Gransnet forums

News & politics

How will the VAT cut be funded?

(6 Posts)
Mollygo Tue 21-Jul-26 22:15:56

There are SO many experts on GN I’m sure someone will know.
If the scrapped (in January) ID scheme was unfunded, how is that going to fund the VAT cut?
Where is the £340 million for stopping tough sleeping going to come from?
Would AB have done better to say he would reduce rough sleeping since that’s what he managed to do in Manchester, rather than stopping it?

Doodledog Tue 21-Jul-26 22:25:04

Where did the £340 million figure come from?

Whether or not the ID scheme was funded, the money would have had to come from somewhere, and now it won't?

I think that reducing rough sleeping is a more achievable target than eradicating it, as there are those who don't want to live in houses, but if it is reduced to a minimum that would be great, so I wouldn't be nit-picking, and I've never felt that perfect should be the enemy of good.

Mollygo Tue 21-Jul-26 22:46:10

Prime Minister Andy Burnham: Announced the £340 million pledge as a day-one funding commitment in his July 2026 speech outside 10 Downing Street to tackle rough sleeping.

In addition Ancoats is being transformed into a northern hub of UK governance, with a major £310 million Manchester Digital Campus currently under construction on the site of the former Central Retail Park off Great Ancoats Street.Key details of this development include:
The Project: The new campus will house nearly 9,000 civil servants and will serve as the permanent "No 10 North," acting as the nerve centre for a rewired British government.

Ideally, a good idea to have political work going on in the North instead of just London.

Cynically, I’ve already read that
, civil servants relocating from London to Manchester as part of the government's regionalisation plans (such as the 'No 10 North' initiative) are generally eligible to claim relocation expenses, provided they meet standard Civil Service criteria.
And an increase in travel expense claims etc for MPs.

Graphite Tue 21-Jul-26 22:53:27

I have already posted elsewhere that Darren Jones had already said that the cost of the ID scheme was going to come from existing budgets. See point 18 here:

committees.parliament.uk/publications/53099/documents/297132/default/

I don’t know where that was going to be but, for example, £2.5 billion Pension Credit goes unclaimed each year. Unspent funds allocated for the benefit remain with the Treasury and are absorbed into the general government budget. This surplus is then redirected to fund other public services or offset government borrowing.

£340 million to address rough sleeping is from the government press release. It’s peanuts in terms of overall government spending.

The new funding, which represents the opening investment, will provide 1,200 homes and intensive support for at least 3,000 people.

www.gov.uk/government/news/new-pm-says-government-can-bring-back-hope-to-britain-and-launches-drive-to-end-rough-sleeping-at-the-earliest-opportunity

If people want to see this in terms of cost per person as we all pay tax in one way or another, there are 55 million adults in the UK. It would cost everyone just £6 in tax to support 3,000 people who need help.

It is literally less than the tax on two bottles of wine from the supermarket. So if we all get £45 tax off our energy bills and spend it on four £10 bottles of wine, we would be putting over £18 each back in to Treasury.

Doodledog Tue 21-Jul-26 23:06:55

Did AB say it would cost £340 million? I'm not disputing that, incidentally - my MIL is in hospital and we've been back and forth for the past few days, so I catch up on the news as best I can, but inevitably miss details.

As for the VAT cut, I don't think everything needs to be 'costed'. I'm sure Maisie will explain better, but in my simple terms I assume that shaving a bit off here and there will do it. Or he could put more tax on wine, which would have the added advantage of reducing costs to the NHS for alcohol-related issues wink. Where there's a will.

For now, I'm happy to get a feel for the ambitions of the new government. When we get the detail, when Parliament reconvenes in six weeks or so, we can worry about whether we think things will work, but it will take much longer than that to see whether or not they have.

To me, there is such a refreshing difference between someone who is concerned about homelessness and (or rough sleeping, which is a bit different) and making life better for people compared to someone who is determined to have Austerity, regardless of its brutality, with no care for the people who suffer. Yes, it has to happen, and no, it might not all slot neatly into place, but I'm happy for now to see the aim, before I worry about the objectives, the strategy and the tactics. This is only Day 2, after all.

MaizieD Tue 21-Jul-26 23:18:40

It is literally less than the tax on two bottles of wine from the supermarket. So if we all get £45 tax off our energy bills and spend it on four £10 bottles of wine, we would be putting over £18 each back in to Treasury.

It would go further than that. The business we bought thecwine from would be taxed on the profit it made from it after taking some of for its costs. As its costs would include paying its staff they would have income tax taken off their pay. And If the staff bought some goods and services the same taxation would be applied until, voila! the £45 would be taxed out of existence and it would all be back with the Treasury. (unless somewhere along the line someone saved some of it).

It would be so much better if people weren’t obsessed with ‘how is the government going to pay for it’ and thought instead about how much its actions will benefit society.

The government is not like a household, it can create its own money, it can pay for anything it wants to.