In the Red Corner, Jeremy Corbyn, suitably fired up by Richard Murphy and his ilk, wants to reduce corporate subsidies, which they claim amount to £93 billion a year.
I have a nasty feeling that they started at the wrong end when they calculated this, see e.g. here. In other words, they are looking at the extra tax which they think businesses ought to be paying; and that £93 billion figure is plucked out of the air.
But I do have some sympathy with the general approach and, as we will see, their £93 billion number is - probably by luck rather than judgment - actually not far off.
In the Blue Corner, we have the Taxpayers' Alliance, who know bugger all about 'tax' and deny there is an implicit subsidy to landownership, but do absolutely sterling work when it comes to identifying public sector waste and overspend see e.g. The Bumper Book of Waste.
I have a lot of sympathy with their approach as well.
Clearly, people draw a big distinction between overly generous tax reliefs and subsidies actually paid in cash; and between old age pensions and working age welfare payments, but ultimately they are all the same thing. In which case, the biggest subsidy is to the owners of UK residential land, and is worth about £200 billion a year (notwithstanding that working owner-occupiers are paying for their own subsidies twice over via taxes on their earning and spending).
So what does HM Treasury's Public Expenditure Statistical Analyses 2014 say..?
Table 5.3 tells us that goods and services acquired from the 'private sector', plus grants and subsidies are £258 billion a year (38% of total govt spending); public sector pay and pensions are £174 billion (26%) and welfare and pensions are £242 billion (36%); and out of that 36%, two-thirds is old age welfare and one-third is working age. The overs and unders net off to nothing, ignore those.
How much of that £258 billion is waste and/or overspend? A quarter? A third? What does the TPA say? Ministry of Defence, NHS IT projects, PFI projects, all this nonsense? The cost of over-employment in the public sector pales into insignificance, despite all the revolving door quangocrats on six-figure salaries.
Add to that most egregious tax break of all, tax relief for pension contributions of £30 - £40 billion, all of which is creamed off by 'the pensions industry' and none of which actually goes into higher pensions?
Bung in third world aid and gross EU contributions (about £20 - 25 billion in total), which are largely recycled back to 'private' UK businesses, and £93 billion a year is not far off, is it, perhaps the true figure is more than that?
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