Thursday, 22 April 2010

Budget Deficit

The BBC reported today that the final figure for the 2009/2010 budget deficit is £163.4billion, lower than the £167billion forecast in the Budget, and than the £178billion deficit forecast in the Pre-Budget Report.

So, good news, then?

Yes.

But let's put it in perspective. The Government borrowed £19million every hour in the last financial year.

Nothing to be too proud about.

Friday, 9 April 2010

Benefit Fraud & Unemployment

The Conservatives have come up with a little piece this morning - apparently, £80 per second has been lost to benefit fraud and administrative waste since 1997.

£80 per second? That sounds like a lot.

Let's multiply it up.

£80 per second is £4,800 per minute, £288,000 per hour, £6.91million per day and, gloriously, £2.52billion per year.

£2.52billion per year is certainly a hell of a lot of money.

But let's put this in the perspective.

A previous post pulls up some information from the recent Budget, which states that the total amount spent on 'Social Protection', i.e. benefits plus pensions, is £196billion. Every year. Based on the Government's own figures, even if you exclude pensions, the total amount being spent on benefits is about £112billion.

And remember, the annual budget deficit is still a decidedly unhealthy £167billion.

The Conservatives do have a point. There should be a drive to reduce waste. But if administrative waste and fraud accounts for a mere 2.25% of the benefits budget, it's not really something to get your knickers in a twist about.

The point is that the same mere 2.25% is £2.52billion. What about the other 97.75%?

Just a thought.

Thursday, 1 April 2010

Wealth Tax

According to the World Wealth Report 2009, the UK has 362,000 High Net Worth Individuals (HNWIs). An HNWI is defined as a person worth more than $1million, excluding their primary residence and chattels. Their average wealth is approximately $3.6million, which means that they control $1.3trillion of wealth.

If we convert these figures into Sterling, which on today's rates makes a dollar worth about 60p, the average wealth of a UK HNWI is £2.16million, which means they control £782billion of wealth. And in the Sterling-denominated world, a HNWI is a person worth more than £600,000, excluding their primary residence & chattels.

A few more figures to regurgitate here - the total population of the UK is 61million, and the total personal wealth in the UK is £9trillion, according to the ONS. We're talking about less than 1% of the total population of the UK, who are in control of at least 8.7% of its total wealth.

What if these people were taxed on that wealth?

If a Wealth Tax were to be introduced, with a threshold of, say, £600,000, these 362,000 people would be subject to that tax. So if you give them an allowance of £600,000, that means that, on average, each of them has £1.56million which is assessable for tax.

It should be a small tax. After all, we don't want to drive them away from the UK. 1% should be quite sufficient. On average, they'd only pay an additional £15,600 of tax per year, which is hardly going to break the bank for them.

This would raise £5.6billion per year. The rises in National Insurance which come into effect next year will raise £3billion per year. Which do you think is fairer?

Just a thought...