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thomas davison

Chancellor's cuts and tax rises aimed at slashing debt 'fail' as public borrowing goes up �600MILLION in a month�Official figures show rise in borrowing in July unexpectedly rose sharply
�Government had hoped to pay off �2.2bn of debt but instead it needed �600m more
�Public sector net debt hits �1 trillion, 65% of the UK's GDP

By Martin Robinson
PUBLISHED: 14:20, 21 August 2012 | UPDATED: 14:30, 21 August 2012

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Blow: George Osborne's austerity policies have again been called into question after public borrowing rose last month
George Osborne�s deficit reduction plans were dealt a heavy blow today when official figures revealed a shock �600 million rise in borrowing last month.
And in even worse news for the Chancellor he may have to borrow at least another �10 billion more than last year, despite his cuts and tax rises.

The shortfall has been caused by a fall in tax receipts and rising numbers claiming benefits as Britain's toils in its worst double-dip recession for 50 years.
Around �2.2 billion of debt was expected to be paid off last month, but instead the Government needed to borrow �600 million more, according to the Office for National Statistics.
This compared with a surplus of �2.8 billion in the same month last year, dashing the City�s expectations of a surplus of �2.5 billion in July.
Public sector net debt is now above �1 trillion, compared to �940 billion a year ago, and now represents 65.7% of the UK�s GDP, up from 61.8% last year.

'At this rate, borrowing for 2012/13 overall will massively overshoot the Office for Budget Responsibility�s forecast of �120 billion excluding Royal Mail effects by over �35 billion.

'And with the recovery falling well short of the OBR�s expectations, we think that the Government will struggle to cut borrowing at all next year either.'
July is normally a strong month for tax income for the Treasury, but total receipts fell 0.8%, driven by a drop in corporation tax, while Government spending increased 5.1%.
In a further blow to the Chancellor, net borrowing for April to June, was revised up by �1.4 billion.

That means borrowing so far this year, excluding a one-off boost after assets from the Royal Mail�s pension fund was transferred to the Treasury, is �44.9 billion, �9.3 billion higher than a year ago.

Mr Osborne is in the process of rolling out billions of pounds of spending cuts and hundreds of thousands of public sector job losses in a bid to slash the budget deficit.

But the plans have been hit by the UK�s return to recession, which is hurting tax revenues, while high levels of unemployment are increasing the burden on the state.
Social benefit payments rose 6.2 per cent to �16 billion in the month while a fall in corporation tax drove a 6 per cent fall in taxes on income and wealth, although this was largely impacted by the closure of the Elgin gas field in the North Sea following a leak.

Staying the course: The Treasury said today it must stick to its guns on cuts but critics have called on the Chancellor to adopt a plan B
A Treasury spokesman said: 'Tax receipts are coming in below forecast but this is mostly explained by the weakness in corporation tax, especially from North Sea oil production.

'The Government remains committed to the credible plan we have set out to deal with Britain�s debts, and today�s numbers emphasise how risky it would be to deliberately increase borrowing.'

Shadow Treasury chief secretary Rachel Reeves said Mr Osborne should now accept that his economic strategy had failed and he should change course.

'This is a damning indictment of a Chancellor who promised to secure the recovery and get the deficit down,' she said.

'His failed plan has delivered the exact opposite - a double-dip recession which is leading to soaring borrowing. What more evidence does the Government need that their plan has failed and they need to change course?

'Unless the Chancellor takes urgent action now, he will end up not only borrowing billions more to pay for economic failure but he risks causing long-term damage to our economy too.'

The disappointing figures will add to fears that the UK�s cherished AAA credit rating could be at risk and will heap further pressure on the Government to scale back its austerity measures.
But David Kern, chief economist at the British Chambers of Commerce (BCC), said: 'While there are many calls for the Government to abandon its austerity plan, this is not the answer.

'To maintain credibility, we need to persevere with spending cuts, but supplement them with forceful policies to boost growth.

'If the UK is to return to growth, we need to see more deregulation, increased infrastructure spending, and the creation of a state-backed business bank.'

These rich guys think they are playing monopoly and if they get it wrong they can start again, a 1000 bullets will change this country.