Category Archives: uk economy

UPDATED DIFFERENCES IN UK GOVERNMENT FUNDING BETWEEN THE NATIONS OF THE UK


THE UPDATED DIFFERENCES IN UK GOVERNMENT FUNDING BETWEEN THE NATIONS OF THE UK

Back in 2009 the cross-bench independent House of Lords Committee enquiring into the Barnett Formula funding allocation system reported that England was subsidising Scotland, Wales and Northern Ireland to the tune of £49 billion a year. 

Here is a link to that report >>> The Barnett Formula Report with Evidence published 17 July 2009

https://publications.parliament.uk/pa/ld200809/ldselect/ldbarnett/139/139.pdf

Given the years that have passed since I think it is worth reviewing what public spending is now in the 3 different Nations and in the Province of the United Kingdom. Here are the figures:-

THE PROVINCE OF NORTHERN IRELAND

Population 1.9 million

Public spending per head £14,018 (approx. £14,263 after deal)

Social security 43 per cent: local politicians effectively refused to approve benefit cuts in 2015 and received a £585 million package to soften the blow over four years

Health 19 per cent: funding cuts for GPs have forced some frontline services to be withdrawn and over 6,500 patients waited over 12 hours in A&E last year

Education 13 per cent: Northern Irish pupils are the highest performing in Europe at primary level for maths but a third of GCSE entrants do not achieve five A*-C grades

Public sector workers 25.2 per cent

Private sector workers 74.8 per cent

THE NATION OF ENGLAND

Population 55 million

Public spending per head £11,297

Social security 45 per cent: cuts to benefits have failed to offset the spiralling cost of pensions, which under the DUP deal will still be protected by the triple lock

Health 24 per cent: the Red Cross warned in January that NHS England faced a “humanitarian crisis” amid chronic bed and staff shortages and long waits for care

Education 14 per cent: Many schools are facing real-terms budget cuts under the government’s new funding formula and last year the number of A*-C grades at GCSE saw its sharpest decline since 1998

Public sector workers 17 per cent

Private sector workers 83 per cent

THE NATION OF SCOTLAND

Population 5.4 million

Public spending per head £13,054

Social security 41 per cent: legislation to give the Scottish government control over 11 benefits has been introduced in Holyrood, which the SNP hopes will ease Westminster cuts

Health 21 per cent: only 5 per cent of A&E patients wait more than four hours despite a staffing shortfall and £100 million bill for locum doctors

Education 13 per cent: literacy and numeracy rates have declined or flatlined since 2012 but fewer pupils are leaving school with no qualifications

Public sector workers 21 per cent

Private sector workers 79 per cent

THE NATION OF WALES

Population 3.1 million

Public spending per head £12,531

Social security 46 per cent: Wales’s population is the most deprived in the UK

Health 21 per cent: the Welsh NHS has repeatedly missed targets despite high investment and is suffering from a shortage of full-time nurses

Education 13 per cent: Welsh students score lowest in the UK for science, reading and maths and Carwyn Jones, the first minister, says that the country’s schools are “crumbling”

Public sector workers 20.8 per cent

Private sector workers 79.2 per cent

These figures do clearly show the effect of England’s subsidy to Scotland, Wales and Northern Ireland. They have more public sector spending on every man, woman and child and they also have a higher level of State employment. All of that is dependent upon the English taxpayer.

It should also be noted that these figures do not include capital spending and that is split in the same sort of way which explains why Scottish, Welsh and Northern Irish politicians are so keen on HS2, since as a result of that money being spent in England, they will get extra windfalls of tens of billions of pounds of English taxpayers’ money!

So far as Ulster is concerned, Theresa May’s DUP deal is the latest subsidy windfall for a Province long reliant on the English taxpayer.

As the Times recently put it:-

“The £1.5 billion price tag for the DUP’s confidence and supply deal — equivalent to an extra £530 for every resident of Northern Ireland — has caused raised eyebrows at Westminster and across the rest of the UK.

But in one respect the windfall is nothing new: The Province of Northern Ireland has long received the most generous funding of any region.

Despite its population of just 1.9 million, public spending per person is higher in the province than anywhere else in the UK: £14,042, according to the Office for National Statistics.

Almost a third (27.4 per cent) of the Northern Irish workforce is employed by the public sector, compared to just 17 per cent across the UK as a whole. Tuition fees remain heavily subsidised and prescriptions are free, as is domestic water. Unlike the other devolved administrations, Northern Ireland runs its own social security system but the money flows directly from the Treasury.

This high public spending and low tax revenues means Stormont’s budget deficit — £9.6 billion in 2014 — is equal to a third of Northern Ireland’s total economic output.

Though that figure is vastly higher than most other developed economies, Northern Ireland defies easy comparison for one very obvious reason: “the Troubles”.

As DUP chief whip Sir Jeffrey Donaldson pointed out last week, decades of conflict have posed huge structural challenges for its economy. Resolving the Troubles has in practice meant the Exchequer alone footing the bill in the absence of significant inward investment from the private sector.

Keen to preserve the delicate constitutional settlement at Stormont, Westminster effectively allowed local politicians to refuse to implement the worst cuts in the coalition years. Not for nothing did the Northern Irish historian John Bew say: “The only thing that unites Northern Ireland’s parties is the way they hold out their hands for money. It’s the SNP on crack.”

Though it is hoped that a planned reduction in Northern Ireland’s corporation tax rate to 12.5 per cent next year – in line with the Republic – will help rectify the imbalance in public and private spending, the DUP deal means a long history of state subsidy will continue.”


Explosive Report on Guy Fawkes’ day – Immigration of NO net economic benefit to UK!

Migration Watch UK have issued a Comment on CReAM’s revised report ‘The Fiscal Effects of Immigration to the UK’.

CReAM is the acronym of
the Centre for Research and Analysis of Migration. It is based at UCL and is part of the classic Leftist trick of creating a network of mostly bogus groups that pop up in an orchestrated or choreographed way to respond issues that are of interest to the Left. Here are some links:-

NORFACE – New Opportunities for Research Funding Agency Co-operation in Europe NORFACE is a partnership between fourteen research councils to increase co-operation in research and research policy in Europe. Over the five project years, the partners will engage in a range of initiatives designed to deliver new levels of co-operative research policy and practice.
CReAM – Centre for Research and Analysis of Migration CReAM is an independent and interdisciplinary research centre located in the Department of Economics at University College London. CReAM’s research focuses on the causes, patterns and consequences of international population mobility and movements affecting UK, Europe and associated global processes.
European Migration Information Network Based in the Migration Research Unit (MRU) at UCL, it also provides a web-based system to quickly locate useful data related to migration issues.
The Economics and Politics of Employment, Migration and Social Justice Anglo German Foundation Project coordinated by Prof. Christian Dustman, University College London
Migration Research Unit The Migration Research Unit is based in the Department of Geography at University College London. It carries out high quality research on international population migration issues.

In this case most of the funding (maybe all) came from the EU funded “European Research Council”. So you, dear taxpayer, paid for it!

In assessing the credibility of Cream’s “Experts” you might like to bear this report in mind:- ” ‘Expert’ behind migrant report was man who said just 13,000 would come from Eastern Europe  http://www.dailymail.co.uk/news/article-2822825/Expert-migrant-report-man-said-just-13-000-come-Eastern-Europe.html#ixzz3IfPrzX8m
 
Here is Migration Watch’s comment:-
“This report confirms that immigration as a whole has cost up to £150 billion in the last 17 years. As for recent European migrants, even on their own figures – which we dispute – their contribution to the exchequer amounts to less than £1 a week per head of our population.”

Migration Watch UK Press Comment on CReAM’s revised report ‘The Fiscal Effects of Immigration to the UK’

1. CReAM have now published a revised version of their paper first put out in November 2013 on the Fiscal effects of immigration to the UK. The original CReAM paper was given extensive media coverage and flourished as conclusive proof that immigration was a fiscal benefit to the UK, and that migrants contributed more in taxes than they took in public spending. It was claimed that their estimations were robust and certain and made on the most extreme of conservative assumptions.

Migration Watch published an assessment of this original paper highlighting that

The presentation of the paper had failed to highlight its own finding of an overall fiscal cost of some £95bn to the UK from 1995-2011.
Despite its claims of using ‘worst-case’ scenarios, in many cases the paper in fact detailed very much best case scenarios that were likely to have overstated the contribution made by migrants.
In areas where it was claimed that no evidence was available, there was such evidence and that a paper purporting to provide robust and certain results should take these into account.Our assessment suggested that the likely fiscal cost of migration over the period might well be over £140bn.

The authors have now carried out what they call ‘robustness checks’ using different scenarios that do take on some of the points raised by Migration Watch and others. None of these reduce the overall fiscal cost. In fact the overall finding – still absent from their headlines – now appears to be a fiscal cost of £114 billion [para 4.2.1] as a best case, and worse-case scenarios extending this to a cost of up to £159 billion [Table A7 Panel (a) (c)] . Quite different from their previous suggestion that the worst case was a cost of £95bn, and with the MW assessment well within this range.

In their press release the authors continue to avoid highlighting their overall finding of this high fiscal cost of migration of billions of pounds each and every year between 1995 and 2011.

Instead, as before, they cherry-pick particular periods or groups to distract attention from their overall result, which they now concede is an even higher cost than they previously thought.

2. Their original and much publicised headline that – despite the overall cost – EEA migrants since 2000 have contributed 34% more than they have received has been endlessly repeated as a justification for continued high levels of migration particularly from Eastern Europe. They have now revealed that even on their extreme and optimistic assumptions, migrants from Eastern Europe has barely paid its way and on what is now their best-case estimation contributed only just over 10% more than they received.

The authors continue to call this in their press release a ‘substantial contribution’ from the accession countries. Not only is this a much smaller amount than people have been led to believe, but to suggest that this is somehow more than their UK-born peers is simply wrong.

They put this contribution “mainly down to their higher average labour market participation compared with natives and their lower receipt of welfare benefits”. Actually, all this means is that they are more likely to be working-age and not receiving old-age pensions, and much is often made of the fact that these are young workers in the prime of life. But official statistics show that in the UK as a whole, working households without children actually contribute twice as much in tax as they receive in benefits. The assertion we hear so often that migrants in general and Eastern European workers in particular contribute far more than their UK-born counterparts is simply not comparing like with like and certainly not demonstrated in any way by this paper.

3. On specific points raised by Migration Watch:

We said that income should be taken into account in estimating means-tested benefits (including tax credits). This is an obvious and highly significant point that appears still not to have been addressed at all.

We said that attribution of company taxes by simple population share will distort the contribution of recent migrants. The authors have taken account of this in a variant scenario that – in our view correctly – no longer assumes that even the most recent migrants have just the same financial stake in UK plc as lifelong residents.

We said that employee wage data alone from the Labour Force Survey was unlikely to be a sufficient basis for any reliable estimation of personal taxes. The authors have now taken some account of this in varying their estimation of taxes paid by the self-employed.

We said that Business rates should not be attributed to self-employed individuals. The authors have taken account of this in a variant scenario that – in our view more correctly – attributes these in the same way as company taxation and better represents the financial stake that recent migrants have in UK plc.

We said that there are significant characteristics of migrants generally or specific groups that are likely to make a difference to fiscal impact. The authors have taken some account of this in relation to housing benefit, consumption taxes, and family size. On the other hand they do not appear to have taken account of some other issues we raised like inheritance tax or council tax.

The effect of even these partial changes has been to significantly up the authors’ estimate of the fiscal cost of migration and show that Migration Watch was on the right track and correct to draw attention to these issues.

4. These adjustments have a disproportionately large effect on the most recent migrant groups, particularly from Eastern Europe. In fact, the cumulative effect in the authors’ own alternative scenarios is to reduce the contribution made by this group to a mere £66 million over the ten years from 2001-2011 (Table A7 Panel (b) (d)). This is clearly likely to be less than the margin of error in the calculation, and shows that the fiscal contribution of Eastern European migrants – notwithstanding their high rates of employment and their youthful age-profile – may well be nothing at all.

Commenting on the report, Sir Andrew Green, Chairman of Migration Watch UK said:

“This report confirms that immigration as a whole has cost up to £150 billion in the last 17 years. As for recent European migrants, even on their own figures – which we dispute – their contribution to the exchequer amounts to less than £1 a week per head of our population.”

Explosive Report on Guy Fawkes’ day – Immigration of NO net economic benefit to UK!

Migration Watch UK have issued a Comment on CReAM’s revised report ‘The Fiscal Effects of Immigration to the UK’.

CReAM is the acronym of
the Centre for Research and Analysis of Migration. It is based at UCL and is part of the classic Leftist trick of creating a network of mostly bogus groups that pop up in an orchestrated or choreographed way to respond issues that are of interest to the Left. Here are some links:-

NORFACE – New Opportunities for Research Funding Agency Co-operation in Europe NORFACE is a partnership between fourteen research councils to increase co-operation in research and research policy in Europe. Over the five project years, the partners will engage in a range of initiatives designed to deliver new levels of co-operative research policy and practice.
CReAM – Centre for Research and Analysis of Migration CReAM is an independent and interdisciplinary research centre located in the Department of Economics at University College London. CReAM’s research focuses on the causes, patterns and consequences of international population mobility and movements affecting UK, Europe and associated global processes.
European Migration Information Network Based in the Migration Research Unit (MRU) at UCL, it also provides a web-based system to quickly locate useful data related to migration issues.
The Economics and Politics of Employment, Migration and Social Justice Anglo German Foundation Project coordinated by Prof. Christian Dustman, University College London
Migration Research Unit The Migration Research Unit is based in the Department of Geography at University College London. It carries out high quality research on international population migration issues.

In this case most of the funding (maybe all) came from the EU funded “European Research Council”. So you, dear taxpayer, paid for it!

In assessing the credibility of Cream’s “Experts” you might like to bear this report in mind:- ” ‘Expert’ behind migrant report was man who said just 13,000 would come from Eastern Europe  http://www.dailymail.co.uk/news/article-2822825/Expert-migrant-report-man-said-just-13-000-come-Eastern-Europe.html#ixzz3IfPrzX8m
 
Here is Migration Watch’s comment:-
“This report confirms that immigration as a whole has cost up to £150 billion in the last 17 years. As for recent European migrants, even on their own figures – which we dispute – their contribution to the exchequer amounts to less than £1 a week per head of our population.”

Migration Watch UK Press Comment on CReAM’s revised report ‘The Fiscal Effects of Immigration to the UK’

1. CReAM have now published a revised version of their paper first put out in November 2013 on the Fiscal effects of immigration to the UK. The original CReAM paper was given extensive media coverage and flourished as conclusive proof that immigration was a fiscal benefit to the UK, and that migrants contributed more in taxes than they took in public spending. It was claimed that their estimations were robust and certain and made on the most extreme of conservative assumptions.

Migration Watch published an assessment of this original paper highlighting that

The presentation of the paper had failed to highlight its own finding of an overall fiscal cost of some £95bn to the UK from 1995-2011.
Despite its claims of using ‘worst-case’ scenarios, in many cases the paper in fact detailed very much best case scenarios that were likely to have overstated the contribution made by migrants.
In areas where it was claimed that no evidence was available, there was such evidence and that a paper purporting to provide robust and certain results should take these into account.Our assessment suggested that the likely fiscal cost of migration over the period might well be over £140bn.

The authors have now carried out what they call ‘robustness checks’ using different scenarios that do take on some of the points raised by Migration Watch and others. None of these reduce the overall fiscal cost. In fact the overall finding – still absent from their headlines – now appears to be a fiscal cost of £114 billion [para 4.2.1] as a best case, and worse-case scenarios extending this to a cost of up to £159 billion [Table A7 Panel (a) (c)] . Quite different from their previous suggestion that the worst case was a cost of £95bn, and with the MW assessment well within this range.

In their press release the authors continue to avoid highlighting their overall finding of this high fiscal cost of migration of billions of pounds each and every year between 1995 and 2011.

Instead, as before, they cherry-pick particular periods or groups to distract attention from their overall result, which they now concede is an even higher cost than they previously thought.

2. Their original and much publicised headline that – despite the overall cost – EEA migrants since 2000 have contributed 34% more than they have received has been endlessly repeated as a justification for continued high levels of migration particularly from Eastern Europe. They have now revealed that even on their extreme and optimistic assumptions, migrants from Eastern Europe has barely paid its way and on what is now their best-case estimation contributed only just over 10% more than they received.

The authors continue to call this in their press release a ‘substantial contribution’ from the accession countries. Not only is this a much smaller amount than people have been led to believe, but to suggest that this is somehow more than their UK-born peers is simply wrong.

They put this contribution “mainly down to their higher average labour market participation compared with natives and their lower receipt of welfare benefits”. Actually, all this means is that they are more likely to be working-age and not receiving old-age pensions, and much is often made of the fact that these are young workers in the prime of life. But official statistics show that in the UK as a whole, working households without children actually contribute twice as much in tax as they receive in benefits. The assertion we hear so often that migrants in general and Eastern European workers in particular contribute far more than their UK-born counterparts is simply not comparing like with like and certainly not demonstrated in any way by this paper.

3. On specific points raised by Migration Watch:

We said that income should be taken into account in estimating means-tested benefits (including tax credits). This is an obvious and highly significant point that appears still not to have been addressed at all.

We said that attribution of company taxes by simple population share will distort the contribution of recent migrants. The authors have taken account of this in a variant scenario that – in our view correctly – no longer assumes that even the most recent migrants have just the same financial stake in UK plc as lifelong residents.

We said that employee wage data alone from the Labour Force Survey was unlikely to be a sufficient basis for any reliable estimation of personal taxes. The authors have now taken some account of this in varying their estimation of taxes paid by the self-employed.

We said that Business rates should not be attributed to self-employed individuals. The authors have taken account of this in a variant scenario that – in our view more correctly – attributes these in the same way as company taxation and better represents the financial stake that recent migrants have in UK plc.

We said that there are significant characteristics of migrants generally or specific groups that are likely to make a difference to fiscal impact. The authors have taken some account of this in relation to housing benefit, consumption taxes, and family size. On the other hand they do not appear to have taken account of some other issues we raised like inheritance tax or council tax.

The effect of even these partial changes has been to significantly up the authors’ estimate of the fiscal cost of migration and show that Migration Watch was on the right track and correct to draw attention to these issues.

4. These adjustments have a disproportionately large effect on the most recent migrant groups, particularly from Eastern Europe. In fact, the cumulative effect in the authors’ own alternative scenarios is to reduce the contribution made by this group to a mere £66 million over the ten years from 2001-2011 (Table A7 Panel (b) (d)). This is clearly likely to be less than the margin of error in the calculation, and shows that the fiscal contribution of Eastern European migrants – notwithstanding their high rates of employment and their youthful age-profile – may well be nothing at all.

Commenting on the report, Sir Andrew Green, Chairman of Migration Watch UK said:

“This report confirms that immigration as a whole has cost up to £150 billion in the last 17 years. As for recent European migrants, even on their own figures – which we dispute – their contribution to the exchequer amounts to less than £1 a week per head of our population.”

Scotland ‘should not take on UK debt’ unless it can keep the pound says leading economist

Professor Sir James Mirrlees

Scotland ‘should not take on UK debt’ unless it can keep the pound

Yes campaign’s economist plots way ahead if Westminster refuses to share sterling

In this article by Ambrose Evans-Pritchard, in the Daily Telegraph today 25.0.14, the usual British line that the UK will continue as RUK if Scotland “leaves” is still being peddled. However if you ignore the blatant RUK nonsense then this article also illustrates why England would be bettter off independent from the near bankrupt UK too.

Here is the article:-

An independent Scotland should walk away from its share of the UK’s national debt if Westminster continues to refuse a sterling union, one of the Yes campaign’s leading economic gurus has advised.

“Britain inherits the debt,” said Sir James Mirrlees, a Nobel Prize-winning economist and a prestigious figure on Scotland’s Council of Economic Advisers.

“It is hard to see how Scotland can take on the debt unless there is a full currency union,” he told The Telegraph. “This is implied by the hard-line taken by Westminster. It is Scotland’s bargaining position.”

Crawford Beveridge, chairman of Scotland’s Fiscal Commission Working Group, warned last week that any such move would be “morally difficult” and likely deemed a “default” by credit ratings agencies.

Not even the Baltic states entirely repudiated Soviet-era debts in the early 1990s, even though the Soviet occupation of their countries was never recognised by the West. It would be hard for Scotland to invoke the “doctrine of odious debts” – where debts run up by despotic regimes can legitimately be reneged on – under international law. The Czech and Slovak republics divided the Czechoslovak debt on a pro-rata basis after their “velvet divorce”.

Sir James said Scotland could continue to use the pound as legal tender inside the country if necessary, whatever London decides. “No country has stopped its currency from being circulated in another state that I know of,” he said.

He suggested that Edinburgh could equally issue a Scottish pound that is pegged to sterling and backed by a currency board along the lines of Hong Kong’s model. But, in his opinion, neither option, if forced upon Scotland, would entail any obligation to take on UK debt.

Sir James said this clash can be avoided. He believes the common sense option for all involved is to agree on a co-operative union. The British themselves would enjoy a “non trivial” benefit from being able to use their own coin in Scotland. “The easiest transition would be to keep using sterling for five to 10 years,” he said.

All three parties in Westminster say they will oppose a currency union after independence, insisting that the eurozone crisis has revealed the perils of trying to share a currency with separate fiscal policies. Sir James played a central role in First Minister Alex Salmond’s Fiscal Commission earlier this year in drafting plans for a future currency. A former Cambridge professor, he is now professor-at-large at the Chinese University of Hong Kong.

He said the eurozone currency experiment has gone badly wrong – and has previously called for the weaker Club Med countries to withdraw – but insists that a UK-Scottish currency union would be a different animal. “The risks have been greatly exaggerated,” he said, speaking at the Nobel laureates’ gathering in Lindau, Germany.

Sir James said the English and Scottish economies are closely interwoven, like Germany and The Netherlands. There is little danger of an “asymmetric shock” for Scotland alone, though he acknowledged that declining oil revenues are a “little worrying” and might force fiscal cuts. However, he appeared to suggest that this would be outweighed by the benefits of eliminating the entire public debt, freeing up interest payments.

The National Institute of Economic and Social Research estimates Scotland’s share of the debt to be £143bn. The UK authorities have announced that they would stand behind these liabilities in order to reassure markets – and will even stand behind RBS and Scottish-based banks temporarily – but this is intended to be a holding action, not a settlement.

Debt repudiation would cause the UK’s gross debt ratio to jump by seven points to 98pc of GDP on the Eurostat gauge. Critics say it would be an inglorious way for Scotland to begin its life as a sovereign nation, poisoning relations with its chief economic partner.

Use of sterling in the face of British opposition would leave Scotland without a lender-of-last resort in a crisis. Sir James said this is manageable if bank support is restricted to high street operations, excluding the global arm of banks such as RBS.

Sir James has equally radical views on taxation, though they are not specifically aimed at Scotland. He proposes “negative taxation” or subsidies for the West’s poorest workers to shield them from low-wage competition from Asia. He also endorses a top marginal tax rate of 100pc for “very high incomes” on the grounds that some people will continue to work regardless, specifically citing tennis players. This may come as a surprise to Scottish tennis star Andy Murray.
Click here for a link to the original article>>> http://www.telegraph.co.uk/finance/economics/11054359/Scotland-should-not-take-on-UK-debt-unless-it-can-keep-the-pound.html

Below is what Wikipedia says about the Professor. Who do you believe – him or Ambrose from the Telegraph?

Sir James Alexander Mirrlees FRSE FBA (born 5 July 1936) is a Scottish economist and winner of the 1996 Nobel Memorial Prize in Economic Sciences. He was knighted in 1998.

Born in Minnigaff, Kirkcudbrightshire, Mirrlees was educated at the University of Edinburgh (MA in Mathematics and Natural Philosophy in 1957) and Trinity College, Cambridge (Mathematical Tripos and PhD in 1964 with thesis title Optimum planning for a dynamic economy), where he was a very active student debater. One contemporary, Quentin Skinner, has suggested that Mirrlees was a member of the Cambridge Apostles along with fellow Nobel Laureate Amartya Sen during this period. Between 1968 and 1976, Mirrlees was a visiting professor at MIT three times. He taught at both Oxford University (1969–1995) and University of Cambridge (1963– and 1995–).

During his time at Oxford, he published papers on economic models for which he would eventually be awarded his Nobel Prize. They centred on situations in which economic information is asymmetrical or incomplete, determining the extent to which they should affect the optimal rate of saving in an economy. Among other results, they demonstrated the principles of “moral hazard” and “optimal income taxation” discussed in the books of William Vickrey. The methodology has since become the standard in the field.

Mirrlees and Vickrey shared the 1996 Nobel Prize for Economics “for their fundamental contributions to the economic theory of incentives under asymmetric information”.

Mirrlees is also co-creator, with MIT Professor Peter A. Diamond of the Diamond-Mirrlees Efficiency Theorem, developed in 1971.

Mirrlees is emeritus Professor of Political Economy at the University of Cambridge, and Fellow of Trinity College, Cambridge. He spends several months a year at the University of Melbourne, Australia. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong as well as University of Macau. In 2009, he was appointed Founding Master of the Morningside College of The Chinese University of Hong Kong.

Mirrlees is a member of Scotland’s Council of Economic Advisers. He also led the The Mirrlees Review, a review of the UK tax system by the Institute for Fiscal Studies.

His students have included eminent academics and policy makers Sir Partha Dasgupta, Professor Huw Dixon, Lord Nicholas Stern, Professor Anthony Venables, and Sir John Vickers.

Despite the headlines – Per capita GDP is down from 2008 because the population has grown by 1-2 million through immigration and consequent high birth rates

So beware of the agenda when you see headlines like these:-

Telegraph
UK economy finally returns to pre-crisis level

Second quarter GDP growth of 0.8pc means total economic output was 0.2pc points bigger than in the first quarter of 2008, its previous peak

By Alan Tovey
9:52AM BST 25 Jul 2014
Britain’s economy is now bigger than it was at its pre-financial crisis peak, after official data showed gross domestic product increased by 0.8pc in the second quarter of the year.
The growth was driven by the dominant services sector – which accounts for almost four-fifths of the British economy – and was 1pc larger in the quarter compared with the same period last year, according to the Office for National Statistics.
Output in the production sector, which accounts for about 15pc of the economy, rose by 0.4pc. However, output in construction – 6pc of the British economy – contracted by 0.5pc over the period, and agriculture – less than 1pc of the economy, fell 0.2pc.
The overall growth – which was widely predicted – means the UK economy is now 0.2pc bigger than its previous peak, which was hit in the first three months of 2008. On an annual basis, GDP rose by 3.1pc in the quarter, the fastest pace of growth since late 2007.
The size of the contraction from peak to the trough in 2009 was 7.2pc.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Given that it has taken more than six years for the economy to get ahead of where it was in 2008 and the economy is still only 0.2pc larger, any celebrations should be qualified… but at least we can finally celebrate this fact.”
He added that there was some concern that the growth was driven by the services sector, despite the Government’s drive to “rebalance” the economy towards manufacturing.
Britain’s dominant services sector powers more than three-quarters of the UK economy.
However, Britain’s economy could well have grown past its previous peak several months ago, according to Peter Spencer, chief economic adviser to the EY ITEM Club. He pointed out that revisions to the methodology by which GDP is measured that are due out in September – such as taking items from the “black economy” such as prostitution and drug dealing – could show “we sailed past the previous peak long before”.
Joe Grice, chief economic adviser at the ONS, said: “The economy has now shown significant growth in six consecutive quarters and the long climb back to the pre-crisis peak of 2008 has at last been completed. It is worth noting, however, that changes this autumn to the way countries measure their GDPs may yet modify our view of how slow the UK’s recovery has been.”
Although Britain’s economy is now powering ahead – on Thursday the International Monetary Fund upgraded its forecast for the UK, predicting growth in 2014 will 3.2pc this year, an increase of 0.4 points that takes Britain ahead of all other developed nations – it has taken a long time to reach this point.
“It has been a long slog, with the UK the second to last member of the G7 group of economies to reach the milestone and taking much longer to rebound than in past recessions,” said Guy Ellision, of head of UK equities at Investec Wealth & Investment.
Germany passed its pre-crisis peak in 2010 and France and the US followed the next year. The slow pace of Britain’s recovery from the crisis is partly because of the size of its banking sector, which took a huge hit in the financial crisis. But critics of the government say it is also because finance minister George Osborne opted for sharp curbs on public spending to rein in the country’s large budget deficit.
The British Chambers of Commerce also sounded a cautious note, warning that growth cannot be taken for granted.
“The fact that Britain’s economy is now bigger than it was in 2008 is great news, and will provide a shot in the arm for businesses and consumers alike,” said John Longworth, the organisation’s director-general. “Yet even though we’re one of the fastest-growing developed economies, there’s no room for complacency.
“Without sustained action, these growth figures could be ‘as good as it gets’ for the UK. The Government and the Bank of England must pull out all the stops to encourage business investment, help exporters and get finance flowing to growing firms who still aren’t seen as a safe bet by the banks.”
He added that he wanted to see interest rates stay low for as long as possible and when they do go up to rise “slowly and predictably” to avoid “undermining the solid business confidence that’s driving growth”.
However, some economics commentators warned that the consumer and business spending that is driving the growth could cause rates to rise.
“The GDP figures mark a concrete expansion of the UK economy to surpass pre-crisis levels and we expect upwards revisions to the data in the coming months,” said Gautam Batra, investment strategist at Signia Wealth. “A pick up in investment spending combined with strong consumer spending will no doubt put further pressure on the MPC to consider rate increases sooner rather than later.”
GDP per person is only expected to return to pre-crisis levels in 2017, reflecting growth in the population and the country’s stubbornly weak productivity since 2008, according to Britain’s independent budget forecasters.

The ONS’s preliminary estimates of GDP do not include a breakdown of spending. They are the first released in the European Union, and are based partly on estimated data.