UK Curent public spending surges by 9%, October 2012 compared to October 2011


The latest figures for spending and borrowing reveal more of the same. Current public spending excluding debt interest was up by 9%, this October on a year ago. Including debt interest it was up 7.4%, as debt interest fell by 7.4% thanks to quantitative easing. Spending  was up generally. Benefit spending rose, thanks to the increases in rates last autumn. General expenditure was also up. Over the six months spending was up in cash and real terms,but by a lesser amount.

Meanwhile taxes on income and wealth fell by 0.7% on the month and by 2.5% this year compared to last. VAT receipts were up by a useful 3.6% and National Insurance by 5.1%. Within taxes on income and wealth revenue from Income Tax and Capital Gains was unchanged April to October compared to the same period last year, showing the continuing impact of the higher rates.

Borrowing as a result rose from  £5.9 billion in October 2011 to an extra £8.6bn this October.  It would be good if the media reported that the main reason for the bad October figures  was the sharp increase in current spending, but don’t hold your breath. I expect they will continue to ignore this inconvenient fact. They are buying the spin line that a fall in corporation tax receipts is the culprit. The problem with that explanation is the fall in CT is less than the increased deficit, whereas the rise in spending is more than the increased deficit. Clearly these media commentators don’t do numbers or even read the official figures.

As there have been some cuts in some programmes, and some redundancies, the issue is where is all the extra money going? It would be good to hear a programme exploring how the government can spend so much whilst many think it is all being cut.

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  1. alan jutson
    Posted November 22, 2012 at 6:35 am | Permalink

    Yes the worst of all Worlds.

    Government spending up, taxes up, debt up.

    Income for many down, inflation still rising for most basic goods and services (transport, utility bills, food), annuity rates down, investment returns on savings down.

    The only good news, perhaps the number of private sector jobs seems to be increasing (although the quality of some of those jobs perhaps in question) but immigration still in the hundreds of thousands.

    Trade deficit ?

    Two and a half years on from the Labour economic disaster, have we actually made any progress at all ?.

    • Disaffected
      Posted November 22, 2012 at 5:25 pm | Permalink

      No the position/mess labour got us into is worse two years on. Osborn has singularly failed to understand that spending needs to be cut, taxes also need to be cut. he is hung up about the Tory privilege label. He needs to understand people do not care about his or his colleagues life style as long as the job gets done. He keeps on acting as if he is completely out of touch with reality and knowing what to do economically. He should go because he is not fit for purpose either as chancellor or Tory strategist.

      • lifelogic
        Posted November 23, 2012 at 2:37 pm | Permalink

        I suspect Osborne knows what is needed but is not allowed to do it. This because of Heathite, Cameron and his having lost the last election and lumbered us with the mad, fake green, every bigger taxes, pro EU, more regulation and every bigger state sector Libdems.

        Perhaps I am giving him too much of the benefit of the doubt. We do not see much of him I note. His budgets were very cack-handed. When are we getting the IHT increased to £1M he promised? Not much chance of anything he says being believed next time, just like Cameron.

    • Bazman
      Posted November 23, 2012 at 5:01 pm | Permalink

      How about all the cuts Alan? Or has there not been any?

  2. lifelogic
    Posted November 22, 2012 at 7:01 am | Permalink

    Tax borrow and waste continues, tax receipts decline and benefits rise. Yet still even the government owned banks (and the rest) are not lending sensibly to the productive sector indeed often pulling loans in for no good reason.

    This is exactly as you would expect with the Cameron and coalition policies of expensive, fake green energy, over taxation, over regulation, transfers to the feckless and huge waste and mismanagement everywhere in the state sector.

    Where is all the extra money going? Down the drain as is usual with Cameron’s coalition. The sensible wealthy are leaving, apart from Non Doms, who are taxed rather more sensibly in the UK.

    Meanwhile more and more net recipients of benefits legal and illegal are arriving.

    • zorro
      Posted November 22, 2012 at 9:24 am | Permalink

      Yes, a very damning report has come out alleging that UKBA bosses misled Parliamentary committees who were investigating backlogs…people granted permission to stay without checking them as they claimed and people allowed to stay with criminal records….Is it really possible that this incompetence or covering up is coincidental or do the people involved have a Common Purpose?


      • lifelogic
        Posted November 22, 2012 at 11:56 am | Permalink

        Clearly the latter. Everyone know they do almost nothing – one wonders why they bother assessing applications when no action is taken anyway when they are rejected – there seems little point. I assume there is some money involved in that paper pushing activity but non available for enforcement.

        I also see the OFT is finally looking into the pay day loan industry which creates so much misery for their dim and desperate customers.

        Lender should simply have the rates capped at say 35% APR any individual who has has to pay more than that is almost certainly better off without the loan at all other than perhaps some special business situations. I see reported that Cameron’s adviser quit to become lobbyist for Wonga. Often the loans seem to be made on the assumption that some relative will probably clear them – since the borrower clearly is unlikely to be able to.

        Let us hope the Coalition and Cameron, for once, do the right thing and stop this tally man business which creates so much misery, and for so many. APR of 4000%+ are absurd.

        • Mark
          Posted November 22, 2012 at 2:34 pm | Permalink

          Labour MP Stella Creasy deserves full credit for her role in bringing this issue to the attention of Parliament. It’s not often I find reason to praise a Labour MP, but she really deserves it for this.

          • lifelogic
            Posted November 22, 2012 at 7:43 pm | Permalink

            Indeed Stella Creasy MP also deserves credit for her stand on the pay day loan 4000% APR racket.

          • lifelogic
            Posted November 22, 2012 at 10:50 pm | Permalink

            Brian Donohoe MP (labour) deserves credit too on the pay day loans scandal.

      • Max Dunbar
        Posted November 22, 2012 at 5:55 pm | Permalink

        Steve Moxon’s “The Great Immigration Scandal” which was first published 8 years ago backs up what you say.
        Moxon was a Home Office immigration case worker who blew the whistle on cover-ups and widespread abuse of the system. He was immediately suspended from his job at the time. This ultimately led to the resignation of Beverley Hughes who was immigration minister.

    • lifelogic
      Posted November 22, 2012 at 12:36 pm | Permalink

      I see that it is reported that the BBC Trust has appointed Tony Hall – Chief Executive of the BBC Trust has appointed Tony Hall – Chief Executive of the Royal Opera House – as its new Director General.- as its new Director General.

      I wonder if this will also be at 3 times the going rate like the last one. Did Lord Patten agree to the same six month pay on “resignation” and 12 month otherwise? So if this one fails will another circa 3,000 licence payer have to pay another £450K out?

      Hopefully he will get rid of all the drivel and sort out the blatant political bias and make it more educational. I do not think, however, that the Royal Opera House is particularly renowned for running a tight ship or operating in a free market.

      • lifelogic
        Posted November 22, 2012 at 12:53 pm | Permalink

        It seems he will get £450K PA and has spend 26 years at the BBC after joining as a graduate trainee. I wish him well but anyone selected by Lord Patten, who is another BBC insider is a rather worrying choice.

        Where does he stand on the ever bigger state sector, the quack science green religion, the EU BBC bias, the endless BBC dumbing down and the running of a tight ship?

        I suspect we know already as he has been appointed by Cameron/Patten types.

        • Richard1
          Posted November 22, 2012 at 3:47 pm | Permalink

          Lets hope he does do domething about bias at the BBC, though I doubt one person, even the DG, can do so.

          I dont share the general outrage at Entwistle’s payoff. The guy had worked many years at the BBC. He should not have been promoted – but that is not (only) his fault. He was entitled to be paid out according to his contract. The bigger issue is setting up a proper board structure at the BBC, with a CEO, just like in any other company. If the license fee became voluntary (ie a sub such as Sky has), the board would need to be much more responsive on these issues. As an interim measure I suggest the license fee be re-named the ‘BBC Poll Tax’.

          • lifelogic
            Posted November 22, 2012 at 10:41 pm | Permalink

            I agree I think Entwistle was quite a good man in the wrong place at the wrong time, the real blame should lie with Patten and the trustees for agreeing to a contract that over rewarded him for failure – does the new DG get a similar one I wonder?

    • Bazman
      Posted November 22, 2012 at 2:03 pm | Permalink

      How are London property prices doing with all these rich leaving?

      • Mark
        Posted November 22, 2012 at 2:36 pm | Permalink

        The richer British are being replaced by even richer foreigners, who seem to be largely exempt from the same taxes.

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

          You could in theory pass a law forbidding foreigners from owning property in the UK. The problem it nearly always seems to go the other way – several countries have had bans on foreigners owning property but have then relented. London not only appeals to the rich and powerful but is also the point of arrival for many poor immigrants, so I think it will always be a special case. Building more residential property for rent in London would help.

          I will be happy if residential property outside London keeps drifting slowly downwards in price until it is affordable. Greater mobility will help economic growth. I don’t think much can be done by government to help people who have negative equity; they will just have to keep paying off the mortgage.

      • lifelogic
        Posted November 22, 2012 at 3:46 pm | Permalink

        Very well in Chelsea, Westminster and Fulham I am pleased to say – less so in the less central, less international areas where people are taxed into the ground by Cameron – but as I have said before this growth is largely funded by rich nondoms with funds from overseas who are taxed more sensibly than UK people. Encouraged be the EURO problems and Arab spring perhaps.

        Rich non doms just pay £30K (rising to 50K) PA plus taxes on income earned in the UK so they can avoid other taxes in the main. Still far more than they cost in services.

        Rich UK people tend to have to leave and many sensibly are. The government should get rid of IHT completely and capital gain should be index linked and reduced, top tax rates should be 40% then the would get out of this vicious spiral and actually raise more tax.

        • Bazman
          Posted November 22, 2012 at 5:03 pm | Permalink

          So all the British rich are leaving? Who and where? Taxed to the ground? I doubt it. Most have very clever accountants right?
          The problem being that often these properties are just bolt holes for the super rich, empty most of the year leading to a similar situation suffered by areas of outstanding beauty and their holiday homes. They are just serviced and little, if no tax, is taken by the individual using local business. So much for sensible tax rates. The house prices are just artificially inflated pushing out the locals or forcing up their housing costs leading to social problems. Are you going to tell us there is no holiday home problem? What is your sensible reply to this point lifelogic? I trust you have one or are you just ranting and praying again? No reply means you are. Same goes for the rest of the fantasists.

          • lifelogic
            Posted November 22, 2012 at 7:48 pm | Permalink

            Holiday homes are fine and bring much income to the areas where people hold them and let them out. They need maintenance and gardeners and pay council tax but use little in local services.

            Win, win for the area concerned.

          • Edward
            Posted November 22, 2012 at 8:04 pm | Permalink

            Clearly you are a very angry person Bazman, it comes across loud and clear in your many posts.
            I’m not sure why you have asked about about London property prices anyway, as this article by Mr Redwood is about the rise in Govt borrowing as recently announced, so it is totally off topic.

            You need to reflect and consider that you might not actually have a monopoly on what the correct opinions are or always offer the correct solutions to our political problems but you always write as if you believe you do.

            Debate, Bazman, is about respecting the rights of others to hold contrary views to yourself, listening carefully to them and then countering them with different and better argued opinions and facts.
            Just yelling at everyone isn’t part of that process and is the reason I susupect, most on this site do not respond to you when you repeatedly demand replies to your questions.

          • Bazman
            Posted November 23, 2012 at 10:59 am | Permalink

            It certainly is not win win for the areas concerned by any mean. A few maintenance men, often outside contractors does not create a society and community. You are either stupid or blind to believe this. They have only recently been made to pay full council tax on holiday homes. Many are empty for much of the year and certainly not let out. You really do just believe your own fantasies don’t you?

          • Bazman
            Posted November 23, 2012 at 4:46 pm | Permalink

            Thanks for your advice Edward. I have little respect for many of the views by middle class middle aged (people) protected by middle class welfare. Lardy lightweights living abroad putting forward ideas to cut the lifestyles of the working and non working poor whilst not even living in the country and not having to live with the consequences of these ideas. Cuts have failed to materialise and expenditure has risen? Really? we have then, the worst of both worlds thousands of jobs cut, pay frozen or dropped, but still no results. The answer? More cuts, but not for the posh boys that’s for sure. Angry and personal? You bet it is Edward thats why you can ram it.
            When you think of a half decent retort get back to us.

    • Disaffected
      Posted November 22, 2012 at 5:33 pm | Permalink

      Spot on. It now emerges even more immigrants were given amnesty than first expected (another 120,000, who presumably have bred even more). Why not just say stop, no one is allowed in until our systems are in place and we as a country can cope?? This is a deliberate policy by the coalition to allow mass immigration to continue to help the EU project by reducing our culture, value and beliefs.

      It is reported today that DECC knows about the scam wind farm owners have been making to get extra subsidies and done nothing about it. Meanwhile people cannot afford to heat and light their homes. This is a Lib Dem led Coalition policy for you!! They are meant to be sorting this out, it is getting worse and it is predicted we will have energy shortages in three years. How does this help the economy and people of the country? Mass immigration continues and the country does not have the infrastructure to support who is here now let alone another increase in population the size of Leeds each year.

      Is there anyone in the government who is not influenced by the dim-witted Oxbridge PPE course? This is one course that should be shut down immediately to save the country a fortune.

      • sm
        Posted November 24, 2012 at 1:28 pm | Permalink

        With uncontrolled access to the UK and its safetynet by seemingly destitute immigrants, i find it unsurprising that spending has increased by 9%. What is the spending per real capita?

        How one expect demands for basic needs to reduce with continued mass migration (particularly those who obtain state aid) really needs some kind of treatment.

        Whats the latest current estimate of our population based on sewerage or power consumption or food consumption? I am sure these numbers are around but not published openly.

  3. Simon Eccleston
    Posted November 22, 2012 at 7:42 am | Permalink

    OK. But I would like to see a graph showing say the 12 month trend with the other factors you are quoting. Where’s the source?

    Reply: ONS official statistics

    • zorro
      Posted November 22, 2012 at 9:27 am | Permalink

      John, do you have the relevant figures for CT and its impact to hand?


      • zorro
        Posted November 22, 2012 at 9:30 am | Permalink

        Some of the increase may still be accounted for by the effect of the redundancy packages still coming through official spending figures.


  4. Pete the Bike
    Posted November 22, 2012 at 7:53 am | Permalink

    I wonder how long the markets will put up with the total failure to curb spending. It’s amazing how long George has fooled people with the austerity propaganda but eventually everybody will realise he’s as much a tax and spend socialist as Gordon.

    • APL
      Posted November 22, 2012 at 8:42 am | Permalink

      Pete the Bike: “I wonder how long the markets will put up with the total failure to curb spending.”

      With QE the government is the market.

    • lifelogic
      Posted November 22, 2012 at 9:26 am | Permalink

      It is worse than “tax and spend” it is tax and waste – on the pigis, the green religion, transfers to the feckless, the EU, more and more government, more and more regulation and daft projects like HS2, the green deal, gender equal insurance, road blocking traffic lights and islands, wind monuments ………

      • Bazman
        Posted November 22, 2012 at 2:04 pm | Permalink

        Usual rant, but who are the feckless?

        • lifelogic
          Posted November 22, 2012 at 10:46 pm | Permalink

          Who are the feckless? They are healthy people who claim more than they contribute – I do not blame them particularly, just Osborne’s tax and benefit system that encourages them to behave fecklessly.

          • Bazman
            Posted November 23, 2012 at 11:03 am | Permalink

            Maybe they are not allowed or able to claim less than they benefit by not being able to find enough work that pays an adequate amount within a commutable distance? If there was no minimum wage the problem would be worse. Tell us liflogic. How do you manage to get money by working when your life views are so simplistic?

          • lifelogic
            Posted November 23, 2012 at 9:27 pm | Permalink

            True perhaps and the reason they cannot find well paid work locally is the huge level of tax borrow and waste within the state sector.

          • Bazman
            Posted November 24, 2012 at 11:58 am | Permalink

            Would you care to explain this none point? Are you saying if we just reduce the public sector the private sector will just fill in the gap? In a modern complex economy you would in many cases se the private sector reduced too. Further exacerbating the problem by causing the economy to shrink. Your religious belif in this as the answer to all economic problems is the same religious belief in socialism that you so hate. Have a think and get back to us with some more thought out points.

    • zorro
      Posted November 22, 2012 at 9:31 am | Permalink

      It’s still easier to make money betting against the markets in Euroland.


    • Vanessa
      Posted November 22, 2012 at 11:20 am | Permalink

      It is so good to see how different this Tory/LibDim coalition is to the Labour one we had before! What has changed? Absolutely nothing, the country is still spirralling down the plughole all thanks to our governments.

      As for the markets they are now manipulated and interfered with by goverments (see energy companies) and it wont stop there. How long before we are a communist country led by communist polit-bureaux nincompoops.

      • Max Dunbar
        Posted November 23, 2012 at 12:34 am | Permalink

        When Thatcher took power in 1979 we were being run (down) by communists. The only word missing from your last sentence is “again”.
        The collapse will be more severe this time before another “Thatcher” takes charge.

  5. Steve Cox
    Posted November 22, 2012 at 8:00 am | Permalink

    The public spending beast is clearly out of control, and there’s evidently nobody in this government with the gumption to try seriously to rein it in. An across the board freeze in all public sector pensions, salaries and benefits for 2 or 3 years is what’s required, but who will even dare to suggest that? And to crown this unholy mess off, Mr. Cameron has done so many foolish things that are only making matters much worse then they need be, such as the vainglorious and deeply unpopular increase in overseas development spending, as well as hamstringing both companies and the general public with a half-witted and puerile green energy policy. Vote blue and go green, what a joke. Vote blue and go broke more like! Seriously, if Gordon Brown was still occupying No. 10 (and throwing sharp heavy objects at his staff) would anything be very much different from where we are? Politicians and their parties appear to have become largely irrelevant to the business of government.

    • lifelogic
      Posted November 24, 2012 at 6:21 pm | Permalink

      “If Gordon Brown was still occupying No. 10 (and throwing sharp heavy objects at his staff) would anything be very much different from where we are? ”

      Yes we would have at least the prospect of a proper Tory party in 2015, rather than the almost certainty of a Labour disaster in 2015.

      It might actually have been better.

  6. Paul H
    Posted November 22, 2012 at 8:26 am | Permalink

    In the meantime the combination of QE and the latest £80billion lending wheeze, with increasing inflation, is continuing effectively to rob savers.

    There are two options – that this is a deliberate policy of continued spending funded by future currency debasement or that the Chancellor is simply incompetent. I am not sure which is worse. Certainly it would help if the Chancellor didn’t spend divide his time (which is, after all, paid for by us) between the day-job and conservative political strategy. He is demonstrably not very good at the latter so perhaps is simply spreading mediocre talent too thinly.

    I was also at speech given by a member of the ITEM club a couple of weeks ago in which he said that the banks can’t lend to big businesses as they don’t want to borrow money and won’t lend to small businesses because the banks perceive them as too risky. So the money is going to go into mortgages instead (no doubt with a thick slice going into bankers’ pockets). Brilliant, absolutely brilliant. Well done, Chancellor!

  7. Brian Tomkinson
    Posted November 22, 2012 at 8:33 am | Permalink

    Please remind Cameron and Osborne of their mantra that “you can’t borrow your way out of a debt crisis”. If only they were true to their words! Their basic deceit is another example of why there is little or no trust in politicians. That much used term austerity means tax increases in this country but government spending rises inexorably. In this regard the coalition is little different from Labour. The Con/Lab/Lib parties are all tax and spend. I presume you are waiting for the broadcast media to produce the programme exploring how the government can spend so much whilst many think it is all being cut? I think you will have a long wait they are also fully signed up to the deceit. It’s all so reminiscent of the story of the Emperor’s new clothes but the little boy hasn’t got a loud enough voice yet.

  8. Electro-Kevin
    Posted November 22, 2012 at 8:47 am | Permalink

    It is all rather worrying, Mr Redwood.

    I wish you had been on the front benches from the start of this Government. We’d have a far better future.

  9. Mike Stallard
    Posted November 22, 2012 at 9:05 am | Permalink

    By merciless taxation, the government are making it more and more necessary to evade and avoid tax. By their ridiculous amount of instructions (thank yo Mr Brown), they are making that very easy indeed.
    And then there are the aircraft which carry people out of England to other places like Dubai where taxes are much more lenient.

    We need a Chancellor who will reduct the state and who will mercilessly cut back on state expenditure, not caring about the “vulnerable”, the Unions, the bureaucrats and the other whiners.

    Just so long as he doesn’t take away my bus pass or winter fuel allowance!

    Reply: Any good Chancellor should look after the vulnerable, but stand up to the system players and the vested interests in higher public spending.

  10. Lord Blagger
    Posted November 22, 2012 at 9:11 am | Permalink

    It’s tipped. The UK government is bankrupt.

    1. QE. 345 bn of the 375 bn has gone on Gilts. To stay afloat the numpties are lending themselves money.

    2. The off the book debts. 4.7 trillion for the state pensions. 1.6 trillion for the civil service pensions. On top of the 1.1 trillion for the borrowing.

    Now what are they doing? Well remember the Round the World in 80 Day’s movies. They were on the boat, becalmed, out of fuel. So they start feeding the boat into the furnace to keep going.

    Its the same with the state. Tax anything, destroy it, just to get a bit of cash in to keep going.

    However, there is no happy ending.

    In the UK, in France, the victims of the fraud will resort to violence.

    The Greeks have been pacifists.

  11. oldtimer
    Posted November 22, 2012 at 9:13 am | Permalink

    It is all very depressing. Many here in the past have suggested measures that could/should have been implemented to avoid this outcome – spending best avoided, reforms to the tax system et al. This coalition, just like its predecessor, seems incapable of comprehending its situation let alone doing anything about it. The outlook is bleak.

  12. Single Acts
    Posted November 22, 2012 at 9:16 am | Permalink

    I have to say, your analysis and commentary is probably the best by any UK politician. A first rate post, only a shame Mr Cameron does not seem to share this view.

  13. Ralph Musgrave
    Posted November 22, 2012 at 10:08 am | Permalink

    JR’s claim that the “cuts” are non existent is supported here:

  14. stred
    Posted November 22, 2012 at 10:30 am | Permalink

    How much has been paid in redundancy for health administrators to transfer to the very similar GP controlled trusts?

  15. Span Ows
    Posted November 22, 2012 at 10:32 am | Permalink

    To summarise:

    Days 1, 3 and 5: “Cuts cuts cuts!Evil Tories (forgetting it’s a Coalition)”, is the cry!

    Days 2 and 4: “Borrowing up! Incompetent Coalition”, is the cry.

  16. Stephen W
    Posted November 22, 2012 at 10:37 am | Permalink

    The culprit is largely the ridiculous 5.2% increase in benefits last April. This should never have been allowed to go ahead. A 4% increase would have been more than most people in work got and would have saved vital billions.

  17. Wilko
    Posted November 22, 2012 at 10:53 am | Permalink

    Too much is spent inefficiently. Take Motorways.

    Govt built fast-centre motorways with 6 drive lanes & 2 hard shoulders. Barriers were added later to stop vehicles colliding at 140mph.

    The result was 9 lanes, incurring 50% extra for safety; mostly wasted.

    If the 9 lanes were used as a Slow-Centre motorway, one hard shoulder suffices. The fastest traffic would be 8 lanes apart.

    • Mark
      Posted November 22, 2012 at 2:45 pm | Permalink

      An interesting idea. Would you advocate switching carriageways, so motorways effectively were driven on the right (implying the need for flyovers to reverse the carriageways at each end), or adopting a rule of overtaking on the left only for motorways?

    • Mark
      Posted November 22, 2012 at 5:49 pm | Permalink

      Also, what would you do about exit/entry ramps?

  18. Neil Craig
    Posted November 22, 2012 at 11:32 am | Permalink

    Perhaps we may expect the BBC, who have repeatedly denounced the coalition for all those “cuts” will apologise.

    Considering that the 28gate scandal proves that the BBC is willing to lie, continuously and deliberately over a period of years about having the support of 28 scientists for their totalitarian “catastrophic warming” propaganda it seems unlikely that they will ever apologise for, or stop, lying.

  19. martyn
    Posted November 22, 2012 at 11:39 am | Permalink

    We need 50 billion off annual public expenditure. And there should be a national debate as to where it should come from.

  20. Acorn
    Posted November 22, 2012 at 11:42 am | Permalink

    The very two taxes you would not want to be going up now are VAT and NI, they reduce spending power of households. Our economy lacks both consumer demand; because they are trying to save and cut there debts fearing for the future. Corporates are operating to put maximum cash in the bank, not investing, they have plenty of unused capacity should any consumers come rushing into the high streets. The money we give to the rest of the world as net importers is probably in an account at the BoE with China or South Korea written on the statements.

    IMHO, any attempt to operate UK plc at less than 8 – 9% budget deficit (120 – 130 billion), will mean minimal if any significant growth for some while. The private sector corporates, need a glass or two of a 40% proof confidence booster to start spending on new kit and ideas. They are currently twiddling their thumbs waiting for Osbo’ to attack their stash with some new tax. Nobody knows what we are doing or where we are going, UK PLC pack lacks an Alpha Mail to get us into a new rut and out of the twenty year old one.

    If you wonder why I say 8 – 9% have a read of the one guy who actually understands floating fiat currency economics and sectoral balances. . You will see that the dead-lock in the US congress over reducing their deficit is the actual element which is driving their recovery. The “fiscal cliff”, if not negated, will send the US economy back into a dive.

    • Acorn
      Posted November 22, 2012 at 5:57 pm | Permalink

      BTW. Neil Wilson has a chart that shows the affect on the sectoral balances of the government sequestrating the Royal Mail Pension Fund into the government coffers. This converts the pension fund into a unfunded pay-as-you-go pension liability joining all the other unfunded public sector pension funds. What was it that guy said; the best way to rob a bank / pension fund, is to own one! . (slow loading)

  21. Jack Jones
    Posted November 22, 2012 at 12:27 pm | Permalink

    It looks increasingly likely that, given the conflation of an unfair constiuency map and the rising number of those dependant on the State, this is the last time we can expect anything other than pure socialist governments until, of course, we go over the cliff. I think, given those circumstances, the government are being very cunning by leaving an even bigger mess for Labour to clean up than the one they left behind. It should hasten the end game nicely.

  22. Narrow Shoulders
    Posted November 22, 2012 at 1:18 pm | Permalink

    And for this they wish to take away child benefit from the affluent without giving back the non-earner in the family’s tax allowance.

    If Government wishes to tax people to death please don’t be so profligate. It is our money, your coalition may start by saving €5.7 million Euros on the European project. do not just veto withdraw funding, see what Mrs Merkel does when someone else with cash plays hardball.

  23. Richard1
    Posted November 22, 2012 at 1:27 pm | Permalink

    Very interesting that the higher rates of income tax and CGT are failing to raise more revenue. We can expect left-leaning media such as the BBC to avoid mention of this fact. The inverse relationship between marginal tax rates and actual tax receipts is an issue on which the political left is in denial.

    • uanime5
      Posted November 22, 2012 at 9:22 pm | Permalink

      Well given that the salaries in the city have dramatically fallen and companies are avoiding paying any taxes is it any surprise that tax revenue is falling.

      • Richard1
        Posted November 23, 2012 at 6:28 pm | Permalink

        The 50p tax rate has clearly failed to bring in the incremental revenue the Labout party claimed it would. No surprise to those of us who recognise the inverse relationship between marginal tax rates and actual receipts. What have tax recepits from companies to do with either income tax or CGT? Someone like you who advocates killing the economy with high taxes should at least find out how the tax system works!

  24. Alan Wheatley
    Posted November 22, 2012 at 1:41 pm | Permalink

    The BBC Radio 4 programme this week on the Highways Agency revealed where money is going, and much of it to waste. It was notable that the Highways Agency were not prepared to be interviewed about the issued raised, and the statements they did provide did not give relevant answers.

    It was also noticeable that the Department for Transport, to whom the Highways Agency is answerable, did not put up a spokesperson. The DfT is looking more an more like a department that is not fit for purpose.

  25. Rebecca Hanson
    Posted November 22, 2012 at 1:44 pm | Permalink

    Here’s a link to Tuesday’s debate in Westminster Hall on value for money. Diane Abbott raises issues on the salaries of those involved in international aid.

    I think we need to get to grips with the salaries of those working for charities and those working to distribute public money. They should be capped to be in line with the public sectors.

    Jobs for the boys high salary jobs which involve public money but are not officially public sector jobs seem to be the modern face of corruption.

  26. Winston Smith
    Posted November 22, 2012 at 1:44 pm | Permalink

    “It would be good if the media reported that the main reason for the bad October figures was the sharp increase in current spending, but don’t hold your breath. I expect they will continue to ignore this inconvenient fact. They are buying the spin line that a fall in corporation tax receipts is the culprit.”

    As I keep telling you there is a political/media elite conspiring to hide the truth. Do an exercise listing the leading editors, commentators, BBC hierarchy and the politicians, their advisers and PR people. You will see they are mostly linked.

    Voting LibLabCon will just continue this nightmare.

  27. Tedgo
    Posted November 22, 2012 at 2:15 pm | Permalink

    I see £1 billion has now been paid out on redundancy packages for NHS managers under the Coalition’s restructuring of the health service. The people receiving these payments only have to wait a month before they can take on a new job within the Health Service.

    I heard yesterday that the MOD has now meet its targets for reducing the number of Civil Service staff. I find this hard to believe, hardly any have gone in our local MOD establishments.

    • uanime5
      Posted November 22, 2012 at 9:26 pm | Permalink

      I believe that this happens every time the Government tries to cut staff in the public sector. It’s a cycle of cut staff to make a big headline, give staff redundancy money, realise they actually needed that many staff, and rehire all the fired staff; the best know example being with the UKBA and the huge queues crated after so many staff were fired.

      • Mark
        Posted November 23, 2012 at 11:16 am | Permalink

        In the case of UKBA there is a widespread problem of low calibre staff. This has just been acknowledged in relation to their failure to deal with the backlog of asylum cases as one example. The only way to improve this is to fire and hire anew: the skill gap is too large to be covered by training, and the culture of the organisation needs to be completely remoulded.

  28. forthurst
    Posted November 22, 2012 at 2:22 pm | Permalink

    Why are these figures surprising. One of the best ways of reducing the take on income tax and increasing that on social security is East European and third world immigration of e.g IT ‘experts’ and the like.

    Bearing down on wages, especially if those coming in are less skilled which a significant proportion are, means that for the same amount of wages paid out, there is a substantial reduction in the tax take and a further increase in social security to support those whose only failing is to be a first worlder and demanding a first world income to pay for the first world benefits the government dishes out to all and sundry until it will inevitably bankrupt the country. We will eventually reach the point where the only people on high wages are banksters on social security and those paid for out of the public purse, often for doing what we didn’t ask for and don’t want.

    What the government needs to do is to simply ask itself the question of whether any policy of their’s increases the country’s financial well-being and corresponding fiscal well-being or reduces it. Covering the country in heavily subsidised windmills, allowing British brands to be bought out with money borrowed from the British taxpayer who himself borrowed the money to loan it, doing many stupid and expensive things because they have been dictated to us by Brussels’ troughers etc. will not get us out of the fiscal hole.

  29. Daniel Thomas
    Posted November 22, 2012 at 2:23 pm | Permalink

    I am not sure how VAT receipts being up 3.6% and National Insurance up 5.1% can be described as useful. This money should be retained by the people who earned it.

    Government does not spend money efficiently, it does not give the people value for their money.

    The government is taxing and spending too much and its killing the economy.

    Tax, spend, borrow and debt with occasional bouts of quantative easing seem to be all the government can come up with.

    They have run out of ideas, the country needs to move in a different direction.

  30. Mark
    Posted November 22, 2012 at 4:08 pm | Permalink

    The ONS tell us that the Treasury’s replacement of the COINS database by OSCAR for monitoring spending is still undergoing teething problems:

    This system collects public spending data from central government departments and the devolved administrations. October is the sixth month that the central government spending data for 2012/13 has been produced using this system. Although the data are for the most part of comparable quality to previous years, there are still some initial data and system issues. Resolving these issues may lead to larger than normal revisions in the central government expenditure data reported during 2012/13.

    In short, they haven’t a clue what is really being spent or where. No self respecting corporate treasurer would consider this adequate.

    The ONS also admit that the profit/loss position of the BEAPFF that holds QE gilts has been completely ignored in public sector accounts hitherto, only being recorded in the “including financial interventions” measures that are normally buried away from public view. Stripping out the BEAPFF mark to market profit of £23bn and its cumulated coupon income (now approaching £35bn, we are told) implies that things are rather (£58bn!) worse at the state owned banks than appeared to be the case.

    The Treasury is now like a hedge fund, exposed heavily to interest rates. The BEAPFF portfolio would lose almost £30bn in value on a 1% increase in rates. New borrowing of around £150bn per year (allowing for gilt redemptions and BEAPFF coupon income) would also become more expensive. We have just seen France downgraded. UK soon?

    The shortfall in CT is mostly down to lower receipts from oil and gas production, still suffering the consequences of Osborne’s ill judged raid that caused 28 fields to shut down in 2011.

  31. APL
    Posted November 22, 2012 at 5:08 pm | Permalink

    First version Posted November 18, 2012 at 8:10 pm and still awaiting moderation.

    (submitted allegations about DFID funding and the BBC which I have not had time to check out. It would take me too long to find it from what you said and see if it is true. I need more evidence/detail if I am to run this. The BBC have shown the dangers of publishing things without back-up)

    • APL
      Posted November 24, 2012 at 9:47 am | Permalink

      Thank you for your reply.

      Perhaps one of your EUrosceptic colleagues would like to investigate, maybe a question of the minister ostensibly responsible for the DFID asking about the funding outlined in the Daily Telegraph Booker column 17 November 2009?

      After all, isn’t the job of parliamentarians to hold the government to account as to how much money it is spending? Don’t sensible politicians want to locate waste, graft and corruption and eradicate it from the public accounts?

      This looks like an opportunity to start somewhere.

  32. Rebecca Hanson
    Posted November 22, 2012 at 7:14 pm | Permalink

    I gather a National Audit Office Report has been published which says that Gove has now spent £8.3bn on Academies – that’s £1bn over budget. Heaven only knows what he’s spent on free schools.

    So there’s part of the problem.

    And it’s all in aid of……?????

    Reply: As the n umber of Academies rises of course the budget for them rises. They are mainly the comprehensive schools with a different constitution.

    • Rebecca Hanson
      Posted November 23, 2012 at 6:32 pm | Permalink

      Here’s a link to the report.

      Is it about £1bn extra the program has cost so far?
      (with – as you say – the rest of the money being money which would have gone to schools anyway?)

      Page 9 of the report would suggest that academies will cost us approx £300m more each year? in the future as the assumptions regarding money which could be clawed back from LAs were not correct…… Or will that money just be cut from budgets so academies have neither the LA services nor the money?

      • Rebecca Hanson
        Posted November 25, 2012 at 5:15 pm | Permalink

        Okay here’s the detail:

        An estimated £1.0 billion of this was additional cost to the Department . It spent £49 million on central Programme administration, £338 million on transition costs, £92 million on academy insurance, £22 million on support for academies in deficit, £68 million reimbursing academies’ VAT costs, and £29 million on other grants. The Department also chose to spend £21 million double‑funding academies and local authorities to ensure sustainability of some local authority services, and £59 million protecting academies against year-on-year volatility in their income. A further £350 million was money the Department was not able to recover from local authorities to offset against academy funding, and which therefore remained in the local authority system.

        So that’s £1.028bn overspend by the DFE on academies alone during the first two years of the program (nobody yet knows how much free schools have cost). And given that £338m were transition costs and £350m relates to costs which were expected to be clawed back from LAs but couldn’t be, if we continue with the transition at the same rate that’s £169m per year for transitions. The annual costs which were expected to be clawed back from LAs but couldn’t be will be at least £175m per year. And that’s without considering central admin costs and so on.

        FOR WHAT? What this £1bn + over £0.3bn per year going forward actually doing to benefit the education of our children? Most of the schools involved are no different at all for having become academies.

  33. David Langley
    Posted November 22, 2012 at 7:37 pm | Permalink

    Today we find that the immigration problem is worse than we all thought. The bare facts are that immigrants from poor countries are going to soak up vast amounts of dough. As soon as they arrive and are given access to our benefits and social care the costs rack up. I have one wife and my chick has flown the nest. Even though I can provide for my wife and I after working non stop for 50 odd years the cost of living is getting close to the amount I get.
    I shudder to think what the large immigrant families are costing and I do not believe anyone has any real idea of the bill for them alone. On present calculations I will need to get back out to work soon, any jobs in the EU going, we discriminate against 70+ here?

  34. Lindsay McDougall
    Posted November 22, 2012 at 8:19 pm | Permalink

    Yes, it looks like a horror story. One month’s figures can be distorted by a blip in defence expenditure for example. However, I understand that it is also a horror story when one looks at the seven monthly totals for April to October. I will delay any detailed response until I have looked at the 7 month beakdown, although it may not be easy for a ‘pleb’ to extract the 7 month breakdown for year 2011.

    We really have to insist that the Chancellor does something about this. If particular ministers have been spending too freely, they should be named and shamed. If it is wilful obstruction by the Civil Service, there should be a wholesale purge.

    The government has not been paying sufficient attention to short term cash flow. Redundancy payments are more expensive than natural wastage. Increased university tuition fees are paid well in arrears. It’s possible that too much is being spent on acadamies / free schools. The move to the new benefits system may be costing more than it should. State pensions and benefits have been allowed to rise more quickly than private sector pay rates.

  35. uanime5
    Posted November 22, 2012 at 9:11 pm | Permalink

    Well somethings are being cut, such as the budgets for schools because the spending on academies is £1 billion over budget.

  36. Derek Emery
    Posted November 24, 2012 at 5:58 pm | Permalink

    It’s interesting to see Cameron preaching austerity to the EU whilst indulging in increased spending here. The loss of the AAA rating would change things.

  • 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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