Big surge in tax revenue forecast – £105.2 billion this Parliament

The Autumn Statement forecasts higher tax revenues in every year of this Parliament compared with the March 2015 budget. In total the new estimates show us paying an extra £105 billion in tax over the five years, with increases of 4% in tax revenue compared to March forecast in both 2017-18 and 2018-19, with smaller increases in the other years.

The forecasts also show an increase in other receipts, mainly the gross operating surplus on public sector trading, which more than offsets the increase in the UK’s own resources contribution to the EU which rises by 29% for the five years compared to the March figure.

Capital Gains tax receipts are now forecast to be 6.4% lower over the five years than the March forecast, reflecting the Treasury’s inability to model the impact of higher rates on revenue. They have had to progressively lower these forecasts in the light of experience and have done so again.

There are strong gains in VAT, in National Insurance  and in Income Tax, though self assessment income tax is now forecast to bring in less this year than the March estimate.

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64 Comments

  1. Narrow Shoulders
    Posted November 25, 2015 at 3:40 pm | Permalink

    £11.5 Billion error announced in forecast VAT receipts from July (pages 106 and 107) which got the Chancellor out of his tax credit hole for now.

    He could have spread that around to all of us who are in this together but chose to play politics with a weakened opposition.

  2. Richard1
    Posted November 25, 2015 at 4:05 pm | Permalink

    Marginal tax rate on income down – revenue received up; marginal tax rate on gains up – revenue received down. Can there be any leftists out there who still deny the Laffer Curve?!

    • Lifelogic
      Posted November 26, 2015 at 9:38 am | Permalink

      Nearly all in government, the BBC and the state sector, simply cannot bring themselves to admit that tax level above a certain point just kill the goose that lays the golden eggs and raises less tax as a result. They even invent quack economics to endlessly justify their desire to waste even more money – or “invest” as they absurdly call it. Government investment start by preventing real and far better investments by the people and businesses that made the money in the first place.

      The best rate for tax levels (for the benefit of the population as a whole) is of course well below the Laffer point. Yet we cannot even get government to stick below this (self defeating even for the state sector) Laffer point.

      • Lifelogic
        Posted November 26, 2015 at 9:48 am | Permalink

        “Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.”

        Winston Churchill.

        Osborne is just slowly milking (and regulating) it to death, while pissing the milk largely down the drain on complete dross and second rate services.

        • Lifelogic
          Posted November 26, 2015 at 9:53 am | Permalink

          Talking of second rate services I see that researchers estimated that if NHS hospital maternity performances were the same for the weekends as they are over the working week there would be about 770 fewer newborn deaths and 470 fewer maternal infections each year compared to the present.

          So that is about 15 deaths each week over and above the Monday to Friday level. Not that their performance Monday-Friday is much good either.

  3. CHRISTOPHER HOUSTON
    Posted November 25, 2015 at 4:11 pm | Permalink

    Quite impossible for the OBR or RT Hon Mr Osborne or indeed the BoE to calculate.

    1/ Mr Carney has again recently stated interest rates will not rise soon, cancelling his last statement, the one before that and the one before that and every statement previously made.

    2/ Rt Hon Mr Osborne indicated previously his near, medium and long- term plan was soundly in line with advice from the BoE. ( “and who can doubt BoE advice?” he insisted)

    3/ The PLAN was based on an exact progression and success of the BoE advice and astrological/ daft economic projections.

    4/ None of those projections proved correct. Not one.

    5/ If the “forecast higher tax revenues” relate to projected income tax/sales tax and many other taxes, how come this can be projected estimated on:-
    a/ An unknown outcome of the EU referendum?
    b/An unknown number of migrants entering the UK?
    c/ An unknown number of people getting work here?
    d/ An unknown number of people leaving the UK?
    e/ An evidenced lack of foresight by the BoE?
    f/ An unknown forward price of oil and gas and other commodities due to geo-politics outcomes?

    The Labour Party both Corbynite and free-rider MPs did not present any real opposition to Rt Hon Osborne’s statement. Well I’ve read a 10-page Introduction to Economic Theory so Mr Osborne is lucky I was not on the front bench of Labour during his nonsense speech.

    • Lifelogic
      Posted November 26, 2015 at 10:02 am | Permalink

      It is hard for Labour to attack Osborne as sensible attacks on his lefty policies would all have to come from the sensible right. Osborne is simply not a Tory he clearly loves a bloated & inept state sector.

      Why are you endlessly taxing so much but delivering little Osborne (other than second rate services, pointless wind farms and daft train lines)? Why are you also borrowing hugely yet delivering so little?

      Why do you think we will move to a “high wage low benefit economy” (other than in the state sector) when you are taxing and regulating the private sector in to the dust.

  4. ian
    Posted November 25, 2015 at 4:12 pm | Permalink

    How is wet&mad going to pay for it, you will fined out in the next budget in march, more than likely pension relief, that is the mount he gives you back out of your taxes to go towards your pension and offer rises like fuel duty and so on.

    • Roy Grainger
      Posted November 26, 2015 at 3:00 pm | Permalink

      For sure pensions will be hit – the small print of his statement yesterday said as much by identifying this area as one that would be addressed in the budget next year.

  5. ian
    Posted November 25, 2015 at 4:19 pm | Permalink

    and don’t forget your council tax bill.

  6. JJE
    Posted November 25, 2015 at 4:30 pm | Permalink

    I continue to be puzzled by the Help To Sell schemes for the builders. It would have been better to listen to Mervyn King regarding the dangers of the state underwriting domestic mortgage borrowing and artificially creating a property bubble which leaves the government having to micro manage even further by penalising Buy To Let. I don’t myself see the problem with Buy To Let as long as someone is living in the property – it’s the empty flats being held as pure investments that annoy me. At current prices and market rents in London it strikes me as more logical to be a tenant.
    Sort out the Planning system and let the market function properly – or do we need to find a real Conservative government to do that? This one seems to pride itself on being New New Labour.

    • Anonymous
      Posted November 26, 2015 at 3:19 pm | Permalink

      JJE – There is nothing wrong with the planning system.

      It is mass immigration that is causing the housing crisis.

      Are you seriously suggesting we get rid of our planning system and make our beautiful country look (bad ed) ?

      And say we get what you want. Building to match this imported demand. Great. A slump in property values and the loss of our culture to boot.

  7. Lifelogic
    Posted November 25, 2015 at 4:33 pm | Permalink

    Osborne was blithely saying “as we move to a higher wage lower welfare economy” but why on earth does he think the UK will? Just his passing of the moronic and counter productive laws on wage levels render industry less competitive and destroys jobs. The complete opposite is more likely. This especially as he is encouraging the hard working and wealthy to leave while having on open door to anyone from the EU regardless of ability and skills.

    Everything Osborne does mitigates against a high wage economy. High wages come from being efficient, having good capital equipment, working intelligently, having low taxes, investing intelligently, having simpler taxes, few regulations, simpler employment laws and above all not having to carry a bloated, largely misguided, overpaid and over pensioned state sector that delivers so little of any real value to the productive. On top of this we have the damaging “equality” agenda, the litigation culture, an over priced, complex and very inefficient legal system, expensive green crap energy, poor roads, uncompetitive banking ……

    Osborne is Tax, Borrow & Waste plus over regulations, over complication, a bloated inept state sector, HS2 nonsense and expensive energy.

    I predict he will spend more and collect far less than he suggest & by a long way.

    • A different Simon
      Posted November 26, 2015 at 10:07 am | Permalink

      We’ve got high wages at the moment . Typically 4-6X those in the developing world given how strong our currency is .

      For a Govt , higher wages mean higher GDP which they equate with growth .

      For an individual , higher wages mean nothing .

      What matters is how much disposable income they are left with after paying for the essentials (including making provision for old age and rainy day) .

  8. ian wragg
    Posted November 25, 2015 at 4:35 pm | Permalink

    As I have said in the previous post, the chancellor must be completely deluded.
    No one will now believe he is going to eliminate the deficit in this parliament.
    Just add to immigration and the many other total policy failures and I doubt you will be in power after the next election.

    • A different Simon
      Posted November 26, 2015 at 10:40 am | Permalink

      With creative accounting a Chancellor could possibly eliminate the deficit – for a while .

      This would require robbing future generations , flogging off what is left of the family silver and can kicking , scrimping on maintenance and running things into the ground , failing to replace aging power stations etc .

      The public finances might seem to improve but private and household finances and indebtedness would probably worsen .

      They might even be able to “eliminate the deficit in this parliament” – if one did not care about the longer term costs and consequences of doing it .

  9. ian
    Posted November 25, 2015 at 4:40 pm | Permalink

    Should push up houses price by 8% to 10% by may next year.

    • A different Simon
      Posted November 26, 2015 at 10:13 am | Permalink

      Complete economic illiteracy and foolishness .

      Who would have thought that a nominally Conservative party would be so in favour of using public money to underpin bubble asset prices ?

      Osborne and Cameron are massively in favour of big govt and state intervention – yet they get the state intervention so horribly wrong !

      Do these people ever entertain doubts and the possibility that they may be fallible ?

  10. ian wragg
    Posted November 25, 2015 at 4:49 pm | Permalink

    I’ve just been checking the graphs on Conhome.
    It shows people in employment rising from 31 million today to 32.3 million at end of 2020. This means that an extra 250,000 annually will join the workforce and unemployment will rise from 1.6 to 1.8 million.
    This lays bare the fact that you have no intention of reducing immigration and if there is a recession the deficit will soar as the tax receipts will be nowhere near what he has forecast.

    • Denis Cooper
      Posted November 26, 2015 at 9:07 am | Permalink

      For more than two decades successive governments have been running a kind of demographic Ponzi scheme to try to get themselves out of financial difficulties of their own making. And it’s not a particularly effective scheme even in the short term, as the costs to the state resulting from unselective mass immigration are similar to the increases in its revenues, while in the longer term the costs to the state will inevitably rise as the immigrants start families with dependent children needing healthcare and education and then themselves stop being vigorous and productive “young workers”, if they ever were, and themselves age and ail.

      I emphasise that the chronic financial difficulties are those of the government, not of the wider population, but it is the wider established population which sees its birthright being shared out with foreigners while deriving no net benefit.

      It might have been OK if the government had been honest and explained its growing financial problems, and then directly asked the established body of citizens whether it could try to solve them by allowing and encouraging mass immigration. Meaning that they, the citizens, would have to be prepared to accept and welcome large numbers of people from abroad to share their country and become citizens like themselves with the same rights and duties.

      But of course the government can read opinion polls as well as anybody else and could not dare to leave that decision to the citizens in a referendum, which would have been the democratic way to proceed.

    • Anonymous
      Posted November 26, 2015 at 3:25 pm | Permalink

      Ian – And there will be many MANY more eligible to claim benefits when the next recession hits.

      The Tory’s love of mass immigration and power station closures will make it hell.

  11. stred
    Posted November 25, 2015 at 5:01 pm | Permalink

    Sometimes I wonder whether Gideon’s ancestors came from Blarney. He certainly is a master. All these figures for futures tax receipts are dependent on forecasts for growth, and these have been consistenly wrong, over optimistic or having to be changed after new information. Like global warming forecasts, they depend on complicated computer programmes and lots of statistical inputs. A change in any of these causes chaotic effect, so forecasts will always be wrong.

    Yet he happily alters his spending and taxes to suit the political moment, and his own chances of the top job. He must have been so upset after being found out over tax credits that he has cancelled the whole idea. This distortion of the economy is now to be left alone completely, instead of looking at the extremes and putting it right carefully.

    As regards making nurses pay more for their training, we need to train more nurses because the NHS has to recruit non degree level nurses from other poorer countries, who then come to live here and also the rest of their family, who then need schools and hospitals. So hey, lets increase training of degree level UK training but pay for it by shafting them with big debts for the training. Forgive them lord, for they have never worked in the real world.

    He is good at raising taxes that are not on his tab though. This time it is council tax increases to pay for care.

    Pensioners will be getting £155 a week though. That is if they are 64 or under. The rest of us, even with SERPS paid for 40 years and on around £130- 145 will still have to make up the difference somehow. I met one of my neighbours who is a plasterer aged over 65 and shuffling up the road yesterday. I asked if he had decided to retire. He had no work that day but would be back tomorrow. How long are you carrying on? Answer- Until I drop. He lives on his own in London and has to pay the bills, incuding green power and council tax.

    • stred
      Posted November 25, 2015 at 5:08 pm | Permalink

      …degree level uk- nurses. Read it twice but only see mistakes on second view.

  12. Denis Cooper
    Posted November 25, 2015 at 5:02 pm | Permalink

    It may work out somehow, but at first sight I can’t reconcile the increases in spending and tax receipts with lower borrowing.

    • JJE
      Posted November 25, 2015 at 10:54 pm | Permalink

      I wonder if Cameron has told Osborne that he’s going to quit sooner than everyone thinks?
      Otherwise this all seems a huge hostage to fortune.

      • Leslie Singleton
        Posted November 26, 2015 at 5:20 am | Permalink

        JJE–Too right about the hostage to fortune. My memory is not what it was but I don’t recall all this total emphasis, at least not till very recently, on the Five Year Plan–I rather thought such plans were more the Chinese thing. Five years is what they call the future, about which we have little idea. It is pure dreamland to base anything much on this £27.5 billion serendipity which is just a paper number if ever there were one and the £10.5 billion “surplus” at the end of five years is pure unadulterated moonshine. And does anybody at all understand and support this increasingly large Foreign Aid largesse? Is it just the usual photos?

  13. Denis Cooper
    Posted November 25, 2015 at 5:14 pm | Permalink

    Off-topic, it seems that Juncker is finally cracking up under the strain.

    https://euobserver.com/migration/131265

    “Juncker: Euro does not make sense without Schengen”

    Reportedly he said the euro is pointless “if people can’t move around freely to use it”.

    Firstly, people moved around between European countries before Schengen, albeit with more formalities at borders, and secondly in any case people living in the eurozone mostly use the euro in the country where they reside, not in other countries.

    Basically both the euro and Schengen provide most ordinary people with some minor conveniences, but with major, and sometimes catastrophic, disadvantages.

  14. Margaret
    Posted November 25, 2015 at 5:30 pm | Permalink

    Ha ! and I believe the welfare and police cuts are going to be great. It would be good to be paid by the NHS never mind face cuts. I defy anyone to look at letters, histories take a full clinical examination, take ECG;s Lung function tests , immunisations , diagnose , take bloods ,take cytological tests , treatment room duties, ear syringing prescribe , educate patients , order supplies, keep the cold chain working well , refer , make telephone enquiries in 1/4 hr for each patient and not get paid for it. There is no extra time apart from the consultation, everything is done on the patients time, they suffer , we don’t get paid. How much tighter are they going to squeeze? The selfish parasites.It is about time you paid staff to carry out full time jobs when they actually do full time jobs.I have been following up patients results at 7’oclock from home being paid up until 1.0pm and work all weekends updating my knowledge for the pleasure of being squeezed.

  15. JoeSoap
    Posted November 25, 2015 at 6:00 pm | Permalink

    Well Osborne seemed to treat this extra tax revenue like a happy occasion, a win on the lottery perhaps, or a new baby born. It is more like a highway robbery.

  16. ChrisS
    Posted November 25, 2015 at 6:05 pm | Permalink

    Since May I thought that at last we had a Conservative Government.

    Instead, we have a Chancellor that seems to be committed to the socialist principals of tax and spend. Austerity is largely a myth, Government spending just keeps rising and any modest gains are not being banked but are being spent, as we saw today.

    OK, he isn’t waving the copy of the little Red Book he was famously given today just yet, but what true Conservative Chancellor would increase stamp duty on second homes and on landlords who purchase additional properties and are already providing housing for millions of people ?

    Or is again singling out landlords by taking away tax relief on legitimate business expenses like debt interest ?

    Or keep the current very high rates of CGT which we thought had been demanded as a one of the prices of LibDem coalition support ? Perhaps they weren’t LibDem demands after all ?

    The only logical reason for keeping the current very high rates of CGT , without the softening effect of Taper Relief, is a dogmatic attitude against all types of wealth creator.
    This is especially true when, as our host has pointed out previously, the take from CGT had almost halved over five years and that was only up to the General Election.

    Yet, far from reducing the rate now, as would be sensible and would create a windfall of at least £2bn-£5bn in the first two years, followed by rising revenue, the Treasury is clearly intending to leave it alone.

    What other reason could they have for forecasting a further reduction of 6% in CGT revenue !

    There can be no possible logic in this, it must be entirely down to political dogma.

    • oldtimer
      Posted November 26, 2015 at 9:45 am | Permalink

      The Little Red Book does seem like an appropriate gift for Mr Osborne. And it is possible that the Shadow Chancellor has opened up a new front with his jibe about the sell out to Chinese investors. This morning he asked if the British public would be happy to see UK air traffic control (on the privatisation list) sold to the Chinese.

      Perhaps the Chancellor should complicate still further his already over complex CGT/IHT regime by creating, for tax purposes, a new category of infrastructure asset that is excluded from IHT and CGT. It would then sit along side other classes of assets that already benefit from exemption from one or both of these taxes, eg your home, family business, AIM investment etc. Think of it as a variation of the original appeal to Sid. The one snag, of course, is that he needs continued sale of assets to foreign investors to cover his trade deficit.

    • stred
      Posted November 26, 2015 at 1:12 pm | Permalink

      Our local landlords association suggested in the last newsletter that raising stamp duty would be a better way to discriminate between home buyers and BTLs, rather than taxing new landlords with big mortgages, who may be taxed on a loss. We got both.

      Many landlords may decide to sell now, perhaps reducing prices but providing a CGT killing for the Treasury. This may be their plan.

    • Anonymous
      Posted November 26, 2015 at 3:30 pm | Permalink

      Landlords providing housing for millions of people.

      Bless their cotton socks !

      • Anonymous
        Posted November 26, 2015 at 3:33 pm | Permalink

        Property has been the #1 investment for returns for a number of decades now.

        Landlords have been reaping the benefits of mass immigration so it’s only fair they started paying for it.

        • stred
          Posted November 27, 2015 at 12:40 pm | Permalink

          There are 2 million private landlords now- a huge expansion, mainly because of the failure of private pensions through taxation. What happens if say half of them decide they are being taxed to a loss and few new landlords are interested in buying, given 8% stamp duty to be paid and income tax relief withdrawl. The houses will have to be bought by private homeowners, many of whom will be unable to afford the inflated prices. Either prices will drop or the house will stay empty, with full council tax payable, with a resulting housing shortage. Tenants who do not want to buy during a bubble will find fewer homes available.

          National public debt is continuing to rise, while private debt is still positive because the value of housing is subtracted from mortgage debt. Credit card and overdraft borrowing is now at an all time high and becoming a problem. A drop in house prices or interest rate rise could tip the balance of the fortunes of our brilliant tactician in the wrong direction very quickly.

          But the Treasury may get a CGT result that actually works.

  17. Lifelogic
    Posted November 25, 2015 at 6:41 pm | Permalink

    Big surge in tax revenue forecast – £105.2 billion this Parliament – well we shall see has he allowed for all the rich and non-doms who will clearly be leaving? Did we not have a few days ago – the gap between state spending and revenue is worst in October for six years with economists warning the chancellor will need further austerity or miss annual targets?
    Yet today he has found £Billions down the back of the sofa.

    What has Osborne got against private housing tenants, why one earth should they have to pay far higher rents and have a more restricted supply of properties due to a huge increase in stamp duty and his not allowing interest deductions and depreciation against rents? Where does he get these moronic, self defeating, anti-tenant ideas from?

    The tax systems should surely be neutral between buying and renting so people can make a fair choice given their circumstances. Fiscal neutrality and simplicity is what is needed, the complete opposite of Osborne-ism.

    The man is hugely misguided economically, most of the money he takes is anyway wasted on dire public service, green crap grants, expensive energy, over paid pen pushers, damaging wars or daft new train lines.

    Yet more work for essentially parasitic tax accounts and lawyers though.

    • Anonymous
      Posted November 26, 2015 at 3:37 pm | Permalink

      So higher stamp duty restricts supply of property ?

      What ? This means houses get demolished, does it ?

      If you’re worried about high rents, well… established landlords with low to zero mortgages can help by undercutting the market and making it easier for young people.

      After all. We’re continually being told that landlords are our saviours and are providing millions of homes to people that wouldn’t exist otherwise.

      • Lifelogic
        Posted November 26, 2015 at 8:15 pm | Permalink

        Fewer get built and fewer are made available for rent.

  18. Edward2
    Posted November 25, 2015 at 6:44 pm | Permalink

    It seems occupying the centre of politics is perhaps more important than doing the right thing economically.
    However this is the game of politics and our PM and Chancellor are very adept at its rules.
    Being popular enough to be re-elected is quite rightly the main ambition.

    Guns have been well spiked in terms of tax credits and I’m sure today’s responses from the opposition benches were spoiled by this, as well as many planned demos in London now having to be cancelled.

    PS
    What a very odd PMQs with topics of solar panels being the main attack from Mr Corbyn and then Chairman Mao’s Little Red Book making an appearance.

  19. Iain Gill
    Posted November 25, 2015 at 6:52 pm | Permalink

    Fantasy sheer fantasy.

    This is NOT a conservative budget, its socialist borrow and spend top down command and control economy focused on protecting an ineffective public sector.

    I give up. A plague on all their houses.

    • Ken Moore
      Posted November 26, 2015 at 2:54 pm | Permalink

      Agreed this spending review could have been written by Gordon Brown.

  20. Mark B
    Posted November 25, 2015 at 7:38 pm | Permalink

    The EU will be pleased. They like nothing more than getting their pound of flesh out of the UK.

  21. ian
    Posted November 25, 2015 at 8:28 pm | Permalink

    Most things in this budget are a smoke screen and you will never see them.

  22. petermartin2001
    Posted November 25, 2015 at 9:16 pm | Permalink

    The Autumn statement would not be so bad if it was economically coherent, with the spending and taxing plans agreeable, or otherwise, according to one’s political opinion. However, it simply does not make any sense. Not only does it not add up it doesn’t subtract either! It is inconsistent with the principles of arithmetic.

    You say that :

    “In total the new estimates show us paying an extra £105 billion in tax over the five years”

    George Osborne says:

    ” we will reach a surplus of £10.1 billion in 2019/20″

    There’s no chance of this happening with the UK running a ~ £90 billion deficit in its external deficit due to trade and other international payments. It would mean that the UK economy would have to find ~ £100 billion every year to pay the import bill and also provide the govt with its £10 billion surplus.

    This, presumably, is your ” extra £105 billion in tax” ?

    George Osborne says that ” Britain will be out of the red and into the black.” which is completely untrue. These figures mean the British economy will be in the red to the extent of £100 billion to pay for the Govt being £10 billion in the black and our overseas trading partners being £90 billion in the black.

    It can’t possibly happen. There’s no way the UK economy can sustain a net loss of £100 billion even for one year – never mind on an annual basis. George Osborne will simply send the economy into a downward spiral trying to achieve the impossible. An economy in a depressed state will also deliver depressed levels of taxation revenue too.

    In a couple of years time, the excuse for the plan failing , as it will , will be that even though the Government has kept spending under control, taxation revenues will have not come in as expected. This will be attributed to: Problems in the eurozone, problems with world trade, problems with loss of revenue from North Sea oil, a new war in the Middle East maybe?

    In other words, the same kind of excuses as the were put forward after the last similar plan failed in 2010, except the Govt could blame the Lib Dems then!

    Reply You are muddling the balance of payments deficit with the public sector deficit. It is the latter which moves to surplus.

    • Edward2
      Posted November 25, 2015 at 10:22 pm | Permalink

      You called for more State spending.
      And now you have got it.
      I’m astounded you still complain.

      • petermartin2001
        Posted November 26, 2015 at 9:25 am | Permalink

        I’d prefer lower taxes too!

        They are too high. The economy would be stimulated by reducing tax rates. With inflation at 0% there is no reason not to press the accelerator a little to get the economy moving.

        • Edward2
          Posted November 26, 2015 at 10:05 pm | Permalink

          I spoke about spending.
          You only mentioned tax.

    • Ken Moore
      Posted November 25, 2015 at 11:01 pm | Permalink

      I agree there is a sense we have been here before with overblown tax predictions from the ‘independent’ office of budgetary irresponsibility.
      As for the ‘out of the red and into the black line’..well it’s a complete lie – the usual trick of conflating the debt and the deficit. (Not that the deficit will ever be eliminated as predicted).

      The balance of payments deficit is deeply worrying as it is currently being plugged by asset sales and yet more borrowing. This can’t continue forever ..the next part of the financial crash can’t be too far away. Osborne is just borrowing time hoping the financial bomb he is building up will go off when his time in the sun is over.

      This time there won’t be any bank bailouts and the government won’t be able to guarantee deposits to anything like the level promised.

    • Leslie Singleton
      Posted November 26, 2015 at 5:32 am | Permalink

      Dear John–A very very tiny surplus and highly imaginative with it. Anyone who has done any budgeting spreadsheets knows how childishly easy it is to adjust the numbers so that they work out, especially after five years, with what you want (just) being achieved at the end. Excel is wonderful for this and makes up your mind rapidly on what the assumptions need to be fiddled to be. I suppose we should be thankful they haven’t come up with a £1 billion (or million) surplus after 10 years.

    • petermartin2001
      Posted November 26, 2015 at 8:23 am | Permalink

      “You are muddling the balance of payments deficit with the public sector deficit” >/em ??

      Not muddling – but I am asking the question of why there seems to be no appreciation amongst the expensively educated economists in the Treasury and on the Govt front bench that the relationship between the two can’t be ignored.

      It isn’t a difficult concept. If the Govt plans to run a surplus there will be a net flow of money from the economy into the Govt’s coffers. The economy already has a balance of payments deficit, meaning there IS a flow of money out of the economy and into the coffers of the big net exporters. Germany, China, Denmark, etc.

      Don’t you see the problem? You can have one inflow and one outflow into a reservoir but the outflow can’t be bigger than the inflow otherwise it dries up. You certainly can’t have two outflows from the reservoir, as the Govt is proposing, because it then dries up super quick!

  23. petermartin2001
    Posted November 25, 2015 at 9:36 pm | Permalink

    If anyone thinks that spending cuts and taxation increases can be relied upon to reduce the Govt’s deficit, they might want to have a try at simulating that for themselves !

    Google {Simple Spreadsheet Model of Government Spending}

  24. Brian Tomkinson
    Posted November 25, 2015 at 9:57 pm | Permalink

    OBR think up new figures for their forecasts made only in July and all of a sudden there is £27bn available. What will they say in April? This is fantasy economics.
    Meanwhile government is spending far more on foreign aid than Home Office including police. One thing Cameron told the truth about he is the heir to Blair!

  25. Ken Moore
    Posted November 25, 2015 at 10:23 pm | Permalink

    Dear Ken,

    The Autumn Statement I gave today delivers on the promise we made to the British people that we would put their security first.

    To protect our economic security, by taking the difficult decisions to live within our means and bring our debts down. The public spending plans I set out today mean we will reach a surplus of £10.1 billion in 2019/20 – that’s higher than was forecast at the Budget and means Britain will be out of the red and into the black.

    From Mr Osborne’s mailshot.

    ‘Taking the difficult decisions’… like increasing spending and ring-fencing an unreformed and bloated NHS. Refusing to cut back an out of control family credit system with all it’s operverse incentives. Dodging difficult decisions more like.
    ‘Bring our debts down’. This man has the bare faced cheek to tell me he is doing this when he has increased debt more than every other government in the last 100 years.

    According to Osborne logic if my overdraft at the bank is £1600 and in one month my debits are greater than my credits I am ‘out of the red and into the black’.

    How can I stop Conservative HQ sending me this rubbish ?

    Dr Redwood how can you stay with this rabble?.

    I note that Douglas Carswell increased his majority to 12,404 when he switched to UKIP in 2014..and still held the seat with a majority of 3,437 in 2015.

    Your majority in Wokingham is 24,193…your position is stronger than Mr Carswell’s…it would be very long odds on you not regaining your seat if you switched to UKIP. Cameron’s blue Labour Conservative party do not deserve your support.

    • Anonymous
      Posted November 26, 2015 at 3:42 pm | Permalink

      Pre-empting an answer to this UKIP question.

      The UKIP candidate for Woking came 4th because Dr Redwood was standing there. Had any other Tory stood there the UKIP candidate would have polled far better.

      Dr Redwood does not need the Tory party.

      • Ken Moore
        Posted November 26, 2015 at 7:06 pm | Permalink

        Indeed the Tory party needs John Redwood far more than John Redwood needs the Tory party.

        The shift to the left of centre ground of George Osborne sits most awkwardly with Dr Redwoods popular brand of common sense politics. George Osborne HAS morphed into big spender Gordon Brown but John Redwood remains himself.

        If I was in our hosts shoes I would be considering why the leadership is ignoring a large number of experienced voices if the party is supposed to be a democratic organisation ?.
        Bombing Syria is another in a long line of elephant traps Mr Cameron is leading his followers into.

        I do think it important that Dr Redwood maintains a ‘clean pair of hands’ and that is much easier when your not gagged by the constraints of party loyalty.
        When the next part of the financial crash occurs. I can’t see George Osborne or David Cameron getting another kick of the ball should say interest rates rise or some other unforeseen event occur.
        Someone needs to help pick up the pieces when messrs Cameron and Osborne are forced to engage with reality by events beyond their control.

  26. CHRISTOPHER HOUSTON
    Posted November 25, 2015 at 10:40 pm | Permalink

    Mr Osborne stated in his speech , I believe, that Local Authorities will ultimately cease to exist though I cannot recall the timescale he indicated. This is like an inverted fairytale by the Brothers Smile.
    Massive deployment on social housing estates of contractors servicing social homes where their work could never possibly be justified…eg contractor vans outside recently vacated homes of “good families” who maintained their accommodations very well can only mean meaningless and wasteful work being done. Much evidence of this over years. Also massive and extremely expensive needless refurbishment in town centres and other areas controlled by Local Authorities.Repeat needless.

    And the Chancellor gives them even more money and makes the tax payer pay even more. His economic “Plan” is an utter nonsense. The OBR figures appear to be contrived by mutual agreement between parties. His spending and economic behaviour is that of a centre-right Labour Chancellor who spends like there is no tomorrow fully expecting a huge economic downturn.
    Well he is probably right about the downturn. He is part of it.

  27. Lindsay McDougall
    Posted November 26, 2015 at 3:05 am | Permalink

    The fly in the ointment – and it’s a big one – is the OBR’s optimistic forecast for economic growth. According to them, real GDP growth will average 2.4% pa for the next 5 years. The long term growth of UK since 1979 has been 2.0%. This figure includes the effect of recessions, which are part of the picture.

    The UK economy has had major recessions in 1981, 1991 and 2008. We will be due another one by 2020.

    • Denis Cooper
      Posted November 26, 2015 at 9:24 am | Permalink

      http://www.tradingeconomics.com/united-kingdom/gdp-growth-annual

      “GDP Annual Growth Rate in the United Kingdom averaged 2.48 percent from 1956 until 2015”

      Brown thought that his wise policies had led to a significant permanent increase in the long term growth rate, but he was wrong.

      • Chris S
        Posted November 26, 2015 at 11:38 pm | Permalink

        What wise policies ?

        Brown couldn’t recognise a wise policy if it were put right in front of him.

      • Lindsay McDougall
        Posted December 4, 2015 at 4:12 am | Permalink

        I think you will find that GDP growth pa gradually fell during the 60s and 70s, which is why I confined my average to the period since 1979. I can recall that when in 1964 Enoch Powell was mocking the growth targets of 4% (by the ‘me too’ Home government) and 4.25% (by the Wilson government), he cited actual growth of 2.75% pa.

        Harold Wilson and George Brown produced a detailed National Plan based on the 4.25% number, having asked businesses responding to their various questionnaires to assume that rate. It was a 5 year plan!! but collapsed in ignominy and ridicule after one year.

    • A different Simon
      Posted November 26, 2015 at 10:20 am | Permalink

      Lindsay McDougall ,

      For a Govt , GDP = Growth . It is not growth per capita .

      Lord Ashcroft told us that Osborne is a massive proponent of increased immigration .

      By importing enough people they can get the “growth” figures they want .

      At what cost though ?

      • Lindsay McDougall
        Posted December 4, 2015 at 4:14 am | Permalink

        2.0% has been the average GDP growth pa since 1979. GDP per capita growth has averaged only 1.6% pa.

    • Ken Moore
      Posted November 26, 2015 at 9:10 pm | Permalink

      Perhaps Gideon also believes he has abolished ‘boom and bust’ and can comfortably spend spend spend today. The Conservatives have a copycat New Labour policy on everything else.

  28. Denis Cooper
    Posted November 26, 2015 at 9:42 am | Permalink

    I think it was probably more a recognition by Osborne that back in 2002 MPs and peers agreed to primary legislation under which the Lords would have a veto over secondary legislation to vary tax credits, and the Lords having exercised that veto it was going to be very difficult to wangle his proposal through. It could have ended up with the Commons having to invoke the Parliament Acts to force through a new Act, either specifically to amend the 2002 Act or more generally to clip the wings of the Lords, who of course actually had much of the public on their side.

    As repeatedly pointed out, a similar hostage to fortune has been written into the government’s Bill for the EU referendum, which foolishly gives the Lords a veto over the date for the referendum to be held.

  • 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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