Yesterday’s figures for September 2014 and the first half of the 2014-15 fiscal year show spending and borrowing on the rise.
Social security benefits are up by 5.4% on September a year earlier, despite the good progress in getting more people into work. Other current public spending is up by 3.1%. Capital spending is up by 42%. As a result of this substantial increase in nominal and real public spending, total borrowing so far this fiscal year is Ā£58 billion, Ā£5.4 bn more than for the same period last year.
VAT revenues are up by 4%. Capital Gains Tax revenues remain very depressed, owing to the higher rate this government has introduced. It is running at around half the level of the pre crisis peak in the last decade. PAYE income tax revenues are up, but so are tax credit expenditures. Overall tax on income and wealth shows no gr0wth at all. The combination of a good policy of taking people out of Income tax at the lower end, and the self defeating policy of trying to hit people with higher rates at the upper end has meant no rises in receipts.
Taxes on alcohol and tobacco are also failing to produce extra revenues. Petroleum Revenue Tax effectively disappeared in the last quarter. The government raised just Ā£18 m in three months as oil prices fell and North Sea output dropped. Ā Our EU contributions so far this year total Ā£5.7 billion, and public sector pensions this September at Ā£3.5bn were 28% higher thanĀ August or October Ā last year.
In the remaining months of the year government needs to get a grip on its spending, and revisit its approach to taxing so it gets more by charging rates people will pay.Ā A Ā 20% Capital Gains tax should bring in more money, for example.
October 22, 2014
Yeah just like Cameron says he is committed to “deficit reduction” R4 news has just headlined an announcement that Dowing St supports a claim from the Lord Mayor of London that she “is not a member of the establishment”. John the next time you see Dave remind him on that if you stop treating the electorate as mugs you might actually win an election.
October 22, 2014
Dame Rita, heaven forbid!
How could you possibly question that Fiona is not a member of the Establishment? She went before HASC yesterday to say how committed she was to getting to the bottom of these matters. Not quite sure what she’s been doing so far mind you….
OK, she is Lord Mayor of London, a top-ranking lawyer and close ally of the ‘bankers’ who operate from the City of London financial quarter. Woolf is an Honorary Bencher of Middle Temple, a Court Assistant of the Solicitors’ and the Wax Chandlers’ companies, and an Honorary Court Assistant of the Worshipful Company of Builders Merchants. She is also a liveryman of the Plumbers’, Arbitrators’, Marketors’ and the Tax Advisers’ companies. In March 2014 Woolf served with Leon Brittan on the International Financial Services forum.
Fiona Woolf is a Member of the Council of The London Regiment of the Territorial Army.
OK, Woolf has disclosed that she lived in the same street in London as Lord Brittan and had invited the Conservative peer and his wife to dinner on three occasions. Lord Brittan was home secretary in 1984 when ministers were handed a dossier on alleged high-profile paedophiles; he has insisted that the proper procedures were followed. She has admitted to dining with Lord Brittan and his family five times since 2008 and had also had a coffee with Lady Brittan on a “small number of occasions”.
But I repeat as Downing St have confirmed that she ‘is not a member of the Estalishment’…. So, I hope that is clear, nothing to see here, move along please
zorro
October 22, 2014
Exactly. Also I see she did Law and Psychology at Keele University & after a private schooling I think. It does not sound too encouraging but we shall see.
Still she is clearly not “establishment” as Cameron says so.
October 22, 2014
“But I repeat as Downing St have confirmed that she āis not a member of the Estalishmentā”
The convocation of the Great and Good is far more more exclusive than I had imagined, obviously; is there some kind of cultural qualification which CMD has recently claimed for himself which therefore unfairly excludes such talented people?
October 22, 2014
Absolutely! I will have you know that David Cameron is related to royalty… http://www.dailymail.co.uk/debate/article-1269378/David-Cameron-Boris-Johnson-scions-royal-blood.html
That gives him a unique ability to tell us serfs what is good for us, and when we should just shut and move along when he has clearly told us that she is ‘not a member of the establishment’….
zorro
October 22, 2014
On a scale of 1 (my Polish plumber) to 10 (The Queen), Fiona Woolf must score 9 point something as a member of the establishment. Is there really nobody else, amongst 60 million British people, who have the wit and willingness to do this job but aren’t so obviously in the establishment club?
October 22, 2014
So this is what Cameron says is “paying down the debt”. Essentially we have low productivity and low wages undercut by mainly low paid immigration. So low tax receipts and higher benefit payments.
20% CGT (after indexation) might be about right. The current 28% CGT, 55% income tax, Stamp duty up to 12%, vat at 20%, NI both at up to 23% and IHT at 40% is clearly bonkers.
Why not just steal all income then give people a tiny allowance to live on?
Meanwhile Clark was doing his best to lose the next election on radio 4 yesterday. He seems to think about 50 MPs think as he does. So unless Cameron gets a huge majority he may have some difficulty delivering his referendum, even if he really wants to. An overall majority for him is highly unlikely circa 7%. Let alone a majority of over 100 that he might need to outvote the vehemently pro EU wing.
Still not to worry it seems the BBC has Russell Brand back on Newsnight again, to give us more of his political wisdom and brilliant vision tonight, that should help.
October 22, 2014
The UK taxpayer is subsidising big business with Ā£5.4 billion in working tax credits. Employment is up in these low paid jobs that is why no increase in income tax, it also does not show the other demands on public services like the world health service, schools, housing reducing our quality of life by building on every piece of green land for mass immigration, lack of social cohesion. Ttoday the LOST foreign criminals who cannot be deported. All costing us a fortune. 6 months to go to the election and the public needs to ask what have the Tories actually achieved? Economy still a basket case with no serious spending cuts, energy policy still in a mess costing us a fortune, immigration out of control, useless criminal justice system, new housing bubble and we are still paying the EU to wreck our quality of life when we have not elected any of them.
October 22, 2014
Spot on with the maths regarding low paid jobs, especially unskilled foreign workers subsidised by the indigenous Brits taxes.
Of course the CBI want more EU free movement so we can pay their sub their wages and pay for their public services, whilst they domicile off shore for Corporation tax purposes, allowed via the Maastricht Treaty. More EU regulation =less competition for them.
I see that our friend and President Mr Junker has told us today that free movement will remain. More mass migration at our expense and the legacy parties wonder why they are haemorrhaging votes. They simply aren’t listening to the British people or acting on our behalf.
October 22, 2014
Yes, all this AND having the pay the EU for it. Ā£5.7 is utterly ridiculous. Just think of what we could spend this money on in our own country instead of propping up half of Europe! I am utterly gobsmacked by what is going on in politics at the moment. Listening to the garbage coming out of the Jeremy Vine show on Radio 2 at lunchtime where they were discussing the fact that wind turbines generated more than nuclear for one day just about summed up the fairy tales our electorate are expected to believe. If we could get one article from the BBC that wasn’t biased in some shape or form we would all be better off! A few more facts instead of fantasy would not go amiss.
October 22, 2014
45% income tax I mean.
October 22, 2014
It’s more than 50 Mp’s that think how Ken Clark does. It is a myth that the Conservative party is ‘sceptical’ about Europe.
For every John Redwood there is a Ben Gummer and Nick Boles that are Europhile to their core. The voting record speaks for itself.
There are many ‘Conservatives’ that have rejected ALL attempts to bring back power or money to the Uk parliament. Whatever the argument John Redwood makes, they will always vote for more Europe as they see this as a good career move. Stick to the script, don’t make waves and annoy the whips. Too many shallow young men and women with no experience of the outer world clinging on the gravy train at all cost.
http://www.brugesgroup.com/mpwatch/index.live
Sadly the Conservatives left wing coup has worked splendidly skewing the Mp selection process in favour of the Europhile. In my view these Europhiles belong in the Labour or Liberal party – their views are incompatible with Conservatism.
That’s why I have no regret in throwing the kitchen sink at the party I used to support – for they have brought the UKIP crisis upon themselves. I and many others have not changed our views but they have.
We know that Mathew Parris has chaired the selection process for Conservative candidate Mp’s..and we know what he thinks to the core Conservative voter. Until the Redwood’s take back control of the party there is very little hope.
October 22, 2014
Is it correct that Parris chairs the selection committee?
What is the source for that?
If so, it explains why the Tories are doomed.
October 22, 2014
Lifelogic, perhaps a spot of QE might be in order to pay back the government bills, and please do not forget no matter what, because the PM likes to remind us so much, that we are ‘paying down the debt’ within his parallel universe in the Gordon Brown 0% growth style!!
zorro
October 22, 2014
A peerage to Sir Andrew Green of Migration Watch I see, as a typical Cameron distraction one assumes.
October 22, 2014
Probably for keeping relatively quiet over the last few years despite the ongoing mass, low skill level immigration to this country which is still at Labour levels in terms of net migration….. You would think at his age that he had nothing to lose.
zorro
October 22, 2014
28% increase in public pensions? How?
October 22, 2014
Good question. A typo, a miscalculation, or what?
October 22, 2014
Retired posties? Flog off everything to fund current spending, creating future higher taxpayer and consumer liabilities.
Has the government considered flogging off our foreign policy with its concommitant military capability? Its not working in my interests so why not charge those in whose interest it is being conducted? Could be a sound investment for mediaevalists somewhere or somewhere nearby where the population (has bad judgement ed).
October 22, 2014
Is this an artefact arising from Royal Mail privatisation?
October 22, 2014
Could the large number of NHS managers who were made redundant and often re-employed by the new Trusts have anything to do with it? If the changes to government, which were intended to reduce waste, have resulted in a 28% increase in generous public pensions, then Mr Osborne should explain how this has gone horribly wrong.
October 22, 2014
8. Recent events and methodological changes
ESA 2010 and the Public Sector Finance Review
In August, the statistics in this bulletin were substantially revised reflecting:
ā¢ the move from European System of Accounts (ESA) 1995 to ESA 2010;
ā¢ implementation of the new ex measures defined as part of the 2013 Review of Public Sector Finance Statistics.
The revisions to the statistics apply to the full time period over which the statistics are reported; in this way year-on-year comparisons (and similar) continue to compare like with like.
The Public Sector Finances comply with international standards set out in the ESA. These standards ensure that economic statistics produced by all EU member states are compiled in a consistent, comparable, and reliable way. The new ESA 2010 standards were adopted by all EU countries in September 2014. More detail can be found in the Transition to ESA10 article published in February 2014 and the Developments to Public Sector Finances article published in June 2014.
The only ESA 2010 change which impacts on public sector net debt is:
ā¢ Network Rail reclassification from private sector to central government.
The main ESA 2010 changes which impact on public sector net borrowing are:
ā¢ Network Rail reclassification from private sector to central government;
ā¢ recording of 3G and 4G spectra receipts as rent and not the sale of assets;
ā¢ new treatment of Royal Mail Pension Plan transfer to government;
ā¢ new treatment for the Local Government Pension Scheme.
Most of the other ESA 2010 changes impact on revenue or expenditure data but are neutral in terms of public sector net borrowing.
The Review of Public Sector Finance Statistics (969.7 Kb Pdf) proposed improvements to the presentation of the statistics and changes to the fiscal measures of net borrowing and net debt (the so called āex-measuresā). The c
October 23, 2014
Thanks, it looks like a clutch of accounting artefacts, not just one!
October 22, 2014
We need a state sector pension mugging tax to redress the balance (after Brown’s private sector one) to make these pensions affordable.
October 22, 2014
Or a public sector pension windfall tax!?
October 22, 2014
I am assuming it’s a typo’. But, politicians arithmetic tends to get very dodgy near elections. Try it for yourself, Ā£3.509 billion this September. Ā£3.237 billion last September. I make that 8.4%.
If you keep making them redundant through “early retirement”, it is very expensive. A female police officer is if I remember correctly, is still the most expensive to retire early.
Reply Yes, a typo – the figures I compared it to were August/October – last September was an unusual figure for last year.
October 22, 2014
There could not be a clearer example of the laffer curve effect than the fact that a rise in the rate of CGT from 18% to 28%, at a time of rising asset prices, has led to a fall in receipts. The Conservatives need to have the courage of their convictions and acknowledge that cutting marginal rates raises incentives, boosts growth and raises tax receipts.
October 22, 2014
In a nutshell the problem is as you point out:
Our EU contributions Ā£5.7 billion, public sector pensions at Ā£3.5bn (28% higher than the same month last year), social security benefits are up by 5.4% on September a year earlier, other current public spending is up by 3.1%. “Capital” spending is up by 42%.
If we do not stop all this endless government waste businesses simply cannot be internationally competitive. By “Capital” spending I assume they mean daft things such HS2, expensive new government building and all the green energy nonsense. Hardly sensible investments very often. Not many new roads or road bridges that I see.
Furthermore so many people even in the private sector are diverted to totally unproductive activity by a poor litigation systems, daft employment laws, over regulation, hugely over complex tax systems, gender neutral insurance laws and much other parasitic government nonsense.
October 22, 2014
Lifelogic,
” I assume they mean daft things such HS2″
Indeed. You may remember our host told us that Ā£340million had been spent and net assets were zero!
October 22, 2014
Exactly that is what they call investment. I also read that Ā£66,000 per person has been spent trying to get mother of young children back into usually part time work!
October 22, 2014
Might as well have just given them the money to spend on something useful. I wonder how many found a job…?
zorro
October 23, 2014
zorro: “I wonder how many found a jobā¦?”
And at the salary paid for the sort of job they might expect to obtain, how many found it economically beneficial without being subsidized by one or other of the government ‘back to work’ schemes?
October 22, 2014
The local Tory MP is calling for the Stonehenge tunnel to be built, at huge cost and with permanent lighting, despite it being cancelled after long and expensive inquiries. All that is needed is a dual carriageway in a 10 foot cutting and an flyover roundabout, with a few trees to screen the tops of lorries, in case they disturb the Druids ceremonies.
HMG is also going to sell Eurostar for Ā£300m now it is highly profitable and giving a good return on investment. Foreigners will snap it up. We can use the money to pay a fraction of the consultants fees and compulsary purchase costs for HS2, with no possibility of a return.
Business as usual in the Treasury.
October 22, 2014
It’s all smoke and mirrors. They trumpet GDP(that flawed, bank friendly output indicator) is up, and then tell us govt debt is up. Govt debt is up, so govy spending up , govt output is up, GDP is up. viola!
Rabbit out of the hat. Taken to its logical conclusion, we just print umlimited govt debt, reach infinite GDP and become Zimbabwe.
October 22, 2014
As many have said on here before, no real effort has been made to make serious savings on expenditure in the last 4 years, but instead a reliance on a tax raising/increasing policy has been used, to try and reduce the deficit.
If you are forever spending more than you are getting in, the easiest way forward is to reduce/cut back spending if you cannot sensibly increase your income.
The Government need to face facts, you cannot expect people to work, for less a percentage than they need to pay to the government.
With tax rates where they are the alternative economy will continue to grow.
The fact that many people who are arriving here, are from such countries where the alternative economy is the norm, does not help matters.
Public sector pensions liability up 28% !!!!!!!
Meanwhile those taxpayers who are funding such (through taxation) are getting derisory returns on their own, even if they can afford to contribute.
October 22, 2014
…and public sector pensions this September at Ā£3.5bn were 28% higher than the same month last year.
Is there a simple explanation for that large rise? I believe that the last increase for indexation in April 2014 was 2.7% based on CPI and I can hardly imagine that there’s been a 25% increase in the number of retired public sector workers in the last year so why the big jump?
October 22, 2014
2 million more in work and no more tax paid. Keep importing them John. You will soon have the population up to 70 million but only the same to spend on skulesanospiyals. Then you wonder why the voters are unimpressed.
Gideons economics are a shambles and it would be a good election to lose
Mind you that is CMD ‘ S ploy anyway.
October 22, 2014
Employment up for low paid jobs that the taxpayer is subsidising through working tax credits, housing, education, world health service. The UK taxpayer subsidising the low wages paid by big business, no wonder they want more immigration and more EU!
October 22, 2014
Perhaps we need more concentration on reducing the tax paid by the low paid. A raising of the starting level for NICs to that for income tax would be a huge start.
October 22, 2014
It seem so. He shows no sign of a real change of direction, just the odd nod towards UKIP – no where near enough.
October 22, 2014
Immigrants are a net benefit to the economy – oft stated defence of EU and other anti UK population policy.
How is tax credits up and tax receipts flat reconciled with this statement?
UK taxpayers are subsidising business employing low paid workers, many from abroad. When will business either be asked to contribute too or have the subsidy removed?
Universal credit will pay (an immigrant or otherwise) Ā£36K per annum take home for a minimum wage job if they have three children ( who will also need schooling and healthcare).
To reduce spending we need to stop subsidising other countries and concentrate on upskilling our own. GDP rises through population growth is a superficial tool greatly exposed through these figures which also inceases the cost of living for all.
October 22, 2014
Some immigrants are a net benefit to the economy and some are not! The trick is to take the former and not the latter – is this not obvious?
October 22, 2014
Impossible while we are in the EU. We should do the same as the USA, Canada, Australia and New Zealand. I would love to live in any of them but sadly even though I could buy my own property outright, my pension is not enough for them to allow me in. Have tried Europe but didn’t match up to life in Canada. I wonder why?
October 22, 2014
Because governments are completely controlled by the corporations. We are getting a big growth in low paid, low skilled workers who pay little or no tax and cost a bomb in tax credits and other benefits….
zorro
October 22, 2014
NS
You have absolutely hit the nail on the head.
While ever we pay tax credits and housing benefit to all low earners it’s a no-brainer not to have a job. No Social Security sleuths on your back and a guaranteed income irrespective of pay rate or cost of rent. It’s an obvious explanation of why employment is increasing but tax paid is static.
Typical Gordon Brown strategy of trying to get everybody on the payroll so that they continued to vote for Labour but it will not work for the Tories because they plainly want to reduce the expenditure.
October 22, 2014
“Social security benefits are up by 5.4% on September a year earlier, despite the good progress in getting more people into work.”
And a lower tax take too – which supports the complaints about the quality of the work people are finding. I hear that, to optimise benefits, a sixteen hour a week limit on working is preferred by many.
The Tories state that there is a lag in the jobs created an pay increases and that things will get better – but this doesn’t follow, especially as there is an over supply of ‘cheap’ (aka government subsidised) immigrant labour.
BTW – are the Ā£70,000 a year (Ā£1bn a year total) costs of each foreign criminal deducted from the economic ‘benefit’ of our open border policy ? Never mind the misery they cause to the law abiding, hard working people our Government is meant to protect.
October 22, 2014
PS – Are the costs of Middle East wars and homeland security deducted from the economic ‘benefits’ of open border policy in order to keep jihadism off the streets of the UK ?
October 22, 2014
@MM
I suspect not but I will wager the costs of security and war are included in our “growing” GDP figures from which the benefits of mass, uncontrolled immigration is trumpeted.
October 22, 2014
JR: “In the remaining months of the year government needs to get a grip on its spending”
Not very likely, as you told us back in 2010 they intended to spend more and reduce the deficit by taxation. Unsurprisingly, the pledge to eliminate the deficit by 2015 was jettisoned years ago. The new claim is to have done this during the next parliament. Why on earth should we believe that with the experience to date and the worsening situation? Remember all that rhetoric about how wrong it was to leave all these debts to our children and grandchildren? Obviously your colleagues don’t think the future burden for the children and grandchildren is yet high enough.
If you were not a member of the Conservative party you might have headed this piece as: “The deficit is not a great election issue for the Conservatives.”
October 22, 2014
Oddly, I think it does remain a good issue for the Conservatives, because they can at least demonstrate the right intentions even where they are unable to demonstrate sufficient progress. Labour will not even talk about the issue, other than by a brief verbal annotation to a sermon about the need for more spending.
It is striking to see the parity between the amount by which borrowing overshot last year’s figure and the amount we send to Brussels.
October 22, 2014
“Our EU contributions so far this year total Ā£5.7 billion”
Any idea what came back from the EU?
Foreign Aid? (incl. Calais fix)
Wars?
Money poured over Scotland for referendum?
Westminster Bloat?
Climate Change?
UN contribution?
October 22, 2014
In other words, nothing worthwhile!
October 22, 2014
The dilemma is that in order to be re elected politicians need to be popular.
There is no stomach for austerity amongst the electorate nor any desire in the media to support the arguments of anyone brave enough to make any attempts to reduce the deficit.
The main ways of keeping the voters and the media happy is to borrow money, tax the rich, whoever they are, and create magic money by the alchemy of QE.
There has been no real change from previous recent Governments in that spending continues to rise.
The figures in this article show a set of figures that would make any company director very worried about their chances of staying in business.
Pensions up 28% in a year. Many more people, but tax take down.
I’m very reluctant to blame it on immigration but half a million people (that we know about ) arriving here every single year from generally poorer nations, versus three hundred thousand leaving every year who generally are tax paying skilled people is not a good way to improve these figures.
And a membership fee for a club of nearly Ā£6 billion is the first thing most company directors would stop paying in order to stop the rot.
October 22, 2014
“Petroleum Revenue Tax effectively disappeared in the last quarter. The government raised just Ā£18 m in three months as oil prices fell and North Sea output dropped.”
I’ve just been reading this:
http://www.scotsman.com/news/politics/top-stories/nicola-sturgeon-s-devo-max-would-lose-scots-5bn-1-3579022
“Nicola Sturgeonās devo-max āwould lose Scots Ā£5bnā”
Well, it’s only a projection from a think-tank, but the nub is that:
“… the UKās North Sea oil and gas revenues of Ā£1.1bn for the first half of 2014-15 ā Ā£1 million less than in the previous year ā would not be enough to make up for the Barnett funding that would be lost in the event of full financial powers being devolved.”
Of course oil prices, and oil tax revenues, can go up as well as down.
October 22, 2014
I said at the time that the severe cuts to capital spending when the coalition took office were a mistake. It enabled them to defer and so far avoid the difficult decisions about real cuts in current spending.
So I am happy to see capital spending rising provided it is being well spent on necessary infrastructure that will deliver a payback. As well as increasing revenue through intelligent as opposed to punitive taxation, let’s also see a fundamental rethink about what the government should be doing. It interferes in every area of our lives, even meddling yesterday in football club ownership.
So how about eliminating a few departments altogether? I would start with Culture, Media, and Sport.
October 22, 2014
No doubt Labour will adopt their usual paradoxical position of denouncing this rise in public and capital spending even though it is their own economic policy. Oh, and they will still say that this government is pursuing a policy of austerity.
Some of the statistics need more explanation as has been said above, in particular:
“Social security benefits are up by 5.4% on September a year earlier, despite the good progress in getting more people into work” Why ?
October 22, 2014
Central government expenditure (current and capital) in September 2014 was Ā£56.4 billion, an increase of Ā£2.9 billion, or 5.4%, compared with September 2013.
Of this debt interest remained at Ā£3.1 billion. Of this Ā£3.1 billion, Ā£1.2 billion is the interest paid to the Bank of England Asset Purchase Facility on their gilt holdings (see table PSA9) which are PSNB ex neutral.
Net social benefits (mainly pension payments) increased by Ā£0.9 billion, or 5.4%, to Ā£17.0 billion. Mainly as a result of increases in state pension payments (within National Insurance Fund benefits); social assistance payments and public sector pension payments.
Other current expenditure (mainly departmental spending) increased by Ā£1.0 billion, or 3.1%, to Ā£32.9 billion, mainly as a result of increases in departmental spending on goods and services.
Central government net investment (capital expenditure) increased by Ā£1.0 billion, or 42.6%, to Ā£3.4 billion, largely due to a Ā£0.4 billion increase in gross capital formation. (ONS PSF for September.)
Beware politicians quoting percentages!!!!!
October 22, 2014
“Social security benefits are up by 5.4% on September a year earlier, despite the good progress in getting more people into work.”
Proof that our current immigration arrangements are not of financial benefit to the UK, never mind the social problems created and our over-full hospitals and schools.
Only large corporate businesses are benefiting.
October 22, 2014
Public spending has got out of control and the latest figures show all . When I read that it costs the country millions to pay for foreign prisoners we cannot deport , , allowing disgraceful and unwarranted benefits claims ,(words left out ed) Reading the riot act to the Heads of Departments has not produced the discipline required to reduce Public Expenditure , more severe forms of punishment are required in the ranks where the decision is made to dispense the benefits .
The population has become used to a culture of ” something for nothing ” and this attitude has to be stamped out . Margaret Thatcher faced a challenge similar to this malaise when she became Prime Minister ; she was resolute in her determination to succeed and unrelenting to her Ministers in implementing her policies . We badly need this sort of discipline and control again ; it has to come from the top and enforced all the way down to the front line .
October 22, 2014
John, may I make a partially off-topic request?
Perhaps you might like to express your feelings on what the recent Didcot Power Station fire, plus other Nuclear Power stations already being down will have on the UK’s GDP figures, given the high probability of power cuts to industry this winter if it cold?
Your thoughts on the political impact of a new ‘three day week’ in the run-up to the General Election would be of great interest.
Reply My views on the need for more and cheaper energy is well known.
October 22, 2014
Off-topic, an interesting snippet in this article:
http://ukpollingreport.co.uk/blog/archives/9031
“Latest polls, and how people would vote with a Con-UKIP pact”
“There is sometimes a lazy assumption that because the Conservatives and UKIP together have a very healthy level of support a pact between the two parties would be a winner. That is not necessarily the case ā parties do no own their voters. If two parties agree to stand to together it doesnāt follow that their voters will go along with it. The usual voting intention in the poll showed Labour four points ahead of the Conservatives, but with UKIP on 18%. Asked how they would vote with a Conservative/UKIP pact the Labour lead grew to six points.”
Reasons for that are offered, although it is all rather academic as there is no prospect of an electoral pact even being sought by either UKIP or the Tories, let alone agreed.
October 22, 2014
The two parties (UKIP and the Conservatives) are now so distinctly different I suspect that such a pact would lead to a serious loss of support for UKIP; not to another party but to an unwillingness to vote at all.
The Tory drift to the left in order to woo the swing voter has now been so absolute that they now actually believe in an enormous amount of socialist dogma.
The right wing have absolutely no influence at all except to ensure a calming response from time to time to quieten them down.
A Conservative party in name alone and yet, a considerable number of MP’s who ought to know better are still willing to wave the banner.
Should circumstances permit I hope UKIP does not agree to such a move but is content to suppport a minority government so long as it suits them
October 22, 2014
“The reason is that only about two thirds of current Conservative voters would back the joint ticket ā some would flake away to Labour or the Liberal Democrats, others wouldnāt vote or arenāt sure what they would do. At the same time only just over half of UKIP supporters would follow their party into a deal with the Tories, others would go to Labour, find an alternate āotherā party or not vote. This probably paints an artificially bleak picture because many of those donāt knows would hold their noses and vote for the joint-ticket, but it should still serve as an antidote to those thinking a pact is a panacea to Tory woes.”
Basically a pact between the UKIP and the Tory party would lead to UKIP losing many of its more intensely patriotic supporters, those who would then be repelled by its association with the unpatriotic Tory party, while the Tory party would lose many of its less patriotic, or plain unpatriotic, supporters, those who would be filled with righteous indignation at the very idea of associating with what they, like the Tory leaders, choose to characterise as the extreme right wing (abuse left out ed) UKIP.
October 23, 2014
(abuse left out ed)
That would be the same abuse employed by Messers Cameron, Osborne and the LimpDim Nick Clunk?
By the way, why is there still a post “Deputy Prime minister” except as a bribe to grease the alliance?
A real Tory party would have abolished the post, and in the process saved the British tax payer a Ā£shedload.
Reply We have a coalition government, and the Lib Dems wanted a DPM as part of the price of coalition!
October 23, 2014
APL: “except as a bribe to grease the alliance?”
JR: “and the Lib Dems wanted a DPM as part of the price of coalition!”
Well, yes. But isn’t it Parliaments job to keep a check on profligate public spending? Why hasn’t it done so in this case?
Just checking wiki to find that it’s been around a lot longer than I thought, Atlee held the post in 1945, God knows why!
But if ever there was a role that didn’t need to exist, Deputy Prime minister is it.
October 22, 2014
It is the only way the Tories can stay in Number 10. They must do a deal with UKIP to keep Minibrand out and the Libdems, down and out.
Mr Cameron has been far too condescending, only for their leader to renege on numerous promises, the main one being boundary changes, of course.
I cannot see a repeat of the 2010 coalition stitch-up being accepted by the back benchers, this time.
October 22, 2014
As usual, you are dead right about the situation over CGT.
I believe a better solution would be to leave the rate at 28% but to reintroduce taper relief on a sliding scale which used to be over 10 years. I would reduce the tax rate for each year of ownership by a simple-to-understand 2%pa.
This would tax anyone making a quick buck at a realistic rate of 28% but reward longer term investors with a rate of only 8%. There can be no doubt that there are thousands of property owners who are hanging on to 2nd properties because of the punative rates. If my suggestion is judged too generous, then set the scale over 15 years and 1.5%pa.
Today it’s actually more sensible to take out a commercial or buy to let mortgage to release capital than to sell up at the current punative rate.
There would be a substantial economic benefit from the additional trading that would take place if the logjam of properties caused by the rate of CGT was eased.
October 22, 2014
I agree. Particularly so in respect of the 15 years that you mention. Current capital gains rates are high for those of us who have held substantial capital assets in the form of property for 15 years or more.
October 22, 2014
I see that Lord Newby, a Liberal Democrat minister, is calling on over 55s to downsize their houses to release money and properties to help family members and other buyers to move up.
I for one would move house but with very high rates of stamp duty and 20% VAT on home improvements to our new home, it would be simply not affordable or sensible to even contemplate moving.
This is just one example of why high overall taxation caused by excessive government spending is so damaging to the economy.
If we had to pay stamp duty only on the net spend and VAT at 5%-10% on home improvements, we would put our house on the market tomorrow.
While rates stay where they are, so will we.
Reply I agree that Stamp Duty is now a major impediment to moving to the property you want/need. I have argued in the Commons for a lower rate.
October 22, 2014
I am in a similar position – I would be happier to move if it didn’t involve paying out so many thousands in stamp duty. It has been reducing social and labour mobility since it was set at these punitive levels.
October 22, 2014
Within these shocking figures, does the government break out how much is paid out for useless green energy subsidies? I read somewhere that these subsidies are supposed to be capped at cĀ£6 billion pa. How is this cap reconciled with the provisions of the Climate Change Act and the Energy Act which mandated the subsidies in the first place?
October 22, 2014
After all these years of faux-sterity,it really is no surprise.There is no political will (amongst those in power)to tackle excess public spending,not surprising given that most of the liberal/progressive middle classes rely on it for their lifestyles.I fear we will have to wait for the “markets” or the IMF to sort it out for us.
October 22, 2014
Huge savings would be made by the simple introduction of minimum pricing for alcohol. This would either have the desired result of reducing consumption and thus police and NHS costs, or result in increased revenue from the extra VAT raised. The government must stop kowtowing to big business areas like this.
October 22, 2014
JR – when in your view do you think interest rates in the UK and also in the eurozone will rise? I would be interested in your opinion.
Reply UK around middle of 2015. Eurozone not before 2016 and probably later.
October 22, 2014
Reply to reply,
“UK around middle of 2015” – politicalese for, ‘after we have got the next election out of the way’!
October 23, 2014
JR – thank you.
October 22, 2014
I would have thought that by now the Conservatives might have woken up to the fact that there is no merit in demand side economics.
It has neither worked in the UK nor in Japan, where the government has now incurrred debt equal to more than the savings of the entire population. How much more evidence do they need that government spending is not the answer?
Proper deficit managment to bring spending properly under control is needed, and fast. No good saying that income has dropped but spending remains the same or is rising, even my bank Manager would not buy that one.
There are many many areas of spending that can be dramatically reduced even though they may be pet projects and, each time it happens it means that less taxes are necessary to support such spending. Reduce the deficit to a surplus and there you have the starting point for debt repaynent.
It would now appear from recent comments that the Conservatives are starting to subscribe to the daft Keynesian idea that thrift is bad for the economy.
Adam Smith will be turning in his grave.
October 22, 2014
It is only within the last 12 months that the leaders of political parties have expressed their knowledge of the difference between debt and deficit. Before that they used the terms interchangeably betraying an unthinkable and quite frankly frightening ignorance at the very top and heart of our political establishment.
Lesser mortals such as ourselves, well who are we to know the veracity or aptness of the figures which you cite: their real meaning if any.
But the numbers on alcohol and tobacco seem Kosher. Policy seems to be we are permitted to indulge in such expensive behaviour as drinking and smoking only in the confines of our own homes. The more dangerous, taxless hobbies of drug inhalation continue to be publicised and by stars glorified and promoted without any real fear they will be jailed for they are too “big” to fail.
Like American culture we are between moving tax priorities from tobacco/alcohol to other drugs which as we used to say when downing a dram of whisky ” is for medicinal purposes only ”
None of this will end well. Cultural deficit in clear thinking will continue to increase. Our debt to all those too big to fail is OK. it never actually existed except in media minds
October 22, 2014
Public spending up: what do they expect with free movement and immigration.No one pays for their treatment or prescriptions where I am. I even get threats. They turn up for appts in the middle of others appts ,demand routine treatment without an appt and threaten to take many other members away from the business if they cannot get their own way and have to wait one day.
October 22, 2014
As with Labour’s Caroline Flint on today’s Daily Politics Show, people keep saying (and this should apply to everyone and not just to those from the EU) immigration is OK so long as the people are paying taxes and contributing.
A lot of the people who come to this country are unskilled and take low-paid jobs (like we have a national shortage of capacity in that area). I wonder if the government truly knows which immigrants are net contributors, and who are taking from the pot by receiving in-work benefits?
That is madness when there are people in the UK who could do those jobs, but are presently getting out of work benefits, as it compounds the problem. It means that rather than turn a net taker into a net giver by finding them gainful employment where they pay taxes, because of unfettered immigration, we then have two net takers!
Of course the unemployed person who is found employment might still receive in-work benefits, but it’s still not as bad as importing them in bulk from elsewhere, for them to take the jobs our own people should be doing.
I seem to recall the Conservative MP for Peterborough, Stewart Jackson, saying something to the effect that only single migrants to the UK of around thirty years of age who have no dependants, are real net contributors. Whatever the accuracies of that statement, he’s got a point and I can at least see where he’s coming from.
The government needs to get a grip if it is serious about getting public spending down. It has allowed itself to run into a wholly avoidable brick wall by permitting an influx of people who take and add to the debt. Moreover, the Tories have lost the plot by allowing their party to be overrun by EU enthusiasts who failed to see the long-term disasters that would ultimately and inevitably ensue.
The need to reduce the national debt is the most pressing, yet perhaps the most misunderstood of any issue currently on the political agenda. Should anything go wrong, we could become insolvent and then be at the mercy of others to determine our domestic and foreign policies, just like Labour who had to go cap-in-hand to the IMF in the 1970s after a previous economic mess-up (some things never change).
Shame on you Cameron!
Tad Davison
Cambridge
October 22, 2014
The huge sums passed to the EU. Are they fixed or dependent upon the revenues raised by our taxes? I’d hate to think that we would have to pay a fixed sum to Brussels regardless of our income.
October 22, 2014
All government spending ends up coming back as taxes as it is spent and respent in the economy. Where else can it go? It can only be temporarily reprieved from its ultimate fate by being saved , either domestically or by the central banks of the big exporters.
So cutting spending means cutting taxation revenue too.
If it is required that the size of government be reduced then taxation needs to be cut. Then the number of transactions in the private sector to return the same taxation revenue to government will increase. Business will flourish. Unemployment will fall. If that produces an increase in inflation to beyond acceptable leves then would be the right time to reduce government spending.
October 22, 2014
Agreed, ultimately the ‘consumer’ class will have no disposable income to spend in the service economy. Calls for minimum alcohol pricing is taking away the very last bit of enjoyment for the average joe. Look at e cigs and smuggled tobacco for evidence of punitive taxation . This coalition has done nothing, absolutely nothing to placate people, at least labour had cheap credit and rising house prices, ie equity release. Thus the spite of say clegg is laid bare, they expect us to actively redistribute our wealth with no carrot. A soviet style command economy will not work without subjugating the population, is he that thick?. Cam not far behind him.
October 22, 2014
Real inflation is going up too. Rents and house prices are up. Wages are down. Food shopping prices are up.
Its a complete joke the official position.
October 22, 2014
“A 20% Capital Gains tax should bring in more money, for example.”
If 49% of ones income is taken in taxes to help fund the spending of a democratically elected government, one might be persuaded to believe that one is being a useful member of society (or the host country).
If 51% of ones income is taken in taxes, one might be tempted to think one has been enslaved.
The perception, albeit skewed by a small percentage, might persuade wealthier people, a proportion of whom work quite hard to achieve their wealth (whatever some in Parliament might wish to think), that they should seek out other parts of the globe where the p*** is not so readily taken; a potentially stupid and unnecessary loss of beneficial wealth creators.
Sometimes, in life, perception is all.
October 22, 2014
In the remaining months of the year government needs to get a grip on its spending, and revisit its approach to taxing so it gets more by charging rates people will pay. A 20% Capital Gains tax should bring in more money, for example.
20% capital gains tax may well bring in more revenue, in itself, than if the rate were higher , but would that mean overall revenue would increase?
I would suggest it wouldn’t. A reduction would simply create a greater incentive to switch income from being declared as such, and therefore attracting income tax and NI contributions to being declared as capital gains.
The sectoral balances show that just about all the government’s deficit is taken up in replenishing money lost to the economy in imports. Hardly any is being saved in the Private Domestic sector which would be stimulatory and lead to debt reduction. That’s a similar situation to what’s happened previously just before an economic crash. There is a big danger looming there. Any increase in interest rates and/or attempted reduction in spending would almost certainly lead to another crash and be counterproductive economically.
October 23, 2014
Social security benefits up 5.4%, capex up by 42%. How so? A whiff of Labour’s ‘borrowing to invest’ here.
October 23, 2014
Can you write on the City Growth Commission report? Especially the economic/transport aspect which I think can and should be seperated from the city devolution aspect.
October 23, 2014
JR: “Social security benefits are up by 5.4% on September a year earlier, despite the good progress in getting more people into work.”
Ha! How can you possibly claim that you have had good progress?
1. I’ve been unemployed for ages, there are jobs advertised but I never get a response to any of my applications.
2. With unfettered immigration, you will never sate the demand for employment. From that perspective alone, you must be being economical with the truth.
3. You might say, you ought to take something less rewarding. Maybe so, but do I see Members of Parliament taking less well paid jobs? Perhaps, but not without first bunging themselves a huge chunk of my tax, for …. resettlement.
That’s after helping themselves to huge chunks of tax for expenses. Rotten Parliament!
October 23, 2014
Overall tax on income and wealth shows no gr0wth at all -JR
So despite record immigration and all the new jobs, there is NO benefit in terms of net revenue. That we were told, is supposed to be the point of open borders -it was good for the economy.
This just seems to underline how all these new jobs are being created by subsidy in the form of taxpayer top ups. In other words government is subsidising employers to create jobs that are unviable to create an illusion of economic recovery.
Meanwhile there is increased overcrowding on roads, in schools, hospitals. We are getting a raw deal.