They have small statues of Lenin and Stalin in their offices and are secret friends with North Korea. They have brought East German communists to England, to help them run a socialist government properly, however it didn't work out good and failed like East Germany. The UK is now in huge debt and have to sell their dominions to the USA. India is also thinking about buying the commonwealth. British scientists with a team of North Koreans, East Germans and some people from Angola is trying to resurrect Karl Marx, to build up a utopia, as Karl Marx described it. It's crazy I tell ya, we are ****ing doomed!

Don't believe this is true, but it's a frightening example of what could happen.

Touché good sir.

 

[curtis290]

Just 5 words. Surely your shortest ever?

I know right! I'm pretty proud of myself, it took a lot to restrain myself but I managed to keep it to one sentence.

In all seriousness:

Yet every other policy by any other party is immediately called bad because of the source rather than the policy itself.

Every political party/organization/group ever does this.

They spent because the public loved it, and didn't give a **** about the consequences as long as they had power.

In other words, they followed public opinion because it got them elected even if it was a bad idea...doesn't this happen in politics all the time?

And you can be a socialist without wasting billions of tax money.

Can you (in the eyes of many, including yourself)? Many people believe all (or nearly all) government spending is wasteful. Since socialism requires a lot of government spending, how could a socialist government possibly not waste billions? Also, could you define 'waste' here? We all have different definitions of waste, and I don't think something is a waste if it achieved its objective. Labour's objective was simply to prolong the bubble as long as they could and keep aggregate demand high to prevent the crisis from rearing its ugly head. Delaying the impacts of the crisis has been part of government practice all over the world, and what you're criticizing Labor of here is exactly the same as what the Bush administration did, among many others, since governments/political parties/people are shortsighted and will try to put off the bad from happening as long as they can, whether or not it's good for the nation in the long-run. In that sense Labour achieved its objective, whether or not you agree with it, so I don't think wasteful is the right word.

Also, the notion that only Labour would have engaged in deficit spending during the crisis (either due to incompetence or ideology) is silly considering the global economic conditions of the time. Governments were doing the same thing all over to prolong the inevitable effects of the crisis. Even the Republicans in America, who are as anti-government spending as any political party in the world, including the Tories, increased government spending and actually ran the federal deficit into record high levels. Had the Tories been in power they would have engaged in deficit spending as well to keep up agreggate demand, although it would have come much more in the form of tax cuts as opposed to spending since they believe government spending is bad. Would the deficit have been lower? Probably, but AD would have been as well and the crisis would shown itself more quickly and the effects would have been harsher. The decision between having a high deficit with higher AD and a lower deficit with lower AD is ultimately up to the public and government; I don't think there's a right answer, and economists disagree as well (and to address your concerns and play devil's advocate, I've heard many economists claim, and these include the types hanging around the current American administration, that countries can rack up much higher deficits than people would think). You can certainly disagree with Labor for choosing the former over the latter, but keep in mind that they were following public opinion, which is pretty common in politics and understandable for such an issue.

Lastly, the article is downright silly. If you want to open this subject for debate on FMB sounds good, but don't start the OP with a stupid article that is comically one-sided (in that it is trying to portray Brown/Labour in a negative light, not saying that it's wrong). Politicians receive economic advice ALL the time. Almost every minute of every day. This advice is all different and contradictory, and there are as many opinions as there are economists. With any decision that is made and ends poorly one can easily go back and find warnings and counsel given to the government officials advising the contrary. What's even sillier about it is how obvious the advice is: there are always going to be people complaining about the wastefulness of government spending from within the public and private sector. Despite the article's portrayal, it's no secret that in 2006 (or any other year) there were a lot of people who thought the government should have cut back on spending. And of course there were plenty of people who thought a fiscal stimulus was the right response to the crisis. The article also attempts to portray this as a very simple, black-and-white issue, that Brown and Balls (what a name) received advice on a technocratic issue that they ignored (suggesting their incompetence). The issue of how much government spending should be used to tackle the crisis is a much broader political issue involving a lot of complicated factors, economic and non-economic. It's not like they would make such a decision based on a few reports or documents found in Mr. Balls' belongings

 

[Joel`]

I know right! I'm pretty proud of myself, it took a lot to restrain myself but I managed to keep it to one sentence.

Aaaaaaaaaaaaaaaand.. It was good while it lasted.

Every political party/organization/group ever does this.

I'm not talking about political parties/organisations. I meant most of the public in general. While I dislike most of Labour's policies, I'll at least take the time to try and understand what they're saying. With the Tories, so many people will write any policy they come up with, no matter how good, just for the fact that it's the Tories.

In other words, they followed public opinion because it got them elected even if it was a bad idea...doesn't this happen in politics all the time?

Yes, and it's why we have an independent fiscal control now. But, no one has ever followed opinion to the extent that they ran a huge deficit during a boom, discredited their own rules. It's plain idiocy, and it's very hard to see a counter reason for why they could have gone so far. It's not as if we're talking a tiny deficit here, we're talking £90bn on top of tax cuts during a huge boom. Even if the banks didn't screw us all over, it was clearly not going to end well. But it was justified because Brown "ended boom-bust".

Can you (in the eyes of many, including yourself)? Many people believe all (or nearly all) government spending is wasteful. Since socialism requires a lot of government spending, how could a socialist government possibly not waste billions? Also, could you define 'waste' here? We all have different definitions of waste, and I don't think something is a waste if it achieved its objective. Labour's objective was simply to prolong the bubble as long as they could and keep aggregate demand high to prevent the crisis from rearing its ugly head. Delaying the impacts of the crisis has been part of government practice all over the world, and what you're criticizing Labor of here is exactly the same as what the Bush administration did, among many others, since governments/political parties/people are shortsighted and will try to put off the bad from happening as long as they can, whether or not it's good for the nation in the long-run. In that sense Labour achieved its objective, whether or not you agree with it, so I don't think wasteful is the right word.

For a start, we're discussing before the economic crisis when we were in a huge boom. I'm criticising him for running a mammoth deficit during the BOOM, against strong advice as well. I accept that something was needed during the recession. Well, spending is going to be needed in the NHS, what isn't needed is pumping money into it inflate public sector employment, so the NHS can have lots of consultants to consult the consultants while they're consulting. Another example, in my area it was decided we'd spend £150k on a ******* statue of an acorn. No one was asked if we'd like an acorn, but hey, we now have an expensive ugly acorn. And then again, hundreds of thousands wasted on a statue of a leaf this time. That is just spending for the sake of spending, so you can post nice figures to the public.

Lastly, the article is downright silly. If you want to open this subject for debate on FMB sounds good, but don't start the OP with a stupid article that is comically one-sided (in that it is trying to portray Brown/Labour in a negative light, not saying that it's wrong). Politicians receive economic advice ALL the time. Almost every minute of every day. This advice is all different and contradictory, and there are as many opinions as there are economists. With any decision that is made and ends poorly one can easily go back and find warnings and counsel given to the government officials advising the contrary. What's even sillier about it is how obvious the advice is: there are always going to be people complaining about the wastefulness of government spending from within the public and private sector. Despite the article's portrayal, it's no secret that in 2006 (or any other year) there were a lot of people who thought the government should have cut back on spending. And of course there were plenty of people who thought a fiscal stimulus was the right response to the crisis. The article also attempts to portray this as a very simple, black-and-white issue, that Brown and Balls (what a name) received advice on a technocratic issue that they ignored (suggesting their incompetence). The issue of how much government spending should be used to tackle the crisis is a much broader political issue involving a lot of complicated factors, economic and non-economic. It's not like they would make such a decision based on a few reports or documents found in Mr. Balls' belongings

Good to see I wasn't the only one that found that funny.

It seems you've grabbed the wrong end of the stick so I'll ignore the rest. I'm criticising him for spending massive amounts during the boom period, not the recession.

 

[curtis290]

Aaaaaaaaaaaaaaaand.. It was good while it lasted.

Baby steps.

I'm not talking about political parties/organisations. I meant most of the public in general. While I dislike most of Labour's policies, I'll at least take the time to try and understand what they're saying. With the Tories, so many people will write any policy they come up with, no matter how good, just for the fact that it's the Tories.

Everyone says they listen to the other party's platform while the general public ignores their own's. Unless you can empirically prove that the Tories are 'less listened to' than Labour, there's no use in making that argument. You may be right but you can understand how a third-party observer unfamiliar with British politics might be sceptical about your claim.

Yes, and it's why we have an independent fiscal control now. But, no one has ever followed opinion to the extent that they ran a huge deficit during a boom, discredited their own rules. It's plain idiocy, and it's very hard to see a counter reason for why they could have gone so far. It's not as if we're talking a tiny deficit here, we're talking £90bn on top of tax cuts during a huge boom. Even if the banks didn't screw us all over, it was clearly not going to end well. But it was justified because Brown "ended boom-bust".

They ran a deficit to keep the bubble going. The structural conditions in the real economy that led to this depression would have started it earlier had it not been for the reckless deficit spending in countries like the US and UK (especially the US, whose consumption drives the global economy). Bush and Brown were simply prolonging the inevitable, and Bush almost succeeded in postponing it until after he left office. How much deficit spending was appropriate and should they have waited until later to begin it are questions that everyone disagrees on. I'm not quite sure where I stand on the issue, I've heard credible economists say most countries can sustain a lot more debt than we think and I've heard others claim the sky is falling because of the huge deficits we've racked up. To be honest I don't think it matters too much, we're screwed either way, it's just a matter of picking your poison.

For a start, we're discussing before the economic crisis when we were in a huge boom. I'm criticising him for running a mammoth deficit during the BOOM, against strong advice as well. I accept that something was needed during the recession. Well, spending is going to be needed in the NHS, what isn't needed is pumping money into it inflate public sector employment, so the NHS can have lots of consultants to consult the consultants while they're consulting. Another example, in my area it was decided we'd spend £150k on a ******* statue of an acorn. No one was asked if we'd like an acorn, but hey, we now have an expensive ugly acorn. And then again, hundreds of thousands wasted on a statue of a leaf this time. That is just spending for the sake of spending, so you can post nice figures to the public.

See the answer above, the reckless spending simply extended the lifespan of the bubble and prolonged the date at which the depression would set in. The statue of the acorn did employ several people to build it, design it, move it, etc. It gave the metal company some money to supply the material and the welding company to carve it. That gave some people the money they desperately needed and would spend to keep the economy going (rather than simply give it to banks who might sit on it or use it to pay down debt). I get your point, but again anecdotal evidence isn't the best way to counter it. For all we know that acorn could have been a rare case.

Good to see I wasn't the only one that found that funny.

It's not as bad as our Speaker of the House Timothy Boehner. Or Representative Anthony Weiner (pronounced weener) who just got busted for sending pictures of his **** to random women. I swear a lot of people vote for these guys just because they have hilarious names.

It seems you've grabbed the wrong end of the stick so I'll ignore the rest. I'm criticising him for spending massive amounts during the boom period, not the recession.

Not grabbing the wrong end of the stick, I'm mostly just criticizing the article (I think it's purposely misleading and a perfect example of 'spin') and then your complaint that Labour supporters ignore the Tories more than the other way around. I did throw in a quick defense of the Brown government's policies but mainly because I understand their pressures and objectives (despite being politically very different the Bush and Labour governments did the same thing, the situation at the time encouraged deficit spending to cover the politicians' ***** whether or not it was good for the economy), not because I agree with them. I think Bush/Brown and their cronies did what most would have done in that situation. Sure they may have been incorrect and a bit spineless, but not evil, and no different from most politicians in any of those aspects.

 

[Joel`]

The point is, he shouldn't have kept spending just to keep the bubble going. He was just setting up a crash to hurt a lot more, as witnessed now. Brown justified the spending by claiming that he had ended "The boom-bust cycle", that was completely idiotic to start with. And not only that, he broke fiscal rules that he himself set to carry on spending. It's only logical to cut spending and increase tax during a boom, so when it all goes downhill there's money in reserve to spend out of it, while also allowing for a longer more sustainable boom. And not only does Labour incompetency end there, the shadow chancellor actually claimed on TV a few weeks ago we didn't even have a structural deficit!