Real public spending rises again

Yesterday’s budget papers confirmed that real public current spending has been rising. On page 65 of the OBR Report they confirm that real government consumption increased by 1% per annum 2010-14. This is interesting as when I argued that there would be real rises in current spending on the cash figures most said that was wrong and the official forecasts talked of cuts.

2015-20 is forecast to show further real growth in government consumption. General government consumption is to grow in real terms every year between now and 2010, as is real government capital spending apart from minus 0.1% in 2016.

The OBR Report summarises the impact of the budget well. It says that departmental government spending will be £83 billion higher than in the March plan. The tax rises in the budget will increase revenues by £47 billion over the Parliament (dividend tax, insurance tax, pension tax and vehicle excise duty), to be offset by cuts in Income Tax and Corporation tax worth £24.6bn. Borrowing will be higher in 2016-17 to 2018-19 by £16.7bn.


  1. Lifelogic
    July 9, 2015

    Indeed so much pointless waste and yet so much fat that could be cut out, but they just want to waste even more it seems. About half the activity that state sector currently does is either pointless or is actively damaging to the economy and the population.

    This while the treasury is telling everyone running businesses how much they have to pay their staff. Assuring us it will not cost jobs and that employers can afford it. How can they possibly know they have not even seen the businesses? They simply have not got a clue about margins, competition and market conditions in most businesses.

    Of course one of the main reasons companies cannot pay more is the constant inconvenience, the unpaid work and over endless over regulation heaped on to companies by government.

    A hugely misguided approach that could only come from someone who is detached from reality and thinks like a command economy, socialist dictator.

    1. Lifelogic
      July 9, 2015

      A huge wasted opportunity to cut government waste & expenditure, simplify the tax system, lower tax rates and actually increase growth, jobs & tax revenues. So much scope to cut but nothing is even being attempted by Osborne.

      Osborne will surely regret this total incompetence. CGT at 28%, SDLT at 12%, income tax at up to 45% plus NI are just far too high. Many companies just do not have the money to pay higher wages. Even those that do will then make lower profits and pay less CT. Also the wages rates need to vary hugely across the country not be
      arbitrarily fixed from No 11 it is lunacy.

      As Andrew Neil said, just now, to a guest on the Daily Politics:- there must have been times when you thought it was Ed Balls delivering the budget. Indeed almost all of it (or even the green lunes with the attack on buy to lets).

      1. Hope
        July 10, 2015

        Cameron accused his contenders of more debt more taxes. His budget was… More debt more taxes. You are correct JR, public spending increases through tax rises and slower spending cuts. What shyster would accuse people of one thing then implement it themself?

  2. Lifelogic
    July 9, 2015

    The employer always “cry wolf” on loss of jobs due to legal minimum wages. This according to the typically balanced & impartial BBC reporter on radio 4 just now.

    No, employers just state the blinding obvious. It will make businesses less competitive, make many jobs not worth doing and with cost jobs and growth. It will also reduce profits, reduce corporation tax receipts and leave these businesses less to invest in plant etc. to improve their future productivity. Jobs will be exported, just as they are due to the greencrap agenda.

    How could it possibly not damage businesses, cost jobs and reduce growth?

    1. Lifelogic
      July 9, 2015

      JR you are trying to be loyal, but what do you really think of this budget?

      I see you are set to speak in the upcoming Cambridge Union Debate:- THIS HOUSE BELIEVES THAT THE EUROPEAN PROJECT HAS BEEN A FAILURE – how did they find anyone prepared to speak against the notion?

    2. Stephen Berry
      July 9, 2015

      The are two ways for the politician to go here:

      1. He can explain in simple terms to the general public how wage rates are arrived at in a market economy. Unfortunately, this gives little role for politicians.

      2. He can pretend that politicians can give workers increases in wages in some way or other and then claim the credit for this.

      Shamefully, despite being told that it would cost 60,000 jobs, Mr Osborne has chosen the second route. This ill-advised measure may come back to haunt the Conservatives. For instance, when we have the next recession and wages need to fall, will the then government be keen to reduce the so-called National Living Wage?

      1. lifelogic
        July 9, 2015

        Indeed perhaps Osborne should suggest making people taller by telling them to pull on their shoe laces too. Or just passing a law to make the inch 20% smaller! It would be no dafter than his budget proposals.

        Simpler and lower taxes and less government harassing is the way to higher pay and greater productivity. Osborne’s route is hugely misguided.

    3. petermartin2001
      July 9, 2015

      You’re not looking at the bigger picture.

      Employers naturally don’t want to pay their own workers any more than they have to, but on the other hand, they want other employers to pay their workers well so they have money in their pockets and can therefore be good customers.

      In any economy everyone who makes a contribution to the production of real things, whether they are capitalists who provide the premises and equipment, or the workers who operate the equipment, has to spend everything they earn.

      If they don’t spend enough then everything won’t clear. If they can’t spend enough because they aren’t paid enough then it still won’t clear.

      1. lifelogic
        July 9, 2015

        But they will just be made abroad in places without these anti competitive lunacies.

      2. acorn
        July 9, 2015

        Peter, I am knocked out by this budget, I never thought it would happen. I would like to think that Osbo’ has been reading Abba P. Lerner on Functional Finance. Even Wynne Godley on sectoral financial balances. Or, someone bought him a copy of L Randall Wray’s “Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems”.

        The bugger has actually done some sensible mods and sterilised them where he could to shift the fiscal framework. OK, if you are in the bottom quartile life will be grim, but not as grim as it would have been in the March budget. The inter quartiles are going to get hit revenue wise but get a few family capital treats. He appears to have got a grip on the high income social housing tenants and similar benefit anomalies, that every local government Councillor will have knowledge of.

        But, getting to a balanced budget by the next election, I doubt will happen for the same reasons he didn’t get anywhere near it for the 2015 election; it is not his choice. The private sector will decide how much it wants to save and how much it wants to spend. They will decide what the deficit will be, not Osborne.

        You will understand Peter, that the only way an economy can grow is by spending money. You have to spend your way out of a recession. If the private sector does not have the confidence to do it, the public sector has to do it; and, create the confidence in the private sector by supplying them with customers with money in their hands to buy private sector goods and services.

        If the budget deficit and the erroneously called, “public sector national debt” mattered (actually private sector national savings), why is Japan, with its 230% debt to GDP ratio, still alive with a positive current account.

        1. Gary
          July 9, 2015

          if we all just spend , where does the capital investment come from to improve efficiencies and make better products !? Capital improvement should come out of deferred consumption ie savings that are loaned out. Then there is a direct link between the savings rate and the borrowing rate and the two ebb and flow as opposites as they are throttled by the rate. This keeps an equilibrium on investment and savings and ensures that capital investment and new enterprises are funded.

          In this never, never ponzi economy where they just fund loans by printing money, any old crap , hare brained investment (mal investment) is funded without constraint. Consumers keep consuming and loans get printed and damn the icebergs. Rates just go one way: down. There is no price feedback to allocate resources efficiently, its just a bun fight and eventually a huge economic collapse as the economy is consumed by unsupportable loan servicing. Madness

          There is no free lunch. you cannot just consume like a perpetual motion zombie.

          1. petermartin2001
            July 9, 2015


            You can’t have a free lunch and you can’t have perpetual motion. Agreed. But if people need houses, and children need teachers and schools then it doesn’t make any sense to have millions of workers unemployed and/or underemployed. We get what we want by working not by hanging about doing nothing.

            But some economists think it doesn’t apply on the National level. They think an increase in unemployment in Greece to close to 30% better enables Greece to pay off its debts. I can’t see why they should. I’m quite puzzled by it all really. How can supposedly intelligent people be so stupid?

            PS Your idea of how banks lend money isn’t right. They don’t take in savings from you and lend them out to me. The banks create new money as they lend. You might want to Google that last sentence for an explanation of how they do that.

          2. Gary
            July 10, 2015


            Yes , I know the banks don’t take in savings and lend them to invest, the banks just print money out of thin air and lend it out. Absolutely insane ! Where is the incentive to make economically viable investments that don’t crash and burn when the easy money causes the economy to be consumed by debt repayment ? There is none. That is why we the taxpayers had to bail out the fools in 2008, and we are going to be asked to it again.

            This is a recipe for disaster. You seem to imply we should just all have all we want. That is Alice in Wonderland. That is the Communist Manifesto restated. Sure we should aim to all have the basics, but we are not going about it in the correct way by building sandcastles to the sky based on debt funny money.

          3. petermartin2001
            July 10, 2015


            At first sight it does appear that the way banks lend money is “insane”. But, it does make perfect sense when you think a little deeper.

            The banks do have to back up the money they have created, usually digitally, with ‘real government money’ on demand. So in that sense they aren’t doing anything a casino is doing when it issues chips. The chips could well function as money outside the casino too, providing everyone was confident that it wouldn’t go bust and default.

            But, bank lending does have an economic impact. It acts as a stimulus to the economy just as government spending acts as a stimulus. It puts money in the hands of those who want to spend it. Which is fine when the lending is occurring but when it stops the stimulus stops too.

            Its the stop-start nature of bank lending which is the source of the problem.

          4. Gary
            July 11, 2015

            Peter Martin

            oh great ! the banks are only constrained by the govt. Yes, But the govt is clueless. The market, you know, the millions of actual people trying to run their lives on Iimited income , spending their own money must dictate the demand for loans and savings. Not some govt – banking cabal.

            This system makes no sense unless you see it for what it is, an insider stitchup.

        2. petermartin2001
          July 9, 2015


          I’m reserving judgement at the moment, but my first reaction was that this is nowhere near as bad as I feared. I think there’s evidence that Mr Osborne has learned from his mistakes in his first couple of years of being chancellor and he’s now got a reasonable handle on how the economy really works which is not at all how he might have thought it worked originally. Maybe that’s just wishful thinking. We’ll see.

          I’m sure he’s smart enough to know that if the economy is losing money to cover the 5.5% GDP net import bill that he has to run a 5.5% deficit in his budget just to keep things all square in the economy. There’s just no possibility of a surplus any time soon. But, that’s not what hardliners want to hear so he has to pay some lip service in that respect.

          But having said that I fear there may be a crash in the stock markets soon. That could change everything. Is it going to be contained to China? I doubt it!

    4. Hope
      July 9, 2015

      Tax rises twice that of tax cuts! Osborne is innumerate or telling lies as Guido points out today. At least someone in the MSM is not letting him get away with his lies.

    5. bigneil
      July 9, 2015

      Saw a small piece that said 1m jobs were going to be created. I’m unsure where they will be. Could they be another million undocumented, no ID, here illegally, contributing nothing but using the NHS for free car washers? . .or . . could they be an extra million at the DWP processing all the benefits claims of those heading through Europe for their free lives here?
      John openly says in the end of his article that borrowing is going to go UP. . .Well . .if all these coming in are helping the country, why on earth are the govt going to borrow more? Could it be we have many more, yet unrevealed by the press, hate preachers on £50k a year benefits? – I worked for 40+ yrs – -can’t get a penny from the DWP. Seems I’ve been in the wrong job all those years.

    6. Hope
      July 9, 2015

      Tax raids. P94 without mentioning in it parliament, Osborne sneaks in his raid on private bank accounts for HMRC to take money without proper judicial procedure. HMRC have made so many mistakes we are not safe.

      First EAW, then the snoopers charter and now able to raid private bank accounts without warrant. What was Cameron talking about Magna Carter? Thoroughly underhand and oppressive behaviour which is becoming normal for the Tory party. Introduced on the sly even though it claimed wide consultation!

      1. lifelogic
        July 9, 2015

        Indeed and when they do rob your bank you will be lucky if they even answer the phone nowadays. You hold for ages ( paying) then it say we are busy and hang up.

        1. Hope
          July 10, 2015

          You are lucky to get someone to answer you! £750 million spent on more tax men, pity the same is not done with Border control staff!

  3. Pete
    July 9, 2015

    So much for fake austerity and the claims of Dave and George to be in control. This country is no different to Greece, too many unproductive mouths to feed and no conception that you can’t carry on borrowing for ever.

    1. petermartin2001
      July 9, 2015

      This country is no different to Greece….

      If you’d care to check, you’d find that the UK issues its own currency. The pound. Greece relies on someone else’s currency. The euro.

      The UK can never run out of pounds. Greece can , and has, run out of euros.

  4. Denis Cooper
    July 9, 2015

    This is “sharing the proceeds of growth”, is it not, but when will the government start reducing its accumulated debt rather than adding more to it?

    1. petermartin2001
      July 9, 2015

      “when will the government start reducing its accumulated debt rather than adding more to it?”

      That’s hardly ever happened in my lifetime and hopefully it won’t ever happen again!

      The government’s financial debts are our financial assets. Penny for penny. The government can only reduce its debts by taxing away our assets. Of course that might be necessary from time to time if we are all spending too much and creating too much inflation. That’s the only reason for reducing our financial assets.

      1. Ken Moore
        July 9, 2015

        ‘The government’s financial debts are our financial assets. Penny for penny. The government can only reduce its debts by taxing away our assets. Of course that might be necessary from time to time if we are all spending too much and creating too much inflation. That’s the only reason for reducing our financial assets’.

        Sorry this MMT stuff doesn’t work for me!

        In theory yes it works. Intuitively NO.

        In theory, theory and practice are the same. In practice, they aren’t….

        1. petermartin2001
          July 10, 2015


          I’d generally agree with your comments about theory and practice. Practice matters. Theory doesn’t – unless it agrees with practice! In science, one experimental result obtained by a humble lab technician has the potential to de-rail the theory of a Nobel laureate. That’s as it should be. I’d disagree with your point about intuition though. Intuition shouldn’t count for anything unless it leads to an insight which can be confirmed empirically.

          Economics, for some reason, seems to be in the control of those who think along different lines. For example if the EU/ECB/IMF Troika forecast unemployment might rise to 12% in Greece, but just for a year or so, but unemployment actually rises to more than double that, and shows no sign of falling, then we might think they’d start to have some doubts about their theory.

          They don’t seem to. They are currently forcing Greece to adopt even more extreme measures which will make an already dire situation even worse.

      2. Denis Cooper
        July 10, 2015

        Apart from anything else, what about the part borrowed from abroad?

        1. petermartin2001
          July 10, 2015


          A large number of UK government bonds are owned by the Chinese central bank. The UK government doesn’t publish figures but I’d estimate they’d have around £400 billion worth. They have some $3 trillion in US securities.

          They have built up these securities not because they are keen to lend money to the UK and USA but because they are keen to run an export surplus to both countries. All they can do with their surplus $ and £ is use them to buy UK and US govt securities. All the US and UK govts can do is deficit spend them back into their economies.

          It’s arguable whether or not this is a big problem. I don’t think it is. But, if politicians do think its a problem, they shouldn’t just look at one small part of the economic cycle. ie the deficit spending, they need to look at the whole cycle. That has to include the trade deficit too, and these days that is a largely forgotten subject of economic conversation.

    2. Tad Davison
      July 9, 2015

      That’s the bit that bothers me most Denis, but seems to have been lost in all the euphoria.


  5. Ken Moore
    July 9, 2015

    Never mind the now pro Eu Murdoch press are on message – The Sun portraying ‘Butcher Osborne’ as the man trimming the fat of government excess. Laughable.

  6. alan jutson
    July 9, 2015

    Yes, once again we have the gamble on growth being able to pay for more Government spending.

    Thus the actual plan is a bit less pain, but for longer, without much wriggle room for a balanced budget after another 5 years if growth reduces from its current level.

    I do not understand the logic of fighting an election on cuts to government spending, and then allowing spending to continue at a higher rate.

    The plan/budget should have been worked on real tax take, not a fictional guess, after all we have a budget every year so it can be adjusted/relaxed if the tax take is improving above and beyond the previous year, rather than forever having to play catch up.

  7. John Horrocks
    July 9, 2015

    The changes in tax on dividends seems to be a huge tax increase on pensioners who are living off dividends and on small businesses where remuneration is taken through dividends. Such small businesses play a significant role in the flexibility and dynamic part of the economy – surely this is a seriously retrograde step and not friendly towards business? nor to many conservative supporters who are retired and living off dividends – it is another slap in the face for them?

  8. turbo terrier
    July 9, 2015

    To pay for these extra wages then surely the government has got to help industry offset these costs.

    Cheaper energy, transport and all the unnecessary paperwork and regulations would be a good place to start.

    If you give them the tools they will deliver it is everybody’s interest for them to do so.

    Somewhere down the line trust has got to be applied to the process. Business are not all like the banks but it takes people who make the decisions who have experience within the business industrail sector to understand that.

  9. Ian wragg
    July 9, 2015

    There’s an awful lot of assumption being made. Another recession is due before the next election and we have the real prospect of power cuts in the next few years due to the stupidity of CMD and company. No word about capping subsidies for renewable energy which will cripple some families.
    No estimate of population growth and the impact on services. All in all a very short sighted budget.

    1. Martyn G
      July 9, 2015

      “No word about capping subsidies for renewable energy which will cripple some families”. It is off topic but I can add to your statement. Many years ago we bought a modest property for cash and rented it out. We maintain it to highest standard and had had same tenants for 15 years.
      Today, my land agent tells me that it is now subject to new law, concerning Legionnaires disease and so all water heating systems must now be raised to 60C and I must pay this year £72 to have it inspected by a qualified person for the disease.
      And so my tenants (and hundreds of thousands of other tenants across the land) will have to use and pay for much more energy and I have incur an annual inspection expenditure (OK, it is tax deductible). How does that fit with the green blob?
      I would ask, how many cases each year are there of ordinary people in ordinary house catching legionnaires disease to justify this implementation of EU law? Probably none and I am certain now that, truly, the lunatics are in charge of the asylum!

      1. Chris S
        July 9, 2015

        Your land agent is wrong.

        All you are required to do is carry out a risk assessment. If your properties have water heating by a combi boiler the risk is almost zero so no action is required and if they have a hot water cylinder, the temperature has to be raised to 60 degrees C occasionally. This can be done by an automatic thermostat.

        You do not have to have any tests or inspections, just keep your risk assessment up to date.

        1. stred
          July 11, 2015

          The risk assessments cost around £100. As, as far as can be ascertained, no-one in the UK has ever caught legionaires disease from a bath or shower head (it has to be breathed in), it would appear to be low risk every time and a good employment opportunity for risk assessors. How often the hot water tank has to be turned up to 60c must be another interesting question, given that bacteria can multiply quickly. The next risk assessment will be the risk of the tenant being scalded.

  10. Roy Grainger
    July 9, 2015

    The living wage is a political move, it is supposed to make it harder for opponents to complain about the (justified) removal of working tax credits – you can take a purist approach and condemn it but as a political manoeuvre it may help the long-term fortunes of Conservatism. Some people will lose their jobs as a result, in some cases to be replaced by under-25s entering the jobs market for the first time.

  11. Know-Dice
    July 9, 2015

    LL too right, they [the Government] are living in their own little bubble completely out of touch. You can’t run a company on a “deficit”…

    Even our esteemed host says in his other thread

    “The official forecast says 60,000 jobs could be lost from the Living Wage”

    1. petermartin2001
      July 9, 2015

      The government isn’t a company. The government is an issuer of currency. A company is a user. If an issuer issues it has to be in debt – just like the British government has been in debt since before the start of the Napoleonic Wars when the National debt soared to well over 200% of GDP.

      Napoleonic France had much more resources available to it than did Britain. Napoleon should really have won. Part of the reason he didn’t was that Britain’s level of commerce, understanding of commerce and the workings of the monetary system was more sophisticated than the French. If you look at the graphs of Britain’s national debt in the 19th century you might be surprised!

      Victorian values weren’t quite what Mrs Thatcher might have explained them to be.

      1. Know-Dice
        July 10, 2015

        I’m not suggesting that the Government is a company, I’m saying you would be unwise to run a company in constant deficit like a government does.

        Surely it’s up to individual “users” whether they wish to use the “issuer’s” currency or any other scheme (gold, barter, exchange of goods…)?

        If a company has its running costs raised (in this case by the Government moving the goal posts -living wage). then the company has a choice of increasing their prices if the market will stand it or shedding staff. The suggestion is that 60,000 jobs will be lost because of this change. Not all companies will have enough profit margin to just absorb this increase, even though I’m sure some will suggest they they do…

  12. Mike Stallard
    July 9, 2015

    Why cannot the government control public spending? From down here, the waste and the unnecessary expenditure is obvious. Why can’t they see it?
    A surgeon removes cancer: why can’t the government remove bureaucracy?
    Meanwhile Labour and the “vulnerable” bleat on about austerity as if we were Greeks. They demand even higher basic wages, more pensions and more people on the public payroll. Listen to LBC if you do not believe me – two strikes today by very well off people asking for more.
    Looking at China, I for one, can see that a tsunami could well sweep the whole of Western Civilization away. It seems to be built very shabbily on sand.

  13. Denis Cooper
    July 9, 2015

    Off-topic, promises that all of the remaining Balkan states including Albania will be allowed into the EU were repeated yesterday, as reported at the end here:

    But while the peoples in those states may have referendums on whether they want to join the EU, and then under their terms of accession join the euro as soon as possible – even if many of those voting will not be aware of the second part – of course we will not have any referendum on whether we want any of those countries to be admitted to the EU, thanks to Section 4(4)(c) of Hague’s “referendum block” law.

    Any chance that Cameron will raise this subject on Sunday, especially as the Polish government is demurring about fulfilling its treaty obligation to join the euro?

  14. Javelin
    July 9, 2015

    Let’s hope we don’t get into debt with the Germans. We took away their armies and they’ve still found a way to cause suffering on their fellow Europeans.

    1. Javelin
      July 9, 2015

      Let’s not pretend Merkel isn’t a nationalist. She has opened no less that three exhibitions celebrating the defeat of the Romams in the Varian ambush. The battle that forged German nationalism and who leaders were played by actors who marched with the storm troopers before the war.

  15. Bert Young
    July 9, 2015

    The Public Sector is now and , as far as I can remember , too large and too costly to the tax payer . It is always possible to find simpler and easier ways to do things ; the Civil Service made attempts back in the early 70’s to introduce and use modules that were already being applied in the private sector to improve its efficiency ; my organisation were consulted on this and many innovative features were introduced . These changes were resisted and ranks closed over the years ; the self protection mechanism proved stronger than the changes .

    The news that Government borrowing is to increase by £83bn shows the disease has not been cured . The public still have no news on Quangos ( are there still as many ? ) , projects like HS2 still survive despite all the public criticism and internal dissent , EU interference is rife and adds to the time and consideration before action occurs . The more one ponders the more one can add to the list . Do we just give up ?.

    Reply Spending increases by £83 bn, not borrowing. Tax revenue also goes up.

  16. Ex- expat Colin
    July 9, 2015

    Road Tax…wrong headed again.Too complicated and its wrong that electric cars are zeroed because remote power generation supplies energy supply and emits. Apart from stupid batteries. Roads are bad because people/work are distributed wrongly, not because cars are shades of green. Mine is sea grey and is really awful.

    The benefits may have been reduced, just watch out for more theft/burglary. Buy CCTV and watch your back.

    Benefits to those in London and SE higher….wrong again. No wonder its a mess down there as I will again discover this w/e.

    No reduction in spongers at Westminster and EU. BBC working on new sponging methods.

    Dover/Calais stacked again,again, again – Great Western strike, UG strike again. Nothing done to avert any of it…again!

    Stop the aid…everywhere, pool it and give to Greek debt or better cut the debt by half. Big haircuts all round to the fools that loaned it all. Try saving…big time!

  17. JJE
    July 9, 2015

    I thought the Government was supposed to be supporting the challenger banks. Instead they have been hit with a 40% increase in their corporation tax out of the blue with the 8% surcharge on top of the regular 20%.

    We do actually need some banks for the economy to function.

  18. Lifelogic
    July 9, 2015

    Sorry “will” cost jobs and growth.

  19. Brown Ghost
    July 9, 2015

    The budget reminds me of an old saying from Warren Buffet: “Debt is like driving with a knife attached to the steering wheel. Fine, as long you do not hit a pothole.” This was an opportunity to ‘get the house in order while the sun is shining’ (to paraphrase either Cam or Os in days past). Hope they do not live to regret it – 3.7%GDP does not seem a small deficit at this stage of the economic cycle by any definition.

  20. Kenneth
    July 9, 2015

    The country will get very few opportunities like it had yesterday to reduce spending and cut taxes.

    Instead we got a Labour budget.

    Very sad.

  21. matthu
    July 9, 2015

    Guido draws attention to a couple of (what many would agree might have been) deliberate falsehoods by Osborne when interviewed by BBC on Today program including this old chestnut:

    George Osborne told Justin Webb on the Today Programme this morning: “… what have we got, a country where the debt is falling”. This is just not true, the national debt is still rising and the day when Osborne promises it will start falling is, after the budget, a year further away than it was before, which in itself was two years later than he originally promised in 2010. Interviewers who let the Chancellor deliberately conflate the debt and deficit are doing their audience a disservice. The Today Programme is almost part of the unwritten constitution of Britain, given we are likely to have an opposition that is introspective and irrelevant it is essential that they hold the government to account – at the very least challenging political spin and lying. Justin allowed this to go unchallenged.

    Osborne and his allies don’t repeat this slip of the tongue by accident, it is deliberate and repeated time after time. It is dishonest. It is designed to give the public the impression that Osborne is successfully dealing with the deficit. He is dealing it with very slowly and he is lucky in that he can print more pounds so the Bank of England can buy up UK government bonds and avoid going the way of Greece.

    You would think that Cameron would advise Osborne not to be so careless with his choice of words.

    Can we rely on either of them to be frank with the electorate about what the UK will be agreeing to after Sunday in order to resolve the Greece crisis?

  22. DaveM
    July 9, 2015


    The mess which is currently surrounding the Scotland Bill, EVEL, etc, is not acceptable. It just makes it look – more and more – as if this whole business, which affects 64,000,000 people, is just an inconvenience to MPs who have better things to be getting on with, like legalising gay marriage and spending all our taxes on pet projects and foreign aid.

    The whole idea of just amending SOs in itself just looks like an easy way to fob the English off and shut them up, with minimum effort from MPs.

    Scots demands for more devo and fairness for England aren’t going to go away. Can’t you and your colleagues just sort it out properly? It should be so simple.

  23. Colin Hart
    July 9, 2015

    So will you be voting for this?

  24. lojolondon
    July 9, 2015

    John, don’t you think it is such a shame that the only way the Chancellor can get a good MSM review of his budget is by increasing spending, when everybody who works for a living knows that is a bad idea? Verily, it is way overdue that we shut down the Biased BBC, and end their massive socialist influence on every aspect of life.

  25. The Prangwizard
    July 9, 2015

    Vote Tory – get Labour.

  26. Lindsay McDougall
    July 9, 2015

    If you include the ending of permanent non-dom status, taxation is projected to increase by £25 billion net. Is this per annum or over the life of the parliament? Way back in 2010, it was projected that the deficit would be eliminated by a mix of public expenditure cuts and taxation increases in the ratio 80:20, so we can’t complain about one budget like this one.

    However, it depends on what increased public expenditure is being financed. If it’s the NHS and defence, fine. If it’s handouts to Brussels and Holyrood, not so good.

    I’m a little wary of the projected increase in the minimum wage to £9. Let’s hope it doesn’t lead to increased unemployment.

    Looking at all the budget figures, it’s pretty clear that the Chancellor is relying on there being inflation between now and 2020. Amounts like £12,500 and £50,000 (income tax thresholds), £9/hour (minimum wage) and £1 million (inheritance tax threshold) will be significantly less than they seem today. There will also be considerable tax revenue increase due to fiscal drag.

    We remain vulnerable to increasing interest per annum on Government debt, which was come when base rate rises. It would have been better if we had cut the deficit faster.

    Reply The figures I supplied including the £25bn tax is for the lifetime of this Parliament.

  27. alan jutson
    July 9, 2015

    There appears already to be some confusion over IHT and how exactly it will work.

    On reading the small print given by some financial advisors today, it would appear that they believe that the present £325,000 IHT maximum will be frozen until 2021

    A new IHT tax allowance for Prime residential properties will then be introduced to run alongside the present frozen band, with an introduction rate of £100,000 in 2017 rising by £25,000 per year. until it reaches £175,000.

    If the two are treated separately, then this could be a real problem for most couples who are property rich and cash poor, as they will not have enough non property investment to take full advantage of the duel £325,000 per person, but most will have more than £100,000 each in their home.

    Confusion abounds, could most people actually be worse off than before ?.

    Does anyone know the actual facts. ?

    Why is it that politicians make things so bloody complicated, is it just to steal our money through more complicated taxes or fines for non compliance ?

    So, So much more simple to make it £500,000 per person including all assets even if it is in 5 years time. !!!!!!!..

    At the moment the £325,000 will be fixed until 2021, and that will have been 15 years at that rate.

    1. alan jutson
      July 9, 2015

      Ref IHT new rules.

      Have written to HMRC for Clarification as their own website explanation and guidelines are not clear, but instead are confusing because they outline two possible systems which appear to run side by side.

      I await the answer with interest.

      Wonder how long I will have to wait ?

  28. oldtimer
    July 9, 2015

    I read that “it is rather hard to pin down a coherent narrative around the changes,” Johnson said at the IFS summer Budget analysis of the tax changes. The tax system has be made even more complex, government spending is still going up, deficit elimination has been deferred – again. It is a budget that owes much to politics and political positioning, not so much to “fixing the roof while the sun is shining” and quite a lot to jam tomorrow – or should that be thin gruel?

  29. ChrisS
    July 9, 2015

    I see that Chris Grayling is already in trouble over his stewardship of the half-baked changes to parliamentary rules to add an English committee stage to the Commons legislative process.

    Attention has been drawn to the budget measure scrapping student maintenance grants and introduce a loan system in England and Wales instead. As this is designed to save the treasury £2.5 billion over the parliament it will surely reduce Scotland’s education funding under the Barnett formula ?

    If so it will not be ruled an “English and Wales Only” measure.

    Which brings me to two serious problems with the current proposal.

    Firstly, this Speaker is no friend of the PM and it seems likely that at every opportunity he will rule that measures are not “English Only” or “England and Wales” only. As the sole arbiter of the rules this is going to create problems.

    Secondly, the Chancellor is going to create more regional devolution within England. Every step down this route weakens England as a single entity and helps fulfill the EU’s plan to break up the Nation States and create regions which Brussels can govern.

    This thoroughly unsatisfactory solution should be dropped and plans should be introduced for full and equal devolution across the UK during this parliament.

  30. Thomas E
    July 9, 2015

    What is the effective marginal tax rate (due to benefit withdrawal) on an unemployed childless man who gets a job under this budget? 65%?

    I just don’t see a massive incentive there. When you include transport and other costs it seems like unemployment with a bit of cash in hand pays better than work under the conservatives.

  31. Ken Moore
    July 9, 2015

    Osborne is turning into Gordon Brown in that he’s becoming over-confident, not believing things can go wrong, assuming the future will be just like the present; supreme arrogance is creeping in.

    Much of his plans are based on levels of tax revenue and GDP growth that will turn out to be wishful thinking. He’s gone a long way with a lot of BS but my hunch is his luck will run out before the next election.

    His family credit changes and working wage may expose his ‘jobs miracle’ as a total sham…

    How many times has he failed on his targets on deficit this his 3rd or 4th attempt to get it right ?.
    If Osborne was as focused on doing the right thing economically as he is on becoming the next prime minister he would do a lot better.

  32. David Price
    July 10, 2015

    So “More debt and more taxes”.

    I don’t recall Cameron pointing to himself in the TV debates and saying that … perhaps without the biassed imposed by the libdems he has moved further left.

  33. Ian B
    July 10, 2015

    I am still reeling from this absurdly wrongheaded “national living wage”. I am currently involved with a group who help people with disabilities to find employment. These sorts of marginal workers have now had their task made much, much harder as they are excluded from employment if their productivity is below £9 per hour; and they will then be attacked as “lazy” and “languishing on benefits” when they have even less luck finding a job under this new regime.

    It is incredible that in the 21st century Tory ministers of state do not understand why price fixing does not work; this is very basic economics. I actually by chance had the opportunity to question my local (Tory) MP about this yesterday and he clearly did not understand the economics either, even saying that “the employers can afford it because we have cut Coporation Tax”.

    Marginal labour- as with people whose disabilities limit their productivity- cannot be made more valuable because a government minister sets an arbitrary price. It is simply excluded from the workplace. The people I work with desperately want a job; they are not “scroungers” on “Benefits Street”. They now will have an even steeper hill to climb into employment.

    This is an absolute disgrace.

    1. Ken Moore
      July 10, 2015

      Good point – employers will just seek out under 25 year olds (many of which will be economic migrants) displacing older workers from the low skill jobs market.
      Who is the government to say what level of pay I need to get a foothold in the jobs market – everyone’s circumstances are different.

      If we didn’t have mass immigration and an unlimited supply of cheap labour there would be no need to legislate on pay – it’s a solution to a problem that shouldn’t exist.

  34. Ken Moore
    July 11, 2015

    Dr John Redwood are you allowed to have a view on the level of public spending – is it too low, high or about right ?.

    Are your hands tied by the need to maintain party ‘loyalty’ ie the approach that leads to cosy party consensus politics and group-think that time and again has led to disastrous decisions.

    Reply I have often expressed a view on public spending in some detail and identified areas where I would like them to spend less. My cuts would start with our contributions to the EU and to overseas aid.

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