Chancellor must answer for black hole in the country’s finances
Responding to news that part of Corporation Tax revenue has been double-counted by HMRC, revising down the take for 2018-2019 by more than £4bn, Liberal Democrat shadow Chancellor Ed Davey said:
Today’s data from HMRC reveals a concerning black hole in the country’s public finances. Since this Conservative Government took office, an astounding £12.86 billion was mistakenly accounted for in the exchequer’s books – money that was never actually there. This is a potentially dangerous oversight for which the Conservative Chancellor is responsible.
Moreover, this highlights the Government’s irresponsibility in slashing corporation tax down to 17%, an ideologically driven move that further weakens our public finances – all without real benefit to business. Sajid Javid must now follow the Liberal Democrats’ call to reverse this policy and explain how this black hole will be addressed.
Corbyn commitments mean nothing with Brexit
Responding to Jeremy Corbyn’s conference speech, Liberal Democrat Shadow Brexit Secretary Tom Brake said:
Labour supporters will once again be disappointed that Jeremy Corbyn has failed to show leadership and commit a Labour Government to opposing Brexit.
The reality is Corbyn’s public spending commitments mean nothing while the country is facing yet more economic uncertainty through either a blue Brexit or a red one.
There is another way. Liberal Democrats will continue to work to not only stop the UK crashing out of the EU without a deal, but to stop Brexit altogether so that we can build a better future for people and the planet.
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Fear not the Tories have found the magic money forest, we don’t need taxes anymore.
U.K. government borrowing is rising more strongly than expected as a decade of austerity begins to thaw.
The budget deficit in the first five months of the fiscal year was 28% higher than in the same period of 2018, despite a modest improvement in August, Office for National Statistics figures published Tuesday show.
https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2019-09-24/u-k-budget-deficit-is-increasing-amid-easing-of-austerity
Is that the sound of tin foil I can hear, soon Peter will be amongst us stating, we can just print money to cover the spend, true until faith in the pound fails, but he isn’t able to answer that particular question, a question that is just a little too hard for him, a question based on reality and not unicorn, sunlit uplands thinking.
Please note for those amongst us who think, my life will improve as austerity ends, well after the election and with Brexit, austerity will be back on steroids. Soon unless your an active hard worker the Daily Mail and Sun will be decrying you as a parasite on society. After all our society works on blaming scape goats and we will need scape goats more than ever after Brexit.
Just another “none Brexit” bit of economic news
In 2012, Wrightbus was riding high. The company launched a new red double decker bus for London.
A fleet of the New Routemasters had been ordered by the then mayor Boris Johnson – and so became known as Boris Buses.
The new bus even had a starring role on Top Gear, racing with supercars.
It was a triumphant time for the Ballymena business, but now it’s been brought low, set to fall into into administration.
https://www.bbc.co.uk/news/uk-northern-ireland-49801334
My bad was just teasing about it being “none Brexit” related, sorry my poor Brexi’s and Lexi’s really shouldn’t get your hopes up, as the article says
It also said the business was facing increased material prices due to exchange rates.
That is a reference to the relative weakness of sterling since the Brexit vote, which makes it more expensive to buy components that are priced in euros or dollars.
The Brexit bonuses just keep rolling in, a hard day for the local MP, a DUP one I do believe. Well I’m sure young Ian Paisley Jr MP will be nipping down to tell the 1500 Brexit martyrs their sacrifice will not be forgotten; he might need a holiday after that meeting.
I think all those referring to a none-Brexit really mean a non- Brexit
Wrightbus should not go under. It is the future for its electrical buses/technology and its hydrogen development research /development It is the future..
Again Brexit threatens jobs and British Industry. Hedge funds are enjoying the rich pickings (and enjoying future ones).
The Boris bus was a disaster. No other bus company would by it, London bus companies stopped buying it once Boris had gone, it is too expensive to run and is uncomfortable. Another Johnson failure, and possibly one of the reasons Wrightbus is in trouble.
@ Frankie,
I have always been someone who has a ‘gave them enough rope and they will hang themselves’, attitude. If one trusts in the judgement of ‘the people’ , I have from the beginning of this tragedy believed that the result of the referendum should not have been challenged from the moment that the results were in.
My argument with your party has been one of strategy and tactics . I really do believe that when the Brexiteers were revealed to have promised the undeliverable, the electorate would have had the common sense to know that they had been sold a lie and a bottom up challenge from the electorate would have developed organically. Instead there has been an approach that could not have done more to polarise and divide opinion.
Alex Macfie, Martin and others can argue the technicalities of Constitutional Law until the cows come home, but we remain law abiding because we support the law. Liberals have long wanted the electorate to become politically engaged, well I am afraid that they have and we don’t like the outcome. I am saddened that the argument is no longer about Brexit but the nature of our democracy and there is rising anger. It has allowed , ‘The people versus the Establishment’ idea to flourish.
Last night I watched Sky News and one of the journalists, ( a brexiteer) was arguing that people feel that they are having their decision revoked by the ‘Establishment’, the Supreme court judges being the latest group to be so categorised – a truly frightening step up. Interviews of people who voted leave in Port Talbot were interviewed confirmed this response with people saying that they would never vote again if the decision to leave the EU was overturned.
The increasingly visceral nature of the divide in the country can’t, in my opinion, be softened by any strategy or tactic that further alienates a large proportion of the electorate , especially and specifically those who were not previously politically engaged, adding distrust in our judiciary to that of our elected representatives.
My simple answer to what would you do? is to say well I wouldn’t have started here. Somehow we have to bring the two sides closer together, separating the two real extremes who refuse to give an inch, and that means compromise.
Jayne Mansfield,
“…separating the two real extremes who refuse to give an inch….. ”
JR-M would no doubt approve of your choice of an imperial unit! 🙂 But, how is arbitrarily revoking Art 50 “giving an inch” ?
“….. and that means compromise”
What are the LibDems offering? Sometimes there isn’t a compromise. We’re either in the EU or we aren’t. Anything in-between, TM’s deal, the Norway option etc, looks to be totally unacceptable to Remainers and Leavers alike.
I can’t see this conflict being resolved any time soon – whatever happens in the next few months.
@ frankie,
“…….the Tories have found the magic money forest, we don’t need taxes anymore.”
I’m afraid we do. You could say that the Royal Mail doesn’t need to cancel stamps, which is an IOU of the RM, on letters. They cancel the stamps because they don’t want us to use them twice. Not because they need the stamps themselves. Or a railway company doesn’t need to collect tickets etc. I’m sure you can think of other examples.
Similarly the £ is an IOU of government. The government tears up its IOUs when it receives them back in taxes. Not because it needs them. It does that because it doesn’t want us spending them!
So do we have a “black hole” in the government finances? Not at all. Would the Royal Mail be at all concerned that they’d issued more stamps than they’d counted off as being cancelled on letters?
Is 17% corporation tax too low? Possibly. But that’s a matter of opinion.
@ Peter Martin,
I am utterly opposed to the revocation of article 50 on the terms set out by the Liberal Democrat Party.
I believe that something in between would actually mollify and be acceptable to those who do not inhabit the political extremes when it comes to our membership of the EU. I have no problem isolating the extremists.
The argument for compromise has to be made and it should have been made, consistently by those who care about the ever deepening divisions in our society. The Liberal Democrat Party has chosen to ratchet up the anti, believing that erudite arguments on Liberal Democrat Voice will somehow lead to attitude change.
I know far too many people who went into the ballot box who were still uncertain which way to vote until they finally had to make their cross, to be persuaded that the extremists pursuing their own political agenda, that attitudes and beliefs could not have altered if they were not treated at worst racists, bigots and xenophobes, and a best gullible and therefore not fit to vote for the ‘correct’ option.
If, as I am sure that so many will argue, the strategy and tactics employed by the ‘Remain’ camp have been so brilliant, why is there now no overwhelming desire to remain? I see very little movement which I attribute to the culture war that now seems to have little to do with the arguments for and against remain, they having become background issues to other more visceral reactions.
I am sorry, but one can’t treat the voters like idiots or worse, and then expect there to be no push back.
@ Jayne,
I personally would prefer to Leave on WTO terms. ie Leave with no deal. My next preference would be to be a fully paid up member along with France and Germany. That means being a part of Schengen, reliquishing our opt outs and adopting the euro etc. This is the only way we’ll have any influence. The way the EU is moving we’ll be faced, and sooner rather than later, with those two alternatives in any case. Its better to face up to it now than procrastinate further.
There’s no compromise possible. We have to decide whether we’re totally in or totally out. Can you imagine the state of Alaska, or any other US state, saying they wanted to be a part of the USA but they wanted their own currency? Guy Verhofstadt makes exactly the same point. And he’s quite right. There’s no middle way that is a long term viable option.
https://www.goodreads.com/en/book/show/280574.The_United_States_of_Europe
David Becket 25th Sep ’19 – 11:15am
Boris thought that there were votes in nostalgia for Routemaster buses, despite the illegal level of air pollution they caused.
If a bus stopped at a traffic light or in a traffic jam a passenger could get off without consulting the driver.
If the bus moved off it might be possible to run fast enough for a short distance to jump on board without consulting the driver.
Boris was twice elected as London Mayor in competition with Ken Livingstone.
Other candidates were available.
Jayne,
The problem with letting the Brexiteers hang themselves is they will hang a large number of the poor before they hang themselves. We can sit and wait till they jump off a cliff, before rushing over to say “Well we knew that would hurt”, I’d rather they didn’t jump.
Peter,
At last the true Peter Martin is reveled no Lexiteer you, a hard right fanatic with no answer too simple questions. You can issue reams and reams of piffle about IOU and stamps but when asked the simple question ” What do you do when faith is lost in the pound” you go ashen runaway while shrieking ” Print more money”. A sad prophet of a failed religion, destined to become an even sad hanger onto any web site that will let him post, desperate to be taken seriously, while offering no insite or answers. If I ever become that sad, please someone shoot me.
@ Frankie,
I’m not sure if you’ll follow this by Paul Krugman but maybe if you take it slowly?
“Seriously, at every stage of our ongoing economic crisis — and in particular, every time anyone has suggested actually trying to do something about mass unemployment — a chorus of voices has warned that unless we bring down budget deficits now now now, financial markets will turn on America, driving interest rates sky-high. And these prophecies of doom have had a powerful effect on our economic discourse.”
The only point I’d make is that we don’t have mass unemployment but we do have a severe underemployment and severe lack of well paid decent jobs.
.https://www.nytimes.com/2012/12/24/opinion/krugman-when-prophecy-fails.html
Peter Martin
There is no point in trying to argue with or explain anything to that person.
Having a massive debt did not do Thomas Cook much good.
Peter,
Investment in knowledge and infrastructure pays for itself. Voting for Brexit and WTO which Minford has stated will kill manufacturing will not. So you are faced with a dilemma to invest you need money, to be able to print money to invest you need to be credible, but by voting for economic harm you destroy credablity. So I’ll ask you again “How can printing money help if the world has no faith in your currency”, a simple question but one you seem unable to answer.
True nevlope2003, but Peter’s solution would be for Thomas Cook to issue their own currency to pay for the goods and services they needed. But you say “No one would believe the currency was worth anything, and wouldn’t accept it”, quite but that isn’t the answer Peter wants and it isn’t an answer he can answer, so he will ignore it.
This article in the FT cuts through some of the contradictions associated with Modern Monetary Theory deficit financing https://www.ft.com/content/744f4fc4-6762-11e9-9adc-98bf1d35a056
“…MMT’s central tenet applies only when the economy is stuck in a deep recession, with interest rates at the effective lower bound of zero… This does not apply in the US today. Furthermore, there are other factors to take into account.
The financial markets may panic at the extent of money creation, at which point risk premia on private and public debt might explode. With long-term interest rates above the growth rate of the economy, debt would be unsustainable in the long run, unless the government eventually runs a surplus on its non-interest budget. In addition, the exchange rate would probably collapse, taking the economy away from the zero lower bound. Once this happens, the standard rules of macroeconomics would apply.
Money printing is anyway limited by the private sector’s willingness to hold cash, which is far from infinite…in normal times and consistent with the 2 per cent inflation target, the appetite to hold money rises at 0.7 per cent of gross domestic product per year. If the government prints more than that relatively small amount to fund its deficit, inflation could follow, though many factors other than the money supply would be relevant here.”
– When economies are stuck at the zero lower bound, like Japan and the eurozone today, MMT could persuade governments and central banks to be less worried about debt constraints when considering expansionary fiscal policy, financed by money creation. Within limits and bolstered by institutional reforms to maintain confidence, this might restore healthy levels of demand more quickly.
– However, when an economy is operating normally, and especially when it is close to full employment, MMT should not be used to justify money financed deficit increases, such as those to finance the Green New Deal. In fact, the results could be highly inflationary and financially destabilising. These are the conditions that apply in the US and UK today.
In summary, MMT is not a “get out of jail” card for populist politicians who want to ignore the established constraints of macroeconomics. When the economy is near full employment, investors should see it as a red flag for the markets.”
Frankie:
“At last the true Peter Martin is reveled no Lexiteer you, a hard right fanatic with no answer to simple questions.”
This is what I was saying months ago. The line may be convoluted, there is an assertion of a left wing stance, but what it adds up to is a position that is strongly aligned with an extreme right wing Brexit. Key for me, more than a year ago, was when I realised that Peter Martin’s supporting link was from Patrick Minford.
Martin,
Two things I’d say
1. Yes I believe Peter is of the right wing persuasion
2. I also believe he thinks he is leftwing. But then to be a true Brexiteer delusion is something that needs to be integral to your being. After all if you can’t hold at least two totally contradictory views then the career of a Brexiteer is not for you; you have also to be able to quickly change your views, while claiming you always held them. I’m not sure they realise it is quite easy to check their previous pronouncements in our new internet age.
@ Glenn,
“There is no point in trying to argue with or explain anything to that person”.
You’re quite right! I don’t know why I might think otherwise! 🙂
@ Joseph B,
“MMT’s central tenet applies only when the economy is stuck in a deep recession, with interest rates at the effective lower bound of zero”
Not true. MMT (minus the Job Guarantee) is a theory of the workings of the economy at all times. It acknowledges, when interest rates are not stuck on the so-called “lower bound”, that a reduction in those rates will create a short term stimulus. However, this very rapidly wears off due to the subsequent rise in the extent of private debt, meaning that another reduction will be necessary to keep the economy moving. So, inevitably, we’ll always arrive at the situation we have now, where interest rates are so low they can’t be lowered any further.
Fiscal regulation of the economy then becomes the only option left to policy makers.
@ Martin
Patrick Minford? He’s a “classical” macroeconomist. We might agree on the folly of trying to have 19 countries share a single currency, but I’d suggest our reasoning would be quite different. Milton Friedman says the same thing too, and he’s quite right about that. But, it doesn’t mean he’s right about everything else too. His money supply theories are way off IMO.
If you’re looking for a left critique of the EU I’d suggest economists such as Prof Steve Keen and Prof. Bill Mitchell.
I’d be interested to see the “supporting link” you have in mind.
Jayne, the only truly democratic way to defeat Brexit is to hold another referendum, with the options of Deal or Remain. That will restore the ‘people’s will’, by giving everyone another chance to vote now the facts of Brexit are clear, and it has been our party’s policy for years and is still. The short-term idea of Parliament revoking Article 50, which the party will now support if we gain a majority in the forthcoming elections, is arguably democratic in the sense that the voters will be told that if they vote for us and we win a majority, that is what we will do. I personally voted against this, one of the minority in the debate, and look forward to the argument for the People’s Vote winning the day after the GE. But a fed-up British public, wanting an end to the vast distraction and cost of the Brexit debate and realising that no kind of Brexit can be better for our economy and security than what we have now, could conceivably accept Revoke as the speediest way to gain Remain.