Sunday, June 28, 2009

Big fucking numbers

There's an illuminating article in The Telegraph today, pointing out that... well... pointing out that the government is spending our future at an alarming rate.
Treasury figures show that welfare payments will exceed income tax receipts by almost £25 billion. Normally, income tax receipts comfortably cover the benefits bill.

In 2008/09, gross income tax receipts were £152.5 billion. In the same year, social security benefits cost the Exchequer £150.1 billion.

In 2009/10, the Treasury is expecting to take in £140.5 billion in gross income tax receipts. Social security benefits are projected to be £164.7 billion.

The disparity between tax revenue and welfare costs was identified by Andrew Brough, a fund manager at Schroder Investment Management, who suggested that the amount of money spent on social protection could soon exceed that raised from both income tax and national insurance.

According to an official Treasury forecast, benefits will cost £170.9 billion in 2010/11. That is equal to what the Government will spend on the NHS, schools and universities combined.

Fucking hell. Seriously, what the fuck is going on? Oh, hang on: let Charlotte Gore tell you...
It’s this ignorance of the ‘opportunity cost’ of money taken from the private sector and individuals by the Government that continues to baffle and amaze me. I’ve said before myself, the Government now spends more in a year than the entire wage earners of Britain earn combined. If you think about it, that sort of figure—over 700 billion—is the equivalent of 28 million private sector jobs. That’s 700,000,000,000 divided into the average wage of £25k. 28 million jobs. More new jobs than there’s people in the country to do them.

Yet it actually buys us a mere 5 million public sector jobs. And the biggest reason given for protecting Government spending? It’ll cost jobs. Ha. Good one. What… wait? You’re serious? This is really happening?

Yes, I am afraid so. And I'm afraid, my dear Charlotte, that your lovely LibDemmy type people are not going to curtail this madness by even one iota. But that is another (fairly fucking short) discussion.

Anyway, it isn't jobs that we are generating here: it is free money for poor people. Oh, and people who decide to have children that they can't afford to pay for, and people who can't be arsed to work, and piss-poor plays that no one wants to watch, and crappy artists that no one wants to fund, and the fucking rest.

Your humble Devil pays just under £600 per month in income tax and NICs and gets... what? Oh yes, I get to be dictated to by a bunch of morons and party lapdogs. Thank fuck: I thought that I was being milked into penury for no good fucking reason whatso-fucking-ever.

I pay over £200 a month in petrol, of which about £160 is tax. Fan-fucking-tastic!

I pay another £138 a year—£11.50 per month—in car tax. Bonus!

I pay another £80 per month in Council Tax. I love it!

I pay 15% on just about everything that I buy. Whoopee!

Not including VAT, tax on cigarettes and tax on booze, I am being taxed at 35.5%: seriously, which is a fair old chunk. And I am not a high earner—I am only just above the median wage level.
This year, motorists will pay £26.6 billion in fuel duty. At the same time, the Government will pay out £27.2 billion debt interest to the investors who hold Treasury bonds.

Debt interest payments are growing rapidly. Grant Thornton, an accountancy firm has estimated that by 2013, debt interest will cost £58 billion, exceeding Government spending on education in England and almost as much as the Treasury raises from VAT.

The rising cost of welfare payments and debt interest represent a political embarrassment for Gordon Brown, who has described such spending as the "costs of failure."

Delivering his 2000 Budget speech, Mr Brown made clear that money spent on debt and welfare was money lost to the public services. He said: "Our promise was to reduce the costs of failure - the bills for unemployment and debt interest - in order to reallocate money to the key public services."

Well, it is the cost of failure, yes—except that it is not money lost to public services, it is money lost to the people who have earned it. It is a lost opportunity cost—what might those people have done with their money had they kept it?

They might have invested it, they might have spent it, they might have started businesses with it; they might not have got into so much debt, they might have been able to put down a decent deposit for a house, they might have sailed round the world. They might have used it to build wells in African shitholes, or donated it to those less fortunate in their own country. All of these things—and more—might have been done, and will now not be.

Some will, of course, say, "well, the government might have done these things too"—but that is to miss the point. The point is not simply that the government would have done these things inefficiently, but also that it is not the government's money—the government has no money except what it extorts from us at the barrel of a gun.

To return to the example of my own finances, once you throw in VAT and everything else, I am probably handing over half of everything that I earn to the government so that they can piss it away on people who decide that they want to have children, or decide that they want to get so fucked up on booze that they end up bothering A&E Charge Nurse on a Friday night.

The state is spending some £150 billion on benefits: if we accept the face figure of about 2.2 million unemployed, then each one of those people should be receiving about £68,000 per year.

Except that there are another 2.5 million on incapacity benefit. OK, well, even so, each one of those people should be receiving some £31,900 per year.

What's that? Of course they don't because there are other benefits? Well, yes: but why? Benefits should provide a safety net for when someone is out of work—or absolutely cannot work. Now, I'm pretty sure that they are not receiving £32k a year, so where the fuck is the rest of my money going?

Actually, most of the money is probably going to pay Civil Servants £40k a year in order to administer a system that doles out £3k a year to those who are out of work.

This really has to stop. And no, I am not in any way impressed by the main parties' squabbling over a billion here or a billion there—it is small change frankly. After all, the Tories aren't even proposing to cut government spending in real terms: they are only proposing to cut the rate of spending.

We simply cannot afford such footling crap from our politicians, and most people in this country understand that. As Eamonn Butler wrote at the ASI some time ago...
If the government sector had grown only in line with inflation, rather than far above it, taxpayers would be £200 billion better off—enough to abolish income tax, corporation tax, capital gains tax and inheritance tax.

Eamonn reiterated this in the Telegraph this week...
If spending since 1997 had risen no faster than inflation, we would be spending a third less than we do now, and could abolish income tax, VAT, and council tax entirely.

The entire article makes depressing reading, laying out the full scale of the government's plofligacy—and the terrifying way in which NuLabour seem unable to grasp that they cannot simply carry on spending more than they take in tax: it's utterly unsustainable.

Eamonn does have a few sugestions as to how we can stop this insane spending spree, and try to bring the state books back into some semblance of order.
The task is to reduce public expenditure without it showing. A freeze on spending and recruitment for a couple of years, then pegging it to inflation, would be surprisingly effective at re-balancing the books. (If spending since 1997 had risen no faster than inflation, we would be spending a third less than we do now, and could abolish income tax, VAT, and council tax entirely.)

Another useful move would be to publish online every cheque the Government signs, so we can see what it is spending and where. Private firms would be able to show what they could do more cheaply. And citizens could point out where they think their money is being scandalously wasted, as with the £300 million on departments’ service contracts, wasted through bad management, or the £200 million lost through bad procurement of hospital buildings.

Then there are the IT projects, such as the NHS records system, that are billions over budget and months or years late (the Department of Employment alone spent £59 million on a computer system that did not work). Exposing such wasteful incompetence would help eliminate it. And do we really need to spend tens of billions on ID cards?

Along with the Royal Mail, we can privatise the Tote, Channel 4, BBC Worldwide, air traffic control and various utilities, which would bring in a handy £20 billion. And we can get rid of central bureaucracy by measures like simply handing head teachers their bit of the budget and telling them to get on and spend it as they see fit, rather than as Whitehall bureaucrats think they should. The same could go for health – give the budget to patients or their doctors, not to layers of bureaucracy such as the strategic health authorities. And the quangos need to be culled again: they have grown in number, cost and power under Brown. For what gain?

Meanwhile, dozens of local government officers are now paid more than £100,000 and retire on generous index-linked pensions – something now almost unknown among the private-sector employees that work to support them. As this newspaper reported yesterday, PricewaterhouseCoopers claims that 96 per cent of companies regard final salary schemes as unsustainable.

About a third of Child Benefit is little more than pin-money for the middle classes. It should be given to the poorest. By taking everyone on the minimum wage out of tax entirely, we would see a stampede into work by those who we presently make better off on benefits.

Another huge saving would be to speed up the plans to raise the pension age, reflecting improvements in health and longevity. This is by far the largest spending change one could make. Yes, many people would not like it – though others would be delighted to avoid forced retirement at 65. But it would be hugely symbolic – a return to honesty in the public finances, and an end of the idea that we can all live at someone else’s expense. If this recession has taught us anything, it should have taught the politicians that.

But this is only trying to fix the economic damage that NuLabour has wrought—the damage to Civil Liberties has been almost as egregious and just a frightening.

Make no mistake: this country is in a very fragile state, and I do not see any of the main three parties advocating the tough measures needed to right it.

The best that my Tory supporting friends can say about Cameron and his merry men is that the country will (probably) be slightly less fucked if the Tories get in. It's not an assertion that fills me with confidence.

When will the politicians wake up and smell the bankruptcy?

15 comments:

Rab C. Nesbitt said...

Fuck me, it's just so mind boggling. And depressing.

John B said...

So to *increase* public sector efficiency, Eamonn is going to take a universal benefit (admin costs: c5%) and turn it into a means-tested benefit (admin costs: c50%)? Genius.

mister_choos said...

BOM had a frightening link on that everybody (especially MPs) should see:
http://www.debtbombshell.com/

Anonymous said...

This is a fine post. Much closer to what you used to do and much better than the highly derivative bog-standard lifted-from-freerepublic crap that you've been pushing for most of this year.

Devil's Kitchen said...

Thanks Anon. I think...

DK

BTS said...

That's brightened up my Sunday stuck indoors at work no end. I think I'll have a drink while I can still afford it..

assegai mike said...

Our biggest problem right now is that we simply can't afford to have the current administration in for a minute longer. They are shovelling billions into the boiler of a broken locomotive every day and this potentially can continue for another 10 months. It's scary. It's everyone's job to do everything they can to force an election as soon as possible. The print media is doing an okay job of late, but Her Majesty's Loyal Oppostion have been woefully wimpish. Who will rid us etc...?

Lola said...

They are not in anyway collecting 140m or whatever in income tax. There are about 6 or 7 million people that work for the state in one way or another. All the income tax they pay is merely a rebate to the rest of us in private business. So we are paying all the tax.

Laying off most of these 6 or 7 million would actually save money as the dole is less than the salary plus benefits they are currently paid for doing nothing, so why not do it on the dole?

North Northwester said...

I say it again: stop baby ranching by pegging child-related benefits, tax credits, premiums and allowances for more than, say, 2.4 children [the latter by pro-rata; not surgery!]. Tie benefits to the mother's National Insurance number so she controls her fertility and her limited benefits budget, and don't allow further child related goodies for replacements if any of the children dies, otherwise you might get 'accidents.'

Make mothers obliged to seek part-time work (9.30 AM to 3 PM, say) once child #3 hits infant school age instead of allowing them to vegetate on Income Support until the last kid's seven as is intended and 12 as it now is, and how about a new wrinkle - no child related benefits etc. for any kid born ten years after the first one.

Otherwise, you'll continue to get lifelong spongers like these lovely ladies, some of whom are acquaintances of mine:

Child Benefits

Anonymous said...

I am convinced we should all vote Labour and let these useless cunts face up to the consequence of their actions. They won't last a year before the IMF and the social unrest caused by the collapsed economy force another election.
It will see them out of power for a generation and perhaps forever if they go the way of the liberals.
At the moment thier game plan is to let the Tories become unpopular cleaning up the Labour mess and get back in next time and sadly I can see that working.

Anonymous said...

Whilst I would agree with most of what was written I would disagree with the opening line:"The task is to reduce public expenditure without it showing."
Sorry but no. The public sector needs cauterising. It needs to bloody hurt. I'd like to see a great deal of its membership starving in the streets in rags. And if that includes some doctors & nurses & teachers & all the other tearjerker categories that's tough.
If it isn't bloody & painful then whatever happens now, they'll slowly creep back over the next few years until the whole mess has regenerated itself.

Gareth said...

We should not seek Government and State on the cheap, we should demand less Government and State and the reduced cost will happen by itself.

manfromthefuture said...

firstly, let me point out you're already paying more than 50% in tax. one of the most evil and pernicious deceptions on the taxpaying people is the illusion of "gross" pay. your gross pay, ie the amount before tax is not really your cost to your employer. your employer has to pay an additional 12.8% NI on your behalf in tax; that's of the gross amount. so for each £100 you get gross, you employer pays £12.80. so really you cost £112.80. now, once you figure £11 Ni and £20 income tax, you net £69. assuming you pay 15% VAT on the 69, there's another £10.35. so we have (69-15%)/112.8 = £52. so ok, you get 52% not half! of course I'm ignoring all the other taxes you mentioned.

When the UK goes bust, it wont stop im afraid. they'll just steal the rest of your money too.

Thortung The Terrible said...

Excellent post.

I did some sums on this a while back and came to the conclusion that 58 to 60% of my gross salary finds its way back to the exchequer in one way or another.

As an example, my council tax has very nearly tripled since I moved here in 1996 and the only change I have seen in return has been a change to fortnightly refuse collection, with the maggot infested wheely bins that result.

J. Wibble said...

The scorn with which the government treats people on benefits might lead people to think one can get 32k a year - as you say, it's more like 3k. The most pathetic of all benefits (and the one which the people claiming it most certainly ARE working hard for) is Carer's Allowance, which amounts to £2761.20 per year and is taxable. In order to claim it you have to be caring for someone for at least 35 hours per week, thus meaning you receive £1.50 per hour for that work.

A cynical person might think that there is some motivation for the government to provide benefits in order to use the people who claim them as scapegoats, like the asylum seekers who are legally forbidden from working and then berated because they don't work.

Interesting observation: The "Benefit theives: we're closing in" ads which seem to be on telly about 8 times a day mysteriously disappeared during the fortnight or so when all that was on the news was expenses claims and resignations. Could this be because they could not serve their usual secondary purpose (after provoking constant paranoia for people who aren't cheating the system) of creating a loathing of benefit claimants, as everyone's loathing had already been used up on the MPs?