The deficit is higher but spending is within the original plans from 2010.

In yesterday’s press we learned that the Autumn Statement this week will include substantial extra sums for the NHS budget, and an enlarged roads programme.

This does not represent an increase compared to original plans for this year set out in the summer of 2010 by the new Coalition government, though it does represent a shift of priorities within the budget totals.

In June 2010 the government announced that it would increase total managed spending from the £669bn of the last Labour year to £737.5bn by 2014-15. Current spending would go up faster, at the expense of capital projects. Current spending was forecast to rise from Labour’s £600 bn to £693 bn by 2014-15.

In March of this year the Treasury published new forecasts for 2014-15 and beyond. They then estimated £680 bn for current spending, down on the 2010 forecast, with higher investment producing a total expenditure figure of £732 billion, down a little on the 2010 forecast.

These figures illustrate that the government has kept current spending under control as it wished to do, and has been able to increase capital spending whilst still keeping the totals below the original forecasts.

The higher deficit than planned is entirely down to weaker revenues, not to higher spending. Most people think spending has been cut heavily, though these figures(as I pointed out originally) meant some quite substantial cash increases in some areas, and allowed small real growth overall, with some departments nonetheless suffering cuts. In explaining the higher deficit, however, we need to explain deviations from the original plans. The adverse ones are all on the revenue side.

As I have explained throughout we are borrowing substantial sums in order to sustain further cash increases in public spending. This Autumn Statement is unlikely to bust the spending limits of 2010, and will allow more investment at the expense of current costs.

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126 Comments

  1. Posted December 1, 2014 at 5:16 am | Permalink

    Extra for the NHS – borrowed to pay for treatment to people who have never, and probably will never, actually contribute what they cost. And all for the English taxpayer to cough up for. Just delaying the inevitable, deliberate destruction of the nation. After 2 world wars Cameron invites the world in for a free life on us, and leaves us to pay for it all. Why did our forces people die keeping this country free, when DC is giving the country away? A real, decent man would be ashamed – he clearly doesn’t have that capability.

    • Posted December 1, 2014 at 10:05 am | Permalink

      I agree fully with that

    • Posted December 1, 2014 at 3:38 pm | Permalink

      And a taxpayer funded “bung” for areas whose public services have been damaged by mass immigration ….. which means British taxpayers are going to be taxed even more to pay for the immigrants we don’t want.

      And the idiot thinks we’re going to be impressed by this.!

      • Posted December 1, 2014 at 8:40 pm | Permalink

        There are no definite immigration figures. It is pure guess work so the position is likely to be far worse and in line with people’s experience and perception. Cameron wanted us to kick him out if he failed to deliver.

        He has failed on the economy, EU, wastes casts amount of taxes, mass immigration, crime and disorder, decimate armed services, more unnecessary Middle East wars, death, havoc and destitution in Libya, education in a mess, welfare still in a mess, building on every piece of green land, changes at Westminster for MPs. You name it he failed to deliver it. He said a lot and delivered nothing.

        • Posted December 1, 2014 at 10:58 pm | Permalink

          yea and they switch the street lights off at midnight causing countless accidents and burglaries, there is nothing to defend the current government with.

          Dominic Cummings is correct about the quality of our political class and public sector, I wish his name was on the ballot paper.

    • Posted December 1, 2014 at 3:54 pm | Permalink

      It doesn’t sound good, but might I suggest a short, sharp, solution until the government gets its house in order (that could take a while):

      Take all costs for all immigrants living in the UK (legal or otherwise) including, but not limited to:

      Inwork tax credits, housing benefit, child benefit, jobseekers allowance, local rates and social services, healthcare, elderly care and top up pensions, education, social housing costs, disability allowances – including costs of any vehicles provided – costs associated with asylum seekers – housing, translations, legal etc, cost of manning the barricades in Calais – need I go on??

      Add them all up – triple the total, and take it out of our foreign aid budget because that’s what it is – it is foreign aid being dispensed right here on the streets of the UK!

      Apologies if some of the above is not PC, but I’m well beyond that now

      • Posted December 1, 2014 at 7:06 pm | Permalink

        Well done! Couldn’t have put it better myself. This is what the electorate are sick of. Watching the news tonight they were talking about elderly people being cared for in their own homes and how inadequate it all was. The carers do not have enough time, are on zero hours, don’t get paid for the miles they drive and then are really upset because they cannot care properly for the person they are looking after because there is not enough time. These are elderly people who have paid into the system all their lives. They deserve better. Instead we see Cameron and Co sending millions abroad and giving away our taxes to foreigners. It has to stop but I cannot see that happening and so people will be thinking very carefully where to put there X next year. I doubt it will be next to the 3 main parties.

        • Posted December 1, 2014 at 10:27 pm | Permalink

          This is what it has come down to. It isn’t in our nature to be uncharitable. We have always been an extremely charitable nation, but I now vet charities carefully – and only give to local causes, or those that will that benefit my own countrymen.

          When our government disgracefully enforces the sale of our pensioners’ homes to pay for their care home fees, while throwing untold benefits at the world and his wife, we have to say that enough is enough!

      • Posted December 1, 2014 at 7:13 pm | Permalink

        The Aid budget would not be sufficient.

        • Posted December 1, 2014 at 9:53 pm | Permalink

          I’m not much into the detail I’m afraid, and maths never was my best subject!

      • Posted December 1, 2014 at 9:03 pm | Permalink

        ‘…and take it out of our foreign aid budget’.
        Are you sure that you have this the right way around?
        No apologies for non-PC!

      • Posted December 1, 2014 at 11:00 pm | Permalink

        don’t forget the cost of the British family displaced from the workforce onto benefits, add those costs in and the figures get a whole lot worse, which is why the political class never do.

  2. Posted December 1, 2014 at 6:15 am | Permalink

    Good morning.

    As I have explained throughout we are borrowing substantial sums in order to sustain further cash increases in public spending.

    An admission that this so called recovery has only come about by vast Government borrowing, coupled with all-time low interest rate and money printing.

    So when the music has to finally stop, what then ?

    Throwing more money at the NHS is not going to solve the problem. It id free at the point of services and, to those who have never worked, or those who have not paid in sufficient funds, it is absolutely free. Most of this extra money will be taken in pay rises and bonuses. very little will be spent improving patient care, especially as more people; even those from Wales, jump on the English NHS to get treatment.

    Not a good day.

    • Posted December 1, 2014 at 8:25 am | Permalink

      Indeed throwing money at the NHS will clearly solve nothing until the structure and incentives are addressed and corrected. The current incentive is to ration and delay while spending more on wages for the upper staff and fighting litigation.

      Just £15Bn for roads that carry 14 times more people/miles than vastly subsidised rail (despite motorists being hugely over taxed for it). Far less than just the cost of the economically idiotic HS2 scheme. A good proportion of this is wasted just on the Stone Henge nonsense expensive tunnel.

      If people want to go by train make them pay the full cost of it themselves then see what the real demand is.

      • Posted December 1, 2014 at 7:21 pm | Permalink

        Still at least we are finally rid of the disastrous “Save the World” Gordon Brown. Let us hope we see no more of this dreadful Man. It took a great effort on Cameron’s part to fail (with his ratting, modernising, husky hugging and all the green crap) to fail win a majority against him.

    • Posted December 1, 2014 at 12:00 pm | Permalink

      Don’t forget all the new jobs the ‘government has created’. Magic, eh?

      • Posted December 1, 2014 at 8:38 pm | Permalink

        Mike Wilson: “Magic, eh?”

        They’ve created them just before an election too. That’s gotta be a coincidence.

        Although one wonders, if ‘creating jobs’ is so damn easy, why the government doesn’t do it all the time?

        Or perhaps they do, and that might account for the dire state of our economy.

      • Posted December 1, 2014 at 8:50 pm | Permalink

        Indeed for every job the government “create” they first destroy about ten through over taxation of the productive.

    • Posted December 1, 2014 at 12:58 pm | Permalink

      When does the music stop? The answer is: “never”. That is, assuming the 2% inflation target is met approximately, the national debt and monetary base will keep expanding (in terms of pounds) till the end of time. But that does not mean they expand relative to GDP. That’s first because of the above inflation point, and second, assuming GDP expands in real terms, then the debt needs to expand in both real and nominal terms if it is to stay constant relative to GDP in the long term (which in practice it does).

      And even if our debt/GDP ratio rose to THREE TIMES its present level, it would then be equal to the level that pertains in Japan. Far as I know the sky has not fallen in in Japan.

      And as to the allegedly horrendous interest bill on the debt, that’s a myth: from 2011 to 2013 the real or inflation adjusted rate of interest on the debt was NEGATIVE. I.e. the UK government was ripping off its creditors, as were some other governments.

    • Posted December 1, 2014 at 7:28 pm | Permalink

      Smack on the nose. The NHS is just one big bottomless pit. Money is not the panacea fo what the big problems are.

    • Posted December 1, 2014 at 8:53 pm | Permalink

      Maybe we should impose a charge on the Scots and Welsh who shun their own NHS service and overload the English NHS. It seems to be acceptable to charge English-based students for their tuition in Scotland.

  3. Posted December 1, 2014 at 6:20 am | Permalink

    Weaker revenues eh? Does that mean the economy is not firing on all cylinders? Does not deficit spending not lead to an increased national debt? Does not a bigger debt load require more of that diminishing tax take be used to service it. Where like in Japan soon all the money the government takes in will be used to pay its debts? A default beforehand is more likely and Dave has warned you of the likely consequences of this already. Admit it, as Keynes would tell you, we are in a structural depression. In the meantime we are buying stuff like Trident, despite everyone else in Western and Central Europe (bar the French) being able to sleep at night without it. Very soon, just like the old Soviet Union, you will be able to describe the UK as being like “Upper Volta with rockets”.

    • Posted December 1, 2014 at 7:57 am | Permalink

      Spot on. These guys are creating mountains of debt to……liquidate debt!

      Why? Because they would rather sacrifice the economy than their precious banking system. Their primary means of power.

      There will be French style courts in public squares before this is all said and done.

    • Posted December 1, 2014 at 10:31 am | Permalink

      “In the meantime we are buying stuff like Trident, despite everyone else in Western and Central Europe (bar the French) being able to sleep at night without it.”

      Quite. It is only us, the French and the US who actually ever do anything, hence the rest of Europe can sleep safely in their beds whilst using our money to prop up and bail out their stupid unworkable currency and provide jobs and benefits for THEIR people that THEY can’t look after properly.

      But not to worry – the good old English will pick up the bill whilst being shafted by the rest of Europe (after all, they haven’t even got their own parliament so what can they do about it?), then, when they all start squabbling again we’ll step in with our friends across the Atlantic and sort it out for them. Then the Germans will hate us more, the meds will resent us because they are unable to fight their own fights, and we’ll be drawn into another ridiculous union designed to stop future wars. Even though we never started any of the bloody wars anyway – we just died in our hundreds of thousands to finish them. In the meantime we’ll contain piracy in the Gulf, finish off in Afghan and Iraq, throw millions at Ebola (again, with our friends across the Atlantic), and get moaned at by the Africans because we weren’t quick enough to respond(!!!), throw more millions at India to help their poverty while they put rockets into space, land a bloody probe on a comet at great expense to the taxpayer (for what???) etc etc etc. Oh, and no doubt the total inaction and incompetence of European governments who are unable to do anything that doesn’t follow a script will mean that we will – again, with the Americans no doubt – end up stepping into Ukraine. But don’t panic Merkel, it won’t be German money spent or German blood spilt, it’ll be British and American money and blood again. Let’s face it, the French are far too friendly with the Russians to get involved in that one.

      If we could just stop spending money on crap we might not be so skint. If I’m short of a couple of quid one week I don’t give £100 to a wino – if I did that he’d say thanks, then laugh at me behind my back, and work out how he can fleece the idiot again next week.

      For God’s sake.

    • Posted December 1, 2014 at 11:54 am | Permalink

      The economy is booming really only on imported money from non doms driven by the world and EURO troubles and government borrowing on the back of future generations.

      Real and well paid jobs (other than the mainly non jobs in the state sector) are being exported.

      • Posted December 1, 2014 at 7:09 pm | Permalink

        Yes, and being replaced with jobs reliant on subsidies such as in the renewables sector. Makes no sense at all. If billions weren’t thrown at wind farms and solar etc it wouldn’t be around. 3 cheers to that. Sooner it’s gone the better.

        • Posted December 3, 2014 at 5:59 am | Permalink

          Indeed it is a huge misdirection of the private sector and that on top of the bloated state sector.

  4. Posted December 1, 2014 at 7:25 am | Permalink

    Today we have Clegg at Stonehenge trumpeting the proposed new road tunnel. What a waste of money putting the road in a tunnel is, more capacity yes but why a tunnel? £1.3Bn wasted just on the tunnel. A new tunnel or two under the Thames or from North to South London or East to West London would be far, far better investments, that is where the demand is. There is no shortage of land at Stonehenge.

    It is hardly surprising the tax revenue is weak. The government is exporting whole industries, encouraging low paid employment through low skilled immigration (that is a net liability on the state), has tax rates that are far to high and far too complex, is forcing up energy prices as a deliberate policy to double prices in the US. The bloated government and idiotic regulations mean UK companies cannot compete at all often.

    More people doing useful things is what is needed and fewer lawyers, tax accountants and bureaucrats. The Coalition has alas not even started to address the real problems and this imbalance of the UK economy. Indeed with the bloated state, endless over & poor regulation, tax increases and all the expensive energy green crap they have made it worse.

    • Posted December 1, 2014 at 7:33 am | Permalink

      What is needed is state sector austerity in current spending, some sensible capital expenditure mainly on roads, cheap energy and the release of the private sector from the yoke that is the state sector, constantly pulling them back. inconveniencing them and nobbling them with endless drivel. Or making them do lunatic things like wind farms and PV on roofs.

      The Coalition has with their lack of capital expenditure and bloated wasteful state has delivered the exact opposite. Wages in the state sector (already about 50% up on the the private sector when pension are included) are now rising faster the the private sector – increasing the gap further.

      • Posted December 1, 2014 at 7:36 am | Permalink

        Landlords now to be mugged unless they do the government job or controlling illegal immigration it seems.

      • Posted December 2, 2014 at 1:13 am | Permalink

        The few people in Scotland’s creative sector often give up the struggle, capitulate and get jobs in the state sector. They then wax lyrical about the regular pay, security, gilt edged pensions and zero stress of a job with Big Brother (now Big Sister). This will probably become even more evident as the country moves ever leftward under the ultra-socialist SNP with Sturgeon at the helm and very much in control.

    • Posted December 1, 2014 at 6:40 pm | Permalink

      Lifelogic

      *What a waste of money putting a road in a tunnel…”

      Absolutely agree.

      Why choose the most expensive way to construct a road.
      If they are worried about noise then build an ordinary road with earth banks alongside.
      Householders have to put up with this method of construction, and they have ears, stones do not !!!

      Crazy political thinking yet again.

      No wonder politicians (I exclude our host) are seen by most to be losing the plot.

    • Posted December 2, 2014 at 9:37 am | Permalink

      I have been driving past Stonehenge for 50 years. It can only be seen from a small length of the hill to the east and vice versa. If it upsets the visitors, it would be easy to screen the road and also prevent drivers having a brief free view. The traffic used to slow to the speed of slow vehicles but usually there were no queues. Then someone decided to improve the junctions of the smaller roads to the East and West, at the end of the section where the tunnel is to be built. Instead of giving priority to the main road to the South West, there are roundabouts with equal time given by traffic lights on the Eastern one. Since then there has been a queue most days, trailing up the hill and this clears when past the roundabout.

      How much would it have cost to build two flyover or flyunder roundabouts, compared to the £1300,ooo,000 announced by Clegg? Perhaps 0.01? Then it would not be necessary to have permanent lighting wasting electricity, and the archaelogical remains would not be disturbed. And above all it would not take another 15 years to relieve the jams.

      • Posted December 3, 2014 at 6:01 am | Permalink

        Indeed they often create congestion by design often for political reasons or corruption perhaps.

  5. Posted December 1, 2014 at 7:51 am | Permalink

    you ain’t seen nothing yet. Revenues will only get weaker as QE, locally or imported in the carry trade, will guarantee spiralling deflation outside of the bond and stock markets.

    Paradoxically. And of course , as usual, the bureaucrats wont see it coming.

    • Posted December 1, 2014 at 10:11 pm | Permalink

      Agreed Gary, and Western QE plus other similar measures have prompted competitive currency devaluations throughout the world.

      Cheap immigrant labour will continue to exert downward pressures on wages in the private sector – it’s no wonder that businesses are keen on the EU.

      Perhaps “can’t see the wood for the trees” would be appropriate.

  6. Posted December 1, 2014 at 7:52 am | Permalink

    It seems to me that serious welfare reform is the key.
    It would deter unproductive immigrants and substantially cut spending simultaneously.

    Restructuring UK healthcare is worthy of serious consideration, but healthcare costs are high throughout the developed world, so we’re talking about efficiency savings, which I doubt would be dramatic. There’s nothing wrong in principle with having health insurance through the state. I’m not going to be terribly impressed if I get a £5k tax cut and then a £4.8k health insurance premium invoice, especially since I do rather like the idea that when the children of the poor get sick, they are properly cared for.

  7. Posted December 1, 2014 at 8:02 am | Permalink

    spending is within the original plans from 2010

    Yes, of course, it can be. You can plan what you want to spend and if you stick to that plan, that is exactly what you will spend.

    The deficit is higher

    This means that taxation revenue is lower that it was planned to be. That’s equally predictably too. Taxation revenue is not independent of levels of government spending. For example, if government spend to recruit a number of teachers or nurses or whatever, straightaway about 35% of the spend comes back as income tax and NI contributions. The remainder gets spent and respent in the economy. At every stage taxes are levied. 20% VAT. Capital gains tax. Corporation tax. Fuel duties. Alcohols duties. Death duties! I’m sure everyone can think of lots more! Yet more income tax and NI contributions.

    So , the government gets all this back. But if it doesn’t spend it, not only doesn’t it get back the taxation, it has to make do with an economy which is performing worse than it should be. People end up being unemployed or in very lowly paid jobs. Instead of paying taxes they have to be supported by welfare benefits.

    So, naturally the deficit is higher than it need be. It’s not rocket science !

    Reply Not so. Had the government spent more the deficit would have been higher, not lower!

    • Posted December 1, 2014 at 7:13 pm | Permalink

      Yes, what about green taxes. Where does all this money go? It certainly isn’t benefitting the UK economy. Just another back door tax. Income tax might be going down but other taxes are rising and people just don’t see it. Take the ridiculous taxes for ‘green’ energy added to our fuel bills. Started at a very low percentage and is now at an average of 15%!!!!! No wonder there are so many in fuel poverty. Home insulation in my area is being thrown at houses in certain areas while others who have no choice but to use oil to heat their homes get left out because they are not in the right post code.

    • Posted December 1, 2014 at 7:43 pm | Permalink

      Reply to reply

      Well it is possible the deficit would be higher if money were spent on the wrong things or the wrong amount was spent. The other factor to consider is taxation. I would agree with Laffer that increases in taxation don’t necessarily result in increases in revenue. If the economy is stifled by taxing too much it doesn’t work at its optimum efficiency. But I’d make the point that we need to look at optimising the return from all taxes – not just one at a time. This corresponds to having a healthy economy working at close to its full potential.

      So just as there is an optimum level of overall taxation, so there must be for spending. Not too much and not too little gets the economy working just right.

      Those in charge of the Eurozone take a far too simple minded view to both taxation and spending. As a result they’ve created the mess they are now in and cause the non-Euro economies problems as a result. They find out the hard way that cutting the deficit is nowhere near as simple as cutting spending and raising taxes.

    • Posted December 1, 2014 at 8:45 pm | Permalink

      509 tax rises what does Cameron, the self acclaimed low tax conservative, have to show for it? Come on it is time for him to move over, he is clueless.

    • Posted December 2, 2014 at 7:15 pm | Permalink

      Looking in on this site, particularly today, reminds me of the opening sequence of the film “2001 : A Space Odyssey”. The monkeys screaming at the monolith, and discovering you can smash things to pieces with a bone.

      Anyway Peter, the concept of things like sectoral fiscal balances summing to zero will be indecipherable on this site. The concept of a currency issuer and currency user – forget it. Slashing the public sector and putting those people out of work – to do what; collect benefits?

      There won’t be any work for them to do. The subsequent reduction of spending power in the economy, will mean the private sector won’t be able to sell them anything and will be shedding labour because of the drop in demand.

      I have been extracting data from the OBR today. It appears that inorder for Mr Osborne to achieve his balanced budget (zero deficit) in 2018/19, it will require private households to return to debt levels they had just prior to the 2008 crash!

      Merry Christmas?

  8. Posted December 1, 2014 at 8:08 am | Permalink

    When revenue diminishes most organisations compensate by reigning in planned expenditure. I note that the higher echelons of the public sector maintain their comfortable lifestyle, some even benefitting from redundancy payments before being rehired for more money. We continue to import subsidised labour forbusiness (recipients of in work benefits) while paying our own to sit at home in tax payer funded residences. HS2 is going ahead. PFI contracts are not being negotiated. (named company ed) contracts are not being renegotiated despite under performance.

    There are savings to be made without huge impact on any but the establishment.

  9. Posted December 1, 2014 at 8:33 am | Permalink

    The news of large scale spending by the Highways Agency was announced by Danny Alexander, Lib Dem Treasury, and the Stonehenge Tunnel by Mr Clegg, no doubt to please their regional voters. Mr Alexander decided to turn the Agency into a private but publicly owned company, as Gordon Brown did with the railway track operation. This enables the bosses to be highly paid directors, instead of mere civil servants.

    However, the conversion does not appear to have made much difference to their competence. When trying to register and pay in advance for my Thames Crossing charges, my credit card computer decided to refuse for security reasons and blocked it until a new pin arrived. Then I tried to pay using another card, to discover that this option is not possible on their new site despite a long preparation period. The registered cars are fixed to only one card. However it is possible to pay for single journeys for one car at the increased price until the original card is unblocked. Having paid twice it is unclear whether the Dart computer will deduct the charge from one card or the other.

    This morning at the Dartford Crossing, there is a queue of several miles to the old toll booths, which are no longer collecting tolls. Believe it or not, this is because they can’t bring themselves to put the barriers up and vehicles have to approach slowly and wait for them to go up. Apparently this is for safety reasons to control flow into the tunnels. But there are traffic lights which could be used if there is a problem and on the bridge side the road is clear after the tolls.

    Mr Clegg was at Stonehenge to explain the good news about the start of a 2.5km bored tunnel, abandoned ten years ago because costs had gone up to £540m then, and no doubt double this figure by the time it is built in another ten years. This tunnel will be lit for safety reasons and use a huge amount of electricity permanently at a time when their other Ministers are telling us to reduce energy use. Anyone using the road will have noticed that the delays are caused by a traffic light controlled roundabout and a smaller one to the West. A small flyover would cure the congestion at both, but the real reason to spend a billion is to protect archaeological remains and give the archaeologists more time, not to mention the interruption to Druid ceremonies.

    Our children will have to pay for it. No doubt they have been greenwashed suffficiently not to care.

  10. Posted December 1, 2014 at 8:36 am | Permalink

    What I find annoying is the leaking of all major items in budgets to the press before they are released in parliament.
    Also having to listen to the DPM taking responsibility and credit for many of the decisions that the government make. Its time that the Conservatives stood up and started to speak out about what they have achieved.

  11. Posted December 1, 2014 at 8:52 am | Permalink

    More evidence if required to show there is no real growth only an increase in government spending and consumption increased by importing half a million souls annually. An illusion created by Gideon which will come back to bite after the election
    Perhaps a good election to lose. Is that the plan.

    • Posted December 2, 2014 at 8:00 am | Permalink

      GDP assumptions are challenged by Andrew Smithers’ research in output growth per capita and per working age capita.This shows that despite overall GDP ‘stagnating’ for two decades Japan’s output and per head wealth creation outperforms that of UK (bottom of five nations including France) USA and Germany.

      UK is highlighed as a basket case with overall GDP rising but individual wealth and productivity declining, the worst performance of all industrialised nations. Explained by business using cheap labour rather than investing in productivity.

      The findings have not been trumpted in the same way that the recent contested report on migrant economic contribution was.

  12. Posted December 1, 2014 at 9:08 am | Permalink

    Miliband is going to make the claim that the economy isn’t working for people, with wages going down and living costs, like housing, rising.

    Osborne is also being confronted with the problem of poor levels of income tax receipts, where they are short some £66 billion than projections suggested.

    The one thing that connects all these is mass immigration, a policy area where Cameron has failed.

  13. Posted December 1, 2014 at 9:10 am | Permalink

    An interesting new report by Chinese economists concludes that the Chinese govt has wasted nearly $7trillion on useless infrastructure. I mention this because There is a renewed chorus of ‘Keynesian’ commentators pushing the fallacious line that because interest rates are low the govt should be borrowing even more in order to invest in ‘infrastructure’. Most recently the BBC’s left leaning James Naughtie conducted a reverential interview with such an economist, Mr Schiller from the US. Is 8% of GDP not enough borrowing Mr Naughtier did not ask? The line that its the current rate of interest which should be the hurdle rate for returns is of course economically illiterate – it is the opportunity cost of capital. Interest rates may not always be low and the borrowing will have to be repaid or refinanced by future taxpayers. Then there’s the question of what the govt would spend this money on. Of course much would be wasted as the Chinese govt has apparently done and as we have seen in the eurozone where govts such as Spain’s and Greece’s have used low interest rates for a spending binge on useless infrastructure.

    Spare us from these Keynesians, we need smaller govt and lower taxes. Keynes himself said taxes should not exceed 25% of GDP (in the UK we are at 38%).

    • Posted December 1, 2014 at 8:11 pm | Permalink

      Keynesianism and the resulting work, known as post -Keynesianism, which has taken place since Keynes’ time to reflect the fact that currencies now no longer have any attachment is a an economic toolkit to achieve whatever is desired politically.

      If you want smaller government and lower taxes then you can have it. No problem. I would say more like 35% of GDP but we’d all have different views on that. The trick is to move to that position without creating mass unemployment. Reaganomics was Keynesianism , except that President Reagan reasoned that lowering taxes would bring in greater revenue. Same thing really. That is the way the present day right should look at the economy too.

    • Posted December 1, 2014 at 8:47 pm | Permalink

      So you may not be over the moon about Juncker’s €315 billion investment plan to save Europe, then:

      http://www.telegraph.co.uk/news/worldnews/europe/eu/11264954/George-Osbornes-secret-plan-to-bail-out-the-eurozone.html

      • Posted December 1, 2014 at 10:16 pm | Permalink

        No I’m not that’s another piece of neo-keynesian nonsense. There is a good debunking of it in today’s FT by Wolfgang Munchau.

        • Posted December 2, 2014 at 9:05 am | Permalink

          A pity then that Osborne could not veto any of it even if he wanted to, or even if he was directed to do so by our elected representatives in our national Parliament.

          That’s apart from the choice of specific R&D programmes under Article 182(4) TFEU, where:

          “The Council, acting in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, shall adopt the specific programmes.”

          All the other decisions being by the ordinary legislative procedure, which has come to mean transnational majority voting without any possibility of a national minister exercising a veto.

          Which is not what we were promised in the government’s pamphlet for the 1975 referendum, which explicitly stated:

          “The Minister representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests.”

  14. Posted December 1, 2014 at 9:12 am | Permalink

    JR: “Most people think spending has been cut heavily”
    A misconception actively encouraged by mendacious politicians. On your party’s side, to make it look as though you were being tough on spending when all along you intended more “borrowing substantial sums in order to sustain further cash increases in public spending.” It suited Labour to play along with the deception for reasons of cynical party political positioning.
    When you say: “In explaining the higher deficit, however, we need to explain deviations from the original plans. The adverse ones are all on the revenue side” you can expect more demands for higher taxation. You are diverting attention away from spending and onto revenues despite the fact that the tax Payer’s Alliance state that there have been 509 tax rises and 209 cuts under the coalition.
    You should be ashamed that you stood on a platform to eliminate the structural deficit by 2015 when it is at best £100bn per annum and may still be increasing. You never mention the consequences of this in terms of increased national debt and interest payments to service that debt (although if Labour were in power you would repeat it ad nauseam).
    Your party has failed on the deficit and debt reduction doing even less than Darling proposed at the last election which you rubbished.
    All you can offer is the threat that if we don’t vote for your discredited party we will get Labour. Many here and in the country reject the false premise of that pessimistic choice.

  15. Posted December 1, 2014 at 9:13 am | Permalink

    I see the Contract between David Cameron and the electorate is online and what interesting reading it makes with regard to cutting the deficit and the debt (also on other subjects such as immigration and the NHS):
    https://d3n8a8pro7vhmx.cloudfront.net/ukipdev/pages/727/attachments/original/1417196375/ge_4pg-newspaper.pdf?1417196375

    • Posted December 2, 2014 at 7:37 am | Permalink

      Page 4 of that is also interesting, considering what actually happened when we got a hung Parliament.

  16. Posted December 1, 2014 at 9:14 am | Permalink

    Further to my earlier comment on the Highway Agency Dart Charge, I had to pay for a separate journey using one car as my credit card refused to work on my account, which includes a number of cars. I put £10 on, as I did not know how long it would take to clear my first card and used a second. This morning the money had been taken from the account and I have no way of knowing whether the toll has been taken from the £10, charged twice, or whether a refund is possible. I tried to phone but after 10 seconds, was cut off with a whistle. Business as usual with our privatised but publicly guaranteed civil servants.

  17. Posted December 1, 2014 at 9:52 am | Permalink

    The only good news is that more money is to be spent on roads.

    Me thinks we should all be honest with the NHS debate as to what it can provide and to who it should provide treatment.
    Clearly the NHS cannot be all things to all people, all of the time, and certainly should not be treating visitors to this country who should all have travel insurance.

    Perhaps we should also look at the rules on handing out new National insurance numbers to all who seem to be able to qualify after just one days work !

  18. Posted December 1, 2014 at 10:01 am | Permalink

    The problem with the 2010 limits was they were too high in the first place. If the actual spending is slightly lower that is of little comfort in itself. The tax revenue failure is partly caused by foolish tax rates, to which attention has been drawn by you and others on many occasions. There are far too many examples of unaffordable, nice to have or politically expedient spending, subsidies and allowances and reliefs. Radical action is needed to bring the national accounts back into some semblance of good order. We will not get it from this Chancellor or his opposition shadow.

  19. Posted December 1, 2014 at 10:14 am | Permalink

    Back in 2009 the Labour government was having to borrow a quarter of all the money it was spending, a simple and startling fact which was never properly brought home to the voters before the general election, and it resorted to indirectly borrowing £198 billion from the Bank of England, a more complicated fact which few voters understood thanks to the various obfuscations put about through the mass media.

    Now the reduction in the deficit means it is down from the Labour government having to borrow one pound in every four that it spent in 2009 to the coalition government having to borrow one pound in every seven or eight that it spends, which means that it is still a long way from being able to cut its accumulated debt rather than just cutting the rate at which it adds more to the debt pile each year, and it seems quite likely that we’ll be hit by the next recession before it has got to that point.

    I take it that while total government spending has gone up in nominal terms it has gone down slightly in real terms, that is after adjusting for the effect of inflation which was of course pushed up the Bank doing the bidding of two governments and creating a total of £375 billion of new money for them to spend; albeit that the extra inflation added only about 8% to CPI, much less than many people anticipated.

  20. Posted December 1, 2014 at 10:21 am | Permalink

    When I retired my income went down. I didn’t continue spending at the rate that I had been when I was working.
    If I’d been Osborne, presumably I’d have said that my income is weaker and I will borrow more, in spite of knowing there is no chance of my income rising in real terms in the foreseeable future.
    When I look at the chart provided with my recent tax statement and see that servicing our debt (not paying it back) costs more than defence, I conclude that there is something seriously wrong with the way the country is being run. When I see that about a quarter of our taxation goes on welfare, and then read in the Mail about a couple who haven’t worked for years getting more on the dole than a trained NHS nurse working full time, I become even more convinced that we’re living in a madhouse.

    • Posted December 1, 2014 at 7:19 pm | Permalink

      Yes, benefits are so high now that many are better off than people working 40 hours a week. There is no incentive to work anymore. People are just shelling out kids to get the extra money. They moan about being poor but run cars, have horses in some cases, have the latest expensive phones, large flat screen TV’s, takeaways, drink, bingo, lottery and tattoos. They don’t know they are born. My husband and I don’t have any of these things and he works all the hours he can. We have to be very careful with our money but are not in debt and will not get credit just to have the latest TV or phone. There are many like us who are sick of people working part time but taking home more than people working full time. The welfare system stinks and is no longer there for the hard times but so that many can live an easy life while having no intention of working for it.

    • Posted December 1, 2014 at 11:08 pm | Permalink

      E P

      Agreed.

  21. Posted December 1, 2014 at 10:35 am | Permalink

    Politicians constantly tell us what is ‘the right thing to do’. Is it the ‘right thing’ to borrow one hundred, thousand, million pounds this year and expect someone else (our children, their unborn children, and 10 more generations to come) to pay it back?

    Is it the ‘right thing’ to use PFI to build a hospital and expect our children to pay for it? How, in 30 to 40 years time, are they to pay for new hospitals when they are paying for the ones we built?

    I would say politicians are doing the ‘wrong thing’ – in a massive way.

  22. Posted December 1, 2014 at 10:39 am | Permalink

    I am with you! I have explained again and again to my creditors (plebs to a man, alas) that by applying rigour I have kept my spending on course and it is only the inexplicable but sad deficiency in revenue, far below confident expectations, that prevents me from coming to their aid.

  23. Posted December 1, 2014 at 10:40 am | Permalink

    Briefly off-topic:

    After the monthly update on the Electoral Calculus website it seems that very little has changed during November, Labour and the LibDems are both up a smidgeon from their averages for October, while the Tories and UKIP are both down a smidgeon:

    http://www.electoralcalculus.co.uk/polls.html

    And the central prediction for May 2015 is that Labour will end up as by far the largest party but 10 seats short of an overall majority, the expected loss of three quarters of the seats they now hold in Scotland being the recent factor depriving Labour of an overall majority but of course doing nothing to help the Tories get an overall majority.

    While even with 17% of the votes UKIP will still not win any seats at all on their model, in contrast with the LibDems keeping 19 seats on just 8%, including just one of the 11 they presently hold in Scotland.

    • Posted December 1, 2014 at 7:01 pm | Permalink

      In many ways I hope Labour do get in on a small vote. You Tories have been desperate to keep the first past the post system. Let’s see how you feel about it by 2020 when it will be 28 years since you won an election. I hope I live to see the day when I see the Tory party, worn down by perpetual opposition, decide that PR is ‘fair’ and ‘the right thing to do’.

      • Posted December 2, 2014 at 7:56 am | Permalink

        Please don’t include me in “You Tories” … I’ve set out my own idea on how we could easily keep the best features of the present FPTP system for the UK Parliament while tempering its worst effects and freeing up the political market place to greater and more effective competition, and it’s not my fault that so few people see the good sense in it and far more come up with (usually ill-founded and sometimes fatuous) objections … the Tories already like PR in Scotland, if the Scottish Parliament was elected under straight FPTP they would have far fewer members and their present leader would not be one of them.

  24. Posted December 1, 2014 at 10:41 am | Permalink

    Morning John,

    The mind set of the government, media and the population changed during Mr Brown’s tenure in both number Eleven and number Ten Downing Street; somehow, he managed to convince the media and the general population, that the more money the government spent on so called public services, the better. He managed to convince the population that because they spent more and more on these services, they cared more than the Conservatives ever would or could.
    At the time, I always asked the question whether more and more money spent was always a good thing. It seemed to me that the real issue should have been value for that money; if a Mars Bar cost one pound, one would expect to get Two for Two Pounds however, it always felt that, with Labour in charge, for your Two pounds, you only got One and a bit.
    It appears that Messers Cameron and Osbourne are taking the same approach regarding spending; the more the better! This is not the true Conservative way in my opinion.

    John, how do you feel about using so called fines for revenue raising? Are these so called fines just more taxes? Why does every fine have to be a “record fine?” Is using the justice system as little more than an extension to HMRC a good thing in your view, or does it bring both into disrepute?
    What has changed in this country to make us all so envious of success and wealth and for the government, media and many in the population to feel the need to punish people and businesses for being successful? Have the socialists finally won?

    • Posted December 1, 2014 at 11:08 pm | Permalink

      Cliff

      The record fines you speak of are all eventually paid for by customers, no one else.

      Thus as taxpayers we fund part of it, and as customers we pay again a second time.

      The fines should go to the customers in many cases not the government.

      • Posted December 2, 2014 at 11:14 am | Permalink

        Indeed Alan!

        It is even more of a farce when a state funded organisation, fines another state funded organisation. It is even worse when another state funded organisation investigates one of these state funded organisations and then uses the state funded courts to issue the fines.

        Sadly, because our media has convinced the population that fines are good and success is bad, people (customers and taxpayers) still call for companies and public service providers to be fined more and more.

        I also disliked it when Mr Cameron recently “donated” revenue from some fines to armed forces charities. As much as I may support some armed forces charities, I don’t see why the state should donate to them when the nation’s financies are in such a mess, I also suspect there are many members of our population who are rather anti our armed forces given our country’s foreign policy.

        As I said above; The system of fines in this country in many cases, are little more than additional taxes. I do fear that some businesses may up and leave if our government and it’s little helpers continue down this path of using the justice system as an extension to HMRC. Businesses need certainty and these fines seem in all too many cases to be randon; the worse one, in my opinion, is the HMRC fining BAT for supplying too much of their product to Belgium in case it is smuggled back into the UK and Nanny doesn’t “get her cut.”

  25. Posted December 1, 2014 at 11:04 am | Permalink

    Let people choose their own healthcare instead of being shackled to a State behemoth built on the discredited ideology of socialism.Anyone who voted for this socialised healthcare is long dead as it was introduced in the 1940’s! Why are we surprised this soviet model lurches from crisis to crisis -it goes with the territory.

  26. Posted December 1, 2014 at 11:07 am | Permalink

    A healthcare system built on socialist ideology? Yeah that oughta work!

  27. Posted December 1, 2014 at 11:20 am | Permalink

    Yet again, we see why we need a new start with a new party in power, or at least one controlling the 2 dreadful galloping horses and the third one, too lame to even comment on the whole sordid arms race. Whatever Osborne spends on the NHS, Labour will just say “we’ll spend 2 billion more then”. THERE ARE NO WINNERS IN THIS GAME.
    With Tories and Labour trying to outspend each other, pouring money into the black hole, we need an honest broker.

  28. Posted December 1, 2014 at 11:24 am | Permalink

    They don’t even get it that the productive, high earners, are taking their chips off the board and cashing them in. They are fed up with the regulations, taxes and stupid spending by governments. You are left with £7 an hour androids, perhaps 10 of them trying to do the job of the former workaholic. Great for unemployment figures, poor for productivity and tax revenues.

  29. Posted December 1, 2014 at 11:24 am | Permalink

    I agree with “bigneil” nobody is looking at the real cause of our overstretched health service and no room on the roads. Too many people. We do not need any more. Those that have come are on low paid work or worse on benefits non of which adds any money to the taxes of the nation I am suspicious of these sums of money suddenly appearing could they be electioneering sweeties?

  30. Posted December 1, 2014 at 11:42 am | Permalink

    Off topic, but on the subject of immigration, often debated here, Switzerland – often and rightly viewed by readers here as an attractive economic and political model – has just rejected some populist-left wing proposals in referenda. Switzerland’s population has grown by over a million in 20 years, and is currently 8.2 million. Some 23% of its inhabitants are foreign nationals, most of them from EU states. Last year, net immigration stood at 81,000 (ie much higher proportionally than the UK’s). By a 3 to 1 majority the Swiss have voted against a mandatory cap of 0.2% of the population in net immigration. We should relax about it as well – but we should certainly get the right to block or kick out foreign criminals, terrorists and welfare scroungers, whether from the EU or not.

    • Posted December 1, 2014 at 7:05 pm | Permalink

      You relax about if you want. I’m fed up with traffic jams, insane house prices, high rents, being packed into trains like a sardine and people being unable to get a doctor’s appointment or get their children into a local school.

      You might be happy about it – probably because you are unaffected or get some cheap labour. I am not happy about it. I want a referendum. If the majority are happy with it – fine. I guess I’ll have to look for somewhere else to live and help the net migration figures a little.

      • Posted December 1, 2014 at 10:23 pm | Permalink

        Mike you need to blame the proper causes, its not immigration. House prices and rents are high because of restrictive planning laws limiting supply. Roads are under invested because of the green crap agenda. If the NHS was enabled and obliged to be more responsive to its customers by having choice and competition there wouldn’t be queues. Maybe much of this isn’t achievable – any reform of the NHS has the left screaming ‘privatization’ – but let’s recognize its govt policies more than immigration which is causing many of the problems you mention.

        • Posted December 2, 2014 at 9:34 am | Permalink

          Of course it’s nothing whatsoever to do with immigration, you can allow and encourage millions of extra people to come here from abroad without any of them, or indeed their children, ever needing anywhere to live. In fact we need more immigration to supply the labour to build the houses just for the established population, not for the immigrants of course because they don’t need any, and none of those vigorous and hardworking young workers will ever grow old and start to ail and become a burden on the taxpayer. It all makes perfect sense, if only the xenophobic British would see that and take a more relaxed attitude to the government handing over their country to foreigners so that a minority can profit.

      • Posted December 1, 2014 at 11:04 pm | Permalink

        Mike

        I am with you as well.

        Agree with the very sensible points you make.

    • Posted December 1, 2014 at 8:35 pm | Permalink

      Rather like the Irish when they voted for the second time on the Lisbon Treaty, the Swiss have voted on this under duress from the EU.

      http://euobserver.com/news/126729

      “The government had also urged voters to oppose the new cap, which it
      said would imperil the ongoing negotiations with the EU following
      February’s referendum.”

  31. Posted December 1, 2014 at 12:11 pm | Permalink

    No mention of PFIs or any of those off the balance sheets numbers, then? Aren’t they increasing year on year? But they are hidden from our view. Why?

    The NHS spent 5% of its budget on management in 1983. Now that has jumped to 15%, a three fold increase on an ever increasing budget. So, just how much of the £2 Billions boost to that political football will actually end up in PATIENT care?

    Is there no end to this electoral bribery? ‘We promise to pay more into the “envy of the world” project but only if you vote for us’!! The NHS already receives too much but we could do with more in our own pockets. But ‘we’ do not matter, do we? That is why “we” are seeking alternative parties to vote for.

    Now, in reality, the NHS funding should not be increased – it must be cut, if it is to survive the next decade.
    So, why cannot successive Governments do what is right for the country and NOT always try to buy themselves another term in office. Such corrupt and malignant policies do nothing but put us deeper into debt and make us very vulnerable to currency speculation.

  32. Posted December 1, 2014 at 12:58 pm | Permalink

    Maybe if we didn’t spend Billions on the Eu Money pit,
    we would have paid off even more off the deficit.

    • Posted December 1, 2014 at 7:20 pm | Permalink

      Yes, all that money given to the EU could go towards our NHS and caring for our elderly instead of paying for EU politicians to waste it.

  33. Posted December 1, 2014 at 1:10 pm | Permalink

    Increased deficit:
    meaning in normal-speak : Mr Osborne failed/paid less of the installments off debt thus increasing that debt ( as when one fails to make the proper monthly payments on a credit card )
    Extra for the NHS:
    meaning Mr Osborne’s eyes are in focus on the Election in 2015 and the campaign where the Labour Party will use the only remaining dumdum bullet in its armoury against the Tories and UKIP.

    Like so many small businesses who fell into ruin and bankruptcy only a little time ago, maxing out their loans and credit cards, making less payments than they should hoping against hope for the economy to pick up… We have seen this movie. Mr Osborne must have missed it but insists we sit through it again.

  34. Posted December 1, 2014 at 1:35 pm | Permalink

    Off-topic, again, JR, is Peter Oborne correct in his implication that George Osborne is preventing Parliament debating Juncker’s €315 billion investment plan?

    http://www.telegraph.co.uk/news/worldnews/europe/eu/11264954/George-Osbornes-secret-plan-to-bail-out-the-eurozone.html#disqus_thread

    And am I correct in my provisional conclusions that a) the government is under no legal compulsion to get any form of parliamentary approval before it agrees to this plan; and b) even if MPs told Osborne not to agree to it he would not be able to veto it?

    Reply The Opposition have days to choose the business of the House, so they could nominate this issue for debate and vote if they wished.

    • Posted December 1, 2014 at 6:54 pm | Permalink

      Reply to reply,
      Not very informative reply to Denis’s questions.
      Leaving it to the Opposition are you? The MPs you keep telling us are Europhiles.
      So much for your Euroscepticism! Party loyalty trumps everything else yet again!

      Reply We don’t have opposition days to use!

      • Posted December 2, 2014 at 8:29 am | Permalink

        Isn’t there a backbench business committee, which could decide that if the government really isn’t prepared to devote any of its time to a debate on this matter then there would be a debate in backbench time?

    • Posted December 1, 2014 at 7:37 pm | Permalink

      “Reply The Opposition have days to choose the business of the House, so they could nominate this issue for debate and vote if they wished.”

      How is the HoC competent to decide this issue and if not why would it want to waste time on it? Surely, Juncker’s plan comes within the remit of the European Parliament and it is no business of the UK’s to decide whether it wants large sums of our money (which we don’t have) to be spent for us by the EU? Clearly the EU needs ‘stimulating’ and the socialist solution to any problem is to throw money (somebody else’s) at it.

      • Posted December 2, 2014 at 8:55 am | Permalink

        Yes, it has been the longstanding view of successive UK governments of different political complexions that UK MPs are not competent to decide such matters. That is why they have agreed EU treaties which mean that the decisions will be taken by transnational majority voting, so even if MPs did get above themselves and had the temerity to direct the Chancellor to oppose this plan he could be, and almost certainly would be, outvoted by the finance ministers from other countries.

        Looking at the Q&A document linked at the bottom of the EU Commission press release, here:

        http://europa.eu/rapid/press-release_IP-14-2128_en.htm?locale=en

        and checking the treaty articles cited as potential legal bases for the plan it appears that Osborne will have no veto to exercise on anything other than the choice of specific R&D programmes; and as the central legal act will be an EU Regulation, rather than a Directive or a Decision, it will have direct effect and immediately become law throughout the EU from the instant that it is made in Brussels, without any need to bother MPs about it.

    • Posted December 1, 2014 at 8:29 pm | Permalink

      Don’t backbench MPs, coalition and opposition, have any views of their own?

      • Posted December 1, 2014 at 9:40 pm | Permalink

        Evidently they do not.

  35. Posted December 1, 2014 at 2:23 pm | Permalink

    About 10 to 15 billion down on taxes coming in then. I feel a good sell of the family silver coming.

  36. Posted December 1, 2014 at 2:46 pm | Permalink

    These figures come as no surprise. We have, effectively, had a minority Lib-Dem government for the past 4 years. On a number of occasions you have advised us that your Party has not been able to proceed with policies inimicable to the Lib-Dem ‘junior’ partners due to their veto.

    • Posted December 1, 2014 at 7:21 pm | Permalink

      Cameron should have got rid of Clegg and co a long time ago. The electorate would thank him for it.

  37. Posted December 1, 2014 at 3:05 pm | Permalink

    The deficit is higher but spending is within the original plans from 2010.</i)

    Labour's or the 'Coalition's'?

    Whichever, the plans were clearly too ambitious, and to attempt to excuse going even further into debt by saying that everything is going according to plans made four years ago is inexcusable, given that governments tend to change every five years and none of the promises made when those plans were laid have been kept.

    I can confidently predict identical excuses in 2019, assuming that the country, whatever that word means in these post devolution, ever closer European Union these days, survives intact until then.

    We should all have learned by now that universal suffrage is a very bad idea.

    • Posted December 1, 2014 at 3:06 pm | Permalink

      Please excuse the incomplete closing tag.

  38. Posted December 1, 2014 at 3:36 pm | Permalink

    In his speech at Stonehenge, Cameron claimed that the country could only afford these road improvements because the Government had “got the nation’s finances under control.”

    Who’s he trying to kid?

    Our debt has doubled under this Government. The deficit has been cut by less than half and is increasing again ….. we are shackled to a protectionist, sclerotic political dinosaur which is seeking to bleed us dry.

    He’s borrowing to pay for these road projects, ramping up the deficit/debt even further.

    Does he really think we’re stupid?

    • Posted December 1, 2014 at 7:09 pm | Permalink

      Does he really think we’re stupid?

      Not at all. He KNOWS we are stupid. Let’s face it – most people vote Tory or Labour. You know what you are getting.

      One hundred, thousand, million pounds for the next 10 generations to pay back – and that’s just the debt for one year! But, you’ll vote Tory in 2015 – like most of the people on here.

      You know what the definition of insanity is … doing the same thing over and over again and expecting a different result. Let’s face it, you can’t be happy with the current result. Actually, most voters are not stupid. They are insane.

    • Posted December 1, 2014 at 7:15 pm | Permalink

      Er… Yes

      zorro

    • Posted December 1, 2014 at 10:24 pm | Permalink

      They are hoping mopst will include all the debt and deficit stuff is too boring for the population to get worked up about.
      Half the population don’t know the difference between debt and deficit.
      A quarter know but couldn’t really care less.
      A tiny minority understand and care..but they are emigrating and being replaced with new voters.

      • Posted December 2, 2014 at 5:14 pm | Permalink

        A tiny minority understand and care..but they are emigrating and being replaced with new voters.

        Some of us cannot emigrate but would.

        This country is becoming a hell-hole and many of us are destined for a very unpleasant old age yet the fools party on, seemingly without a care in the world.

  39. Posted December 1, 2014 at 4:02 pm | Permalink

    Funny how the country is at 3 to 3.3 growth but pounds is not going up, didn’t wet&mad do away with rigging the currency markets or is it that the treasury are only ones allowed to rig the market.

  40. Posted December 1, 2014 at 4:51 pm | Permalink

    Think of the savings to be made by
    Scrapping Trident
    Scrapping HS2
    Leaving the eussr club
    Probably other easily identified savings. Why does nobody in the leadership seem to think. John can you explain why these things are not considered?.

    • Posted December 2, 2014 at 1:38 am | Permalink

      Nothing to say John?. Will you give your 11% pay rise to the food banks?

      Reply I have not received an 11% pay rise

      • Posted December 2, 2014 at 8:41 am | Permalink

        Reply to reply – If you do, will you give it to the food banks!

  41. Posted December 1, 2014 at 5:44 pm | Permalink

    Don’t worry about the drop in tax revenue. That just means you are accidentally leaving more spending power in the economy for the little people to spend. The chances of it causing some inflation are zero, if not less. What ullage is left on credit cards, is going to be filled up by Boxing Day.

    Likewise with the budget deficit. Your “original plans from 2010” were supposed to be for a zero deficit for fiscal 15/16. That was never going to happen; (a nice little earner for some). It won’t happen in the 2018/19 sequel either. (Osborne 2: The Nightmare Returns).

    If only you had stuck with Mr Darlings plan in 2010. He was running an 11% budget deficit and the economy was lifting off the runway. He would have throttled back when the economy was above the clouds and he could have done it cost free. It’s a pity that Osbo’ never learnt to fly an economy.

    Don’t let Osbo’ drop the deficit below 6% of GDP. That will be about £100 billion at current GDP. Most of the government deficit is paying for the rather large net import bill we have. The lower the deficit, the more the private sector will have to use up its savings or increase its debt levels to pay for those 60 inch Plasmas and i-phones. The great export boom envisaged in 2010 hasn’t happened and it is not going to happen anytime soon.

    • Posted December 1, 2014 at 7:36 pm | Permalink

      In the run up to the GE you are going to hear a lot of fluff about increased spending on this, that or the other. The other side will respond with the classic “How are you going to pay for it???!!!”.

      The truth is, the government can pay for anything it wants to buy, it can never be insolvent in its own currency. There is no bill it can’t pay in its own currency. The only worry it has is controlling inflation; which it will do mostly with taxation and sometimes with interest rates if it wants to pass the blame off onto the Central Bank.

      etc ed

  42. Posted December 1, 2014 at 6:05 pm | Permalink

    Can imagine in another twelve months it will be the same old story – throw more money at the NHS. If only I could cap my contribution.
    Are the political class unaware that its the tax payer thats in for enough debt already. But no – kick the health can down the road.
    Lets recover some money – health insurance required by all immigrants and retro for last 24 months on all new incomers – payment in respect of all non shows/missed appointments – no foreigners treated unless their Country of origin provides cost Gtee
    Its not rocket science – just simple good and sensible house keeping. But will that shower at Westminster do anything – dream on.

    • Posted December 1, 2014 at 7:24 pm | Permalink

      I couldn’t believe it when I saw the figures for the numbers of people failing to turn up for their out patients appointment. I had to stand and wait for the electronic device to bring up the message again because I wasn’t sure I had seen the figures correctly. Over a thousand for the month of October had missed their appointments!!!!!!!!!!!!!!! How disgusting and they should be charged. What a waste of hospital time and money. When are we going to get tough on people who cannot be bothered to help themselves and foreigners who come to the UK for free treatment?

      • Posted December 1, 2014 at 10:23 pm | Permalink

        The last I heard, which is some time ago, the cost for an interpreter to attend a consultation at a doctor’s surgery was £50.

  43. Posted December 1, 2014 at 7:21 pm | Permalink

    I hope that Gideon is in finer fettle when delivering the Autumn statement than he looked at last week’s PMQs. He appeared rather spaced out. Doubtless, he had something on his mind…. Defending the government’s performance will be easy compared to what it might be like defending the actions of some present and former MPs in the near future… Tick tock…

    zorro

    • Posted December 1, 2014 at 11:33 pm | Permalink

      Gidders knows future generations will never be able to repay his debts.
      He could have done the right thing and cut spending more quickly but he choose to buy himself a few more years in the sun.
      The very same Labour spending plans that he described as ‘reckless’ he is now implementing. His nervousness is fully justified.

  44. Posted December 1, 2014 at 7:30 pm | Permalink

    Meanwhile, north of the border down Holyrood way, there is not a peep about the impact of the collapse in global energy prices on the revenue projections for an ‘independent’ Scotland. Alas, cruel world.

  45. Posted December 1, 2014 at 7:44 pm | Permalink

    The pressure is on to get the government to spend more of our money.

    The BBC last night on Westminster Hour said:

    “Who will get the credit for this extra NHS spending because Norman Lamb from the Liberal Democrats- the Health Minister – says that he’s also been calling for extra spending on the health service.”

    The BBC, as always, sees extra taxpayer spending as a good thing and asks who should get the “credit” for it.

    This is what we are up against.

    In many years I have never heard the BBC put on pressure to reduce public spending.

    Mind you, I would prefer the BBC to stay out of politics altogether.

    • Posted December 1, 2014 at 11:03 pm | Permalink

      Split the BBC up and sell it off, those bits that cannot make a living in the commercial world can fail and shut. Welcome to the real world.

  46. Posted December 1, 2014 at 8:04 pm | Permalink

    Petermartin 2001
    the incoming tax and ni for government workers never leave the governments pocket so you can sack them with no tax loss, only consumption go down

  47. Posted December 1, 2014 at 10:13 pm | Permalink

    So Camerons boasting about the millions of new jobs is just hollow – most of these are too poorly paid to fill the treasury coffers but we are saddled with higher in work benefit payments. Jobs that are unviable without subsidy that we keep being told people already living here won’t do. Now we know in part why.
    Meanwhile more pressure is put on essential services.

    Mr Redwood you talk of ‘investment’..but does this include the broad definition of ‘investment’ used by Gordon Brown that pretty much included anything ?. Why are we still using Brown’s retail price index that doesn’t include housing costs ?.
    We know why Mr Brown switched to the RPI index – to underestimate inflation to keep interest rates low to funnel credit spending into consumption boom.
    Why is your chancellor following the same path by building an economic ‘recovery’ based on borrowing?

    Really government forecasts are complete rubbish and the actual figures are nothing more than industrial scale deception. It’s just a matter of time before the bond markets and the public cotton on to the whole ponzi scheme.

  48. Posted December 1, 2014 at 10:54 pm | Permalink

    John,
    You are putting a positive spin on a political class completely unable to live within its means, adding to the burden of our children massively in ever increasing debt. Wasting large amounts of it on endeavours completely against the will of the British people.
    If we had learnt nothing I would have thought throwing more money at the NHS will not achieve anything would be it, why is everyone in the political class afraid to say the obvious about our health system?
    I’m tired about hearing about the “deficit” too, I aint forgotten Cameron’s “we are paying off the deficit” as if it’s the debt which of course it isn’t. Let’s talk about the national debt and how much it keeps going up, and how much of it is not even counted – guarantees on ex nationalised industry pension funds, private finance initiatives, and all the rest of it.
    We are living in a mad country where the state would rather subsidise sink estates full of unemployed people, give them the worst schools in the developed world, and import massive workforces.
    The state has taken away all choice from ordinary people, no choice of school, no choice of GP, no choice of other healthcare provider, and we can all see how poor state monopoly provision is cant we. And yet the political class bangs on about diversity and equality while at the same time making sure its own have access to plenty of choice, and don’t suffer the indignity of being positively discriminated against in their own country. Equality is only for some people in this country.
    As Roger Taylor of Queen says an honest politician is a contradiction in terms.
    Cheers

    • Posted December 2, 2014 at 12:49 pm | Permalink

      Not much of a positive spin..the only ‘positive’ seems to be that an arbitrary spending limit set way back in 2010 hasn’t been exceeded. This was probably set high anyway to generate a good news story further down the line.
      Really no analysis by Mr Redwood on the affordability and sustainability of our current path. This is the tragedy of him staying wedded to the Modern Conservative party – he is very much constrained on what he can and cannot say in my view.

      Reply I have often given you my view which was to spend less. I also set out on various occasions the ways in which I would have spent less.

      • Posted December 2, 2014 at 4:56 pm | Permalink

        Thanks you for your reply.

        That begs the question, why has a Conservative led government spent so much money and ignored voices like yours. Why is decision making made by such a narrow few.
        What part of the mistake of matching Labour’s spending plans in 2007 did your party not understand. Why has your party exceeded the spending levels outlined by Mr Darling that were described at the time as being ‘reckless’.

        Gordon Brown tested to destruction the idea that spending money solves all problems….then we hear that Gideon is throwing money at the NHS!.

  49. Posted December 1, 2014 at 10:56 pm | Permalink

    Can you imagine of individuals lived their life this way?

    • Posted December 2, 2014 at 10:10 am | Permalink

      Perhaps we would Margaret, if the State allowed us to create new money via a small printing press in our garden shed.

  50. Posted December 2, 2014 at 10:02 am | Permalink

    My daughter opted to work a shorter week rather than take a rise which would have put her in the higher tax band, which in turn allowed her to dispense with the cleaner who came in on a weekly basis. So her cleaner has lost her job, although she’ll probably get another without trouble, and two women are now working part time doing one job, which taking into account their personal allowances, will result in a loss of taxation revenue of more than just the higher rate element.
    This shows how the higher rate affects ordinary peoples’ behaviour, it would affect that of the super-rich far more as they have far more to lose.

  51. Posted December 2, 2014 at 4:58 pm | Permalink

    The interesting question is not Corporation Tax (8% or so of revenues), but what has happened to Income Tax? Received (economic) wisdom is a fairly exact relationship to national income. The quite limited tax adjustments of recent years should not have affected this. But rising GDP has not produced the expected rising Income Tax (around 30% of revenues). Why not?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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