2012 August 22 « Dr Alf's Blog

United Kingdom (Photo credit: stumayhew)

English: Oliver Letwin MP, Minister of State, Cabinet Office (Photo credit: Wikipedia)

English: Francis Maude MP, Minister for the Cabinet Office (Photo credit: Wikipedia)

This monthly update from the independent UK Office of Budget Responsibility (OBR) is well worth a read. Check it out!

…………………………….Office for Budget Office Responsibility » Monthly public finance data.

The big headline on Twitter is as follows:

Corporation tax receipts likely to remain below March EFO forecast.

There does not seem to be too much good news in this commentary and plenty of downside risk, in my view.

Given the huge spending on Big Four consultants over the last ten years, and the massive investment in ERP systems, it’s surprising that the Public Sector still can’t close their books properly on a monthly basis like any self-respecting Private Sector company.

What amazes me is that Francis Maude and the Cabinet Office are still congratulating themselves on what an excellent job they maintain that they are doing.

I wonder if the Treasury and the Cabinet Office is still calling in their chums at the major consultancies and paying fees of five thousand pounds a day, plus expenses?

For me, here are some open questions:

What are the downside risks for the year?
What emergency actions should the Government take in risk mitigation?
How will the Government achieve more rapid cuts in Public Spending because of the depressed Private Sector?
Will this Government ever be brave enough to face up to the required transformation in the Public Sector, or will further cuts fall on front-line services?

What do you think?

English: US President Barack Obama and British Prime Minister David Cameron trade bottles of beer to settle a bet they made on the U.S. vs. England World Cup Soccer game (which ended in a tie), during a bilateral meeting at the G20 Summit in Toronto, Canada, Saturday, June 26, 2010. (Photo credit: Wikipedia)

MANCHESTER, UNITED KINGDOM – OCTOBER 03: Britain’s Prime Minister David Cameron runs along a canal early in the morning on the second day of the Conservative Party’s annual conference on October 3, 2011 in Manchester, England. Chancellor George Osborne is expected to confirm a freeze on council tax for the second successive year during his speech at the Conservative Party conference. (Image credit: Getty Images via @daylife)

Mmmm….cake. And government info. (Photo credit: emkeller)

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Rodney Willett sent me a tweet and invited my views on the following article. His article is well worth a read and I set out my response below.

A Devonian’s Political Blog.

Regular readers of this blog will know that I am passionately:

Pro-growth
Anti-austerity

I favour a balanced model:

Growth AND
Austerity (targeted over the medium term)

My political views and my inherent bias are on record on my blog. You may wish to check this out!

Unlike Prime Minister David Cameron, I am proud to declare my political views but respect that they give me an inherent bias in my views of the World and indeed colors how others view me. My political beliefs in summary are:

Libertarian, rather than authoritarian
Internationalist and Pro-Europe
Right of centre , favouring strongly individualism compared to state
Strongly anti-bureaucracy, favouring small government
Pro democracy
Anti corruption
Pro Keynesian and anti monetarist (I favour a belt & braces approach with sound monetary policy, good fiscal discipline but leaving room for state intervention where necessary)
Pro Monarchist

Returning to Rodney Willett’s article, I believe that UK Chancellor George Osborne has embarked upon “Unplanned Austerity“. Osborne has applied the bacon-slicer and top-sliced the Public Sector‘s budgets, with cuts falling on front-line services like healthcare, education, and military capability. David Cameron’s Government has been proven to be an omni-shambles on Public Sector Reform. Let’s be clear, David Cameron’s Government does not have:

Strong leadership
Overarching vision
Coordinated and carefully analyzed strategy, and
Fully risked assessed, properly costed and effectively managed delivery plans

However, I agree that with the UK’s debt levels, there is a place for carefully “planned austerity“. Personally, I believe that former Prime Minister, Gordon Brown, made the right judgement calls in the financial crisis of 2008 and was a powerful player on the international stage at that time, unlike his successor David Cameron who has reduced the UK’s influence in the World.

What is required is, first and foremost, huge stimulus to increase demand, with massive incentives for both public and private sector capital spending, with the Government underwriting guarantees. At the same time, the Government must announce properly costed and risk assessed “planned austerity” program, targeted at comprehensively remodelling the Public Sector in the medium term, with serious consolidation, de-layering, reduced pay levels, transformation and widespread outsourcing.

Of course, the above model is generalizable and equally applies to the EU and reducing the EU bureaucracy. It would also be appropriate for a 2nd term, President Obama. In many respects, a twenty-first century Marshall Plan is required to stimulate growth – Christine Lagrande, Managing Director of the IMF would be an ideal sponsor.

What do you think?