George Osborne's deficit reduction plan under pressure as borrowing rises

[lol-lol]

Interesting article in the Torygraph (earleir this week).

 

In all the ephoria that the 7 year recession is supposedly over and every thing is rosy (unless you are public sector or middle to low income of course ie over for top 10% earners or so).........

 

 

 

http://www.telegraph.co.uk/finance/economics/10982357/George-Osbornes-deficit-reduction-plan-under-pressure-as-borrowing-rises.html

Chancellor set to miss deficit reduction target for 2014/2015 after borrowing rises in first three months of fiscal year

 

George Osborne is on course to miss his goal of trimming Britain’s deficit this fiscal year after figures showed public borrowing climbed 7.3pc in the first quarter.

The Government borrowed £11.4bn in June, just £100m less than the same month last year, and well above analysts’ forecasts of a deficit of £10.7bn.

Last month’s borrowing increased the 2014/15 deficit to £36.1bn, up from £33.7bn at the same point a year ago. It also brought total public sector net debt to a record £1.305 trillion in June, equivalent to 77.3pc of GDP.

 

The figures, which exclude the effects of financial interventions and other one-off factors, underline the magnitude of the task facing Mr Osborne. The Chancellor is aiming to cut the deficit to 5.5pc of GDP in the 2014/15 fiscal year, from 6.5pc last year, to meet targets set by the Government’s forecaster, the Office for Budget Responsibility (OBR).

 

“The way things are right now, the deficit reduction predicted by the OBR appears to be very difficult to achieve,” said David Kern, chief economist of the British Chambers of Commerce.

Chris Leslie, Labour’s shadow chief secretary to the Treasury, said the figures put Mr Osborne on track to borrow £190bn more than planned under this Government.

“George Osborne is not only set to break his promise to balance the books by next year, he is also borrowing more so far this year than the same period last year,” he said.

The Treasury insisted borrowing was “in line” with forecasts. It blamed the weak income in April and May on tough comparisons with the same period last year, when its coffers enjoyed a boost from high earners deferring income to take advantage of the cut in the top rate of income tax.

Samuel Tombs, senior UK economist at Capital Economics, warned the figures showed Britain’s fiscal consolidation “has a long way to go before the public finances are on a sustainable footing”.

[Aspman]

and those figure won't include all the stuff kept off balance sheets like pensions and PPI payments which are far more than that £1Tfigure.

 

Without wanting to get into a massive argument (sure someone will oblige anyway) I do wonder where it all goes. Considering the the ****ty state of most things and that everyone is screaming abut cuts.

[lol-lol]

and those figure won't include all the stuff kept off balance sheets like pensions and PPI payments which are far more than that £1Tfigure.

 

Without wanting to get into a massive argument (sure someone will oblige anyway) I do wonder where it all goes. Considering the the ****ty state of most things and that everyone is screaming abut cuts.

 

Indeed, have both a pension from HMRC and private pension I would like the choice of taking some or all of the civil service pension scheme money out so I could do what I want with it like private sector pensions but since it is paid out of the current tax receipts I do not think there is any provision to take anything out of it. 

 

For instance a civil servant, forces guy, senoir rank, would be on a pension of around £40K per year plus his lump sum of North of £100K which to fund as an annuity would cost around £1M.  Multiple this by a million for all the other 5M public servants, though some do have a pension pot, and you are up to a Trillion pounds. 

 

You can see why the current government is devaluing the pension out-goings by reducing it real terms by keep public sector wages below inflation and also raising the retirement age to reduce this off balance sheet amount! 

Edited 25 July, 2014 by lol-lol

[cheezemonkhai]

and those figure won't include all the stuff kept off balance sheets like pensions and PPI payments which are far more than that £1Tfigure.

 

Without wanting to get into a massive argument (sure someone will oblige anyway) I do wonder where it all goes. Considering the the ****ty state of most things and that everyone is screaming abut cuts.

 

The cuts are not "cuts" they are just overspending by less than we were before.

 

We are still living way above our means.

Two ways of dealing with it, both are required. One is to spend less and two is to sell more to the rest of the world (exports)

 

The UK has been spending more than it earned for many years. No too far ahead we're going to reach the point where interest will stop us doing everything.

The current interest bills are huge as it is.

[VWD]

Does this lot know better :notme:

https://uk.news.yahoo.com/illegal-immigrants-caught-trying-leave-uk-072348584.html#ppK9mHu

 

Illegal Immigrants Caught Trying To Leave UK

A group of illegal immigrants have been caught trying to leave the UK and smuggle themselves into France by hiding in a lorry on a cross-channel ferry

[Aspman]

The cuts are not "cuts" they are just overspending by less than we were before.

 

 

Ah the old deficit Vs debt confusion they're always so happy not to clear up.

 

"Deficit down deficit down"

 

"debt up debt up"

[giandougl]

Main trouble is.. the government can borrow money with extremely low interest being charged, so, the government needs a borrowing deterrent to curb their borrowing..?? wop-up interest charges.. YES???

[sparks03]

I do wonder where it all goes. Considering the the ****ty state of most things and that everyone is screaming abut cuts.

Train set for Richie Branson, G4S, Serco, quangos, Europe, aid for countries with bigger space programmes than our own, doomed IT projects, Jimmy Savile cover-ups, Trevor Francis track suits from a mush in Shepherds Bush Edited 25 July, 2014 by sparks03

[lol-lol]

Main trouble is.. the government can borrow money with extremely low interest being charged, so, the government needs a borrowing deterrent to curb their borrowing..?? wop-up interest charges.. YES???

 

Interest rates will rise steadily over the next few years but the UK Government would like to defer it until after, or at worst only just before, the next election. 

 

The UK National Debt has gone up from about half a Trillion pounds at the time the Lehmann Bros cascade failure started, jumped to around three quarters of a Trillion pounds and now is over £1.3T.

 

Still rising by about £100B a year and mainly being arrested by lower public sector payouts (wages and pension) rather than economic growth and our productivity per capita is still 6% lower than it was in 2007.

 

House prices seem to have peaked but it is reminding me of the last bubble during the last Con Government in 1992/7 where house prices adjusted themselves downwards by about a third.  It will stop the "subsiding" of a few million peoples cheap mortgages (me included sadly with a Nationwide Tracker) but at least a normalisation will occur.

 

Ex Bank of England Governor Mervyn King said, before the last election, the next UK Government may regret winning the election as they will have to deal with the real financial crisis ie National Debt.  The Con-Dems have managed to defer the debt issue by passing half the bill to Public Servants (whilst also lowering upper rate income tax, corporation tax and stopping the bankers bonus tax), raising VAT though few are spending much.  As global interest rates click upwards lets hope a shining knight comes along like the US with its new gas production, they have even started to export crude again! 

Edited 26 July, 2014 by lol-lol

[nellyboy]

The austerity robbery will never end. In 10 years we will still be robbed every week to pay for some national debt or another. We are all mugs paying for the mistakes of others who deserve nothing more than a public hanging.

[gadgetman]

But if everything had remained the same as pre 2010 general election deficit would be a similar level to now, but debt would be down.

It was in one of the broadsheets about a year ago when the growth figures came out and didn't look that good.

[lol-lol]

The austerity robbery will never end. In 10 years we will still be robbed every week to pay for some national debt or another. We are all mugs paying for the mistakes of others who deserve nothing more than a public hanging.

 

And the answer to getting everyone to pay their way has been known for about a thousand years ie Excise Duties.

 

PAYE, avoid by using the taxfree loopholes, Corporation tax, lots of loopholes for offsets, VAT, being VAT registered and siphon off VAT reclaimed goods for yourself legimimately and not so as it appears unlikely to be caught as so few people looking in to this any more.

 

Hence the tax take is some £50B-£500B less than it should be.

 

Top thousand in the UK have doubled their wealth in the last 5 years.  Land Lords made another quarter of a trillion pounds in this period as rents have followed up on house prices.

 

Excise Duty should be raised on fuel and VAT cut so the taxation burden is more fairly shared. Excise Duties on large cars, on materials used in production but VAT lowered so net effect is less tax for most people but more for those that buy extravagant items as done in Scandanavian countries, Signapore etc.   

Edited 26 July, 2014 by lol-lol

[moley]

These facts and figures are all well and good, but does anyone have a real workable solution to solving the problem? 

The Tories don't have it, Labour certainly didn't have it last time out and the Lib Dems will struggle to get two seats next time out as Mr Cable sold of Royal Mail way too cheap.

[gadgetman]

The solution wouldn't be popular. It's like saying you'll revamp the NHS or schools.

Unless it's positive across the board, it's something saved for when you're in office.

Trouble is you have the rich who the Tories have to appease, and the unions if labour get in.

Tax system needs a complete restart across the board, but no one has the balls to do it

[cheezemonkhai]

Plus the Tories are getting somewhat stopped by being in coalition.

Scrapping 50 MP would have been a start.

[gadgetman]

The biggest waste of legislation is 40 & 50% tax rates.

So many use clever accounts to avoid it, it's merely a token gesture to make people think that the rich pay more.

In effect most pay less in tax than the average person does

[cheezemonkhai]

The biggest waste of legislation is 40 & 50% tax rates.

So many use clever accounts to avoid it, it's merely a token gesture to make people think that the rich pay more.

In effect most pay less in tax than the average person does

Sorry, but totally not the case for the 40%. Most there are on pays and get shafted by it. It kicks in at just over 40k, so it's not only rich people that get hit by that.

[gadgetman]

The top 1/3 of the 40% rate dramatically reduce their liability below that of most paying 22%.

Iirc it was a stat banded around by UKIP during the European elections and fact checked by channel 4.

[lol-lol]

These facts and figures are all well and good, but does anyone have a real workable solution to solving the problem? 

The Tories don't have it, Labour certainly didn't have it last time out and the Lib Dems will struggle to get two seats next time out as Mr Cable sold of Royal Mail way too cheap.

 

One of the pluses of Excise duties are that they can spur the economy and create jobs.  Taxing certain aspects ie fuel and other material metals, glass, plastic, but reducing VAT will target companies who have little incentive to be green to obtain cleaned trucks etc and design make lower damaging products but the effect would be mitigated to the consumer by lower VAT rates ie 15%, 5% or zero.  More solar and other energy saving installations ie insultation etc. 

[lol-lol]

The biggest waste of legislation is 40 & 50% tax rates.

So many use clever accounts to avoid it, it's merely a token gesture to make people think that the rich pay more.

In effect most pay less in tax than the average person does

 

Sadly true.

 

Actual even more extreme than you suggest.  Whilst government advice is that people should be putting 14% of their earnings to pension clearly it seems logical to put a bit more than that if you are going to pay 40 or 45% tax on the earnings.  In addition is you lower it you can continue to claim Child Beneift if you get it below the £60K and towards the £50K.  Bit of a juggling match but a no-brainer to do if you payroll department are OK with you doing course corrections every now and then as you have to take in to other Beneifts in Kind ie Car allowances, Private medical and petrol cards for example.

 

A good accountant can get your tax code twice the normal 10K starting point ie £20K or so.

Edited 29 July, 2014 by lol-lol

[lol-lol]

Sorry, but totally not the case for the 40%. Most there are on pays and get shafted by it. It kicks in at just over 40k, so it's not only rich people that get hit by that.

 

Sounds like it would pay you to see a clever account.  Pensions, ISAs and other quite legitimate are to all intensive purposes encouragements from Government provide several schemes to avoid the 40% tax band. 

 

"PAYE - Pay As You Earn" (if you cannot be bother to tax plan).  Why pay 40% now when you can pay nothing or 20% a few years down the line?

[lol-lol]

Is it not cheaper to avoid the 40% tax rate now and even borrow the money (at one of the 2 or 3 % credit card or mortgage offset deals) and then use the ISA or pension money to pay it off in a few years time when you can use the latest "lets hep the rich get richer" George Osbourne deal where there are no limits soon how much of your pension pot you can withdraw (Other than the pension pot cannot be bigger than £1.25M and a limit of £40K per year going in currently if memory serves)?

 

http://www.hmrc.gov.uk/pensionschemes/understanding-la.htm

Edited 30 July, 2014 by lol-lol

[jlwah]

Is it not cheaper to avoid the 40% tax rate now and even borrow the money (at one of the 2 or 3 % credit card or mortgage offset deals) and then use the ISA or pension money to pay it off in a few years time when you can use the latest "lets help people to access their own savings in a way of their choosing rather than on notional terms decided by a government" George Osbourne deal where there are no limits soon how much of your pension pot you can withdraw (subject to tax being paid on it) (Other than the pension pot cannot be bigger than £1.25M and a limit of £40K per year going in currently if memory serves)?

 

http://www.hmrc.gov.uk/pensionschemes/understanding-la.htm

 

Post corrected to bring it in line with reality.

[sparks03]

I pay 40% tax and have no choice about it! 

[Paul007]

I've just had a nice cheque from Mr O's office because I bothered to check the tax coding.