Politics Thread (encompassing Brexit) - 21 June 2017 onwards

[Guest Kopfkino]

2 hours ago, toddybad said:

 

With it in, debt is at 88%. Without, it's closer to 65%. And you've already said you agree with @Kopfkino that it isn't really debt, as do I.

 

 

I haven't said it isn't debt

[Guest]

2 minutes ago, Kopfkino said:

 

I haven't said it isn't debt

Matty thinks you have.

 

It is technically debt. But government debt owned basically by the state. It's just accounting. It's hardly something we need to be worrying about at this point. 

 

As Matty will never listen to me, I think it's time you came clean about a few things such as why surplusses are counter productive, why reducing government spending reduces demand in the economy, why infrastructure spending can increase GDP by more than the increase in debt etc. I don't mean say you believe what I do, simply that they are reasoned and legitimate theories. 

 

We're never going to have a reasoned debate about the best policies if both sides dismiss truths - or at least theories that should not simply be dismissed.

 

I mean, you believe in completely free market economics. I don't believe in it. But I can at least accept that THEORETICALLY it is reasoned. I just don't believe that it works in reality as it assumes too many things that don't happen in real life.

[Guest Kopfkino]

10 minutes ago, toddybad said:

Matty thinks you have.

 

It is technically debt. But government debt owned basically by the state. It's just accounting. It's hardly something we need to be worrying about at this point. 

 

As Matty will never listen to me, I think it's time you came clean about a few things such as why surplusses are counter productive, why reducing government spending reduces demand in the economy, why infrastructure spending can increase GDP by more than the increase in debt etc. I don't mean say you believe what I do, simply that they are reasoned and legitimate theories. 

 

We're never going to have a reasoned debate about the best policies if both sides dismiss truths - or at least theories that should not simply be dismissed.

 

I mean, you believe in completely free market economics. I don't believe in it. But I can at least accept that THEORETICALLY it is reasoned. I just don't believe that it works in reality as it assumes too many things that don't happen in real life.

 

I'm not sure Matt said thats what he thinks I said. Yeah I'm not sure where he's stated he believes, or I believe, BoE held debt isn't debt. 

 

So it is debt. It is fundamentally debt. And when BoE unwinds QE as it will have to begin to do at some point in the next 5-10 years, national debt won't increase because that is still debt, despite who currently owns it. And so there is no reason for it to be treated any different to any other portion of the debt. 

 

The Germans seem to be doing okay with a surplus, as do the Swedes, as do the Norwegians persistently, as does South Korea, as do the Czechs, as New Zealand have, as have Iceland this year, as Ireland are forecast next year, as in fact Greece are starting to do, so maybe its better to ask those that have run a surplus (in most cases consistently) at some point in recent times how its been counter-productive? 

 

But yes THEORETICALLY Keynes' General Theory has some basis to it.  

[DJ Barry Hammond]

 

How can you have clear “truths”in theoretical future financial policy making? After all, past performance is no guide to future returns.

 

Additionally - there is nothing wrong with having a surplus persay.

 

 

[Rogstanley]

36 minutes ago, Kopfkino said:

 

And so there is no reason for it to be treated any different to any other portion of the debt. 

 

Two reasons I can think of:

1) the government doesn’t have to pay interest on the debt held by the BOE

2) there is no defined repayment period

 

With zero interest to pay and inflation running at about 3%, the government can just sit on that debt and let inflation take care of it. In 25 years time it’ll be worth less than half what it is now.

Edited 6 January 2018 by Rogstanley

[Guest Kopfkino]

14 minutes ago, Rogstanley said:

Two reasons I can think of:

1) the government doesn’t have to pay interest on the debt held by the BOE

2) there is no defined repayment period

 

With zero interest to pay and inflation running at about 3%, the government can just sit on that debt and let inflation take care of it. In 25 years time it’ll be worth less than half what it is now.

 

1)it doesn't change the fact it isn't debt. Plus the BoE only hands back the interest less deductions for its own cost of borrowing so as interest rates rise, less will be handed back.

2) BoE owned gilts still have a coupon expiry date so no idea wtf that means. Yeah it buys another when a gilt expires, but it won't be that way once QE is unwound, which won't be so far away given the Fed's begun the process. 

[Rogstanley]

31 minutes ago, Kopfkino said:

 

1)it doesn't change the fact it isn't debt. Plus the BoE only hands back the interest less deductions for its own cost of borrowing so as interest rates rise, less will be handed back.

2) BoE owned gilts still have a coupon expiry date so no idea wtf that means. Yeah it buys another when a gilt expires, but it won't be that way once QE is unwound, which won't be so far away given the Fed's begun the process. 

The point is these things are under government control so can be altered to suit. That makes it fundamentally different to debt owed to others. 

 

Let’s put it in the terms of personal finance, as austerity proponents so often do. If you were given a loan of say £100k on which you had no interest to pay and could pay it back whenever you wanted, would you rush to pay it back? 

Edited 6 January 2018 by Rogstanley

[Strokes]

1 hour ago, Rogstanley said:

 

Let’s put it in the terms of personal finance, as austerity proponents so often do. If you were given a loan of say £100k on which you had no interest to pay and could pay it back whenever you wanted, would you rush to pay it back? 

Toddy says national debt shouldn’t be compared to personal debt.

[Rogstanley]

5 minutes ago, Strokes said:

Toddy says national debt shouldn’t be compared to personal debt.

No and he's right, it shouldn't, because you would never ever get that kind of deal as an individual. My example was just a thought experiment to make the point that the BOE debt shouldn't be treated in the same way as 'normal' debt.

Edited 6 January 2018 by Rogstanley

[Guest Kopfkino]

1 hour ago, Rogstanley said:

The point is these things are under government control so can be altered to suit. That makes it fundamentally different to debt owed to others. 

 

Let’s put it in the terms of personal finance, as austerity proponents so often do. If you were given a loan of say £100k on which you had no interest to pay and could pay it back whenever you wanted, would you rush to pay it back? 

 

But its not under government control whilst BoE has operational independence. The Treasury might well be able to overrule (it's not particularly clear how far it can go or for how long), I would suggest that isn't in the long term interest of UK monetary stability. 

[Rogstanley]

10 minutes ago, Kopfkino said:

 

But its not under government control whilst BoE has operational independence. The Treasury might well be able to overrule (it's not particularly clear how far it can go or for how long), I would suggest that isn't in the long term interest of UK monetary stability. 

I don't know the exact mechanisms behind which organisation has the authority to do what, but it's enough to know that Osbourne and the BOE agreed that interest doesn't have to be paid on the BOE held debt. That alone is enough to mark out that debt as different from the rest.

 

Interestingly, one apparent* consequence of that has been to lower the debt interest as a percentage of GDP to its lowest level for many decades, possibly even the lowest level in history:

 

 

Which really brings into question the rhetoric about debt repayment being an urgent priority due to the interest.

 

*I got this straight off opendemocracy without checking for myself so might be wrong

Edited 6 January 2018 by Rogstanley

[Guest]

28 minutes ago, Rogstanley said:

I don't know the exact mechanisms behind which organisation has the authority to do what, but it's enough to know that Osbourne and the BOE agreed that interest doesn't have to be paid on the BOE held debt. That alone is enough to mark out that debt as different from the rest.

 

Interestingly, one apparent* consequence of that has been to lower the debt interest as a percentage of GDP to its lowest level for many decades, possibly even the lowest level in history:

 

 

Which really brings into question the rhetoric about debt repayment being an urgent priority due to the interest.

 

*I got this straight off opendemocracy without checking for myself so might be wrong

"But if we didn't have to pay the debt interest we could give the rich a tax cut"

[Guest]

UK companies will face huge new VAT burden after Brexit

Controversial changes in bill would force importers to pay duty upfront on EU goods

More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit, under controversial legislation to be considered by MPs on Monday.

The VAT changes spelled out in the taxation (cross-border trade) bill – one of a string of Brexit laws passing through parliament – are causing uproar among UK business groups, which say that they will create acute cashflow problems and huge additional bureaucracy.

Labour and Tory MPs and peers said that the only way to avoid the VAT Brexit penalty would be to stay in the customs union or negotiate to remain in the EU-VAT area.

Last night the Tory chair of the all-party Treasury select committee, Nicky Morgan, said the committee would launch an urgent investigation. She also said she would be writing to the head of HM Revenue and Customs to see what contingency plans were being made to avoid hitting UK firms.

The bill, which has its second reading in the Commons on Monday, spells out clearly how VAT would have to be paid upfront by companies. The government’s own explanatory notes on the bill say the existing regime will end “so that import VAT is charged on all imports from outside the UK”.

The Labour MP and former minister Chris Leslie said that the VAT hit to firms was “yet another aspect of Brexit that the Leave campaign failed to inform the public about”. He added that he would be tabling urgent amendments to ensure the UK remained in the EU VAT area – a move that would enrage pro-Brexit MPs.

UK companies that import machine parts or goods ready for sale from the EU can currently register with HMRC to bring them into the UK free of VAT. They register the VAT charge and reclaim it later, all as a paper exercise. VAT is added to the price of the product whenever it is sold to the final customer.

Without a VAT deal with Brussels, importers will have to pay the VAT upfront in cash and then recover the money later, creating a huge outflow of funds before they can be recouped.

VAT experts say the imports of services operate separately, with most relying on the exporter to account for VAT. This is expected to remain the situation, although travel companies and financial services firms operate under special arrangements and could face extra costs without a specific agreement covering their industries.

In a briefing sent to MPs, the British Retail Consortium, which represents 70% of the UK retail industry, said: “If the bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU-27 for the first time.”

It added: “Liability for upfront import VAT will create additional cashflow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process. Mitigation measures could include companies instituting a revolving credit facility, or utilising import VAT deferment reliefs.

“Both measures require companies having to take out costly bank or insurance-backed guarantees, so would increase the costs of importing goods from the EU.”

Morgan told the Observer: “One of the things that has not been explored fully is the implications for tax from Brexit. As Brexit comes closer we are beginning to see the reality of how it will bite. The same businesses that are going to be hit by new customs arrangements also face being affected by new VAT rules.”

The Tory peer and former editor of the Sunday Telegraph, Patience Wheatcroft, said it would be “very difficult” to get round the problem of upfront VAT charges for UK companies doing business with remaining EU member states “unless we stay in the customs union”.

The chancellor of the exchequer, Philip Hammond, said: “Britain is a great trading nation, and innovative UK businesses are central to the success of our economy.

“This bill represents the first step in setting up an independent UK customs regime and reaffirms our commitment to deliver a smooth transition for businesses as we leave the EU.”

Treasury sources added that the precise nature of the UK’s future customs relationship with the EU would be the subject of Brexit negotiations with Brussels.

[Guest Kopfkino]

4 hours ago, Rogstanley said:

I don't know the exact mechanisms behind which organisation has the authority to do what, but it's enough to know that Osbourne and the BOE agreed that interest doesn't have to be paid on the BOE held debt. That alone is enough to mark out that debt as different from the rest.

 

Interestingly, one apparent* consequence of that has been to lower the debt interest as a percentage of GDP to its lowest level for many decades, possibly even the lowest level in history:

 

 

Which really brings into question the rhetoric about debt repayment being an urgent priority due to the interest.

 

*I got this straight off opendemocracy without checking for myself so might be wrong

 

That's not what happened though. The APF was indemnified on set up such that the Treasury bore any losses sustained and any gains were received by the Treasury. The interest payments just sat there and it was deemed inefficient to be issuing more debt to service that interest so the BoE released it, minus their cost of borrowing and continue to do so. Which is different to government altering things to suit, It was already agreed upon at the start.

 

We are effectively issuing debt now just the service the interest. Interest payments and the budget deficit are close to equal. That money could be spent on all manner of things but instead its spent on giving coupon payments to bond holders. It's bizarre that lefties seem so comfortable with that.

 

 

[Guest]

I don't know about the rest of you but I've enjoyed a couple of days away.

I can't be bothered with arguing atm so thought I'd provide an article from the sun which could actually be supported (albeit it's from the not entirely trustworthy as far as you can throw it sun) by people on both the centre right and left.

 

https://www.thesun.co.uk/news/5292018/unhappy-tories-could-break-away-and-form-new-centrist-party-with-30-disaffected-labour-mps-if-hard-brexiteer-succeeds-theresa-may/

[Strokes]

16 minutes ago, toddybad said:

I don't know about the rest of you but I've enjoyed a couple of days away.

I can't be bothered with arguing atm so thought I'd provide an article from the sun which could actually be supported (albeit it's from the not entirely trustworthy as far as you can throw it sun) by people on both the centre right and left.

 

https://www.thesun.co.uk/news/5292018/unhappy-tories-could-break-away-and-form-new-centrist-party-with-30-disaffected-labour-mps-if-hard-brexiteer-succeeds-theresa-may/

I think that would be a good thing, both parties are polarised and if the centrists see more in common with each other than their current party they should do it. Open sabotage, instead of sneaky backseat driving.

[Bryn]

It will be interesting to see what the change from Health Secretary to Health and Social Care  

Secretary will bring. It suggests that even the Conservative Party recognises that social care is too important to the functioning of our society to leave it in the hands of the free market. Can't tell you how many patients I've seen left in an acute hospital at enormous daily cost because no one will take them. Or even worse, patients who are admitted from a nursing home, which continues to be paid whilst the patient is hospitalised, only for them to turn around and say they can no longer take that person back without a full reassessment which they seem to then fail.

 

If they're planning on tackling that kind of thing then credit where credit is due.

[Sharpe's Fox]

When the “new Centrist Party” happens I will join it and hate Britain, it’s working class and their institutions also.

Edited 8 January 2018 by Sharpe's Fox

[Alf Bentley]

Looks as if this cabinet reshuffle has changed very little so far: McLoughlin gone voluntarily, Brokenshire for health reasons, none of the major figures moved, it seems.

It's being reported that Hunt refused to move from Health and May backed down and let him stay with social care added to his portfolio.

 

That all seems to suggest a lame duck PM. I wonder if that means there's a chance the Tories could dump her before the Brexit negotiations are complete?

Probably not, still, but cannot imagine she'll be around much more than a year, if that long.

 

Combining Health and Social Care seems a good idea on the face of it, but is it meaningful or just PR window dressing?

Most social care is overseen by local govt, not national govt, isn't it? And sorely under-funded.

It would be meaningful if Hunt planned to introduce major new legislation and significant new funding, but how likely is that with Brexit dominating the agenda and finances tight?

 

Hang on! Just being announced that Justine Greening is out at Education. Refused to accept a move to Work & Pensions, according to the BBC, successor yet to be announced....

[Strokes]

9 minutes ago, Sharpe's Fox said:

When the “new Centrist Party” happens I will join it and hate Britain, it’s working class and their institutions also.

It’s basically a new Lib Dem’s isn’t it?

[Guest]

25 minutes ago, Bryn said:

It will be interesting to see what the change from Health Secretary to Health and Social Care  

Secretary will bring. It suggests that even the Conservative Party recognises that social care is too important to the functioning of our society to leave it in the hands of the free market. Can't tell you how many patients I've seen left in an acute hospital at enormous daily cost because no one will take them. Or even worse, patients who are admitted from a nursing home, which continues to be paid whilst the patient is hospitalised, only for them to turn around and say they can no longer take that person back without a full reassessment which they seem to then fail.

 

If they're planning on tackling that kind of thing then credit where credit is due.

The thing is that, although social care nominally sits with local government, it's really a joint NHS/local government venture due to the way their funds have been combined and managed recently.

They should sit together but I'm unclear what the change will be until we hear from Jeremy c, er, hunt. 

One things for certain - millions have just been spent on new headers, titles and logos for the new name that could have been put to better use.

From what I can gather hunt was going to be moved but, as I expected having read his guff previously, he refused to move. That actually hinders the Tories as they were expected to unveil some ex-nurse as the new health secretary which might have helped their image somewhat.

[Guest]

31 minutes ago, Bryn said:

It will be interesting to see what the change from Health Secretary to Health and Social Care  

Secretary will bring. It suggests that even the Conservative Party recognises that social care is too important to the functioning of our society to leave it in the hands of the free market. Can't tell you how many patients I've seen left in an acute hospital at enormous daily cost because no one will take them. Or even worse, patients who are admitted from a nursing home, which continues to be paid whilst the patient is hospitalised, only for them to turn around and say they can no longer take that person back without a full reassessment which they seem to then fail.

 

If they're planning on tackling that kind of thing then credit where credit is due.

I'd wait and see before offering any credit 

[Buce]

44 minutes ago, toddybad said:

I'd wait and see before offering any credit 

 

I feel the same about Gove - ostensibly he seems to be doing a good job, but he's such a vile creature that I'm just waiting to see what the catch is.

[Vacamion]

40 minutes ago, Sharpe's Fox said:

When the “new Centrist Party” happens I will join it and hate Britain, it’s working class and their institutions also.

 

30 minutes ago, Strokes said:

It’s basically a new Lib Dem’s isn’t it?

 

I would totally vote for a new centrist bloc containing Soubry, Morgan, Greening, Liz Kendall and Yvette Cooper.

 

Run by wee Ruth Davidson.

 

 

#centristgurlpower

 

 

 

 

[Carl the Llama]

If it brings a bit of common sense back to British politics I'm all for it.