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François Hollande vows to tax the rich to pay off French deficit

Leftwing frontrunner in presidential race launches manifesto

François Hollande, the leftwing frontrunner in the French presidential race, has vowed to make the rich pay the highest price to help drag France out of its economic crisis, while promising to pump more money into schools and state-assisted jobs.

The Socialist rural MP, who recently declared "my real adversary in this campaign is the world of finance", launched his manifesto on Thursday, a road map of how the left would deal with the financial crisis. Hollande said he would raise taxes for banks and big companies as well as France's richest people, and use the money to help wipe out the nation's crippling public deficit.

By scrapping some €29bn (£24bn) worth of tax breaks for wealthier people introduced under Nicolas Sarkozy, he said he could find €20bn to deal with the corrosion of French society: record unemployment, soaring youth jobless figures and an education system that has been shamed as one of the most unequal in Europe, where one in six children leave with no qualifications.

Read more here:http://www.guardian.co.uk/world/2012/jan/26/francois-hollande-french-presidential-manifesto

It is a pity we have no party in this country that will tackle the inequality, the tax and pension breaks for the richest and the wealth divide that characterise our society.

Ministry of Defence to cut further 3,000 civilian jobs

Defence secretary will be forced to admit MoD has miscalculated how many staff it can afford, Guardian learns

Another 3,000 civilians are to be axed from the Ministry of Defence to help it bring down an estimated 2bn overspend in its budget.
Philip Hammond will be forced to make the embarrassing admission in the coming days amid fresh concern within the MoD about how to balance its budget.

This anxiety has led the defence secretary to order the army, Royal Navy and RAF to go through all their key contracts and equipment programmes to ensure they are in line with their targets.

According to sources, the department still has a £2bn-3bn overspend and ministers fear this figure will rise, not fall, unless further action is taken.

The admission over the number of civilian job losses - which may have come from miscalculations in the money for civilians - is likely to put the department under even more strain, and force a rethink about where redundancies will come from.

The strategic defence and security review (SDSR) included a pledge to axe 25,000 civilian jobs from the MoD before 2015.

This is the baseline figure that the department and the unions have been working with since September 2010.

That has now been revised to 28,000. It is understood MoD finance officials have realised that the money set aside for civilians in the SDSR won't be enough to support the workforce they wanted – so more redundancies are needed.

In addition, the MoD will lose another 7,000 civilian posts between 2015 and 2020. It means the department's civilian workforce will have been cut from 75,000 to 40,000 within nine years.
Union leaders have asked for an immediate meeting with Hammond to explain the discrepancy, and are demanding to know why civilians are paying for the mistake.

They suspect the department lost track of how many people it employed at the time of the SDSR, which might have contributed to the accounting errors.

Steve Jary, national secretary of the Prospect union, said: "The truth is that cuts to civilian specialists in the department far outnumber cuts to the armed forces. Over 10,000 civilians left the MoD last year and it plans to cut another 10,000 in 2012. The department is already struggling to cope with its day-to-day business, and come the summer, will face a moment of truth. This is a disaster waiting to happen."

He added: "It just doesn't make sense. The armed forces needs both the skills and specialisms of those in the civil service coupled with the military capacity provided by our soldiers."
Though civil service cuts are considered more palatable politically, unions have warned the loss of core skills has already forced the department to buy in consultants on expensive, short-term contracts.

In December, the Guardian revealed that the department had spent nearly £600m over two years hiring outside consultants because it did not have enough in-house expertise.
A confidential internal report on the spending highlighted numerous flaws and rule-breaking, and warned that control of the MoD purse appeared to be "poorly developed or non-existent".

Earlier this week the MoD was strongly criticised by MPs on the defence select committee who said it was "grotesque" that the armed forces were being subjected to compulsory redundancies while no civil servants have yet been asked to leave against their will.

The committee dismissed explanations given by ministers and senior officials, describing the different treatment meted out to military personnel and civil servants as shocking.

The MoD defended the position, saying: "Reductions to the civilian workforce have had to be made to help tackle the financial black hole the government inherited in the MoD. Civilians receive considerably less in compensation than the average soldier; where a sergeant receives an average payoff of around £65,000, a civilian receives around £30,000 on average. The MoD civilian workforce is reducing by around 33% compared to a reduction of 17.5% in military manpower."

The MoD said the extra 3,000 civilian cuts were part of the annual planning round.

"Each year, we review our plans to take account of changes over the previous 12 months and to ensure that we have the right equipment and manning levels to meet the future needs of our armed forces as agreed in the Strategic Defence and Security Review. Final decisions have yet to be taken but this annual process rightly considers the status of all our key programmes to ensure the continued coherence and balance of the whole programme."

UK state debt is not £1 trillion – it is only £725 billion

Stories abound on the fact that the UK supposedly has state debt of £1 trillion for the first time. (We published a story to that effect yesterday) This however is not true according to Richard Murphy at Taxresearch.

Over the last few years the UK has issued debt as shown below totalling about £560 billion.
I have based all my data on the national accounts for the third quarter of 2011 unless otherwise noted. It’s the borrowing since 2008 that has supposedly given rise to the debt of £1 trillion.

(To see the detailed figures please visit: http://www.taxresearch.org.uk/Blog/2012/01/25/uk-state-debt-is-not-1-trillion-it-is-only-725-billion/ )

However, it should be noted that the government has done something else at least as significant. Through the quantitative easing programme the Bank of England has repurchased or will be soon repurchasing near enough £275 billion of that debt (I’ve shown the last £75 billion as happening in Q3 of 2011 as that’s near enough when it was authorised).

Now the Bank of England is owned by the UK government so if, in accounting terms, a consolidated set of accounts were to be prepared the £275bn owed by the Treasury to the Bank of England would simply be crossed out, or ignored. The actual debt would only be £725 billion.

And in this case that would be absolutely the right point of view. There is no hope at all that this debt will ever be sold back into the markets: there’s enough new debt to sell to meet all market demand for UK debt without ever re-selling this stuff. So it’s absolutely right to say this debt does not exist and should not therefore be in the statistics at all because for all practical purposes it has already been written off. And as important, the interest paid on that £275 billion should not be considered government spending justifying cuts either: that interest is paid straight back to the government.

Then note what this does to the narrative on average borrowing. OK, this data misses quarter 4 of 2011 as the information is not yet available, but over 6.75 years the average borrowing is near enough just over £42 billion and that’s a remarkably consistent sum over time and is only 3% or so of current GDP; and that’s within the Maastricht limits, let it be noted.

Nor is there any hint now of this QE causing inflation, all of which can safely be said to have had other causes, not least because as Government accounts also show, the M3 measure of money supply has fallen steadily since 2009, meaning there is no prospect of inflation in the future either as a consequence of this process.

So we have no debt crisis. We just have misinformation about how big the debt is and about how much we’re borrowing. Tell the truth, as I have here, and you get a very different picture indeed. And that would also lead to very different economic policies too. Because tell this story and the focus need not be on cuts that we do not need but on growth that we do need. False accounting is forcing the national political agenda in a direction in which it need not go.

It’s all a matter of getting the story right and on this occasion it takes an accountant to do that.
So shall we stop all the other nonsense, now and get on with the real issue, which is we have low net borrowing that we can afford, lower interest costs than the government claims and the basis for sustainable recovery already in place. All we need to do is grab the opportunity.

So, why the interest in beach volleyball, Minister?

Government claims it is a coincidence MPs 'bought DOUBLE the number of tickets for 'skimpy outfit sport'

Arguably, it is an Olympic sport that would be equally at home on a Baywatch film set as it will be at the Games.

Yet the Government has insisted it is pure ‘coincidence’ that ministers have bought double the number of tickets for beach volleyball – famous for its skimpy outfits – as they have for athletics.

Former Labour sports minister Gerry Sutcliffe asked if it was just an ‘oddity’ that ministers bought 410 tickets, worth £26,000, compared with 246 for athletics.

Read more: http://www.dailymail.co.uk/news/article-2091350/MPs-bought-DOUBLE-number-tickets-London-2012-volleyball.html#ixzz1kSfh60SW

Harrier sale consultants net £1.1m

The Ministry of Defence paid consultants over £1.1m for their part in the sale of the UK's Harrier jump jet fleet to the United States, it has been revealed.

Defence Equipment, Support and Technology minister Peter Luff revealed the figure in the House of Commons following a question from Madeleine Moon MP.

The US paid around £110m for 72 Harriers, meaning that consultants netted around 1 per cent of the final value of the deal. The payments are understood to be part of a wider consultancy deal with Alix Partners, which drew criticism last year when it was revealed that their consultants were being paid around £3,950 a day for their work as savings consultants.Luff said that the MoD paid no other external bodies during the trade deal, which was announced in late November 2011."

No external legal or currency brokerage costs were incurred by the Ministry of Defence for the retirement of the Harrier fleet or for the sale to the US Government," said Luff. "The external consultancy costs for these two activities were £0.7m and £0.4m respectively. We do not expect to incur any further costs relating to the retirement and sale to the US Government of the Harrier fleet."

The value of the sale is $180m (around £110m). This figure includes 72 Harrier airframes, spares and associated support equipment. The MoD will receive monetary payment from the US government for the full value of the Harrier sale before 1 April 2012. Overall £1bn will be saved from removing the Harrier from service."Luff said that the money from the sale would be retained by the Ministry of Defence so that it could be reinvested in "key priorities".Shadow Defence Secretary Jim Murphy said the £1.1m cost was "extraordinary".

"Ministers must explain why others are profiting from decisions which have seen thousands made redundant and Britain left without an aircraft carrier with aircraft for a decade. Surely this money could be better spent to help preserve jobs or important capabilities," he said."

It's plain wrong for a consultant to be paid more in a week than many of our soldiers receive in a year. David Cameron and his Ministers are losing all credibility on defence."Madeleine Moon told The London Evening Standard she was "appalled" at the consultancy bill for the sale.

MoD redundancy payoffs cost £75m

The Ministry of Defence has paid out more than £75m to civilian staff who have been made redundant in the last three months, it has been revealed.

Around 2,500 of the ministry's staff received an average payout of around £30,000, official figures published in The Guardian show.

Over 25,000 civilian redundancies were called for by 2015 in 2010's Strategic Defence and Security Review. With an average payout cost of £30,000, the SDSR-related redundancies could cost the Ministry £750m, although savings in the salary bill over time will be significantly higher, helping the MoD tackle its budgetary 'black hole'.

A Ministry of Defence spokesman said that the average civilian member of staff had received "considerably" less in their redundancy payouts than military personnel."Where a sergeant receives an average payoff of around £65,000, a civilian receives around £30,000 on average," the spokesman said."

The MoD civilian workforce is reducing by around 33 per cent compared to a reduction of 17.5 per cent in military manpower.

"Shadow defence secretary Jim Murphy said the figures showed government's priorities were wrong."David Cameron is culling the army in their thousands while spending millions on civil service payoffs," said Murphy. "He needs to get his priorities straight. People worried about the impact of the cuts on families and the front line will be angry at this news."

UK debt passes £1 trillion for the first time

UK public debt has passed the £1 trillion mark for the first time, as the Government borrowed nearly £14bn last month despite its continued austerity drive. (The Telegraph)

Public sector net debt excluding financial interventions, such as bank bail-outs, rose to £1.004 trillion in December, the highest since records began in 1993.

The Office for National Statistics (ONS) said it expected the figure to ease back in January due to tax inflows, but to rise again in February.

However, borrowing in December came in lower than expected, putting Chancellor George Osborne further ahead of a target set by the Office for Budget Responsibility (OBR) to bring borrowing down by £10bn to £127bn this financial year.

The ONS said that public sector net borrowing, excluding financial interventions fell to £13.7bn in December, down from £15.9bn in the same period in 2010.

Sterling slipped slightly against the euro following the news, after falling close to a four-week low on the back of better-than-expected eurozone PMI surveys. The pound also fell a quarter of a cent against the dollar, to $1.5534.

Vicky Redwood, senior economist at Capital Economics, said that the £1 trillion figure was "a reminder of the enormity of the challenge that still lies ahead to get the public finances back on a sustainable footing."

She added: "We expect weaker growth than the OBR is forecasting to make its future borrowing forecasts much harder to meet. Indeed, so far, it has been weaker spending growth helping borrowing to fall, whereas tax receipts are falling short of the fiscal forecasts."

Stalling growth saw the Chancellor revise UK borrowing forecasts in last year's Autumn Statement. Borrowing is now expected to be £5bn more this financial year than originally forecast, £19bn higher next year and £30bn higher in 2013-14.

The OBR also said in November that downward revisions to its growth forecasts meant that the deficit would also shrink less quickly over the next five years.

Most economists expect official GDP figures released on Wednesday to show the UK economy contracted during the final quarter of 2011.

Growth is expected to have fallen 0.1pc in the three months to December according to a Bloomberg poll, compared with a 0.6pc rise during the third quarter.

The International Labour Organisation (ILO) warned on Monday that Britain risks falling back into recession because of an "unabated" weakening of the jobs market, while the Ernst & Young ITEM Club and the Centre for Economics and Business Research believe that the UK is already in recession.