The government is expected to make an announcement today on how it will pay the compensation due to the victims of the infected blood scandal.
It is thought that the cost might be as high as £10 billion.
It is widely forecast that the government will treat this as capital spending and that it will be funded by an increase in government borrowing as a result. If this is claimed, the government will be lying and covering up the truth yet again, as if not a single lesson from this terrible episode is going to be learned. It will also be doing false accounting.
Capital expenditure is a sum spent on the acquisition of an asset that has value that will last beyond the end of the current period of account for the organisation making the payment.
There is quite literally no way on earth that the compensation payments owing to the victims of the infected blood scandal can be described in that way. They are sums due to them as a result of past failings by the government. No future benefit to the government arises as a result. It is impossible to claim otherwise. So, this is not capital expenditure.
It is, instead, a revenue cost. It should be provided for as such in the government's accounts at this moment when the liability is accepted as being due for payment. It should increase the deficit unless tax is raised to cover the cost. I have already suggested how that can be done, with ease.
However, both treating this as a revenue cost and covering it with tax are unacceptable to this government. As a result, they are planning to lie about the nature of the cost, account for it incorrectly, and plan to brave this out as yet another cover-up of the truth with regard to this matter.
I have already said this morning that government cannot be run to protect the powerful. That message has obviously not got through to Downing Street. It really is time that it did.
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In all the discussions one lesson that is being very much under reported – the purchase of American factor 8 was down to a failure to invest in the NHS and was chosen as the cheaper option. Time and again this is what is happening, driven by the Treasury – short term savings and long term costs.
Agreed
Thank you, both.
Twas ever thus.
In the past, I could have understood Treasury short-termism. However, having worked with the Treasury at times since 2007, initially on investor services regulations, I also think corruption has something to do with it. It’s not just the Treasury and not just the UK.
So often a domestic and / or European solution / capability has been ignored and / or rejected in favour of the US.
Older readers may remember https://en.wikipedia.org/wiki/Lockheed_F-104_Starfighter and the Westland affair.
One wonders what Richard made of the recent FT piece on reform of the Treasury.
We should be fearful that the Blair organisation has recruited many young Treasury officials since the pandemic receded.
Declaration: Mum’s big sister worked for what became British Aerospace. As she’s bilingual, we are Mauritian, she was seconded to what became Aerospatialle, worked on a series of Anglo-French projects and married a local colleague. So many misssed opportunities.
Surely they could just expand Ways and Means accounting, as they have already upped the previous £400m limit, and could extend this as far as they like ?
Wouldn’t that then automatically bring the funding under revenue accounting, even if its £10bn ?
If they wanted
But the fudning is niot the issue – that’s easy
The issue is the false accounting
According to the IMF (as reported in the Guardian) ” in order to stop debt rising, the Treasury may need to consider a range of potentially unpopular revenue-raising measures including widening the scope of VAT, road pricing, scrapping the triple lock on the state pension, raising more from inheritance tax and capital gains tax, and wider user charges for public service”.
Inheritance tax and Capital Gains, maybe but the rest…….. Could you please send them a few copies of Taxing Wealth.
@AliB I think the point is being missed everything is geared up to maintaining a form of People and Planet Harming Capitalism part of which is the large holders and controllers of capital greedily want to minimise their taxation but maximise it on others. To this end parliamentary, media and educational systems are subverted by all manner of means FPTP, Trojan Horse infiltration of radical parties, rigid editorial control, educational systems that avoid teaching how the monetary system has to work, etc.
Richard produced a very powerful challenge to conformist thinking about the appropriateness of the UK’s current taxing imposition with his Taxing Wealth Report yet neither Starmer nor the Guardian/Observer are making use of it to inform economic debate. They aren’t doing so because their central goal is to enforce mindless conformity to the needs of the super-rich whilst pretending to challenge those needs. That conformity is sociopathic the issue is how to get people to recognise it and what vehicles need developing to counter it.