Why do the People of the UK Accept Financial Repression?


It is amusing yet disturbing to see that the UKs media fails to mention the public debt of the UK but refers only to GDP and inflation figures, the ‘everything is awesome’ meme. Both of these numbers are manipulated but asking how the GDP deflator number is derived, what the actual number is and why does it increase GDP and lower inflation? This would be the start of a discussion.

When governments find themselves in a situation where they cannot pay off their accrued debt, they have a number of plays open to them. They will not relinquish power without a good scrap.

1.The first play is hyperinflation and this destroys the currency but also the debt, not ideal if you wish to remain in control.

2. The second is default, also known as the Argentinian option but this eventually leads to the destruction of the currency.

3. The third option is austerity, which is parroted by the political parties as necessary but if we have had austerity for 5 years why has public debt gone up by 80% since the coalition came to power? Currently standing at £1.4 Trillion with £1 billion per week being used to fund interest payments on the debt, £52 billion per year and rising. Austerity is a lie, it’s never worked but we’re all in this together, well most of us as you will see. As public debt has increased so much, interest rates are not going to rise, it’s counterintuitive and illogical for government to do so, they have another option.

4. The fourth and my personal favourite is financial repression, sounds like fun which it is. Repression hits both savers and wage earners, if inflation is higher than interest rates then savers lose out. If inflation is higher than wage increases, the wage earner loses out. If both of these scenarios play out, savers and wage earners lose out and those that hold the debt benefit. Continue reading

It’s Time to come Clean about our National Debt


Courtesy of Liam Halligan @ The Telegraph:

Most pundits assume the general election will be fought against a strong economic backdrop. The Conservatives certainly hope that buoyant consumer sentiment, including continued rock-bottom interest rates and stable financial markets, will help them secure victory, and even an overall majority, in May 2015.
After David Cameron’s conference speech in Birmingham earlier this month, complete with a promised £7bn income tax cut, some 39pc of voters said it was the Tories “they most trust to manage the economy”, compared with just 19pc backing Labour.

It was in the afterglow of that speech that the Tories chalked up an overall poll lead for the first time in more than two years. A strong economy, then, will clearly be front-and-centre in any successful Conservative general election campaign.

It’s politically significant, then, that public sector borrowing figures released on Tuesday were truly shocking – so bad, that further pre-election promises of tax cuts are now much less likely. Such promises, as we just saw, are vital when it comes to keeping the Government’s electoral opponents at bay. If such terrible figures continue into the coming months, the Tories could even lose their reputation for superior economic management.

The economy is growing at 0.7pc per quarter, we learnt on Friday, far faster than last year. Yet public sector net borrowing over the first half of 2014-15 was 10pc higher than the same period in 2013-14. Borrowing in September alone was £12bn, a staggering 15pc up on the same month the year before. While tax receipts were up 3.1pc, revenue growth was outstripped by even higher spending. For all the talk of “austerity”, central government expenditure in September was 5.4pc above that during the same month a year ago, as welfare payments spiralled.

The Government, having already borrowed £58bn between April and September, is almost certain to miss its £96bn annual target by a mile. It’s now all but certain the UK will post a sixth successive year of triple-digit, billion-pound deficits, five of them under the Tories. Osborne has borrowed more in his half-decade as Chancellor than his predecessor Gordon Brown did during a decade at the Treasury. The Conservatives’ 2010 “emergency Budget” said the books would be balanced by next year. Official projections now suggest that won’t happen until 2018-19.

Continue reading

Will Our Private Savings Be Sacrificed To Pay Down The Public Debt?


Courtesy of Adam Taggert @ Peak Prosperity:

Recently, an article by Daniel Amerman caught our attention. Titled Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?, it details the process known as financial repression, where sovereign debts are slowly paid off by syphoning private savings from an unaware populace.

In this week’s podcast, Chris discusses the mechanics of the process, as well as its probability, with Dan:

To understand financial repression, we have to understand that we’ve been there before. Many nations have gone through periods in the past where they’ve had very high levels of government debt. And there are four traditional ways of dealing with that.

One of them is austerity. Everyone understands that. You raise the tax rates. You lower the government spending. This is a painful choice. It can last for decades. And what do you think the voters think about that?

There is another option and this we can call this the Argentina option. And that’s defaulting on government debts. It’s radical. Everybody understands it. How do the voters feel about it?

There is a third option is rapidly destroying the value of currency. Creating high rates of inflation that very quickly wipe out the true value of a national debt. But that also wipes out the true value of everyone else’s savings and salaries and so forth. It is such an obvious process you can’t really hide it. So how do the voters feel about that?

Those first three – they all work. They’ve all been done before. But they’re all very painful and make the voters very angry.

Now there is a fourth way of doing this. There’s nothing controversial about its existence; it’s not the slightest bit controversial for professional economists or people who have studied economics extensively. It’s financial repression. And it works. It’s what the advanced western nations did after World War II. It was a process that took 25 to 30 years, depending on the country. The West went from an average debt as a percentage of national economy from over 90% to under 30%. So we know it works in practice. Continue reading

Caring too much. That’s the curse of the working classes

Courtesy of David Graeber @ The Guardian:


Working-class people care more about their friends, families and communities – they’re just ­fundamentally nicer.’ Illustration by Matt Kenyon

“What I can’t understand is, why aren’t people rioting in the streets?” I hear this, now and then, from people of wealthy and powerful backgrounds. There is a kind of incredulity. “After all,” the subtext seems to read, “we scream bloody murder when anyone so much as threatens our tax shelters; if someone were to go after my access to food or shelter, I’d sure as hell be burning banks and storming parliament. What’s wrong with these people?”

It’s a good question. One would think a government that has inflicted such suffering on those with the least resources to resist, without even turning the economy around, would have been at risk of political suicide. Instead, the basic logic of austerity has been accepted by almost everyone. Why? Why do politicians promising continued suffering win any working-class acquiescence, let alone support, at all?

I think the very incredulity with which I began provides a partial answer. Working-class people may be, as we’re ceaselessly reminded, less meticulous about matters of law and propriety than their “betters”, but they’re also much less self-obsessed. They care more about their friends, families and communities. In aggregate, at least, they’re just fundamentally nicer.

To some degree this seems to reflect a universal sociological law. Feminists have long since pointed out that those on the bottom of any unequal social arrangement tend to think about, and therefore care about, those on top more than those on top think about, or care about, them. Women everywhere tend to think and know more about men’s lives than men do about women, just as black people know more about white people’s, employees about employers’, and the poor about the rich. Continue reading

UK Debt Is Actually £100 Billion Higher Than We Thought, Official Stats Body To Say

Courtesy of Huff Po:


George Osborne’s austerity message is set to be dented by the government’s own statistics body, as it prepares to adopt new calculations that mean the UK’s public sector debt will be £100 billion greater than estimated.

The Office for National Statistics will bring in the new calculation this autumn as part of sweeping changes that include estimating illegal activities like prostitution and drug dealing as worth £10 billion to the country’s national wealth.

The UK’s debt will effectively increase from well over £1 trillion by more than £100 billion, or 7.3% of GDP, as the ONS attempts to improve its accounting standards changes introduced by the US, Canada and Australia.

The ONS will bring Network Rail’s debt onto the UK’s books and also stop classifying the state’s stakes in the Royal Bank of Scotland and Lloyds as liquid assets that can be sold off quickly.

But in good news for the coalition, the ONS will give the UK’s GDP a boost of up to 5% (£75 billion) by reclassifying research and development as capital spending rather than a cost of production Continue reading

A First Look At New Report On Crony Capitalism – Trillions In Corporate Welfare

The world we live in is not what is taught in schools and universities or shown in the paper or on TV. It is really topsy turvy, upside down and inside out. Austerity is a lie, it is an ideology used to repress and control the population, much like the monetary, legal and political systems. Government, regardless of colour or flavour has encouraged a dependency on the state but its not the work shy or lazy who receive favourable tax breaks, regulation or subsidies, it’s the corporations and they don’t want you to know. Straight from Wiki:

Fascism’s theory of economic corporatism involved management of sectors of the economy by government or privately controlled organizations (corporations). Each trade union or employer corporation would, theoretically, represent its professional concerns, especially by negotiation of labour contracts and the like. This method, it was theorized, could result in harmony amongst social classes. Authors have noted, however, that de facto economic corporatism was also used to reduce opposition and reward political loyalty.

Courtesy of Liberty Blitzkreig:

One of the primary topics on this website since it was launched has been the extremely destructive and explosive rise of crony capitalism throughout the USA. It is crony capitalism, as opposed to free markets, that has led to the gross inequality in American society we have today. Cronyism for the super wealthy starts at the very top with the Federal Reserve System, which consists of topdown economic central planners who manipulate the money supply and hence interest rates for the benefit of the financial oligarch class. It then trickles down through lobbyist money into the halls of Washington D.C., and ultimately filters down to local governments and then the average person on the street gaming welfare or disability.

As such, we now live in a culture of corruption and theft that is pervasive throughout society. One thing that bothers me to no end is when fake Republicans focus their criticism on struggling people who need welfare or food stamps to survive. They have this absurd notion that the whole welfare system doesn’t start with the multinational corporations and Central Banks at the top. In reality, it is at the top where the cancer starts, and that’s where we should focus in order to achieve real change. Continue reading


Courtesy of The New Yorker:

George Osborne, the patron saint of austerity enthusiasts on both sides of the Atlantic, was in the House of Commons on Thursday, reveling in the fact that the U.K.’s economy is finally growing again, and claiming that “Britain’s economic plan is working.” Delivering his annual Autumn Statement—he was a bit late—the Chancellor of the Exchequer pointed to forecasts from the quasi-independent Office for Budget Responsibility, which point to G.D.P. growth of 1.4 per cent this year and 2.8 per cent in 2014. Continue reading

The Three Types of Austerity

Courtesy of Frank Hollenbeck from Ludwig von Mises Institute:

Reading the financial press, one gets the impression there are only two sides to the austerity debate: pro-austerity and anti-austerity. In reality, we have three forms of austerity. There is the Keynesian-Krugman-Robert Reich form which promotes more government spending and higher taxes. There is the Angela Merkel form of less government spending and higher taxes, and there is the Austrian form of less spending and lower taxes. Of the three forms of austerity, only the third increases the size of the private sector relative to the public sector, frees up resources for private investment, and has actual evidence of success in boosting growth.

Let’s take a closer look at the Merkel form of austerity being implemented in Europe in which governments “plan” to cut their spending and raise tax revenues. Of course, “planned” cuts are not actual cuts. Four years after the crash of 2008, the UK government had only implemented 6 percent of planned cuts in spending and only 12 percent of planned cuts in benefits. In almost all European countries, government spending is higher today than it was in 2008. A new study by Constantin Gurdgiev of Trinity College in Dublin examined government spending as a percentage of GDP in 2012 compared with the average level of pre-recession spending (2003–2007). Only Germany, Malta, and Sweden had actually cut spending.

Although several governments have raised tax rates, tax revenues have collapsed in response. The large and growing black markets in Greece, Italy, Spain, and even France are a testament to wrongheaded European tax policies. Current commitments to reign in tax fraud are a joke when tax rates are already at nosebleed levels.

Notably, the Merkel form of austerity has led to an increase, not a decrease, in the relative size of the public sector. For example, the Greek public sector, while getting smaller, has nonetheless been contracting at a slower rate than the private sector. Since the first bailout, Greece lost at least 500,000 private sector jobs but shed far fewer public sector jobs. For years, the Greek government has been pledging to cut 500,000 public sector jobs, and in recent months, the Greek government has finally pledged to begin laying off public sector workers over the next two years. A total of 12,500 civil servants, including teachers and police, face reassignment or the axe by the end of the year, with a further 15,000 facing the same options next year. Not only is this too little, too late, but it is also only a pledge.

The Keynesian form of austerity is no better. According to these economists, we need even more government spending to boost demand to obtain growth. For the Keynesians, the lavish amounts of money already spent was apparently too little and not spent in the right places, yet the last five years are a testament to the failure of this type of austerity. We are now left with a massive debt overhang and little growth to show for it. Government spending has simply “crowded out” private spending.

Ignored is the fact that we don’t need government to boost demand because there is never a deficiency of demand. Governments instead should be more concerned with the ability of the private sector to produce the right supply.

Growth will come from the private sector, and the austerity we need is one that makes the private sector larger than the public sector and one similar to that implemented in 1920 in the United States. In what Thomas Woods calls “The Forgotten Depression of 1920,” the U.S. government cut spending 50 percent and sharply reduced taxes. The public debt was reduced by a third, while monetary policy was kept on hold. The economy recovered quickly (in 18 months) and by 1923 the unemployment rate had fallen below 3 percent.

A more recent example of similar tactics is Latvia which followed a similar strategy in 2009-2010. It cut government spending from 44 percent of GDP to 36 percent. It fired 30 percent of the civil servants, closed half the state agencies, and reduced the average public salary by 26 percent in one year. Government ministers took personal wage cuts of 35 percent, although pensions and social benefits were barely reduced and the flat tax on personal income was left untouched at 25 percent.

The Latvian economy dropped 24 percent in two years, but rebounded sharply in 2011 and 2012 with yearly real growth of over 5 percent. Unemployment hit 20.7 percent in 2010, but has steadily declined to a little over 12 percent today. Because the cuts prompted deregulation, Latvia enjoyed a boom in the creation of new enterprises in 2011. It was able to transition from a bloated construction sector to a vibrant economy of many small- and medium-sized enterprises.

Latvia borrowed heavily from the IMF, and was criticized in 2009 for its overly aggressive economic strategy. Latvia recently repaid its loan to the IMF three years early, indirectly silencing its critics.

Austerity worked because it was the right form of austerity: one which gave people hope and one with a light at the end of the tunnel. Today, Europe has austerity fatigue. It missed the opportunity to implement the right type of policies.

Since it now seems impossible to implement the right form of austerity, what should Europe do? To get back on the path to growth, Europe needs to dump policies to spur aggregate demand, and focus on policies which bring the right products at the right prices. As J.B. Say said:

The encouragement of mere consumption is no benefit to commerce, for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone, furnishes those means. Thus, it is the aim of Good Government to stimulate production, of bad Government to encourage consumption.
Without growth, Europe is heading for a train wreck since it will shortly be unable to finance its debt. It must refocus its strategy toward stimulating production, freeing up Europe’s entrepreneurial spirit. This is a policy much more likely to succeed.

Wasted! How ‘Austerity Osborne’ is still squandering billions

George Osborne is a fool of the highest order, I’d personally call him a financial terrorist, devoid of common sense, ideas, leadership and morality…AUSTERITY DOES NOT WORK! He is skirting round a problem which requires decisive and honest leadership, the exact opposite of Osborne.

Courtesy of the Spectator:

When the Chancellor stands up to present his spending review next Wednesday it will be with the reputation of a crazed axeman. Much of the country, whether it thinks it a good thing or not, subscribes to the belief that George Osborne is shrinking the state year-on-year, slicing here, chopping there. In a recent poll 58 per cent of respondents agreed with the proposition that Osborne’s ‘austerity drive’ is ‘harming the economy’. Twenty per cent agreed that it was the ‘correct medicine’.


Yet it was a trick question based on a faulty premise: that there has been an austerity drive. The truth is that public spending has risen under this government — and in real terms, too. In 2009-10 public sector current expenditure, adjusted to 2011-12 prices, was £634.2 billion. By 2011-12 it was £645.7 billion and in 2012-13 it is projected to have been £647.1 billion. A more correct question for the pollsters to ask would be: do you think that George Osborne should stop flinging our money about, and actually begin the austerity drive that he keeps talking about?

Osborne is no mad axeman but a bodger blundering around with a blunt chisel. Go back further and you can see just how absurd is the notion that the coalition has turned Britain into neoliberal hell or paradise, depending on your point of view. In 1975/76, in the depths of economic crisis and shortly before Denis Healey went off to the IMF to beg for a bailout, public spending peaked at 39.8 per cent of GDP. In 2011/12 it was 42.2 per cent. That year, the then Labour government spent, in today’s money, £260 billion — less than half what the coalition will spend this year. In other words, the sub-socialist British state of the 1970s, with its nationalised car factories and shipyards, was smaller than it is now.

Yet George Osborne has never sought to challenge his axeman image. When challenged by Labour or the IMF over ‘austerity’ he has happily accepted the charge, protesting only that he still believes he is on the right course and will not be distracted.

He wants us to believe that big cuts are taking place. Take the Cabinet Office’s Efficiency and Reform Group, which crows about having made £5.5 billion worth of savings on the civil service last year and claims to be on its way to saving the taxpayer £20 billion by the next election, through such means as reducing the cost of employing temporary staff and improvements to procurement.

The National Audit Office was not so impressed, concluding recently that too many of the savings were only temporary in nature and that without proper reform it isn’t clear how the £20 billion target will be achieved. Yet it wouldn’t be hard to achieve the target if the government really wanted to. Even after the attentions of the Efficiency and Reform Group — which itself cost £72 million to run last year — civil servants are still enjoying two-and-a-half ‘privilege days’ a year on top of their bank holidays, they still qualify for a £75 evening dress allowance, and subsidised loans to buy bicycles.

The state has paid £500 million over the past three years to send the children of diplomats and military officers to public schools. Civil servants who began their careers before 2002 are still retiring at 60 and taxpayers are forking out £912,000 a year to subsidise flying lessons, diving lessons and trips to Barbados through the civil service sports council.

Dwarfing all this are bloated wages and salaries. Remember Osborne’s great public sector pay freeze, supposedly imposed for two years in 2012? Why, then, did the public sector pay bill rise from £165 billion in 2009/10 to £171 billion? The pay freeze was a mirage, through which many workers continued to enjoy fat increases in pay.

During the boom years the public sector unions liked to compare themselves with the private sector. But come the recession, when private sector pay started to fall, funnily enough they stopped doing so, with the result that according to the ONS, public sector pay is now 8.2 per cent higher than in the private sector. The Taxpayers’ Alliance (TPA) has calculated that if public sector pay and pensions were reduced to bring them in line with their private sector equivalents, it would save the taxpayer £53 billion a year.

That is the sort of saving which a genuine austerity chancellor would be proposing — and indeed is the sort of saving which a future British government may have to make if the deficit is not closed and the country is forced, as it was under Healey, to seek a humiliating bailout from the IMF or elsewhere. We don’t need to have a deficit. The TPA went on to detail a total of £120 billion of possible savings a year: from the really big sums, including £20 billion from fraud, £15 billion on procurement and £5 billion on benefits paid to families with incomes of over £100,000 a year; to the petty level where public money continues to be frittered — such as £2.3 million a year subsidising the restaurants in the House of Lords, £683,000 refurbishing 10 Downing Street, and £20 million spent translating council documents into obscure languages for the benefit of hardly anyone.

The TPA reached its £120 billion figure while hardly touching the swollen NHS, education and International Development budgets which Osborne has ring-fenced. But why should these budgets be protected from the need to cut spending? Is the Chancellor really saying that no school, hospital or development agency is guilty of waste?

‘I guess they’re just trying to deal with the psychological torture of being in captivity.’

What about the £17.5 billion set aside for medical negligence claims, much of which will disappear into the pockets of lawyers? That could be trimmed in one go with an end to ‘no win, no fee’ agreements and the spurious claims that result from them. What about the £700,000 spent sending staff at NHS England on team-building exercises, the £4,800 spent on breast implants for an aspiring model who claimed that having small breasts was ruining her life, or the average £2,492 spent sending patients on ‘exercise referral schemes’ — i.e. subsidised gym and dance classes?

What about the money wasted on iPads and interactive whiteboards for schools? What about the £5 million spent organising a Question Time-type show in Bangladesh or £25 million spent on climate change adaptation in Kenya, part of which was used to help tribal ‘rainmakers’ to come up with a consensus weather forecast with the country’s meteorological service?

What George Osborne has failed to appreciate is that public spending is a monster which will happily munch through every possible resource held in front of it. It takes ruthlessness just to keep it under control, let alone to shrink budgets. Generating headlines about ‘heartless cuts’ on the Today programme — something which has been achieved by every government in living memory, Gordon Brown’s included — doesn’t mean you are reducing the deficit; it just means you are holding back from funding some extravagance which someone, somewhere would like you to fund.

While saving pennies matters, the public budget will never be balanced again unless government is prepared to tackle the really big items of expenditure: health care, welfare and education. The government has tried quite hard to rein in the benefits bill but has ultimately surrendered, and has now settled for a slower rise than had previously been predicted. But when it comes to the largest item of the Department for Work and Pensions’ budget — the state pension — the government has not even tried to rein in costs. Quite needlessly, it has committed to increasing the state pension with a ‘triple lock’: guaranteeing to raise it by inflation, average earnings or 2.5 per cent, whichever is greater.

The result is that even if the cost of living falls — as it did in 2008/09 — the state pension will still be jacked up by 2.5 per cent. The projected cost of the triple lock is eye-watering: within 20 years the annual bill for the state pension will rise — at 2012 prices — from £63 billion to £106 billion, or from 4 per cent to 4.4 per cent of GDP.

One appreciates that pensioners get jolly angry — and with some justification get upset when they read about benefit claimants receiving more than they do — but why the need, in the middle of a budgetary crisis, to treat them to a more generous deal than any government has previously offered them? The coalition seems to be at war over welfare, with Nick Clegg at the weekend threatening to block reform if benefits for wealthy pensioners are not also cut back. There is a perfectly simple solution to satisfy both sides of the coalition: cut the benefits and don’t increase the pensions above inflation.

Osborne has all too easily allowed himself to be smothered by the argument advanced by Ed Balls, the IMF and others that only public spending keeps us out of the quagmire of recession. In its extreme Gordon Brown form, this doctrine arrives at the conclusion that there cannot be any such thing as public sector waste: every penny spent by the government, regardless of purpose, is necessarily another penny sloshing around the economy which otherwise would not be. It is a theory which has a rather obvious fatal flaw: the penny spent by the government must come from somewhere. If it does not come directly out of the pockets of individuals and businesses, it comes from borrowings which must eventually be repaid. What really matters is whether the penny is being productively spent. Because the public sector has such a dire record on productivity, a transfer of resources from private to public sector is going to have a negative effect on economic growth.

It was a lesson best demonstrated in Sweden, a country often held up as an example of the good of public spending, but which saw a dramatic increase in growth between the mid-1980s and the mid-2000s when spending was slashed. In the first decade of that period, economic growth averaged 1.5 per cent a year. In the second decade of that period, during which public spending was progressively cut from 71 per cent to 51 per cent of GDP, the economy grew by an average of 4.5 per cent a year.

A braver chancellor than George Osborne would not be boasting about cuts and then gingerly trimming a bit around the edges while maintaining public spending above 40 per cent of GDP; he would be delivering a spending review which reduced public spending closer to the 30 per cent mark (it touched 34 per cent in 1999, before Gordon Brown’s spending splurge). Anaemic growth is not a function of cuts in public spending, of which there have been none. It is a result of a swollen public sector trapped in low productivity.

The art of taxation, observed Mark Twain, is like plucking a goose to obtain the greatest amount of feathers while suffering the minimum amount of hissing. In attempting to cut public spending, George Osborne has achieved the exact opposite: he finds himself cornered in a shed by the hissing, spitting goose of public spending, whose feathers are growing faster than he can pick them out.

Taxpayers Alliance uncovers £120 Billion of Wasteful Spending

From the Taxpayers Alliance showing that austerity is completely unnecessary if wasteful spending is removed from the system. Regretfully we have a parasitic and wasteful culture that encourages inefficiency and a misallocation of resources. We need a change in culture and a move away from short term thinking, it ruins it for the rest of us in the long term.

The article in full:

In advance of the Comprehensive Spending Review, we can reveal how the Government could cut vast swathes of wasteful and unnecessary spending. A new online edition of the Bumper Book of Government Waste, published today, identifies potential savings to the tune of nearly £120 billion, a figure almost exactly equal to the current budget deficit. This equates to a massive £4,500 for each and every household in the UK – enough to give every family in the land a luxury holiday or pay their household energy bills nearly three times over.


Excellent work has been undertaken by the Cabinet Office’s Efficiency and Reform Group in terms of finding savings, but taxpayers’ cash has still been wasted in a number of ways, with significant sums ripe for being saved in many areas, including:

£53 billion – Additional cost of funding pay and pensions for public sector workers over and above the private sector average, based on analysis of figures from the Office for National Statistics and the Pension Policy Institute
£25 billion – Amount wasted through inefficient public sector procurementand poor use of outsourcing, based on an authoritative report from the Institute of Directors
£20.3 billion – Cost to the economy of public sector fraud, according to the National Fraud Authority
£5 billion – Amount paid in benefits to those with an income in excess of £100,000
£4 billion – Losses to the taxpayer from RBS and the sale of Northern Rock
£2.9 billion – Amount spent needlessly by the Department for Business, Innovation & Skills and Department for Culture, Media & Sport, which should both be scrapped
£1.2 billion – Annual subsidy to foreign farmers through the EU’s Common Agricultural Policy

Our figure is almost certainly an underestimate. A rigorous assessment of the public sector efficiency commissioned by the European Central Bank found that if the UK’s bloated public sector were as efficient as that in the economies of countries like the US, Australia, and Japan, no less than £137 billion could have been saved in the last year.

In addition to the big ticket items, we have identified hundreds of examples of smaller sums being wasted. It is, however, all still taxpayers’ money and there is no excuse for waste, regardless of the amount involved. Among the culprits identified are:

Arts Council: Gave a £95,000 grant to artists in Brighton for “Skip”, a rubbish dumpster outlined with yellow lights

Crawley Council: Spent £5,070 on 12,200 hot drinks from vending machines for council employees, when the equivalent number of tea bags would have cost just £200

Department for International Development: Spent £21.2 million on a road maintenance project in Bangladesh, later pulled due to “fiduciary irregularities” after it emerged that less than 10% had actually been spent on roads

Durham Council: Funded a £12,000 clothing allowance to allow councillors to wear “Geordie Armani”

Hull Council: Spent £40,000 on a concert in honour of the councillor who is Lord Mayor this year

Ministry of Defence: Paid £22 for light bulbs that are normally 65p

Prison Service: Paid £720,000 to professional actors for role playing that is aimed at helping inmates become employed

Scottish Government: Signed a £1.4 million 4-year contract for taxis for civil servants in Edinburgh – despite staff being told to use buses

Stoke-on-Trent Council: Spent £330,000 to pay for redundancy packages and subsequently rehiring 25 members of staff

Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“George Osborne must take the golden opportunity offered by the Spending Review to get the nation’s finances under control and ease the burden on taxpayers. The latestBumper Book of Government Waste shows that tens of billions of pounds are still wasted each year and there is an enormous amount of fat left in the public sector.

“If Ministers do something about it, they can give taxpayers a better deal and still provide the frontline services which people depend on the most. More money must be left in the pockets of struggling households who need it to support their own families and their own causes. They will get better value than any politician or bureaucrat.”