Thursday, December 07, 2006

Nigerian Flim-Flam Budget

Brown advisor

The BBC's sadly missed Business Editor Jeff Randall (whose value is underlined daily by the witterings of his extraordinarily uninformative successor, Robert Peston) puts it in a nutshell:

"Brown's survival kit comprises a systematic distortion of statistics, coupled with a style of delivery for which a Nigerian flim-flam man would trade his grandmother."

As we blogged yesterday, despite the fact that Gordo spent virtually the entire speech bragging about how much more of our money he was intending to burn on vast new spending projects, even a cursory examination of the small-print shows that his overall discretionary spending decisions sum to zero (OK, there is a net additional £155m for schools next year- a munificent 0.27% of education spending).

In one way of course, unravelling Gordo's convoluted statistical distortions and slippery half truths is a complete waste of time. But just for the record, I've scanned some more of the smallprint:

  • Forecasting errors- ie changes to his budget projections caused by being too optimistic previously- have added £21bn to borrowing over the budget period (2006-07 to 2010-11). The main errors were to overestimate North Sea revenues (by c£3bn pa) and to understimate inflation- which affects pensions and other upratable benefits
  • Borrowing- total net borrowing over the period will now be £145bn, up from £124bn and increasing our official national debt by one-third (our real national debt is of course much higher- see here)
  • Taxes will be increased by £2.2- £2.3bn pa, of which £1bn pa plus is from the higher Air Passenger Duty
  • Spending- has increased by £2.3bn pa, all of it driven by overoptimism in previous forecasts: not just on inflation but also less visible items such as the real cost of writing off all that Third World Debt Gordo pushed through (the Report smallprint- para B87 notes Gordo's desire to find "a more appropriate way" of writing off oil-rich Nigeria's debt... not writing it off perhaps?)
  • Gershon "cuts"- as we know, the largesse for "frontline services" is supposedly funded from cuts elsewhere: Gordo now reckons unnecessary backroom activities at DWP, HMRC, and various other departments can release 5% pa of their budgets for ever. We know of course, that these savings are largely smoke and mirrors (see here), and in any event, cutting spending at DWP and HMRC is likely to rack up even further the massive fraud losses already taking place, thus being offset by a fall in revenue (see here, here and here)
  • PFI- a bloke down the pub last night reckoned that the projected cost of PFI has gone up by 11% since the Budget. I haven't had time to crunch the numbers myself yet, but certainly the payments forecast for 2010-11 and 2020-21 have increased by roughly that amount- that worrisome ticking from the £90bn PFI debt box is getting louder...

Gordo's plan of course is to step ashore before any of the bombs actually rip a hole in the hull. But his successor at No11 is going to need a steady head to defuse this lot.

PS Talking of Brown's budgets, you have been made known to me as a good God-fearing man/woman, and if you would kindly help Major Frobisher's offshore associate Mr Moses Odiaka repatriate $35m- which for complex but trivial administrative reasons is becalmed in a nominee suspense account in Curacao- please send me full details of your bank account with pin numbers etc. You will receive $10m by return for you kind consideration. Or perhaps you would be interested in an extra 6 inches- guaranteed.


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