Guardian: How Britain Blew It

[corevalue]

Instead, the report said, successive governments used the proceeds from oil and gas fields to keep public borrowing down rather than build up a fighting fund to tackle long-term problems such as the ageing of the population.

"To a significant degree, the money has effectively been handed back to this and other generations since the early 1980s to spend or, in many cases, to invest in housing or other assets."

Those two sentances quoted from the article sum it up for me.

The oil wealth of this country was used to give the baby boomer generation tax cuts which they've now spent or "invested" in housing-as-pensions. The cake has been eaten, and there is no second helping.

Expect a lot of angry boomers when they realise they scoffed their pensions in the 80s and now the cupboards' bare. I can't see heavily indebted 18-30 year old happily handing over 50% of their salaries in taxes to pay feckless boomers what they think they're due.

Feckless boomers scoffing their pensions? Oh my. You don't remember the 14% interest rate we had to pay on our mortgages then. Tax cuts? I don't remember any significant change in taxes in my time, except that income tax went down a few percent whilst VAT (was purchase tax) and NI went up; only the uber-rich benefited because Maggie reduced the 90% top tax rate down to 40%. I do remember MIRAS disappearing, an effective increase in taxes ( caused a surge in HPI to beat the deadline).

I remember the pensions mis-selling scandal, and the only good advice I ever got from a financial advisor - I stayed inside the SERPS pay-related state pension scheme; I'd pay more monthly, but get more state pension later (hopefully). My private pension into which I sunk > £100K turned out to be rubbish, the annuity offered when it matured was less than £3K a year. I could have done twice as well with it in a regular savings account, and at least as well with fivers stuffed in a mattress - and this was in the "good" years! Pensions being such crap is one of the drivers behind BTL, which as we know, is one of the main drivers behind HPI.

So, would you rather honour the arrangement people who have worked all their lives made to get a pension (remember, we paid into schemes and government contributions all our lives), or have them compete against you in house purchase?

[bpw]

you are missing the point ! I am sure your parents were saying the same about you. Did they create an economy that promised too much at the expense of the next generation. Nope. The facts speak for themselves. This generation of pensioners and the boomers behind them have crippled their offspring but debts that the wont pay. I dont want charity payouts, or to have to sit arround like a vulture waiting for my parents to die. I want intergenerational accounting thats fair and unbiased - sadly orwells pigs still rule the farm.

BTW - it was your choice to mollycoddle your son - you should have feed him porridge and told him that bare foot jogging was his chosen sport.

Tee hee. I'd be a much richer man if my kids didn't keep relieving me of money. 'Don't like school son? No worries, I'll pay f

Haven't you seen the figures about how much it costs to bring up kids these days? About 175k each isn't it. And you begrudge it when we ask you to take out a 175k mortgage so we can get our money back! Fair's fair.

[bpw]

you are missing the point ! I am sure your parents were saying the same about you. Did they create an economy that promised too much at the expense of the next generation. Nope. The facts speak for themselves. This generation of pensioners and the boomers behind them have crippled their offspring with debts that they wont pay. I dont want charity payouts, or to have to sit arround like a vulture waiting for my parents to die. I want intergenerational accounting thats fair and unbiased - sadly orwells pigs still rule the farm.

BTW - it was your choice to mollycoddle your son - you should have feed him porridge and told him that bare foot jogging was his chosen sport.

Tee hee. I'd be a much richer man if my kids didn't keep relieving me of money. 'Don't like school son? No worries, I'll pay f

Haven't you seen the figures about how much it costs to bring up kids these days? About 175k each isn't it. And you begrudge it when we ask you to take out a 175k mortgage so we can get our money back! Fair's fair.

Edited February 29, 2008 by bpw

[huw]

Feckless boomers scoffing their pensions? Oh my. You don't remember the 14% interest rate we had to pay on our mortgages then. Tax cuts? I don't remember any significant change in taxes in my time, except that income tax went down a few percent whilst VAT (was purchase tax) and NI went up; only the uber-rich benefited because Maggie reduced the 90% top tax rate down to 40%. I do remember MIRAS disappearing, an effective increase in taxes ( caused a surge in HPI to beat the deadline).

I remember the pensions mis-selling scandal, and the only good advice I ever got from a financial advisor - I stayed inside the SERPS pay-related state pension scheme; I'd pay more monthly, but get more state pension later (hopefully). My private pension into which I sunk > £100K turned out to be rubbish, the annuity offered when it matured was less than £3K a year. I could have done twice as well with it in a regular savings account, and at least as well with fivers stuffed in a mattress - and this was in the "good" years! Pensions being such crap is one of the drivers behind BTL, which as we know, is one of the main drivers behind HPI.

So, would you rather honour the arrangement people who have worked all their lives made to get a pension (remember, we paid into schemes and government contributions all our lives), or have them compete against you in house purchase?

Your points are well-made. It's not as if the current generation of taxpayers is showing any great prudence when it comes to balancing the books, it's consume consume consume and hope that someone else will pick up the tab. People now in their 20s/30s are behaving no differently to their predecessors, except they're doing it on a more epic scale. It's a tragedy that North Sea oil was squandered as it was, but even that made a lot more sense than putting a trillion or whatever on plastic.

[bpw]

You should try living in scotland! They are insular, and very narrow minded on the whole. They are also more anti english than the english can understand. If you want to see the scots at their worst you should have been with a crowd of scots during the england-holland match (was it euro 96?). The Scots all cheered for holland like wild rabid dogs chasing a haggis on heat.

England 1 holland 0 ......... boooooo

England 2 holland 0 .......... booooooo (more drink, more bleary eyed drunks, and pastier northern faces)

England 3 holland 0 ............ boooooo ...... er hang on a moment.... if england win by three goal difference then scotland are not knocked out....... booo .... er hmmmm,

England 4 holland 0 ----- holy haggis, ya wee man, I dinnae want england ta win, but ma knackers tell da scotland wont be knocked out if the sasenachs beat tha cloggies.... rabid cheers started withe scotties putting their tenth drink down and then anxiously cheering the enemy. How sweet it was - racism is skin deep after all!

Thankfully the england team realised the dire position they were in and let a goal in !!

England 4 Holland 1 ......

We left the pub at that point hearing comments like -Ya wee bastards, lets find and english ******* and do him in (true!)

Scotland is a beautiful country often wasted on narrow minded and very bigoted people. (there are some nice ones of course but are hard to find during an england scotland match)

Anyone else here fed up with constant Scottish whingeing about oil? .

[Mr C]

Legally, the sea bed (where most of the oil fields are) off the Shetland Islands is not owned by the Crown, it never has been, now or during any time in the past. So Scotland does not legally own the oil fields, nor do the English, Welsh or Irish, it still legally belongs to it's long standing owners.

[jazza]

There are very few countries that get rich that have no natural resources, since we have spent the money made from oil, coal, steel etc etc Britain is going to end up being poor. It might be time to leave and start a family somewhere else as the future is looking grim.

Singapore. Japan. The non-oil gulf states.

You might as well say there are a hell of a lot of countries with loads of resources who are poor and not getting any richer.

[The XYY Man]

You should try living in scotland! They are insular, and very narrow minded on the whole. They are also more anti english than the english can understand.

Funny, 'cos I lived and worked in Dunbar for 9 months (and have had numerous holidays in Scotland) and have found them to be the warmest and friendliest people I have ever had the pleasure to meet.

And I have regularly been told to put my money away in the pub and been bought numerous drinks and invited back to people's houses for a party afterwards.

But then of course I'm Northern English - and I think you'll find they bear us no animosity at all - 'cos they know we've been shafted by the South just as much as they have.

Great place, great people.

[council dweller]

I just wish that oil revenues could have been spent on building more council houses so that hpi could have been largely prevented. If this been done there would now be a choice between paying a low rent permanently or buying at much lower prices than currently exist. The impact of RTB and the failure to build more council houses is enormous IMO and has been driving up the whole market. This has created wealth for a few and an illusion of wealth for many.

Edited February 29, 2008 by council dweller

[corevalue]

I just wish that oil revenues could have been spent on building more council houses so that hpi could have been largely prevented. If this been done there would now be a choice between paying a low rent permanently or buying at much lower prices than currently exist. The impact of RTB and the failure to build more council houses is enormous IMO and has driving up the whole market. This has created wealth for a few and an illusion of wealth for many.

I'd agree with this. One of the worst things Maggie did was to discourage rentable local council housing, whilst encouraging their run-down with the right-to-buy schemes. I'm not against RTB, but I think it has to be carefully managed to avoid exploitation by flippers.

[kobaiashi]

They are insular, and very narrow minded on the whole.

Scotland is a beautiful country often wasted on narrow minded and very bigoted people.

Thats very open-minded of yourself, classing us all under one stereotype. Your exactly the type of english c*** we love to hate

[Dosser]

I totally agree - Scotland really blew it in the 70's - if only our parents had voted and taken to the streets - we'd be the richest nation in Europe.

My only hope is independence soon so we don't blow the other half on those subsidy junkies in England.

But then who would the Scots blame for their failings?

[hallander3]

Some Norwegian towns used their excess wealth to invest in American CDOs , MSBs and the like. They lost the lot of it! :angry: Now I don't know if it was oil money they lost, but you get my point. Indeed the UK had the chance to save and invest oil revenue. I well remember that large airport up in the Shetlands that was built for the boom. Empty as a grave yard when I was there. Point is, how well would the money have been handled Not well I am guessing. Money attracts fools. The government was gonna spend it all to look good on the tax front. As you might know, here in the USA, the same bit was tried. Big tax cuts, but the money was borrowed straight out and now 9 trillion is owed. The UK at least HAD the money to afford the tax cutting. So it could have been worse.

[huw]

Some Norwegian towns used their excess wealth to invest in American CDOs , MSBs and the like. They lost the lot of it! :angry: Now I don't know if it was oil money they lost, but you get my point. Indeed the UK had the chance to save and invest oil revenue. I well remember that large airport up in the Shetlands that was built for the boom. Empty as a grave yard when I was there. Point is, how well would the money have been handled Not well I am guessing. Money attracts fools. The government was gonna spend it all to look good on the tax front. As you might know, here in the USA, the same bit was tried. Big tax cuts, but the money was borrowed straight out and now 9 trillion is owed. The UK at least HAD the money to afford the tax cutting. So it could have been worse.

It's a fair point, but on the other hand the UK national debt is either half a trillion pounds or one trillion pounds (2006 figures) depending on whether you include public sector pension liabilities. So simply using this windfall to pay down debt would have put us in a much better position today (we could cut taxes due to having to pay less interest, for example).

[payback period]

Your points are well-made. It's not as if the current generation of taxpayers is showing any great prudence when it comes to balancing the books, it's consume consume consume and hope that someone else will pick up the tab. People now in their 20s/30s are behaving no differently to their predecessors, except they're doing it on a more epic scale. It's a tragedy that North Sea oil was squandered as it was, but even that made a lot more sense than putting a trillion or whatever on plastic.

*Excuse me*, not everyone aged 18-35 is a profligate spender. Some of us are prudent savers.

Unfortunately we didn't get referendums on gigantic cost commitments such as PFI or Guif War 2. If you'll recall these were sanctioned by some men in their 40s, 50s and 60s who are kept in power by the votes of their contemporaries.

[Kurt Barlow]

There are very few countries that get rich that have no natural resources, since we have spent the money made from oil, coal, steel etc etc Britain is going to end up being poor. It might be time to leave and start a family somewhere else as the future is looking grim.

Japan being the exception

[council dweller]

I'd agree with this. One of the worst things Maggie did was to discourage rentable local council housing, whilst encouraging their run-down with the right-to-buy schemes. I'm not against RTB, but I think it has to be carefully managed to avoid exploitation by flippers.

Yes, I'm also not totally against RTB and at least now, those who buy have to have held the tenency for at least 5 years (up from 2) and discounts have been reduced considerably. As has been pointed out before many people have exercised the right to buy and have made large paper profits, only to see their own children struggling to pay for overpriced housing/unable to get a council house. I wonder how many get the conection ?

As for SWFs , I can't imagine any British government forming a SWF only see it used by the following Labour/Tory government. Of course in the case of China, the current government is the communist party and the next government is likely to be the communist party.

Edited February 29, 2008 by council dweller

[huw]

*Excuse me*, not everyone aged 18-35 is a profligate spender. Some of us are prudent savers.

Unfortunately we didn't get referendums on gigantic cost commitments such as PFI or Guif War 2. If you'll recall these were sanctioned by some men in their 40s, 50s and 60s who are kept in power by the votes of their contemporaries.

* Excuse me* plenty of younger people voted New Labour, if anything the wrinklie Telegraph readers would have voted Tory and young trendy things who bought the idea that 'things could only get better' would have voted New Labour. Just look at the demographic at the next round of party conferences if you don't believe me

[huw]

As for SWFs , I can't imagine any British government forming a SWF only see it used by the following Labour/Tory government. Of course in the case of China, the current government is the communist party and the next government is likely to be the communist party.

Good point, and a strike against an adversarial political system such as ours, perhaps (I'd guess that Norway is more consensus based, though I don't know for sure).

Still, you never know, the Chinese surplus might yet be gobbled up by a defaulting USA

[council dweller]

Good point, and a strike against an adversarial political system such as ours, perhaps (I'd guess that Norway is more consensus based, though I don't know for sure).

Still, you never know, the Chinese surplus might yet be gobbled up by a defaulting USA

I think the Chinese SWF's have only dipped a toe in (so far) as far as investing in the US is concerned and will likely buy when assets are just a few cents on the dollar or not at all. The Chinese are known for being shrewd business people are they not? The term 'the Jews of Asia ' springs to mind...or have they become as financially incompetant as Gordo Brown!?

Power comes out of the barrel of a gun and also from having a big 'wad' and saying ; look at this...LOADSA MONEY !!!

[ZeroSumGame]

*Excuse me*, not everyone aged 18-35 is a profligate spender. Some of us are prudent savers.

Unfortunately we didn't get referendums on gigantic cost commitments such as PFI or Guif War 2. If you'll recall these were sanctioned by some men in their 40s, 50s and 60s who are kept in power by the votes of their contemporaries.

Splendid reply young whippersnapper. Pity us old-timers didn't get the option to vote on gulf-war-2 either. Hmmm. Just remind me now. Taking the abject human misery out of the equation : what exactly was the point of the oil-war with gas at £1.10 per liter in the UK ?

[Ah-so]

There are very few countries that get rich that have no natural resources, since we have spent the money made from oil, coal, steel etc etc Britain is going to end up being poor. It might be time to leave and start a family somewhere else as the future is looking grim.

As someone pointed out above, Japan is a good example. There are a large number of countries that have got relatively rich from limited natural resources. The Swiss are not poor, but they seem to get by. God knows what the Spanish economy is about, but they seem to manage.

Oil rarely benefits a country to a great degree. "The curse of oil" is a well-known expression to show how countries with oil have poorly developed economies and excessive public sectors (coincidently rather like Scotland). By investing oil money, the SWFs only spread the problem out for generations. Once oil gets to a certain percentage of a country's GDP it strangles growth and development and leaves the population like an indolent 20-something with a significant trust fund - no motive to work or develop. In the end it leaves a country stunted.

Spending North Sea oil money was the best thing to do with it.

Scotland should consider itself lucky - it could have had gold or diamonds, the guarantee of poverty.

[ZeroSumGame]

Scotland should consider itself lucky - it could have had gold or diamonds, the guarantee of poverty.

Hmmm. an interesting view point. I doubt there are few Jockos still around at this unGodly hour otherwise you'd get a reaction to that comment.

[right_freds_dead]

Splendid reply young whippersnapper. Pity us old-timers didn't get the option to vote on gulf-war-2 either. Hmmm. Just remind me now. Taking the abject human misery out of the equation : what exactly was the point of the oil-war with gas at £1.10 per liter in the UK ?

to stop a nutcase reaching a strong enough position to threaten the west.

be it taliban fundamentalism, dictators with wmd or nuclear bent extremists.

like tackling hitler in 1937.

it was a pre emptive move. save time and lives.

there would never have been a moment of western peace with a nuclear middle east hotpot.

of course, now we can only see 1 result and not the alternative that could have been. its easy to pick at.

plus - its ONLY oil.

they have it, we want it. they need techs and medical, we have it. we trade. only the region is staffed by corruption and brutality, stifling trade and relations. once free of these brutes and fanatics, the region has as good a chance of any of developing into a peaceful and prosperous society, with a valid contribution to the global community.

[dhpcza]

to stop a nutcase reaching a strong enough position to threaten the west.

be it taliban fundamentalism, dictators with wmd or nuclear bent extremists.

like tackling hitler in 1937.

it was a pre emptive move. save time and lives.

there would never have been a moment of western peace with a nuclear middle east hotpot.

of course, now we can only see 1 result and not the alternative that could have been. its easy to pick at.

plus - its ONLY oil.

they have it, we want it. they need techs and medical, we have it. we trade. only the region is staffed by corruption and brutality, stifling trade and relations. once free of these brutes and fanatics, the region has as good a chance of any of developing into a peaceful and prosperous society, with a valid contribution to the global community.

So why didn't they choose to go for North Korea? Nutcase, dictator, nuclear, position to threaten the west.

Iraqi armed forces and attack capability has been kept pathetically weak by sanctions and bombing sorties. No threat at all really and certainly no need for a full on invasion and occupation. Comparing it to tackling Hitler pre-emptively is pretty weak. There was no Iraqi War machine, it had all ready be nullified.