Mr Osborne has been in the news a few times of late, both supporting the comments of a Coalition MP and in his own right. Both times he has got his sums wrong, or more correctly he tried to persuade the electorate that his numbers were something they were not.
A politician trying to fool us, well I never.
The first case was an attack on the big oil companies, you know, the money grabbing greedy scum that run ESSO or SHELL or the others, the ones who make our petrol so expensive. The ones who put the prices up like rockets and lower it more slowly than falling feathers when the oil price changes.
Interesting metaphor, if gives a clear image of greed capitalist corporations screwing every last penny out of the poor sods who have no choice but to buy petrol, what with the state of public transport these days.
But as people looked into the numbers something funny happened, Osborne scored an own goal by bringing the numbers to the public’s attention. Now most people around about the buget listen to some chancellor drone on about a penny on the fuel levy or it stays the same. But that’s a politician talking and its then followed by a bunch of dry and boring TV presenters saying the same thing.
Lets be honest hear, how many of you fall asleep or change the channel when the budget comes on then skim the highlights in a paper the next day.
So it probably came as a bit of a surprise when people started breaking down exactly how much our petrol costs so they could point the finger of blame at those greedy corporate types who were robbing us blind.
The price of oil has dropped 20% this year, that’s nice. But the price of petrol has not dropped by 20%, oh noes, those greedy Oil companies are stealing from us, robbing us blind etc etc.
Out comes the Lib Dems and the Tories to stand up for us poor petrol buying fools who are being cheated. Because, you know, they care for us. Either that or there is an election coming up.
Trouble is, the greedy types who are robbing us blind are not the big oil companies, well they are a bit, but the real robbers are the government.
Let’s have a look at a nice little image that sums it up:
A litre if Petrol. Where does that price come from. If you pay £1.24 a litre what is the break down.
40.4p for the actual cost of the oil, refining and shipping.
5p to the profit of the retailer.
57.95p in Fuel duty tax to the chancellor.
20% VAT on the price.
Well well, those greedy petrol stations are taking 5p from every litre of petrol to pay themselves, talk about money grabbing. Then we have the price of the product, buying the oil, shipping it to a refinery, turning it into petrol and shipping it to the petrol station. This does go up and down with the price of oil though it doesn’t mirror it exactly and it does change more slowly that the oil price drops. Yes those money grabbing oil companies cheat us by a few pence on every litre of petrol. Talk about fleecing us.
But wait, what is that huge great chunk of money being taken by the government, the fuel tax. Oh and the VAT. Almost 80p in every litre that is NOT going to the petrol seller or the oil company.
The fuel levy is fixed, so as the price of oil drops as it is doing now the government tax becomes a larger part of your fuel costs, oil may get cheaper, taxes never do.
Plus, and here is the really funny part. VAT. Value Added Tax, a 20% tax imposed by the government on Petrol. That’s 20% of the cost at the pump which is the Fuel duty, the product and the retailers share.
Which means that the UK government, our caring chancellor and every other tax hungry money grabbing politician that has held that job is TAXING US FOR PAYING A TAX!
That’s right, we are being taxed on the money we are paying as a tax. Just how can that ever be justified as being fair?
To pay tax on the money that is being taken from you as a tax.
Just who is the greedy money grabber round here George?
The other attempt to fool us comes with the government reaching a deal with the EU over that £1.7 billion that the UK owes on account of the drugs trade and prostitutes doing more business.
Cameron had his little staged angry minute and then he and Osborne charged off to negotiate the matter. Then we had congratulations, the celebrations, the back slapping. He had done it, the money we owed was halved. We were only going to pay £850 million. Oh and we didn’t have to pay until after the next election and the UK wouldn’t be paying interest on the outstanding sum.
Wow, well done that man. So we are only paying £850 million (which is a lot of nurse and police wages but not a lot compared to the UKs annual budget). Well break out the champagne.
Of course then he explained how it was being done and people started asking a few questions and working out what was going on. Which seems to be pulling the wool over the eyes of the electorate yet again, lies, more lies and some statistics carefully taken out of context.
Lets start with what exactly the EU rebate is.
Many years ago, when the UK was one of the poorest members of the EU our PM of the day went to Brussels and gave them a dammed good handbagging, Mrs Thatcher came home having secured a UK rebate.
This has been changed over the years, Blair reduced it somewhat, but it’s still there and we still get it. So what is it.
Simple version, ruddy complex accounting.
Short version, the UK gets a rebate of 66% of the money that it pays into the EU that is in excess of what it gets back from the EU. This was to reflect the fact that at the time a huge chunk of the EUs budget was the Common Agricultural Policy from which Britain received very little. So the rebate was based on the CAP.
The rebate is based on CAP spending across the 15 EU members that were present when it was arranged, all members since then are not covered and given that they are the central and eastern European members who generally receive more from the EU funds than they contribute to it money spend on them is not factored into the UK rebate. So certain types of EU spending that UK money contributes towards does NOT qualify for inclusion in the rebate and certain types of spending in the 15 countries does qualify.
Like I said, ruddy complex accounting.
Anyway the rebate is generally done the year after payment is made which would have been 2015 based on a December 1st 2014 payment date.
Interest was to have been charged if the sum was not paid on time as well, nothing like adding insult to injury.
Now Dave and George has done their negotiating and come back all happy to tell us that they have halved the amount we are to pay. Not £1.7 billion but a mere £850 million. George also managed to get them to delay payments until July and September 1st next year. After the next general election so if it goes pear shaped he will be off on his toes and the next bloke has to sort out the mess.
Thing is, the rebate is a repayment, as in something is paid back after you have paid in the first place.
The UK gets its automatic rebate on all payments, there was nothing to negotiate on that one, Maggy did that years ago. So basically what George managed was to get rid of the interest charges and to delay payment. An achievement to be sure but hardly the great victory being proclaimed.
The UK is still paying £1.7 billion next year, then the EU will calculate the rebate for the entirety of the UKs payments to the EU and work out the rebate for the year. How much rebate will be due on the £1.7billion will depend on total payments for the year and where the money has been spent, that will be worked out next year.
Call me cynical, people do, but I’m thinking that somewhere in this whole mess the only way we will be seeing £850million in rebates will be fancy accounting based on all the 2015 figures, not just George and his deal over the £1.7billion.
The treasury says we are going to pay the full $1,7 billion, every leader in Europe says we are going to pay the £1.7billion. Accountants and financial experts who have looked at the deal say we are going to pay the full £1.7Billion.
George and Dave say we will only actually pay £850million.