If you want to manage something, then measure it. We should be hearing monthly on the progress with reducing the growth rate of spending, increasing tax revenues and cutting the deficit, in line with the plans.
Just to get the ball rolling, I reproduce beneath the Treasury figures for spending (total current) since the Coalition government started in May, compared to the same period a year earlier under Labour. The figures show that total current spending has run 7% higher than last year, to the end of November.
Total current spending, £ billions
May 2009 47.4 May 2010 50.7 plus 3.3 (7%)
June 2009 47 June 2010 49.7 plus 2.7 (5.7%)
July 2009 46.9 July 2010 49 plus 2.1 (4.5%)
August 2009 44.9 August 2010 48.5 plus 3.6 (8%)
September 2009 46.0 September 2010 50.6 plus 4.6 (10%)
October 2009 47.6 October 2010 49.3 plus 1.7 (3.6%)
November 2009 48.6 November 2010 53.9 plus 5.3 (10.9%)
Total 328.4 351.7 plus 23.3 (7%)
The figures remind us that the deficit reduction strategy relies on higher tax revenues, not on spending reductions overall. Whilst some individual areas have been cut in real terms and some even in cash terms, the overall trend of current spending growth this year has been one of strong growth in cash terms, with a real increase of around 3% depending on your choice of inflation index. Capital spending has been reduced, which takes a little of the pressure off the deficit. With the exception of October, the growth rate of spending has been accelerating over this financial year.
The main weapons to tackle the deficit will be the higher VAT rate, higher fuel duties, higher National Insurance, and the estimated increased taxes from growth and inflation. As the higher taxes come due, so the questions about value for money and the choices made over public spending will become more insistent from a public worried about the impact of the taxes on living standards. We have seen this recently with the criticisms of the rising fuel price.
January 17, 2011
“If you want to manage something, then measure it“. William Thomson (Lord Kelvin) said something similar about raising knowledge to science.
Judging from the amount of paperwork imposed on the self-employed, all in the name of measuring income (especially in January), Government are trying to manage far to much. It certainly isn’t science, because none of the forms explain or improve anything!
January 17, 2011
Hard to see much growth when Nick Clegg now it seems plans 10 months’ paternity leave, this on top of soon being unable to retire older people without sacking them for being incompetent.
These people have not got a the slightest clue about being able to compete on a world stage.
January 17, 2011
Doubtless we will further have to listen to government spokespeople usually talking rather slowly (as if to a rather dim 9 year old children) explaining on Radio 4 & Newsnight, to employers how this will “really be beneficial to to all if we just all hold hands together through this and thus have a happy, happy workforce”.
If only employers weren’t so dim as not to see their mad logic.
We meanwhile will be planning our businesses’s emigration and redundancy strategy as the only sensible response to this mad administration before we go bust anyway.
January 17, 2011
This is most shocking.
Here at Wisbech, the amount of new “spend” is quite extraordinary. The two Comprehensives are having BSF lavished on them. There is to be a brand new Council Offices (£,7000,000), at the Gym, there is a brand new climbing frame with two plastic eyes on it. There is, I understand, a new park (cost £1,000,000) too.
And then there is the inflation………
January 17, 2011
For a country that’s over 1 trillion pounds in debt, the solution shouldn’t be to punish the people with higher taxes (including the inflation tax), but rather to slash government spending.
Spending is, and has always been, the problem. In Britain, we need a fundamental rethink of the role of government.
January 17, 2011
It’s that nanny state thing John. To paraphrase Steve, [down the page]; there are now more voters in bed with nanny than suffering from nanny. The Heritage Foundation thinks the same.
http://www.heritage.org/index/Country/UnitedKingdom
I love the line under “monetary freedom” where it says; “The government controls virtually all prices for health care services.” They could have added; “but not very well”.
January 17, 2011
I agree with this most warmly. Very well said!
January 17, 2011
Much growth is highly unlikely without a far smaller and more efficient state (preferably about half the size). At the very least we need the sense that Cameron and Clegg have their heart in the battle and are heading the right way. They claim to be business friendly, but almost all the changes, post election (in employment legislation, taxation, state expenditure growth and the expensive energy policy) say the exact opposite.
Clearly they are trying their best to loose the next election – which now has to be only a maximum of only just over 4 year away.
January 17, 2011
Another excellent analysis. This should be on the front pages of the newspapers and the broadcasting media but it won’t because they prefer to regurgitate all the spin about cuts. Just where have there been any cuts and, if there have, where has all the additional spending of borrowed money gone? There was a time, quite recently, when political parties, including even Labour, worried about being labelled as high taxers. We now seem to have the opposite position. What happened to George Osborne’s claim that the deficit would be reduced 80% by spending cuts and 20% by tax increases? What happened to the idea of restoring trust in politicians?
January 17, 2011
So the plan is not working then ?.
How could it, if spending was PLANNED to increase for the next 5 years. The economy is not doing well enough to just grow out of the deficit with increased Tax Revenue by itself.
The Government were supposed to be planning deficit action with a plan which included 80% cuts 20% tax increases, so far all I have seen are the tax increases and inflation hitting my finances.
The plan is not working, but what I do not understand is why the Government continue to take the flack about cuts, because they do not want to take flack about the Policy of deficit reduction policy showing signs of failure.
So we now have FAILURE at ALL LEVELS.
Please, please will they own up to something, at least counter the argument about cuts with, “actually spending has gone UP” and silence the media on this score.!
It was never going to be easy, but we have the worst of all worlds at the moment.
Looks like a one term government to me, because now the cuts will have to be deeper, start later, and thus the results/promises will not happen in one parliament.
The PR man needs to start with some serious action if he wants to pull this one back we have now wasted nearly 1 year out of the 5.
January 17, 2011
Since the deficit is a failure of government to manage the budget how is it right that the ordinary taxpayer should be asked to pay more and more tax year after year to continue to bail out public sector failure? What we need is not just deficit reduction- which is just government saying we’ll try not to be so naughty in future- but a return to sound money and balanced budgets. Anything else is political cowardice and negligence.
January 17, 2011
How does it feel to be a member of just another identikit ‘tax and spend’ party? ~ are you the same John Redwood who gloriously returned money to the Exchequer from the Welsh Office budget one year.
If you will forgive the Dorian Grey reference, what’s the portrait in your attic looking like?
January 17, 2011
Isn’t there a “supertanker effect” in at least some of those numbers-momentum from pre GE comittments?
Shouldn’t we would expect to see reductions after indexation, if not in cash terms from April on ?
January 17, 2011
Colin
Isn’t there a “supertaker effect”……
Yes there is, and no one expected things to happen immediately, but the problem is the Government have promised to INCREASE spending for the next 5 years, AND REDUCE reduce the deficit to nothing within the same 5 years.
Even if they are correct and deliver on the deficit, our actual Debt would have increased over those last 5 years to even higher levels.
January 17, 2011
Thank you for this honest information. Many of us have not been fooled by the cuts rhetoric/propaganda by the Coalition Government or the opposition or the trade unions.
January 17, 2011
From this part of the world (SE Asia) the UK (& indeed Europe) looks v vunerable. Unless we start becoming a really business friendly country with low taxes etc., I just can’t see how we are going to earn our living.
January 17, 2011
Allowing for the difficulties of a new government setting targets for the early months, I wonder how these figures compare against target?
January 17, 2011
It’s a strange path the coalition have chosen to tread.
As can be seen from these figures they are continuing along a ‘Keynesian’ path (the quotes are because the situation today with our bloated government bears no relation to how things were when he put forward his theory which makes sense if the government had a large surplus it had saved for a rainy day) so anyone of a conservative bent will be tearing their hair out at increased taxes now on the promise of putting the brakes on spending at some indeterminate point in the future.
For the Lib Dem supporters, it must appear that all the coalition have achieved are indiscriminate cuts and if you were only to watch the BBC you’d believe public services are in danger of collapsing and anarchy taking over.
I know it must be tempting for a politician to try and be everything to everyone, but so far the coalition appears to be achieving the exact opposite of this.
January 17, 2011
I find it very worrying that no government, whatever its political complexion, ever seems to be able to reduce expenditure in spite of the fact that the average citizen can see see government waste virtually everywhere. Unlike private companies, governments and councils have no competition and thus do not have the financial discipline required to run a successful business, putting up their prices (ie taxation) whenever they want.
I didn’t expect any real change from the Tories, and have got exactly what I expected!
January 17, 2011
So the spending is going up 7% in cash terms, the tax take is forecast to go up by a similar amount in cash terms. So the total debt is not likely to be going down anytime soon. Still, with spending and taxes doubling every ten years, the national debt won’t look so big.
Regarding fuel prices. Angry of the US tells me he has paid the equivalent of 51 pence per litre for regular gasoline, (unleaded petrol). He says 8 pence of that is tax; he is outraged.
We do win on property tax though. My Council Tax is currently 0.58% of my property value. His “Property Tax” is four times that percentage.
January 17, 2011
I wonder, Mr. Redwood, how much of the increase in spending is accounted for by rises in the cost of servicing the ballooning national debt?
January 17, 2011
do me a favour and add the number of ICT visas issues also month by month?
January 17, 2011
On 5 January in “Gather Ye Taxes While Ye May” I argued that the gap between tax revenues and planned spending may now be a permanent feature of the UK budget unless something radical happens. This is because the Taxable Economy is reducing while The Alternative Economy grows. It is a perilous situation unless a way is found out of it.
January 17, 2011
Cutting the deficit entirely via tax rises wasn’t what we were promised, not does it seem to me to be a Conservative way of fixing the massive mass left by Labour. Just ask yourself: is this how Mrs. Thatcher would have done it? I think not.
What I am trying to understand is if things would be very much different if Labour had (God forbid!) won the election? They may have delayed the token cuts in 2010, but before the election Alistair Darling was showing some signs of fiscal sanity. He knew that major cuts in public expenditure were the only option to solve Britain’s problems, in spite of all the silly blurb spouted by Labour now that they are safely back in Opposition. I am beginning to wonder if a fourth Labour government (that does bring shivers down my spine) might not have been more honest and effective in actually CUTTING public spending rather than simply milking the middle classes yet more?
Some years (decades?) ago, you may recall, somebody wrote an interesting article about how American Presidents always did the opposite once they were in office to w3aht they had promised when on the stump. Mr Cameron’s government seems to be heading the same way. The promised ‘bonfire of the quangos’ has turned out to be a damp squib, to much derision in the press. Eric Pickles has made some good headlines, but appears largely powerless to enforce his will upon local authorities wrt basic things like restoring weekly bin collections. The PC madness, often resulting from the Human Rights Act, continues apace, and Mr Cameron has back-pedalled like mad on his previous promises. OK, I’m getting away from cutting the deficit now, but you get the picture? It’s all ‘listen to what I say’ but don’t please look at what I do. Thank you, John, for highlighting what they are doing (or rather, NOT DOING)!
January 18, 2011
He’s not known as the heir to Blair (whom the Cameroons call ‘The Master’ according to The Spectator blog) for nothing.
January 17, 2011
How depressing.
January 17, 2011
If the Coalition really wished to cut public spending, they get out and about.
This weekend I drove around to an older friend and noticed that there is still enough taxpayer’s money to pay for new speed humps and wiggly lines all over his area of town. He has to slow to 2mph to avoid damaging his back. On the motorway new average speed cameras are being installed, causing sudden braking and very long slow overtaking periods.
Many of the new measures of state control are supposed to be revenue neutral, ie. the taxpayer pays through extra fines rather than the Treasury. Or, for example, safety regulation is paid for through registered private specialists who, in turn, pay for the permission to do the ‘work’.
The cost of this is uncontrolled, as the quangos are monopolies. For example, my excellent Gas Safe registered gas man has to pay £3200 every 5 years for his ‘tickets’ and then an annual registration fee. This has just increased from £420 to over £600. Another forgotten bit of inflation which, in the end, is paid for by the consumer and taxpayer.
Perhaps politicians in the UK are wary about doing away with much of this ‘Health and Safety gone mad’, in my gasman’s words, because they reckon there are now more voters working in the system than suffering from it. We are no longer a nation of shopkeepers. Now we are ‘kerbstone whitewashers’.
January 17, 2011
“progress with reducing the growth rate of spending”
Well – there’s your problem. If ambition is limited from the off as merely reducing the growth rate, we’ve got no chance.
January 17, 2011
The coalition has produced a government that always seems to be on the back foot. The BBC are talking cuts, bank bonuses and bosses’ pay rises while rapidly rehabilitating the Labour Party.
And then, today the BBC parroted the Liberal/Labour talk of the Liberals ‘detoxifying’ the Conservatives. The phrase is doing the rounds and the BBC may not want to let go of it. Next they will be calling the Coalition a ‘Conservative-led government’.
Detoxifying? Mr Redwood, do they mean you? Are you being fumigated?
I am sure this is not deliberate collusion between the BBC and Labour but it certainly adds to impression of bias at the BBC.
This cannot go on. The media narrative is all about cuts, the majority of which have not even happened yet. I think it is time the Conservatives reminded the Liberals that the country should come first and, the government should challenge the BBC’s bias in public and in every interview. I cannot see an alternative.
I blame the messenger.
January 17, 2011
Some more figures. Total public debt and debt as a percentage of GDP:
2003 1139 30.45
…..
2011 1539 60.56
2012 1620 65.37
2013 1710 67.95
2014 1803 68.50
2015 1902 67.51
Source : http://bit.ly/uk-debt-to-GDP
January 17, 2011
So the start point for deficit reduction is even further away, not a good start……
January 17, 2011
It is apparent from these figures that the government is going to have to re-visit spending cuts.
A drop in property prices, slowing Chinese economy, higher interest rates will demand action is taken.
January 17, 2011
If everyone in the country was to save a proper amount for old age there would be even less money available for spending on property .
As the UK becomes a less desirable place to live property prices will decline even further .
Further correction in property prices is innevitable because they are still vastly overpriced .
The only upwards pressure is immigration , another thing the new Government has backtracked on .
January 18, 2011
Richard ,
I am not disagreeing with your statement that the Govt is going to have to review spending cuts .
Clearly further tax rate rises will at best be subject to the laws of diminishing returns .
The writing is on the wall , growth and consequently the tax take are going to fall short of the forcasts which the target level for spending “cuts” were based on .
Still don’t see why falling house prices should require public spending to be cut . Bad news for banks and businesess with loans secured on houses and people trapped in negative equity but it’s too late to do anything about that .
January 17, 2011
So far, so bad. Planned public expenditure growth over the life of this parliament is supposed to be zero in real terms, leading to public expenditure steadily decreasing as a % of GDP (assuming there is some growth). Increased tax revenue was supposed to account for only 20% of the planned deficit reduction.
The Ministries responsible for the November public expenditure overrun were Health, Defence and Overseas Aid. Some explanation is called for. We want to hear “It won’t happen again”, with reasons.
It’s high time that the Prime Minister demanded better performances on public expenditure containment from his Secretaries of State, and harder monetary policy from the Govenor of the Bank of England and his MPC. Some heads should have rolled already.
January 17, 2011
I still think that the huge increase in bureaucracy will eventually bring us into a very nasty place. At the end of the 19th century the Russian empire was bogged down by an incompetent bureaucratic system that prevented anything being done – including any reform, and which was overthrown in a revolution. We get the word ‘Byzantine’ to describe a bureaucracy that is excessively complex and which, again, is swept away only by the fall of an empire. What is particularly alarming about our own situation is that our bureaucracy is both expensive and ‘not fit for purpose’.
January 17, 2011
John, focusing on the deficit is meaningless.
This misses the point somewhat.
The deficit is merely a reflection of the private sectors need/decision to spend less…probably to pay off a mountain of debt.
Government spending creates money, taxes destroy money.
It’s meaningless to say that taxes fund spending, the truth is that government spending creates the money to pay taxes with, if it’s less than taxes we will all be chasing our tails trying to pay them.
The deficit is merely private sector savings .
January 17, 2011
“The main weapons to tackle the deficit will be the higher VAT rate, higher fuel duties, higher National Insurance, and the estimated increased taxes from growth and inflation.”
Sorry John – I disagree.
I would go with something along the lines of… “The main weapons to prevent growth will be the higher VAT rate, higher fuel duties, higher National Insurance, and increased taxes.”
There is a program on LBC radio this evening discussing the impact of inflation and whether it’s actually becoming too expensive to work. The specific example used to get the discussion going is the cost of parking at commuter stations, some of which have seen an increase of 19% (yes nineteen percent).
People are phoning in deeply concerned about the increased cost of getting to work through train fares and higher fuel costs.
Essentially, what they are saying is that they are deeply concerned about the increased cost of doing business.
Add to that everything else which is going up in price to due inflation, and the average worker will end up with less and less disposable income.
The devalued pound is great for manufacturers, apparently. But input price annual inflation was at 12.5% in December. Margins are being squeezed.
So if it’s too expensive to do business here, and there are low disposable incomes, how will this lead to growth?
PS – The UK Debt Bomb (http://www.debtbombshell.com/) ticked up to 13 digits today. Quite apt for the most depressing day of the year.
January 17, 2011
How long have we got before the financial markets realise that the Coalition’s heroic deficit reduction plan is less real than Harry Potter?
What will happen when they do?
January 18, 2011
I seem to recall reading (perhaps on this site) that the market rate for UK borrowing is now the same as it was at the tail end of the last government. The markets did lower rate in the immediate euphoric rush of Osbornes grand cutting strategy but they are past that now.
January 17, 2011
Labour tax and spend seems to be the same as Tory tax and spend. I cannot for the life of me see what is the difference between this government and the last.
Please tell Dave to stop talking of cuts when there aren’t any.
January 17, 2011
Inflation seems to be running aroud 7% now, but fuel being much higher which will soon feed through. So once we are in 12-15% inflation, a +7% psbr will seem like a very good result.
When you need to get the currency value down and pay back the national debt, it’s one answer. Just not the best one.
Definitely not a Tory one.
It’s a long time since we heard the phrase “sound money” from any of your leaders.
January 17, 2011
Centro, the West Midlands Passenger Transport Authority, who strangely are responsible for producing the region’s 15 year transport strategy – governed mostly by folk who call themselves Tories, but where mostly socialist officers tell them what to do, has just produced it’s plan for our region’s transport strategy for the next 5 years.
No sign of cuts here, and certainly no sign of wise, highly cost effective spending either, which is desperately needed to our get traffic moving again. No, they are asking for (and just may well get) £60m to spend on “Green Lanes”, which happy smiling people on bicycles, and on busses, only pictured in the sunshine, which they claim are desperate for.
Meanwhile, the rest of folk who actually produce our wealth, pay more and more motoring taxes, to subside those so well represented by the 7 story office dwellers at Centro
All this whilst high net worth folk are moving abroad, to any of the places where taxes are sensible! Something has to change I say! Why isn’t Redwood in the cabinet ?
http://www.westmidlandsltp.gov.uk/
January 18, 2011
Sounds quite sensible to me. Cycling is good for health, good for the environment and helps tackle rising levels of obesity that inflict massive extra costs on the NHS. Cycle paths are very cheap to build compared with major new roads.
Good bus services are essential for those without cars and also help to reduce car use and congestion. The coalition (sorry, “Conservative-led government”) say they want to reduce welfare dependency and get people back to work. You need good public transport to help people access jobs or training.
Maybe there are areas where money is wasted but these examples don’t seem to me a wast of money.
January 17, 2011
This is all rather depressing, but it does help to prove what every natural conservative is feeling about the coalition – that they are governing as though labour had won the election. Higher taxation, more spending and no real cuts, other than those to defence spending…
Mr Cameron shows more desire to appease the Liberal Democrats than those on his own benches. Pre election promises are shown to be worthless. And since when did Tory voters ever vote tactically for the Lib Dems?
I think something fundamental has and is being done to your party from within, Mr Redwood. What will it take for you to revolt or are you happy with the situation?
January 17, 2011
Thank you John. As suspected in our recent post no news was not good news.
Any comments or 6-month forecasts please from Camco, those ruthless slashers and burners?
When does the bloated Labour overhang start to reduce?
January 17, 2011
From 1749 to 1849 throughout the World’s First Industrial Revolution, the National Debt of the United Kingdom was over 100% and went as high as 250%!
What kind of namby pamby deficit hysterical terrorist wusses are we to hyperventilate about figures way below 100%, why?
Because Brussels arbitrarily set limits at 60% that then got broken straightaway by the so called ‘hard’ currency men of Germany, let alone France?
January 17, 2011
Dear John Redwood
What more proof do you need, Sir, that even the supposed “Conservatives” have become Socialists? Taxes will be rising, the already-enormous Public Debt will rise even more and the lifeblood of the British economy will (again) be severely crushed! The Public Debt is not just the £850 billion that is on the official Government Balance Sheet by the way: Do refer to the Taxpayers Alliance website where there is a You Tube clip about “The Real National Debt” estimated to be near £ 8 TRILLION (Yes, you read correctly)! That debt includes the cost of bailing out the banks, the costs of Private Finance Initiative/Public Private Partnership liabilities, the unfunded costs of Public Sector Pensions and the huge unfunded State Pension liabilities.
And George Osborne is still allowing total Government Spending to increase! No, we need deep DEEP cuts, like cutting the wages of all in the Public Sector on over £30,000 by 20% and FREEZING their wages for a decade, like cutting ALL Quangos down to 10% of current sizes, like getting out of the EU (which gets more threatening to our future by the day) and using the savings to pay down the terrible debts. We have total debts of almost six times annual GDP output, it is a monumental threat to the future prosperity and solvency of this nation and our nominally Conservative-led Government has not got the guts to do what is really needed to forestall disaster.
Britain also needs deep tax cuts, a Flat Tax of 20% on all personal income and profits (with a tax free allowance of £12,000) would help stimulate the economy and it could, and should be paid for by cutting the bloated Welfare Bill (we need a Workfare Scheme in Britain for all the unemployed, who should only be able to get unemployment benefit for five years in a lifetime). We need to cut all the expensive Green Projects that will do little to help stop global warming and we must use the money saved to build more nuclear power stations and upgrade the rail network, so that Britain is not at the mercy of the effects of Peak Oil (as this grows scarcer and more expensive globally) and as the existing power stations come to the end of their lives! Blackouts will threaten otherwise, they Would hurt the economy and then we will be EXTREMELY IMPERILED by the terrible Public Debts run up by Gordon Brown (and which David Cameron lacks the courage to seriously confront because he does not want to lose an Election)!
In the meantime, Sir, you might want to reflect on whether the Conservative Party is a true reflection of what you believe Britain needs and whether your patriotic duty for the long-term good of Britain lies seeking a political force closer to those views (or if this does not exist in your view, finding some like-minded colleagues in the Conservative Party or UKIP and doing a “Big Four” and setting up the Freedom Enterprise Party?).
Regards
Ian Pennell
Reply: The UK’s debts haev been often charted on this site, but they are nowhere near £8 trillion.
January 17, 2011
These figures are scary. Where are the “cuts” some proclaim and others fear? Looks like classic early 1970s inflation stoking.
January 18, 2011
So we are still heading in the wrong direction , going even faster , it’s just that the rate of acceleration is tailing off .
Doesn’t look like inflation is going to get here in time to rescue us .
Whilst many public sector workers earn modest wages , there are an awful lot on basics of 50k or more , typically equating to packages of 67k+ and thousands of them on 6 figure salaries .
I doubt many appreciate how lucky they are to receive guarantees that their pay will not be reduced , even if it is frozen so will not rise .
Given the state of the country and the taxpayer , how can the government justify continueing to pay public sector salary levels the country cannot afford ?
January 28, 2011
I would respect this man a lot more if he was not looking so dishevelled.
Do up your top button, put on a tie and wear a suit. Why do politicians think they need to look like comprehensive school teachers?