Where Is Our Money Going? ( A Brief & Welcome Break From R.F.C)
The recent debate surrounding Rangers FC and any possible tax liability has drawn one stark remark from many: That this is money that could have been spent in the U.K. on public amenities.
For once, I am thankfully going to be able to leave the Rangers FC debate for a while because the remark made me set my brain ticking into motion.
Exactly where has our money gone?
This is a question that was posted on some form of inflatable billboard outside Ibrox stadium on Tuesday afternoon. Today though, I ask the question myself – but outwith Rangers.
In the U.K. as a whole – where has our money gone?
I am not going to put a date, or even event in place of when the U.K. woke up to realise it was ‘skint’.
Naturally it would be impossible to have such a debate without referring to the banking crisis.
The U.K. was traditionally an industrial landscape – many I am sure will be old enough to remember the Glasgow Industrial scene not to mention the former sight of Ravenscraig in Motherwell that I can see from my desk as I type.
Manufacturing in the U.K. was another major industry – in recent years we have seen the likes of ‘Cadbury’ and ‘Terry’s chocolate orange’ being sold off to foreign investors. A travesty.
The U.K. decided that it would be a banking nation –t hat banking was the very way forward for our nation to prosper. We were good at it, apparently. Then of course, some rather stupid decisions were made and guess who suffered for that: The taxpayer.
It would be difficult to say exactly how much the banking bailout has cost the U.K. I am sure someone with a more numerical mind than my own could justify the figures.
To be frank, the simple answer to the question, ‘How much did the bank bailout cost us?’ – would be: however much you want to report.
The National Audit Office has set a figure of £850 Billion in 2009. That equates to over £26’500.00 per U.K. Taxpayer.
Those figures are broken down into:
- £76 billion on the shares in RBS and Lloyds;
- £200 billion for liquidity support through the Bank of England (Quantitative Easing);
- £250 billion in guarantees on banks’ borrowings;
- £40 billion in loans to Bradford & Bingley and others; and
- £280 billion in providing insurance cover for banks’ assets.
But the £26,562.50 figure that is alluded to is a total exposure, not losses or actual spending.
So then we can parry this down and look specifically at figures such as the share prices of RBS and Lloyds.
Again, there are different stats, e.g. £76 billion above, £65.8 billion in other news reports and £62.62 billion according to the UKFI.
These figures vary as the share prices are based upon differing amounts gross versus net, with the UKFI taking the net figures in their annual report.
According to those figures, the UK taxpayer owns £45.22 billion of RBS (83%) and £17.42 of Lloyds (41%).
RBS shares were trading at 50 pence per share when the government intervened, and Lloyds were 74 pence. The shares are now approx. 30 pence and 35 pence respectively. So you could say that the loss on paper for just those two banks is:
- RBS is down approx. £13.5 billion; and
- Lloyds is down approx. £8 billion.
So, on paper, these two banks have lost over £21.5 billion, or around £700 for each UK taxpayer.
Then there’s Northern Rock, Bradford & Bingley et al on top.
So the figures of how much this crisis has cost can vary from anything as low as £700 to over £26,500 per person.
The truth is that it doesn’t actually matter but, for the sake of argument, Sky News put the figure at over £3,500 per person.
This is based upon:
- £45.22 billion in RBS shares;
- £17.42 billion in Lloyds shares;
- £27 billion in loans to Bradford & Bingley;
- £20.7 billion owed by Northern Rock; and
- £1.4 billion invested in Northern Rock’s high street business.
The figures all come from the UKFI report, and work out to be £3,562 per taxpayer in exposure.
Bear in mind however that these are not losses, but the cost to the taxpayer which may be recouped.
So you can see the lies, darned lies and statistics view of the world.
I could spin the numbers to be anything from a few hundred pounds lost for each taxpayer to over £26,000 exposure for everyone.
The more important question is when the government and taxpayer will recoup these costs, if ever.
What about Foreign Aid?
Andrew Mitchell famously said at the foreign policy conference in London that the U.K. was a ‘development superpower’ before going on to compare the U.K. in terms of aid to that of the U.S military might.
U.K. Foreign Aid figures can be found here: DFID
But here is a brief breakdown.
- UK Overseas Development Aid (ODA) in 2010 is estimated at £8,354 million compared with the 2009 figure of £7,223 million.
At times of such financial hardship in the U.K. for many normal families, this is the largest figure ever recorded for such.
- UK (ODA) accounted for an estimated 0.56 per cent of UK Gross National Income (GNI) in 2010, compared with 0.51 per cent in 2009. This is the highest level of the ODA to GNI ratio since the United Nations target of 0.7 % was set in 1970.
A very credible thing to do: but can we really afford to be doing it?
- Bilateral expenditure (that is, direct aid given to other countries) increased to £5,383 million in 2010 from £4,732 million in 2009.
- ODA contributions to multilateral organisations (that is, to second parties such as the United Nations, European Commission, the World Bank and other regional banks, which is then distributed to other countries) increased to £2,971 million in 2010 from £2,491 million in 2009.
- UK bilateral ODA to Africa increased to £2,057 million in 2010 from £1,789 million in 2009.
- UK bilateral ODA to Sub-Saharan Africa increased to £1,869 million in 2010 from £1,603 million in 2009.
- UK bilateral ODA to Asia in 2010 fell to £1,231 million from £1,384 million in 2009.
The EU’s foreign aid budget amounted to €7,292 million, or £6, 5 billion. According to the Bruges Group, British taxpayers contribute £14, 6 billion in straight annual payments to the EU (this does not include the indirect costs to the taxpayer).
Only France and Germany contribute more to the EU budget than Britain, so it takes no imagination to work out that a large percentage of British tax money handed over to Brussels winds its way, through one route or another, to the foreign aid budget. As does that of France & Germany – however, for now – those countries are none of our concern.
The figures above are, it must be noted, only the direct grants. The actual foreign aid budget is considerably higher, with estimates varying between £9 and £12.1 billion, depending on which programmes (such as “debt relief”) you want to include.
Even taking the lower end figure, the promised rate of growth of the foreign aid budget means that within two years, it will exceed the entire Home Office Budget. Are we spending more abroad than at home?
The Home Office budget, which pays for policing and counter-terrorism, has been cut by 25% and is set to fall from £10.1 billion in the current financial year to £8.3 billion, by 2014/15 — by which time the foreign aid budget will have climbed to well in excess of £13 billion.
This may sound like some form of political statement, I suppose that it is – but the figures are there for all to see.
Why – I ask, is the U.K. spending so much of OUR money abroad. I do not wish to sound uncharitable. Indeed, I am far from. Nor do I wish to say that such money is not greatly received abroad and that it does not achieve remarkable things. The problem is that surely foreign aid should be money that we do not require?
I live in a reasonable area. From my window at this moment I can see an area – literally a mile away- that is known for depravation, drug misuse, unemployment and poor education. Crime is rife and indeed even Taxi drivers will not enter the ‘scheme’ itself after dark. Anyone wishing a taxi must walk to the boundary and phone one from there.
Surely some of the money spend abroad would be far better spent at home, to solve our own inheritable problems. Generation after Generation is being lost. I agree that it takes more than money to solve a problem.
Only years of hard work and cultural change will solve the ingrained problems in Scottish society.
Money provides facilities and money provides people jobs, to offer their expertise and to actively seek to solve the problems as opposed to glossing over the rot that leads to so many of our problems in society.
What about HMRC?
I am deliberately going to fudge over this issue because – quite clearly I cannot be arsed talking about tax any more. The recent Rangers trials have just about scunnered me on the subject. What I will mention though was the recent settlement with Vodaphone for approx. £1.5 Billion when true liability exceeded £2.2 Billion. That is a huge drop – especially for a company that is suffering no financial hardship.
If I must, there is also the Rangers debacle over EBT schemes. As we all know, or should be now, this included a scheme over a ten year period (approx..) of tax avoidance that could lead to revenue of over £100million at the top end in fines etc. that HMRC will fail to collect. Only a few have benefited from this finance!
Of course Rangers are not alone, Chelsea recently settled for £6.5 million with HMRC and Arsenal were well documented for using the EBT scheme for their own players. Arsenal settled with HMRC on the matter but I do not hold figures for such.
These are only high profile examples – but you can rest assured that such schemes will have cost the taxman literally £Billions over the years.
Should HMRC have been taking much closer inspection of these financial irregularities before now? Surely taking action quickly would have assured that such money would have found the national coffers rather than waiting for such a prolonged period of time when the opportunity to recoup said tax( in full) has almost completely gone.
More stern punishments perhaps to deter such practices?
I think it would be near impossible to put a figure on the amount of tax lost over the years. The sky would be the limit for any guesses.
A sensitive subject and one that will get the moral issues out of everyone.
Let’s look at the Finance.
There are no definitive figures for the current war in Iraq or Afghanistan. Nor am I an expert in the rights or wrongs of such wars and the necessity for such.
What is certain is the figure falls somewhere between £20-30 Billion. Most of us will never have a million pounds – let alone a billion pounds, so it is difficult to comprehend exactly how much money this is. Let’s just say for talking sake that the figure stands at approx. £12million per day.
What does that equate to?
Well, for every two days of the war we could have built a brand spanking new school in 15 different areas. Yes, 15 new schools.
I went to a high School that was built circa 1985. A fairly modern School:
By the time I started in 1997 the School was, more of less – not fit for purpose. The corridors were too narrow – the School was built for 500 pupils, yet held over 800. Classrooms had dangers windows that, on more than one occasion, resulted in the amputation of someone’s finger. One teacher lost the tip and a pupil received some serious stitching.
For less than a month in Afghanistan, say about 20 days – we could build another Wishaw General hospital.
Teachers and nurses are forever protesting regarding wages. Hell we could give them all a £1000.00 pay rise for the cost of only 60 days of war.
Rather than subject ourselves to Mr Cowell and his cronies making millions to find ‘talent’ why not replace the £100 million to the Arts council that they were stripped of only last year? It would only cost us 1 week at war. Or, Rangers potential tax liability.
Government funding of science research was reduced by about a billion pounds over the last year. That’s a huge loss for British science – and ultimately for our economy – but we shouldn’t be too fed up because it’ll pay for a whole 11 weeks in Afghanistan.
What about youth centres? In the wake of the recent riots you might think that it would be a good idea to invest in anything that would help young people find their feet. For the cost of the war, you could build at least two a day – and those would be top-of-the-line places. Build a bit more modestly, and you could probably manage five or 10 a day.
Council housing anyone? My girlfriend and many friends have grown up in one so I think I know their value. How many millions of families have relied on such? We have nearly two million people on waiting lists at present, and we aren’t anywhere near keeping up with demand. Let alone having so many in disrepair, due to age and poor upkeep.
What would it cost? And how much more would it stimulate our economy to build houses rather than to pour money into foreign wars?
We’re constantly being told that these are hard times and we have to tighten our belts, but as far as I can see the belts round the biggest bellies aren’t tightening at all.
As usual, it’s the people at the bottom who suffer – both here and in Afghanistan.
Well, what can I say really? The rallying call of ‘where has our money gone?’ has sent me on a demented path to find out where the REAL money has gone in this country. The endless contributions could lead to a very very long post indeed – but I shall curb it at the main points as I am sure enough can be seen to realise that we really are being ripped off in this country.
And to think that I pay £1.32 Per LITER for fuel……