Yes, it was spending, not tax revenue, that caused the extra borrowing

 

 Seeing the reporting of yesterday’s figures, I am amazed. They know a few of the figures, and give a most misleading view of what happened. They all claim the problem was the 9% fall in Corporation Tax revenues.

The actual figures are  that spending in October was up by £3.6 billion compared to October 2011 (including interest payments – which reduced the increase. Spending excluding interest was up by £4bn).  Corporation Tax fell by £0.8 billion to £8.1billion.

Borrowing rose by £2.7 bn more than in October 2011. That means the rise in spending more than accounts for the rise in borrowing, with tax revenues making some positive contribution. Corporation Tax is relatively small and had a bad month. VAT and NI did better.

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30 Comments

  1. zorro
    Posted November 22, 2012 at 2:34 pm | Permalink

    John, thanks for confirming my suspicions. That is why I asked for the figures on CT drop in revenue. The monetary value of the drop in monthly CT receipts is equivalent to only 20% of the figure for the rise in monthly spending excluding interest……So, it is demonstrably false to claim that the main reason for the extra borrowing was to cover the shortfall in CT receipts. What about the extra £3.2 bn which needed to be borrowed to fund this extra spending? Where did that go?

    zorro

    • Bazman
      Posted November 24, 2012 at 12:18 pm | Permalink

      I forgot to mention that you would be moving large numbers of often unemployed or without enough money to support their families to areas where there is little work. Why are house priced so cheap in these areas? That is not to say rents is necessarily cheap. Would you like to respond and justify your fantasy or are you now converted in the argument? If you are not converted then please tell us why? Being bigoted and stupid is an acceptable reply. Saying nothing is not.

      • zorro
        Posted November 25, 2012 at 10:50 pm | Permalink

        You seem to have the monopoly on bigotry and stupidity. I have explained that it is likely that rents will fall to a more acceptable now that they will not be guaranteed muggins to pay whatever they ask. You may think it is OK for unemployed people to choose to live in Kensington at taxpayer expense, I do not. I live where I can afford. etc Wages might have to go up in London if they cannot attract people to live there as it is too expensive….

        zorro

        • Bazman
          Posted November 26, 2012 at 10:09 am | Permalink

          Read my previous post of why rents will not fall. You just have blind belief that they will.

  2. Brian A
    Posted November 22, 2012 at 2:37 pm | Permalink

    Are you really amazed? The political establishment and much of the media have decided to construct a narrative around the notion that wicked multinationals, by managing their tax affairs in accordance with UK and EU rules, have somehow brought ruin to the nation. Your figures illustrate clearly that the problem is fundamentally one of excessive spending and borrowing.

    • Bazman
      Posted November 24, 2012 at 12:24 pm | Permalink

      Or EU and UK tax rules. Why should these companies be allowed to use the wealth, health of the population and infrastructure of this country and Europe but not pay the same tax as million of other businesses do? Do tell us Brian fundamentally why this is acceptable. We are fascinated with your thoughts.

  3. Terry
    Posted November 22, 2012 at 2:54 pm | Permalink

    John, what is going on?

    Now apparently, we have a Ministry of Disinformation that diverts the truth from the public. The ordinary folk in the street will not dissect the figures and we are thankful for your revelations. We are not amused by this subterfuge.

    So much for “more transparency in Government”. It seems to me that it is the Back Benchers who should be running the country and not those current residing in Downing Street. I do believe that with the ‘Quad’ of public schoolboys now in charge, the chances for a Tory victory in 2015 are poor at best. And God help the country if that Labour demolition team get back.

  4. lifelogic
    Posted November 22, 2012 at 3:32 pm | Permalink

    Indeed these reporters never look even one thou beyond the spin that is pushed at them.

    So the coalition continues the positive feed back death spiral of the state sector growing and killing off the private – or making it all relocate somewhere more sensible.

    Are we entitled to know the details of the new contract that the BBC trustees agreed with the new DG? Should the new DG resign after a few days will he be receiving £450,000 as the last one did. I do not suppose we will be entitled to know even though the BBC is always assuring us it is “our BBC” and it is “accountable”. Accountable how one wonders – through Lord Patten?

    But of course when it comes to freedom of information the BBC is a “private organisation” – their expensive lawyers claim – so we were not even allowed to know who attended the meeting that made them abandon all sense and balance on the global warming great swindle agenda. Nothing must get in the way of diverting tax payer funded grants into the pocks of the few well, connected, to fund quack energy generators it seems.

    • Bazman
      Posted November 22, 2012 at 4:53 pm | Permalink

      So it was all spent on the BBC maybe it was spent funding private companies? Thought of that one? Would that be killing off private companies profits? I doubt it as you cannot see further than your own myopic views. If it was spent on benefits or infrastructure payments then who benefited and what projects where funded and why? Your obsession with the BBC is on par with the single mothers obsession of many right wing Tories, but when analysed as a percentage of the benefits bill is quite small. More politics to prove who’s side they are on. Ram it.

      • lifelogic
        Posted November 22, 2012 at 10:35 pm | Permalink

        Expenditure on the BBC may not be that huge in the overall scheme of things, but £145.50 is a great deal for many who do not have it. The main thing is the damage the BBC do by setting a big state, fake green, quack science, pro EU, pro big state, big tax and over regulation agenda at every opportunity.

        This is the real damage they do.

        • Bazman
          Posted November 23, 2012 at 11:17 am | Permalink

          A hundred and forty five quid is a huge amount for those who do not have it? How are they going to pay for all your private health and infrastructure fantasises then. They are not is the simple answer. What should they do if they then need these services to get a job or maintain health? You seriously think all the news channels saying pretty much the same as the BBC will cease to exist if the BBC was disbanded and turned into a subscription service providing right wing news? Your predicable argument being that there would then be balance? How thick are you?
          The state spending money on private companies and housing benefits to private landlords? Is this killing off private profits? Your usual blindness I superpose? Would you. Lets face it lifelogic you and a number of the posters on this site need insulting as your views insult the average reader with their simplistic right wing solutions that are below the level of a ten year old. The insult are deliberate and meant to cause offence though probably not in the likes of yourself, but hopefully in any others tempted to promote retarded and regressive views without justification or personal consequence.. Ram it? Yes. Ram it.

          • Edward
            Posted November 23, 2012 at 1:38 pm | Permalink

            Bazman,
            You dont have a monopoly on the correct political views or the best solutions.
            You believe you are right just as many others do.
            Some of your rants disfigure this excellent site and add nothing to the debate.
            Stop shouting and heckling like a teenager having a tantrum.

          • Nicol Sinclair
            Posted November 23, 2012 at 1:39 pm | Permalink

            ” How thick are you?” does not add a great deal to the debate. Try to be a bit more polite… and you may get further with your arguments.

          • Bazman
            Posted November 23, 2012 at 5:00 pm | Permalink

            The correct political view as you put it is not to put forward policies that you yourself could not live under given the same circumstances and not promote elitist policies under their laughable belief that somehow the greater good will be passed down by their elitist views. It will not. How thick are you? Is justified when points are put forward but religious belief still prevails despite the person consistently ranting about religious politics. Ram it.

          • Edward
            Posted November 23, 2012 at 11:00 pm | Permalink

            Sadly Bazman, it seems you are slowly descending to being the Troll of this site.
            You need to realise that your political opinions are no more valid norautomatically correct than anyone else.

          • zorro
            Posted November 24, 2012 at 8:30 am | Permalink

            Bazman, your world view does not allow any alternative opinion. You go on about people proposing solutions that they will not be able to live with themselves. What we propose is a sensible ta and spend policy which will enable more people to have jobs and look after themselves. Surely you would want this too? However, you seem to feel that continually paying out benefits is the best solution ad infinitude. That is not the case, and it is a cause of the malaise. I am by no means rich, and work to earn my living. I would be no worse or better off as a result of policies I propose, but I think that it would other people the chance to work and earn a living rather than waste their lives on benefits. On this matter, I strongly disagree with the government getting rid of REMPLOY jobs, as, even though they were subsidised, it gave less fortunate disabled people a chance to work.

            zorro

          • Bazman
            Posted November 24, 2012 at 12:04 pm | Permalink

            So glad I am annoying you and any others who are part of the right wing love in. I notice that you never have anything sensible to say to counteract my points. Trolling? I’m sure Mr Redwood as an MP is an expert is an expert in the field and would have my points removed or edited if he thought this was the situation. They don’t like it up ‘em Mr Mainwaring!

    • Disaffected
      Posted November 22, 2012 at 5:46 pm | Permalink

      Better still why did Patten spend so much on consultant fees the last time the post was advertised and this time there was no process and we are expected to believe he is the right man for the job?? What is the minister for CM and S doing about this fiasco?? Why is there not a process in these days of equality babble? Cameron, Clegg and Harman have previously spouted about the need for women in top jobs, political parties, board rooms etc this is a top job where is the fair open transparent process?

      An independent process and an independent person should be selected. This has all the hallmarks of a job for the boys selection. Recent events demonstrate the BBC needs radical overhauling and break up. This man previously worked for the BBC, how do we know it is not going to be the same old same old? A different culture is required. What is the government thinking? Having just had Leveson inquiry and Sky and the BBC scandals, it would be appropriate that some thought went into this selection procedure and outcome.

    • Bob
      Posted November 22, 2012 at 8:41 pm | Permalink

      @lifelogic
      ” relocate somewhere more sensible”

      It’s happening! (see link)

      http://www.cebr.com/wp-content/uploads/London-loses-top-spot-press-release-11-Nov-press-release.pdf

  5. Brian Tomkinson
    Posted November 22, 2012 at 3:40 pm | Permalink

    Don’t you realise that, encouraged by your government, the media now see increases in tax and government spending as good and tax avoidance as bad. You need to find another way of explaining the truthful facts to people.

    • lifelogic
      Posted November 23, 2012 at 7:32 am | Permalink

      Legal tax avoidance is clearly good as the money will them almost certainly be invested or spent far better than it would by this government. Government expenditure is nearly always spent on the wrong things and done very inefficiently too.

      Just look at the green energy racket that is pushing up everyone’s energy bills by hundreds of pounds and destroying the countryside, bats and birds. How may elderly will die this winter as a result of this Libdem/Cameron/EU religion?

  6. Jon
    Posted November 22, 2012 at 6:51 pm | Permalink

    Where are they spending more? It can’t be good to be criticised for cutting spending when actually increasing it. Maybe the OBR will shed some light. It drives a hole through Mr Cameron’s argument for restraint over the EU budget.

  7. davidb
    Posted November 22, 2012 at 8:42 pm | Permalink

    I tried to read a piece in the Indi about Corporation tax, and was tempted to comment, but in the end just thought whats the point?. I suspect great numbers of people have no clue about our tax regime at all. A company can only pay CT on its profit if it makes a profit. If the economy shrinks – and its the private sector doing the shrinking – how can they be expected to make taxable profits? Prices are depressed. Losses from bad debt are on the up. Import costs are on the rise and freight charges are rocketing as we try to save the world 80 pence a litre at a time.

    I’m glad you have informed me that public spending increased. I was quite content to think that once Companies were making money again the tax take would be back up and thus some efforts at attacking the structural deficit were beginning to bear fruit. Nope, its the same old rudderless ship sailing close to the reefs.

  8. Leslie Singleton
    Posted November 22, 2012 at 9:09 pm | Permalink

    So, shall I hope to see a letter from you to the Editor in the Telegraph tomorrow or perhaps a question in Parliament, or both?

  9. Stephen O
    Posted November 23, 2012 at 2:46 am | Permalink

    Freedom of the Press is not enough for a well functioning democracy. The press also need to report what is actually happening rather than a fiction.

    I do not believe the false reporting is simply the result of ignorance among editors and reporters. They have a reason for how they report.

    John, you often point out the misreporting, but never say why you think it happens.

    My theory is simply a commercial imperative to gain readers and reduce costs. They twist the news to what ever way they think will attract the publics attention and accept ‘prepared stories’ from spokesmen (both government and opposition).

    What is your theory?

  10. Lindsay McDougall
    Posted November 23, 2012 at 2:54 pm | Permalink

    I needn’t have worried about lack of information for ‘plebs’. The ONS statistical bulletin is very informative. Borrowing in FYR 2012/13 started off at MINUS £28 billion because of taking over the assets of the Royal Mail Pension Fund (liabilities from this come later – like PFI hospitals). After October cumulative borrowing was only £23 billion less than in FYR 2011/12, so there has been a £5 billion deterioration.

    Current public expenditure has been significantly higher in May and October than a year earlier. In the other months – April, June to September – there has been little change.

    It looks as if total borrowing for FYR 2012/13 might turn out to be about £100 billion, continuing the trend of a £20 billion reduction in each year. However, in FYR 2013/14 the trick of taking over a pension fund will not be available. Therefore, we will need real cuts or to sell some banking shares or extra tax revenue from real growth – or all three.

  11. Pleb
    Posted November 23, 2012 at 6:09 pm | Permalink

    Cancel HS2 = 32billion
    Cancel Trident = ??? billion
    Cap public sector pay
    Cap public sector pensions
    Start doing proper things for once! Or have the lunatics finally taken over the asylum.

  12. Pleb
    Posted November 23, 2012 at 6:15 pm | Permalink

    Why don’t we scrap nuclear submarines. We are a small country, Denmark and those others of our size don’t need them, nor do we.
    Why can’t a nuclear sub power unit not be used to generate electricity? They work in confined spaces allongside people with no apparent problems?
    Is it only the usless people that climb to the top of the power pole. After the struggle are they so usless as to forget the reasons they went into politics to begin with.
    Sorry about the rant but it really annoys me have inefective politicians are.

  13. Pleb
    Posted November 23, 2012 at 6:16 pm | Permalink

    John Im sorry please delete one of the above, my PC let me down there.
    Sorry

  14. Narrow Shoulders
    Posted November 23, 2012 at 8:57 pm | Permalink

    Is it not time to introduce paid for services?

    The cost to the user for each service could be determined according to income but as the Government (both previous and I expect subsequent) ones are incapable of determining value, it should be up to the users to determine need and quality. The only way to do that is to make them paid for at the point of use.

    I object to more of my earned income being given to central Government to squander.

    The future benefit bill I would solve by insisting that NI actually became insurance and your pension would be defined by contribution amount and length. Unemployment benefits should only be available for a time proportional to amount of time paid in and tax credits and housing benefits should be abolished as they distort the market. Without them either market rates would be paid or prices would be lower.

    Government spending – who needs it?

    With regard to the above I do accept that there are those in society who both need and deserve our support but we seem to have rather too many.

  • 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
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