Myths about the cuts

short notes from Red Pepper Aug/Sept 2010 recirculated by Sarah Lasenby :

Economists have spelt out with alarming clarity the dangers of a double-dip recession increasing cost of unemployment benefit and lowering the tax take.

The International Monetary Fund has also warned that the proposed cuts are too rigorous and will lead to an economic crisis in the UK

Myth – the debt is the highest it has ever been
At 70% of GDP [the total of goods and services produced in one year] this is high but far from unprecedented.
From 1920 – 1960 our debt never fell below around 100%
At the end of WW11 our debt reached 250% and the Welfare State was set up plus nationalisation of the health service and major industries.

Myth – the UK's debt is the worst -
UK has the lowest percentage of Government debt of all the G7countries.

Myth – Our Government debt is unsustainable
Interestingly the nature of our debt is helpful as 70%- 80% of our debt is held within Britain and held on a long term basis – over 12 years on average. This makes our debts more sustainable than those of Greece and Portugal.

Myth – Public spending got out of control under Labour.
Levels of public spending are at the same level as in the early 1990s, during the last economic crisis. This is usual as spending always rises during a recession as result of welfare spending on unemployment and lower tax take.

Myth- UK has a bigger public sector compared to other countries
UK public spending is lower, as a proportion of the economy, than in France, Italy, Austria and the Scandinavian countries.

On Health UK spent 8.4% of GDP in 2007. roughly half of that spent in USA and well behind Germany and France.

Dr Alex Nunn of Leeds Met. Uni.+ Transpennine Working Group wrote the article this comes from.

Unison's Alternative Budget
£4.7 billion could be raised by a 50% tax on incomes over £100,00
£5 billion from tax on vacant housing.
£25 billion could be raised by closing tax loopholes. The Tax Office says its more like £42 billion and some experts say its £120 billion.
All these taxes would be progressive in contrast to the increase in VAT