Stupid things Brown has done with our money

by John Fitzsimons on 27 January 2010  |  31 comments
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As of last week, we all support Newcastle United - financially, at least. John Fitzsimons rounds up three other stupid ways the Government has wasted taxpayers' money.

I've always had a soft spot for Newcastle United. The people are great, they've always played decent football, generally they are a very likeable club.

However, I've never wanted to be involved financially with them. But now I am. And so you. No really, you are!

Last week, Newcastle United confirmed it had signed a contract extension with its current shirt sponsors - a certain state-owned bank called Northern Rock.

And it's not like the money involved is small fry - the contract comes into force from next season, when in all likelihood Newcastle will be back in the Premier League. So long as they stay there for the next four seasons, it will end up costing me and you £10m!

This bank is supposed to be paying us back the millions and millions of pounds that has been pumped in to keep it afloat. I appreciate that advertising helps, but does advertising on a football shirt really constitute good value? I highly doubt it - I've never been more likely to use a certain company just because they sponsor a football team. My own side, West Ham, are sponsored by an online gambling company - I have plenty of online gambling accounts, but I've no urge to open another one at SBOBET.

Sadly this frankly appalling waste of the money we shell out each month is just the tip of the iceberg. Here's three more examples of where your money has been blown lately.

1) The VAT cut

At the tail-end of 2008, the Chancellor Alistair Darling ordered for VAT to be cut by 2.5%, by 17.5% to 15%. The idea was that because products were cheaper, we'd all be falling over ourselves to buy them, thereby boosting the economy, and everything would be sunshine and light.

While the cut was only temporary (coming to an end on 1 January), it was hardly cheap, costing up to £12bn according to some experts.

In fairness to the Government, most economists agree that the cut helped in terms of retail figures and restricting rising unemployment, though there are wildly differing views on just how helpful it was, and whether it provided value for money.

The problem though is the temporary nature of the cut. Many economists, including the Centre for Economics and Business Research, have suggested that while the cut had only a small impact, seeing prices go up again may actually stall the recovery the economy is currently staging. So not only did the cut provide poor value for money, its reversal may now cause things to get even worse.

Brilliant.

2) Work for RBS? Have a bonus!

Royal Bank of Scotland, a bank so crippled it has relied on all of us to take a whopping 84% stake in it, is still paying bonuses to its staff. It's far from alone of course, but as the Treasury is in charge of the bonus payouts, you'd at least hope they are miniscule. Instead, reports suggest £1.5bn will be winging its way out in bonuses.

The bank's chief executive, Stephen Hester (who is on a £9.7m package by the way) says there is nothing he can do about the need to pay bonuses, blaming the good old marketplace.

Of course there's nothing wrong with rewarding good performance with a bonus, but when RBS is expected to report losses of billions I can't help but feel perhaps that money earmarked for bonuses might be better spent elsewhere.

3) The car scrappage scheme

This idea sounds like a great deal for us all, but I think it's a waste of money.

So long as your car is old enough, has a valid MOT and you've owned it for at least 12 months, you will qualify for £2,000 off the price of a new car if you trade your old car in.

But it's not all it's cracked up to be - we've written before about why the scheme means you'll actually end up shelling out more than you save, in our piece Car-scrappage scheme will cost you money!

Of course, the Government didn't launch the scheme to help us save money on a new car - it was trying to help the ailing motoring industry. The trouble is, the scheme didn't deliver in that respect either - according to the Society of Motoring Manufacturers, car production fell by 31% in 2009, even with the scrappage scheme (and lower VAT) in place.

Whoops.

Well, those are my three most hated cases of awful wasted money by the Government, but I'm sure you all have your own. Why not share them with your fellow lovemoney.com readers via the comment box below?