FakeCharity of the day

Having spent the morning on a family surfing lesson (as in 'the waves' rather than 'the internet') and the afternoon at the Blue Reef Acquarium (which is really good but either a tad expensive or a tad small, depending on your point of view), I haven't had time to trawl the usual sources today, so am indebted, again, to AC1 who asked, completely o/t, "Is Brake a fake?"

From the BBC:

Swindon has become the first English authority to scrap the use of its fixed speed cameras.

The Conservative-run borough council said it was reinvesting the £320,000 a year maintenance costs for the five cameras in road safety measures. The move does not mean the town will be left without any speed cameras as Wiltshire Police will continue to operate mobile units. The decision has been called "reckless" by the road safety charity, Brake...

Leaving aside the question of what "road safety measures' might entail - the article suggests it'll be "vehicle activated signs", i.e. another complete waste of money, let's have a quick look at Brake.

Their website screams fakecharity - it uses the same template as all the others, with sub-pages for 'Home', 'About us', 'Contact us', 'Our supporters' (as a variant on 'Support us' or 'Donate'), 'Jobs' and 'Links'.

The income in their 2007 accounts (see page 8)was as follows:

Corporate partnership £285,718
Donations £333,057
Road Safety Education £296,984
BrakeCare £75,979
Fleet Safety Forum £66,535
Research £3,360
Investment income £15,759

Their list of corporate partners seems innocuous enough. Donations include "Community Fundraising £236,319" (which might or might not be suspect). Note 3 to the accounts discloses income of about £70,000 from the Department for Transport, the Youth Justice Board, the Office for Criminal Justice Reform and the Scottish Executive. Those government departments are all duly listed on their site, along with Children in Need, which you might argue is not a fakecharity.

So far, so not so bad, really. Where it starts to stink a bit is on their list of Organisations working with Brake, which includes, along with some genuinely interested private groups, the following:

British Transport Advisory Committee
Chief Fire Officer Association
Child Accident Prevention Trust
Community Transport Association
Disaster Aftercare Services
European Secure Vehicle Alliance
GMB
The Intensive Care Society
Learn + Live
Motabillity
Pre-Hospital Care
Never Away
Parliamentary Advisory Council for Transport Safety
Prospect
Public & Commercial Services Union
Road Operators’ Safety Council
Road Safety Markings Association
The Slower Speeds Initiative
Transport & General Workers Union
Transport Management Association of the NHS
University of Huddersfield

All of which appear to be quangos, fakecharities, public sector pressure groups and/or wholly or party funded or arganised by the government (there may be exceptions and I am happy to edit that list down a bit).

So, to cut a long story short, Brake appears to be, to a large extent, a fake.

They're missing the obvious solution

AC1 draws my attention to an article in The Times on the topic of illegal sub-letting of council housing. Let's take these numbers at face value:

In parts of Westminster council, for example, the rent for a three-bedroom council house would be £114 a week. But the market rent for the same or similar property would be as much as £550 a week, netting the sub-letter £22,672 a year.

And what's their inevitable solution ..?

Some sort of 'crackdown', of course, and "Once fraudsters are identified, tenants in homes that have been sub-let will be evicted after a court order. The illegal tenants would be rehoused only if they would have been eligible for council housing anyway. But tenants who have abused the system by sub-letting property would lose their right to a council home and have to pay back any rent owed."

This ain't going to work, of course, why would it?

So, how about the free-market solution? All Westminster Council has to do is offer an amnesty to those people who are paying £550 a week and offer to allow them to continue in occupation at a modest discount to market value, let's say £500 a week, on condition that they report their erstwhile landlords.

HMRC can collect income tax on the illegal landlord's £22,672 profits for each of the past few years. Westminster Council can then (hopefully) reclaim all the rent the illegal landlords have been collecting privately,. DWP can go after them for all the Housing and Council Tax Benefit that the illegal landlords have been claiming - and if these 'agencies' co-ordinate their attacks, they might end up with a more than 100% reimbursement.

In future, Westminster Council will be getting £500 a week rent from all these flats (which over time they can bump up to £550, of course), rather than just £114, so they've got more money to spend on other stuff, like building more social housing, if necessary.

What can possibly go wrong?

Ben's Play World

We picked up a leaflet for Ben's Play World (now rebranded 'Kidzworld Cornwall', it would appear) in the hotel lobby. The six bullet points* on the last page sum up why this is a 'must visit'. The first three seem relevant/informative enough, but the last three made us laugh:

• Baby Changing
• Secure locker room
• Massive free car park
• Modern toilets
• Friendly staff
• Cafe with T.V. and free newspapers

There obviously wasn't enough space to point out other key attractions such as 'eletrical lighting' and 'acccessible by metalled road' and so on. 

* I didn't bring a scanner with me and can't be bothered to photograph/download it, so you'll have to take my word for it.

Sun, sea, sand and ... surf!

We dutifully trotted down to the beach for a couple of hours after arriving. Happily, wi-fi works really well in the bar/lounge area where we are staying, it just needed the landlady (is that what you call the owner of a hotel?) to go into 'system preferences' and click around a bit a few times.

Obviously, I'm doing this on borrowed time, as Mrs MW will go mental if I'm not back upstairs in three minutes to go out for fish'n'chips. Maybe I'll find an excuse to disappear for an hour or so later this evening once the littl'uns are asleep.

So ta-ta for now.

Posting will be infrequent for the next few days

As I am off on family holiday, which involves finding excuses to sneak off to an Internet café at every available opportunity.

Peter Mandelson (3)

One step forward, one step back ...

As I have been saying for ages, there isn't a 'gender pay gap' as such, it's a 'mothers-versus-everybody-else pay gap', which is of course based on official statistics, as well as personal and anecdotal evidence.

I thought we'd made a bit of a breakthrough recently when The Farrah Fawcett Society finally acknowledged this simple fact (possibly inspired by Tim W's article at Comment Is Free?) but now 'they' have reverted to type and are insisting that it's a 'gender pay gap' again.

Ah well.

BBC fail to draw obvious conclusion ...

From the BBC:

... the Met Office is issuing a revised forecast for more unsettled weather well into the month. It is a far cry from the "barbecue summer" it predicted back in April. The news will raise questions about the Met Office's ability to make reliable seasonal forecasts...

The real problem for the Met Office is that this is the third summer in a row where its forecast has failed.

In 2007, the Met Office chirped: "The summer is yet again likely to be warmer than normal. There are no indications of a particularly wet summer." We got downpours and floods in the wettest summer for England and Wales since 1912. Temperatures were below average.

In April 2008, the Met Office forecast: "Summer temperatures are likely to be warmer than average and rainfall near or above average." That did not prepare people for one of the wettest summers on record with high winds and low sunshine.

In both instances, the Met Office failed to predict the movements of the jet stream - the high-level wind that races round the world 10km above the surface.

Missing figures round ...

The widely reported statistic, that Sunbeds raise cancer risk by 75% (even assuming it to be correct) is of course meaningless unless you know what the actual cancer risks are, with and without using a sunbed.

As I like to say, the chances of you being hit by a meteorite are increased by several million per cent every time you leave a building and go outside.

Pete Doherty won't like this...

Following the successful rebranding of Jennifer Lopez as "J-Lo"; of Lindsay Lohan as "LiLo"; and of Susan Boyle as "SuBo", the media have announced that they are going to do this to all celeb's.

Via.

Pathetic rebuttal of the week

There's a fine article in The Independent about donations to political parties (as reported to El Comm), which points out that the 'consultants' have greatly increased their donations to the Tories, who are likely to win the next election, and reduced donations them to Labour.

As the article explains, these are 'donations in kind' of seconded staff:

PwC also provides support for Mr Osborne, and two of its staff worked part-time with the Tories on their work and pensions proposals last year. This month, the party revealed that the firm also provided specialist advice and a member of staff for the party's shadow Treasury team.

And here's that rebuttal:

"The firm does not make any cash donations to any political party or other groups with a political agenda," a PwC spokeswoman said. "However, in the interests of the firm and its clients, we seek to maintain constructive and balanced relationships with the main political parties."

IMHO, a straight cash donation seems a lot more above board and honest than sending in some weasels to try and actually influence policy as it is made.

Troughs. Snouts.

Ruth Kelly

Reader's letter of the day

From the FT:

Sir,

It is unworthy of Samuel Brittan to criticise the “supposedly virtuous mid-Victorian period” in discussing the high level of the national debt (How the budget hole developed, July 24).

The national debt was high at the start of the Victorian period because this country had been fighting the Napoleonic Wars for a generation (and four other major wars throughout the 18th century, each lasting at least seven years).

Roughly half the cost was covered by current taxation and half by loans. Between 1840 and 1890, while the national product rose from £440m to £1,265m, the total net liabilities of the state fell from £840m to £685m.

Thus in 50 years the national debt steadily fell from 190 per cent of national product to 55 per cent. And none of this decline was due to currency debasement: the Victorians, unlike modern politicians, didn’t go in for that.

D.R. Myddelton, London W9, UK.

I for one would like to see a government to reducing the national debt a bit faster than by 3% of GDP every year, but hey ...

Why I despise the Tories

Firstly, for their paucity of ambition; they waffle vaguely about spending cuts, and the best they can come up with is this:

With total public borrowing set to reach £1 trillion, the Tories would cut tax credits for households earning more than £50,000 and bring in road tolls on newly-built roads, [David Cameron] said.

Scrapping the 50p tax rate for high earners, proposed by Labour, would not be a priority, and it would be several years before the party could consider cutting inheritance tax, Cameron said. Cutting tax credits to the proposed £50,000 level would mean 130,000 families losing an average £500 a year.

So they aren't going to scrap the ludicrous 50p tax rate that will raise bugger-all, and they hope to repay £1,000,000 million of public debt with road tolls and by making means testing even more savage - 130,000 families x £500 a year = the princely sum of £65 million, or about 0.1% of planned government spending? As to Inheritance Tax, that ought to go straight in the bin and be replaced by adding a few more Council Tax bands, all the way to "Z" (ditto Stamp Duty Land Tax), as far as I am concerned.

Secondly, for their paucity of ambition. Alice Cook did a chart on government spending yesterday - basically, if we reduced government spending by planned borrowing of £175 billion per annum, that would still only take us back to 2004 spending levels of about £450 billion per annum. Were 'services' that much worse five years ago? Were welfare payments that much meaner five years ago?

Thirdly, what is their obsession with means-testing? It's just taxation by another name. If they want to make sure that families earning over £50,000 don't get Tax Credits, then they are going to have to increase the withdrawal rate by 5% or 10% for some or all recipients, i.e. put up the effective basic rate of tax by 5% or 10%, only instead of doing it in an honest in-your-face manner, they do it by drafting in another army of administrators to pinch a few quid here and a few quid there.

Wouldn't it make more sense to reduce the basic level of Tax Credits (or replace them with a much higher tax-free personal allowance) and scrap means-testing entirely? Have they overlooked the fact that fraud, error and overpayments of Tax Credits are running at £1,000 to £2,000 million per annum, most of which arises because of the complications and means-testing? Now, that's money worth saving!

And finally, for their paucity of ambition...

Cameron said he would not axe budgets for overseas aid and the NHS, but cuts would be made elsewhere.

The 'aid budget' can go straight in the bin as well, as to the NHS, see this fine article on the IEA 'blog.

Excellent free publicity!

Hats off to these chaps! I'm sure the shock-horror-outrage headlines will be an enormous boost to sales, at [an outrageous] £9.99 a bottle. And don't tell me that they'll restrict output to a mere three thousand - that's all part of the scam to boost the product's perceived value.

I'm pleased to see a new fakecharity, Alcohol Focus Scotland, giving its rent-a-quote. Unfortunately, the Scottish Charity Register doesn't publish their accounts so I can't tell you how much of their income is directly or indirectly from the government.

We already outed the British Liver Trust as a fakecharity here.

France takes part in Silly Week

From The Metro:

Illegal asylum seekers are to be offered £1,700 to go home in a last-ditch effort to rid Calais of its infamous 'Jungle'.

Town official Pierre de Bousquet said the 500 migrants staying at the camp needed to realise Britain was not 'Eldorado' where they could live in luxury.

He wants to give them cash and a flight back to where they came from. In most countries where these people are from, €2,000 is not nothing,' he said. Closure of the camp was inevitable, he said. 'The situation is unacceptable. Patience has its limits.'

You could also see this as an extra incentive to make the journey to the camp, I suppose.

Chloë Smith

Another day, another reckless throw of the dice (28)

More bright ideas on how to reflate the house price bubble from The Guardian:

First time home buyers could be thrown a lifeline under plans being considered by the Treasury to underwrite 'risky' mortgages, allowing people with only small deposits to buy homes.

Since the credit crunch took hold, banks have demanded far tougher criteria for lending, asking buyers to provide between 25% and 30% of the price of a home as a deposit. There were 30,000 loans to first time buyers in the first three months of 2009 against an average of more than 100,000 a quarter in the previous decade...

If the Treasury copied the [Canadian] scheme (1) it might have to act as the insurer in the first instance before stepping back to underwrite insurance from private sector companies – opening the government to considerable criticism as it would put further taxpayer money at risk at a time when public finances are already stretched (2)...

The idea is being pushed by specialist insurers who might sell the necessary insurance to the banks. Genworth Financial, a US-based company, is among those to have submitted proposals... "We urge the government to consider developing a partnership with mortgage insurance providers in order to prudently and efficiently provide a lasting and sustainable solution for the wholesale mortgage market (3)," Genworth said.

(1) As to Canada, I refer to this article:

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for over-consumption that the U.S. code does: interest on your mortgage isn't deductible up north. In addition, home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours.

In other words, the simple lack of subsidies and the fact that you can't just 'hand back the keys' has led to a more stable housing market in Canada. If "we" really wanted housing to be affordable (and it is quite clear that "we" in the UK collectively do not), we can either increase supply or reduce the subsidies, or choke of price bubbles by taxing land and property more and incomes and production less.

(2) As Alice Cook says, "Is there no end to this madness? Why should a renter have her tax receipts used to subsidize a first time buyer who wants to buy a home?"

(3) "developing a partnership", "providers", "prudent", "efficient", "sustainable"? They appear to have learned NulabSpeak from a three-year old dictionary.

£1bn to kick-start Silly Week

From The Metro:

Hundreds of building projects that have stalled in the recession are to be kick-started with almost £1 billion of public money, the Government is set to announce.

The cash is being targeted at developers and housing associations who can get developments back under way by the end of the year but cannot get funding from elsewhere.

Some 20,000 jobs are expected to be created in the process. Up to 22,400 new homes, more than a third of which will be "affordable", could be built(1). Almost half of the money will be in the form of loans, to be repaid within five years(2)...

Housing minister John Healey will announce 270 development projects in line for the cash, although they will still have to undergo due diligence. But he will stress that the Government is not awarding developers a "handout"(3).

"There are tough terms to this deal including repayment of loans within five years," he will say. "And only builders who accept a realistic current market price(4) for their homes are eligible..."

(1) If the government allowed more homes to be built, or even better stopped wasting £4 billion a year on Housing Benefit for private tenants and used the money to build 80,000 council houses a year, then houses would become more affordable. Sure, councils aren't brilliant at managing their properties, so why not auction off the right to collect the rent to managing companies (or indeed tenants' associations), and allow them to keep whatever surplus they generate, and repeat the process every three years or so? Then instead of housing being an expense, it would be a nifty source of income, seeing as councils can obtain the most valuable/expensive component - i.e. planning permission - for free.

(2) So if 'almost half' is loans, that means over half is a straight hand out, yes? Why 'within five years'? If sensibly priced, it shouldn't take the builders more than a year to finish off the houses and sell them.

(3) See (2).

(4) Does anybody think that they'll manage to strike a good deal for the taxpayer? Why not wait until the builders go bankrupt and then buy them for fire-sale prices? Why not give the builders a kick up the arse by imposing Business Rates on half-finished developments? If there's only one potential buyer, then whatever he offers is the market price, surely? So maybe this qualifies as "another reckless throw of the dice" to prop up house prices.

Deborah Dark

From The Telegraph:

Deborah Dark was held in a high-security prisonin Madrid after being arrested on arrival while travelling with daughter and one-year-old twin grandsons. Spanish police were acting on an extradition order from France of which Mrs Dark was unaware.

Mrs Dark, a housekeeper-secretary to a foreign diplomat based in London, eventually realised that the problem stemmed from an incident in France 20 years ago, when she was acquitted of a drugs offence – and from the controversial system of European Arrest Warrants, which were designed to make extradition easier but which have been criticised for being overused and for having no inbuilt time limits.

Now, even after judges in Britain and Spain threw out a request from France to extradite her, Mrs Dark remains too frightened to travel abroad, and Fair Trials International, the campaigning group, claims that her case highlights flaws in the arrest warrant system.

The warrants have already proved controversial in cases such as that of Dr Fredrick Toben, the Australian-based academic who was arrested at Heathrow last year on a warrant issued by German authorities over charges of Holocaust denial, which is an offence in Germany but not in Britain. He was later freed...

Reader's letter of the day

From The Metro:

Ed Balls' scheme to make parents sign contracts ensuring their children behave in school (Metro, Thu) is both patronising and totalitarian.

Has it occurred to him that not everybody shares his views on bringing up children? That they don't believe in making them go to bed early, wearing uniforms and complying with petty rules or homework?

My view on bringing up children is: no bullying, no cruelty to animals. Otherwise, you don't bug me, I won't bug you.

Mark Taha, London SE26.

Gordon Brown gets his World Wars mixed up.

Gordon Brown was on the BBC News yesterday (video clip embedded here) talking about the death of Harry Patch, who had fought in the trenches in World War One.

At about 34 seconds into the clip, he says we should "... remember what we owe that generation of people - our freedom, our liberties, the fact we are a democracy in the world. These men and women during World War One did a huge amount..."

WTF? Is he perhaps confusing World War One (1914 - 18) with World War Two (1939 - 45)?

The UK was not under any particular threat during World War One and it is a mystery to me why we got involved. We should have cheered from the sidelines while the Europeans did each other in; sold them weapons and supplies; and maybe taken the opportunity to pinch all their colonies from them.

My new widget

Ha!

Letters from a Tory (for example) has had a Wordpress plug-in on his 'blog for ages that shows and ranks people who have left the most comments (in which, I am neither proud nor ashamed to say, I currently rank number 8).

I noticed just now that Fausty had the Blogger version (in which I rank number 6), so have dutifully added it to mine, just beneath 'Recent comments'. It's a doddle to set up, i.e. you just follow the instructions.

Be warned though - what is annoying is that you can't shuffle the widget into the right place using the normal 'layout/add and arrange page elements' screen; you have to go into 'edit html', find the 'sidebar' heading right at the bottom and then cut and paste the widget down to where you want it, but hey, if I can do it, then so can probably most of you.

Reader's letter of the day (2)

Also from The Times:

Sir,

Alan Milburn’s attack on alleged “closed professions” rings a little hollow. Since coming to power, quite a few Labour ministers seem to have been either related to, or have at some time shared a flat with, another member of the Cabinet. Surely an even more tightly closed shop than any of the professions that Mr Milburn deplores?

M. Pettinger, Herstmonceux, E Sussex.

I suppose we could also ask Alan Milburn probing questions about how difficult it is for working-class kids to accumulate so many tasty sources of income.

Reader's letter of the day

In The Times:

Sir,

You describe (leading article, July 23) how housebuilders have “sat on large banks of land in expectation of higher returns tomorrow”. The obvious answer is to institute a “land value tax”, so making it too expensive for developers to sit on land without developing it.

D. B. C. Reed, Northampton.

For the doubters among you, this won't hurt genuine home-builders. Instead of paying £1m for some land and paying the bank £70,000 a year interest to sit on it in the hope that the land will appreciate in value (which in the long run it always does) they will end up paying a total of £70,000 in total for [interest + LVT].

In other words, if the LVT were set at ten per cent of the land value, the operation of the free market would force the land value down to £400,000, the interest would be £30,000 and the LVT would be £40,000 a year. The genuine home-builder (who is employing people and creating something of value) gets on with the job, builds and sells the houses and makes just as much money as he would have done anyway.

The Benefit Fraud Blog

The Purple Scorpion set up another 'blog a while back called Benefit Fraud.

It's a good scrapbook of benefit fraud stories that he updates regularly and is well worth a visit every now and then.

(IMHO, there's little of this that couldn't be fixed by replacing all benefits with a single, age-related payment, aka a Citizen's Income - remembering always that fraud, error and administration costs for flat-rate benefits such as Child Benefit are barely measureable - but that's another topic.)

Amy Winehouse

Irrelevant figures underlying UK transport policy

From Lord Adonis' article in The Times:

The passenger and operational benefits of electrification are immense. Electric trains are far quieter, more reliable, less polluting and cheaper to buy and maintain than diesel trains...

Rail electrification is central to the low-carbon plan set out by Ed Miliband, the Energy Secretary, last week. An electric train emits around a third less carbon per passenger mile than a diesel train, and less than half as much as a private car and a quarter as much as a short-haul plane...

Yes, at 'point of use' those figures are probably correct. But, assuming that CO2 emissions are a relevant consideration, which they are, of course, as they are a proxy for use of fossil fuels, which are scarce and expensive resources, what I want to know is what is the 'full cost' comparison?

How much CO2 is used in generating the electricity to power the trains, to smelt the steel to make the trains and rails (which have to be replaced every six years or so, I am told) and to light the stations and the car parks? Sure, aeroplanes are machines that burn fuel, but the air through which they fly is just there, unlike rails or roads. And we worked out elsewhere that in terms of CO2-per-passenger-per-mile, flying is much the same as driving a car with two passengers. And so on.

Rail is a small proportion of total transport and, therefore, of transport emissions, but its capacity to reduce overall emissions is significant if we pursue a relentless policy of both electrification and expansion, including high-speed rail... At present rail accounts for only 6.3 per cent of journeys, half the proportion of Switzerland and a fifth of that in Japan. There is no good reason why Britain should not aim for much higher proportions.

False comparison. Where rail travel really comes into its own is passenger transport in densely populated areas. Ninety per cent of the Japanese live in two massive conurbations. Switzerland is in fact six or seven large self-contained conurbations surrounding some more-or-less uninhabited mountain peaks. I wouldn't be surprised if a quarter or a third of all 'journeys' in the Greater London area are by train, for example. I was speaking to a chap just now who told me that he needed to get back from Edinburgh to London recently, the cheapest train ticket was £129 and a flight cost £12.99. Rather unsurprisingly, he took the 'plane.

This 'social mobility' debate completely misses the point

Alan Milburn has sparked off the wild goose chase, yet again, for example per the BBC:

Top professions such as medicine and law are increasingly being closed off to all but the most affluent families, a report into social mobility has said. Former minister Alan Milburn has chaired a study for the prime minister on widening access to high-status jobs.

Now, let's look at high-paying jobs generally and split them into two broad categories.

1. There are those which require some combination of innate skills, education/training, hard work and/or luck. Let's include top footballers, pop stars, film stars, Formula One drivers and of course entrepreneurs in this list. Nobody in his right mind would suggest that these groups are particularly the domain of the middle or upper classes. Of course family and other connections help, but they are not the be-all and end-all.

2. Then there are "the professions", as defined by Alan Milburn, which appears to be journalism, medicine, law and the civil service.

a) Yes, there is nepotism in the media, but in the non-State sector (i.e. everything but the BBC and Channel 4) there is a natural limit; if the sons and daughters of other journalists produce a crap output, circulation and advertising revenues will fall and the newspaper or TV station will fail. Nepotism in the State sector is a disgusting waste of taxpayers' money of course, but then again, State-controlled broadcasting is a disgusting waste of taxpayers' money, so that's easily fixed.

But aside from journalism, his list of "professions" are what I like to refer to as "people who profit from the misery of others, largely at the taxpayers' expense".

b) 'Doctors' is a tricky category as it does require some innate skills and a lot of hard work to qualify, the work is probably not particularly enjoyable and serves a useful purpose, but by the same token, most doctors are paid for by the taxpayer, most handsomely, it would appear. And their pressure group the BMA certainly has ideas above its station, it being at the forefront of the bansturbators.

c) The whole criminal justice system appears to be there largely for the amusement and enrichment of judges and lawyers rather than the protection of the public, despite being funded by the long-suffering taxpayer. Even in other areas, the income of the legal profession depends on the government enacting ever more laws to generate ever more work for them. That's why we'll never get a commonsense rule like divorce courts recognising pre-nuptial contracts, because it would deprive swathes of the legal profession of their incomes etc. Ditto 'employment law', 'human rights law', 'environmental law' etc etc.

d) The civil service is far too big anyway, we just don't need three-quarters of it. So that fixes that problem, rather than 1,000,000 top civil service jobs being hogged by the upper classes, there'd only be 250,000. I'd rather see 750,000 top civil servants being given the sack that create an additional 1,000,000 civil service jobs to be reserved for working class people (as defined).

To sum up, the question is not "Why do so few working class kids make it into the professions?" (whether they do or don't is difficult to prove or measure), the question is "Why are the professions so bloody well-paid in the first place?".

Why? Just Why?

Phil Woolas (y'know, the immigration minister) has spoken out after it was revealed that foreign criminals have won £500,000 compensation for being kept in prison past their release date (usually about 2 weeks after they were sent there).

He said, "We do not apologise for our tough system, but where the courts tell us that we have detained a criminal for too long, we are bound to accept their decision.” 'Tough system'? 'Tough system'!? What kind of 'tough system' sends an Islamic radical such as Abu Qatada to jail for life then bails him out on home arrest whilst letting him roam the streets for two hours a day!? What kind of 'tough system' keeps him on benefits (not my money yet, thankfully) whilst he is wanted in Belgium, Algeria, Spain, France, Germany, Jordan, Italy and the United States, and preaches for the destruction of the very system that is keeping him alive!?

Why can't we bring back the death penalty for scum like this and fry him before he turns more of our own people against us?

Meaningless statistics of the day

I do wonder why they bother compiling and publishing crap like this:

From the BBC:

Rates of drug use and drinking are continuing to fall among young teenagers, annual NHS figures show. The proportion of 8,000 11-to-15-year-olds surveyed who have never drunk alcohol rose slightly to 48% in 2008.

48%? Wot? Not even a glass of champagne at a wedding? So that's a big fat lie for a start.

However, those who do drink alcohol seem to be consuming more, the NHS Information Centre said. The survey also found that pupils are more likely to drink if they live with other drinkers and if their parents do not mind them drinking. It is the first time the annual questionnaire has looked at the relationship between teenage drinking and drinking habits of the rest of the household.

It's nice the way that the NHS are now asking children about their parents' drinking habits, isn't it?

Also from the BBC:

There has been a 3% increase in the use of Class A drugs in England and Wales, Home Office figures show. The British Crime Survey found almost four in every 100 people used a Class A drug in 2008-09 despite the overall use of illicit drugs remaining stable.

The survey found increases in use of cocaine, ecstasy, tranquilisers, anabolic steroids and ketamine. The long-term fall in drugs is partly down to a fall in the use of cannabis in England and Wales. According to the figures from the 2008-09 survey, almost 40% of people have used illegal drugs at some point - and about one in 10 had done so during the last year.

The use of all illegal drugs has been falling since 1996 but effectively stable over the last year...

All pretty dull so far, nothing to report. But hang about - what's this ...

But despite the long-term decline, almost four in 100 people used a Class A drug during the year, up 3% on the previous year. The rise confirms an underlying upward trend and supports a United Nation's analysis that the UK has the greatest number of Class A drug users in Europe.

So, despite these statistics being flaky at best, OT1H the use of drugs (to the extent that people 'fess up to it) is falling ever so slightly, but OTOH because people are doing less of one type and more of another, this confirms an underlying upward trend?* Rather disappointingly, the BBC don't include any rent-a-quotes from a fakecharity followed by a government spokesman saying that they will be responding to the fakecharity's concerns.

* A bit like the "seasonal fluctuations masking an underlying warming trend"?

And you though the London School of Economics was for the brightest and best?

From yesterday's FT (page unavailable?):

But the 21 year-old's rise to the academic peak was far from pre-destined. Ms Chan says her background was "working class". Her father runs a Chinese takeaway and her mother works as a homecare assistant. Education was valued at home but Ms Chan's parents do not have the money to support her at university.

She says this made the bursary she received from PwC, the professional services firm crucial. It gives several thousand pounds to three new LSE undergraduates each year ... Ms Chan says that without it, "I would not have been able to go to university in London".

The halls of residence in her first year cost much more than friends at universities outside London have to pay. Incidentals also take their toll. "The cost of food around the LSE is high. most sandwich shops charge what professionals in the area would pay ."

... She thinks she would have earned "better A-levels" than her two As and a B if she had not had a job at weekends to help support herself while at grammar school in outer London.

Dude, WTF?

Why does she need to pay top whack for halls of residence if her family lives in outer London? If she and her family were that hard up, wouldn't she save herself the £5,000 a year (or whatever it costs), stay with Mum and Dad and just take the Tube into town?

She managed to get the LSE to accept her and PwC to sponsor her, yet she doesn't realise that even in central London you can reduce the cost of your sandwiches by 80% or something by, er, buying a loaf, some margarine and fillings and making yourself a packed lunch at home?

Her Dad runs a takeaway? Does she not know what his gross margins are?

Her Mum is a 'homecare assistant'? Who failed to pass on the secret-art-of-sandwich-making to her beloved daughter?

Just An Introduction

Readers, fellow bloggers,

This is a brief post just to introduce myself, I am 'JP' and I will be blogging quite a bit here starting Thursday. I am a teenager living in Scotland, dissatisfied with the country under New Labour and draconian EU rule. I would call myself a libertarian conservative, and have been described by many as a 'cold hearted, right-wing bastard'. Let's see how that goes.

Conspiracy Theory Of The Afternoon

From the FT:

The Labour party has been the surprise recipient of a £4.6m pre-election boost after a successful claim for past overpayments of value added tax. The news came yesterday just hours after Revenue & Customs admitted that it had set aside almost £5bn to pay claimants after a landmark legal ruling last year.

The party successfully claimed £2.15m and will also receive £2.45m of interest. The windfall is a welcome fillip for Labour at a time of dwindling private donations and has put it on a slightly more stable financial footing, enabling it to cut its net debt from £19m to £17.5m during 2008. The figures emerged in accounts released last night after they were signed off by the party's ruling National Executive Committee*. Labour saw a drop in income, however, with donations down from £11.2m to £9.5m and membership fees dropping from £4.4m to £3.9m...

Party sources stressed that a number of other large charities and firms had also benefited from the Lords ruling.

What a coincidence, eh?

* Bastards! We at UKIP always do our best to get our accounts in to El Comm before the submission deadline of 7 July.

Epic Fail Of The Day (2)

... whoever it was who published this:

"Chen thinks GDP growth will be muted until household income starts to rise again."

Why not say "Chen thinks that household income will not start to rise until GDP grows again"?

Epic Fail Of The Day

From the BBC:

Human flu jab trials 'under way'

Idiots! It's "swine 'flu" that we're worried about, not common-or-garden "human 'flu" (whatever that is).

Fun with numbers

An excellent bit of number crunching by Cliff D'Arcy at Yahoo:

I compared the quarterly unemployment data from the Office for National Statistics with house-price data from Nationwide BS, over the past 26 years. The result: one goes up, the other goes down

According to my nifty spreadsheet, the correlation coefficient in my example was -0.81. In other words, when unemployment rose, house prices dropped 81% of the time , and vice versa. This is quite a strongly negative relationship.

Alas, what this calculation doesn't tell us is whether this is a causal relationship. In other words, we can't claim that falling house prices cause higher unemployment, nor the other way around. After all, both could be the result of another factor, such as rising or falling economic growth, and there may well be no direct link between the two.

Then again, as I said earlier, unemployment is a lagging indicator: it takes time for joblessness to hit consumer confidence and, ultimately, house prices. Introducing an 18-month time lag between the two sets of data increased the correlation coefficient to -0.84, producing an even stronger association.

In summary

If unemployment does rise from today's 2.38 million to as much as 3.2 million, as forecasters predict, then I suspect that this spells bad news for house prices.

Indeed, I don't expect to see any sustained increase in house prices until unemployment peaks and starts to fall. This could happen in the second half of 2010, but I'd be mightily surprised if we saw any lasting recovery in property prices before then.

In short, while we may see a few upwards blips in the monthly house-price data, don't expect a true dawn for house prices in 2009...

H/t K8te at HPC.

VAT - truly a shit tax

Simple logic tells us that VAT is not a tax on 'consumption' (as if that were a bad thing), but either a tax on business turnover or a tax on gross margins (depending on how you argue it). Suffice to say, like Hal 9000, if you try to build some sort of coherent strategy on something that is basically a lie, bits will keep dropping off and you have to invent new lies to patch over the missing bits.

Approaching five billion missing bits, it would appear.

FFS, if they haven't worked out how to make VAT 'work', even on a purely administrative level after thirty-six years (even ignoring the economic damage, which is more difficult to measure), can't they just do the decent thing and scrap it and increase corporation tax to fifty per cent* (or whatever rate we'd need to make up the difference). Which is roughly what employees suffer, if you factor in Employer's and Employees' NIC and Tax Credits withdrawal at the 'second withdrawal rate'.

There'd be a complete outcry, of course, if the government announced that they were abandoning their favourite stealth taxes - VAT and National Insurance - and having a flat tax rate on all income of fifty per cent, but at least it would be honest.

Ah ... right.

* Fag packet time, based on round figures from memory, valid as at a year ago - corporation tax receipts (excl. North Sea surcharge) £30 bn on pre-tax profits of £140 bn, VAT receipts £80 bn. Gross profits, pre-VAT = £220 bn, so required rate = (£80 + £30 bn)/£220 bn = 50%.

What a difference a year makes ...

July 17 2008:

Ryanair, the cut-price Irish airline, today announced it will withdraw nearly a third of its aircraft from London's Stansted airport and suspend operations at seven other European airports because of higher fuel costs and airport fees. Michael O'Leary, chief executive at Ryanair, said his airline would operate 28 aircraft out of Stansted, down from 40.

It is the second straight year that Ryanair has reduced its activities at Stansted for its October to March winter period...

21 July 2009:

Budget airline Ryanair has announced a reduction in its services at Stansted Airport, blaming higher charges. Ryanair will reduce the number of aircraft it runs at the airport by 40% in its winter schedule, and will cut the number of flights by 30%, it said...

The company said that Stansted was one of its most expensive bases, and added that an increase in air passenger duty tax was also a factor in its decision. The airline operated 40 aircraft from Stansted in the summer, but said this would fall to 24 this winter.

Right To Reply

I nominated this as my Reader's Letter Of The Day last week. It was a tad provocative but I thought he made some fair points. Umbongo pointed out that "... a bit of googling has established that our Mr Pateman is apparently that glory of the 21st century - a Reader in Education at the University of Sussex. Such parasites have no business castigating those on whom they prey and on whose taxed labours they depend for their ill-earned bread."

In that funny way that real life has of intruding into the 'blogospere, Mr Pateman has now left a comment as follows:

"Just for the record: I am 62 and run a VAT registered business. I intend to continue for as long as I can. I took early retirement from the University of Sussex in 1997 and much prefer working for my living. That screws two of your correspondents.

The concessions which kick in at 60 (free bus passes and all the rest) help disguise the fact that the basic state pension, on which those in full retirement must rely, is inadequate and low in comparison to the norm in other European countries. I am much in favour of a higher retirement pension, which leaves people free to spend it as they see fit. Maybe they won't spend it on bus rides. I am also in favour of better provision for the elderly frail, but they don't vote and so are unlikely to get it.

I am opposed to universal freebies at 60, sweets handed out by politicians in the hope that you will doff your cap to them at the next election. Some of your correspondents clearly will."

Yet again, I'd agree with him on the basic thrust of that. I'm not budging on discriminatory pricing though.

Keith Richards

From today's London Lite. Click to enlarge:

The World's Greatest Article. Ever.

Read and enjoy.

I have no idea how reliable the statistics or inferences are, but who cares?

Via Leg-Iron, who got it from Captain Ranty.

Yup, as predicted.

A good summary of the figures at Sky News:

... Government accounts showed that the amount of tax collected plummeted by £32bn last year... Corporation tax takings plunged by 14.1%, VAT by 15.9% and income tax by 3.9%.

Part of the VAT shortfall can be explained by the fact that the rate went down from 17.5% to 15% of course, but £32 billion (about 5% of total receipts) looks 'about right', seeing as the economy contracted by something approaching 5%, so big deal, really.

But public spending rose again, with social benefit outlays up 9.7% to £13.3bn [as] more people claimed unemployment benefit.

OK, welfare spending up £1.2 billion in a month, that's £14 billion annualised, a hike of about 20% in non-pensions welfare spending, so again, big deal.

Let's assume that the economy now flatlines, we'd expect an additional deficit of around £50 billion (i.e. £32 billion less tax and £14 billion more welfare spending), which is 3% of GDP, pretty bad, but not the end of the world.

This is the deeply worrying bit, right at the end of the article, almost as an afterthought:

Chancellor Alistair Darling predicts net borrowing over the year hit £175bn - economists say £190bn is more likely.

We'll have to live with £50 billion of that, the question is, what on earth are they spending the other £140 billion on, about ten per cent of GDP? The obvious answer "more quangos and malinvestment and crap" is almost certainly the correct one.

The bankers' bonus culture - a complete red herring.

They're all wading in now, even the Tories, muttering darkly about the 'bonus culture' having got the banks into a mess.

*rant*

Which is complete tripe of course - these bonuses were a symptom of the credit bubble and not the cause. It must be quite clear to anybody that the whole New Labour economic miracle and G-d knows how many consecutive-quarters-of-economic -growth since 1997 (cheerfully adding on a dozen that happened under the previous government, of course) were based on the house price bubble (which makes home-owners feel wealthier and allows them to spend in excess of their incomes by constantly re-mortgaging), and that the property price bubble is merely the flip-side of the credit bubble (you can't have one without the other).

So Labour wanted there to be a bubble; and the gullible British public wanted there to be a bubble - have we already forgotten all the smug conversations about how much our houses had gone up in value?

Both bubbles are themselves huge con-tricks, of course, but somebody somewhere has to do the conning. On the property-bubble side we had endless property shows on the telly, endless newspaper articles ramping property and the constant drip-drip saying that you have to 'get on the ladder' and the way that home-owners look down on tenants (while cheerfully piling into buy-to-let...). On the other side we had the Chinese (and others) selling us cheap goods and lending the proceeds back to UK banks; we had the Bank of England keeping base rates artificially low; we had the FSA turning a wilfully blind eye to reckless lending; and of course we had the whizz-kids at the banks performing alchemy whereby self-certified and 125% loans were securitised and so on.

These whizz-kids were just doing the government's dirty work for them - the government and the gullible British public wanted them to do this in order to maintain the illusion that the paper profits we were all earning were somehow a real and just reward merely for owning a home.

Sure, these whizz-kids paid themselves handsomely at their shareholders' expense, but even the shareholders believed the hype, and, like victims of all good con-tricks, they wanted to believe the hype - now it's all gone tits up they claim that they were completely hoodwinked, or in the case of many Northern Rock shareholders, believe that the government brought the bank down and now want compensation.

I am not ashamed to say that I also made handsome pile of money from the property market in the ten years 1998 - 2008 (and am now renting again, I'll sit this one out, thanks); the opportunity was there, so why shouldn't I take it? Neither I nor the whizz-kids make the rules, so don't blame us for cashing in*. Blame yourselves for going along with the crazy Ponzi scheme that is the UK housing 'market'.

Just sayin', is all.

*/rant*

* The same applies to George Soros on White Wednesday, or indeed the millions who stay on the dole because The Rules tell them there is no point working unless they can earn something approaching the median wage. Don't blame George Soros, blame whomever it was who took us into the ERM; don't blame the scroungers (as easy a target as they may be), blame whomever it was who invented means testing.

Tax credits are shit

One hundred and eighty-nine thousand results, and who's Number One?

Macavity WAS there ...

... he was just speechless, is all.

Out of the swimming pool, into the fire ...

Thanks to everybody who voted here.

To summarise, sixty-eight per cent of us learned to swim doing doggy-paddle or breaststroke (which is what I'd have expected from the readers of a middle-aged 'blog such as this) and only eleven per cent learned front crawl first. I know for a fact that my Dad taught me and my sisters to swim using breast stroke (oh come off it, no sniggering at the back) on holiday in 1973, and swimming lessons at school seemed to revolve around this (with or without floats). Front crawl was just for the show-offs and athletic kids. But we dutifully take our two young kids to swimming lessons on Sunday morning and they focus on front crawl, which seems a bit counter-intuitive to me, seeing as it pre-supposes confidence, strength and actually knowing what you're doing. Ah well.

This week's Fun Online Poll: "What weighs more heavily on the next generation - £1 trillion-plius of public sector debt or £1 trillion-plus of mortgage debt?"

Vote here or use the widget in the sidebar.

Fun Online Poll: House prices

... over at The Times.

The question is "Do you think house prices in the UK represent good value?"

So far, 95.3% have voted "No, house prices are still over-valued". Which is lousy grammar, as it happens - houses are over-valued and house prices are too high. You might as well say "No, houses are still too high", really.

A moronic 1.5% have voted "No, if anything house prices are under-valued", which is not only moronic, it repeats the houses/house prices mistake referred to above and the answer should start with "Yes ..." rather than with with "No...". And only a moron would choose this option anyway, if I hadn't mentioned that. Morons.

H/t LuckyJim at HPC for that second bit of pedantry.

Harriet Harman

Here's a guest caricature by The Lass (aged 6):

Yeah, but compared to what?

From the BBC:

The total amount of UK mortgage lending rose sharply in June compared with the previous month, according to lenders.

The amount lent by members of the Council of Mortgage Lenders (CML) reached £12.3bn in June, up from £10.5bn a month earlier. However, the rise was mainly the result of the common seasonal increase in moving home and the figure was still 48% lower than in June 2008.

Right, let's go back a bit further, shall we (all based on CML figures AFIAA)?

Gross mortgage lending June 2009: £12.3 billion
Gross mortgage lending June 2008: £25 billion
Gross mortgage lending June 2007: £34.2 billion
Gross mortgage lending July 2006: £30.4 billion
Gross mortgage lending June 2005: £25.7 billion
Gross mortgage lending June 2004: £28.2 billion

Remember also that house prices barely rose during 2005, which you can easily correlate with the relatively low figure for lending in that year. OK, we can argue that correlation does not mean causation, but seeing as house price rises and easy credit are both themselves symptoms of confidence in borrower's future earnings capacity ...

FakeCharities: important update

When I wrote this post a week ago, I assumed that for a body/activity to qualify as a charity, its main purpose had to be on Lord McNaghten's very short list, to wit:

• The relief of poverty;
• The advancement of education;
• The advancement of religion; or
• Other purposes beneficial to the community.

If you read the original judgement (Income Tax Special Purposes Commissioners v Pemsel), Lord M actually said this through gritted teeth: what he was trying to do was restrict the scope of things that could claim to be charities (from some of his comments, you'd assume he was an atheist, at the very least), but so be it, this was the law as it stood since 1891.

My bad.

As Melanie Phillips (h/t The Purple Scorpion) points out, they chucked this in the bin a year or two ago. The list of charitable purposes is now in Section 2, Charities Act 2006, and includes:
(a) the prevention or relief of poverty;
(b) the advancement of education;
(c) the advancement of religion;
(d) the advancement of health or the saving of lives;
(e) the advancement of citizenship or community development;
(f) the advancement of the arts, culture, heritage or science;
(g) the advancement of amateur sport;
(h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
(i) the advancement of environmental protection or improvement;
(j) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage;
(k) the advancement of animal welfare;
(l) the promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services;
(m) any other purposes within subsection (4).

If this weren't bad enough, it's all subject to an overriding requirement for there to be a 'public benefit', as defined in Section 3. Section 4 in turn leaves it up to The Charities Commission to issue guidance on this , in other words, make it up as it goes along (and use it as an excuse to persecute private schools, which was the topic of the original post).

They have cheerfully scrapped the old prohibition on political campaigning*, of course, as Auntie Mel points out, thus leaving the floodgates open to a whole wave of FakeCharities, FakePressureGroups and so on, see this blog and others ad nauseam.

Just sayin', is all.

Sub-section Of The Week

Charities Act, 2006

Section 2, Meaning of “charitable purpose”:
...
(3) In subsection (2)—
(a) in paragraph (c) “religion” includes—
(i) a religion which involves belief in more than one god, and
(ii) a religion which does not involve belief in a god;

Nick Clegg

Bloody Hell, that was quick ...

From an interview in the FT, 29 June 2009:

FT: That’s touching. Have you ever considered renouncing your life peerage and standing again for the House of Commons?
Peter Mandelson: It’s not possible legally to do that.
FT: There’s no way you can do it?
PM: Nor have I made any inquiry. [Laughter]. Therefore, I’m trapped.
FT: Is it really not possible?
PM: I believe. I believe it is for life. That is what a life peerage is.
FT: Does it feel like a life sentence now you’ve got the taste for British politics back again?
PM: Of course, you could always change the law.
FT [Laughs]: Part of the next Labour manifesto?
PM: You may see it on Monday.
FT: Really? That is a joke, I presume.
PM: We’re not allowed ...

From the BBC, 18 July 2009:

Life peers are to be given the right to resign from the House of Lords - something hereditary peers have been able to do since 1963.

The measure will be included in a Constitutional Reform Bill, due to go before Parliament on Monday. The bill will also bring an end to the hereditary principle. The changes would mean peers, such as Lord Mandelson, would be free to give up titles, stand as MPs and possibly take up more senior government posts. Although Lord Mandelson is the government's first secretary, the jobs of foreign secretary, chancellor of the exchequer or prime minister would pose constitutional difficulties for an unelected peer.

Killer arguments against LVT, not (19)

I said, in the comments here: "LVT is a straight user charge in return for the legal protection and other benefits that accrue to property owners, which only the state can provide."

Ian B hit back with "And which every citizen receives, and which you intend to give non-landowners for free, which means they are getting something for nothing."

Nope.

To expand slightly on my original reply, there are basically four groups of people. Those living on the streets, who get very little in the way of protection from the state, don't pay rent and wouldn't pay LVT; social tenants (which is a whole 'nother topic); owner-occupiers, which includes children living with their parents (or indeed parents living with their children); and private tenants.

Let's focus on the private tenants (owner-occupiers would simply pay much less income tax, VAT etc. but possibly a bit more in LVT if they live in an above-average house). The total rent that private tenants pay includes a large element that relates to location values, which in turn result from what the state does; what it allows or doesn't allow; and of course the fact that the 'exclusive possession' that the landlord is selling is only worth as much as the landlord's own right to 'exclusive possession' which is in turn guaranteed and policed by the State. The tenant's rent doesn't include an element for the COST of the things that the State does that don't add value.

So those tenants are not getting "something for nothing", they are paying for its market value in a free-ish market. If the landlord in turn is asked to pass on the element that relates to the location value (or a percentage of the total property value as a rough and ready approximation), then neither the landlord nor the tenant are 'getting it for free', and the total tax that the state gets from tenanted or owner-occupied property is much the same.

Killer arguments against LVT, not (18)

Ian B, who now posts over at Counting Cats came up with two more non-arguments against Land Value Tax/Property Value Tax in the comments here.

(As background, I have long said, as a first step in the right direction, we could replace all existing taxes on residential properties (Council Tax, Stamp Duty Land Tax, Inheritance Tax, TV licence fee, Insurance Premium Tax etc) with a fiscally neutral flat tax on land/property at current market values, which would be about 1% per annum, i.e. on an average property worth £150,000, the annual tax would be £1,500, which is much the same as current council tax plus TV licence fee. Any such system of taxation would have to work on the basis of averaged-out market values based on actual selling prices of properties in each area (i.e. postcode sector or local council ward etc). Sure, it's a bit rough and ready, but better to be roughly right than precisely wrong, say I.)

Ian B's first argument seemed to centre around his claim that "...nothing has value except when it is traded. You are confusing an estimated value with actual value. An estimated value is the value that somebody thinks something would have if it were traded. [and later] You are confusing three things; value (which is instantaneous), utility (which is purely personal) and "the going rate" which is simply an average of similar goods, and which can change arbitrarily at any moment."

I cheerfully agree that I am a simplification campaigner, but his argument overlooks the fact that LVT is still the best way of making land-ownership (which is a series of state-protected local monopolies) more like a free market (see footnote). If we average out selling prices of similar houses on a particular estate and arrive at £200,000, the tax bill would be £2,000 per house. By definition, because there is a free-ish market in the purchase and sale of houses (even though houses themselves are a state-protected monopoly/artificially scarce resource), the tax would act like a price signal, and house prices and the corresponding tax bill would reach an equilibrium where people are happy to pay it.

If £2,000 tax were "too high" in Year One, then instead of five per cent of houses coming up for sale in that area, maybe ten per cent would come up for sale in Year Two, and purchasers would offer rather less than £200,000 to compensate them for the fact that the tax is "too high", so selling prices would fall to £180,000 or £160,000 (or whatever) and the tax would fall to £1,800 or £1,600 (or whatever), i.e. to a level where those marginal households who were thinking of moving, or put their house on the market but failed to sell, decide that they'd now actually prefer to pay the tax and stay put.

It is, in other words, not so much a question of finding out the exact market value of houses, but finding out the market value of the state-protected privilege of owning a home in any particular area. Provided market participants can influence the level of the tax by choosing to buy or sell, the tax will be at the market rate.

I'll cover his second "killer" argument in the next post.
------------------------------------------
Footnote: Remember always that land and property-ownership is not a "free market" and not in any meaningful sense a "private" contractual arrangement. Although there is a free-ish market in buying and selling property, what you are buying are state-protected monopoly privileges, and not the physical thing itself.

In real life, your come-back against the vendor of a property is minimal (unlike other goods and services, where you either have legal rights under the contract, and if not, at least the producer of faulty goods and services stands to lose his reputation), as you have to do your own property survey and legal searches. Apart from restrictive covenants imposed by developers when houses are first built, you have little or no private contractual rights/obligations as against your neighbours. If there is a dispute between your and your neighbours that you can't settle amicably, you have to resort to The State to try and sort it out for you.

So the main benefits of owning land and property - the right to have a house on a particular plot, exclusive possession and legal protection of title - are rationed or provided by The State, via land registration (or recognition of title deeds to unregistered land) and the legal system that guarantees you exclusive possession (backed up by force, i.e. the police will eject squatters or tenants in arrears) and so on, as well as the fact that The State provides or organises the road maintenance, street lighting, refuse collection, planning restrictions so that your neighbour doesn't open a pig farm etc.

Conversely, although the police do a good job in solving murders (and the courts do an even better job in releasing murderers ...) the state cannot protect your "right to life". If somebody shoots or stabs you or runs you over, you are dead, and nothing can bring you back. Similarly, the recovery rate for stolen property or cars is pretty appalling, so in a practical sense, the state does a pretty poor job in protecting your physical possessions. The same goes for investments; if you invested money with Bernie Madoff, no amount of imprisoning him is going to get you your money back.

So the only type of property which The State can really protect on your behalf is land. It does protect the actual building as well to some extent (i.e. the fire brigade, investigating burglaries, evicting squatters) but there's not much it can do if somebody smashes in your front window or smashes the bottles you put out for recycling (that's one for Charlie B!). And without that protection, land/property would be more or less worthless, seeing as the cost of hiring the services of a private army would be prohibitive.

The Benefits Trap. A first hand experience.

From Hektor Reborn, also up at Old Holborn:

And now, the best part. Hammersmith & Fulham is my council. They have an eight year waiting list for council housing, but those on JSA can claim housing benefits. I would be eligible for around £150 per week renting a private flat and £15 per week council tax benefit. All of this is income dependent so if you are earning money you get less benefit. So let's add this up. £64 JSA + £150 Housing Benefit + £15 Council Tax Benefit = £229 per week. Let's call it £230 for simplicity. That works out at £11,960 per year. Not a bad wage (starting salary as a squaddie is around £15,000) for doing 5 minutes work per week.

So, how much would you have to earn to take home £11,960 after paying council tax at £15 per week? About £15,675 by my calculations. The State has decided that there is an income that people need to survive but they still tax you if you earn that much. How does that make sense?

So you have a choice when offered a job worth around £15,500 or less: take it, work hard, earn your own money or do nothing and get the same amount of money. What if you are offered a job for £16,000? You would be better off by £6.63 per week, not £9.61, due to tax. That's not a lot of money for a lot more work. £17,000 makes you £19.90 better off per week instead of £28.85 because of tax.

The State seemingly doesn't want people at the job centre to get jobs (or it would be making them do a lot more), and even if they are offered a job, unless they are offered a good wage (average in the UK is about £25,000)* there is little incentive to take it.

If I decide to move into a flat on housing benefit, I will have a large incentive not to take a job unless it comes with a good [wage]. So, no bar jobs, no part time waiter work, etc. It just doesn't pay. The same goes for the other 2.38 million people.

* The link in the original article didn't seem to work. According to this article:

According to ASHE, "mean" gross annual earnings across all employee jobs in 2008 came to £26,020. You may think that's rather a high "average" salary. And if you look just at the figures for full-time employees, that figure rises to £31,323.

Another way of measuring it is "median" gross annual earnings. According to ASHE, this was the more modest figure of £20,801, across all employee jobs. If you are earning that sum a year, you are "Mr or Mrs [or Ms] Mid-Point" - precisely half the surveyed working population earns less than you and half more. For just full-time employees, the median rises to £25,123.

I'm surprised he was that brazen about it

From yesterday's FT:

Ken Clarke, the outspoken former Conservative chancellor, has warned David Cameron not to translate his "standing up to big business" rhetoric into policies in government.

I'm struggling here. We know that politicians lie about nearly everything and can only hope to achieve a small fraction of whatever bright new future they promise during an election campaign.

But if Dave's "standing up to big business rhetoric" was just rhetoric, how much else of what he has said was "just rhetoric" as well? How is the voter supposed to distinguish between "rhetoric that will be translated into policities" and "rhetoric that won't be translated into policies"?

But like I said, it's surprising that Ken Clarke was so blatant about admitting it.

Open primary closed.

Mark Reckons
Dick Puddlecote
Bloggers4UKIP
Not A Sheep
Their contempt for you is total
The Fat Bigot
Rab C Nesbitt
Brixton 81
TImothy Wallace
Obnoxio The Clown

Swine 'flu is funny again: official

And you thought that OUR government wastes time and resources on non-existent problems ...

From the BBC:

A garden gnome giving the Nazi salute has landed a German artist in trouble with the authorities in Nuremberg.

Prosecutors are investigating whether the gnome, which went on show in one of the city's galleries, breaks the strict law banning Nazi symbols and gestures.

There's a Godwin Prize for the first person to make a spurious comparison with Germany between 1933 - 45.

Carbon emission reduction tomfoolery

The whole topic is too depressing for words, but the following 'bloggers seem to have summoned the energy and summed it all up nonetheless:

Legendary Leg-Iron
The Fat Bigot
Nick Drew
Julia M

I don't have much more to add right now.

Big Scary Numbers & debt-for-equity swaps

Most of today's newspapers carry an article with a headline along the lines of Company pension deficit hits a record £300 billion, to use The Evening Standard as an example. They write:

The accountant [Deloittes] predicted that businesses would be forced to find alternative means of bolstering funds, such as putting property into the pension fund pot, rather than just cash. These alternatives would allow companies to revive their pension plans without eating into profits. Deloitte pointed out that closing final salary pensions would not be enough to make much of a dent in the shortfall.

Well, duh. This is yet another manifestation of the credit bubble, whereby employers commute part of employees' salaries into a vague promise of a future pension.

(To digress for a moment, final salary pensions are doomed to failure of course, because the company will tend to overestimate the future cost, and the employee will tend to underestimate the future value, leading to a terrible mismatch. See also John B's slightly lengthier take, there's a link in my "Words of Wisdom" widget. Contrast that with a good old-fashioned pay rise - the employee gets £x extra per month; provided he values his free time at < £x and the employer values his output at > £x, then both sides win, but back to the practical problem in hand...)

These deficits can be easily fixed without "eating into profits", as follows:

Let's assume there were just two plc's involved, A and B, each with a deficit of £1 billion. What A should do is go to the bank in the morning, borrow £1 billion and give it to its pension trustees, who in turn invest in £1 billion's worth of new shares issued by B. A simultaneously issues £1 billion new shares for cash to B's trustees, takes the cash and repays the bank in the afternoon.

B and its trustees do exactly the same, and by tea-time, each plc's deficit has been wiped out - a latent accounting liability has been converted to into share capital, with the kicker that A and B can then claim a corporation tax deduction of 28% x £1 billion, and the bank has earned a few hours' worth of interest on £2 billion*.

Continuing the theme, once their pension funds have been replenished, A and B can say to their employees, "Look, this is all getting a bit messy, we calculate that the actuarial net present value of your pension promise is £x,000. Would you like to waive your pensions and take [slightly less than] £x,000's worth of stocks and shares instead?" Each employee would probably be pleasantly surprised and keep the shares for the investment income; keep them as a cushion against redundancy; or indeed sell them and pay off a bit of his mortgage or something, so that would help deleverage the household sector as well.

What's not to like?

* I first mooted something along these lines, I suggested that A and B issue bonds rather than shares (to get the tax deduction for interest payments as well), but seeing as deleveraging is the flavour of the month, I am now suggesting issuing shares.

Follow the money: all roads lead to ...

There is a fine bit of painstaking backwards digging, from fakecharity Ecotricity all the way to the EU, here.

Via EU Referendum.

Shameless: Open Primary

As LFAT reminds us, "it’s that time of year again when Total Politics magazine compiles their list of the Top 100 political blogs in the UK, as voted for by you."

Obviously, I'd be flattered if anybody included me on their list of their favourite ten UK political 'blogs, which you have to email to toptenblogs@totalpolitics.com.

In the spirit of openness and inclusiveness, I shall include on my own list the first ten people who leave a "Vote for me!"-type comment. If fewer than ten people have asked by the close of play today, I shall make up the balance with whichever 'blogs have happened to generate me most referrals.

If you thought that sounded bad ...

From the FT:

Cities and towns such as Newcastle, Swansea, Barnsley, Ipswich and Hastings have become too dependent on public sector employment and will face serious difficulties as hundreds of thousands of jobs are lost as a result of future public spending cuts, the Centre for Cities think-tank [1] warned yesterday.

All have more than 30 per cent of their employment in the broader public sector. In particular, they have sizeable civil service outposts, quangos and local government - sectors likely to bear the brunt of job cuts that could total between 240,000 and 290,000 [2] over the three years following 2011, the think-tank said...

Thirty per cent? Sounds a bit high, doesn't it? But let's not forget that across the UK as a whole, 25.5% of all jobs are currently in 'Education, health and public admin', from Table 5(2) here. Interestingly, 14.3% of 'male jobs' and 38.3% of 'female jobs' are in said categories.

BTW, any Southerners who uses this an excuse to bash the regions ought to remember that while the percentage of people in London & the South East employed directly or indirectly by the government may be lower, most of the public sector employees earning six figure salaries work in London.

Just sayin', is all.

[1] Obviously, it's not a think-tank, it's a fakecharity, ostensibly funded by some Sainsbury trust or other, and inevitably based in, er, London.

[2] If it were up to me, that would read "about three million", but I'd take great delight in sacking people in order of how high their salaries are.

Harman: Strictly Come Dancing guilty of 'racism'

From The Metro:

Equality Minister Harriet Harman today hit out at the axing of performer Alesha Dixon from Strictly Come Dancing, saying she was a victim of "race discrimination". Ms Harman urged the BBC to bring the 30-year-old, whose father was Jamaican, back to the hit celebrity talent show.

Dixon will be replaced on the judging panel by white British choreographer Arlene Phillips, who judged the competition in 2007 and 2008, when the show returns in the autumn.

During Commons questions on upcoming business, Ms Harman, who is also Commons Leader, told MPs: "I think it's absolutely shocking that Alesha Dixon is not going to be a judge on Strictly Come Dancing. And as equality minister, I am suspicious that there is race discrimination there. So I'd like to take the opportunity of asking the BBC - it is not too late, we want Alesha Dixon in the next edition of Strictly Come Dancing."

I shit ye not.

Gary McKinnon

Reader's letter of the day

From today's FT, headed, rather provocatively "Benefits scrounging by the over-60s":

Sir, That the government is to look now at the default retirement age of 65 is good news (July 4). But it has already created a culture in which people are led to think that they should hang up their boots well before 65. This it has done through an array of “concessions” that kick in at 60: free bus passes, prescriptions, swimming; the winter fuel payment and, of course, old age pensions for women. The private sector is also hot for concessions at 60: cinema tickets, haircuts, train tickets [1]. The list is very long.

There should be no concessions for mere age. It may involve less bureaucratic expense to make some benefits universal at a certain age, but 60 is no age. There should be concessions for disability, infirmity and poverty [2], of course. But both government and the private sector have conspired to give benefits scrounging a good name provided it is done by those over 60. Time to put an end to this saga.

Trevor Pateman, Brighton, UK

While I agree with the main thrust of this, I have two caveats...

[1] This practice, known as price discrimination, is usually observed with businesses with high fixed capacity, high fixed costs and low variable costs, and where the goods/services are consumed at point of sale. It makes perfect sense for train and bus companies on local routes to charge higher prices during the rush hour (because commuters are less price sensitive and have the money to pay) and lower prices during the day-time (which pretty much overlaps with when pensioners tend to travel to the shops etc). The fixed costs are there anyway and provided the ticket price covers the marginal cost of that extra bit of fuel, driver's salary etc it's still worth doing.

The same goes for cinemas, or for hairdressers or take-away restaurants who offer lower prices during the daytime on whatever day of the week most pensioners pick up their pensions. The strategy only works with goods and services consumed at the point of sale, of course, or else the old folk would just fill their boots and pass on the saving to their younger relatives.

[2] I hotly disgree on this. If we are to have redistribution, let it be universal, low-level and non-means tested.

Big Brother is watching ... me

A big thanks to everybody who followed my link to The Fat Panel* - I'm currently number 8 on their list of referrers.

They checked up on me at 16:50:48 this afternoon.

* A fakecharity/industry lobby group that is currently funded by an unrestricted educational grant from the Margarine & Spreads Association.

Well spotted!

There's an article on the BBC website headed Benefit tenants 'rip off' landlords, which I dutifully read as I'm interested in welfare reform, the Local Housing Allowance and so on. Read it if you can be bothered and make up your own mind whether this is anecdotal or the tip of the iceberg (and yes, the government were warned that this would happen ...).

But the article itself isn't the interesting bit, what is interesting is, as Tudorian pointed out over at HPC, that it's "written by the BBC Asian Correspondent."

Then read the article again and look at the names of the people who were interviewed ...

Chart 2.1

Shamelessly pinched from Mark's Any:


What the chart shows is that if an unemployed person finds a minimum wage job and works 50 hours a week (isn't that against the law anyway? Hmm.), he or she is about £50 a week better off than on the dole, which is why upwards of five million people just don't bother.

Now, is it just me, or wouldn't it make more sense to scrap Housing Benefit, give every legally resident adult £60 (or whatever) per week cash and a BR code for PAYE purposes (i.e. no entitlement to personal allowance). Assuming a flat-tax rate (i.e. income tax and Employee's National Insurance get rolled into one) of 31% to get the ball rolling, a 25-year old who's currently unemployed would only have to work about 20 hours per week to end up better off than they are/would be now.

If the recipient is e.g. a student or a married mum, well so be it, it obviates the need for a whole parallel universe of means-tested student grants and loans and Statutory Maternity Pay (or transferable married couple's allowance or whatever the Tories are currently dreaming up), and if the recipient already has a job, it's much the same as having a £10,000 tax-free personal allowance (at this level of annual income, the weekly tax paid and the £60 benefit would more or less net off).

And last but not least, it'd make life easier for employers, because PAYE would be a flat 31% (or whatever) of gross wages with no need to faff about with personal allowances and so on. We could even go one better than that and scrap Employer's NIC and increase corporation tax to a flat 31% as well ...

Hey, once you start simplifying, the possibilities are endless - if you're with me so far, we could then abandon the distinction between 'corporation tax' on retained profits and 'PAYE' on wages and salaries paid out, and tax companies as if they were partnerships, with automatic loss relief if salaries exceed gross profits...

What's not to like?