… and of course the government delayed reports loaded with bad news. The UK is broke and gets ready to default on its debt.
Ministers bury £32bn tax crisis as recess starts
A mountain of bad news was buried by the Government as it rushed out reports and 26 ministerial statements the day before MPs go on holiday. Whitehall sources said that many of the reports were ready to be published weeks ago, and would normally be released in stages, but ministers had insisted they all be delayed till yesterday.
The dangerous state of the public finances was laid bare by the reports, which showed that the Government’s tax take plummeted by £32 billion last year. Figures from HM Revenue & Customs showed income tax, national insurance, VAT, stamp duty and corporation tax fell by £21 billion, while other debts and legal liabilities had cut income by a further £10 billion.
Related article: Flow of tax cash into Treasury drops by £32bn (Telegraph)
The figures were disclosed as the National Audit Office (NAO) refused to sign off six sets of Whitehall accounts because of fraud, error, overpayments and IT problems. The accounts, covering billions of pounds, included the Ministry of Defence, the Treasury, the Revenue, the Department for Work and Pensions, the Home Office and the Equalities and Human Rights Commission. The Government also slipped out reports criticising its training programmes and announced delays in several policy areas.
Philip Hammond, Shadow Chief Secretary to the Treasury, said: “It is a disgrace that the Government is apparently trying to sneak out these very important reports at the fag end of the parliamentary session. It gives no time for MPs to hold ministers to account — presumably what Mr Brown intended.”
It also emerged that HM Revenue and Customs has set aside nearly £5 billion to deal with potential claims after a legal victory over VAT by a relative of Ian Fleming, the author. About 13,000 businesses that claim they have overpaid tax have sent in claims in the wake of last year’s legal action by Michael Fleming, an Aston Martin dealer.
Yesterday’s revelations included:
— stamp duty receipts dropped by £6.1 billion from 2007-08. Corporation tax take fell by £5 billion and VAT fell by £5 billion. Income tax and national insurance contributions dropped £5.7 billion, as the Government increased personal allowances to compensate those hit by the abolition of the 10p tax rate;
— a faulty IT system handling army payroll had resulted in £140 million of errors, according to MoD accounts. The NAO pointed to limited checks that were carried out, allowing an increase in suspected fraud. The document also showed that the MoD had been unable to account for £155 million of secure radio sets that had been issued to troops fighting in Afghanistan and Iraq;
— the Treasury failed to stem fraud and error in the tax credit system, which rose from 7.8 to 8.6 per cent last year. This included 50,000 cases of fraud in the system administered by HM Revenue & Customs, accounting for between £100 and £200 million;
— a highly critical report on the Equalities and Human Rights Commission lambasted its decision to hire consultants who had already been paid hefty redundancy payments by the Government when three equality commissions merged. Its accounts showed £311,000 had been paid in consultancy fees to seven employees, who had been paid £629,276 in severance costs;
— the Treasury accounts revealed that it had spent £24 billion bailing out banks last autumn without parliamentary approval. Lloyds Bank and Royal Bank of Scotland had bad loans guaranteed under the asset protection scheme to stave off a banking meltdown. A Treasury spokesman claimed there was no time to ask MPs;
— a training scheme that cost almost £1.5 billion was said to be a waste of money. The NAO said Train to Gain, which arranges training on behalf of employers, paid £11 million after claims made in error. Almost £3 million was not recovered. At least a third of trainees failed to complete their course;
— a review of the impact of housing development on gardens has been delayed “because of the larger than expected volume of responses”. Ministers won’t say whether the evidence suggests that there is a threat from developers to garden land;
— ministers will consult on whether to extend free HIV treatment to foreign nationals beyond diagnosis and counselling. Free NHS care is to be extended to failed and destitute asylum seekers and those with children;
— family legal aid reforms are being postponed. The £528 million bill has risen by 25 per cent; the numbers represented have dropped by 11 per cent. Consultation on a new fee structure ended last March. “Further analysis” is needed, Jack Straw said yesterday.
July 21, 2009
Jill Sherman, Sam Coates and Gary Duncan
Source: The Times