Saturday, 8 November 2014

“Only” £1.7 billion

Most people of a sceptical disposition spotted George Osborne’s claim to victory in the saga over our EU contributions as a fraud straight away. We’ll pay the full amount alright, it will take a few months longer, until after the next election to be precise, but pay we shall.

There’s another aspect to this “victory” though that irks me just as much, even though I haven’t seen it mentioned yet. It’s the way in which numbers like this are tossed around casually, as though a trifling matter of £1.7 billion was akin to a rounding error. Which in fact from the EU perspective is exactly what this “adjustment” was. In the spending orgy that is big government, it’s easy to lose sight of just how vast these sums of money are in the real world.

In the context of the vast, sprawling organization that is the modern state trillions are the starting point for an economic crisis, budgets of major departments are hundreds of billions, and a spending cut or increase has to be tens of billions to even register. Even a decent expenses fiddle is in the millions.

It’s easy in this context to lose sight of the fact that these are stupendous amounts of money. Going off a population of 60 million, then £1.7 billion equates to nearly £30 per person. £30 for every man woman and child in the United Kingdom. £30 might not sound a lot, but when you consider the rate at which these sums are routinely thrown around it adds up pretty quickly. Each billion represents £16.66 per person. And since only around half the population are actually net contributors to the tax system you can instantly double that, and we’ll round it down to £33 per tax payer. Try, as an experiment watching the news and putting £33 in a jar every time you hear of a billion pounds being spent by the government. If you start on Monday you’ll likely have enough for a nice weekend away, and possibly a new car in a good week.

It almost seems like an age of innocence now, but sometime around the year 2000, when Labour were getting into their stride public spending past £365 billion a year. Which meant that you as a taxpayer had spent your £33 before you got out of bed. Every morning. And every morning since. And a lot more on recent mornings, because next year public spending is forecast to top £730 billion. If you haven’t left the house yet today, you’re £66 pounds down. Every single day.

If you earned a respectable £50,000 a year, paid no tax, spent nothing and saved every penny of your earned income it would take you 20,000 years to earn a billion pounds. Or 34,000 years to pay our budget adjustment. That’s everything earned by an above average tax payer since we first domesticated dogs.

If look at the more realistic scenario of paying `about a third of your income in taxes then you can extend that to 60,000 years to save a billion pounds, or 102,000 years to pay this budget contribution. There isn’t even a lot known about what humans were doing 100,000 years ago, other than saving for an EU budget contribution, but it is a very, very long time.

And remember that our government is not only spending these staggering sums every day and taxing us for them, but they’re actually borrowing more for us to pay in future. At least £5 of that £33 that the government has spent today was not taken from your savings but put on your credit card.

Ah but I’m not alone, you say. Millions of other people are paying taxes just like me and this is a drop in the ocean. It’s still quite a big drop though. It’s 100,000 people working and paying taxes for a year. Wasting £1.7 billion is pretty much like letting the whole of Northampton not pay taxes for a year. Which if you live in Northampton probably sounds a lot better than the warm glow we get from making a full EU budget contribution.

Most people accept a level of taxation as the price of living in a society with things like defence, roads, education and healthcare. However over the years other things have been added on as carelessly as I buy things when I’m drunk. Looking at British government spending is like getting my credit card bill later. So that’s £11 billion a year to the overseas charity I signed up to. There’s that £23 billion Innovation and Skills course I signed up for and never finished. A paltry £6.8 billion to subscribe to the Department of Culture, Media and Sports Gold Package. I’ll have to call the bank and find out who the hell The Cabinet Office is and what  they do, but it’s “only” £750 million so I could just pay it off in 45,000 years or so.

Ultimately though, this behavior is not only wasteful and foolish, it’s insulting to the British tax payer. People work hard for their money and pay a significant chunk of it in taxation. When George Osborne carelessly throws away £1.7 billion, it isn’t just like spending a few quid on surplus TV channels or suspect charities, it’s throwing away many productive lifetimes of people’s contributions. It’s telling a town like Northampton that it might as well not have existed except to pay for a few more people in Brussels to dream up their nonsense.