Some Inconvenient Facts

Tuesday 24th January

We ignore facts at our peril.  Statistics, as we know can be presented in such a way as to paint a picture which does not exactly correlate with the facts.  For example, I would hazard a guess that almost all my readers are above average in the leg department; having two whereas because a very few have lost one or both legs the average is slightly lower than two.

But certain facts are incontrovertible.  At the time of the referendum much was made of the U.K.s contribution to the EU; £350 million per week was blazoned across buses and our TV screens.  When our rebate is taken into consideration the real figure is just less than half of that sum.  An inconvenient fact.  When one takes into consideration the individual rebates made to farmers under the Common Agricultural Policy, many being quite wealthy landowners, and regional grants made by the EU the true figure is far less.  In fact when one, thanks to Mr. Gideon Osborne, receives a breakdown of how total Government Revenue is spent it transpires that our net contribution to the EU is right at the bottom of the list at 1.1%.  Just above that is Overseas Aid at 1.2%.

Another inconvenient fact is that Defence Spending, which is often the subject of fierce debate comes in at 5.2%.  Just above that is interest (not repayments – heaven forfend we should ever repay our debts) due on our huge National Debt at 5.3%.  And this when interest rates are the lowest for years, and after almost 7 years of Austerity.  The reason is simple – low taxation.  The share of GDP raised in taxation (including the 2010 hike in VAT) is just above 35%; this is historically very low, even under Maggie it was above 40%.  Government Ministers wring their hands when the NHS is struggling, or beds are blocked by a lack of Social Care (mostly because local councils have been forced to make severe cuts), and say we simply cannot afford it.

In fact we can afford whatever level of taxation the Government chooses to impose.  I can remember paying 33 pence in the pound Income Tax in the Seventies.  The reality of economics is that prices will more often reflect the public’s ability to pay than the cost of the products to the seller.  And yes, higher taxes may well cause an increase in inflation; but inflation at around 5% is actually a very good thing.  If you can borrow £100 pounds but pay it back when £100 is only worth £95 then you are in pocket, as mortgage holders discovered all through the Seventies, Eighties and Nineties.  Also wage increases of around 1 or 2 % leave you feeling no better off, but an increase of 5% even if prices are rising by the same amount gives you an immediate good feeling.  Savers presently struggle to see the point of saving with miserable rates, a touch of higher interest rates would help encourage saving.  Of course increasing taxes is never popular, but nor is a crumbling NHS or school classes increasing or libraries closing or your grandparents stuck in a Hospital bed because there is no provision for them in the Community.

All Government decisions are choices, even Brexit.  Soft, Hard or Red White and Blue – it is a choice, but let’s not allow inconvenient facts to blur our rose-coloured vision.