Comments on: Pre-Budget Report: Darling must cut UK’s huge welfare bill

By: Philip

Philip — Wed, 09 Dec 2009 20:53:08 +0000

The winter fuel allowance should be scrapped. You don’t have to spend it on fuel in any case – it is just an age-related hand out. However, as a minimum it should be absorbed into the state pension and de facto, not paid to anybody below state pension age. The history, I think, is that it was paid to pensioners but then the government were taken to court for discrimination because that meant that males and females received it at different ages, so it was given to everybody at 60.

By: Richard Wellings

Richard Wellings — Wed, 09 Dec 2009 17:48:11 +0000

Len – the problem with means testing the winter fuel allowance would be the effect on work incentives (not to mention still greater intrusion into individuals’ private financial affairs). Having said this, the effect would be relatively small in this instance.

By: len shackleton

len shackleton — Wed, 09 Dec 2009 16:31:14 +0000

I can’t see how the winter fuel allowance can be justified for anyone in full-time work.
In-work benefits are supposed to be means-tested, aren’t they?

By: Richard Wellings

Richard Wellings — Wed, 09 Dec 2009 16:22:39 +0000

Barry – the problem with this argument is that every pound spent by the government has to come from somewhere (e.g. tax, borrowing, printing money). Public borrowing absorbs resources that might otherwise be available to the private sector. There is also the problem that expectations of tax rises and/or inflation to pay off the debt act as a deterrent to investment. Another important point is that government spending reflects the preferences of bureaucrats and politicians rather than individuals, so the two are not strictly comparable (hence, best not to rely on aggregates).

By: Barry Trotter

Barry Trotter — Wed, 09 Dec 2009 12:51:51 +0000

“Growth is already threatened by the well-known crowding out effect of public borrowing, which diverts resources from the productive parts of the economy.”

What evidence do you have? To my mind the collapse in bank lending has had a dampening effect on the economy. Private demand is just not there. Surely the increase in govt borrowing is simply replacing that fall in demand. So its not crowding out the private sector since private sector demand left the stage before the increase in public borrowing began.

By: D.R. Myddelton

D.R. Myddelton — Wed, 09 Dec 2009 09:24:45 +0000

I believe two principles above all should guide a responsible Chancellor of the Exchequer in these difficult times. The first is to identify and publish the true position, as nearly as you can honestly judge it. The second is that there must be ‘no sacred cows’.

On the basis of his record so far there seems little reason to expect that Alistair Darling will satisfy either of these principles. He has been absurdly optimistic and he has ring-fenced large swathes of government spending.