It’s official – current public spending rises 2010-2012 in real terms

 

                           In my commentary on the 2010 and 2011 budgets I pointead out that the large cash increases in total current spending meant it was likely there would continue to be real growth in this spending. Most other commentators talked about deep cuts.

                         Now I have a new ally in arguing this case. The government and the Office of Budget Responsibility  tell us that real public spending rose by 1.5% in 2010, by  0,3% in 2011 and is forecast to rise by another 0.5% this year. Of course there are individual cuts, to help pay for the increases in health, overseas aid, EU spending and the other growing areas. It is however importtant to understand that there has been and still is a rise in overall current spending, not just in cash terms but also after allowing for inflation.

                           I also said after previous budgets that I thought the forecast for such a huge tax revenue rise over the five years was optimistic. It is interesting that the government now agrees with this, and has cut the forecast by 13%.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

93 Comments

  1. lifelogic
    Posted March 22, 2012 at 7:14 am | Permalink

    Indeed and the country need a rise in, overall public current spending after inflation and usually spent on daft things, just like it needs a kick in the teeth or more over priced green energy.

    Yet more tax, borrow and waste from this government.

    • lifelogic
      Posted March 22, 2012 at 9:34 am | Permalink

      I see in the FT a table (from HMRC HMT) showing Inheritance tax is expect to slowly (and evenly) rise from just under £3B to £3.5 by 2016-17.

      JR does this mean the Osborne £1M IHT “promise” has been shelved for ever?

      The promise Osborne wisely made and that gave a big surge in the polls and made Mr Brown, foolishly, bottle his early election plans (thank goodness). Not that this lot are very much better.

      They should of course get rid of IHT completely. It is not the government’s money. They will only waste it anyway and it has already been taxed. Anyway we need to attract, not push away, the wealthy.

      • MickC
        Posted March 22, 2012 at 12:38 pm | Permalink

        Yes, of course it means that IHT will continue to be a tax for the “squeezed middle”!

        UK governments of all colours have done as much as they dare with increasing indirect and income tax, now their only remaining way to raise money is a tax on capital (which IHT is, of course).

        There will almost certainly be a “mansion tax” introduced by Osborne and this is the prelude to a general wealth tax which will be introduced by the next government, which will be Labour or Lib/Lab.

        The UK is effectively finished as a country for the middle classes. It does not pay to work hard (too much income/indirect tax), save (value of money inflated away, poor return on investment, greedy City operators), or even try to leave something for your family (IHT and the looming wealth tax). Try to get a decent education for your children and you are “buying advantage” or if you try for a decent state school the children will be penalised for their background and not get into university (but the state will still take your money of course).

        Yes, the only thing to do is work for the State, telling other people what they shuld be doing-not much reponsibilty, if you cock-up-nothing happens, and a pension which won’t be inflated away.

        I’m voting UKIP next time. No they won’t win but at least I won’t have voted for one of the three statist parties.

        • Electro-Kevin
          Posted March 23, 2012 at 12:44 am | Permalink

          There should be a ‘none of the above’ box on voting slips.

          Otherwise the only option is to spoil papers. This is not a mindless act. It is the only way to express that one is not indifferent but cares very much. It is the only way to express that one is disenfranchised.

          • Bob
            Posted March 24, 2012 at 11:05 am | Permalink

            @Electro-Kevin
            Why spoil a vote, just give it to a smaller party, help them to keep their deposits, that’s the best way to register a protest vote.

          • Bob
            Posted March 24, 2012 at 11:22 am | Permalink

            If 50% of the votes were spoiled and 50% went to the Tories, then the Tories win.

        • norman
          Posted March 23, 2012 at 10:08 am | Permalink

          Simon Hughes was on the radio yesterday boasting about how this budget was the first in many in taxing wealth rather than just income.

          Hard to believe a putatively Conservative Chancellor would be the one to put his name to this. Private property rights – the basis of the civil society – are under sustained attack from this and the previous government and it’s all one way traffic. We seem to be revelling in abandoning responsibility and embracing socialism then wringing our hands over the collapse of society.

        • Disaffected
          Posted March 23, 2012 at 11:56 am | Permalink

          Here here.

      • Mark
        Posted March 22, 2012 at 1:36 pm | Permalink

        The projection can only be on announced policy. I think a further IHT “promise” may be saved for the next election. You can consider the credibility of that.

        • lifelogic
          Posted March 24, 2012 at 6:59 am | Permalink

          Its credibility in the light of the “cast iron” promises at the last election on the EU treaty, EU negotiation, on £1M IHT, on child benefit, on cutting the deficit ………….

          And Cameron does a party political broadcast focusing the importance of parties keeping their promises!

      • Gareth
        Posted April 7, 2012 at 11:41 pm | Permalink

        I, for one, think that taxes on capital are a bloody good idea. Better some layabout heiress that’s never done a day’s work in their life get taxed than me for working my fingers to the bone!

    • outsider
      Posted March 22, 2012 at 9:48 am | Permalink

      Dear Lifelogic, Mr Osborne has made sure that public spending and taxes will continue rising into the distant future. According to the Red Book, the former Royal Mail Pension scheme is to become “a newly established unfunded public pension scheme” (ie paid for out of taxation at about £3 billion a year). The scheme’s £28 billion of assets, which earn far more than the costs of gilts, “will be disposed of” and the cash proceeds “transferred to the Consolidated Fund” to pay for more spending now. I think we can dismiss any future Government rhetoric about not burdening future generations as, to put it mildly, spectacularly insincere.

      • lifelogic
        Posted March 22, 2012 at 11:59 am | Permalink

        Indeed.

      • Winston Smith
        Posted March 22, 2012 at 11:04 pm | Permalink

        The Royal Mail Pension has

    • Disaffected
      Posted March 22, 2012 at 9:56 am | Permalink

      Osborne is borrowing, spending and taxing more than Gordon Brown. He is borrowing to give taxpayers’ money away to overseas aid, EU, welfare lifers, Middle East wars etc. Subsidise useless wind farms, based on unproven science, where the landed gentry receive a huge pay packet from the taxpayers’ pocket. Is there any family member of Mr Cameron that might benefit from such a scheme?

      The Government does not have the courage to stop spending and make the cuts that we can afford. Welfare lifers get a 5.2% pay rise next week.

      QE has devalued pensions by about £74 billion. Interest rates at historic lows to hit savers and pensioners. Blair and Gordon Brown were an angels compared to this lot.

      Tally ho, back to the boys who like horse riding.

  2. Andy Man
    Posted March 22, 2012 at 7:19 am | Permalink

    What an appalling indictment of a Conservative(?) led coalition. Absolutely no progress made on cutting the immense deficit, increased taxation, no real progress on deregulation, NHS reform or the EU. Stupid projects like the HS2 white elephant allowed to go ahead and continuing overseas warmongering.
    Quite why the money markets haven’t turned on Britain with it’s money printing and massive overspending is a mystery.

    • Electro-Kevin
      Posted March 22, 2012 at 10:53 pm | Permalink

      Because the BBC howl about ‘cuts’ ???

    • norman
      Posted March 23, 2012 at 10:11 am | Permalink

      The money markets haven’t been participants, it’s all BoE funded. Osborne would like you to believe otherwise, and he banks on the fact most people will as it’s pretty boring stuff, but it’s all smoke and mirrors.

  3. stred
    Posted March 22, 2012 at 7:55 am | Permalink

    The Treasury must enjoy the dispensation of tax increases presented as generosity.
    Take the increase in fuel duty, which is ‘only’ to be increased in line with inflation.

    HMG prints money which increases inflation and lowers the £. The fuel price reaches record highs. VAT is increased and the take is added to by the price increase. Fuel duty is charged on the price increase including the VAT. Then the duty is raised in line with inflation. – A tax on a tax on a stealth tax.

    The raising of the old age pension to £140 is another generous provision. The fact that existing pensioners, even qualifying just before the increase, will not be paid this for the rest of their lives is not mentioned. And what they do receive will not be subject to old age special allowance but this is justified because they will not lose because of the general increase.

    Presumably, they must think anyone over 65 will be deteriorating mentally and unable to understand or care.

    • Magelec
      Posted March 22, 2012 at 9:51 am | Permalink

      I thought that the old age special allowance was in recognition of the higher cost of living experienced by pensioners, most of whom are on fixed incomes. Not to mention that there is virtually no interest paid on any savings pensioners may have.

      • Atlas
        Posted March 22, 2012 at 6:19 pm | Permalink

        When Osborne announced the abolition of special pensioner tax allowance (but not in so many words) my ears pricked up because he mumbled and hurried it through (A Gordon Brown trait). Clearly he knew he was doing the dirty.

        So much for Cameron’s promises about the elderly. He would do well to remember that it is the older section of the population who vote and UKIP is a definite alternative. George is not so smart after all.

        John, do you approve of Osborne’s move?

        • Bob
          Posted March 24, 2012 at 11:10 am | Permalink

          I don’t ever recall anyone accusing George Osbrowne of being smart.

    • Disaffected
      Posted March 22, 2012 at 10:07 am | Permalink

      Well said. It must be remembered these were choices made by Tory ministers, they did not have to but they wanted to.

      We are expected to believe that after two years spending and borrowing cannot be brought under control, when people like John, see through the bravado and state what is the likely outcome.

      I hear Mr Heseltine is commissioned to lead and report for the Government. This is the man who recently re-affiremd that the UK should be in the Euro despite the obvious mess it is in. However, Messrs Cameron and Osborne trust his judgement. Perhaps they will next get Mr Major to lead the possible debate whether the UK needs an EU referendum- of course, all in the interests to make sure it is fair and independent.

      Wake up pensioners, Tories are robbing you.

      • A Different Simon
        Posted March 22, 2012 at 12:23 pm | Permalink

        Heseltine sounds credible and authorative when he talks but that is all undermined by his lack of judgment in the projects he chooses to associate himself with :-
        ie attempting to betray your country and promoting the millenium dome ; a golden calf if ever I saw one .

        Whats are the odds on Heseltine standing as a London Lord Mayoral candidate when Boris becomes leader of the HM Opposition ?

        • lifelogic
          Posted March 22, 2012 at 5:45 pm | Permalink

          What are the odds on Heseltine standing as a London Lord Mayoral candidate when Boris becomes leader of the HM Opposition ?

          He was 79 yesterday according to Wiki so pretty low I think.

          But now that, thanks to Cameron, we are all legally obliged to employ people until they are 110+ who knows?

          reply: Very unlikely!

          • Bazman
            Posted March 24, 2012 at 1:07 pm | Permalink

            Good job they will be able to work to 110 as your beliefs do not allow for any pension. Tell us how you save for a pension on a no minimum wage job? This on top of paying for healthcare and full market rates for rent/road tolls, rip off utility companies hiding behind green regulations etc. w
            With no additional support for children. Do tell us your ‘logic’. Their children will be grown up when they are 110? You will have to do better than that.
            No reply? I wonder why?

    • uanime5
      Posted March 23, 2012 at 12:49 am | Permalink

      Alternatively they think the over 65’s aren’t physically fit enough to vote.

  4. alan jutson
    Posted March 22, 2012 at 8:01 am | Permalink

    John

    Clearly it would seem you read the figures and what is behind them, better than any others.

    I am not sure that I should congratulate you, or castigate everyone else for their lack of numeracy and understanding of economics, and human nature.

    Thank you for sharing your thoughts with us on this blog over the last few years, I would not blame you if you said, I told you so, but pleased you have not done so, as it says a lot more about you than many of your critics.

    • Electro-Kevin
      Posted March 22, 2012 at 10:56 pm | Permalink

      x2

  5. HJ
    Posted March 22, 2012 at 8:08 am | Permalink

    John,

    Would it be possible to provide a link to reference where the OBR has said this please? I must admit that I was under the impression that public spending was due to be reduced in real terms by about 1% in fiscal 2011/12 and that presently we are on target for a small underspend (if you can call it that when we still have a huge deficit).

    reply OBR Table 1.1 p 11

    • Caterpillar
      Posted March 22, 2012 at 10:16 pm | Permalink

      Said table not only shows JR’s numbers but seems to forecast champagne for New Year’s Eve 2012/2013. From 2013 inwards UK will suddenly have 2% CPI rate, falling Govt consumption, increasing business investment, increasing consumer expenditure, falling unemployment, falling claimant count, output gap heading back up.

      (My biased view – not only does it look like the forecast recovery correlates with inflation under control, it also looks a bit worrying that the output gap will be tightening with little room on inflation … perhaps the champagne will go back in the cupboard by 2016/2017).

  6. David
    Posted March 22, 2012 at 8:30 am | Permalink

    John

    Do you still stand by your previous forecast of inflation in 2012?

    What do you think about the inflation forecast presented in the budget for 2013? (1.9%).

    (I maintain my view that the BoE inflation forecasts are too optimistic – and that inflation above 2% is in the interest of the BoE/government, for many reasons).

    Finally, will writing to my MP (Ann Main) have any impact whatsoever on the possibility that DEBT reduction will be a priority in the future?

    • Disaffected
      Posted March 22, 2012 at 1:31 pm | Permalink

      I think we can all give advice about writing to your MP. They do what they are told. Cameron has tried to impose silence and compliance by choosing candidates and now, as John states, he wants to choose MPs for the select committees. All sounds a bit similar to the unelected unaccountable EU bureaucrats to me.

  7. Brian Tomkinson
    Posted March 22, 2012 at 8:42 am | Permalink

    I’m not sure if you are pleased or concerned that public spending has risen in real terms but I certainly am concerned. This is a tax and spend government hardly different from Labour. When we voted for a party to tackle the economic crisis created under Labour we were told that the deficit would be reduced 20% by increased taxation and 80% reductions in spending. When are these reductions due to start? This government has been a real disappointment in many ways but the way they have failed to really address their spending is the worst indictment. This economy will have to improve despite the actions of this government not because of them. It has been said many times before but how doubling the national debt in just 5 years is regarded as prudent and sensible management of the economy is surely a sick joke?

    • Bob
      Posted March 22, 2012 at 1:41 pm | Permalink

      On the bright side the Tories have come out of the closet on gay marriage, and they have increased foreign aid by a billion, thanks to freezing the personal allowances for pensioners.

      • Brian Tomkinson
        Posted March 22, 2012 at 6:22 pm | Permalink

        Thanks for cheering me up Bob!!!!

    • Dave B
      Posted March 22, 2012 at 5:46 pm | Permalink

      I have a feeling that the reductions in spending are going to be ‘relative to GDP’, which is to say there won’t be any. They are just hoping that the economy grows faster than the debt.

      • Disaffected
        Posted March 23, 2012 at 12:07 pm | Permalink

        No chance of growth, there are many commentators who state debt economies need growth. Look around and you will see that there is not any despite ploughing on with bureaucratic EU political dream- which has nothing to with economics and all to do with political ideology.

        I would rather the £45 million a day is pent on small businesses, I would rather have the overseas aid spent on infrastructure projects in this country not India, Pakistan and Argentina!

        I am afraid the Tory party had a chance and blew it. They could have called another election by now. The gutless streak, not genius, shows that the Tory party want to pass the debt on to the next parliament in case they lose and Lib Dems want to get the votes of the welfare lifers and immigrants.

        Labour might have learned what they need to do to win outright again and then both the Lib Dems and Tories will be in opposition for many many years, especially as they have failed to make any progress on all key policy issues that the public wanted to see changed.

  8. colliemum
    Posted March 22, 2012 at 8:50 am | Permalink

    Having heard the usual suspects on the BBC from all three parties, I am sad to say that the coalition politicians – yes, that means Osborne! – trying to sell us the £5.30 pw increase in state pension from next month as ‘the bestest biggest evah’.
    This is made even worse because Balls was the one who pointed out that this increase was simply due to the rate of inflation up to September last year.

    We may be over 65, but we do not all suffer from memory loss.
    In fact, it seems to me that the younger generation blissfully forgets what happened before Tuesday last week.

    It is also sad to see that the politics of envy has now jumped from moaning about bankers to vitriolic attacks by the non-pensioners on what is their parents and grandparents generation.

    The Tory Party will have their work cut out come the next election. Better start working now. A good way would be to stop the spinning.

    • Bob
      Posted March 22, 2012 at 1:48 pm | Permalink

      I think a lot of people will be having a look at the policies on the ukip website after this less than impressive attempt at budgeting, which let’s be honest could have been written by Brown and Balls themselves for all the difference it makes to our economic prospects.

      It certainly sends a clear message to the young that savings and pensions are for mugs!

      • Disaffected
        Posted March 23, 2012 at 12:14 pm | Permalink

        Lib Dems make it clear that it does not pay to work under £35,000, they are fanatical about the UK becoming part of an EU state, they want social mobility (or as most see it communism to drag people down rather than give a hand up ie business, education etc.) and all the 18 year old girls have to do is get pregnant and the taxpayer will provide a free house and a living for the rest of their lives. What incentive is there to do well at school? And the next generation will follow so on and so forth. Cosmetic changes to change the names of schools will not make any difference.

        We need a system where people need to learn that they have to work for something in return. The something for nothing society needs to stop.

        • uanime5
          Posted March 23, 2012 at 8:06 pm | Permalink

          Most girls can get all those benefits at 14.

  9. amedin
    Posted March 22, 2012 at 8:53 am | Permalink

    John

    I always enjoy reading your blog & your comments on actual government spending over the past 2 years have been illuminating.

    Do you think you could add a link to the source within your post (or cite page numbers etc). Might help convince the casual observer & widen the acceptance of the actual fiscal position.

    Reply: It’s the economic forecast table in the OBR Budget commentary issued yesterday

  10. Dave666
    Posted March 22, 2012 at 9:25 am | Permalink

    Ooh what a surprise having trashed the technology and manufacturing base where else is HMG to keep its coffers filled from? Why pensioners savings and pensions themselves of course. We must at all costs continue to subsidise rampant criminality which underpins the boom in the SE such as the sheds with beds scandal.

    Has no one in Westminster got the Cahones to address the criminality?

    Has no one in Westminster got the nous to connect start ups with willing individuals recently made redundant?

    Must Mray Portas be the only proactive individual in the nations?

    • A Different Simon
      Posted March 22, 2012 at 12:34 pm | Permalink

      The only person talking about putting the global financial mafia in it’s place is Ron Paul .

      Our political class are absolutely wedded to the notion of high house prices .

      Apparently complete destruction of the UK’s future , division between the generations , and virtually guaranteed mass civil unrest in the near future is a price well worth paying for protecting private investors investments in property and land .

      Our bricks and mortar mortality has killed us .

      • Electro-Kevin
        Posted March 22, 2012 at 11:07 pm | Permalink

        Indeed, Simon.

        It was the obsession with housing – inflated by dual income mortgages – which made working compulsory for mothers to the point that people stopped breeding altogether in many cases (excepting single teenage mums who were able to secure independent housing for themselves at the earliest age.)

  11. Nick
    Posted March 22, 2012 at 10:28 am | Permalink

    Half a league, half a league,
      Half a league onward,
    All in the valley of Death
      Rode the six hundred.
    ‘Forward, the Light Brigade!
    Charge for the guns’ he said:
    Into the valley of Death
      Rode the six hundred.

  12. Bill
    Posted March 22, 2012 at 10:45 am | Permalink

    We are left with the view that: (a) the BBC and the opinion writers in the newspapers are liars or (b) they are full of arts graduates who struggle with figures or (c) they do not know how to adjust figures for inflation or (d) they don’t care or (e) they are frightened by the orchestrated opposition voices clamouring for more money or (f) they are worried about demonstrations on the streets and assume that pensioners are less likely to protest than benefit claimants or (g) all of the above.

    • lifelogic
      Posted March 22, 2012 at 1:35 pm | Permalink

      The BBC just starts with their standard BBC religion (pro quack green wash renewable energy, pro rights, pro endless “equality” laws, pro diversity, anti science, pro redistribution, pro confiscation of the money of the rich, pro larger benefits for every one, pro the over payment of the state&BBC sector workers, pro trains & bikes, anti Murdoch, pro the anti-democratic EU socialist super state …) then they just work through the budget to see how they can use it to push their agenda.

      Andrew Neil seems to be nearly the only sensible person employed by the BBC on any political or news program.

      • Bill
        Posted March 23, 2012 at 12:06 am | Permalink

        Agree that this is probably how it works, and with the added proviso that, for the professional commentator, politics is a spectator sport. It is, as someone said, ‘show business for ugly people’ (John, of course, excepted!)

      • Bazman
        Posted March 24, 2012 at 1:16 pm | Permalink

        Where does your pro business quackery backed by Murdoch propaganda and gifts to the rich with no evidence of benefit to society fit in?

  13. oldtimer
    Posted March 22, 2012 at 11:29 am | Permalink

    The coalition has failed to take the radical steps needed to get a grip on state spending. So far it is mostly talk. The obvious blunders are disturbing, eg last years tax on N Sea oil and gas (now reversed and replaced with incentives), the child benefit fiasco (now modified but still extremely damaging to many single earner families) and the presentational failure over the so-called “granny tax” (although the merger into a single allowance makes sense). There remains a smoke and mirrors element, that was so offensive in the Brown budgets, that jars. My first impressions are that politics has triumphed over economic needs.

    • Disaffected
      Posted March 22, 2012 at 1:38 pm | Permalink

      Sorry. I do not understand. Osborne is borrowing, spending and taxing more than Gordon Brown. John has already demonstrated that actual spending is up in real terms. The Coalition knows this and have deliberately continued and told the public a totally different story. If it were a business it would be fraud.

      We have heard from the CEO bashing and anti enterprise lobby from the Lib Dems about unfair rewards and accountability. What about incompetent ministers? What action is taken against them? They get tax free parachute payments in addition to minister pay when their respective department has failed and made the country broke. Why isn’t Mr Byrne, Darling etc made to pay the money back? What are the personal consequences for their failures??

      Right to recall at the very least please.

      • oldtimer
        Posted March 23, 2012 at 1:39 pm | Permalink

        I am unclear what it is you do not understand about my comment. It was critical of Osborne and the coalition.

  14. Liz
    Posted March 22, 2012 at 11:41 am | Permalink

    Whatever the contents of this budget, presentation wise it has been a disaster. Most of it was leaked, and therefore fully discussed beforehand, and the main thing that wasn’t – the freezing of the age tax allowance has been presented – even by “Tory” papers as a new tax! The Tories have handled this extraordinarily badly and allowed the LibDems to take credit for the general raising of personal tax allowances and themselves to take the flak from their many elderly supporters for the “Granny Tax”. The constant leaking of supposedly confidential budget information shows a complete contempt for Parliament.

    • uanime5
      Posted March 23, 2012 at 1:03 am | Permalink

      According to an MP speaking in Parliament at about 11 am this morning (I forget who he was) the only thing that wasn’t leaked was the “Granny Tax”.

  15. Bill
    Posted March 22, 2012 at 11:53 am | Permalink

    And perhaps a political calculation has been made that old people are unlikely to change the voting habits of a lifetime. Put the pension up, and the Labour pensioners still will not vote Tory; put it down, and where do the Tory pensioners go? UKIP, despite the comments of some, seems to me to be a waste of time and, as you showed recently, John, amounts to less than 4% of the votes – enough to rob the Tories of a majority and not enough to do anything useful.

    • Bob
      Posted March 22, 2012 at 9:05 pm | Permalink

      @Bill
      You’re right. They’re taking it for granted that the older generation are too set in their ways to vote for a different party after forty or fifty years of voting for the same way, i.e.the political parties that that got us into the mess we’re in (ruled from Brussels, broke, defenceless and largely dumbed down).

      I hope you won’t let them take you for granted Bill, I certainly won’t.

      I was a dyed in the wool Tory until they stabbed Maggie in the back, then I woke up to the fact that the party had been hijacked by a bunch of commies.
      I think any real conservative can see that, especially when Cameron declares his passion for gay marriage “…because I’m conservative…”, a fact that he omitted to mention in his election manifesto!

      We were expecting a bonfire of the quangos, and instead we got gay marriage.

      Nothing will change until and unless we vote for change.

      • Bill
        Posted March 23, 2012 at 12:08 am | Permalink

        Thanks, Bob. The question is what to do about all this to achieve a better outcome. We need something like the Tea Party, a ginger group to push the Tories into a more sensible direction and to cancel out the Lib Dem influence.

        • Bob
          Posted March 24, 2012 at 11:16 am | Permalink

          Wasn’t Dan Hannan trying to promote a cross party conservative movement? What happened to that?

          • Bob
            Posted March 24, 2012 at 11:18 am | Permalink

            Maybe not enough conservatives in the Tory Party? :)

    • norman
      Posted March 23, 2012 at 10:20 am | Permalink

      It’s the millions who voted, or who would like to vote, Conservative but now sit at home that should be the real worry, not the 4% of us who vote with our consciences. Where are the missing millions? should be the question George Osborne (political genius of the party, we’re led to believe) has in his mind every day.

  16. javelin
    Posted March 22, 2012 at 12:23 pm | Permalink

    Return of the DEBT JUNKIES !!

  17. Simon
    Posted March 22, 2012 at 1:19 pm | Permalink

    Only one t in importtant in paragraph 2…

  18. RDM
    Posted March 22, 2012 at 1:43 pm | Permalink

    John,
    I just thought I’d ask about what is now becoming obvious, well to me anyway. The number of available contract roles (Business Investment) is falling fast, and has been this last few months. I have gone from applying for ten roles a day, to one or two, if I’m lucky. Certainly, the tend is still downwards, and has been since the crush of 2008.

    Can I ask; Is this a reflection on real Business Investment, and is the Government trying to increase consumption to compensate?

    There seems to be a structural change (Agency Workers Directive) going on here, or will it take a long time to recover the Business Investment levels of 2008? It seems as if I should leave for somewhere overseas. A better Return then the Dole?

    I walked into NatWest this morning, to ask about the guarantee scheme (A startup loan), and they stated what I already know. They said that they would have consider a startup loan anyway, but they need collateral, and they know they can’t help a Technology startup, to much up front capital required?

    I seem stuck, a bit like the Economy?

    Regards,

    RDM.

    • Yudansha
      Posted March 22, 2012 at 11:14 pm | Permalink

      I think there’s also a house price crash going on in the SW.

      Put our house on the market under agent’s recommended value and have been advised to drop by 10k in a week. That puts us below 2004 prices despite renovations.

      Ditto two houses we’ve looked at. One has been removed from the market and put up for rent despite a 40k drop in price in recent weeks.

  19. David Langley
    Posted March 22, 2012 at 3:34 pm | Permalink

    I don’t want to pay for any increase inEU contributions and Foreign Aid, quite the reverse I want to stop paying for any of that and I know the sums involved are quite trifling to the government but to me they represent an offensive use of our taxes.
    Your knowledge of the EU project is sufficient for you to agree with me and millions of your countrymen that enough is enough.
    Regarding Foreign Aid, The middle East and Africa has vast assets that properly managed would make their lot a far happier one than ours. By all means send all our consultants out there and properly paid by the recipients of that advice, they should prosper. If they disregard it then tough. Standing in an aid queue all day and night does little for future prospects.

  20. Denis Cooper
    Posted March 22, 2012 at 4:26 pm | Permalink

    Frankly I’m not surprised that government spending is still rising not just in cash but in real terms.

    The government is having to borrow something like £2000 per capita of population per annum to fund its spending, piling up more and more debt to be repaid in the future, but any attempt to make even small cut backs – even down to tens of pounds a year per person – is met with outrage by one section of the population or another, whipped up by a totally irresponsible mass media egged on by a totally irresponsible opposition.

    And that’s apart from the real concern that if the government did suddenly make deep cuts to its expenditure then that would depress the economy even further, and risk sending us into the same counter-productive austerity death spiral as Greece and (soon) Portugal

    I makes me despair and start to wonder whether maybe that’s now the only answer – take the country to the very edge of bankruptcy, so that the government has no choice but to incontinently slash public spending by 20% or more, and bring it home to the whiners that so far they’ve been living on tick and now they’re going to be really hurt, not just irritated.

    • Bickers
      Posted March 22, 2012 at 8:54 pm | Permalink

      The Canadians managed to cut their public spending by 20% and now their economy is heading in the right direction

      • Tedgo
        Posted March 22, 2012 at 10:27 pm | Permalink

        They do not have to finance the EU.

        • lifelogic
          Posted March 23, 2012 at 9:30 pm | Permalink

          Or put up with its top down absurd, command economy, regulations.

      • Denis Cooper
        Posted March 23, 2012 at 4:02 pm | Permalink

        A couple of years ago the talk was that Osborne would try to copy the Canadians:

        http://www.telegraph.co.uk/news/worldnews/northamerica/canada/7807047/Coalition-government-the-Canadian-cuts-model-that-the-Tories-wish-to-emulate.html

        However –

        1. That was done over 3 or 4 years, not suddenly all in one go, “incontinently” as I put it above.

        2. According to this at that time:

        http://www.guardian.co.uk/commentisfree/2010/jun/20/budget-cuts-george-osborne

        “The coalition government wants to do more; to nearly eliminate a structural budget deficit of 8% of national output – some £116bn – in five years … It is twice as tough as the famously harsh measures Canada took between 1994 and 1997.”

        3. Canada did it at a time when the world economy was picking up and the private sector could more easily take up the slack created by public sector cuts.

        4. Even so, it was very far from a painfree process.

        But it’s going to be difficult getting anything like 20% cuts even gradually if every 0.2% provokes outrage from one sectional interest or another.

    • uanime5
      Posted March 23, 2012 at 1:14 am | Permalink

      Well the problem is that so many people are unemployed and salaries are so low that most people can’t survive without benefits, so any attempt to reduce these benefits will harm a large number of people; making it deeply unpopular. Unless companies are willing to create more jobs and pay their employees a higher salary so fewer people need job seekers allowance and tax credits it will not be possible to reduce spending.

      Also spending cuts aren’t the only way to fix a deficit. Raising taxes is an effective way of obtaining additional funds, thus reducing the amount that has to be borrowed.

      • lifelogic
        Posted March 23, 2012 at 9:31 pm | Permalink

        Raising tax rates further will not raise revenue just destroy jobs.

        • Bazman
          Posted March 24, 2012 at 1:20 pm | Permalink

          This is your belief not a fact. Your church is wrong in many ways and this is one. Believing in something does not make it true though could be true in some cases.
          Your pro free market economic quackery backed by a divine right to rule, is a religion itself.

  21. Vanessa
    Posted March 22, 2012 at 4:42 pm | Permalink

    It is a great shame that politicians do not look closer to home for their savings. Considering most of you take our taxes to line your own pockets or your family’s coffers to be told that it is criminal to avoid tax when all of you are set up as limited companies to do just that – it is about time the public were told what criminals we are ruled by (together with your chums in the EU) the taxpayer should button down and decide NOT to pay parking fines, council tax, income tax, VAT etc. If we ALL did it you lot would collapse and OHHH what a lovely sight that would be. I am sick and tired of the interference from “authority” telling me what I can and cannot do in my own home, in my neighbourhood, in schools etc. etc. Bugger-off and leave me alone.

    Reply: Sweeping false criticisms in most cases. Most of us do not set up as companies to lower our tax charge. Perhaps you are thinking of Mr Livingstone, the former Mayor.

    • Bob
      Posted March 22, 2012 at 9:26 pm | Permalink

      @Vanessa
      If as a nation we stopped paying the t.v. licence the domination of the media by the BBC would come to an end. Then we might see some progress.

      If anyone tells you that you must have a licence if you have a T.V. they are either misinformed or lying.

      You do not need a licence to watch:
      – DVDs or other recorded programs on a T.V. set
      – Catch up T.V., iPlayer or 4OD either on a pc or an internet T.V.

      The BBC have been setiing the mood music for the Fabians.

    • Disaffected
      Posted March 23, 2012 at 12:30 pm | Permalink

      Oh dear John, the lack of trust from the public is represented in the poor turn out at elections.

      How many Tory MPs were sent to jail, public outrage for all the sleaze surrounding them the last time they were in power? How about the house flipping? Some are in the cabinet, what credibility do they have? How about the sting with Mr Hoon and co after Cameron stated lobbying was the next scandal and then he did nothing of any substance to change it.

      We have seen the substandard behaviour of MPs parliament is endemic, and just like spending cuts, no one has the courage do anything about it. It is not possible for over half (302) of the MPs to be overpaid or fiddle expenses during the expenses scandal and only a handful get prosecuted. Most criminals do not get a choice to pay back their what they stole in lieu of court or banned from parliament for a small number of days- how is that a punishment when there are some MPs who rarely attend because they are on the speech circuit!! Prosecution should be the first consideration and internal discipline the second, not the other way around.

      Could you point me to where in Hansard an MP or minister stood up in the house and had the leadership to say this fiddling is wrong and it must stop. A lot of our money was spent on legal fees to prevent us getting the information.

  22. peter davies
    Posted March 22, 2012 at 4:51 pm | Permalink

    Appreciate what you say on cuts but why on earth in a period when we are having to belt tighten are there increases in the o’seas aid and EU?

    Why cant the EU be told to follow the same pattern as everyone else and accept that if governments are having to cut back their funds should follow the same pattern?

  23. Nigell
    Posted March 22, 2012 at 5:38 pm | Permalink

    All very clever Mr Redwood, as ever, and no doubt right again but what are you and your colleagues going to do about it? Absolutely nothing because you and the rest are all lobby fodder, hooked on the junketing, obviously all the financial perks and the delusion that somehow you have some power.

    Within the last two months a report came out detailing the billions (30?) that are wasted, your government even spent £500 million more trying to save money, £12 billion is spent on overseas aid, much on countries that don’t need it or are totally corrupt, let alone what the EC costs and wastes. This at the same time as the Treasury was reputed to be refusing the 1.9 billion cost of care for the elderly and you have just put up taxes for pensioners. Despite all the BS and hot air most public sector employees will enjoy far greater benefits than many in the private sector.

    It is obvious your Government really couldn’t care less about older people or indeed much else, apart from holding on to power for power’s sake/ to stop the other side getting in. The next time a Politician uses the word democracy, they should be sued under the Trades Description Act.

    Reply: I highlight, camapaign against and seek to change it

  24. lojolondon
    Posted March 22, 2012 at 5:53 pm | Permalink

    Just the three areas that need cutting the most – health, overseas aid, EU spending. Labour doubled NHS spending and made it worse. There should be NO frontline cuts, but all the wasted money goes to the Many trusts, quangos like NICE and thousands of execs in these organisations, all paid between 1 and 300 kpa.
    Likewise in the EU area – all money purely splashed against the wall.
    When we leave we will look back in disbelief that we could raise a Billion pounds a month just to give it to our nearest enemies!!

    • uanime5
      Posted March 23, 2012 at 1:17 am | Permalink

      Well health spending is about to change as the Government has passed its bill to sell the NHS to private healthcare companies. Though this is likely to increase costs rather than decrease them.

  25. Alan Radford
    Posted March 22, 2012 at 7:43 pm | Permalink

    John Redwood, please. Please do the right thing by your country. Join the Conservative Party (aka UKIP). A few more defectors could cause an avalanche, and quickly upset the whole rotten applecart. Osbornes ‘budget’ is a disgrace. Weak, cowardly, ineffectual, dishonest Gordon Brown without the sleight of hand. The conservative party is finished. Why do you remain as a back bencher for them? Surely you have some fight left in you?

    • lifelogic
      Posted March 23, 2012 at 9:34 pm | Permalink

      That would be pointless under the current voting system.

  26. Ian
    Posted March 22, 2012 at 7:45 pm | Permalink

    John,

    Could you perhaps shed some light on how your observations here relate to the public spending as %age of GDP figures. If the government reaches the OBR predicted 39% for the year 2016-17 this will be a lower figure than all but 2 years of the previous Conservative government – surely a boon for fans of the small state.

    Reply Public spending can grow in real terms and fall as percentage of the total, if the private sector is growing more quickly than the public. It’s not my observation this time – it’s the Treasury figure

  27. JimF
    Posted March 22, 2012 at 9:50 pm | Permalink

    Sadly there are no marks for being right about this. The electorate are happy being lied to by LibLabCon leaders, while folk such as yourself, Hannan and UKIP generally tell it as it is and get ridiculed. This is because PR skills coupled with debt in the hands of Cameron Clegg, Miliband and Co. outweigh the unwelcome truth.

    It is time for the ridiculed to ridicule the leaders themselves, because they have lied. They lied about referenda, spending cuts, growth and tax reforms which haven’t happened.

  28. Winston Smith
    Posted March 22, 2012 at 11:20 pm | Permalink

    Spending is increasing overall but some areas are suffering drastic cuts. I’ve just been on a tour of Portsmouth Harbour. Its like visiting a defeated nation, post war. There are more decomissioned ships than active ones. The Royal Navy will soon be part of an EU-wide force. That is what serving seamen told me.

    Also, pretentious middle-class art galleries in booming London have taxpayer subsidised free admission. Admission to HMS Victory is £21.50! Portsmouth is a fairly depressed region, about to lose much of its Naval industry. It needs tourists more than London.

  29. mart
    Posted March 23, 2012 at 1:07 am | Permalink

    Dear John,

    How is it possible that public spending continues to rise? Where is all the money being spent? I thought the whole country was braced for cuts. It is now “priced in” to people’s expectations. When / where are the cuts going to happen?

    If the cuts aren’t yet happening in earnest (as you keep reminding us), then what will things look like when they DO happen?

    So rather than cutting waste (about which I do not hear much), taxes are being increased on those of us earning a pretty ordinary salary who have children (I am referring to the tax changes surrounding child benefit). It would be better if the government just put a penny or two on income tax; at least that would be honest, easy to understand, and cheap to administer. I can’t imagine the cost that will be incurred by HMRC trying to track down family relationships, aiming to match taxpayer with benefit recipient. Has this been discussed in Parliament yet?

    By the way, I eagerly await your comments on govt road privatisation proposals – I have read with interest your own proposals in the past, and although I did not agree with you (there does not seem to me to be an opportunity for an open market in roads, except in rare and specific examples), they sounded a bit more sensible than what I have heard so far about the govt proposals.

    Kindest regards

    Reply I will write again about roads when I put evidence in to the government about their new plans. They are going to go off and spend some time designing a detailed policy.

  30. uanime5
    Posted March 23, 2012 at 1:22 am | Permalink

    For those interested here are the OBR predictions from 2010 compared to what they currently / actually were.

    2011 has fallen from 2.6% to 0.8%, 2012 has fallen from 2.8% to 0.8%, 2013 has fallen from 2.8% to 2.0%, 2014 and 2015 show no real change. I suspect that 2013-2015 will be revised down to less than 1%.

    http://www.independent.co.uk/news/business/comment/david-blanchflower/david-blanchflower-the-obrs-credibility-is-in-tatters-7580597.html

    • JimF
      Posted March 23, 2012 at 5:51 pm | Permalink

      They just haven’t printed enough new money, that’s the problem. NOT.

  31. Mark
    Posted March 23, 2012 at 6:04 pm | Permalink

    I note the OBR failed to comment on the March 21st public finances release. A large increase in spending, and a drop in tax revenues in February surely merits an explanation.

    http://budgetresponsibility.independent.gov.uk/category/topics/monthly-public-finance-data/

  32. Lindsay McDougall
    Posted March 25, 2012 at 1:08 am | Permalink

    These figures are little less than GDP gowth over the same period, which hardly squares with the Chancellor’s assertion that within a year public expenditure will decline from 48% of GDP to 43% of GDP.

    It is clear that 0% real growth in public expenditure is required for several years. We are not going to get that if we treat health spending, EU contributions and foreign aid as sacred cows.

    Public expenditure was less than 40% in the Clarke years and during Labour’s first term, when they more or less followed Conservative spending plans. It can be done; what’s more it was done by people not regarded as particularly Right Wing. You can argue that health care wasn’t good enough then but most other services were OK.

    And this is also a very good time to strive for zero inflation. Deliver that to pensioners and they won’t worry about losing all their privelidges.

One Trackback

  1. […] wouldn’t think it from glancing at the headlines, but public spending is actually increasing. It was up by 1.5 per cent in 2010, 0.3 per cent in 2011 and is projected to increase by 0.5 per […]

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page