Slapped wrist for Ritchie!

So, Ritchie says:

There’s a perverse untruth about the fiscal deficit that the likes of the Institute for Fiscal Studies and their acolytes, like Stephanie Flanders on the BBC, keep going on about. This untruth is that we had one before 2008. The truth is that if government had accounted like a company – on an accruals basis – there would have been no deficit recorded at all.

Some horrible little fact checkers decide to have a look:

The Treasury, however, disagrees.

A spokesman told Full Fact: “[Murphy\’s] article misunderstands entirely the way we account for public finances. We already use accruals accounting.

“It\’s also quite wrong about the payment of tax lagging by a year. Many taxes are paid much earlier and corporation tax, for instance, can be paid slightly in advance.”

Independent experts are also sceptical.

Andrew Gambier, manager of technical strategy at the Institute of Chartered Accountants in England and Wales, says that the Government uses a mixture of accruals and cash-flow accounting, with items such as Private Finance Initiatives and state pension liabilities covered by the latter method.

Mr Gambier said: “I think Richard Murphy\’s argument is a nice try, but it\’s overly simplistic. I\’m concerned about him simply shifting the income graph forward a year.

“Large, profitable businesses making more than £1.5 million profit a year have to make payments on account of their corporation tax liability so they are already on an accruals basis. Also, as corporation tax is a small proportion of overall tax receipts it wouldn\’t make much of a difference even if he were right – and he\’s not.”

Both the Treasury and the ICAEW say his argument is, umm, full of shite.


As Ritchie himself says in his own comments section:

And if you deny that you know nothing of tax, accounting or economics

7 thoughts on “Slapped wrist for Ritchie!”

  1. Odd there’s no story there Tim

    Someone changed there mind

    As for your sources both are Conservative controlled

    Did you expect objective comment?

    You’ll really have to do better than that

  2. Mr Murphy, are you saying the respondents named are wrong. Please say so. Clearly, unequivocally.

    “Someone changed there mind”. Who? When? Why?

    “As for your sources both are Conservative controlled”

    Can you prove the Conservative Party controls the ICAEW? That’s what you’ve said.

    As for the Treasury spokeperson, are you suggesting that spokeperson doesn’t believe what he/she said but was somehow coerced to say something different to please the Conservative Party. Yes or no? Please be clear.

  3. The Full Facts site has this at the end of the article “Mr Murphy was unavailable today for comment.”

    I wonder why feels able to comment here on Tim’s blog but not to the real econmists. Possibly because he has no argument to back up his case because he knows he is in the wrong.

    Time to shut up shop Ritche.

  4. If nothing else, this episode clearly shows just how vast the vast conservative conspiracy is that is attempting to paint Mr. Murphy as a complete incompetent twit.

    Luckily, Mr. Murphy has the sort of razor-sharp mind that can easily parry whatever thrusts the government and real accountants might attempt.

    By the way, what exactly is a “there mind”?

  5. I still find it terrifying that the man at one time had a professional practice. Where I one of his former clients, I’d be hot-footing it to the best CA I could with prior years’ tax returns in hand.

  6. Pingback: FCAblog » Ritchie jettisons toys from the pram again

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