Tax cuts cost
My former boss Robert Peston has been investigating the reasons behind the government’s stance on the current strikes. His conclusion is that they have run out of money. A pretty simple solution, but why has the UK run out of money?
Tax take has risen out of its normal very narrow range of 32-34% and there is no chance of it coming down, it is only going up.
The IFS has a simple explanation as to why that is- in the last 30 years “we funded increasing spending on the welfare state — the NHS, pensions, benefits — by cutting defence spending.”
North Sea oil helped enormously as well and the government also stopped doing expensive things like paying for people to go to university or investing in infrastructure or building houses.
In short, we were living in a fools paradise.
All those tax cuts which were apparently funded by higher growth and less state intervention, were actually paid for by slashing spending and loading debt on the young.
Now the young are going to pay again as the baby boomers having benefited from low taxation for all those years now demand more spending on health, pensions and social care.
As Liz Truss discovered you can’t borrow to cut taxes and get away with it, but that is essentially what the UK has been doing for years.
We never could afford those tax cuts. The bill just took a long time to arrive.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media