New public sector borrowing figures from the ONS make grim reading ahead of the budget. It’s at the third-highest September level since records began and at its highest since the pandemic…
The state has borrowed £6.7 billion more than the OBR forecast so far this financial year, and £1.2 billion more than a year ago this month. The ONS says spending is to blame despite record revenue from growth-killing taxes:
“While tax revenue increased, this was outweighed by increased spending, partly due to higher debt interest and public sector pay rises.”
Chief Treasury Secretary Darren Jones has issued the old line blaming the Tories for having “no plan to fund pay deals for millions of public sector workers. Strikes cost at least £3bn last year, so it was the right thing to do to end those damaging disputes.” At this rate Reeves might have to invent yet another black hole before the budget…
Low-skilled migrants are costing the taxpayer a staggering £150,000 each, according to the latest findings from the OBR. The tax watchdog revealed that migrants coming to Britain are draining public resources, such as the NHS, while the tax they contribute is minimal, as low-skilled migrants earn half the average wage. And these are legal migrants…
By the time a low-skilled migrant who’s come to the UK aged 25 reaches pension age at 66, they’ve already cost the taxpayer £151,000. And if they make it to 80, the bill skyrockets to nearly £500,000. Bear in mind the price tag doesn’t include education or other youth services. So the bill for the taxpayer could be even higher for low-skilled migrants who come to the UK before the age of 25…
Meanwhile, the average British-born worker actually boosts the economy by £280,000 over their lifetime. As Starmer vows to crack down on cheap labour and spiralling migration (net migration hit a record 764,000 last year), these figures highlight the sheer cost to the public purse. And these are just the migrants who actually have jobs…
Torsten Bell, ex-director of the left-wing Resolution Foundation turned-Labour MP, tried his best to spin Reeves’ invented justification for tax rises by arguing that Labour is only now “learning of completely irresponsible management of public spending/services“, which is somehow different from being able to read Office for Budget Responsibility public finance forecasts. Guido wonders how exactly Bell thinks the OBR calculates its forecasts then…
Bell himself was more than a few times able to chat to the OBR about all this while Resolution Foundation director. A Freedom of Information request has revealed that the think tank has had a whopping thirteen meetings over two and a half years just with the OBR. Torsten was present at the latest tête-à-tête this year…
The OBR has kept details of the meetings, which took place on average every two months, secret. Its own advisory panel is filled with tax-raising fanatics. Labour is in the awkward position of claiming the OBR doesn’t have full information while simultaneously giving it oversight of major budget decisions. Spinning itself into absurdity…
Who knew economic forecasters could get so impassioned? The Office for Budget Responsibility’s chairman Richard Hughes went gung ho in criticising the government at yesterday’s House of Lords economic affairs committee and blamed the Treasury for the OBR’s “work of fiction” forecasts. Not the first time he’s pointed the finger at Sunak and Hunt…
Hughes said the OBR’s forecasts are flawed because they are based on “questionable assumptions” and a lack of information from the government:
“Some people call [the forecasts] a work of fiction, but that is probably being generous when someone has bothered to write a work of fiction and the government hasn’t even bothered to write down what its departmental spending plans are underpinning the plans for public services“.
The forecasting chief wants the margin for error in debt-reducing fiscsal rules widened and warned that Hunt has given himself a “tiny” corridor in which to operate. It’s probably not a good idea to tie your budgets to a forecaster that has misjudged UK public sector net borrowing by £53 billion every year since its formation…
Efforts to counter the orthodoxy of the OBR are growing. 46 Tory MPs and four peers, including Jacob Rees-Mogg, Priti Patel, and Suella Braverman, wrote to Jeremy Hunt on Sunday and have now published a report into the OBR’s wildly inaccurate forecasts. Their analysis has found:
The Conservative Way Forward group says that Hunt should end the Treasury’s “unhealthy dependence” on the OBR and “allow a diverse range of perspectives to provide scrutiny of the government’s budget and fiscal events”. The Tories will have to kill their own baby…
In the OBR’s first ever analysis of its long-term performance last summer the quango finally admitted it tends “to overestimate real GDP growth and underestimate government borrowing”. Meanwhile its continued failure to use dynamic modelling in its forecasts means it always concludes tax cuts are doomed to fail…
Read the group’s report and their letter to Hunt below:
