Cameron's error

Prime ministers have been known to make a long list of mistakes, but one particular error tends to stand out above the rest. Margaret Thatcher's was the 'poll' tax. On the surface it seemed a fair system and that may be still the case, but it was crazy to think that it was going to work. Tony Blair had a good run with military campaigns, but went off course to say the least with a part in the invasion into a sovereign nation; Iraq. Mr Brown was well known for selling off the gold reserves at a rock bottom price, but the other financial misdemeanours made that action pale into insignificance. As for David Cameron, he set in motion the devastating cuts to policing, probation and the prisons.

Why do I think that this cuts to the justice system ranks as the biggest error made by this prime minister? The worst aspect of a crime is the pain, suffering and humiliation. However, aside from the terrible aspect of the physical and mental harm, there is a cost element. David Cameron thought that money could be saved by making cuts to the justice system, but it doesn't pan out that way. Far from it. Each injury perpetrated by a criminal can result in tens of thousands of pounds of hospital care, paid for by the government. An item stolen from a shop results in a loss of VAT, lower income and corporation taxes paid. Every aspect of crime leads to lower tax receipts and/or a greater spend by the government.

Some people have argued that crime can boost the economy. We replace items lost in a burglary and repair our damaged cars. It is good business for a few, nevertheless this is bizarre thinking. If you believe that there is an upside, then smash your mobile phone up. Then go buy another one and repeat until all your savings are exhausted.

Keeping someone in prison is expensive, but so too is funding them when they are out. People rarely come out of prison and jump into a good job, paying tax. A large proportion will be paid unemployment benefits, housing benefits and so forth. It is not cost free outside vs a lot holding someone inside prison.

Increasing the spending on the justice system, increases the amount of money coming into the government's coffers in the short, medium and long term.

An item is stolen worth 125. The shop paid 100 for it. The shopkeeper reclaims about 17 in VAT back from the government. They then deduct 42 or more from either the income tax bill or corporation tax bill. Thus nearly 60% of the loss is borne by the government or you the taxpayer / citizen. Smaller traders may not be able to reclaim as much, but business growth is hampered thereby reducing the longer-term tax inputs to the treasury.

More police invites less crime which leads to higher tax revenue and less waste. (Obviously only up to a point until crime gets very low. )


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