Sunday, 27 April 2008

When you shake a politician’s hand, count your fingers

We are repeatedly told by the government that their good management of the economy over the last 11 years has ensured that we are in strong financial shape as a nation. And there is a lot of evidence that the economy is fundamentally strong, with relatively low interest rates and good employment numbers. Whether or not you put that strength down to Gordon Brown’s abilities, there are some questions you might want to ask. And like any financial advisor I’d caution that past performance is no guide to the future.

“NBP, you old cynic!” I hear you cry. Well it wouldn’t be me if I was prepared to accept everything the politicos tell me. If our economy is well placed to weather the current financial storms, then please tell me:

Where is all the VAT from food cost increases going?
Where is all the Duty and VAT from petrol and diesel prices going?
Where is all the VAT from increases in domestic and industrial fuel going?

The treasury is dependent on big increases in prices of staples like petrol and food. Yes, the stuff you can’t do without. The drivers of real inflation. Without these increases and the tax take on them, the UK budget deficit would be widening even further.

Again, we have doublespeak from our leaders. Almost in the same breath they opine empathy with the hard pressed motorist, householder and shopper whilst at the same time relying on the relentless rise in the tax take on everyday essentials.

I’m sure there’s a case to state for spending those billions on fighting wars in Iraq and Afghanistan. And doling out benefits to fraudsters always happens anyway. Angst is easy to muster, but I’ll try to resist the temptation. There is a lot that the government needs to spend a lot of money on – Health Services don’t run themselves, especially inefficient ones. So I thought I’d see if I could find a resource that would tell me where our taxes are spent.

Well the first thing you find when you start to look at government spending is that a lot of it comes from money the government doesn’t actually have. In the 2007/08 financial year the UK public sector recorded a £7.6bn deficit. We have routinely run a deficit since 2002-3 and it is getting worse. In fairness Labour did preside over a percentage decrease of borrowing (against GDP) from 1997 to 2002, but even that measure has been getting worse every year since. Economic experts at the helm? Hmm.

Anyway, that minor diversion aside I picked up this chart which shows, at the broadest level, how the government intends to spend the approximately £600bn of income it will collect in this financial year.

Very high level. I’ll be returning to the subject of where our taxes are spent in more detail in a later blog. However, while looking through the various source of government information on the net I happened across an entry in Hansard about a bill brought before the Houses of Parliament over 2006 and 2007. Called the ‘Government Spending [Website] Bill’, it was introduced by Baroness Noakes (gawd bless ‘er) with the aim of making ‘provision for a website to enable public access to information about government expenditure’. “There has to be a website”, she said, “it has to be publicly available, and it has to be searchable. In essence, once it is up and running, citizens can go online to find out, for example, how much the government have spent with individual suppliers…or on particular things, such as travel and entertainment.”

There was debate in both houses, right through to a second reading in the Commons in June 2007. Then the bill was dropped, and I can find no further mention of it, nor of any government intent to introduce a similar resource for the public. How strange.

I wouldn’t suggest that the government doesn’t want you to know where it spends your money. But neither can I say that they are falling over themselves to make it easy either.

The finances of the country should not only be available to all at the broad and the detailed level, but our leaders should be prepared to explain them at both levels.

I shall return…


Anonymous said...

You may like to know that the Government Spending Website Bill remains Conservative party policy, reiterated most recently by David Cameron at the Google Zeitgeist conference in November 2007. The Labour Government were not interested in the Bill which is why it was not allowed to progress through the Commons.

NBP said...

Thanks, I didn't know that. To me it's inexcusable that such a bill should be blocked. Sure I can understand that some expenditure should - in the public interest - remain either undisclosed or maybe have to be 'disguised'; you have to be realistic. But if I go to my accountant and ask him what I've spent my money on I expect him to tell me to the penny. Same goes in the taxpayer / taxspender relationship. The government is merely the proxy for the owner of the money - the humble taxpayer - and it is reprehensible that it does not recognise its DUTY to inform the taxpayer what it is spending his money on. Bravo Tories if you are prepared to do this.