Government borrowing: Insanity, explained with nonsense

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The Coalition government has no intention of reducing the UK’s debt burden as it provides an excuse to cut spending on public services and shrink the state. Messrs Cameron, Osborne et al know that, when the public becomes sick of all the nonsense they have been spouting about it, they can hand the mess over to the next government and laugh all the way to the (offshore) bank.

Government borrowing figures for August have been released and the Treasury has been talking nonsense about them. Again.

Let’s start with the facts: UK public sector net borrowing was £14.4bn in August – slightly higher than the same month last year, and therefore the biggest deficit for the month since records began. Corporation tax receipts fell by 2.1 per cent; benefit payments rose by 4.9 per cent.

Barring the effects of one-off transactions like the raid on the Royal Mail Pension Plan that I mentioned last month, borrowing from April to August increased by £12.9bn, or 22 per cent, on the same period last year – to £61.3bn.

The British Chambers of Commerce reckon that at this rate, total borrowing for 2012-13 will be £20bn+ more than estimated by the misnamed Office for Budget Responsibility at the time of the last budget.

Public sector net debt stood at £1.04 trillion at the end of August 2012, equivalent to 66.1 per cent of gross domestic product (GDP) – that’s up from 1.032tr at the end of July, or 65.7 per cent of GDP.

The BBC, reporting on its website, has stated that the figures make it more likely the government will fail to wipe out the structural budget deficit by its deadline – and I think it won’t make a difference whether that’s 2015 (already long-abandoned) or 2017.

The Treasury, on the other hand, is still telling us it is getting the deficit down. Exchequer secretary to the Treasury David Gauke said new figures showing borrowing for 2011-12 came it at £119bn, rather than the OBR’s forecast of £126bn meant the government was dealing with its debts.

This is particularly rich, coming from him. Everybody now knows that the best way for the government to pay down its debts is to tax all the rich Brits who have stashed their cash in offshore tax-havens. Mr Gauke used to work for a tax avoidance firm and his wife is a tax avoidance lawyer. He is exactly the wrong man to lecture us on getting the deficit – the difference between government spending and tax receipts – down.

Some, like Sir Mervyn King, governor of the Bank of England, are now saying that overshooting the deficit reduction target would be acceptable if the reason was slower economic growth across the world, and the government has been happy to play its ‘Eurozone Strife’ card many times in the past.

But I’m not convinced. I tend to agree with The Guardian’s summary of the Coalition’s non-achievements so far, which states: UK exports to the EU have been growing, at least until early 2012; the deepening Eurozone crisis was mainly due to the same austerity policies employed in the UK; therefore austerity should have been cut back and demand revived.

What we’re left with should be no surprise to anyone: Numbers that don’t add up and explanations that don’t make sense.

Do you want your children to starve?

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The current joke has Oliver Twist saying, “Please, sir, can I have some more?” To which Eric Pickles replies: “Clear off! This is MY trough!”

Well? Do you want your kids to starve?

The Guardian has reported that budget cuts are forcing the closure of breakfast clubs in primary schools across the country – despite increased demand. The research, by Labour MP Sharon Hodgson, shows 40 per cent of councils are cutting back.

This means vulnerable children will be going to school hungry and will therefore be unable to concentrate in lessons.

Think about the consequences of this. If they can’t concentrate because of hunger, they’re likely to misbehave – and this could set a precedent for the rest of their lives. Malnourishment leads to misbehaviour, leading to what? Crime, perhaps?

At the very least, the inability to concentrate means their grades will drop and their academic careers will fail – in some cases, before they have had a chance to get going.

Who knows how many will develop health problems associated with malnutrition?

This will happen, not because they are “bad kids” or because they are “academically sub-normal”, but because they come from poor families. The rich, meanwhile, will streak ahead in the race for The Good Life.

The Guardian reports that Essex County Council said it had 219 breakfast clubs in schools last year, but 169 this year. In Surrey, 2,870 children were being given breakfast last year but only 1,200 in 2012. That’s creating 1,670 potential problem children.

All this is happening in the country with the seventh largest economy in the world.

A Department for Education spokesman acknowledged the importance of the service, but said it was up to schools how they spent the funds they were given. The “pupil premium”, aimed at the most disadvantaged children, would be doubled, the DFE said, but not until 2014-15 – in time to buy your votes at the 2015 election, perhaps?

Until then, do you really want your kids to starve?

The benefits system is failing thousands of people every week, forcing more and more of them to seek help from Britain’s growing number of food banks. “Breadline Britain”, under the Tory-led Coalition, is now a literal expression. Previously it was just metaphorical.

The Trussell Trust, which runs the UK’s biggest food bank, in Coventry, is opening new food banks at the rate of three per week.

Almost half the people who go to food banks are there because of benefit changes. the Department for Work and Pensions does not work fast enough to arrange benefits for when claimants need them, leaving poor people in crisis for weeks, or months, at a time. Then the debts start racking up.

Sanctions, imposed as temporary punishments by the new benefits regime, are also adding to the queue at the food banks. Since 2010, the number of people getting their Jobseeker’s Allowance suspended has spiked, and we all know that the disability tests introduced for Employment and Support Allowance (and soon to come in for Disability Living Allowance) are causing hardship and – in fact – death for Britain’s most vulnerable people.

Sanction or disallowance of benefits happened to 167,000 people in the three months up to February 2012.

What do people do for money when the State fails them and they can’t get work? They fall into the debt trap.

High-interest, doorstep lending to poor people is Britain’s latest – perhaps only – boom industry. In other words, the government’s sick benefits regime is forcing the poor into debt to organisations that will take away everything they have left, in order to make up payments on a loan whose interest rate they probably made up on the spot.

And when they’ve taken everything, what do you do then?

Do you really want your kids to starve?

Poll tax revival plan to take away your home

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Will we soon see demonstrations against the Coalition’s plan to cut Council Tax Benefit, as we did against the Poll Tax, with which it has been compared?

How much do you like your home?

Is it a good building? Do you get on with the neighbours? Do you live in a pleasant part of the country?

Well, take a good look around because you could soon lose it all if the Tory-led Coalition government has its way.

The plan is to scrap Council Tax Benefit from April next year and compel local authorities to set up local council tax support schemes, in order to cut 10 per cent from the current council tax benefit bill – a total of around £470 million per year.

Because pensioners will not be attacked in this way – at this time – this means working-age people are likely to face a loss of at least 16 per cent of their benefit.

Councils could choose to reduce spending in other areas or increase their revenue through council tax but, as these will affect groups other than current benefit recipients, I think we all know which way our councillors will be pushed. Either way, the local authority will take the blame – or at least, that’s what the Coalition hopes.

It will then be up to those authorities to pursue poor people through the courts for payment, if they cannot afford the new charge. This could amount to more than 760,000 people who work, but whose incomes are so low that they currently receive council tax benefit (The fact that the benefit being paid to them is effectively a subsidy for their employers, who should pay enough for them to support themselves without the need for benefit, is apparently a side issue) plus the disabled (already a target for hate campaigns by the Department for Work and Pensions), the unemployed, and families with young children.

The alternative, of course, is to move somewhere cheaper. You see, this is another part of the government’s social cleansing policy, created to run alongside the housing benefit cap and the ‘bedroom tax’.

The plan, in the government’s Localism Bill, has already been labelled a revival of Margaret Thatcher’s hated Poll Tax because it aims to ensure that everybody pays, no matter how little money you have.

To put this in perspective, the annual saving will total less than one-twelfth of Vodafone’s tax bill. That company owed the UK Treasury £6 billion but the government let it get away with paying just £1.25 billion after a ‘sweetheart’ deal was made with HM Revenue and Customs. That’s the same government that will have you kicked out of your home for the sake of a few pennies.

Rebates of up to 100 per cent have been available to the unemployed, disabled people, full-time carers and households on low incomes, many of whom have not been required to pay at all, ever since Council Tax came into effect in 1992.

Councils are currently setting out how they plan to deal with the change. Manchester has launched a consultation on proposals to require all households except pensioners to pay at least 15 per cent of the council tax bill, while Barnet is proposing a minimum 25 per cent charge for all working-age residents – clearly that council wants to clear out the poor and set up shop as a desirable residence for the rich.

Adding insult to injury, the tax increase for the low-paid will be timed to come into effect next April, on the same day as a tax cut for millionaires.

It all seems a very vindictive way to keep the scheme’s architect, Eric Pickles, in pies.

Wouldn’t it be better just to get Vodafone to pay its taxes?

Why the Tory-led debt crisis has worsened

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This poster contains more factual accuracy than you’ll ever see on genuine Conservative campaign material (I say)

Never mind the playing field sell-offs for a moment; they’re only a small part of the economic mess over which the UK’s Conservative-led government is presiding.

Figures from the Office for National Statistics have shown that in July the government borrowed £3.4 billion more than on the same month last year. Net borrowing was £557 million (according to The Guardian), but the government made a surplus this time last year, and the figures were a serious disappointment for economic analysts, who had been predicting another surplus of about £2.5 billion.

So far this year, public sector net borrowing – excluding banking interventions and a one-off boost from a transfer (some say theft) of Royal Mail pension assets to the Treasury – was £47.2 billion, up from £35.6 billion during the same period in 2011.

The Office for National Statistics said net debt was 65.7 per cent of GDP. The BBC said this amounted to £1.032 billion, but I think £1.032 trillion is nearer the mark.

The Treasury says disappointing Corporation Tax receipts are to blame, especially after the closure of the Elgin oil platform.

Some analysts say the government may now overshoot its target for reduced borrowing this year, of £120 billion, possibly by more than £35 billion (excluding the Royal Mail effect)

I say that the Coalition government’s economic mismanagement has reached new heights.

We know what’s happening: This government has left open tax loopholes – such as exempting profits earned in overseas subsidiaries from taxation – that have allowed corporations to sit on hundreds of billions of pounds in retained profits.

It abolished the bankers’ bonus tax, so the financiers who caused the mess are not only still paying themselves average salaries of £350,000, but also enjoying billions in bonuses.

It has abolished the 50p top tax rate – creating a tax break for the rich. Executive pay has risen by more than eight per cent this year.

The richest thousand people in Britain own 25 per cent of its wealth – £1.5 trillion.

At the same time, benefits have been slashed, leading to mass suicides and health-related deaths.

VAT has been increased, helping to stall the economy.

Inflation has risen.

Income tax and National Insurance have increased in real terms.

University tuition fees have been tripled, meaning students face years – perhaps decades – of work to pay off the loans they have to take out, simply to get an education.

Public sector pay has been frozen.

Tax avoidance is only seen as a problem if it’s done by a satirical comedian with a talent for humiliating the Coalition government.

And then there’s that massive Royal Mail pensions raid.

And we see that the government is borrowing more, due to a fall in corporation tax payments.

We know why it’s happening: The government wants to cut public services down to (if David Cameron has his way) nothing apart from the judiciary and security services. Everything else is to be sold off to private corporations in order to fleece the general public of whatever they have left – wages, benefits, savings.

Some people are saying that the Tory economic policy has failed. They say George Osborne, as Chancellor, set out an economic goal and a method for achieving it – only to find that his methods have made the problem far worse. They say that his stubbornness in pressing on, even after being told his plan is a disaster, makes him the very definition of a failure.

Silly, silly people.

They forget how much the Conservatives love the private sector and hate public services. Their instinct is to ensure that large corporations (the kind that are happy to give funds to the Tories) have as much opportunity to make as much money as possible. They don’t want to balance the nation’s account books; that would mean taxing the rich and the corporations – in essence, biting the hands that feed them.

As long as the UK is in the red, they’ll have a perfect excuse to do as much damage to public services – and the vast majority of the population that relies on them – as they possibly can.

Let’s go back to the playing fields now. The decision to spite the legacy of the Olympic games by selling off 31 of these fields – 10 more than the Department for Education had previously admitted – was a gift on a day when the economy was shown to be utterly unfit while in Tory hands. They provide so many opportunities for clever wordplay, don’t they?

For example, I could say that, instead of levelling the playing field (in terms of the deficit and national borrowing) the Tories have made it steeper – possibly to match the slope at sold-off Woodhouse Middle School in Staffordshire.

But it would be more accurate to say that these Conservative Party hooligans have got onto the pitch – and spoiled it for everyone else.

Britain’s worst idlers – the MPs who wrote Britannia Unchained

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I have been saddened to learn of two events that will take place in the near future: The death of The Dandy, and the publication of Britannia Unchained.

The first needs little introduction to British readers; it’s the UK’s longest-running children’s humour comic, which will cease publication (in print form) towards the end of this year, on its 75th anniversary. The second appears to be an odious political tract scribbled by a cabal of ambitious right-wing Tory MPs, desperate to make a name for themselves by tarring British workers as “among the worst idlers in the world”.

The connection? Even at the end of its life, there is better and more useful information in The Dandy than there will be in Britannia Unchained.

The book’s authors, Priti Patel, Elizabeth Truss, Dominic Raab, Chris Skidmore, and Kwasi Kwarteng, all members of the Free Enterprise Group of Tory MPs, argue that British workers are “among the worst idlers in the world”, that the UK “rewards laziness” and “too many people in Britain prefer a lie-in to hard work”.

They say the UK needs to reward a culture of “graft, risk and effort” and “stop bailing out the reckless, avoiding all risk and rewarding laziness”.

Strong words – undermined completely by the authors’ own record of attendance at their place of work.

Chris Skidmore’s Parliamentary attendance record is just 88.1 per cent – and he’s the most diligent of the five. Kwasi Kwarteng weighs in at 87.6 per cent; Elizabeth Truss at 85.3 per cent; and Priti Patel at 81.8 per cent. Dominic Raab is the laziest of the lot, with Parliamentary attendance of just 79.1 per cent.

To put that in perspective, if I took more than a week’s sick leave per year from my last workplace, I would have been hauled up before the boss and serious questions asked about my future at the company. That’s a 97.9 per cent minimum requirement. Who are these slackers to tell me, or anyone else who does real work, that we are lazy?

Some have already suggested that these evil-minded hypocrites are just taking cheap shots at others, to make themselves look good for promotion in an autumn reshuffle. Maybe this is true, although David Cameron would be very unwise to do anything but distance himself from them and their dangerous ideas.

I think this is an attempt to deflect attention away from the way the Tory-led government has mismanaged the economy, and from its murderous treatment of the sick and disabled. As one commentator put it: “They get a token Asian, a token African, a token Jew, mix in the middle class/grammar school rubbish propaganda, and suddenly they are just ordinary people? No they are not; they are stooges for the ruling elite.”

Britain doesn’t reward laziness among its working class. What it rewards is failure by managers, directors of industry, financiers. These people continually increase their salaries and other remuneration while their share prices fall, their dividend payments are lacklustre and shareholder value is destroyed. What have they given shareholders over the past 10 years? How many industrial or commercial leaders have walked off with millions, leaving behind companies that were struggling, if not collapsing? Does the criticism in Britannia Unchained apply to senior executives and bankers?

Our MPs are as much to blame as big business. They vote themselves generous pay, pensions and extended vacations (five months per year). They never start work before 11am, never work weekends (or most Fridays, when they are supposed to be in their constituencies, if I recall correctly). They enjoy fringe benefits including subsidised bars, restaurants and gyms. They take part-time directorships in large companies which take up time they should be using to serve the public. Only a few years ago we discovered that large numbers of them were cheating on their expense claims. They take more than £32,000 in “Resettlement Grant” if we kick them out after one term – which, in my opinion, means all five authors of Britannia Unchained should be applying for it in 2015.

These are the people who most strongly represent the ‘something-for-nothing’ sense of entitlement the book decries.

Have any of them ever worked in a factory or carried out manual labour? I’ll answer that for you: With the exception of Elizabeth Truss, who did a few years as a management accountant at Shell/Cable and Wireless, none of them have ever done anything that could be called real work.

In fact, the people they accuse work very long hours – especially the self-employed. When I ran my own news website, I was busy for 12-14 hours a day (much to the distress of my girlfriend). Employees also work long hours, get less annual leave, earn less and pay more – in prices for consumer goods, taxes and hidden taxes – than most of Europe. Average monthly pay rates have now dropped so low that they are failing to cover workers’ costs, leading to borrowing and debt.

Are British workers really among the laziest in the world? Accurate information is hard to find but it seems likely we’re around 24th on the world league table. On a planet with more than 200 sovereign nations (204 attended the London Olympics), that’s not too shabby at all.

Interestingly, the European workers clocking on for the fewest hours are German. Those lazy Teutons! How dare they work so little and still have the powerhouse economy of the continent?

If so many are reluctant to get up in the morning, why are the morning commuter trains standing room only? Or have the Britannia Unchained crowd never used this form of travel?

It seems to me that Britannia Unchained is just another attempt by the Tory right to make us work harder for less pay. The Coalition is currently cutting the public sector and benefits to the bone, while failing to introduce policies that create useful employment, and trying to boost private sector jobs. The private sector has cut wages and pensions. The result is higher unemployment and benefits that cannot sustain living costs, creating a working-age population desperate for any kind of employment at all (even at the too-low wages already discussed).

And let’s remember that Conservatives want to remove employment laws to make it easier to dismiss employees. In other words, they want a workforce that will toil for a pittance, under threat of swift dismissal and the loss of what little they have.

Why do they think this will improve the UK’s performance?

We already work longer hours and have less protective legislation than in Europe (such as the European Time Directive). But we are less productive in terms of GDP than their French and German counterparts, who work fewer hours and are protected by the likes of the ETD.

France is more unionised than we are, yet its production per employee is higher.

The problem is poor management and bad leadership. Poor productivity is almost always due to poor investment and poor training. Workers are abused when they should be treated as an investment. They lose motivation and when managers get their decisions wrong, they blame the workers.

Working class people are sick of grafting for low pay and in poor working conditions, to be exploited by the types of people represented by the authors of Britannia Unchained.

Is it any wonder we feel de-motivated?

I started this article by linking The Dandy to Britannia Unchained, noting that one was coming to the end of its life in print while the other was about to be published for the first time. I’ll end by pointing out a quality they have in common.

The Dandy is closing because it represents ideas that are now tired and out-of-date. Britannia Unchained should never see publication – for the same reason.