£22bn black hole

[keeperofdarktails]

I've just heard Rachel Reeves talk about how the previous govt has left a £22 billion black hole in the economy.

I'd have thought that after over a decade of austerity we should be in a (theoretically) better place in the economy so why is there a black hole? I know cost of living has increased and prices etc, but they've had years of cutting public spend budgets too so I just wonder where has the money gone..? I wish the bbc reporter would have asked her this, reporting was so obviously biased.

Quite a few billions were given to friends in high places eg for non existent PPE.

A primer:

https://ifs.org.uk/articles/ps22bn-black-hole-was-obvious-anyone-who-dared-look

Close to £1bn wasted on funding the royals over the past decade

House of Lords black hole " for the 2022-23 financial year the costs of the House of Lords excluding estates and works expenditure and non-cash items was £104,670,000. Of this amount the costs directly relating to the Members Finance Scheme (including allowances and travel expenses) totalled £21,110,000. As at 31 March 2023 there were 776 members eligible to attend the House"

Benefits factories £54m

Track&Trace, COVID cockups etc bottomless pit

Ofsted £150 million a year, absolute fucking outrage

That's just for starters.

I work in a senior role in government and have been involved in the finances for a while. Two things post austerity that have flattened us as a country financially: Johnson and Truss.

Johnson: pandemic, poor fiscal oversight and lots and lots of knee jerk reactions and costly contracts to dubious organisations.
Truss: crashed the economy.

Add into that Brexit which has made trading with the EU more difficult then you have a really toxic mix for public finances.

We may have just managed the upheaval of leaving the EU with minimal damage if we hadn't had the other two factors. But it is dire in the civil service at the moment. It will take at least two parliamentary terms to correct this... probably more.

Also Paul Johnson IFS article quoted above very good. All politicians (except maybe Reform - more on that in a moment) have known this and none of them have been honest about it. At least Teresa May was clear there was no magic money tree. Reform only don't know about it as they have no clue what they are doing from a policy/financial perspective and aren't keen on the details.

Starmer live in the Rose Garden.
Mentioned £22bn and that, 'Things can only get worse.'

Massive pay increases to appease trade unions are a got part of this black hole.

Let's not forget the cost of furlough, the hit to the economy of lockdown etc. Brexit has also hit our finances. It's not all "The Tories".

Well the 100 billion a year caused by a Brexit that was utterly pointless certainly hasn't helped - as well as losing some very good companies and also lost opportunities of international company's locating here -

It was done to try and stem the ukip votes and didn't do that either-

The Tory's were tight in areas were they needed to spend and yet extremely fiscally lax in areas were they needed to be tight- usually areas that benefitted their donors and mates

Obviously Covid and Ukraine didn't help at all either but Brexit made it that we were in a weaker position all round to recover from it- still all those people knew what they voted for- or so they say

It's all of the above - Brexit, poorly-managed Covid (PPE and test and trace), huge back-handers to Tory donors - but also we have an ever increasing elderly population and ever decreasing working (ie tax paying) population. This is the case in most developed countries, but is felt more keenly here because of Brexit and immigration controls - all the non-British young healthy tax payers have returned home.

@mugglewump that's exactly it- we have the same issues as many other country's too- but it's emphasised here by Brexit- there are other factors too- by allowing people to get held of large lump sums off pension plans and house prices that have massively increased - many over 55s now have access to large lump sums ( including inheritances too) that simply didn't happen before and are leaving the work force in droves ( I'm not blaming them by the way given the nature of many companies today) this is reducing tax take gained from many higher earning workers. We then mix it in with many lower earners, lots of who need benefit top ups to pay extortionate private rents and get by and you have a complete maelstrom on public finance. Far too few higher earning tax payers, far too many needing to claim etc

Pay increases that don't even match inflation and were recommended by outside experts?

What are benefits factories?

Who’s been in charge for the last 14 years? Whose brilliant idea was the Brexit referendum? Oh, it was “The Tories”, who else is to blame?

the debt is needed for fractional reserve banking as It allows banks to create money and expand credit

Eh?

We're talking about how government spending is more than budgeted.

What's that to do with banking?

Pandemic and lockdowns. global wars.

Huge increases in people off work long-term sick and PIP claims.

The "massive" pay increases is because many public services have been underpaid through not getting the wage increases the private sector has had in the same timeframe because the Tories didn't want to pay them more so froze pay.

Furlough was Rishi Sunak's idea (the Tory Chancellor at that point).

Lockdown was called by Boris Johnson (the Tory Prime Minister).

Brexit happened because David Cameron (the Tory Prime Minister) called a Referendum of our membership of the EU.

So yes, definitely all the Tories.

I am not against all of the policies above, just pointing out your argument is flawed.

Lol blaming a political party because more than half the population of the u.k wanted out of the E.U ? 🤣👌 definately must be 52% racist hard far right activists, must be millions of um. The fact is, all that voted to remain are still angry 😰 🤣

Blaming a political party because significant high profile members of that party spread lies which were amplified by the MSM and influenced the vote of half the population of the UK.

HTH.

And remain voters have a reason to be angry, if indeed they are. It's been a stinking disaster which has cost our country greatly.

PPE, Rwanda project, proxy war. It’s that simple.

Also blaming that party for the implementation of Brexit

Oven ready deal, remember that lie?

Brexit is done, you won, you got what you wanted.

Given that the public accounts are all available to the opposition, claiming they didn't know is either incompetence or bull shit.

They needed to reassure people In order to get elected. Now if they want to spend, it has to come from somewhere and that means higher taxes.

Labour always delivers higher taxes.

However that is not necessarily a bad thing. Higher capital gains tax and higher inheritance tax for 5 years to fund improvements to the NHS and state secondary education would benefit most people.

It's good to know that so many people on mumsnet know how to fix this easily. Presumably they are climbing the political career ladders to get to a position where they can implement all these things?

because the govt then borrows from the bank of england a private corporation

We all know the solution. Bring Boris Back. Alas, he will never return due to the heartless way he was treated. Poor thing. I often lie awake at night worrying about him.

The Bank of England isn’t a private corporation.

https://www.bankofengland.co.uk/about/governance-and-funding