£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.

Completely this... It is fixable IF Labour chose to adjust priorities

HMRC have staff but they're not experienced nor competent enough to know what to look for any more. Far too many made redundant over the past 20-25 years and the young ones coming through haven't a clue - they're mostly just unqualified call centre workers.

20-25 years includes Labour administrations as well as Tory ones. May I add that it didn't happen only in HMRC. In my experience both parties like to get rid of experienced civil servants because 'the computer will do it now'. No, a trained clerical officer in the civil service, not very expensive at that grade, knew the job much better than the phone-answerers with minimal training, and the experience has been made redundant or retired. Both parties. Both parties.

@upinaballoon

Both parties. Both parties

Yes, I agree, two cheeks of the same arse indeed. Actually, it's all three parties. The libdems fouled things up taxwise during the coalition too! So three cheeks of the same arse (doesn't really work quite so well!).

The reality is that it's the permanent civil servants who are the ones messing things up. Politicians come and go, but basically given options by their permanent secretaries. It's often said by politicians that that "Yes Prime Minister" TV series was worryingly true to life!

Civil Servants come and go too, plus ministers have their own advisors.

I think its more a matter of not wanting to clamp down on certain things, like tax evasion! and avoidance loopholes.

Perhaps they think its all too difficult or they have other reasons, bit like never really doing much on tenants rights, just talk, because so many MPs are also LLs, inc Labour ones.

I wouldn't blame the LibDems, they were always going to be handy to blame for any Tory screw ups.

I have not read the full thread but I think your comment

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

Makes me think YOU should be PM.

If only political parties of any side actually gave a shit. It's always and only about power and there'll always be an ideology behind it, right or left.

This is what Labour needs to fix, and won't even have the money for it because Education and the NHS come first

weownit.org.uk/blog/destruction-last-14-years-numbers

That list makes me want to cry. How can we have lost so much yet still have the highest taxes for 70 years and such a huge national debt? Where the fuck has all the money gone?

Well, i can tell you or least part of it.

100s of Billions handed out in Covid and Energy Support, we then used this money to pay energy bills and mortgages, in other words we handed much of it back to Businesses and Banks.

Now the Govt has to make good all this borrowed money but they wont be getting it from Energy companies and banks, it will come from the ordinary worker.

Close to £1bn wasted on funding the royals over the past decade
@SlothOnARope
And hasn't Charlie, the man with all the money just been given a 50% 'pay' rise, he doesn't fucking work so I don't know why he deserves a pay rise🤬

Most of those things on that list went before Covid or surging energy prices. That argument doesn’t wash. Nor does the monarchy.

Many reasons the economy is not in the best shape.

1. Huge rises for train drivers and Junior Doctors.
2. COVID costs so much money with furlough and grants to self employed. Not to mention PPE and investment in COVID vaccination.
3. Tory government allowed people to draw down pensions from 55. They often decide to retire early and then run out of money by 67. Then claim Pension Credit.
4. Welfare bill through the roof. Many DC and adults who struggled through COVID now on DLA or PIP. Not helped by the NHS waiting list so long for treatment.
5. More DC needing additional support in education. Not enough special schools.
6. UC is very generous if there is a disabled DC in the family and means no cap on benefits too.
7. Other stuff like MP's being paid for second properties including all electricity bills allowed as expenses. RR claimed over £2k electricity last year whilst taking £200 off pensioners this year.

Lol of course it washes, its exactly what happened.

No idea about the monarchy, its irrelevant.

The settlements on the pay rises haven't even started to take effect so are not anything to do with the £22b. I've just posted this on another thread but it shows exactly why local authorities have no money. According to the IFS their allocation was halved over the period from 2010. Spending on infrastructure on hospitals and schools almost stopped. The conservatives have left the country with poorer services, worse buildings and inadequate plans for the economy. The IFS sets out the challenges going forward

Full report here

ifs.org.uk/publications/conservatives-and-economy-2010-24

We spend more on debt interest than education, and that spending has to be borrowed, so just adding to debt.

We've had annual deficits most years out of the last 25-30, so the total debt is just steadily growing.

Tens/hundreds of billions were given to people sitting on their arses during covid when they weren't allowed to work. Not just that, but huge loss of productivity due to people not working, things not being made, etc.

The 2008 crash cost hundreds of billions and most economists at the time said it would take a decade for the economy to get back to where it was pre crash. That's how it worked out, but of course, then we had covid then Ukraine, which has knocked us back again.

When the total national debt is 2.5 TRILLION, a billion or so over a decade is basically a rounding error in the big scheme of things, so nothing to get worked up about is it's trivial. Not saying it's right, but saving that billion would be a drop in the ocean of the country's problems.

We need to be looking at, and challenging, the really big things. Basically, where the hell all the billions is going as we're not seeing it in real life amenities, services, etc. There's either a lot of fraud or a lot of inefficiency.

Most of the cuts on that list were long before Covid and the rise in energy prices. You can lol as much as you like.

We agree for once. I love it when that happens.

Yes those. The pay increases (which are above what was accounted for) is about half of the “black hole”. In reality there isn’t really an unexpected change in the public finances- the labour part knew very well what the situation was

To be fair one area where HMRC have identified a significant “tax gap” (ie that people are not paying what they should) is small businesses. But they tend to be difficult and expensive to collect from

How do you explain the hidden home office figures, verified by the IFS?

https://ifs.org.uk/articles/home-office-budgeting-and-asylum-overspends

We haven't had an economic 'crash' since 2008. Truss didn't crash the economy, she contributed to interest rates increasing though, they were going up anyway.
There is no such thing as a black hole in economics. It's used to describe the gap between government expenditure and incoming revenue, when the gap is considered to be too big.
I say these things as a Labour voter with a passing interest in economics!

Even more difficult now HMRC got rid of all the local experienced tax inspectors working in local town centre HMRC offices (which have been closed down). The kind of people who lived and worked in their local area, so could use their local knowledge based on what they observed from going about their normal lives, and what they gleaned about other businesses by going to random businesses to "check their books".

Back in the 80s when I first started in accountancy, we'd have regular visits by tax inspectors coming into our office, almost on a daily basis to check the "books" of clients we acted for, usually for VAT returns, but also for payroll. They'd make notes and take copies of B2B invoices etc in our clients' records and then cross check them against the other businesses' records at a future inspection, just to make sure that the same invoice and same payment was recorded correctly in both!

Or the local inspector who would get one of his assistants to log down details of deaths as per the local newspapers, then check undertaker records to make sure they tallied, and then checked the care home's records to make sure they tallied too! He discovered several local care homes who were only recording income from, say, 8 residents, whereas the home had 10 rooms!

Another one would make notes of local boarding houses/guest houses showing "no vacancies" and then many months later check their books to check that they were showing a full occupancy in terms of booking income!

Quite devious, some of them! Especially the one who'd go to random pubs in evenings whilst he was off the clock, as he liked socialising, and would make notes of the amount of coins being put into the juke box, pool table, vending machines, etc., and again, months later go to check the books to make sure the takings tallied!

You just can't do that sort of thing based in a call centre 200 miles away! Hence why the "small business" tax evasion is growing fast. They know the chances of being caught out are pretty close to zero.

Indeed, we were running a huge deficit anyway this year (as we have for most of the last 25-30 years!). The so-called black hole, is just "another" 22 billion, added to the previously forecast deficit of around 100 billion. So basically 20% more than forecast/expected!

Truss crashed the economy. Please. Nonsense like this doesn’t wash. She spooked the bond markets and was in power for 5 minutes. I think one of the things flattening this country’s economy is having people who hold senior positions in government and who simultaneously have such a slight grasp on economics, or indeed reality.