Why did the government borrow so much again?

 

                  The July  figures for public borrowing were disappointing.  The government borrowed an additional £600m in a month when revenues are traditionally strong. The deficit in July 2012 was  £3.4 billion higher than in 2011.

                    There are two very simple reasons why borrowing was up. The first is  a fall in tax revenues.  They collected £0.4 billion or 0.8% less than in July 2011 in cash terms. Allowing for the current inflation rate of 3.2% (RPI) this is a considerable real fall.

                    The second is the continuing growth in spending.  Current spending was £2.4 billion or 5.1% higher than in July 2011. It confirms the pattern of considerable real increases in current public spending, even after allowing for 3.2% inflation. Given the  fact that a public sector pay squeeze is in place, the real increase should be more than this implies. Government investment spending also rose by £0.6bn or 33% on the low July 2011 base.

                     If  the government keeps increasing spending at this rate, there will be too much borrowing. Tax revenues from  self assessment income tax  and capital gains tax are falling because the government has set uncompetitive rates. The Chancellor wisely changed his tax regime for oil and gas in the latest budget, following the fall off in activity  last year from higher taxes. He needs to review all taxes with a view of maximising revenues by setting competitive rates.

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171 Comments

  1. Iain Gill
    Posted August 21, 2012 at 12:52 pm | Permalink

    because thats what they always intended to do, just like on immigration they say one thing and do another

    • me2
      Posted August 21, 2012 at 1:53 pm | Permalink

      5 years of Tory led government should leave us with:

      – more national debt
      – higher public spending
      – increasing immigrant population
      – higher contributions to the EU
      – higher overseas aid
      – destruction of the countryside by wind farms
      – increased enrgy costs due to idiotic energy policy

      you could could carry on for hours, but they say “please vote for us again, we’re trying to change things from the inside”.

      • Timaction
        Posted August 21, 2012 at 6:46 pm | Permalink

        Mr Cameron has shifted his Party so far to the left that they are more socialist than the Labour Party. I think most people out here have wised up to him and Mr Osborne. Neither have any real life experience of anything outside of the Westminster Village and wouldn’t understand the concerns of most people or businesses. He also keeps his clones close to him in office.
        I’m amazed that none of his advisers actually explain the basics to him!
        It makes no difference which of the LibLabCon are in office as its more of the same anyway!! EU puppets one and all.

  2. Posted August 21, 2012 at 1:02 pm | Permalink

    Might the Conservatives now confront the Liberals and say: “Can we actually have an economic policy or do you want to continue making us wreck the country?” Maybe Mr Cameron should bring David Laws back to the treasury, only as chancellor this time.

    • Lord Blagger
      Posted August 21, 2012 at 3:46 pm | Permalink

      Yep, lets put a fraudster in charge.

    • Posted August 21, 2012 at 6:56 pm | Permalink

      Hello Paul.

      Here’s the New Statesman’s perspective on that…http://www.newstatesman.com/blogs/politics/2012/08/hindsight-cables-deficit-reduction-plan-looks-better-osbornes

      from your blog…
      “Conservatives must start to preach tolerance while banning all opposition, making it illegal if necessary. If people argue with us, we should attack them personally while claiming to concentrate on the issues. We need comedians and TV-presenters who ridicule the left while treating rightist crackpots as prophetic visionaries.”
      You are indeed Michael Gove’s ultimate fan it seems.

      • Posted August 21, 2012 at 7:04 pm | Permalink

        Oops sorry that’s a blog on the New Statesman – not the New Statesman’s view.

        • lifelogic
          Posted August 22, 2012 at 9:07 am | Permalink

          It is certainly seems like a lot of boring waffle/drivel by John Pugh the Lib Dem MP for Southport. What on earth is he trying to say. Also why on earth has Southport, of all places, (retired, seaside, northern golf type of), got a Lid Dem MP anyway.

          Thanks to Cameron I assume they could see no difference.

      • Bazman
        Posted August 25, 2012 at 8:07 am | Permalink

        You will need to name a funny right wing comedian first Paul when you told us the name of one we will take you and your silly right wing ideas more seriously and not see you as a crackpot which at the moment is self evident. Your lack of reply to this is telling. The New Statesman as portrayed by Rik Mayall in the 1980’s comedy sound about right. Ram it.

    • lifelogic
      Posted August 21, 2012 at 7:00 pm | Permalink

      David Laws after his expenses problems,(words left out-ed) and well after all the other expenses frauds etc. were exposed (and the general public outrage) should simply resign as an MP.

      He often reminds me of (name left out) He is clearly unsuitable for office and he is also a Liberal too, so wrong on virtually everything anyway.

      • lifelogic
        Posted August 21, 2012 at 7:44 pm | Permalink

        On the positive side he did not study Oxford PPE but apparently went to Kings, Cambridge obtaining a double first in Economics. Mind you Denis Healey had a double first too (Greats) and that gave us 98% tax rates the IMF and lots of other damaging nonsense.

  3. Lindsay McDougall
    Posted August 21, 2012 at 1:10 pm | Permalink

    Tax revenues from self assessment income tax are also falling behind because HM Revenue & Customs haven’t been sending out tax return forms. Despite the fact that I had paid some income tax for earnings in FYR 2010/11, the self assessment office did not send me any forms out this year. Even when I sent them a reminder, they still sent out no forms. In the end, I simply printed out a couple of forms, did my self assessment and enclosed a cheque, and sent the whole thing by registered post. They have now cashed the cheque.

    Mr Redwood, HM Revenue & Customs could have had that money in May had they extracted their digits. It’s the old, old story. You can’t rely on government departments for much, but you can always rely on their sloth.

  4. Iain Gill
    Posted August 21, 2012 at 1:12 pm | Permalink

    So that last failing nationalised industry propped up as ever by the public purse the NHS is being encouraged to work commercially abroad? Do us a favour. Like Rover, British Shipbuilders and so on it should be consigned to history. Why won’t any Conservatives apart from Dan Hannan honestly say how rubbish the NHS is? I myself have had to pay again to see a private GP this week as access to my supposed NHS GP is non-existent, paid out of taxed income. If there are any senior folk in the NHS with spare energy I suggest they get fixing service provision in the rest of the country. I note there is a hospital in Wales that is refusing admission to A & E because they don’t have enough doctors in the papers today. Really? offer docs more money and they will come! Turn the whole thing into a state backed insurance scheme, and get the state out of Stalinist state controlled enterprises. I say this not because I am a raving nutter right winger but because I want to fight for decent service for the patients!

    • Jerry
      Posted August 21, 2012 at 6:46 pm | Permalink

      Turn the whole thing into a state backed insurance scheme, and get the state out of Stalinist state controlled enterprises.

      What do you think N.I stands for Iain?…

      Not that I’m suggesting that the NHS couldn’t be better run, it could, but I very much doubt a Free Market would be any better from the patients point of view, certainly not for A&E anyway. Of course those who want to make money from others miss-fortune, they will love it…

      • zorro
        Posted August 21, 2012 at 7:17 pm | Permalink

        The big joke is that it stands for National Insurance!……However, your entitlement to NHS treatment has nothing to do with your paying this ‘insurance’…….You could have been paying NI all your life, then live abroad for a few years, and come back for a few years and be entitled to nothing…..hardly a good scheme!

        zorro

        • lifelogic
          Posted August 22, 2012 at 9:10 am | Permalink

          Exactly – give us the money now and we might treat you later, if and when we feel like it.

          • Jerry
            Posted August 22, 2012 at 10:37 am | Permalink

            As is the case with any insurance cover – Duh!

        • Jerry
          Posted August 22, 2012 at 9:10 am | Permalink

          Yes Zorro, if you live in the USA for example and stop paying your US health insurance (because you have been living elsewhere and then return) you also stop being able to access those same services, so what is any different?

          In the USA I don’t think a returning US citizen (passport holder) would be denied treatment, although it might be very basic, a UK citizen will be treated just as the next person in practise…

          “Health Tourism” is another issue altogether and yes it needs sorting.

          • zorro
            Posted August 22, 2012 at 10:33 am | Permalink

            But in the USA you would be able to continue paying a premium for overseas cover and be treated when you went back to paying premiums in the USA. You can’t do that with NI, and I know of several cases as I described where people have not received treatment because of residency rules after paying NI for donkeys years.

            zorro

          • Jerry
            Posted August 22, 2012 at 1:19 pm | Permalink

            Oops, that was a bit ambiguous

            …a UK citizen returning to the UK will be treated by the NHS just as the next person, in practise…

          • Jerry
            Posted August 22, 2012 at 3:48 pm | Permalink

            @Zorro: “You can’t do that with NI, and I know of several cases as I described where people have not received treatment because of residency rules after paying NI for donkeys years.

            Is it really not possible to carry on paying NI “stamps” if abroad, or have these people chosen to allow their payments and thus ‘cover’ to laps?

          • zorro
            Posted August 22, 2012 at 7:19 pm | Permalink
      • Iain Gill
        Posted August 21, 2012 at 7:48 pm | Permalink

        yes A & E needs special setup, but could be state regulated/subsidised without being state run

        we need proper minors clinics in competition to each other in the big cities, so when you get agony from say ear ache in the middle of a bank holiday you have somewhere to go other than a long A & E queue where they will regard you as too trivial to bother with

        for elective stuff we need the buying power in the patients hands, yes it would improve service levels – just as i may always go to the same supermarket the fact everyone has a choice and many move forces all supermarkets including mine to constantly optimise. it is good for those customers even those who do not use their ability to move. but you need to be able to take your money elsewhere when you see you are surrounded by dirt, being held waiting all day, and so on in immediate terms and the money needs to follow the patient so the providers feel the pain of someone being so upset they walk out in their pockets.

        everybody needs to make money, making money helping people is noble. being paid to be another body in a rubbish health provider like the nhs where the customers have to take it or leave it must be soul destroying, just likes the rice production managers in Maos China – and all the incentives will lead to false stats in the same way too.

        lets be honest the nhs produces the worst heathcare in the developed world why is it treated like a national relegion by the media class and political bubble?

    • uanime5
      Posted August 21, 2012 at 7:17 pm | Permalink

      Firstly all GPs are private. They’re contractors who sell their services to the NHS but they’re not part of the NHS.

      Secondly unless you can magically increase the hospital’s budget they can’t offer more doctors higher salaries.

      Thirdly even if you offer doctors more money this doesn’t guarantee that any doctors will be prepared to work in this hospital (especially if they have to move).

      Fourthly if you don’t increase the overall number of doctors all your plan will do is reduce a shortage of doctors in one hospital by creating a shortage in another hospital. Thus the problem isn’t fixed but moved.

      • lifelogic
        Posted August 22, 2012 at 9:14 am | Permalink

        You get the doctors and get hospitals to work efficiently also make the money follow the patients and get rid of layers of incompetent management and the lawyers.

        Also get rid of quack medicine and vanity treatments.

    • Nina Andreeva
      Posted August 21, 2012 at 7:19 pm | Permalink

      You have got to be kidding end socialised medicine? I presume you are not some PPE student and have actually worked for living? if you are I suggest you visit a website of one of the American insurance companies and find out just how expensive coverage in the USA, provided they will offer cover if you have any pre-existing conditions.

      I would prefer not to have to shell out another £500 per month and still have access to the NHS world class medics. Remember nobody in the UK has been made bankrupt due medical bills. Also Danny Boy probably does not use the NHS because just like his colleagues in the US Congress, the European Parliament provides him with private care again on the backs of the taxpayer.

      • lifelogic
        Posted August 22, 2012 at 9:15 am | Permalink

        “Remember nobody in the UK has been made bankrupt due medical bills” – no but very, very many have just died due to poor treatment.

        • uanime5
          Posted August 22, 2012 at 5:35 pm | Permalink

          Just like in the USA when health insurance companies send people to the cheapest clinic/hospital available.

        • Bazman
          Posted August 25, 2012 at 8:10 am | Permalink

          In America no insurance or the wrong insurance would mean in many cases of dying of no treatment. Checking your insurance or means to pay before checking your pulse? You know that is what would happen.

      • zorro
        Posted August 22, 2012 at 10:37 am | Permalink

        What about France or Germany?

        zorro

        • zorro
          Posted August 22, 2012 at 12:37 pm | Permalink

          It’s not always only credit card health care or NHS style treatment. There are other perfectly sensible options.

          zorro

          • Bazman
            Posted August 25, 2012 at 3:54 pm | Permalink

            Which in this country will lead to credit card health care. Count on it.

    • Mark
      Posted August 21, 2012 at 11:56 pm | Permalink

      The Welsh Assembly is responsible for running the Welsh NHS. From what I hear they aren’t making too good a job of it.

    • Lindsay McDougall
      Posted August 23, 2012 at 1:35 pm | Permalink

      Making health care free at the point of consumption quite literally encourages us to be irresponsible about our health. For example, I’ve been overweight for over 25 years and no-one is to blame but myself. Perhaps if there had been charges for hospital treatment I might have done something earlier.

      There are people who are chronically sick through no fault of their own. Charities set up by GP surgeries and by hospitals (with good tax breaks) could assist in funding the treatment of such people. Discretion would lie with the charities; they might choose not to fund abortions or liver transplants for alcoholics.

      • Bazman
        Posted August 25, 2012 at 8:16 am | Permalink

        Just silly. You assume that many see a connection with their health and their bank balance. Interesting right wing way of thinking about illness and who’s ‘fault’ it is. Taken to it’s conclusion everyone who is ill is to blame. You are going down the road of the American right. All abortions in any circumstances? Like most right wing fantasists you have not thought your ideas through.

  5. Richard
    Posted August 21, 2012 at 1:31 pm | Permalink

    In business our budgets were always set to allow for the unfortunate fact that sales figures often came in lower than expected and purchasing costs often ended up more than expected.
    Shame the Government doesn’t do this as it seems their tax revenues are less than expected and their spending is more than expected.
    These figures are alarming compared to the same month last year and in a Company faced with figures like these showing accelerating losses of sales combined with increasing costs immediate radical action would be taken.

    They need to cut away non essential elements of the State, reduce the top salaries in the quangocracy, reduce tax rates to maximise revenues and reduce payments to the EU and overseas aid to name just a few things they could quickly do.

    We are borrowing over £10 billion a month, adding to a debt soon approaching a trillion.
    When is the Government, the BBC and others going to grasp what needs doing and wake up?

    Reply: In many businesses forecasting costs is easy and you can manage them to stay on budget. Forecasting business revenues is far more difficult.

    • The Realist
      Posted August 21, 2012 at 5:09 pm | Permalink

      But it did not take the brain of Britain John to see where the risk was with Government policy on taxation, as I and many other commentators on this site have mentioned time and again over the last 2 plus years.

      • zorro
        Posted August 21, 2012 at 7:19 pm | Permalink

        They have been warned continually that they were setting tax rates which were discouraging activity….they are paying the price.

        zorro

      • lifelogic
        Posted August 21, 2012 at 7:54 pm | Permalink

        The risks are very clear – you increase tax rates to these sort of percentages, increase the mad regulations and employment laws, and the businesses cannot get any sensible bank lending, and confidence is very low already then you get even less revenue, more claimants and fewer cash cows to milk and bleed next month.

        The likely prospect of Labour, after this socialist rabble, in 2015, does very little for confidence too I find.

        • Bazman
          Posted August 25, 2012 at 8:24 am | Permalink

          Which employment laws? You cannot keep mentioning mad employment laws without specifically naming them and you cannot keep on with your blind beliefs that tax cuts create jobs. Where is your evidence of jobs created by the cutting of the top rate?
          Without naming or giving any evidence you statements are right wing religious, polluting fox news nonsense. Fatalistic, self seeking, race to the bottom, hereditary system supporting religious middle aged male claptrap no less. Ram it.

    • uanime5
      Posted August 21, 2012 at 7:19 pm | Permalink

      Reducing tax rates never maximises revenues. Reducing tax avoidance and evasion will.

      • lifelogic
        Posted August 22, 2012 at 9:17 am | Permalink

        How much (legal) work would you do if tax rates were 99%?

        • uanime5
          Posted August 22, 2012 at 5:36 pm | Permalink

          As much as I needed to live on and no more.

        • Bazman
          Posted August 25, 2012 at 8:27 am | Permalink

          They are not 99% and if they where you would have to be earning the maximum amount. You forget who sets the laws too and the exodus from London is not happening is it? How do you think they earn so much?

          • lifelogic
            Posted August 25, 2012 at 4:33 pm | Permalink

            Non doms, already rich or have good tax planners.

      • zorro
        Posted August 22, 2012 at 12:40 pm | Permalink

        What nonsense, there are plenty of examples of countries reducing tax rates and then getting higher tax returns……Why don’t you advocate tax at 100%, give me some pocket money and nake done with it, because according to your logic we will reach a state of nirvana of no tax avoidance and everything will be hunky dory….

        zorro

        • uanime5
          Posted August 22, 2012 at 5:42 pm | Permalink

          So by your logic a lowering taxes to 0.1% would raise the most tax revenues. Care to name some countries where that has worked.

          Also can you name some countries where reducing tax rates resulted in higher tax revenues because George W Bush tried this for 10 years in the USA and it didn’t work. It seems the wealthy don’t create jobs because when give tax cuts, instead they get richer.

          Finally tax revenues increase when more people are working or are working longer hours, not because people pay less taxes.

          • zorro
            Posted August 22, 2012 at 7:23 pm | Permalink

            I think you know that I was using hyperbole. Try understanding my argument and read the Adam Smith link I posted further down the thread.

            zorro

          • Bazman
            Posted August 25, 2012 at 8:30 am | Permalink

            They need to produce some evidence that tax cuts produce jobs and not just less revenue. You are right that they quote 99% tax but seem not to be able to quote the good of little tax. Wonder why?

  6. A.Sedgwick
    Posted August 21, 2012 at 1:31 pm | Permalink

    I sense that the Euro demise is being used in the same way that Gordon Brown blamed America and the “credit crunch” for our ills.

    Equally Osborne’s budgets have had the same misplaced and cavalier optimism of Brown’s.

    The deteriorating situation will continue and there is no real escape route. Cameron and Osborne were the wrong men for the time and they have delivered in spades.

    There is a forlorn 10,000 – 1 shot that the real Conservative Party, say 100 MPs and UKIP will merge and give the next election a real go at beating Labour. Otherwise it is downhill to Mr.Ed as PM.

    • Boudicca
      Posted August 21, 2012 at 3:11 pm | Permalink

      I seriously doubt that there are 100 Conservative MPs with the guts to do what is necessary. They all put their individual careers before the country – and whilst Cameron is PM there is still a hope that they may get a Ministerial pension, if only they stay in the party and keep their heads down.

      We are going to get Ed as PM and the best we can hope for is that the Conservative Party fractures after going down to a bad defeat in 2015 and the EU sceptics finally see that the only hope of governing again is to unite with UKIP.

      Reply: Around 100 Conservative MPs rebelled on the EU, rebelled on Lords reform and rebelled on windfarms. I think you underestimate the feelings in the Parliamentary party about these issues.

      • Boudicca
        Posted August 21, 2012 at 3:59 pm | Permalink

        But not enough for even ONE to take the step of leaving the Party and becoming and Independent Conservative, let alone join UKIP.

        All mouth and trousers …. apart from the ones in skirts.

        Reply A move which would achieve nothing, leaving the voting balance in the Commons just the same on EU issues.

        • The Realist
          Posted August 21, 2012 at 5:16 pm | Permalink

          Sadly John, it will be too late for this country when the Tory party finally see the light , recognise their guilt and complicity in the great European project. Sometimes you need a serious breakaway to change Politics forever, the current lot of conservatives really do beggar belief in their priorities. It should be Country, Constituency and finally Party in that order. In most , though certainly not all, it is me , me , me . You are one of those exceptions let me say , though more circumspect I feel than you used to be in your more fiesty years.

          • zorro
            Posted August 21, 2012 at 7:23 pm | Permalink

            John may have mellowed with years, but perhaps he is keeping his powder dry?

            zorro

        • Acorn
          Posted August 21, 2012 at 6:49 pm | Permalink

          All mouth and trousers …. apart from the ones in skirts”

          That reminds me, I wish to start a Cloe Smith MP Protection Society. The poor cow was wheeled out again to take the flak for Osbo’. As an expert management consultant at the age of 25 – LOL. Economic Secretary ten minutes after she sat on a green bench – LOL. She really should be in charge and let Osbo’ go back to the wallpaper factory.

          JR, you did not look confident on the box this lunch time; should I worry?

          • zorro
            Posted August 21, 2012 at 7:25 pm | Permalink

            Cast Elastic thought that she was an accountant…

            zorro

        • Boudicca
          Posted August 21, 2012 at 7:12 pm | Permalink

          I would send a clear signal which others might then rally around. they can still vote with the Government on most issues – but not when British interests are betrayed in the interests of the EU.

          But not one of the cowards will do it.

        • lifelogic
          Posted August 21, 2012 at 7:58 pm | Permalink

          To reply: clearly JR is right here a move to UKIP is pointless indeed worse than pointless under the current voting system.

          • BobE
            Posted August 22, 2012 at 12:30 pm | Permalink

            Lifelogic, I disagree. If UKIP gains a lager vote % it might send a message to the wide eyed federalists.

          • lifelogic
            Posted August 25, 2012 at 4:35 pm | Permalink

            It might but it would be too late anyway.

      • Atlas
        Posted August 21, 2012 at 4:09 pm | Permalink

        John,

        Is there a similar feeling in the Conservative Party’s MPs about the evident failings with the European Arrest Warrant?

        The EAW is another piece of bad EU legislation meekly enacted by this administration. Is David Davies the only MP concerned with UK Civil Liberties?

        Reply No, lots of us are concerned and there are various opponents of the EAW including myself

        • lifelogic
          Posted August 22, 2012 at 9:20 am | Permalink

          The EAW is a total outrage as are the US arrangements.

          • Rod
            Posted November 25, 2012 at 7:03 pm | Permalink

            The EAW is a very good way of tackling big time crime which transcend borders. Does organised crime and the criminals respect individual boundaries. Of course not!!
            At another level the EAW enabled us to extract from France the Eastbourne teacher who allegedly abducted one of his pupils with the minimum of delay. By contrast the treaty with the USA is one sided and unfair.

        • Atlas
          Posted August 22, 2012 at 9:43 am | Permalink

          Thank you for the reply. I’m heartened to know that you and others are concerned.

  7. alan jutson
    Posted August 21, 2012 at 1:45 pm | Permalink

    “Why did the Government borrow so much again”

    Because spending is out of control !

    Tax Income is too low, because tax rates are too high.

    All of the growth is in the alternative economy, so the government gets no taxes at all !

    Why is it that people with an expensive education cannot understand this ?.

    Because they do not live in the real world, or mix or talk with people who have to budget their own spending, and live within their own means.

    Because those in charge do not have a clue as to how to run their own family budget let alone a business or a country.

    Recent Quote from Mr Miliband to a question about household finances from the Press:

    “My wife handles it all, but I think we have an overdraft”.

    HE THINKS THEY RUN AN OVERDRAFT. !!!

    Recent quote about the cost of a pint of milk from a number of MP’s

    Not sure, about 50p, 45p

    Not one of them realised it is sold in LITRES.!!!!

    • alan jutson
      Posted August 21, 2012 at 4:14 pm | Permalink

      Once again I repeat what I have repeated so often before.

      You cut your spending to suit your income.
      Just like millions of us out here.

      You base all of your calculations on KNOWN FIGURES.
      Not pie in the sky calculations, and if only with a following wind, whims and fancies.

      Spend only 80% of the last years ACTUAL TAX TAKE, and you will never be in debt. Indeed you can even start payinmg off debt.

      It is so bloody simple.

    • scottspeig
      Posted August 22, 2012 at 11:11 am | Permalink

      I still get my milk in pints – just saying.

    • Bazman
      Posted August 25, 2012 at 8:32 am | Permalink

      Tax Income is too low, because tax rates are too high. Where is you evidence? Maybe it is to low because there is not enough jobs and not because of high tax rates.

  8. Mick Anderson
    Posted August 21, 2012 at 1:46 pm | Permalink

    Why did the government borrow so much again?

    Because they find it easier than managing the economy properly!

  9. adams
    Posted August 21, 2012 at 1:48 pm | Permalink

    Very restrained John . The opportunity to fulminate is resisted . A four letter tirade would have been very understandable. LOL . Is it any comfort that the Liebour mob would be just as incompetent ? These EU puppet parties are all the same really .
    Don’t you think ?

  10. Daniel
    Posted August 21, 2012 at 1:49 pm | Permalink

    What does Mr Redwood recommend the tax rates should be? Why hasn’t the 45p rate made a positive difference?

    Reply The 45p rate is not yet in force. I suspect 40p is nearer the tax maximising rate.

    • Bob
      Posted August 21, 2012 at 7:08 pm | Permalink

      Reply to reply.

      Correct Mr. Redwood, 45p was a feeble sop to mollify the few remaining conservatives in the Tory Party.

      It should have reverted to the tried and proven 40p rate, which is the rate that Brown was happy to keep in force until he was kicked out.

      If there aren’t enough conservatives left to oust the pathetic duo, then you may as well move to UKIP. Leave the wets to the Lib Dems.

      • zorro
        Posted August 21, 2012 at 7:28 pm | Permalink

        Try lower…..35%

        zorro

        • Bazman
          Posted August 25, 2012 at 8:34 am | Permalink

          Why not 5% or nothing?

          • zorro
            Posted August 25, 2012 at 3:33 pm | Permalink

            I knew we’d bring you round to low taxes…hahaha…..but seriously folks, the state does need some revenue for services but smaller taxes means that people can provide for themselves more efficiently.

            zorro

          • Bazman
            Posted August 25, 2012 at 6:57 pm | Permalink

            Not if you are on national minimum wage or as many are against this, even less.

      • Bazman
        Posted August 25, 2012 at 8:33 am | Permalink

        Where is your evidence? You cannot just ‘feel’ 40p is right.

  11. Denis Cooper
    Posted August 21, 2012 at 2:03 pm | Permalink

    It’s OK, the ECB is going to print as much money as may be needed to Save the Euro, and when the economy of the eurozone picks up that will help ours as well.

    Later, the eurozone will expand and eventually engulf us, but that’s further in the future.

    • zorro
      Posted August 21, 2012 at 7:31 pm | Permalink

      Denis,
      You know the script 🙂 …..but will Cast Elastic have the chance to get the UK into the Euro?

      zorro

      • Denis Cooper
        Posted August 22, 2012 at 9:13 am | Permalink

        I don’t envisage that Cameron would still be Prime Minister when a future government argued that our anomalous position inside the EU but outside the euro had become increasingly untenable, as we headed towards there being maybe forty EU member states and only the UK was still refusing to adopt the EU’s currency as it obviously should; and faced with continuing, unreasonable, ignorant public opposition that government of whichever party then decided not to take the risk of holding a referendum, but instead bounced us into the euro just through an Act of Parliament without any referendum, “notwithstanding Section 6(5)(e) of the European Union Act 2011”.

        As the EU treaties stand it might take ten years or it might take thirty before sterling was consigned to history along with the other national currencies, but Cameron is following in the footsteps of Major by doing his best to make sure that it will happen eventually.

    • Mark
      Posted August 22, 2012 at 12:24 am | Permalink

      No-one will need to save Euros if they’re going to print them like that….

      They may prefer to save in gold and other commodities instead though.

      • Denis Cooper
        Posted August 22, 2012 at 9:32 am | Permalink

        Well, the Bank of England has now printed £343 billion, equivalent to nearly a quarter of GDP, and that’s added a bit to domestic inflation but the external value of sterling has nevertheless risen; so on that basis the ECB could easily get away with creating a couple of trillion euros, which should be enough to keep the distressed states in the eurozone.

        It would have to be enough to have the effect of spreading enough of their debts and losses across the whole eurozone population, contrary to all the political promises made at the time of the Maastricht Treaty and the legal prohibition which is still enshrined in the present EU treaties.

  12. startledcod
    Posted August 21, 2012 at 2:15 pm | Permalink

    The question in my mind for which I just cannot find an answer is why the Chancellor has not set out to maximize revenues. One does not have to be a slavish follower of Laffer to understand that high tax rates reduce income. If 50% or 45% really were to produce more income how come Gordon Brown, the tax accumulation Master didn’t introduce them until he was packing?

    A couple of years ago, the top 1% of tax payers used to pay over 25% of income tax. It is a fact that the further up that 1% one goes the more mobile the money becomes; suppose 0.1% of tax payers decide that they don’t like the rates and the constant bash the rich rhetoric choose to vote with their feet and pay their taxes where they are welcome, it’s probably a fair prediction that over 12% of the tax would disappear, I fear that has already happened.

    So I return to my question, why does George Osborne not set rates that get the rich to pay more rather than less tax? Could it be that he fears the ‘George gives tax cuts to his rich mates’ headline more than he fears bankrupting the country.

    John I would be keen to hear your views.

    • startledcod
      Posted August 21, 2012 at 4:24 pm | Permalink

      If Michael Gove were Chancellor he would set the rates correctly and then painstakingly take to the airwaves to explain he had done it exactly because he wanted the rich to pay more tax. Furthermore he wouldn’t allow whiny BBC interviewers to portray it as a tax cut for the rich.

      • uanime5
        Posted August 21, 2012 at 7:29 pm | Permalink

        This might surprise you but the majority of the people in this country aren’t so stupid that they’ll believe giving the wealthy lower taxes will increase tax revenues. Especially when they receive higher levels of tax to maximise tax revenues.

        • Bazman
          Posted August 25, 2012 at 8:35 am | Permalink

          They don’t believe it for one second.

    • uanime5
      Posted August 21, 2012 at 7:27 pm | Permalink

      Real evidence shows that high tax rates don’t reduce tax revenues. The Laffer Curve, the trickle-down effect, and other such nonsense are trotted out whenever the wealthy need to justify their tax cuts.

      The only way to get the rich to pay more is to close tax loopholes, not give them tax cuts.

      • zorro
        Posted August 22, 2012 at 12:56 pm | Permalink

        Real evidence which you never seem to quote…..

        zorro

        • uanime5
          Posted August 22, 2012 at 5:45 pm | Permalink

          Well have you gotten richer because the wealthy have had tax cuts or from the trickle down effect resulting from banks being giving huge bailouts? Thought not.

          Also where’s your evidence that the Laffer Curve and the trickle-down effect work?

          • zorro
            Posted August 22, 2012 at 7:25 pm | Permalink

            Come on uanime5, two posts further down the thread. Not too far to go…..

            zorro

          • Bazman
            Posted August 25, 2012 at 8:37 am | Permalink

            Their most fundamental belief is the trickle down effect. Sparrows and horses theory is a more likely outcome.

  13. Antisthenes
    Posted August 21, 2012 at 2:21 pm | Permalink

    There really is a Laffe curve. The left of course will never admit that of course they say that you can squeeze the rich until they squeak. The Laffe curves has just as much effect on those lower down on the income scale. We have been here before. The rich cut and run, productivity falls as workers work less overtime and the black economy expands. Nobody not even a Conservative lead coalition learns from past mistakes.

    • uanime5
      Posted August 21, 2012 at 7:30 pm | Permalink

      The right will never admit why the Laffer Curve is only ever used to justify tax cuts for the wealthy but never for the poor.

      Also the rich can’t cut and run, as was clearly demonstrated when the USA had a 98% tax rate for the wealthy.

      Reply: I want tax cuts for all

      • zorro
        Posted August 22, 2012 at 12:53 pm | Permalink

        Don’t you mean when the UK had tax on unearned income at 98% in the 1970’s…….The US has never had such a ridiculous tax rate. They would have the state militia out against the federal government!!

        Anyway, it gives me a chance to disprove your soak the rich theory……http://www.adamsmith.org/80ideas/idea/67.htm

        You really do shoot yourself in the foot sometimes…..

        zorro

        • uanime5
          Posted August 22, 2012 at 6:12 pm | Permalink

          You really should try doing real research before criticising others. All you’re doing is highlighting your lack of knowledge.

          Below is a Wikipedia article detailing the levels of income tax in the USA. While at it’s highest it was 92% between 1944 to 1963 it was 91% or higher. Also between 1965 and 1982 it was 70%. So your claim that the USA would never accept a high level of income tax is completely wrong. Next time check your facts Zorro as you’re only embarrassing yourself.

          http://en.wikipedia.org/wiki/Taxation_history_of_the_United_States#Development_of_the_modern_income_tax

          Regarding the website you posted it’s complete nonsense. The writer makes no effort to assess why the level of tax revenues changed and attributes it solely to the tax levels without considering any of the other factors that were involved; such as inflation, an increase in population, and the massive pay rises for senior executives.

          Every point made by this author about taxes increases from the wealthy can be explained by the wealthy paying themselves a higher salary, for example the wealthy paid 10% more in taxes because they increased their salaries by 10%. This would explain why the author couldn’t find any examples of tax revenue increases when the taxes of the non-wealthy were lowered.

          Finally the top 1% only pay 27.5% of the tax revenues when they have 27.5% or more of the wealth. Let’s face it when 10% of the population has 57.2% of the total wealth (5.72% each) this means 90% of the population have 42.8% of the wealth (0.476% each), so most of the country is poor. High levels of income disparity are never good for a country as they result in high levels of crime, low education levels, and the glorification of celebrities rather than professionals.

          • zorro
            Posted August 22, 2012 at 7:56 pm | Permalink

            You stated that it was 98% so check your own facts. At what salary level did the US high tax rates kick in, and on what proportion of income. Were they federal or state taxes?

            zorro

        • Bazman
          Posted August 25, 2012 at 8:38 am | Permalink

          Aa I said sparrows and horses nonsense. You assume the rich will invest in things that produce jobs and taxes.

  14. lojolondon
    Posted August 21, 2012 at 2:28 pm | Permalink

    £15 Billion to the EU + £17 Billion on ‘foreign aid’ = £32 Billion totally wasted.

    We need a government that will ‘take the difficult decisions’ as Brave Dave said – well, we are still looking for that government!

  15. Atlas
    Posted August 21, 2012 at 2:29 pm | Permalink

    Osborne has painted himself into the corner. He made a big play of sounding tough and resolute in the early days of this administration. Now, when things have not turned out as he hoped, he is stuck, with his own words coming back to haunt him.

    He fell into the Gordon Brown trap of wanting the No. 10 position so much that all his political scheming took over from the day job.

    Cameron likewise is now stuck with Osborne; so it seems that we are going to go nowhere fast.

  16. Matthew
    Posted August 21, 2012 at 2:37 pm | Permalink

    The trajectory is wrong – Course correction required

  17. Auror
    Posted August 21, 2012 at 2:41 pm | Permalink

    It would be extremely helpful if Mr.Redwood could provide some explanation or indication of why spending is 5.1% higher than spending in July 2011. Was this in line with the Chancellor’s plan or is this an unanticipated change of course? The precise behaviour of the economy, and thus tax receipts is not, as such, under the control of the government. One would hope that spending is. Why is spending going up and up, as Mr.Redwood claims, and why is does this seem to be so unstoppable. Can it really be that the elected government is unable to control this?

    Reply: the planned rise in current spending this year was 2.7% in cash terms. Benefit spending has been particularly buoyant, but there are various overruns.

    • zorro
      Posted August 21, 2012 at 7:35 pm | Permalink

      It also doesn’t help that welfare spending went up significantly, not helped by the fact that benefits were updated at 5.2%…..

      zorro

  18. lifelogic
    Posted August 21, 2012 at 2:45 pm | Permalink

    Indeed, entirely predictable. You cannot keep bleeding the productive without many of them giving up, taking it easy, claiming benefits or just leaving so they do not have to carry the bloated state sector any more. At least get the tax rates down to maximum revenue levels perhaps 35% of GDP then get them down further to maximum benefit for maximum number of people, perhaps just 20% of GDP. Spending nearly 50% of GDP on so called public “services” of little real value to many and transfers to the feckless is just absurd.

    Do something on regulation (in the right direction for a change) and get easy hire and fire in place. The Tories are two years late acting already.

    • Bazman
      Posted August 25, 2012 at 8:44 am | Permalink

      In my travels I meet a few people and one person I met is a financial fixer for Arab sheiks sons. He basically wipes their arses financially. Telling them they have no money, what they need to sell to get money, buying/selling property and so on. Many of these Arabs have no money themselves and are being lent money to fund their lifestyles by banks relying on their families to repay the loans. Sensible banking investing in the good of the country by helping the wealthy? Ram it.

  19. Spartacus
    Posted August 21, 2012 at 2:56 pm | Permalink

    I can tell you, since the Tories have followed a policy to crush us little people who have saved, many saving for a first home, who have tried to provide for ourselves, old age, child costs etc… I will not be voting for todays party of ‘self reliance, hard work and sound money’.

    Furthermore, I have come to the conclusion that the 16% of capital savers have lost since 2007 through a policy of interest rates held below inflation, is simply a policy which has been engineered to reward the rich: The Landlords and BTL empires, Bankers whose gains have risen and other well connected types at the expense of us little people.

    I now moved my stance from one of self reliance, independence, moral attitude of providing for oneself etc….the ‘so called’ conservative core values, and have moved to one of considering that the whole system is utterly and totally corrupt and saving for the future is simply a con game of huge and immense proportions.

    So, for savers like us,victims of such Tory mugging – the bigger the welfare state the better(after all saving for your future is for total mugs). In fact, even better would be a party that would CRUSH the RICH to pay for it.
    Many of us savers will vote accordingly. Oh-Savers getting fleeced outnumber debtors by 6-1. Bye bye Conservatives.

  20. Boudicca
    Posted August 21, 2012 at 3:07 pm | Permalink

    We have been fed a lie that there are massive cuts in government spending – which the BBC has propagandised on behalf of the government – whilst anyone who follows any of the serious commentators knows that spending is increasing in real terms just like it would have under a Labour Govt. It is only the rate of increase that is marginally lower.

    The Government/Treasury is killing the economy. We need real cuts in spending. We need the bonfire of the Quangos which has been much talked about, but not delivered. And we need both simplification of the tax system and carefully targeted tax cuts.
    Cameron, meanwhile, is content to transfer more £millions to the EU by way of membership fees plus all the associated costs; more £billions in Aid and more £billions for the climate change scam – paying the elite with the taxes and levies paid by the ‘little people.’

    Cameron is persuing virtually the same social democratic policies that his hero Blair espoused. He and Osborne are part of the problem – along with Clegg, Cable, Miliband and Balls. They are not the solution.

    We need the UK State – and the EU – off our backs.

  21. Adam5x5
    Posted August 21, 2012 at 3:11 pm | Permalink

    Are you really surprised Mr. Redwood?

    I can’t see anything changing until the markets force a change by realising that nothing will change until the government cannot borrow so cheaply.

    Unless the government changes it’s financial policy sharpish, there will come a point when we can no longer borrow cheaply and we end up defaulting.
    I would rather we didn’t, but the way we are going I can’t see any other outcome.

    I’ve said before many a time how to solve these problems.

    1. Cut tax significantly
    2. Cut spending significantly
    3. Cut regulation

    An EU referendum would help as we would then be able to get out from under their regulatory burden as well (assuming we left).
    How about we cut foreign aid as well to places like India and China?

    The way this government is behaving is atrocious.
    Do you actually believe that Cameron is a Conservative Mr. Redwood?
    From where I’m sitting, he sure doesn’t act like one…

    • Bazman
      Posted August 25, 2012 at 8:46 am | Permalink

      What if the cuts produce a downturn? It will not as you religiously believe? Yeah right. Which regulations specifically? Hire and fire by any chance? Health and safety? Ram it.

  22. CG
    Posted August 21, 2012 at 3:18 pm | Permalink

    Ah yes, but if we’d introduce the Robin Hood Tax… Then again, that would hurt your friends too much… 0.05% is too much to ask.

    • outsider
      Posted August 21, 2012 at 6:46 pm | Permalink

      Dear CG,
      I assume that you are referring to a tax on “financial transactions”. Personally, I would favour such a tax if it were set to maximise long-term tax revenue and applied to cut the UK deficit. Unfortunately, this is most unlikely to be the case.

      1) Many of those who propose such a tax want to slash the number of financial transactions, particularly speculative transactions, computerised trading, derivatives and so on. They want to stop things rather than raise money. Bear in mind that UK share purchases are already taxed at 0.5 per cent and house purchase at anything from 1-7 per cent. So a general 0.05 per cent tax the tax could actually cut revenue.

      2) The phrase “Robin Hood tax” was coined by those who wanted the proceeds to be pooled globally and used solely for the benefit of poor countries. Bear in mind that most rich countries do not spend as much (proportionately) on aid as the UK.

      3) The European Commission wants such a tax to be a “European” tax, with revenues accruing to the Commission as “own resources” to fund new or better EU spending programmes. Bear in mind that about three quarters of this tax revenue would come from the UK.

      4) The tax would only work if all other countries that do or could compete as centres for financial transactions played along with the scheme. Bear in mind that the US, Switzerland, Singapore, the UAE and China/Hong Kong (to name a few) are unlikely to agree.

      • uanime5
        Posted August 21, 2012 at 7:38 pm | Permalink

        1) How much revenue does speculative transactions, computerised trading, and derivatives generate? If it’s a low amount then any loss will be offset by the gains made from the additional revenues.

        3) The EC stated publically that all the money raised in the UK could be spent in the UK. Your Europhobia will not change this.

        4) As long as people want to trade with the EU it’s irrelevant what taxes the other countries wish to introduce. This taxes effects all trades involving the EU whether you’re in the UK, Germany, USA, or China.

        • outsider
          Posted August 22, 2012 at 9:34 am | Permalink

          Dear Uanime5,
          How dare you call me europhobic. What evidence have you?

          • outsider
            Posted August 22, 2012 at 2:56 pm | Permalink

            Dear Uanime5,
            If we can switch from name-calling to argument, I guess that your second point refers to an EC’s new compromise offer of March23 this year. It suggests that one third of revenue raised by an FTT initiated in 2014 could be retained in the country in which it was taxed. The remaining two thirds would become EU “own resources” and that this could lead to members states contributions taken as a percentage of Gross national income (GNI) could be cut by half in 2020. This relies on an assumption that the revenue will rise “in line with GNI” from E57 billion to E81 billion by 2020, which is open to question. The illustrative cuts in GNI-based contributions are E10.8 billion for Germany, E8.8 billion for France and E7.7 for the UK. The reduction in posited UK contributions is equal to 14 per cent of the total posited reduction of E54 billion. So even this compromise offer was not, I think, quite what you suggested. These posited reductions, of course, do not allow for any increase in the pro rata EU budget in 2019-20.

        • Winston Smith
          Posted August 22, 2012 at 2:24 pm | Permalink

          Your posts are full of lies, but no.2 is clearly ridiculous. If certain posters continue to post lies, the moderators should ask them to link all their claims in future. Otherwise, the site acts as propoganda for those deliberately trying to mislead.

          • uanime5
            Posted August 22, 2012 at 6:32 pm | Permalink

            Just because you don’t like something doesn’t make it false.

            Besides if John required everyone to prove what they claimed most of the commentator wouldn’t be able to post because they don’t have any evidence.

          • zorro
            Posted August 22, 2012 at 7:30 pm | Permalink

            Uanime5,
            It doesn’t stop you demanding proof from others though if it doesn’t agree with your views…..

            zorro

          • Bazman
            Posted August 25, 2012 at 8:48 am | Permalink

            The right wing religious belief, but only when that belief applies to others. Sound about right? It should as it is.

    • Bob
      Posted August 21, 2012 at 7:25 pm | Permalink

      @CG
      0.05% would be the thin end of the wedge.

  23. Ferdinand
    Posted August 21, 2012 at 3:45 pm | Permalink

    It’s the same old problem ‘ – Governments spend, because there is no personal penalty to the minister concerned. If a minister was told that he loses his job if he spends more than x he will not spend more than x. There are exceptions which is what the cabinet is for. Otherwise overspend and your head will role. Cameron doesn’t have the strength to do this because he is weak and has never run a business.

  24. Lord Blagger
    Posted August 21, 2012 at 3:47 pm | Permalink

    Admit to the debts.

    Send everyone a statement with their share of the mess.

    Then you will get pressure for change.

    However to quote you

    “That’s not the way it works”

    Quite, it isn’t working is it?

    • zorro
      Posted August 21, 2012 at 7:39 pm | Permalink

      It’s not my debt. I don’t owe a penny, and won’t pay for the feckless.

      zorro

  25. Derrick Wilkinson
    Posted August 21, 2012 at 4:05 pm | Permalink

    It’s really quite funny – in a not very funny sort of way. When Osborne increases taxes and closes tax loopholes, everyone howls with outrage. Various proposals in the last budget come to mind, as well as the current calls for reductions in petrol duty. Likewise when anyone proposes cutting spending, whoever is affected by that howls with outrage. And the media are always there to ensure those howling have the best possible public platform. So when the budget remains out of control we have to ask: do we too bear some of the responsibility? The answer always seems to be to increase someone else’s taxes and/or cut someone else’s spending. The government have failed to show the political courage needed at this time, but perhaps we should all share a little of the blame.

  26. Posted August 21, 2012 at 4:21 pm | Permalink

    A 5.1% increase in spending is really quite alarming, as is the continued high inflation. I would say the government is failing in three ways here – failing to rein in costs, of course, failing to push the MPC to pay more attention to its remit to control inflation rather than focus on simulating economic growth, and perhaps most heinous, failing to communicate this situation properly – the one thing which should be well and truly within the Government’s reach, even if it has given up on spending restraint.

    Look how much attention the 3% inflation has had. Compare and contrast the attention given to the 5.1% spending increase. Perhaps someone in the bureaucracy could be tasked with filing a PCC complaint each time the media refers to “cuts”, requiring a correction to be run noting that spending has in fact increased significantly? Not to mention, of course, that this point should be hammered home in every interview on the subject. Keep pounding the message home until presenters can’t get away with the lie about “cuts” any more!

  27. Lindsay McDougall
    Posted August 21, 2012 at 4:25 pm | Permalink

    It is obscene that current public expenditure is still rising in real terms. The “automatic stabilisers” are a vice, not a virtue. To counter them, end the index linking of state pensions, unemployment benefit and other benefits paid to people for not working, income support and public sector salaries. Remove foreign aid to India and restrict it to Pakistan. Our economy’s central problem is one of excess PUBLIC expenditure, particularly current expenditure. It is quite useless to look at other sectors for the solution.

    • zorro
      Posted August 21, 2012 at 7:42 pm | Permalink

      That would surely be some examples of the government easily containing its own expenditure. Unfortunately, it is too useless to even do that!

      zorro

      • Bazman
        Posted August 25, 2012 at 8:49 am | Permalink

        It’s expenditure to private companies?

  28. Leslie Singleton
    Posted August 21, 2012 at 4:32 pm | Permalink

    Given that, as earlier today, Labour are, irrespective of the facts, going to play their “cutting too far and too fast” broken record at every turn, why doesn’t the Government take them at their word and take steps that might be accurately described as far and fast cutting? You never know that might work– why wouldn’t it? And if it upset the Liberals, so much the better.

  29. Sue
    Posted August 21, 2012 at 4:40 pm | Permalink

    “The first is a fall in tax revenues” – You can look forward to more of that as fuel goes up and wrecks more businesses. We, Joe Public will be buying less because we will be even worse off than we are now and some may even lose their jobs. There comes a point when travel to work becomes so expensive that lower paid jobs just aren’t worth the hassle.

    As the EU plunges further into chaos, we will be exporting less to them and our hands are tied in the single market which stops us “free trading” with the rest of the world. We are still supporting foreigners on benefits and housing instead of using the “3 month self sufficiency rule” that other EU countries are using. Still funding foreigners under the national health when other EU countries are charging up front.

    Why are we still funding unions, especially when UNITE are funding the Labour Party? Small businesses still can’t get loans and are being strangled in red tape. If I were to start a business here now, I’m not sure I would declare my earnings. It’s not that I mind paying my fair share of tax but I will only do so if I have a say in how it’s spent and at the moment, I don’t approve of what this government is doing with it.

    Still funding India who are now going to Mars, would you believe? Still funding the rest of the world while the UK goes under.

    More quangoes, more decadent expenses for civil servants and each day another £53million goes to the EU.

    Could a government BE ANYMORE INEFFICIENT?

    • uanime5
      Posted August 21, 2012 at 7:41 pm | Permalink

      Actually the UK can freely trade with any other country and about 10% of our exports go to the USA.

      • zorro
        Posted August 22, 2012 at 1:00 pm | Permalink

        Good…..glad that you acknowledge that we can do so happily with EU countries if we leave the EU……Have I got that right?

        zorro

        • uanime5
          Posted August 22, 2012 at 6:40 pm | Permalink

          You’re not wrong but you’re not right either.

          The UK can trade with the EU if we leave the EU but all our exports will be subject to import taxes. So we can trade with the EU but not happily trade with them.

          • zorro
            Posted August 22, 2012 at 7:33 pm | Permalink

            We could trade equally with them. They might change their minds.

            zorro

          • outsider
            Posted August 22, 2012 at 8:47 pm | Permalink

            “The UK can trade with the EU if we leave the EU but all our exports will be subject to import taxes. So we can trade with the EU but not happily trade with them.”

            This is getting ridiculous.
            No doubt you wish to bring hope to protectionists who would want to raise tariffs against the remaining EU and cut our vast trade deficit. But what you state as fact is in reality extraordinarily unlikely.
            The EU has established an EU-Mediterranean free trade deal trade with 12 non-EU countries. It has concluded free trade agreements with Chile, Mexico, Switzerland, South Africa and most recently Korea. As we know, if only because the immigration element has caused controversy, we are negotiating and FTA with India, as well as Singapore and Malaysia.
            The average EU external tariff facing other developed countries is, I understand, 1.6 per cent. So what is the likelihood of a member state leaving the EU suddenly facing trade-damaging tariffs.
            So your statement is, to be kind, disingenuous.
            Exactly why and for what purpose do you make such a statement?

          • Mark
            Posted August 22, 2012 at 9:24 pm | Permalink

            I think you’ll find that the World Trade Organisation means that the tariff impact is limited. We would of course be free to raise tariffs on imports from the EU in accordance with WTO rules. We would also avoid the loss of VAT to carousel fraud (this takes advantage of international movements), worth around £13bn.

    • zorro
      Posted August 21, 2012 at 7:45 pm | Permalink

      Probably not, they are gold medallists at it……

      zorro

  30. oldtimer
    Posted August 21, 2012 at 4:44 pm | Permalink

    The answer to the question you pose in the title to this post is simple. Incompetents are in charge. Unless and until competent people are in charge, nothing will change. Miliband and co are not among the competents either.

  31. Sue
    Posted August 21, 2012 at 4:45 pm | Permalink

    I actually think the people that comment on your blog regularly could do a better job of running the country!

    • zorro
      Posted August 21, 2012 at 7:46 pm | Permalink

      For a lot less money too!

      zorro

    • Electro-Kevin
      Posted August 21, 2012 at 9:38 pm | Permalink

      I disagree, Sue.

      If I thought I could do a better job then believe me, I would put myself up for it. I expect I speak for most here who would find things much more difficult if put on the spot rather than just yacking about it.

  32. Brian Tomkinson
    Posted August 21, 2012 at 5:28 pm | Permalink

    You cannot be really surprised as you warned us back in 2010 that Osborne’s plans were to increase current spending and reduce the deficit by tax increases. The national debt was planned to double in just five years. There are some politicians who say they would reduce government spending but none of them holds office. The only mystery to me is why you still support a party and a government when they are wilfully doing many things with which you disagree and failing to deal with the economic crisis. You know what needs to be done, you are a MP and yet you are just as impotent as the rest of us, as we head for the financial rocks.

    • zorro
      Posted August 21, 2012 at 7:49 pm | Permalink

      Deserves an answer John…….

      zorro

  33. Jon
    Posted August 21, 2012 at 5:39 pm | Permalink

    The answer has become clear as Mr R has frequently stated, taxation has reached its limit, further tax increases do not generate more revenues.

    The increase in spending is worrying, if some of this is EU regulated costs then we should do what other countries do and ignore much of it especially now.

    This needs to be put back on track or Labour will get in and completely ruin the finances.

    • Bob
      Posted August 21, 2012 at 7:47 pm | Permalink

      “…Labour will get in and completely ruin the finances.”

      @Jon
      Do keep up.

  34. Paul
    Posted August 21, 2012 at 5:40 pm | Permalink

    How on earth did Cameron and Osborne, who have no experience of the real world, get to the top of the Conservative Party? Cameron left university, became a researcher, worked for Carlton Communications for a few years, and now he’s the PM. George ‘silver spoon’ Osborne’s rise is even worse. You might as well have grabbed any old Oxford graduate off the street and made them leader of the sinking Conservative Party. This pair of clueless numpties have no idea how the real world works because they’ve never been in it and people are baffled as to why Cameron and Osborne always appear incompetent and mess up everything they do. I think deep down JR, and a few other Conservative MPs, would be delighted if UKIP (the only party worth voting for) consistently outpolled the Conservatives and would join them like a shot if they went mainstream. If the Conservative Party is to be saved, the first thing to do is get rid of Cameron and Osborne. Otherwise, let’s look forward to Ed Miliband picking up where Cameron left off in destroying this country.

    • JimF
      Posted August 21, 2012 at 7:30 pm | Permalink

      It cannot be said enough that politicians should run with what they believe in, not stick to party loyalty when that party is dragging the Country into more debt and degradation of living standards. This argument of changing the Party from within isn’t working, is it? The forthcoming argument that, with a free hand, the Conservatives would put the Country back on course after 2015 will make your Party a laughing stock.

    • Bob
      Posted August 21, 2012 at 7:51 pm | Permalink

      If Mr. Redwood switched to UKIP, I think a lot of other kindred spirits would follow, the Tories would be sunk forever and the new Conservative Party would be born!

    • zorro
      Posted August 21, 2012 at 7:51 pm | Permalink

      Fortune favours the brave……

      zorro

      • Bazman
        Posted August 25, 2012 at 8:50 am | Permalink

        Or the rich.

  35. Steven Whitfield
    Posted August 21, 2012 at 7:22 pm | Permalink

    All sides of the political debate seem to be colluding in hiding the depth of our economic problems. The BBC’s line today was that we are in for ‘several more years of ‘austerity’. What austerity is this when spending keeps rising?.

    The Sun’s respected political editor Trevor Kavanagh doesn’t appear to know the difference between budget deficit and national debt. Reading the Sun’s political leader we are invited to assume that George Osborne is ‘tackling the national dept’ seemingly unaware that it is still piling up like there is no tomorrow.
    It is almost as ridiculous as the Chancellors own claim to have a ‘credible plan’ up his blazer sleeve.

    How can a plan possibly be ‘credible’ when it is based upon deceit and a series of grossly optimistic or just plain wrong assumptions . ALL the forecasts that the ‘credible plan’ were based on have been proven to be totally wrong .
    This is no time for a schoolboy to be getting work experience, George needs to make way for the mighty Redwood. But the chances of the Conservative leadership putting the best interests of the country over petty party politics are about nil.

  36. uanime5
    Posted August 21, 2012 at 7:43 pm | Permalink

    So because the economy is doing badly the rich need more tax cuts. Here’s a radical idea how about removing some tax loopholes so that the wealthy and large companies actually pay their taxes.

    Also I suspect that the higher level tax incomes are low this year because the wealthy are delaying as much money as possible until next year when they’ll only be taxes at 45%, rather than 50%. Scrap the 45% reduction and you’ll see the top 1% taxes increase back to 2011 levels within a month.

    Reply: Top tax has taken less ever since 50p came in as the rate

    • Lindsay McDougall
      Posted August 22, 2012 at 12:58 pm | Permalink

      The top tax rate was 40% throughout most of Labour’s tenure. You really are determined to make us swallow YOUR poison pill, aren’t you.

      • uanime5
        Posted August 22, 2012 at 6:42 pm | Permalink

        What is your point?

        • Lindsay McDougall
          Posted August 22, 2012 at 11:58 pm | Permalink

          Accept that 40% should be the top rate of income tax and stop bellyaching about it. That’s a point. Labour’s action in making the top rate 50% was something they did just as they were leaving office; its purpose was to poison relationships between their successors and mess up the economy. Hence the expression “poison pill”. That’s another point.

          Is that enough points for you? Now do you finally understand? It’s hardly rocket science.

          That’s a tactic of yours, isn’t it? When you don’t like the point that has been make, you pretend that one hasn’t been made.

          Let’s try another one. Do you accept that the Lisbon ‘Treaty’ is simply the constitution that has already been rejected by France and Holland – or do you need that one to be explained ad nauseam?

    • uanime5
      Posted August 22, 2012 at 6:48 pm | Permalink

      Reply: Top tax has taken less ever since 50p came in as the rate

      How are you calculating this? Before the 50p tax rate was introduced the top tax rate was 40p. Are you saying that the 50p tax rate generates less than the old 40p tax rate?

      Anyway given that HMRC has shown that the 50p tax rates generates several billion pounder per year and that cutting it to 45p will cause a loss of over £2 billion I find your claim hard to believe. Especially since you only mention self-assessed tax revenues but never PAYE ones.

    • Bazman
      Posted August 25, 2012 at 8:59 am | Permalink

      It was more of a political idea. Laughably we are all in it together except when it comes to pay-offs and austerity. Managers crap. Make me a manager so I can manage. Ahhh! Bazman. Manager. I can see now. Put me in charge of that van. Well not quite in charge as it’s not my van and any problems see the mechanic. Tax disc? Secretary. Cleaning? Car wash. Abuse from other drivers. I don’t drive it. Yeah the van? That my responsibility.

  37. davidb
    Posted August 21, 2012 at 10:51 pm | Permalink

    Over the past 2 days I have heard discussions on radio phone ins and news about abuses of the Blue Badge scheme and about how “unjust” it is to sell off the million pound houses we pay housing benefit claims on. I have also observed my own council spend about a month replacing the kerbstones and resurfacing a rarely used pavement beside a very potholed frequently used road, while a neighbouring council is today busy removing a recently built roundabout apparently because heavy goods vehicles have found it impossible to navigate. I suspect that we are still burning much money on projects that are less than necessary – or well planned.

    VAT is up. VED is up. Petrol is up again this week – and the taxes with it. Railfares are to rise above inflation. Why did they borrow so much again? Because they are soaking the taxbase past the point of its capacity to bear the increase, and all the while cutting nothing, but wasting plenty.

    The public are going to vote the Conservatives out next time. They may as well get on with cutting taxes and brutally pruning the state expenditure. Govern!

    Start with all those entitlements and dont stop cutting until our tax revenues equal or excede the expediture. Those who voted Conservative last time did so because that was what they expected.

    Oh, and all those policemen at the Ecuadorian Embassy ( 50! I read in one report ), how much are they costing? Let him go to Ecuador. Exile from the western world? Poetic justice surely.

  38. Mike Wilson
    Posted August 22, 2012 at 7:50 am | Permalink

    ‘Tax revenues from self assessment income tax and capital gains tax are falling because the government has set uncompetitive rates.’

    If this is obvious to you Mr. Redwood, why is it not obvious to your bosses?

    I’ve just paid my self assessment tax and I paid more than last year. But, of course, that is not the point. I’ve got to the point where all enterprise and entrepreneurial instincts have been knocked out of me. I just don’t care any more. The harder I work the more money you take off me and the more money you have to waste.

    Why should I work my nuts off all year so that you can take my tax and give a buy to let landlord 25 grand in rent for a social housing tenant. You take my tax and pay someone else’s mortgage with it so that, over 25 years, that landlord can get a second (or 50th) property bought for them by the government using my money.

    Government has progressively become more and more on the side of the tax receiver and thinks that those of us who work hard are just cash cows to be taxed until we bleed. Well I for one have had enough.

    I’m just going to tick over until I retire and then look forward to, for the first time in my life, being on the receiving end of all this tax.

  39. waramess
    Posted August 22, 2012 at 9:30 am | Permalink

    You really are wrong if you believe that the tax rate is what matters. It is what people pay that matters to them and no tax reduction is not something that will go over their heads.

    People have started avoiding VAT with cash payments which automatically then avoids payment of income tax they motor around on heating oil and they will continue to find ways of paying less to the government until the tax take starts to diminish, not the tax rate

  40. Posted August 22, 2012 at 10:16 am | Permalink

    If we had had even the world average growth rate over the last 2 years we would now be over 12% better off. So would the Exchequer – and the deficit, indeed it would be down considerably more because we would increase the money supply proportionately to growth. Thus the deficit would be essentially ended.

    There is no factual dispute that we could have such growth rates, or indeed considerably better, if all 3 parties were not actively opposed to doing so.

    • uanime5
      Posted August 22, 2012 at 6:50 pm | Permalink

      All factual evidence shows that developed countries can’t have the growth rates of developing countries.

      • Posted August 22, 2012 at 10:05 pm | Permalink

        Uni, as ever, makes no attempt to produce any factual evidence for his asertion. Though, as ever, he is invited to try.

        Were it anything other than the opposite of the truth, Britain could never have been birthplace of the industrial revolution, nor nowadays would Singapore, arguably the richest country in the world, have recentl; achieved a 14.3% growth rate.

        To repeat “There is no factual dispute that we could have such growth rates, or indeed considerably better, if all 3 parties were not actively opposed to doing so.”

  41. BobE
    Posted August 22, 2012 at 12:40 pm | Permalink

    When our exports go to Rotterdam, even though intended for other countries outside of Europe, they are classified as exports to Europe. This inflates the apparent trade with Europe.
    As to the economy, well we will have a couple more years of pretending to be in charge followed by a labour government. Presumably they will finish our descent into the EUSSR.
    The elite will move to commisionair jobs in the EU.

  42. Conrad Jones (Cheam)
    Posted August 22, 2012 at 1:29 pm | Permalink

    Why did the government borrow so much again?

    Why did the Bank of England create £375 bilion for the Reserve Accounts of Private Banks ?

    In an effort to stop the money supply from collapsing.

  43. David Langley
    Posted August 22, 2012 at 1:41 pm | Permalink

    Accountants will measure your business success or failure and then leave the business managers to decide what to do. A sensible manager will question the figures until he is sure they are correct. The manager then decides what to do next based on financial forecasts and sales forecasts. If he is any use he will amend his strategy accordingly. The business will then need to understand what to do, and a good manager will explain the whys and wherefores. If it does not make sense then the workers and the team will decide what they are going to do. That is where I am right now John with the present government. I have no idea if the figures are correct, or the plan. I do know what should be done to start to impress me and this government is not doing it and seems to have no sense of urgency or that time is of the essence. We need to do the big things first not mess about with little bits of legislation.

  44. Derek Emery
    Posted August 22, 2012 at 1:54 pm | Permalink

    Does anybody really expect the coalition to reduce public spending? They are far too soft to tackle this. At least with Labour there will be no pretence they are trying to cut spending. The UK will continue its orgy of borrowing more and spending more money it has not got to maintain its unaffordable lifestyle until it can’t afford to borrow more. Inevitably at some stage lenders will take fright of the zero growth UK ever being capable of paying back debt and will up interest rates. Then the UK will predictably resort to printing money time to continue supporting the lifestyle.

  45. bertsanders
    Posted August 22, 2012 at 3:48 pm | Permalink

    The Coalition is just not going as was indicated – the lib-dems may be the problem – but debt, immigration, supposed cuts do not seem to happen. Labour believes more borrowing will be the answer – I doubt it- the profligate Brown years of plenty will cause years of adjustment and probably another Labour Government.
    I believe the Governments general thrust is right but they try to be all things to all people.
    After 60 years a Conservative next time I will vote UKIP as it seems it may be the only way I may see an EU withdrawal which I have always believed would be beneficial. It hurts but I would like to see it happen.

  46. Harold
    Posted August 22, 2012 at 6:15 pm | Permalink

    It’s over, people.

    You all over there have spent yourselves into oblivion.

    It’s just a matter of waiting for the implosion now. First Greece, then Italy, and then the bold traders will get around to you.

2 Trackbacks

  1. By MPs and voters turn on Osborne » Spectator Blogs on August 21, 2012 at 6:13 pm

    […] does not have support from members of her own party, either. John Redwood wrote a blog today which criticised ‘uncompetitive rates’ of tax:If the government keeps increasing spending at this rate, […]

  2. […] showed government spending in July grew by 5.1% on the previous year, mostly on welfare payments. Redwood wrote on his blog: “If the government keeps increasing spending at this rate, there will be too much borrowing. […]

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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