3 Questions to Ask This Election

questions election 2015

The main political parties stand there and talk about the deficit, public spending, taxation, the NHS, hung parliaments and dangerous coalitions. Do you ever sit there and wonder what all of it means, afraid to ask the important questions in case you look uninformed? Well we’ll ask the questions for you.

Is The Deficit Bad?

Deficit doesn’t sound like a good thing, does it? But it often appears to be nothing more than a buzzword, used by political parties to score points and by the media to make sweeping accusations, while remaining widely misunderstood by the general public.

The government’s finances are obviously complex. The deficit is not. Like you, the government has an income, which is generated mainly through taxation and the sale of its assets, and it also spends money on things like public services, wages for public sector employees, welfare payments and so on.

If the government spends more than it ‘earns’, it runs a deficit. What doesn’t often get mentioned is that the UK government has regularly run a deficit since the 1940s; through times of economic prosperity and austerity, boom and bust, there have only been 11 years where income trumped spending.

There are two types of deficit, though. According to Full Fact:

The current budget deficit is the difference between what the government spends on things like wages and welfare payments, and what it gets in current income (mostly tax revenue).

Public Sector Net Borrowing is the current budget deficit, plus net investment: the difference between what government spends on assets like roads and buildings, and what it gets from selling these assets.

The deficit must not be confused with debt, which is what the government owes to its lenders – and, confusingly, itself – which might be the International Monetary Fund, Bank of International Settlements, or other states. Incidentally, the UK had been paying off its debt to the US for WWII loans up until 2006. To spend more than it earns it has to borrow, in the same way that an individual would need a loan, credit card or overdraft to spend more than you earn.

For more on debt, or the government’s internal and external borrowing, read this article on “Who does the UK government owe money to?”.

It’s always bemusing to think that banks gladly encourage people to spend more than they earn (or just think about student debt from tuition fees for a more pertinent example).

Full Fact has some great information on the economy if you want to find out more.

Have The Tories Reduced It?

In 2013 the Tories claimed to have reduced the deficit they inherited from Labour by one quarter. This statistic was even proudly displayed on their website. Their mantra is one of deficit reduction, brought about primarily through cuts to public services that they deem a necessary evil, so it’s not surprising they’d want to show the upside of all this austerity. But are their claims true?

It is true that the current government has reduced net borrowing but not by the amount they state. And the cost this deficit reduction has vastly outweighed the benefit. The New Statesman revealed this around the time of the original claims:

“[T]o summarise, the coalition reduced net borrowing by 24 per cent between 09/10 and 11/12 but only by slashing infrastructure spending by 42 per cent and tipping the UK into a double-dip recession and, perhaps, a triple-dip. Current borrowing has fallen by a smaller 15.3 per cent over that period.

If, unlike Cameron, we take into account the borrowing figures since April 2012 , net borrowing has fallen by 18.3 per cent since 09/10, while current borrowing has fallen by just 6.4 per cent.”

It begs the question: are the huge cuts we see actually making the kind of difference the coalition

What’s Going On With The NHS?

The NHS is consistently one of the most important things to voters; so it’s important to question changes to it.

While the NHS has never been a 100% publicly-owned entity, it has been subject to more rampant privatisation in recent years. Back in the ’80s, cleaning was one of the first things to be outsourced to private companies, something that has led to a rise in hospital related illnesses according to some studies. Under New Labour, we had the PFI fiasco. To cut a long story short, the foundations were laid for the current situation, where most NHS services are put out to tender, when a variety of private companies like Virgin Care bid for contracts. Essentially, this a slow selling-off of parts of the NHS.

The main concerns for critics are that private businesses haven’t necessarily improved services (in fact, the opposite is often true) and that the more the NHS gets privatised, the greater the risk we end up with the American system where we have to pay for healthcare.

For more information see False Economy and We Own It.