George Osborne’s efforts to cut the deficit have suffered a setback after the Office for National Statistics revealed that borrowing in the 12 months to October had risen to £64.1bn – an increase of £3.7bn (6.1%) compared to the year before. The data also shows combined cash receipts of income tax and NI were only 0.6% higher than in the same period of 2013-14. The OBR had forecast a 5.6% increase for the full financial year. The Treasury hopes strong revenues from self-assessment in January will help bridge the gap. “Weaker-than-expected wage growth, lower-than-expected residential property transactions and lower oil and gas revenues make it unlikely that the full-year receipts growth forecast from March will be met,” the OBR said. The UK’s underlying debt stands at £1.449trn or 79.5% of GDP.
Source: Financial Times The Daily Telegraph The Times The Independent, Page 47Daily Mail, Page 2, 91
Cable: Osborne’s tax cut ‘fantasy’
Vince Cable has warned that Treasury insiders are increasingly concerned that promises made by George Osborne to cut taxes by £7bn appear increasingly unaffordable. “When you look at the numbers, tax cuts on any significant scale are simply not deliverable unless you make horrific cuts to key public services such as the police and defence,” Mr Cable said. “Technically, of course, you can always make tax cuts, but if you are to avoid hitting services you would have to put up other taxes or cut services massively. It is total fantasy to suggest otherwise.” Gavin Kelly, chief executive of the Resolution Foundation thinktank, adds that the low-wage recovery and disappointing tax receipts is a difficult background against which to be talking about tax cuts or spending rises.
Source: The Observer, Page 1
The aphorism that “truth is the first casualty of war” is attributed to the Greek dramatist Aeschylus, who was active some 25 centuries ago. “It is a profitable thing, if one is wise, to seem foolish” is also one of his. However that may be, one feels that truth doesn’t greatly flourish in the political arena either, and more especially is threatened with extinction in a General Election campaign such as we are now entering. This is not to castigate Dr Cable in particular – on this point we think he’s probably right: anyone promising tax cuts after 2015 is at best disingenuous and at worst an arrant knave. Our firm advice to all our readers is to take anything they hear over the next few months on future tax policy with at least a pinch of salt, and more likely a bucketful.