Conservatives! Hold the line on cuts.

UK Chancellor, Philip Hammond, is shortly due to present his Autumn Statement, outlining spending and taxation plans.  As with his predecessor, it is a good opportunity to offer advice on what his priorities should be.

There has been much prognosticating by the so called experts about the state of the UK’s finances, post-Brexit.  The latest indicates that there is a £25 billion funding gap which will arise as a result of depressed growth by 2020.  Couple this with Hammond’s Tory conference talk of loosening the reins and we can maybe expect that the much needed fiscal discipline – a policy which very much differentiated the Conservatives from the Labour opposition during the 2015 General Election – will be ditched.

This certainly shouldn’t be so.  

The UK, for the benefit of future generations – your children and grandchildren – needs to urgently reduce public spending.  At the same time, we need a simplification of the UK tax code.  I would contend that one of the major contributors to the industry that has sprung-up around tax avoidance, is the current complexity of tax law.  Indeed, I would suggest that there are parts of it that no one really understands!

The Tax Payers Alliance undertook an extremely well-researched and fully costed analysis of the UK’s public finances and came up with proposals to reduce taxpayer spending.  This blog highlights what I see as the most cost effective and politically acceptable cuts.  The figures shown are based on the TPA’s cumulative total for the years 2017-2020 (3 tax years).  The amounts combine what the TPA call both Programme One measures – required to get public spending down to 35.2% of GDP by 2019-2020 – and Programme Two measures – designed to drive public spending down further, to 31.7% of GDP by 2020-2021.

So to my recommendations:

·      Increase the extent of charges in the NHS.  Saving 2017 to 2020  £26 billion. 

This includes charging people that travel to the UK, for so called ‘health tourism’ for the services that they receive from the NHS.  Frankly can’t believe that this would be opposed by any sane UK politician.

·      Abolish the Department for Culture, Media and Sport  Saving £8.3 Billion

·      Abolish the Department for International Development and scrap Development Aid Saving  £41.8 Billion

·      Abolish the Department for Environment and Climate Change  Saving £1 Billion

·      Abolish the Department for Business, Innovation and Skills  Saving £12.9 Billion

Government itself must be reduced.  The focus of the UK must be on productive workers not on parasitical bureaucrats.  Where there is a perceived (but much reduced) need for some of  the services currently provided by these ministries, then the tasks to be reassigned to other ministries.  In terms of International Aid, the UK is in debt.  It cannot make any sense, other than in the lala land of Westminster to be borrowing money and placing a burden on the UK tax payer, only so that we can give that money to overseas countries.  Especially so, when many of the recipients are either corrupt or don’t need the money.

·      Abolish the H2S programme  Saving £9 Billion

This is a white elephant in the making.  And a very expensive one, at that!  The economic case for this has been doctored more than a randy tom-cat.  Other than the economists who pull together the fictional projections, I doubt there is anyone that believes this project will be delivered for the £50, 60, 70 Billion price tag.  The saving shown could be reduced if the government decided instead to spend some of that money, on improving communication networks across the whole country.   Imagine the benefits for the country if 4G or even 5G coverage was nationwide.  Think of all those saved carbon footprints!

·      Scrap National Pay bargaining  Saving £13.1 Billion

I have written here before about this.  How can it make sense that people – almost exclusively public sector employees – get the same salary increase regardless of where they live.  The ‘cost of living’ for a  public sector employee living in London  or maybe Edinburgh are very, very different for one living in Durham or Cornwall. 

·      Reduce grants to Scotland, Northern Ireland and Wales  to be in line with England and Scotland’s to match its relative prosperity compared to Wales.  Saving £21.1 Billion

Okay, I have a ‘bee in my bonnet’ about this.  To me it is iniquitous that English tax payers must subsidise residents of other parts of the UK (and, to declare an interest, yes I do live in England)  In Scotland this is particularly galling, where Scottish born university students are provided with free tuition (as are students from other EU countries) while English students are charged fees.   It is time that these members of the Union pay a fair share for the services they enjoy.  Who knows, maybe then they would elect fiscally responsible assemblies and parliaments!  Currently it is easy to elect ‘rent a gob’ politicians in Scotland or Wales or Northern Ireland who spout off on all sorts of issues – even those for which they have no competence – and then spend and spend and send the bill to Westminster.

·      Freeze Benefits for two years and then uprate with CPI  Saving £5.7 Billion

·      Means Test winter fuel payments  Saving £4.3 Billion

·      Reduce the Welfare cap to £20,000  Saving £2.3 Billion

·      Scrap Childcare subsidy  Saving £2.6 Billion

·      Cut Child Tax Credits to their 2003-4 levels, in real terms  Saving £16.8 Billion

·      Target free bus passes, for the elderly, for those who genuinely need them  Saving £1.7 Billion

·      Flatten housing benefit rates across expensive areas to cut 10% off bills  Saving £7.9 Billion

Looking at the savings, it is easy to see the extent that the welfare programme is still a very significant part of the UK’s spending.  I have no doubt that implementing such cuts as proposed, would unleash a howl of protest from Labour and the rest of the Left.  The same could be expected from the soft Left in the Conservative Party.  This I find highly ironic.  At the moment, the tax payer is subsidising vast numbers of employers of people who are in work or people who do not need the benefits that they receive (rich old age pensioners, for example).  How can anyone justify companies paying low wages to people and people only being able to afford to take these jobs because they receive supplementary handouts from the tax payer, via the State?  The State and the tax payer need to get out of the business of subsidising private enterprise. 

These are just my selection from the TPA’s Spending Plan.  Now let’s turn to income taxes.

Raise the Income Tax threshold to £15,000 from next year and to £20,000 by tax year 2019-2020.

Reduce the basic rate of income tax to 15% for all income between £15,000 and £50,000.  For income over Sterling £50,000 reduce rate to 35%

Abolish National Insurance contributions, for both employee and employer for all employees under the age of 25 years.

Abolish all of the so called Green Taxes.

Increase Inheritance Tax thresholds to £600,000 and then increment to £750,000 by 2019-2020.

Finally, another ‘bee in my bonnet’.  Tax MPs expenses.  If the average tax payer is reimbursed for home to work travel or accommodation, then this is considered a taxable benefit.  Brexit has shown that the people are taking back control from the elites.  Those who think that they should be treated differently than the rest of us.  

If you’ve read this far, I apologise for the length of the piece.  I am under no illusion that these progressive policies will be implemented – I think it will take some kind of tax payers revolt for common sense to come to Britain’s public finances – that or a financial crisis, however, who knows, maybe one day a UK government will pay more attention to the tax payer that funds all this and less to the recipients of the tax payer’s largesse.  Then they might also think about our children and grandchildren.

Don’t hold your breath, though!

Massive, Massive hat-tip to the Tax Payers Alliance!

Aid and debt

I posted previously about George Osborne's Autumn Statement and and the International Aid budget.

I will send this blog, via Twitter, to George Osborne and David Cameron.  The same sentiments though, apply in the rest of the European and the USA.  However, I don't really expect common-sense to suddenly break-out in the upper reaches of the UK Government.

How, even in the crazy world in which we find ourselves, can it possibly make any sense for a government to borrow money, so that it can give this money to another country?

Think about that.

Would you borrow money, so that you could donate it to charity?  Indeed, would you do so, knowing that it is your children and your children's children and their children that would have to pay the interest on it?

I have heard all of the stuff about 'rich' countries having a 'duty' to share the wealth with the poorer ones but how do we define 'wealthy' and 'poor'?

Is a country 'wealthy' if it has debt close to 100% of its GDP?  For that matter, is a country 'poor'  if it can dispatch rockets into space?

In 2013, the UK gave aid to the value of £249M to Nigeria.  In case you missed it, Nigeria has huge oil reserves but the almost endemic corruption means that the country has to import fuel to illuminate homes, cook food and drive vehicles.  Does it really make sense for the UK to borrow money to send to Nigeria?

Britain gave £104M to Ghana, which is in the midst of an oil fueled boom!

Crazy as that sounds, Britain also borrowed £946K to give to Argentina.  The same Argentina that constantly threatens Britons in the Falkland Islands.   The same Argentina that invaded the Falklands and now requires Britain to retain a military presence on the islands.  I am not making this up!

Then there is Brazil £5.5M and India, receiver of a whopping £269M of aid.  These are the very same countries that are supposed to be the emerging economic powerhouses!  Brazil is actually running a budget surplus, at the moment.  The UK is borrowing money  to give to Brazil.  The UK is running a deficit of 3.6% of GDP and a country that is running a surplus of 1.6% of GDP.  This is the same Brazil that has a GDP which is the seventh largest in the world!  The UK?  The UK is the sixth largest in the world.

Yesterday, in the Houses of Parliament, Member's of Parliament voted on a bill which will enshrine, in law, a guarantee that the UK will donate 0.7% of GDP to international aid.   Doesn't matter what state our economy is in.  We donate 0.7%.  Doesn't matter if people are dying on the streets of the UK.  We donate 0.7%.  This is the  liberal idiocy equivalent of Nero's antics with a fiddle!

In what world can it make sense to guarantee, by statute, that we will always donate 0.7% of GDP to international aid?

If you need an example of just how out of touch politicians are, how remote the 'Westminster bubble' has left them, then this is it.

Over to you, George and David!  

Osborne's last chance

Maybe the title isn't strictly true.  There is always the April 2015 budget but tomorrow, when Chancellor George Osborne delivers the government's Autumn Statement, he has to get it right as this will set the tone and the battle lines for the 2015 General Election.

I have already posted here and here on what I think should be happening but I wanted to have a last- minute rant or contribution to the debate, depending on your view, on what George Osborne should be saying, tomorrow.

First and foremost, the UK is broke.  I'll say that again. The UK is broke.  We are more than £1.4 Trillion in debt.  How much more than £1.4 Trillion?  Nobody knows.  That £1.4 Trillion is just the admitted debt.  It doesn't include unfunded liabilities like future pensions to be drawn by civil servants, local government employees and MPs.  It doesn't include the more than £350 Billion of NHS Private Finance Initiative debt nor lots of other 'off Balance Sheet' financing of the type in which Gordon Brown's Labour Treasury, excelled.  Note, when companies like Enron used such accounting techniques, they were, rightly, pilloried and ended up being declared for what they were - bankrupt!  However, for entities like HM Government, the rules get suspended.

So, with a 'broke' UK, the opportunities and choices are limited.

We cannot afford HS2 - so we scrap that and save, more than £50 Billion.  Let's be clear though, that isn't really a saving - as it is just a reduction in future borrowing needs.  Also, for the sake of clarity, everyone knows the £50 Billion number is just the starting point.  The final number will be much higher, if we were to proceed.

We cannot afford International Aid.  Sorry Bono but Britain simply cannot borrow money so that we can give it to others - no matter how genuine and heart-wrenching their need may be.  It cannot be about Britain sitting on the big table and lording it over others like China, because we meet the aid obligations and they (and other nations) don't.   The money we give to other countries is ultimately funded, on an interest bearing basis, by those same Chinese!

Britain must cut back on overseas ventures.  I would dearly love us to be able to project a strong military presence around the globe and demonstrate the strength and value of our democracy and traditions but we simply don't have the money.  Today, the biggest foreign investor in Africa is China and yet how much do you think they are contributing to fight the spread of Ebola?  Britain does have a strategic interest and, to some extent a local one, in the fighting in Syria and Iraq but the major beneficiaries of holding back ISIS are Iraq, Iran, Turkey and Saudi Arabia and other neighboring countries.  If Britain is to fight on their behalf, then they should pay us top dollar for doing so.

Now to domestic matters.

All government spending must be cut.  That is all as in all.  No ring fencing, no special cases, no phasing in.  Simply put, no, no, no!

Or another way, cut, cut, cut.

Firstly, and this helps Cameron cut the Gordian Knot about immigrants, immediately announce a cut in welfare payments to all non-native born Britons.  If you do not have a British passport, or the right to one, then you get no welfare.  Zero, nada, zilch.  I know that Human Rights lawyers and the European Court of Human Rights (ECHR) and all of the others that want Britain to spend money it doesn't have, will scream and shout and threaten all sorts of retribution but that's all they can do.  We must pass legislation to immediately end our association with the ECHR and abolish the Human Rights Act.  Another advantage of doing this is that it will end the Coalition and the Conservatives will have to govern alone, without the dead, interfering hands of the Lib Dems on the tiller.    I would think that George Osborne could even sell raffle tickets, for the benefit of the national debt of course, for the winner to tell Vince Cable he is fired!  I would buy a ticket for a fiver.  Hell, I might even buy two just for the chance to see the look on the face of a man who has taken sanctimonious 'prattishness' to new Olympian heights.

Secondly, as said before, tell the NHS, that funding is cut by say 20%.  This can be reduced to 15% if they abrogate their PFI deals and get significant reductions in their PFI payments.

Thirdly, All other government departments a significant cut in expenditure plans as outlined in my earlier mails.  Though, the more I think about the unsustainable deficit and the increasing debt mountain, perhaps deeper and faster cuts are required.

Clearly, some people will suffer from these cuts.

 Foreigners who take advantage of our overly generous welfare payments.  Financiers who gulled a spend-freely Socialist government into excessively generous PFI deals, and NHS back-office staff and civil servants who allowed this to happen - 'because at the end of the day, the Government will pay'.  They will suffer loss.  hard as it sounds, I don't think that is our concern.

So too though, will Britons suffer loss and therefore the tax cuts side of the equation needs to be put in place.  Accelerated raising of the tax threshold, immediate reductions in fuel duty and abolition of asinine 'Green' taxes will be a start.  Here's a further idea.  Use some of the money that  is saved by not funding International Aid, to promote charitable giving at home.  Allow  people tax-relief on up to say £1,000 of a contribution that they make to any charity that supports UK based charities that only work in the UK.    So nothing for contributing to Oxfam, Band Aid or Save the Children but full relief, up to £1,000 for money or goods given to a local food bank, for example.

This should be the thrust of the Autumn Statement but, scared by UKIP and bullied by their Coalition partners, the Lib Dems and in thrall to the Labour dominated media, Osborne's speech will likely mean more borrowing, more debt and the sound of cans being kicked down the road.

Osborne Statement leaked

Below is the transcript of the Autumn Statement that Chancellor George Osborne is to deliver to the House of Commons on December 3, 2014.  Given its content, we can expect that there will be changes made to water down many of these but see what you think.

Mr Speaker, fellow members of the Conservative Party and members of Parliament from other parties.  Today, following this speech, I will place in the House of Commons Library a copy of this statement and supporting documentation.

The supporting documentation includes a statement from the independent Office of Budget Responsibility (OBR) which comments on my statement.  As the House will know, the OBR was established by this government to act as an independent reviewer of the economic situation within the United Kingdom and of the government's responses to that situation.  Essentially, to ensure that there is independent scrutiny of government budgetary plans so that we avoid the multiple counting of expenditure and unfunded promises, which could not subsequently be kept, that were so prevalent under the previous government.  Also to comment on taxation and policies that would drag Britain further into debt.  The House will recall that Britain's spiraling debt increases were occurring even before the 2008 global economic crisis.

Before I get too far into this statement, I must declare an interest.

It is customary, in such circumstances that the Rt. Hon. Leader of the Opposition, will respond to this statement.  I declare therefore that though I have made a financial contribution to the 'Save Ed' campaign, I do not expect to receive any favours in return for such largesse.  My donation was in excess of the 2p that the Leader of the Opposition recently allegedly gave to a beggar in Manchester, but I consider my £1 money well spent, if it keeps him and the other Ed sitting opposite and continuing to peddle their Micawberish lines about 'needing to borrow ever more because something will turn-up to sort it out'.

I have news for them.  Something did turn up to sort it out.  It is the Conservative Party.

Before I digress too much a final comment regarding the party opposite.  A friend recently reminded me of the line from the film, Love Story and turned it around to make it relevant to Labour and their economic incompetence.  Labour means never having to say sorry, is how it goes!

So Honourable Members, when you read the statement and hear the comments from those opposite, remember that, Labour means never having to say sorry for how they left this country in 2010.  Labour means never having to say sorry for the deficit that they left the country, for the debt mountain that would grow bigger because of the financial black holes and unfunded spending that they left behind.  In fact the only time that Labour have said sorry, is when they left a note at the Treasury saying ' Sorry, there's no money left!'

Before I get to the statement, just a word about our Coalition partners, the Liberal Democrats.   Some members of that party have indicated that they do not support this statement and will vote against any measures arising from it.  My Right Honourable friend the Prime Minister has suggested that any such dissenting members, who hold ministerial office should consider their position and that is what they are now doing.

Thank you for your patience and now to the statement.

The UK economy is well on the way to recovery.  Indeed it is leading the way, in terms of all economic indicators, among the G7.  As with any patient that has had a serious illness, a relapse is possible, though given that the fundamental underlying economic health issues have been identified and the remedies are known, we can expect a full recovery, over time, so long as we stick to the medicine that has brought us back from the brink.

Sticking with this medical theme, the UK economy was obese and suffering as a consequence.  In 2010, the Body Mass Index, or BMI was very unhealthy.  We were funding a financial/calorific intake that was far in excess of our needs and of what was good for us.  We were getting fatter on other people's money.

For the health of the patient, that had to stop!

Over the last 4 1/2 years, we have initiated policies which have begun the slimming down process.  Our economic BMI is still too high but now when we get on the scales we can see improvement and as a nation we know we cannot treat this like some kind of yo-yo diet where we now  backslide and start getting into debt again.  We need to stay the course.

Staying the course is  vital for any healthy diet.  However, a diet needn't be all doom and gloom, not all abstinence and restraint.  Sometime we also need the carrot of a little self-indulgence.

This statement looks to keeping Britain on that healthy diet.  We will slim down the State but will indulge our people along the way.

Firstly, the slimming regime.

In the Budget planned for April 2015, this government will propose removing the so called ring-fence from Education and Health spending.  At a time when all other sectors of the economy are learning that they need to slim down and lose weight, we cannot, as a nation have two vital services that are allowed to gorge while others are on reduced rations.  that is not the British way, that is not the Conservative way.

All government departments, will need to reduce year on year expenditure by 5% in the fiscal year 2015/2016 and a further 5% in each of the succeeding 4 years.

The NHS has been protected from the expenditure reductions that have been required at other government departments but it simply isn't fair that this continues.  I know that the party opposite will scream about the NHS not being safe in Tory hands and so on but the reality is that we are all in this together, we cannot slim-down the body and ignore any large part of that body, we must look at this as a whole.

My colleague the Minister for Health will be advising NHS Trusts on the planned spending budgets  for coming years in a short time.  This advice will include instructions that they should immediately undertake wholesale re-negotiations of all PFI contracts.  And, let us state here and now, we expect these PFI providers to fund the largest part of the reduction in NHS spending.  We will advise NHS Trusts that they will be allowed to go into receivership, bankruptcy, fold or call it what you will but we, the British taxpayer and the Conservative government, will not allow the people to be ripped-off by paying exorbitant fees to private finance organisations.

To be clear on this.  We know that most of these overly generous PFI contracts were signed under previous Labour governments and were considered a 'neat trick' to keep the public finances looking good.  This though isn't about political point scoring.  This party wants to see a healthy NHS not one that is having its very life-blood sucked out by onerous PFI contracts.

To those financiers listening to this, my advice is clear.  Get in touch with your NHS Trust partners and renegotiate the terms of your agreements as a priority.  This issue of overly generous contracts is now on the table and we know we can expect the full support of the 'banker bashing' brigade on the opposite benches, so it isn't going away.

Details on departmental budgets will be placed in the House of Commons Library following their announcement by the respective Ministers but the foregoing outlines the overall direction of where we are heading.

Turning now to taxation.

It will come as no surprise that this party is committed to reducing the tax burden on ordinary people.  The party opposite will bleat about tax cuts for the privileged few and so on, and they may, in their comments,  be yet joined by others.  The reality though, and they absolutely know this, is that government spending isn't funded by the privileged few, by the top earners.  If these people were taxed at 100% it still wouldn't be enough to fund spending.  And that is before we contemplate the huge increases in public spending that will be required to fund the extravagant promises made by the party opposite!  Why they would want to throw away the gains we, as a country, have made in the last 4 1/2 years is simply criminal.  We haven't come through a period of austerity, just so that we can go out on a Labour Party inspired binge!

At the recent Conservative Party conference, we proposed certain measures would be enacted if we were entrusted with power, by the British people, after the May 2015 General Election.  We now believe that we can accelerate some of these proposals.

The April 2015 Budget statement will include proposals to raise the income tax threshold to £12,500 with effect from April 2015 and increase by £500 increments each succeeding fiscal year until it reaches £15,000.  This will lift millions of people out of paying tax, altogether.


The April 2015 Budget statement will include proposals to raise the income tax threshold for the 40% rate from the current level of £41,865 to £45,000 from April 2015 and then by £1,000 increments each succeeding fiscal year until it reaches £50,000.  This will cut the tax bill for millions of so called 'middle earners' .  These people have contributed to putting the UK economy on the road to recovery and it is only right that they should get to keep more of the money that they earn and to be able to spend it as they like, not so that its spending is dictated by some bureaucrat in Westminster or the local town hall.

The April 2015 Budget statement will include proposals to completely lift the burden of so called 'green taxes' from our people and our businesses.  These taxes have crept stealth-like into the fabric of our country and sap the economy.  They force Old-Age Pensioners to sit in unheated homes because they cannot afford to pay high gas or electricity bills which are high because of these taxes that were brought in by the last Labour governments.  These killing taxes must go.

Linked to this, effective midnight, the fuel duty will be reduced by 10p a litre.  I have listened to representatives of the transport industry and of those from rural communities and know that this is the right change to make, to aid our people.

Honourable friends colleagues and Members, these are the headline changes that this Government will be putting before the House.  The full statement, including the comments of the OBR and the current position of the economy will now be placed in the House of Commons Library.

I commend this statement to the House.