The truth about those tax inspectors

If you were curious about Danny Alexander's extra 2,250 tax inspectors announcement,you would be correct to question exactly what is going on.

HM Revenue and Customs has revealed this morning that £35bn of tax went uncollected between 2009-10.

The sum,you will be glad to know is less than the previous year,£5b, but still makes up 7.9 per cent of the amount of money that should have been collected.

Now the FT's Sue Cameron has spilt the beans


What the minister said was that “an additional 2,250 staff will move into new anti-evasion and avoidance jobs”. In plain English, existing HMRC staff will move from their present jobs to work on tax evasion by the rich in a new “affluent” unit. Mr Alexander told the Lib Dems that “this month over 1,000 of these jobs are being advertised”. And so they are – all of them internally. (No, I wouldn’t dream of describing him as Duplicitous Danny. He is just dexterous with words.) Meanwhile, the cull of HMRC staff from the present 66,000 to 56,000 in 2014/15 continues.

War breaks out over the £5bn

There appears to be a row developing over the spending plans of the coalition.

With yesterday's warning from the IMF over the risks of the economy slipping back into recession,various sources are leaking that there will be a £5bn increase in capital spending to help boost the economy.

The Treasury has rejected suggestions that George Osborne would change his economic strategy and this morning the Chief Secretary to the Treasury Danny Alexander has been rolled out to the media to confirm that the coalition will not be changing its spending plans.

They are an integral part of our deficit reduction plan he told the Today programme adding that

'This country has a great asset in clear spending plans that we are sticking to, and that is something we should not sacrifice'

However there is no smoke without fire with the BBC's Nick Robinson quite adamant that sources have told him that there are moves afoot to release the £5bn.

Odds on that the source is the Business Secretary?

One Tory who is definitely against a move is John Redwood.Writing on his blog he says spending an extra £5 billion is a stupid idea launching a tirade at the BBC whose economic correspondent

seemed unaware that the government has already tried the £5 billion capital boost, and the economy has slowed down markedly despite it. (Red Book page 93 Public sector gross investment) She seemed unaware that the government upped the spending figures in March, with so little favourable effect.

CBI urges fiscal restraint

As a merry-go-round of cut or not to cut continues this morning's latest participant is the CBI which has told the Chancellor that he should balance the public finances sooner rather than later but is right to avoid big cuts this year to protect the fragile recovery.

CBI Director General Richard Lambert presenting the CBI's budget recommendations said that.

"The degree of fiscal tightening we'll need is more challenging than other G7 countries. But one real advantage is that the maturity of government debt is longer than other countries, and we're confident the UK's credit rating is sustainable,"

Writing to the Chancellor they recommend that the budget is balanced two years earlier than forecast by Darling by the end of fiscal year 2016.

An earlier date for budget balance should be achieved through a combination of lower overall spending and public service reform, rather than resorting to damaging tax rises at time when the economy is still fragile.

Meltdown for public sector

If you work in local government,this morning's news won't make particular good reading.

Councils are considering plans to reduce their spending which includes the possible cutting up to 170,000 public sector jobs in anticipation of a dramatic downturn in their budgets.

The news comes courtesy of the BBC based on answers from a survey of 49 councils with a combined workforce of 256,000,which suggests overall cuts of around 10 per cent.

According to the report

Roads, libraries, the arts and leisure appear most at risk of cutbacks. Children's social services, services for the homeless and planning appear to be safest.

Comment of the day

Comes from William Hague speaking at the Tory party spring conference in Brighton

Gordon Brown is like a credit card company who will always send you another letter saying it would be so easy when in debt to borrow even more. Every family, every small business, everyone except this Government knows it is the road to ruin.

Courtesy of Iain Dale

Maybe this will be the issue for the election-cut now or cut later

So now we have the war of the economists.

After last Sunday's pro Tory tacckling the deficit strategy in the Times,comes the FT's pro Labour response.

Far from worrying about what the financial markets will do to our credit rating 60 other economists have signed two open letters backing Labour's policy of delaying spending cuts until 2011.

According to the paper

The letters, while not overtly political, reject the Tories’ claim that cuts are needed now to reassure the markets and head off the risk of Britain losing its triple A credit rating.

The second one in particular will hearten Labour after yesterday's deficit figures for it backs the chancellor’s plan for tackling the deficit, warning that “with people’s livelihoods at stake, a responsible government should avoid reckless actions”.

So the battlelines on the economy are drawn and maybe this will be the issue for the election-cut now or cut later

Who is for turning over the deficit

It will be compared with the famous economists letter to Margaret Thatcher at the height of the monetarism experiment.

The Sunday Times' lead story being that 20 economists have written to the paper worrying that little is being done to tackle the budget deficit.

They state that

In the absence of a credible plan, there is a risk that a loss of confidence in the UK’s economic policy framework will contribute to higher long-term interest rates and/or currency instability, which could undermine the recovery.

adding that

the government’s goal should be to eliminate the structural current budget deficit over the course of a parliament, and there is a compelling case, all else being equal, for the first measures beginning to take effect in the 2010-11 fiscal year.

Whichever government comes to power in May they should take note that the signatories include the former chief economist of the International Monetary Fund, a former deputy governor of the Bank of England and head of the Financial Services Authority, and a former permanent secretary to the Treasury and cabinet secretary.

The letter will be no doubt seen as an attack on Labour,but really it should also apply to the Tories as both appear to think votes are more important than fiscal realities

A flaw in Osbourne's plans maybe

We may be on the edge of the EU's tackling or non tackling of the Greek crisis but its outcome may may profound effects on George Osborne's economic visions.

According to Chris Dillow,

Greece’s troubles cast doubt over George Osborne’s “new economic model”, which envisages a rebalancing of the economy away from public spending and towards exports?

after he has argued that tough fiscal medicine will be balanced by the creation of an export market as sterling weakens.

However

What if all countries are tightening fiscal policy? They can’t all have falling exchange rates.

Where do our exports go then

Stiglitz backs Brown

I am just reading the Independent's front page splash with Joseph Stiglitz.former senior advisor to Bill Clinton who wants Gordon Brown to defy economics and continue to reflate.

He says the paper

is appalled that the banks have expressed "not a note of gratitude" about the funding and subsidies they have received from taxpayers "without which they would not exist", and that they have had the cheek to turn around and say that they don't have enough money to lend to small businesses or would-be homeowners, but that they have to spend vast sums of money raised from often hard-up taxpayers on obscene bonuses

But it is advice to Gordon that for me stands out.He thinks that he should ignore any clamour to reduce the budget deficit and recoils at Cameroneconomics

"Because cutting back means the economy goes into a downturn and the markets lose even more confidence, as it will trigger another recession or depression." If we do do that, he says, we will get the dreaded "double dip" recession. He urges ministers instead to tell the opposition and those short-sleeved, short-sighted, short-memoried traders in the City to consider the investment and returns that will come from all the public spending we are doing.

for those who worry about our AAA credit rating

he finds it "unconscionable" that the British Government is now being held to ransom by the very credit ratings agencies – currently murmuring about withdrawing the UK's AAA rating – which fouled up so badly over sub-prime mortgages and all those unfathomable securities that landed us in the mess we're in now. And if the markets won't buy our gilts – the bonds the Treasury issues to cover its vast borrowings (about £175bn this year) – he wants the Bank of England to be "cooperative" and buy them instead.

Eurozone under crisis

Off the radar somewhat but fair play for the Independent in highlighting the story this morning is the worrying trend in European stock markets which have been plunging on fears of debt in Southern Europe.

As the paper reports

Some £30bn has been wiped from the FTSE in recent days, and it lost a further 1 per cent of its value yesterday as European policymakers again failed to reassure markets that the "contagion" could be contained. The crisis could push Europe, including the UK, into a "double dip" recession. In foreign exchange markets, the euro slumped to its weakest level against the dollar since May, and its weakest level against the yen for more than a year.

and as the FT says

The rout sent investors fleeing to the safety of US government debt, boosting the dollar to its highest level against the euro in more than eight months and sending US Treasury prices higher only days after the Obama administration forecast a $1,556bn deficit for 2010.

Problems in Greece,Portugal and Spain are puuting the Eurozone under its biggest test since formation and whilst the Greek government is urgently addressing those problems,it will need the giants of the zone,notably Germany to support such measures

Universities set for cuts

Meanwhile at the other end of education,we will see spending cuts announced for universities which will see according at least to the Universities, thousands of people missing out on degree courses in England.

As BBC news reports

Professor Steve Smith, president of Universities UK, the vice-chancellors' group, said the cuts would impact on the quality of teaching, as managers prepared to cut teaching budgets for the first time since Labour came to power.He added that the cuts would increase competition for places.