Tory Liberal failure on the economy – Double-Dip recession

With the news that we are officially in a double-dip recession period LINK it is becoming clearer that the Tory Liberal economic policies are fundamentally flawed. Yes, they inherited a large deficit, but they also inherited a growing economy.

Cutting too far too fast has recklessly damaged the UK’s good prospects of getting our economy moving again. So far, the Tory Liberals have increased unemployment by

  1. Slashing jobs in the public sector on the unsubstantiated claim and risk that jobs will miraculously appear in the private sector to make up for the rise in unemployment in the public sector
  2. Increasing VAT which has an impact on a business’ take home profits, meaning that they have less profit available to employ people and expand
  3. The VAT rise also impacts on consumer spending and disincentivises businesses
  4. Scrapping the Future Jobs Fund which equips young people to be work ready. Indeed the long term impact of this has also been ignored by the Tory Liberals. Even if there is a lack of employment opportunities in the country, it is important that these schemes are invested in so that people are equipped with the skills they need and are work ready for when the economy does recover and there are jobs for people to go into.

Unemployment should never be a price worth paying. The immediate and long-term impact of worklessness is far worse than pursuing an aim to get rid of the deficit in four years. The Tory Liberal Government have made this their priority and ignored the impact that this damaging course has on ordinary people.

The VAT rise also had a detrimental impact on inflation. Naturally, it costs more to buy products because there is more tax paid on spending money. This leaves less disposable income to the individual and what’s more, wages are not going up with inflation. People are being squeezed with higher costs and lower income.

This brings me to my final point on the deficit, which has increased under this Tory Liberal administration – LINK

Growth is a key component to tackle the deficit. Without economic growth, it becomes difficult to address the deficit. This has been the Tory Liberal Coalition’s main failure. There is the issue of the Eurozone crisis that the right wing Government will point to. However, slashing public sector jobs with a front loaded approach and the VAT rise are policies of the Government’s own making.

The Tories are out of touch with ordinary people and their stance on the 50% tax rate at this very moment in time is testament to that. The Liberals aren’t bothered about issues such as employment, jobs, the economy, crime and the NHS – this is proven with how easily they flipped their position on these what I consider core issues. They are far more concerned with the House of Lords and the electoral system and appear more principled on these issues than ones that have a more profound impact on people.

The Treasury vs Brent Liberal Democrat Sarah Teather

The detail of the Autumn Statement presented by George Osborne on Tuesday reveals some truthful observations on the global financial crisis. It does not blame Labour spending on schools, hospitals and police for creating a financial mess. It says….

1.3 The intensifying euro area debt crisis, driven by excessive levels of debt, now represents the most dangerous threat to the world economy since Lehman Brothers collapsed in autumn 2008. Even if this crisis is resolved quickly, the financial instability and uncertainty it has caused has been a blow to confidence and is damaging the UK economy.

1.4 It has been clear that the financial crisis of 2008 and 2009 reduced the UK’s growth potential relative to the unsustainable pre-crisis trend, but the extent of that loss is uncertain. Most significantly for medium-term growth prospects, the OBR has now substantially revised down its assessment of the level of potential output. That is consistent with evidence from previous financial crises, which have shown large output losses typically persist for many years.

1.5 As a result of these three factors — the inflation shock, the impact of the euro area debt crisis on confidence, and the ongoing structural impact of the financial crisis — the OBR’s November 2011 Economic and fiscal outlook shows that:

  • economic growth has been revised down to 0.9 per cent for 2011 and 0.7 per cent in 2012,
  • with a slower recovery thereafter;
  • the trend level of economic output has been revised down by about 3½ per cent by the end
  • of the forecast period. Comparing the OBR’s trend output projection with an extension of
  • the Budget 2008 projection, trend output will be around 13 per cent below the pre-crisis
  • assumption by the end of the forecast;
  • public sector net borrowing and the structural deficit have been revised up in every year of
  • the forecast as a consequence of the weaker economy; and
  • public sector net debt as a proportion of GDP is forecast to peak at 78.0

HM Treasury: Autumn Statement 2011

So three reasons cited by the Treasury for the country’s economic woes are inflation, which has not been helped by the Tory Liberal VAT bombshell which increased Value Added Tax from 17.5% to 20%, the Eurozone crisis which is questionable because the full impact of a financial crisis usually takes two months to actually affect the day to day running of an economy and the financial crisis which started with the collapse of Lehman Brothers in Autumn 2008.

Compare that to what Brent Liberal Democrat Sarah Teather has blamed the problems of the economy on.

“For years Labour spent more money than the country could afford.”

“It is absolutely vital that we pay back the massive deficit racked up by the last Labour Government”

Liberal Democrat and Brent Central MP Sarah Teather (LINK)

Sarah Teather has criticised public spending by Labour which saying that spending on hospitals, police and schools caused the deficit thereby using this argument to justify making drastic cuts to Brent Council, Brent NHS and Brent’s police force.

Fib Dems give all politicians a bad name

Voters have always been cynical about politicians who make extravagant promises only to renege on them a few months later but never in recorded history has a party betrayed every principle it ever stood for as the Liberal Democrats have done since May 6th.

Before the election, the Lib Dems supported Labour in not wishing to cut too fast too soon for fear of a double dip recession. Now they have supported the largest cuts package in the western world. Before the election they described Tory plans to increase VAT as a ‘secret VAT bombshell’ but they have since voted to increase VAT to 20%. Before the election, they gave a commitment to universal child benefit but they have since supported scrapping child benefit for some middle income families but not others. For years, they promised to abolish tuition fees; indeed it was the subject of Sarah Teather’s maiden speech. Now they are in favour of doubling tuition fees. In March this year, Sarah Teather berated the Tories for planning to abolish subsidised rents for Council and housing association homes; now they support new council tenancies at 80% of market rents and the abolition of security of tenure for those tenants. During the election, the Lib Dem Leader Nick Clegg described the alternative vote system (AV) as “a miserable little compromise”. By September he was saying that “AV is infinitely fairer than what we have at the moment”.

Brent Council’s Labour Leader, Councillor Ann M John, OBE has compiled a brief list of Lib Dem quotes made in the run up to the May election all of which have been comprehensively disavowed in the five months since the election.

I will be publishing extracts from the list which is entitled ‘The Fib Dems in their own words’ on my blog page over the next few weeks

Councillor Ann John said:

“The Fib Dems are the harlots of British politics. They will say anything and do anything to get into government. In less than six months they have betrayed every policy they fought the election on. They give all politicians a bad name”.