Benefit fraud - the levels are very low

[ttosca]

Repost: Benefit fraud - the levels are very low

Earlier this year, we published this blog from Richard Exell which looked at the very low levels of benefit fraud.

We're reposting it today as an alternate view on campaigns against benefits that are running in various newspapers at the moment. The figures show that benefit fraud levels are actually very small.

At the end of Richard's post, there's also an extract and video from a post on disability hate crime that we ran in June, in which people with disabilities talk about their experiences of the repercussions of benefit fraud media campaigns. Their feeling was that these campaigns were directly influencing the way people on benefits were being perceived and that people with disabiltiies were being associated with benefit cheating.

From Richard Exell's original post:

"This DWP report on Fraud and Error in the Benefit System really ought to get more coverage.

With this publication we now have figures for the whole of the financial year 2010/11.

They show: 0.8% of benefit spending is overpaid due to fraud, amounting to £1.2 billion, and that this proportion is the same as in 2009/10.

If we look at the estimates for different benefits, they are:

Retirement Pension 0.0%;

Incapacity Benefit 0.3%;

Disability Living Allowance 0.5%;

Council Tax Benefit 1.3%;

Housing Benefit 1.4%;

Pension Credit 1.6%;

Income Support 2.8%;

Jobseeker?s Allowance 3.4%;

Carer?s Allowance 3.9%.

Look at the figures for disability benefits and see how low the figures are. Remember them next time the BBC is running one of its 30 minute hate programmes, pushing the idea that every disabled person on benefits is a fraudster."

There is an updated statistics document from the DWP here.

falseeconomy.org.uk/blog/repost-benefit-fraud-the-levels-are-very-low

Niceguy why talk about Ill and disabled people at all then?

Why?
What do you want them to do!

Pick up their beds and walk?

If you are concerned about those who are readily available to take work and those who employers are willing to employ, talk about them

High unemployment for those with disabilities is more to do with societal views of disabilities than unwillingness on the part of disabled people.

It's hard enough to get a nursery to accept a child with complex needs, how the hell do we get employers to want to give people with disabilities a job?

The current campaign to demonise people on disability related benefits is not exactly helping the cause is it?
Disabled and bone idle?

if my oh loses his job how will he compete with those who can walk? Despite his 0 sick days he is seen as an expensive liability.

What about those who need communicators, adtations etc. Jesus the noise that comes from businesses protesting about pc gone mad whenever equality laws are discussed.

I was replying to the post regarding why it is fraud if someone is able to work but does not. My point was that the definition of 'able to work' varies from person to person. It was not an attack on the ill & disabled. It was simply trying to demonstrate that there is a big grey area. Like I said, everyone believes the line should be drawn somewhere else but the line must be drawn somewhere. I know many people who work whilst having disabilities but I know not everyone can. That was my point. I'm not bashing, simply saying the situation is complex.

My further point is that we simply cannot afford the status quo. And that we need to be honest about this. Sticking our head in the sands doesn't work. That's not to say we scrap all benefits. Not at all and not for a second. Just that we need to be more selective. Not out of choice....out of necessity.

The usual response now is to say that I'm benefit bashing, uncompassionate, right wing Tory wanker.

But the elephant in the room is that we cannot support everyone that we currently do. Like I say, that's not me picking on the ill and disabled. Not all my family are fit & healthy. Neither are all my friends. I don't live in some right wing bubble where only the strong survive and to hell with the rest.

We've such a big deficit that a few nip/tucks to our tax regime won't plug it. In the same way that benefit fraud won't and neither will raising taxes on the rich.

In my opinion, continuing to focus on benefit fraud and tax avoidance by the rich are the economic equivalent of a placebo.

The original assertion by Ttosca is that benefit fraud rates are low. Yes they are. But that doesn't mean we don't have a problem and that we should carry on regardless.

The benefit fraud rate may well be small (we have no real way of knowing without some form of audit) but it is still a legitimate area for the government to clamp down on. Any benefit cheating is wrong in the same way as any other criminal activity is wrong - its prevalence is irrelevant.

All other talk about benefits must, by definition, be about legitimately awarded benefits. We could argue until the cows come home about the current set up, its effects on the wider world and how, come the revolution, we'd all fix it, but we shouldn't lose sight of the fact that benefit claimants are, predominantly, entitled to what they claim. I don't think anyone is trying to bash either the working disabled or the non-working disabled.

One thing is clear though; we cannot carry on as we are borrowing 10% of GDP indefinitely. The books will, one day, need to be balanced. Eliminating fraud (at both the benefit fraud and the tax evasion ends of the scale) will help, but on its own is no fix for the huge mess we are in. Only major structural reform of ALL government spending will do - until we face up to this unpalatable fact of life, we are standing like an ostrich with our heads in the sand.

The benefit fraud rate may well be small (we have no real way of knowing without some form of audit) but it is still a legitimate area for the government to clamp down on. Any benefit cheating is wrong in the same way as any other criminal activity is wrong - its prevalence is irrelevant.

Actually this entire conversation is degenerate. Some of you want to argue over the few crumbs dropped off the table by the wealthy elite. You want to argue over who should receive a smaller share of the even diminishing amount of crumbs.

The reality is that:

a) Corporate profits are at an all time high:

www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6

www.alternet.org/story/156042/corporate_profits_at_all-time_high%3B_wages_at_all-time_low%3A_can_we_call_it_class_war_yet/

Whilst wages, as a percentage of the economy, are at an all time low, and:

b) Wealth inequality has never been this large since the 1920s:

www.bbc.co.uk/news/business-16545898

and

c) Corporate tax intake as a share of GDP is at a historical low:

www.cfr.org/united-states/us-corporate-tax-reform/p27860

And
still
some of you moan, bitch, and complain about the poor, hard done-by business who are suffering from 'too much red-tape' and 'regulation'.

It's ridiculous. Absurd.

Poor people are not your enemy. Your blind or disable neighbour is not your enemy. If you want to know where all your money went, it didn't go towards the poorest. It went to the top 5% who now own over two-thirds of the world's wealth. They are your targets, not the poor.

One thing is clear though; we cannot carry on as we are borrowing 10% of GDP indefinitely. The books will, one day, need to be balanced. Eliminating fraud (at both the benefit fraud and the tax evasion ends of the scale) will help, but on its own is no fix for the huge mess we are in. Only major structural reform of ALL government spending will do - until we face up to this unpalatable fact of life, we are standing like an ostrich with our heads in the sand.

We're not at 11% deficit because of public spending, either through welfare or anything else. We're at 11% deficit because of the financial crisis caused by banking fraudsters, and the subsequent recession, loss of tax receipts, and rising unemployment costs. We were not at 11% deficit prior to the crisis.

ttosca I see once again that you are quoting US statistics and implying that they apply to Britain. Perhaps they do, but I doubt it. By voting in probably the most left leaning president in their history, it is obvious that America will be diverting more and more of its resources into government spending programmes typically paid for, as you so helpfully point out in your link, by the taxation from individuals rather than corporations. Still, that's socialism for you - it certainly explains why the average American's slice of the pie is shrinking and why Joe Shmoe is poorer.

"Poor people are not your enemy. Your blind or disable neighbour is not your enemy."

I know. I don't see how you can imply that I think this from the post that I wrote. I've always supported the poor and the disabled and if you can find any post of mine on this site which states to the contrary please feel free to repost it for all to see.

"If you want to know where all your money went, it didn't go towards the poorest. It went to the top 5% who now own over two-thirds of the world's wealth."

T'was ever this way - unless you go back far enough into history when it was even more asymmetric. It may be far from ideal but it's nothing new and certainly hasn't sneaked up on us since 2008, Maggie Thatcher or even the time of Christ.

"They are your targets"

No they are not. My targets are meritocracy, a decent education for all, giving everyone an opportunity, getting people to stand on their own two feet and taking responsibility for their own lives. Your idea of making the rich poor won't make the poor rich.

"We're not at 11% deficit because of public spending, either through welfare or anything else. We're at 11% deficit because of the financial crisis caused by banking fraudsters, and the subsequent recession, loss of tax receipts, and rising unemployment costs. We were not at 11% deficit prior to the crisis."

Yes, yes, yes, so you keep saying. It was all them evil bankers to blame. Simples.

Except that you are not telling the full story. We were running a deficit before the crash. We had a growing debt before the crash. We had well over 2 million declared unemployed (who knows the real number?) before the crash. Quite simply, the system was already broken, the crash, when it came, smashed the life out of what was left of our economy. There is no sign that the economy is going to spring back into life any time soon so, barring a miracle, one has to accept that we either make some radical changes now, or we carry on borrowing 10-11% of GDP a year every year until we run out of money to borrow.

No amount of benefit fraud or tax avoidance posturing will get us out of the predicament we are in.

amicissimma Because it's frequently those in receipt of said benefits who should the loudest and proclaim that fraud doesn't exist. And there are always calls of "what about my severely disabled child who needs 24 hour around the clock care?" as if they really and truly believe that debate and annoyance is centered around those cases.

I reckon if each and every mumsnetter named and shamed on a list here just 1 or 2 people they know are claiming "fraudulently" then the list would be quite the eye-opener.

I do not know anyone claiming fraudulantly.
I also wonder what happened to the 50 people that were blind.

Oh, and disability benefits are paid to people who are working, and guess what it's not fraud. DLA IS NOT AN OUT OF WORK BENEFIT.

amicissimma I think part of the problem, and I hope you don't mind me pointing out that your post sounds like you've made the same mistake, is that people are confusing being in receipt of disability benefit with their ability to work. The two are totally different and should be treated accordingly. It is perfectly possible that a person may be able to hold down a job despite having an underlying health issue such as, plucking an example out of thin air, a heart murmur. In this instance, they may be in receipt of the mobility component of DLA to enable them to get around without exerting themselves too much. This is an in work disability benefit and there is nothing fraudulent about this sort of claim providing that there is a genuine underlying health reason. They may end up committing fraud if their condition improves and they fail to inform the authorities or if they have lied about the severity of their condition. The only way around this, that I can see, is to have regular assessments - this isn't popular and mistakes tend to be commonplace but I can't see any alternative.

At the other end of the scale, there are those unfortunates whose disabilities preclude them from working at all. For these people, an out of work benefit needs to be paid to make up for their lack of income. Again, if their condition improves and they fail to notify the authorities, or they lied and simply faked their condition, then they should be weeded out and punished.

I don't think that the families of genuinely disabled benefit claimants consider the chancers to be anything other than scum. It is for the few rotten apples who try to game the system that everyone has to be inconvenienced with assessments. Any anger they might have may be due to the high number of errors that these assessment boards make and the reams of paperwork that needs completing before you can appeal against a bad decision.

amicissimma The name and purpose of the benefit is irrelevant. If it is being fraudulently claimed then that is a matter for the courts.

I may be misinterpreting what you are saying but are you suggesting that if an individual is capable of working they should be excluded from any disability benefits (DLA)?

But it costs more to live if you are disabled. Hence DLA. Most of the people working and getting DLA use their DLA to enable them to work.

Judgeypants-

ttosca I see once again that you are quoting US statistics and implying that they apply to Britain. Perhaps they do, but I doubt it.

Why do you doubt it?

Inequality in Britain soaring:

www.guardian.co.uk/society/2011/dec/05/income-inequality-growing-faster-uk

By voting in probably the most left leaning president in their history, it is obvious that America will be diverting more and more of its resources into government spending programmes typically paid for, as you so helpfully point out in your link, by the taxation from individuals rather than corporations.

'Left-leaning', in the context of the US, is centre-right in just about every single other development Western country in the world. And he government spending under the Bush's was far greater.

Still, that's socialism for you - it certainly explains why the average American's slice of the pie is shrinking and why Joe Shmoe is poorer.

No, that's really not socialism for you at all. Socialism - or social-democracy (what you mean here) doesn't dump a greater share of the tax burden on the poor while giving tax breaks to corporations and the rich. That's what's called 'neo-liberalism'. Don't confuse the two. We've had three decades of neo-liberalism in the West, not 'socialism'. This has resulted in soaring wealth inequality, child poverty, job insecurity, etc.

"Poor people are not your enemy. Your blind or disable neighbour is not your enemy."

I know. I don't see how you can imply that I think this from the post that I wrote. I've always supported the poor and the disabled and if you can find any post of mine on this site which states to the contrary please feel free to repost it for all to see.

I'm really not addressing you all the time, you know. :P I was addressing the people who are always complaining about the crumbs which are thrown to the poor while ignoring the massive transfer of wealth from the vast majority to the top richest.

"If you want to know where all your money went, it didn't go towards the poorest. It went to the top 5% who now own over two-thirds of the world's wealth."

T'was ever this way - unless you go back far enough into history when it was even more asymmetric. It may be far from ideal but it's nothing new and certainly hasn't sneaked up on us since 2008, Maggie Thatcher or even the time of Christ.

"T'was ever this way" is the motto of a conservative. Someone who refuses to call for change because he is always looking backwards instead of forwards. "T'was ever this way" was used to defend slavery, racism, sexism, child labour, and pretty much anything else we find unacceptable in modern society.

And yes, the situation is now worse that it was in 1950. Humanity made great progress in wealth inequality and rising standards of living during the 20th Century. We are now in the process of regressing to levels of inequality not seen since the 1920s. This is not a function of 'nature', like the weather. It the result of deliberate economic policies which transfer wealth from the majority to the tiny minority. This can and should be changed.

"They are your targets"

No they are not. My targets are meritocracy, a decent education for all, giving everyone an opportunity, getting people to stand on their own two feet and taking responsibility for their own lives. Your idea of making the rich poor won't make the poor rich.

I don't want the rich to be poor. I want the rich to stop stealing everybody else's wealth.

"We're not at 11% deficit because of public spending, either through welfare or anything else. We're at 11% deficit because of the financial crisis caused by banking fraudsters, and the subsequent recession, loss of tax receipts, and rising unemployment costs. We were not at 11% deficit prior to the crisis."

Yes, yes, yes, so you keep saying. It was all them evil bankers to blame. Simples.

The gambling bankers are primarily responsible for the crisis, yes.

Except that you are not telling the full story. We were running a deficit before the crash.

Yes, we were. However, most governments also ran a deficit in most years for the past several decades. Our debt didn't accumulate because our GDP grew greater than our deficit.

We had a growing debt before the crash.

I showed you the debt/GDP ratio before the crash. Before the crash, it was growing, yes, but at a slow pace. It was still at a historical low point.

We had well over 2 million declared unemployed (who knows the real number?) before the crash. Quite simply, the system was already broken, the crash, when it came, smashed the life out of what was left of our economy.

There were many problems with the economy before the crash. Primarily that consumers needed to take on debts in order to maintain their standard of living, as they were getting a smaller and smaller slice of the pie. Public spending was not one of the main problems.

There is no sign that the economy is going to spring back into life any time soon so, barring a miracle, one has to accept that we either make some radical changes now, or we carry on borrowing 10-11% of GDP a year every year until we run out of money to borrow.

Err, no. The only way to fix the economy is to bring us out of recession and restore growth. You won't fix it by cutting spending. On the contrary, cutting public spending will harm the economy and any chance of recovery. Cutting spending will further drive down tax receipts and further depress the economy.

No amount of benefit fraud or tax avoidance posturing will get us out of the predicament we are in.

Recovering even 'just' £30 Billion in unclaimed tax would probably cover all the cuts being made in the name of reducing the deficit. Not only is this the morally right thing to do, as ordinary people should not suffer because of the gambling bankers, but it more beneficial to the economy than making cuts, which just kill off growth.

We're back to your tired old argument Ttosca of ah but before the recession we didn't borrow loads. The fact is that we still borrowed. So in fact not only were we spending all the money we had whilst the good times rolled, we still had to borrow.

But at the end of the day we are where we are. And that is an economy which is not growing because of a variety of reasons. And it's doubtful it will grow for some time.

But this thread is about fraud and on that it sounds like we all broadly agree. Fraud is low.

" The only way to fix the economy is to bring us out of recession and restore growth."

I don't think that many people would disagree that we need to come out of the recession and restore growth. The question is 'how?'. If it were easy surely the current government would've rushed to be 'the government who saved the country'.

Not at all. The government won't do what it should do, and what it has to do, because it is ideologically opposed to doing so. The Coalition government - mainly the Tories - are exploiting the crisis to cut back the size of the state and to public spending. Both of these things were Tory goals before the crisis, and almost always have been. Unfortunately, this ideology is not compatible with growth in the midst of a recession, because it is anti-Keynesian.

Therefore, unless a 'Plan B' is enacted, or the Tories are kicked out, we will remain mired in recession or, at the very least, very meager growth.

Meanwhile, while we wait for the growth, we need to do something about the ever-growing deficit.

a) We don't "Wait for growth". We make growth happen, partially through govt. investment.

b) The deficit is ever growing because we are cutting spending. Do you not understand this? We are cutting the absolute rate of spending, but the deficit is increasing. This is happening because unemployment is increasing, business is stalling, people aren't spending, and there is a loss of tax receipts - so govt. revenue is steadily decreasing due to these disastrous and ideological cuts.

The fact that it was so huge during our last period of growth suggests that growth alone will not be sufficient to reduce it. We can, of course, just let it grow and grow and let our children and grandchildren and greatgrandchildren use any growth they create to pay for our lifestyle today. Why not? After all, we won't be around forever. No thanks.

You're not making sense. Our total debt burden/GDP was at a historical low point, as I have shown a million times, and which I'll show you again:

This is our debt/GDP. Immediately prior to the crisis, it was roughly the same point it had been for about two decades (on average), and way lower than most of the 20th Century.

www.ukpublicspending.co.uk/downchart_ukgs.php?chart=G0-total&year=1900_2011&units=p&state=UK

Benefit fraud is a lower than is popularly perceived. However, the main aim of any government's anti-benefit fraud campaign is to cleverly blur the edges between benenfit fraud and the debate on benefit entitlement. Therefore the debate about which cases should/ should not receive benefit is tinged with the suggestion that ALL benenfit entitilement is somehow fruadulent or certainly morally suspect. That is how it is easy for people to overlook certain facts such as DLA not being an out-of-work payment - it's blurring the boundaries in people's minds. Similarly, it is often forgotten that the whole child tax/ working tax system replaced tax cuts which the working parents received in their PAYE income. Although many became able to claim the child tax/ working tax benefits on the one hand, the income tax they paid instantly went up at the time turning many families from tax-payers to benefit receivers in one fell swoop.

Also, the spending cuts are effecting the poorest in society, usually those on benefits, the most. For example, where I live spending cuts have reduced the rural bus service to the nearest city. I live in a town of 12000 people which no longer has a bus service after 8 pm or on Sundays to the nearest place that offers work to most youngsters straight from school, automatically barring them from jobs which require evening or Sunday hours. The bus fares have also gone up. It's the hidden costs of spending cuts such as these that often mean it is unfeasible or even impossible for whole families to find work.

I agree that fraud, however undesirable should not be mistaken with entitlement. Because we do need to have a sensible debate about whom we can support and it's going to be tough enough already for those who will no longer receive support without them being unfairly branded as fraudsters.

The Coalition government - mainly the Tories - are exploiting the crisis to cut back the size of the state and to public spending.

Given Labour also promised to slash public spending, albeit at a slower rate and reality has forced the coalition to only implement about the same cuts as Labour originally promised. So Ttosca, do you also believe Labour were also planning to exploit the crisis or are they immune from criticism because they are not Tories?

www.guardian.co.uk/society/2012/aug/21/councils-invest-food-banks-welfare-cuts

ttosca

^"ttosca I see once again that you are quoting US statistics and implying that they apply to Britain. Perhaps they do, but I doubt it.

Why do you doubt it?"^

Because, as you point out yourself, the US is moving from a small state towards a higher tax model. Whereas we in the UK have had high taxation levels for generations, the US's relationship with high taxation is still in flux. It will impinge on their businesses and households in a different way to the way it impinges on ours. Secondly, the devolved federal nature of the states, and their respective different solutions, means it is difficult enough to compare two states within the US, never mind an external country. Thirdly, America hasn't been as affected by the Euro zone collapse as we will have been. Those are just off the top of my head. Why do you think their stats would apply here?

" social-democracy (what you mean here) doesn't dump a greater share of the tax burden on the poor while giving tax breaks to corporations and the rich."

Yes it does, or did I just imagine Gordon Brown's fiscal drag and doubling the starting rate of income tax for the poor? Social Democracy works by bribing Peter with Paul's money. When Paul runs out of money the system breaks down. To a socialist, spending other people?s money is the solution for everything.

?Our debt didn't accumulate because our GDP grew greater than our deficit.?

Nonsense ? your own graph shows this to be patently false. In any case, that GDP growth was built on false assumptions and credit.

?Primarily that consumers needed to take on debts in order to maintain their standard of living, as they were getting a smaller and smaller slice of the pie. Public spending was not one of the main problems.?

Public spending wasn?t one of the problems ? how could it be. Taxation, especially hitting the lower paid through the aforementioned fiscal drag as well as the government?s policy of inflating the cost of housing, was causing people to take on debt to maintain their standards of living.

?The only way to fix the economy is to bring us out of recession and restore growth. You won't fix it by cutting spending. On the contrary, cutting public spending will harm the economy and any chance of recovery.?

If we carry on doing what we are doing, there will be no prospect of growth on the horizon for the next few years. In the meantime we will just continue racking up government debt at the rate of 10% of GDP each year until something comes along. Every time we do this, we run the risk of higher borrowing costs as the markets, rightly, lose confidence in our ability to repay those debts. When this happens, the cost of borrowing will rise dramatically and Britain will be sunk by its debts. The only sensible course of events is to reduce that borrowing in a structured way now to buy us time before the whole house of cards collapses.

?Recovering even 'just' £30 Billion in unclaimed tax would probably cover all the cuts being made in the name of reducing the deficit.?

I take it that you learned nothing from the Vodafone episode. Most of this ?so called? tax avoidance turned out to be perfectly legal. This huge rump of untaxed money that is owing to HMRC that you talk about simply doesn?t exist. By all means change the system to minimise tax avoidance wheezes in future but unless you can find something in the order of £125 Billion more each year in owed tax you will still need to add to the debt, make cuts or increase taxes elsewhere.

?The Coalition government - mainly the Tories - are exploiting the crisis to cut back the size of the state and to public spending.? Unfortunately, this ideology is not compatible with growth in the midst of a recession, because it is anti-Keynesian.?

As I mentioned before, if borrowing and spending 10-11% of GDP isn?t Keynesian, what is. It?s also funny that those on the left conveniently forget the other part of Keynes? theory which stated that government debt to GDP ratios should never exceed 25%.

?We don't "Wait for growth". We make growth happen, partially through govt. investment.?

What, like HS2 where we spend billions on a project to shave 10 minutes of a train journey, or a couple of aircraft carriers just to immediately mothball them? That isn?t investment, that is pissing your money up the wall. Look at the Spanish Casas (or the unused airports they paid for) to see what happens when governments ?invest? in stuff.

^?Our total debt burden/GDP was at a historical low point, as I have shown a million times, and which I'll show you again:

Immediately prior to the crisis, it was roughly the same point it had been for about two decades (on average), and way lower than most of the 20th Century.?^

But, ?most of the 20th century? isn?t a decent place to take your averages from. For a start, two of the biggest and costliest wars in history were fought in that time span ? the debt incurred paying for these wars skew the average so far as to make your statement meaningless. The pre-crash ratio was, in any case, increasing (from 2001) despite the country being in the longest sustained boom we?ve seen.

I've been giving this whole thing some more thought overnight and it dawned on me that things are much worse than even I originally thought. The published borrowing rate which ttosca has been bandying around isn't the full story by quite a considerable margin. To calculate the total amount of money that we taxpayers are on the hook for, we need to include PFI and any other liabilities we may be exposed to. These include unfunded public sector pensions, unfunded state pensions, Network Rail liabilities etc.

The Tax Payers Alliance have helpfully totted up these numbers for us and arrived at the eye watering sum of £7.9 TRILLION. Details can be found here. Now I'd take these figures with a pinch of salt - for example this number includes £2.6 Trillion of RBS/Lloyds debt which, even in a real melt down scenario, would be unlikely to be called in at anywhere approaching 100% of face value. The rest of the figures - the remaining £5.3 Trillion - seems a reasonable assumption.

If this is the case, then the UK's true national debt, once all Enron accounting has been stripped away, stands at around 220% of GDP - perilously close to the most recent highest peak in the immediate aftermath of WW2. According to the Tax Payers Alliance, the real debt more than doubled over the Labour government?s tenure.

MrJudgeyPants

^"ttosca I see once again that you are quoting US statistics and implying that they apply to Britain. Perhaps they do, but I doubt it.

Why do you doubt it?"^

Because, as you point out yourself, the US is moving from a small state towards a higher tax model.

Err, no I didn't point that out. I said that the share of the tax burden has shifted massively away from corporations and towards individuals. That's partially why ordinary people are suffering, whilst corporate profits are at an all-time high and wealth inequality hasn't been this great since the 1920s.

Whereas we in the UK have had high taxation levels for generations, the US's relationship with high taxation is still in flux. It will impinge on their businesses and households in a different way to the way it impinges on ours.

Taxation for whom? And does it impinge differently? Both countries are have shifted the tax burden away from corporations and on to individuals.

Secondly, the devolved federal nature of the states, and their respective different solutions, means it is difficult enough to compare two states within the US, never mind an external country. Thirdly, America hasn't been as affected by the Euro zone collapse as we will have been. Those are just off the top of my head. Why do you think their stats would apply here?

Yes, very good, states have differing levels of personal and corporate income tax. So what? The broad trends are important, and you still have national income taxes which apply across all states. The broad trend has been a shift in the tax burden from corporations towards individuals. The top rates of income tax, furthermore, decreased massively since the 1970s, down from around 80 and 90%. The same thing holds for the US, where before the 1980s it was around 70%.

The US and UK follow broadly the same trends, with the US in the lead, and the UK following soon afterwards.

" social-democracy (what you mean here) doesn't dump a greater share of the tax burden on the poor while giving tax breaks to corporations and the rich."

Yes it does, or did I just imagine Gordon Brown's fiscal drag and doubling the starting rate of income tax for the poor? Social Democracy works by bribing Peter with Paul's money. When Paul runs out of money the system breaks down. To a socialist, spending other people?s money is the solution for everything.

This is just idiotic. You've painted yourself as a poltical ignoramus when you count New Labour as social-democratic.

?Our debt didn't accumulate because our GDP grew greater than our deficit.?

Nonsense ? your own graph shows this to be patently false. In any case, that GDP growth was built on false assumptions and credit.

You don't know how to read a graph, eh? This is getting ever more ridiculous.

?Primarily that consumers needed to take on debts in order to maintain their standard of living, as they were getting a smaller and smaller slice of the pie. Public spending was not one of the main problems.?

Public spending wasn?t one of the problems ? how could it be. Taxation, especially hitting the lower paid through the aforementioned fiscal drag as well as the government?s policy of inflating the cost of housing, was causing people to take on debt to maintain their standards of living.

You're confusing the term 'public spending' - which is generally used to refer to government spending on services and infrastructure paid for through taxation. But you're quite right, citizens took on debt in order to manage the stagnant wages and rising costs of living.

?The only way to fix the economy is to bring us out of recession and restore growth. You won't fix it by cutting spending. On the contrary, cutting public spending will harm the economy and any chance of recovery.?

If we carry on doing what we are doing, there will be no prospect of growth on the horizon for the next few years.

If we carry on doing what? Cutting public spending? You're right, there will be no prospect for growth, because the cuts are harming the economy.

In the meantime we will just continue racking up government debt at the rate of 10% of GDP each year until something comes along.

No, not 'something comes along'. We actively get ourselves out of the recession through investment and stimulating demand by actually letting the majority of the population keep more of the money they earn.

Every time we do this, we run the risk of higher borrowing costs as the markets, rightly, lose confidence in our ability to repay those debts. When this happens, the cost of borrowing will rise dramatically and Britain will be sunk by its debts. The only sensible course of events is to reduce that borrowing in a structured way now to buy us time before the whole house of cards collapses.

We have a long way until our borrowing costs get out of hand. At the moment they are at a historical low point. This is precisely what gives us room to manoeuvre and borrow money to stimulate the economy.

?Recovering even 'just' £30 Billion in unclaimed tax would probably cover all the cuts being made in the name of reducing the deficit.?

I take it that you learned nothing from the Vodafone episode. Most of this ?so called? tax avoidance turned out to be perfectly legal.

I take it you learned nothing from the Vodafone episode. The government settled - in effect, letting Vodafone off the hook.

This huge rump of untaxed money that is owing to HMRC that you talk about simply doesn?t exist.

It simply does exist, as even 'HM'RC has said so.

By all means change the system to minimise tax avoidance wheezes in future but unless you can find something in the order of £125 Billion more each year in owed tax you will still need to add to the debt, make cuts or increase taxes elsewhere.

Repeat after me: We're primarily experiencing a revenue crisis due to being in the middle of a recession. Do you not understand this? You don't 'balance the budget' during the middle of a recession. It's both unrealistic and actively harmful. First, you bring back the economy into growth, and bring back tax receipts to a normal level and reduce unemployment, then you can talk about reducing the deficit to what is needed.

?The Coalition government - mainly the Tories - are exploiting the crisis to cut back the size of the state and to public spending.? Unfortunately, this ideology is not compatible with growth in the midst of a recession, because it is anti-Keynesian.?

As I mentioned before, if borrowing and spending 10-11% of GDP isn?t Keynesian, what is.

I'm sorry, but you're just being an idiot, and I'm getting sick of this conversation with you. 'Keynesianism' isn't just another word for 'something bad', or 'run a deficit'. It doesn't mean either of those things. What is referred to by the word is that, when you're in a recession, you stop digging. In a recession, there is a lack of demand. That is where the government steps in: to create demand. This can be done by investment and job creation. It doesn't simply mean 'run a huge deficit! That'll fix it!'.

It?s also funny that those on the left conveniently forget the other part of Keynes? theory which stated that government debt to GDP ratios should never exceed 25%.

The UK hasn't had a debt to GDP ratio under 25% for 300 years - almost since records began, and long before Keynes was born.

We don't "Wait for growth". We make growth happen, partially through govt. investment.?

What, like HS2 where we spend billions on a project to shave 10 minutes of a train journey, or a couple of aircraft carriers just to immediately mothball them? That isn?t investment, that is pissing your money up the wall. Look at the Spanish Casas (or the unused airports they paid for) to see what happens when governments ?invest? in stuff.

I'm getting bored of this now.

^?Our total debt burden/GDP was at a historical low point, as I have shown a million times, and which I'll show you again:

Immediately prior to the crisis, it was roughly the same point it had been for about two decades (on average), and way lower than most of the 20th Century.?^

But, ?most of the 20th century? isn?t a decent place to take your averages from. For a start, two of the biggest and costliest wars in history were fought in that time span ? the debt incurred paying for these wars skew the average so far as to make your statement meaningless. The pre-crash ratio was, in any case, increasing (from 2001) despite the country being in the longest sustained boom we?ve seen.

Eh!? Up until 2007, it was lower than it had been any time prior to 1970. From 1970 to 2001, it halved, from 60% down to 30%.

Jesus Christ. And you still complain about the debt because it increased slightly from 2001, for 7 years prior to the crisis?

You guys are nutters, and simply want to see the state spend less money period. You are small-state ideologues, like the neo-cons who are responsible for this crisis. Like them, you are attempting to exploit the economic crisis, which was not the making of the public, in order to cut government spending and reduce the size of the state - no matter what harm this brings to the public.

IMF advises delaying austerity until growth returns

Cutting government spending in a crisis will condemn a country to an even deeper recession and inflict ?permanent? damage on the economy, the International Monetary Fund has warned.

www.telegraph.co.uk/finance/economics/9497849/IMF-advises-delaying-austerity-until-growth-returns.html

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Which is totally not what I've been saying over and over for the past year or anything.