Budget 2013

[Mad Cyril]

Anything you would like to see?

I would like to see an end to state benefits for wealthy pensioners.

State pensions and winter fuel allowances should not be subsidising cruises, holidays on the Algarve and lavish spending sprees in Marks and Spencer.

Invest the money saved where it will do most good, in the young.

 

[Tangled up in Blue]

I suppose it would be too much to hope for a serious capital investment programme to kick start the building of (at least) 50,000 new houses in the UK?

 

[Neil_F]

I suppose it would be too much to hope for a serious capital investment programme to kick start the building of (at least) 50,000 new houses in the UK?

The lack of house building is not a problem of capital but regulation.

There are two principle actors in the house building game: private companies building private housing and housing association building social/ affordable housing.

The planning system restricts the amount of new building on the greenbelt to zero. There is also a limit on building new homes on greenfield sites to 40% of any new homes. The stated preference is brownfield sites. These sites are expensive to develop and there is a limit on density. As such, there is a plethora of new build flat complexes on brownfield sites that has pushed down prices in this type of accommodation, but few new family homes.

The limit on greenfield sites push up their price such that housing associations can't afford it. As such it is difficult to build any affordable family sized homes.

We could build 500,000 homes within two years without spending a penny of public money if the planning system was relaxed. That will never happen though because of political reasons. Local authorities and the local population would oppose every new development and drag it through the courts for years.

The reason that we cannot do infastructure in this country is not a lack of capital but the limits of the planning system and the wholesale local opposition to virtually every development.

 

[Napster]

I'd like to see more support for SMEs, through a government-supported credit facility - banks aren't lending, the government needs to create some liquidity and help for small businesses.

 

[C'mon you Shrimpers]

Can't agree more with Napster. my dentist was telling me his plans for expansion have been thwarted by the bank in spite of his decent business plan and records of number of customers etc. Can't disagree more with the mad one. Yes, let's hit those who have saved hard and worked hard and been successful and paid in to the pension scheme through National Insurance. Not their fault successive governments have wasted this money. At least they are supporting a few jobs on these cruise ships.

 

[Neil_F]

I'd like to see more support for SMEs, through a government-supported credit facility - banks aren't lending, the government needs to create some liquidity and help for small businesses.

Government making decisions on business lending terrifies me.

The Spanish Cajas were essentially political lending vehicles and look what happened to them.

 

[C'mon you Shrimpers]

Government making decisions on business lending terrifies me.

The Spanish Cajas were essentially political lending vehicles and look what happened to them.

I know what you mean Neil and sympathise up to a point but believe me there are a lot of good ideas out there needing investment and banks are not helping. In fact they seem to have forgotten why they were set up in the first place. They've gone from one extreme to the other. Rather than the Bank of England printing money I'd like this to go to small and medium businesses. Remember the guy who wanted £10,000 for a new van and the banks said no. Mervyn King wrote to him and advised he try a Swedish bank.

 

[Tangled up in Blue]

The lack of house building is not a problem of capital but regulation.

There are two principle actors in the house building game: private companies building private housing and housing association building social/ affordable housing.

The planning system restricts the amount of new building on the greenbelt to zero. There is also a limit on building new homes on greenfield sites to 40% of any new homes. The stated preference is brownfield sites. These sites are expensive to develop and there is a limit on density. As such, there is a plethora of new build flat complexes on brownfield sites that has pushed down prices in this type of accommodation, but few new family homes.

The limit on greenfield sites push up their price such that housing associations can't afford it. As such it is difficult to build any affordable family sized homes.

We could build 500,000 homes within two years without spending a penny of public money if the planning system was relaxed. That will never happen though because of political reasons. Local authorities and the local population would oppose every new development and drag it through the courts for years.

The reason that we cannot do infastructure in this country is not a lack of capital but the limits of the planning system and the wholesale local opposition to virtually every development.

So that's something (for once )that the Tories can't blame the last Labour Government for.

 

[steveo]

Anything you would like to see?

I would like to see an end to state benefits for wealthy pensioners.

State pensions and winter fuel allowances should not be subsidising cruises, holidays on the Algarve and lavish spending sprees in Marks and Spencer.

Unfair Cyril. These people have probably contributed more and taken less form the state over the years. Why should they be penalised?

 

[Neil_F]

So that's something (for once )that the Tories can't blame the last Labour Government for.

All governments are to blame. This problem dates back to the 70s.

 

[Napster]

Government making decisions on business lending terrifies me.

The Spanish Cajas were essentially political lending vehicles and look what happened to them.

Maybe not government making the decisions on who/how much to back, but backing a fund financially which helps SMEs and maybe this is aided by corporate bodies.

 

[Neil_F]

I know what you mean Neil and sympathise up to a point but believe me there are a lot of good ideas out there needing investment and banks are not helping.

Statements like that make me nervous. Good ideas don't necessarily make money (e.g. the railways were a brilliant social utility and still are but no one investing in them or building them at the very start made any money).

In fact they seem to have forgotten why they were set up in the first place.

The banks are trying to repair their balance sheets and adhere to new capital rules. They were never going to be in a position to lend on a big scale. The argument about how we got to this point is one we've had many times in this forum so I won't re-hash it.

Remember the guy who wanted £10,000 for a new van and the banks said no. Mervyn King wrote to him and advised he try a Swedish bank.

Again, these examples make me nervous. We don't know what the guy's business plan was, what his or his business's credit rating is. It may well be he is a bad investment.

There are also other forms of finance beyond debt. Why doesn't your dentist find an equity partner to invest? There are a multitude or business angels and venture capitalists who would be prepared to do so for the right deal.

Until the existing banks repair their balance sheets (a ten year process) or the regulations are relaxed so that new banks can be created, which is currently almost impossible to do, then I'm afraid the credit issues will remain.

 

[steveo]

So that's something (for once )that the Tories can't blame the last Labour Government for.

What's it got to do with you? you should worry about the problems in your own Country.

 

[Mad Cyril]

Unfair Cyril. These people have probably contributed more and taken less form the state over the years. Why should they be penalised?

State benefits are not a savings scheme though.....

 

[superblue24]

So that's something (for once )that the Tories can't blame the last Labour Government for.

Actually not true.

The current government have brought in the "NewBuy" scheme which allows good interest rates on 5% mortgages when you buy a new house. My wife and I are in the process of buying a brand new house in Ipswich, and we were surprised how easy the process of actually buying a brand new home is.

To add to this, my father in law is also planning an extension to his current property and I'm told that the Tories have in fact removed a lot of red tape from the process of applying for an extension and made it a lot easier. He happens to be a Labour voter, but was happy at this change.

 

[C'mon you Shrimpers]

There are also other forms of finance beyond debt. Why doesn't your dentist find an equity partner to invest? There are a multitude or business angels and venture capitalists who would be prepared to do so for the right deal.
.

Neil, we're talking about small businesses who don't want a partner. They want a small amount of investment by borrowing money and paying it back with interest. This is what banks did and it's about time they started doing it again. If they won't then it is the responsibility of government to find another means. Personally I'd want the banks to do this rather than government but if as you say it will take them 10 years then clearly there has to be another way. You might remember my story about a friend who is a business mentor and his views on banks. I'd back his judgement and experience in this.

 

[steveo]

State benefits are not a savings scheme though.....

so why pay out to the less well off?

 

[Neil_F]

Neil, we're talking about small businesses who don't want a partner. They want a small amount of investment by borrowing money and paying it back with interest. This is what banks did and it's about time they started doing it again. If they won't then it is the responsibility of government to find another means. Personally I'd want the banks to do this rather than government but if as you say it will take them 10 years then clearly there has to be another way. You might remember my story about a friend who is a business mentor and his views on banks. I'd back his judgement and experience in this.

Government is telling banks to hold more capital relative to the amount they lend. There are two ways to do this: obtain more capital by increasing investment or reducing the amount lent. No one wants to invest in banks so they cut lending. If they don't they will be fined.

Governments and regulators are actively encouraging banks to reduce lending and simulataneously making it almost impossible for a new bank to enter the market. It is total madness.

All this is being done in the name of "stability", the totally insane notion that government and regulators can prevent another banking collapse - they cannot. They need to design a system whereby any banking collpase is small and contained, with new banks replacing failed ones without the need to bail them out with taxpayer money. They are doing the very opposite of that by entrenching the position of the very few mega banks.

Businesses may want credit for expansion, I understand the desire to protect ownership, but sometimes you have to take what you can get. If I was given the choice of no expansion or expansion with a profit increase with 5% less equity then it is an easy choice to make, especially when it is possible to hive off new investments and the earnings derived from it.

 

[pickledseal]

This is the best thing I've seen about the budget so far: http://www.buzzfeed.com/lukelewis/the-best-of-the-internets-reaction-to-george-osborne-joining

 

[C'mon you Shrimpers]

Neil what would you want in the budget.