Sunday, 2 December 2012

Join the Debt Debate

by Peter Jordan

Chancellor's choices: Raise taxes?
Cut benefits? Borrow more money?
(source: Belfast Telegraph)
This week, there will be a lot of coverage of the Chancellor of the Exchequeur's Autumn Budget Statement. This will focus on how much Government spending has exceeded what they have received via the tax system and what the Chancellor plans to do about it.

To understand this you will need to have at least a basic understanding of mathematics. Sadly, this means that most people won't have a clue what the Chancellor is talking about; according to a recent study for the Government, just 1 in 5 adults have sufficient mathematical skills to achieve a Grade C or better in GCSE Maths. This study also showed that if you are good at Maths (everyone at PGS falls into this category) you will have the opportunity to earn more money and become wealthier than most of the population during your adult life.

To give you an idea of how important this will be for your future happiness it is sobering to look at the results of another study by the Institute of Fiscal studies. This study showed that 50% of the adult population (16 to 64) earned less than £418 per week. After tax and national insurance this means they take home no more than £333 per week. To give some context the average weekly cost of a place at PGS (including uniform costs and things like trips) is circa £280 per week.

Although the distribution of income is uneven, the share of wealth (savings, shares, pensions and the value of things you have bought like property and cars) is even more uneven. The top 10% of households own 42% of the nation’s wealth. This means that if total wealth was £100 and there were 100 people, then the richest 10 of these own £42 of the wealth (£4.20 each) while the other 90 people would own £58 between them (on average £0.64 each).

This suggests that you need to set your sights high and focus on being in the top 10% or even 1% of earners to enjoy a life free from financial stress even if this means taking Maths a little bit more seriously! It also explains why there is so much noise when it comes to working out who should pay for the spending that currently exceeds taxes. 

Even after 2 years of cuts, the situation is far from under control. In September the Government collected £42bn pounds but spent £55bn.  This would be equivalent to you spending £13.10 when you only received pocket money of £10 per week! Unless your parents agreed to give you more money, you would obviously have to find a job to earn £3.10 to allow you to carry on spending at this level.

Although everyone working more would be the best solution for our country, the big problem we face is that very few people work. Most people are oblivious to this as the statistics are quite complicated. However, the bottom line is that only 1 in 3 people in the UK (20 million out of a total population of 62 million) have a full time job. Is it any wonder that the taxes aren’t high enough to cover all the money the Government is spending on our behalf? 

The main problem the Chancellor faces is that nobody wants to have their pensions or benefits cut, nobody wants to pay higher taxes, university students don’t want to pay for their education, people want 5-star health care and rich companies and individuals will pay a small fortune to accountants to make sure they pay virtually no tax at all. This is why Government’s just keep borrowing more money.

However, borrowing more and more money is not a sustainable strategy and carries the risk that we end up in as much trouble as Greece and Spain. So, since the youth of the day will have to sort this mess out in the years ahead, what do the finest minds of PGS think we should do?

In this context it would be interesting to hear your opinions and discover your opinion on these questions:

Should the Government:

1.      Cut benefits?

2.      Increase taxes?

3.      Borrow more money?


5 comments:

  1. 4. Hold on for a few more years until it's somebody else's problem.

    ReplyDelete
  2. Cantius says that hanging on for a couple more years just won’t work. A “New World Economy" began to take hold on Earth in the late 22nd Century and eventually made money obsolete. In the meantime benefits must be cut (fairly), taxes increased (fairly) and more money borrowed to promote growth.

    ReplyDelete
  3. Borrowing more money is insanity, we need to stop lending money AND stop receiving it, we'll only have to struggle to pay it back in a few years. Increasing taxes is the most likely to cause public outrage and leaves us questioning why we bother working at all, when we give so much of our money to the government.
    The only reasonable solution is to cut benefits, or even better, cut government spending in general. With millions forked out on the new Police and Crime Commissioners and only an 11% turnout in some areas, we are clearly spending much more than is required in areas that are of little importance. We need to stop wasting money and cut government spending if we are to tackle our current economic issues

    ReplyDelete
  4. What we need to do to do to is as follows:

    1. Cut all overseas aid (10 Billion Per Year Saved)

    2. Start 'International Development Investment Fund' with 5 Billion To invest over 5 years. This would be used to fund creation of new businesses and job creation in LEDC's in a similar way to Chinese business investments , but would look at ethics as well as return. ( 5 Billion one off cost , reinvested to create more jobs after 5 year loan period)]

    3. Leave the European Union and sign a free trade agreement. Even at the highest estimate of the economic benefits of the EU this would save 8 Billion per year. ( 8 Billion MINIMUM saved)

    4. Get rid of EU migrants on benefits- why should we pay for them???
    (Saved : UNKNOWN)

    5.Ban people on housing benefits living in areas where their is a high cost/demand for housing. (Saved : UNKNOWN)

    5. Cut VAT to 15% from 20% to increase spending and inspire consumer confidence. (Cost : Unknown)

    6. Bring social services back under NHS control as Councils in the poorest areas (where social services are needed more) cannot afford to have them as people on benefits do not pay council tax.

    7. Tell Scotland to put up or shut up - No further devolution without a yes vote on Independence and if they do become independent sell all their oil in the form of futures at a very very very low price.

    8. Stop Subsidising loss making wind farms that need 4000 turbines (and that's when it's windy at all of them ) to produce the same amount of power as a nuclear power station. Build Nuclear power station instead. This would lower everybody's heating bill by £130 + however much cheaper the energy is to buy

    9. Massive airport building project - new (privately funded) Airport south of london with 4 terminals and 4 runways, third runway at heathrow , second runways at gatwick , luton and stanstead , no new airports for north of england as their is no demand (unless they are privately funded)

    10. Allow private companies to build rail track and run it.Allow construction of toll roads (In addition to state funded roads)

    11. Cut police salaries and pensions by 10% to save money. Replace PCSO'S with special constables who can actually arrest people.

    12. Abolish all academies and free schools and replace with New Vocational Schools for 15 + (for students that have sat basic GCSE short course) and State grammar schools. Get rid of 'super' heads who are adept at getting pupils to scrape c's and replace with headtechers with experience at encouraging pupils to excel to the best of their abilities. Give out 'education vouchers' for the cost of state school for parents to spend on private schooling if they so wish.

    13. Get rid of free bus passes for pensioners
    (Saving : Unknown)

    14. Cut MP's , and Councillors salaries by 25%

    15. Keep the post office property of the government.

    16. found a north east assembly in order to reduce the number of labour seats in parliament.

    17. Bring in a flat PERCENTAGE rate of income tax at 30% . It's fair because everybody pays 30% on all earning above new regional caps ( ie higher in richer south where wages are higher) (Cost or Saving Unknown

    18. Bring in mansion tax (Saving Unknown)

    19. For every month you are on benefits up to the 20th month £1 of your benefits will be turned into food stamps.

    20. Make prisons worse (ie no sky tv , no tv at all except for one communal tv limited to preselected channels ( ie bbc news , bbc 1 , bbc 2 , bbc 4 (not bbc 3) , yesterday, Gold) subcontract food supply to cheap private company (whoever makes the hospital food maybe???)
    (Saving UNKNOWN

    21. Renegotiate special relationship into a more equal partnership.

    22. Build Nuclear weapons in Britain instead of relying on america.

    23. Ensure future of all UK naval shipyards

    24. Develop own jump jet instead of relying on america.

    25. Bring back harriers until new jets arrive

    26. Privatize uk stake in channel tunnel

    A lot of other stuff I am too tired to type up.

    ReplyDelete

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