Central government funding and other fairy tales

The government has used many ways to persuade us that they are bestowing their magnificent largesse on us, in amounts far beyond our wildest dreams. First of all they the excelled at "re-announcements", where sums of money could be flashed around when a project was first conceived, repeated when the same idea was affirmed, then again when approved, and again when funded etc.

When that began to fall flat, they moved on to the “give with one hand while taking away with the other”. This would often show up in the Budget as a tax giveaway, which was quietly noted elsewhere as being funded by a tax increase. The best example was a much heralded 2% reduction in the rate of corporation tax which was supposed to stimulate business. On closer inspection was entirely funded by a reduction in the standard rate of writing down allowances from 25% to 20%. In other words there was no net saving in taxes paid by companies (because the corporation tax rate cut was funded by the cut in allowances against corporation tax), and in fact the net effect was to shift more of the tax burden to capital intensive industries, precisely the types of industries that would most likely create stable long term employment.

When that began to wear thin, they moved on to the "nebulous announcement". A typical announcement would be the G20 £5 trillion of global stimulus (which is simply a figment of Brown’s imagination), or the other measures listed at the G20 summit in London, which were either announcements of initiatives which had been in place for years (trade finance: i.e. export credits as we have had for decades), amounts already committed, or permissions for multinational agencies to borrow more or to print SDR’s (travellers cheques for central banks), without any commitment to actually make any investment.

As reported ten days ago, they have a new technique in the Butchering Britain’s Future program. The idea is to announce new spending measures, without mentioning that they will be financed by cutting back previously announced projects, thereby reaping the political rewards of announcing two projects while actually only completing and paying for one, usually in a Labour heartland.

When Mr Brown said that £1.5billion would be found to pay for 20,000 new homes for those on low incomes and council house waiting lists, he omitted to mention that nearly £600 million would come from the Department for Communities and Local Government who would take it from housing projects already announced as well as from projects to refurbish council and private rented homes.

So John Healey, the Housing Minister, has written to leaders of 50 councils saying how much of their funding for new homes they will lose next year. The average 42%. Cambridgeshire County Council will see their funding reduced from £13.8million to £7.8million. Greater Norwich will lose more than £2.5million. King’s Lynn is losing £2.7million, Exeter and Devon £3.5million, Teignbridge £2.7million and South Hampshire £4million.

44,000 council houses will also not be refurbished next year because £150million is being taken from the Government’s Decent Homes programme and a further and 8,600 private rented houses will lose £75million of funding for a scheme to upgrade rented homes in the private sector.