The kids stayed at a friend's house today, so me and Her Indoors did the decent thing and went to see The Bounty Hunter, which I must say is really rather good.
It's sort of a rom-com mixed with crime caper and screwball comedy. The rom bits were few and far between but I found them genuinely quite touching.
After that we went to an Italian restaurant and came home.
Wednesday, 31 March 2010
The kids stayed at a friend's house today, so me and Her Indoors did the decent thing and went to see The Bounty Hunter, which I must say is really rather good.
From the BBC:
Disgraced senior officer Ali Dizaei has been dismissed from his job with immediate effect by the Metropolitan Police Authority (MPA)...
Dizaei, was jailed for four years after being convicted of misconduct and perverting the course of justice. The former senior police officer was found guilty of attacking and falsely arresting a web designer in 2008.
From the BBC, without any apparent deliberate irony:
David Cameron has said that a Conservative government would train a 5,000-strong "neighbourhood army" to set up community groups. The Tory leader said in a speech this offered a "positive alternative to Labour's big government" approach.
"Our aim is for every adult citizen to be an active member of an active neighbourhood group," he said...
Tuesday, 30 March 2010
11 January 2011: For updated version showing rates for 2011-12, click here.
Just to keep things updated, subject to a few simplifying assumptions, here's an overview of how the main rates of tax on income or production interact. There are three income tax rates (20%, 40% and 50%); three rates of National Insurance (8%, 11% and 1%); two Tax Credit withdrawal rates (39% and 7%); a mainstream corporation tax rate of 28% (I've ignored small company 21% or marginal rate of 29.75%) and VAT (which is zero or 7/47 of turnover).
There are plenty more marginal income tax rates, a few even higher, some of them lower, but this should help give an overall picture (click to enlarge):Hands up anybody who thinks it would be more honest, not to say less economically damaging, to have a single, flat rate of income tax? Obviously, the lower the better, that's a different topic.
Economists told MPs that a VAT hike would be well received by the City as it would be a transparent, measurable move to cut the country's growing debt pile and would remove uncertainty.
Asked whether the market would prefer a big VAT hike 'nice and early' both Alan Clarke, economist at BNP Paribas and Simon Hayes, chief UK economist at Barclays Capital said they thought the market would welcome such a move.
Hayes told the Treasury Select Committee: 'I think that would be taken very positively by the financial markets. The attractive thing at the moment about tax increases is that they are straightforward. They can be pre-announced. They are credible and you can have a reasonably fair idea about how much money they will raise,' he said.
These 'economists' work for banks, of course, and they follow The Golden Rule that the best tax is one that somebody else has to pay. Remember that banking, finance and insurance are largely exempt from VAT, as are house prices or residential rents. Residential new builds are zero-rated (so no VAT to pay by builder can reclaim input VAT).
So to Hell with the productive economy which has to generate all the VAT, let them pay the extra tax to keep the credit and house price bubbles going and keep the City boys in champagne and Ferraris, eh?
H/t Mark at HPC.
From The Metro:
The Harris poll that suggests that women are putting of having children because it may harm their job prospects misses on rather more obvious reason (Metro, Mon).
Rocketing house prices over the past 30 years mean that mothers working is no longer a choice but a necessity for many. Successive governments have failed to deal with rampant house price increases and the effects will be felt by British society and the economy for decades to come.
The BBC have extended the concept of "Star In A Reasonably Priced Car" (familiar to viewers of Top Gear) with a new rubrik, called Cause Celeb, in which stars chat amiably about their chosen serious illness. This week, Amelle Berrabah from The Sugababes talks about cancer.
Previous episodes include:
Darth Vader star on cancer
Sir Steve Redgrave on diabetes
Danny Wallace on MS
Phil Neville on cerebral palsy
James Landale on lymphoma
Keith Duffy on autism
Jim Broadbent on Alzheimer's
Ulrika Jonsson on incontinence
Which star/illness combination would you like to see on the BBC? Perhaps we can get a petition going or something.
Monday, 29 March 2010
From the printed version of this article in the Evening Standard:
Mr Osborne said: "According to Gordon Brown's logic, carrying on wasting money is crucial to securing the recovery. We think this is wrong. No one can seriously argue that tackling waste is somehow going to damage the economy".
What they were talking about was George's claim that a Tory government would not impose the hike in National Insurance. Whether that proposal is worth the paper it's written on is another topic, but as The Second Worst Tax, it's definitely one that should be reduced as a matter of urgency... as per UKIP's manifesto.
Thanks to everybody who took part in last week's Fun Online Poll: "How do people create wealth?", the results were as follows:
By working hard, starting a business and or investing wisely - 83%
By owning their homes or other land and property - 9%
Other, please specify - 8%
Which must be the 'correct' answer. Why did I ask such a dumb-ass question, you will be wondering...
The oft-repeated mantra is that "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing."
Now, it is quite true that an individual can become wealthy by owning land and buildings, but as rental values and land values are, broadly speaking a function of overall disposable incomes in the economy, the profits only arise because of the wealth-creation efforts of others; the same applies to people who own nothing more than their own home, if you see exclusive occupation of land as a form of 'consumption' (but a special form of consumption where there is no identifiable 'producer').
So that mantra deliberately misses the point. What we should be asking is why are we taxing the goose (hard work, entrepreneurship, wise investments) in the first place, remembering that £1 raised in taxes on output or income reduces the size of the economy by another 50 pence? Why aren't we taxing the 'golden eggs' (rental values, land values etc), which will increase over time whether they are taxed or not?
On a lighter (or indeed darker) note, and while it's still fresh in everybody's minds, I wonder how many people are up for scrapping the EU-mandated system whereby we have to alternate between Greenwich Mean Time and British Summer Time, and would like us to experiment for a year or two with sticking to GMT or BST throughout the whole year, and if so which?
Vote here or use the widget in the sidebar.
... one of the headlines on the BBC is
Gulf Stream 'is not slowing down'
The Gulf Stream does not appear to be slowing down, say US scientists who have used satellites to monitor tell-tale changes in the height of the sea. Confirming work by other scientists using different methodologies, they found dramatic short-term variability but no longer-term trend.
A slow-down - dramatised in the movie The Day After Tomorrow - is projected by some models of climate change. The research is published in the journal Geophysical Research Letters...
I had, until a couple of years ago, assumed that this whole 'Global Warming' theory was true (whether man-made or not). This didn't worry me too much (it saved us all the hassle of mowing our lawns in summer, for example), what worried me more was the possibility of Global Cooling, so the Warmenists invented a theory that MMGW would lead to a new Ice Age, in support of which they argued that MMGW would somehow turn off the Gulf Stream.
Only it now turns out that it hasn't happened so far, so that's another thing less for me to worry about.
The government's attempts to force banks to continue lending into a falling housing market to keep the bubble inflated, by nationalising and bullying RBS and Lloyds, doesn't really seem to have worked, so they're now going to try an even more direct approach.
From The Daily Mail:
Post Offices will start offering controversial 'super-size' mortgages to help young people with little savings buy their first home, the Government will reveal today.
Under the radical plan, Britain's struggling network will hand out mortgages to people who can only afford a 10 per cent deposit. It raises fears that they will be left exposed to a negative equity nightmare if house prices fall sharply over the next few years, as some economists predict...
... under the new plans, millions of people who have not visited, or rarely visit, their Post Office will be encouraged to return by a new range of products. The radical shake-up will include a proposal to force Britain's banks to pay a new 'community levy'... The money will be used to help the Post Office and credit unions to hand out cheaper loans to people, who would typically be targeted by loan sharks...
The decision to offer 'super-size' mortgages comes just days after the Chancellor scrapped stamp duty on homes bought for up to £250,000 for first-time buyers until March 2012. For many young people, they feared they could not take advantage of the tax break because few banks would give them a mortgage.
The number of 'super-size' loans has collapsed since the credit crunch. In August 2007, there were 829 loans for those with a deposit of only 10 per cent. Today there are just 154.
Sunday, 28 March 2010
Just to round off the day by poking a bit more fun at the Lib Dems, as a footnote to their tax policies is this:
No to unfair bills. We will stop banks and energy companies raiding your pocket with unfair bills and charges. We will put a stop to unfair bank charges and make sure energy companies charge you fairly so people who use the least pay the least.
There's no hint as to how they distinguish between 'fair' and 'unfair' bank charges, or what they propose to do about them, so that's a fail, As to 'unfair' energy bills, let's not forget that top of the list of things that the Lib Dems stand for are these nuggets:
Environment Making real commitments to stop climate change
Economy A sustainable, green economy for Britain
Which almost certainly boils down to forcing energy companies to subsidise windmills and all the other 'green' tomfoolery, which, however you estimate it, will be passed on to consumers and will add hundreds of pounds to every household's annual domestic fuel bills. So on the one hand they are in favour of higher domestic energy bills but on the other hand they are against them.
Or is there some double-think at work here whereby energy bills would be 'high but fair' if the Lib Dems were in charge, as against 'high but unfair' under some other unspecified party? This is all EU-driven anyway, so I don't really see the point in having a policy on it at all, you might as well have a policy on changing the tides.
So, having established that the top level statements are pretty vacuous, let's look in more detail at their proposal to increase the personal allowance for income tax from the current level of £6,475 to £10,000:
Cutting taxes for people on low and middle incomes. There will be no income tax on the first £10,000 you earn – meaning 3.6 million working people and low income pensioners will no longer have to pay any income tax at all, while millions more will have an income tax cut of £700. Pensioners will get up to £100 extra.
The change will be paid for by introducing a mansion tax, closing loopholes that benefit the wealthy and making sure airlines pay for the pollution they cause.
Two fundamental errors there.
1. It is true that increasing the personal allowance by £3,525 would reduce people's income tax bills by up to £705, and that this would, in relative terms, benefit lower earners more than higher earners (so it's a very good place to start), but they quite clearly overlook the other tax on income that employees have to pay, being Employee's National Insurance contributions ('NIC'), which is 11% of your income above the 'threshold' of £5,720 per annum (let's ignore Employer's NIC for now).
If we are to level the playing field even a little bit, then they ought to increase the NIC threshold to £10,000 per annum as well, which would mean a tax saving of up to £705 for people with mainly interest or rental income and a saving of up to £1,375 for employees.
2. If thirty million taxpayers get a tax cut of £700 each, the total 'cost' would be in the order of £21 billion.
a) Vince Cable's mansion tax (I thought they'd shelved this idea anyway), was set at 1% on the amount by which the value of a home exceeds £1 million. There are currently about 200,000 such houses, so let's assume a tax take from each of £5,000, that would raise £1 billion, but then minus off the Inheritance Tax that won't be collected and that gets it down to £600 million.
b) What loopholes that benefit the wealthy? The only one that springs to mind is the fact that very high earners could claim tax relief on pension contributions of £255,000 per year, but Alistair Darlling's weird new rules have probably wiped out a lot of the value of that tax break, so let's call the possible saving £5 billion or something.
c) I'm all in favour of airlines paying for the value of landing slots they use, and have done fag packet workings that say total revenues would be £5 billion per annum. You could, in theory, raise the same amount by increasing taxes on airline fuel, but it comes to much the same thing and sets an upper limit of £5 billion.
OK, that gets us halfway to raising the required £21 billion. If the Lib Dems want to be taken seriously, would they mind telling us how they will raise the rest? Or would they like to explain what government spending they'd cut, which would be a much simpler and better way of freeing up money for tax cuts?
OK, Gordon Brown has revealed Labour's 'General Election pledges' (but without actually calling an election), as announced by the BBC, who allowed the Tories and the Lib Dems to respond. Delightful is this:
Lib Dem leader Nick Clegg called the pledges "vacuous".
Yup. That from a leader of a party who couldn't even be bothered to think up a campaign slogan, so just bodged together the vacuous slogans dreamed up by Labour (A Future Fair For All) and the Tories' (Vote For Change, which, going by the date of the linked article, they invented a year ago) into the even more vacuous Change That Works For You. Building A Fairer Britain. For a start they could have used a colon rather than a full stop.
I accept it is difficult summing up your policies into a few words or sentences - to be fair, UKIP's original manifesto slogan 'Straight talking' was sidelined in favour of 'Empowering the people', neither of which is going to sway voters one way or another - so let's look a bit deeper at the Lib Dems' slogans and see how they translate into actual policies. Under 'What we stand for' on their website we find this:
Environment: Making real commitments to stop climate change
The climate ain't changing, and even if it were, there no reason to assume that it's changing for the worse or that there's anything we can do about it.
Economy: A sustainable, green economy for Britain
'Sustainable' and 'green' are meaningless and what is this obsession with 'Britain'? Firstly it's 'the United Kingdom' and secondly, I doubt whether there's much a UK government can do about the economy in Peru or in Malaysia or one of those other countries that aren't the UK.
Health: A healthcare system fit for the 21st century
Drivel. 'Fit for the 19th or 20th centuries' wouldn't sound too awe-inspiring and it'll be a while before we have one fit for the 22nd.
Law and Order: More police on the streets to reduce crime
Fair enough. That's a proper policy. Can't argue with that.
Education: Cutting class sizes and scrapping tuition fees
Fair enough. I'm not sure that cutting class sizes ought to be the top priority, and I'm all in favour of people paying a fair chunk towards their own higher education (rather than the taxpayer generally stumping up), but hey, at least they are proper policies that you can be for or against.
Transport: Putting passengers first and improving mobility
A bit vague, but seems fair enough.
I'll have a look at the fatal flaws in their idea of increasing the tax-free personal allowance to £10,000 later on.
Saturday, 27 March 2010
Tobias Ellwood MP advances the case for abandonding the silly ritual of putting the clocks forward an hour to BST in March and then back an hour to GMT again in October over at ConHome.
AFAICS, the only upside to this ritual is to provide us with a brilliant pub-quiz type question ("Which is the longest month?"), and I am pretty much sold on the idea of leaving our clocks permanently at BST. To be fair, the only way to find out whether the advantages outweigh any disadvantages (and there must be some - perhaps there'll be more people throwing in the towel if they have to go to work in the dark for several months in winter, but we won't know until we've tried) is just to leave our clocks at BST for a year or two, see what happens and then maybe have a vote on it. Or have a vote on it first. But it must be worth serious consideration.
UPDATE: Re 1968 - 72, see the comments to this post.
Anways, Denis Cooper, who knows about stuff, wades in (on a later thread):
As I have pointed out in a detailed comment on Mr Ellwood's article, this is a matter of EU law - Directive 2000/84/EC - which cannot be changed unilaterally by the UK government.
The UK government does not have the freedom to do what Mr Ellwood wants, which is to move clocks forward by one hour for the whole of the year, unless it also moves them forward by an additional hour for the agreed period of summer time:
"Article 1: For the purposes of this Directive "summer-time period" shall mean the period of the year during which clocks are put forward by 60 minutes compared with the rest of the year."
The concluding passages of my comment may seem harsh, but I'm fed up to the back teeth with UK politicians, especially Tory politicians, abusing their positions of trust by deliberately pulling the wool over the eyes of the public about the EU:
"If Mr Ellwood is unaware that this matter which so greatly exercises him is subject to existing EU law, which cannot be changed unilaterally by the UK, then he's unfit to be a government minister. On the other hand, if he is aware of the EU law but he deliberately chooses not draw the attention of readers to its existence, then he is unfit to be an MP, let alone a government minister."
I stand by that.
Friday, 26 March 2010
10cc's 'Dreadlock Holiday' (thematically, a precursor of The Clash's Safe European Homes, neither of which could ever be played on politically correct radio).
Up a semi-tone at 2 minutes 35 seconds, halfway through the line "I hurried [gearchange] back to the swimming pool":
From The FT:
From April, the richest 2 per cent of families will feel the impact of higher taxes when a 50p top rate of income tax is levied on earnings over £150,000 and their tax-free income tax allowances are abolished.
Compared with 1997, families with people earning more than £100,000 are losing another £1 of every £7 they take home, the IFS calculated. If the tax rates of 13 years ago were in place, these families would be 15 per cent better off than they will be under the new income tax rules.
The poorest tenth are, by contrast, the big beneficiaries since the last year of John Major's government. They are 12 per cent better off now.
Now, whether or not you agree with redistribution from higher earners to low- and non-earners*, the general idea is that £1 is worth more to a poor person that to a rich person; or that a transfer from a rich person to a poor person only reduces the income of the rich person by 1% but increases the income of the poor person by 20%.
But because New Labour were so busy redistributing to themselves, their friends and their families, they couldn't even manage that - as the article says, the top two or three per cent are fifteen per cent worse off but the bottom ten per cent are only twelve per cent better off, i.e. most of the extra tax has been siphoned off, i.e:
3 households earning £100,000 pay £15,000 extra tax = £45,000
10 households with income of about £5,000 get £600 extra income = £6,000
New Labour siphon off the balance = £39,000
* Ultimately, I don't either. I think there should be redistribution from people who occupy high value land to those who don't, and let's scrap taxes on incomes and production completely, separate topic.
You'll find that the bulk of people who say they're against redistribution are quite happy for wealth to be indirectly channelled from income earners to property owners by insisting that infrastructure, local services etc are paid out of income tax, but that property income and gains remain tax free. AFAIC, redistribution sideways and upwards is still redistribution. Under New Labour there was an enormous amount of this diagonal redistribution as well, of course.
Further to point 4 of my recent Crash course in social housing etc, it looks as if they are about to revoke this earlier act of Whitehall-knows-best madness, with all its unintended consequences.
From 24 Dash:
Proposals have finally been tabled to scrap the complex system of cross-subsidies for council housing in England, and allow local authorities to maintain and build homes using their own funds from rents and sales...
Mr Healey said that the four million people who live in England's 1.8 million council properties will get better homes and better services under the new system, which now goes out for consultation with local authorities.
Under the Housing Revenue Account (HRA) system, introduced in 1935, money from rents and sales of land and homes is sent by councils to Whitehall, where the DCLG manages the national housing debt and redistributes funds to the 177 local authority areas according to a complex formula.
The new self-financing system would allow councils to keep their cash and decide for themselves how to spend it on maintenance, refurbishment and repairs of social housing. In return, councils will be asked to take on their share of a £3.65 billion debt* . Town halls will also be able to borrow more cash to fund refurbishment and house-building projects.
"This is a once and for all settlement between central and local government," said Mr Healey, "It will bring council house funding up to date, replacing a system which was introduced before the Second World War. Councils will get the freedom to fund and run their council homes, without central Government subsidy.
"Not a single penny from rents or sales will go to Whitehall and not a single penny will subsidise other councils as the current system dictates... This is a change which councils have been calling for, and which has cross-party support. This is an opportunity for radical change which will allow councils to do much more to provide better services and better meet the needs of local people."
Excellent. One more thing I can tick off from my manifesto. If nothing else, at least it puts local councils on par with Housing Associations.
Also of note is the statistic that "Every year as a country we are raising £6 billion a year from council house rents", i.e. an average weekly rent of £64. I strongly suspect, having calculated this before, that this is the gross figure before deducting Housing Benefit, which 'pays' half of that £6 billion and so isn't real income. If it were up to me, I'd scrap centrally-funded Housing Benefit as well and leave it to councils to sort out as best they can (by hiking rents on their nicer properties, chucking out non-payers or identifying sub-letters, for example).
* Which sounds like a lot, but it works out at about £2,000 per council home.
A lot of people don't like the idea of banks being expected to sort themselves out via debt-for-equity swaps because they think that somehow debtholders are being 'forced' to lose money. Nonsense. The only serious alternative is government bail-outs, whereby the taxpayer is forced to give the banks money.
The good news is, if you just leave it to market forces, then debt-for-equity swaps are what will happen anyway, even though these swaps come in an infinite number of guises. From BusinessWeek:
RBS and its National Westminster Bank Plc unit offered to buy back some dollar-denominated preference shares with a face value of $14.3 billion, paying as little as 52 cents on the dollar, the Edinburgh-based lender said in a statement...
D'you see that? Those preference shares (halfway between shares and bonds - so the same principles apply) are trading at 52p in the £1. The pref holders have already lost 48% of their initial investment - provided they are offered a choice of 52p in cash; or ordinary shares or new bonds with a market value of 52p, then they shouldn't be too bothered.
The gimmick is that the old pref's had a nominal value of £1 but the cash paid out, or new shares or debts issued have a nominal value of 52p, so the bank can book the difference of 48p as a gain. It's not really a gain, it's just losses which have been crystallised in the hands of the bondholders, which have to be removed from the bank's accounts to prevent double-counting.
RBS, which is 84 percent owned by the government after it arranged a 45.5 billion-pound bailout of the lender, also said it converted $935 million of its 9.118 percent preference shares into ordinary stock. Investors in $548 million of the shares opted to receive a cash payout rather than common stock...
Again, d'you see the key word there - 'opted'?
RBS said it decided not to follow Lloyds TSB Group Plc in issuing contingent capital notes because it saw “limited benefits from doing so at this time...”
Which is a pity - those CoCo's are like rolling debt-for-equity swaps, something that Denis Cooper and I once dreamed up during an email exchange (not having realised that they already existed).
Thursday, 25 March 2010
They're all coming out of the woodwork now: from The Evening Standard:
Arts and cultural leaders (1) today issued a warning that Britain's economic strength could be “shattered” if funding to the sector is cut....
Samuel West, currently starring in the West End hit Enron... said maintaining arts funding was a “no-brainer”. Speaking at the launch of a joint manifesto for the future of culture, he said: “The arguments are so clear, economically, socially, aesthetically, that the only possible reason to reduce the total amount of money available for the arts in this country is censorship.”(2)
The arts generate £2 from philanthropy, sponsorship and their own business ventures and box office for every £1 of public subsidy (3). Sir Nicholas Hytner stressed that the subsidy was what created successes like the National Theatre hit War Horse. “Public investment means we can take risks we would otherwise be unable to take,” he said (4).
The manifesto says investment has created a huge appetite for culture and generated billions for the economy....(5)
1) Here's their manifesto. Here's the list of members:
Arts Council England
Association of Independent Museums
Cultural Learning Alliance
The Heritage Alliance
Heritage Lottery Fund
Local Government Association
Museums, Libraries and Archives Council
National Campaign for the Arts
National Heritage Memorial Fund
National Museum Directors’ Conference
Society of Archivists
Society of Chief Librarians
The Art Fund
The National Archives
I'd guess that most of those organisations are either state-backed or state-funded, or if not, are lobby groups for businesses which are partly state-funded.
2) No, my friend. It's when the government gets involved in arts funding that we end up with censorship. Withdrawing funding and leaving people to their own devices is the opposite of censorship. it's called 'freedom of speech' or 'freedom of expression' or something.
I'd like to add that there are three "creative industries" in the UK that are completely beyond the pale and infra dig as far as these luvvies or the government are concerned and which receive neither subsidies nor tax breaks nor interference, but which despite that - or more probably, because of that - generate a lot of income for the UK and in which we punch above our weight. They are: pop music; West End musicals; and computer games.
UPDATE: As AC points out, a tax break-sum-subsidy for the video game creators was proposed in The Budget. Ah well, that's another UK industry doomed to wither and fade, unless the next lot reverse it.
3) False comparison. If funding were halved, then all things being equal, they'd generate £4 for every £1 of public subsidy. So?
4) You'd like to 'take risks' with other people's money? Hmmm. A bit like banks?
5) If the 'investment' shows such a positive return, why wouldn't private investors be prepared to step in?
OTOH, it is quite possible that subsidies to certain things, like free museums or galleries are a net boost to London's tourist industry and show a positive return (I love those free museums myself, excellent value) but if anybody should be subsidising them, it's land and property owners in central London, who ought to be allowed to vote, democratically, on how much subsidy there should be, and to whom, and then pay for it themselves via a precept on their Business Rates or Council Tax. This is not an issue for central government or the taxpayer generally.
I just received an email from a recruitment agency proudly announcing that "ECHM Taxation [has changed its name to] Morgan McKinley Taxation"
Hopefully it's not just me and DBC Reed who'll find this name somewhat incongruous.
Whatever next? A flash PR company called McDaniel Bates Ellas Otha? A posh firm of City laywers called Burnett Arthur Chester?
This week's Fun Online Poll had a high turnout and a conclusive response, so I'm calling the result now:
"Would you be bothered if British Airways goes bankrupt and is split up between smaller competitors?
Yes - 19%
No - 79%
Other, please specify - 3%
That seems pretty clear cut to me, so no further discussion required. Thanks to the 154 people who took part, as ever.
As it's a quiet news day, this week's second Fun Online Poll is a general question:
How do people create wealth?
Vote here or use the widget in the sidebar.
I stumbled across the IPPR's Budget write-up, which as you might expect is completely supportive of whatever it is that the Labour government proposes to do.
By force of habit, I downloaded their most recent accounts from the Charities Commission website to have a look at who funds them.
Note 2 just says "The majority of the donation income is received from companies (the other significant sectors accounting for more than 10% of the total are individuals and trusts)." The financial review is a little more helpful, it says: "The income of the organisation was £3.434m in 2008... Our donation income comes from a variety of sectors including corporates, trusts and foundations and individual donors. The majority of this income suppods specific research projects. AII our funders from the past year are Iisted on our website."
Their full list of donors/sponsors/clients does not say how much each one gave, but includes the following (I deleted about a third from the original list who are clearly private companies or unknown to me):
Age Concern England
Association of Colleges
Association of Colleges North
Association of North East Councils
Child Poverty Unit
City of London Corporation
City Parochial Foundation
Commission for Rural Communities
Community Foundation Serving Tyne & Wear and Northumberland
Danish Ministry of Foreign Affairs
Department for Children Schools and Families
Department for Culture Media and Sport
Department for Energy and Climate Change
Department for International Development
Engineering and Technology Board
ESRC (Economic and Social Research Council)
Equalities and Human Rights Commission (EHRC)
Ernst and Young LLP*
European Climate Foundation
Foreign & Commonwealth Office
Friends of the Earth
Global Development Network
Government Equalities Office
Greater London Authority
Greenpeace Environmental Trust
Home Office - UK Border Agency
Homes and Community Agency (formerly the Housing Corporation)
Independent Asylum Commission
Institute for Employment Studies
International Development Research Centre (Canada)
Kent County Council
Learning and Skills Council – Coventry
Local Government Association
London Borough of Brent
London Borough of Islington
London Borough of Waltham Forest
London School of Economics
Low Pay Commission
National Museum Directors' Conference
National Policing Improvement Agency
National Union of Journalists
National Youth Agency
New America Foundation
North East Improvement& Efficiency Partners
North East Refugee Service
North East Strategic Migration Partnership
Northern Rock Foundation
Office for the First Minister and Deputy First Minister of Northern Ireland
Princess Royal Trust for Carers
Public and Commercial Services Union
Save the Children Fund North East Development Team
Serco Group Plc*
Skills Development Scotland
State Government of Victoria
Stockwell Community and Resource Centre
Sustainable Consumption Institute
Swedish Foreign Ministry
Tata Consultancy Services*
UK Business Council for Sustainable Energy
UK Commission for Employment and Skills
UK Online Centres
University of Hertfordshire
University of Oxford
Welsh Assembly Government
World Vision UK
Look chaps, if you're going to lie in the accounts, there's no point then telling the truth on your website is there? The chances are that most people would go to your website first anyway. So, epic fail, I'm afraid.
* I've left some private businesses on there who earn a fortune from government contracts.
Wednesday, 24 March 2010
... on behalf of, er, fakecharities.
Further to my occasional series 'I'm surprised they are that blatant about it', the FT writes up a press release from The Charities Commission:
Public sector cuts could create a "financial black hole" for thousands of charities that receive a high proportion of funding from the government, the charity watchdog warns today. The Charity Commission's concern underlines the wide ripple effect of Treasury austerity, which is likely to be felt across swaths of the economy that are not part of the public sector but have a close relationship with it...
Dame Suzi Leather, who chairs the Charity Commission, warns that in spite of economic recovery: "Our research shows that the financial recovery for charities may lag behind that of other sectors."
Since when is the Charities Commission the cheerleader for, rather than watchdog of, 'charities' in general or fakecharities in particular?
What sort of 'research' did the Charities Commission carry out? A couple of 'phonecalls to sound out which charities might like to appoint Dame S as a trustee for a modest annual fee when her contract runs out, only to be told that their budget for overpaid meddlers was already maxed out?
Ah... from the press release (link as above)... "The key findings of the survey of 1,010 charities, carried out by MVA Consultancy...". Their website in turn explains that "MVA Consultancy provides advice on transport to central, regional and local government, agencies, developers, operators and financiers....", i.e. they are a fakeprivatecompany, who are
(a) living off Ye Olde Taxpayer and
(b) claim to specialise in transport, about a million miles from 'phoning round a few charity mates.
From the BBC:
Central grants to local authorities make up the bulk of councils' income, and have risen to £76.2bn for the coming year. The total take from council tax will be £26.3bn in 2010/11, up from £25.6bn this year.
That probably understates the importance of central funding - schools and hospitals are decidedly 'local services' and the government spends about £150 billion on them (a third of which is probably waste) - but, hey.
Council tax bills in England will rise by an average 1.8% in 2010/11 - the lowest annual rise since the tax was introduced in 1993, new figures show... Local government secretary John Denham said the below-inflation increase had been made possible by a 4% increase in central funding for councils from next month. "The lowest ever increase has been made possible by a 45% real increase in government funding for local services since 1997," he said.
Now, as we well know, there is no such thing as 'central funding', what he means is that local services are largely funded out income tax, National Insurance, VAT and corporation tax, i.e. taxes on economic activity. So, whichever level of total tax and spend you choose (and we are currently way above that level, of course) there's a trade-off here - it's easy to reduce the increasingly meaningless Council Tax if you just hike the other taxes a bit, which is quite clearly what Labour have been doing in order to stoke the house price bubble, get the Home-Owner-ist vote etc.
Shadow local government secretary Caroline Spelman said: "Council tax is Gordon Brown's most painful stealth tax...
No it's not a 'stealth tax', you stupid witch. Council Tax is an 'in-your-face tax'. A stealth tax is something like not indexing up personal allowances, which the Tories reckon will increase income tax and National Insurance receipts by £2.2 billion, that's what I call a stealth tax, and a stealth tax on wages at that. The milk-curdler continues:
"Under [Gordon Brown's] watch, council tax bills have doubled...
Probably true, in cash terms (rather less than that in real terms). But house prices have trebled, so the total average council tax bill is only about fifteen per cent of the total increase in value of an average property since 1997, so the tax more than pays itself and it's mainly taxes on economic activity that pay for local services (see above). Or put it another way, Council Tax has fallen from 1% to 0.6% of average property values - leaving that little bit extra in the first-time buyer's budget to take out that little bit bigger mortgage to push up house prices that little bit more...
... while frontline services like weekly bin collections have halved. You pay more and get less under Labour. This rise compounds the massive hikes of previous years. As Scotland benefits from yet another council tax freeze, hard-working families and pensioners in England now face council tax bills of £120 a month."
Now, maybe I've missed something, but isn't the £2.2 billion stealth tax on wages something that should primarily concern 'hard-working families'? Didn't the Tories deliberately design Council Tax to have a large Poll Tax element, i.e. to be regressive, i.e. to bear unduly on "hard-working families and pensioners"?
And unlike a flat tax on land or property values, there's no escaping the Council Tax/Poll Tax, you can't reduce your bill by trading down or moving somewhere cheaper: if you want to move somewhere with lower Council Tax bills, then all things being equal, you'd end up paying more for a similar house.
To cut a long story, they're as bad as each other.
From the Department of Communities & Local Government's Budget write-up:
The Total Place pilots have shown how, through bold local leadership [and] breaking down silos in favour of better collaborative working, it is possible to deliver services which meet people's needs, improve outcomes, end duplication and generate savings.
The Budget commits the government to delivering radical freedoms and flexibilities for local agencies. All local councils in England will benefit from the removal of at least 10 per cent of the current National Indicator set.
Yup, they have actually set a target for the reduction of targets.
From the BBC's Budget write-up:
Chancellor Alistair Darling has axed stamp duty on house sales under £250,000 for first-time buyers paid for by a rise in duty on homes over £1m... the planned cut in stamp duty would stay in place whoever wins the election, as it is similar to existing Tory policy.
So this all to help the 'first-time buyer', is it? Doesn't that pre-suppose that sellers won't just hike their prices by one per cent to match? (And it's a nice bit of Indian Bicycle Marketing).
Even The Daily Mail sees it that way:
Labour will be desperate to avoid signs of another collapse in house prices in the run up to the general election, expected in May, and a stamp duty cut - reported last night by the BBC - would be an ideal way of propping up the market.
I don't like Stamp Duty Land Tax, like most land or property taxes, it is almost deliberately badly designed, it's as if they were trying to bring such taxes into disrepute (a weird mixture of Poll Taxes, transaction taxes and jealousy surcharges), but the only people who'll benefit from this are people who sell up in the near future. If I were in the market for a house - oh, I am - then I'd rather wait another year or two, as prices are set to fall by considerably more than one per cent.
From the BBC:
British Telecom has been accused by a businessman of being unfair to rural areas after quoting more than £56,000 to install broadband at his farmhouse. Tony Simkin, of Beulah, Ceredigion, who has a jewellers in Somerset, wanted to file his VAT returns online. ..
Right. So although he is described as 'a businessman', he is in fact asking for broadband for his remote farmhouse. Why doesn't he get online at his jeweller's shop and file his VAT returns from there? What sort of insane commute does he do every day?
He added: "I believe it is grossly unfair of BT to ignore people in rural areas so that they can maximise their profits in cities and well populated areas."
Does anybody force him to live in remote farmhouse, miles from where his business is? Wherever you live, there's a trade-off. You prefer fresh air and trees to broadband? Move to the countryside. You like having broadband and a shorter commute? Move to the suburbs.
Is there any reason to assume that BT are trying to make an unconscionable profit on this? Maybe they are, in which case he simply declines their offer. Why is he whining about ignoring people in rural areas? Is he happy to put his stock in a van and drive round the countryside offering his wares to 'people in rural areas' for below cost? Or would he rather 'maximise his profits' by running his actual shop in a town-centre?
The headline in The Metro says "SS assassin jailed for 1,944 murders" but if you read the article it says he "committed three murders".
Tuesday, 23 March 2010
So does anyone know who the NREC are? They appear to be registered as a company rather than a charity* and were formerly the Northamptonshire Racial Equality Council**... I cannot find any reference to them on the Charity Commission website. However they have a bunch of local councillors on their committee and a name that implies Quangodom or Fake-Charityness.
Basically I want to know whether they are receiving public money, because their behaviour is not something I wish to subsidise. So if anyone knows how to go about finding out then please leave a comment.
Here's an extract from their 2009 accounts showing their sources of income (click to enlarge):
* A lot of charities are companies as well, so their accounts would be filed at Companies House and at the Charities Commission.
** The company has since changed its name to Northamptonshire Rights and Equality Council.
Who will you vote for* in the 2010 General Election?
* Yes, I know that should be "For whom will you vote..?"
From The Evening Standard:
A third runway at Heathrow will not benefit Britain as much as previously claimed, ministers admitted today. They accepted that a new way of measuring the cost of pollution, introduced just six months after the Government-backed Heathrow expansion, means the economic boost from it would now be lower...
The Department for Transport put the monetised net benefit of another runway at £5.5 billion using the then published values for the shadow price of carbon and assuming the number of flights were to rise to 702,000 a year. But last July the Department for Energy and Climate Change introduced an assessment method for the cost of carbon based on mitigating the effects of pollution rather than the damage caused...
A Lib-Dem analysis of the plans based on the changing cost of carbon found that environmental damage from another runway would cost £4.5 billion more than originally assessed — a total of £9.3 billion.
As any cost accountant knows, the relevant cost is the lower of:
a) the cost of the damage, and
b) the cost of preventing the damage.
For example, if you have a few slates missing from your roof, the cost is the lower of:
a) the cost of the damage from the leaks etc (many £1,000s), and
b) the cost of getting a roofer in (a couple of £100),
= a couple of £100.
Conversely, you might have a pinprick leak in your outdoor swimming pool*; the relevant cost is the lower of:
a) the cost of the damage (an extra few £1 a year for pumping in slightly more tap water than otherwise), and
b) the cost of draining the pool, digging a huge great hole and having a bit more sealant applied (tens of £1,000s),
= a few £1 a year.
Under The New Maths, the cost of the pinprick leak in your outdoor swimming pool is in fact tens of £1,000s.
* I don't have an outdoor swimming pool in my garden, and I doubt whether many of you do either, but it was the first thing that sprang to mind.
Adam Collyer highlights yet another instance of the Warmenists taking the piss.
From the BBC:
Children's access to safe places to play should be treated as a serious political issue, say campaigners promoting the right to play.
Play England has issued a manifesto - including demands for a 20mph (32kph) speed limit in residential areas. A survey for the charity says 83% of adults want the government to promote policies to help children have more opportunities for outdoor play...
Having read the key words 'campaigners' and 'charity', I assumed that the BBC would then follow their usual 'write-up-of-fakecharity-press-release' template, peppered with rent-a-quotes from other fakecharities and concluding with a statement from a government spokesperson confirming that the government was going to 'do more'.
We'd then have to scurry off to the Charities Commission website to look up the 'charity', download the accounts and scroll through until we found the page which explains that they are largely government funded.
On this occasion, the BBC have saved us the hassle:
Play England, part of the National Children's Bureau and funded by the lottery...
PS, I am thoroughly in favour of there being more playgrounds, and my earliest political triumph was getting the local council to build a small playground at the end of my road, mainly by just getting on their nerves for two years, different topic. Be that as it may, children's playgrounds are very much a local issue and bugger all to do with the national government.
Following the ASH-sponsored report on the completely-made-up-cost-of-smoking that we have all roundly abused, Policy Exchange have produced a fine summary of the relative impacts of Employer's NIC, VAT, income tax and corporation tax*, which supports my contentions that Employer's NIC and VAT are The Worst Taxes. From the press release:
Employers’ National Insurance one of worst possible taxes to rise
With a 1% rise in National Insurance Contributions planned for next April, Policy Exchange’s latest report today warns that Employer’s NIC is potentially a very damaging tax. New modelling in the report, Taxation, Growth and Employment, finds that increasing employers’ National Insurance dramatically increases unemployment and reduces growth. The report
recommends that the Treasury urgently re-examines the decision to raise employers NIC.
The report also finds that:
• It is not clear that raising VAT is less damaging than rises in the basic rate of income tax – it may even be worse.
• Long term, increasing the tax on debt and cutting corporation tax ought to reduce economic volatility (albeit probably only modestly), potentially increasing economic growth.
• There are a number of fiscally neutral tax reforms have the potential to boost growth and reduce unemployment.
• A fuller understanding of the dynamic effects of tax increases make tax rises look like a less attractive to address Britain’s fiscal problem.
Yesterday's FT focussed on the finding that VAT was The Worst Tax (even though that is not what the report says - it says that Employer's NIC is The Worst Tax) and wheel out some rent-a-quote EU-apologist academic fuckwit who deserves to be taken out and shot:
Michael Devereux, of the Oxford University Centre for Business Taxation, said an advantage of changing the VAT rate was that – unlike income and corporation tax – it would not induce individuals or corporations to move abroad.
This argument boils down to the fact that VAT is much the same as an import duty. If the UK levies import duties on something that can be produced here, the superficial argument is that with import duties, there is no tax advantage in making that abroad and then importing it.
As we know, import duties are just protectionism, which reduces overall wealth, and are a subsidy to less efficient domestic producers, who can thus increase their own prices rather than being exposed to competition and maybe focussing on something else where they have a comparative advantage.
So that's not much of an argument.
If the argument that VAT does not induce individuals to move abroad is to hold water, we must go with The Big Lie that domestic consumers are fixed and immovable and thus we can tax their spending as much as we like. But purely as an individual, would you really want to stay in a country where imports are more expensive, where domestic producers overcharge, and where the economy is permanently running below full capacity?
Remember that individuals can't just spend, they have to earn as well. Where do you think the economy will run better and where will your wages be higher: in a free and open economy or in one hampered by protectionism? Don't forget that the cost of imports is exports, and the two balance off in the long run - if domestic producers are cosseted by import duties, then by definition, they won't be exporting so much, so you as a producer-consumer will be producing less, earning less and then overpaying for what you consume.
* As a Tory think-tank, it wouldn't occur to them to recommend shifting taxes from economic activity to land or property values, which have no negative economic impact whatsoever - as a 'consumer' of land (i.e. the occupier at any one time) the tax cannot increase the overall cost to you (including cash cost and notional cost - worst case, the tax increases the cash cost but depresses the notional cost in equal and opposite measure), and nobody is seriously suggesting that disgruntled landowners would take their land abroad, are they?
Monday, 22 March 2010
Yesterday, I outlined the system of Domestic Rates in Northern Ireland, which is a property value tax of 0.78% per annum (i.e. not a million miles from Land Value Tax).
I suggested that instead of capping the value to which the rate is applied at £400,000 (which benefits people in larger houses) while retaining the jealousy surcharges Stamp Duty Land Tax and Inheritance Tax (which hurt people who buy or sell larger houses, or who have a large house, or indeed a small house but lots of other assets), it would be much simpler and better to simultaneously scrap the £400,000 cap and scrap the jealousy surcharges (let's assume that this would be more or less fiscally neutral for the sake of this discussion).
Once you think along these lines, it would be quite easy to get rid of all the other wealth/property related nuisance taxes like Capital Gains Tax, the TV licence fee, Insurance Premium Tax and VAT on domestic energy bills as well - each of these raises around £2.5 across the UK, so to replace the lot would involve hiking the tax rate by about 0.25%, in other words, you could get rid of the lot and increase Domestic Rates to 1% per annum. This would reduce collection costs and reduce distortions, while improving collection rates (it's difficult to evade property value taxes, although they are quite easy to avoid - you just move somewhere smaller or cheaper or take in a lodger and split the bill two ways).
Dearieme duly trotted out the time-honoured objection:
"[this would enable us to] shut down the departments at HMRC dealing with SDLT and IHT": you naif, starry-eyed optimist, you.
Others have raised this as well, the idea if a system of property value tax were in place, the government would just keep increasing the rate and increasing the rate, but without replacing or reducing other taxes. This notion is, frankly, complete and utter nonsense, neither in theory nor in practice (it has not happened in Northern Ireland, or in Taiwan or on Sark or anywhere else that has property value taxes, has it?). I responded thusly:
D, that's the beauty of property taxes. Apart from being the economically least damaging taxes, they are the very opposite of stealth taxes; people know what they are paying and object violently (but irrationally) to every penny (unlike true stealth taxes like VAT or National Insurance, which are economically very damaging but people don't seem to care). So the only way a government could push through a £1 increase in property taxes is by demonstrably cutting other taxes by at least £2.
No doubt somebody will come along and say "The government wastes so much money, they should just cut the waste and cut other taxes by £2 but without increasing property taxes by £1", to which I reply "Nope. Of course wasteful expenditure should be cut, but if there's £2 to spare, we would still do better by cutting taxes on economic output by £3 and increasing property taxes by £1" and I'd keep going until either wasteful spending has been reduced to £nil or taxes on economic output have been reduced to £nil.
From the BBC:
More could be done to prevent the early deaths of up to 50,000 people each year hastened by air pollution, MPs say. A Commons Environmental Audit Committee report said failure to reduce pollution had put "enormous" cost on the NHS and could cost millions in EU fines....
EAC chairman Tim Yeo* said: "Air pollution probably causes more deaths than passive smoking, traffic accidents or obesity, yet it receives very little attention from government or the media. In the worst affected areas this invisible killer could be taking years off the lives of people most at risk, such as those with asthma."
Oooh! "more deaths than passive smoking", so pick a number greater than zero, eh? "traffic accidents", that's a known figure, about two or three thousand a year, nowhere near "up to 50,000". How many people die of obesity? No idea. That must be what it's like in the Westminster bubble - the people in there actually see things like passive smoking or obesity as threats to life and limb.
* Lest ye forget, Tim Yeo is a Conservative MP. A company called AFC Energy pay him £3,750 a month for doing one day's work (from They Work For You). AFC Energy do all this clean coal, hydrogen fuel cells and all that nonsense, i.e. are exactly the sort of people who are claiming to have technology which will reduce 'air pollution'.
This is just to illustrate that the daily rate requested by Stephen Byers MP was quite realistic.
From the CityAM (summarising an article that appears to have appeared in the FT even though CityAM refers to The Times):
A Conservative government would continue multi-million-pound state funding of trade unions in spite of the party’s hardline rhetoric against the strikes, David Cameron’s union envoy has said. Richard Balfe, appointed by the Tory leader to improve the party’s relations with the unions, said Cameron would not be seeking to pick a fight.
Just sayin', is all.
Thanks to everybody who took part in last week's Fun Online Poll. The responses to the question "How long does your journey to work take in the morning?" were as follows:
less than 15 minutes - 32%
15 to 30 minutes - 22%
30 to 60 minutes - 29%
60 to 120 minutes - 15%
more than 120 minutes - 3%
I foolishly forgot to include the option "I work from home", which (judging by the comments) would be about a third of the 32% who reported a journey time of less than 15 minutes.
There is no particular back story to this poll - I was just genuinely interested whether my assumption that the majority of people are prepared to tolerate a commute of 'about half an hour' was correct and what the spread about the mean (37 minutes) is.
Staying with the travel theme, the British Airways versus Unite (the trade union) industrial dispute seems to me like one of those cases where you want both sides to lose.
As a privatised former public entity, BA was given enormously valuable landing slots at UK airports for free but inherited a hefty final salary pension scheme which it never bothered to fund properly. Even though it was privatised a quarter of a century ago, it never really shook off the public sector mentality - even now, salaries for BA staff are nearly twice what they are at other airlines (if they had taken lower salaries then the difference would have gone into the pension fund and all would be sweet and dandy).
The trade union is being completely daft - in economic terms (if you consolidate the airline and its pension fund into one entity), the employees already own about ninety per cent of their employer (or at least older members of the final salary pension scheme do). I am surprised that the union doesn't have an economist to quietly point this out.
Luckily, there is a way in which both sides can lose. All it needs is for passengers to stop booking with BA for a few weeks and the whole thing will simply collapse. All their slots can be auctioned off properly by the government (preferably on a leasehold rather than a freehold basis) and smaller competitors and new entrants can snap up the aircraft, infrastructure and most of the employees.
So that's this week's Fun Online Poll: "Would you be bothered if British Airways goes bankrupt and is split up between smaller competitors?"
Vote here or use the widget in the sidebar.
Sunday, 21 March 2010
Interestingly, Northern Ireland never replaced Domestic Rates with Poll Tax or Council Tax. The old valuations had got a bit out of date, so they revalued all residential properties as at 1 January 2005 and then calculated the rate required to raise the same amount of tax, which happened to be 0.78% per annum (plus local precept, where applicable) on the updated capital values.
They cap the value per property at £400,000, so the biggest annual bill you can have is £3,120 (plus local precept if applicable). That, taken in isolation, was a daft thing to do, but I suppose it's only fair as they still have Stamp Duty Land Tax and Inheritance Tax, which are jealousy surcharges on properties worth more than £250,000 (3% band) or £500,000 (4% band) or estates worth more than £325,000 (40%).
That strikes me as a lot fairer than Council Tax in the rest of the UK, which is in 8 bands (annual bills between £850 and £2,550) so it is less regressive, i.e. does not have a Poll Tax element.
Further, if it were up to me, I'd get rid of SDLT and IHT as well and get rid of the £400,000 cap. I suspect that this would be a modest net benefit to people in homes valued at more than £400,000, i.e. would you rather pay lots of 0.78% instalments or have your heirs pay one big 44% or 43% chunk when you die? Either way, it keeps things nice and simple and enables us to shut down the departments at HMRC dealing with SDLT and IHT.
Saturday, 20 March 2010
From The Times:
Between 20 and 50 per cent of all Muslim marriages are said to be consanguineous [the PC term for inbreeding or even incest] and 8.5 per cent of all births are to parents related by blood [so that's an epic fail within the same sentence, unless the vast majority of consanguineous Muslim marriages are childless, whatever].
Religions vary as to what they allow. The Koran prohibits uncle-niece marriages, even though these are permitted by Jews and Hindus. Yet uncle-niece marrages involve the same amount of inbreeding as marriages between cousins — with 12.5 per cent of genes being identical.
Nope. We can argue the toss about the 12.5% figure, but an uncle-niece baby is far more inbred than one born to first cousins. The following diagram shows why:
To explain, in the top half, A and B have child AB, C and D have two children CD and CD; E and F have child EF. AB marries one of the CDs and the other CD marries EF, and so on. The two first cousins ABCD and CDEF have a baby ABDCCDEF. So that baby's genes are 25% from A or B; 50% from C or D and 25% from E or F.
In the bottom half, Uncle CD and Niece ABCD have a baby. Their baby's genes are 25% from A or B and 75% from C or D. That is a considerably smaller gene pool than a baby born to first cousins.
I caught a bit of yesterday's Wales debate on BBC Parliament yesterday evening. Labour backbenchers were lining up to ask set piece questions about Tax Credits, which Peter Hain smugly answered as follows (Hansard, Column 860):
Tax credits have made work pay (1), lifted hundreds of thousands of people out of poverty (2), and encouraged people to get off benefits and into work (3).
1) Maybe Tax Credits do 'make work pay', but surely the main reason people go to work is to earn money? So it's the employer who 'makes work pay' by, er, paying wages.
2) Don't forget that the income-tax free personal allowance is only £6,475 (and the National Insurance threshold is even lower than that), so you start paying income tax and National Insurance (total 31% of your wages) long before you have reached a level which could be fairly considered to be 'out of poverty'. So the impact of this is the equal and opposite of 'making work pay' and pushes as many back into poverty as Tax Credits claim to lift out.
3) What he means is "encouraged people to get off out-of-work benefits and on to in-work benefits", if we see Tax Credits as a benefit rather than negative tax. Let's agree that people working rather than not working is usually A Good Thing for the sake of this discussion.
There is little correlation between Tax Credits and tax paid, but as ever, let me point out that a single earner claiming the 30-hour Tax Credits rate who is earning £195 a week is paying £23.45 a week in income tax and National Insurance and is, in theory, entitled to £23.14 a week in Tax Credits (TBMT, Table 1.1b).
That seems a bit of a long way round to me - would increasing the tax-free personal allowance/National Insurance threshold to £195 a week (or £10,140 a year) not be a better place to start?
From the BBC:
Conservative leader David Cameron has announced plans for a new tax on banks - even if other countries decide not to do so... The Tories, who have not yet provided any details of how their scheme would operate, hope that by adopting a more limited measure if the UK acts alone they will avoid driving banks into exile...
Mr Cameron said: "We had the biggest bank bail-out in the world. We can't just carry on as if nothing happened. In America, President Obama has said he will get taxpayers back every cent they put in. Why should it be any different here?" He said a Conservative government would introduce a new bank levy to pay back taxpayers for the support they gave and to protect them in the future.
So, no details as ever, but it's worse than that. Let's first look at how we got here:
1. The government used taxpayers' money to subscribe for more shares in RBS and Lloyds. Those shares were standing at a £34 billion loss at the moment. The share values might or might not rise to reduce this loss (fat chance).
2. The Bank of England lent the banks another £185 billion under the Special Liquidity Scheme in April 2008, which is due to be repaid in April 2011 (fat chance).
3. The Bank of England lent the Northern Rock £26 billion, which has been largely repaid. I'm not sure if it's the Good Bank or the Bad Bank half that will have to repay the rest. The overall net loss will probably be quite modest.
4. Then there is a £250 billion credit guarantee scheme, whereby cash only changes hands as and when loans go bad. The banks do pay a modest fee for this.
5. The above list is not exhaustive, and there may even be double counting. But the short answer is, UK banks owe the taxpayer "a heck of a lot", let's just add together 1. and 2. and call it £225 billion for sake of this discussion.
6. To be fair about all this, the Bank of England in turn owes the commercial banks about £144 billion as at December 2009, Table B1.1.1. This is what happened to the 'cash' that the banks got from selling back gilts to the government under the Quantitative Easing scheme.
So that's a net liability from commercial banks to the taxpayer of about £225 billion minus £144 billion = £81 billion (ignoring the money they wasted on repaying depositors in Icelandic banks, I think we can whistle for that). Can't we just collect this £81 billion* first and then busk it from there? Why should we invent a new tax to claw it back?
Liberal Democrat economics spokesman Vince Cable said: "The other parties seem to be moving on to ground the Liberal Democrats have occupied for some time: banks must pay for the protection they enjoy from the taxpayer." Mr Cable said his party had been "very specific about how this crucial issue should be tackled, after extensive discussion with the City and others". He said it was "seriously worrying that both the Conservatives and the government still do not seem to have worked out a specific proposal".
7. Uncle Vince is going off at a bit of a tangent here; I think he's talking about the fee that the banks have to pay for the £250 billion guarantee scheme (bullet 4 above). Historically, the UK has guaranteed deposits, it currently guarantees the first £50,000 that a depositor has with each bank, which seems fair enough to me.
8. Whether that £50,000 is "too high" or "too low" is a moot point, and the insurance premium that the banks pay is probably "too low", but never mind.
9. Like most people, Uncle Vince doesn't seem to realise that no UK bank, however badly run, is in such a mess that its assets wouldn't be enough to repay ordinary, everyday deposits. Even Northern Rock back in 2007 would have had enough to repay depositors three or four times over. Sure, the banks have made losses, and that loss has to be borne by somebody, but why invent new rules?
10. Why not just make it clear that if a bank loses the faith of its depositors and has to turn to the government, that it will immediately be split into a Good Bank and a Bad Bank (which is what they did with Northern Rock after two years of messing about). The good loans, branches, assets, employees and deposits (up to £50,000, let's say) are moved to the Good Bank and the bad loans are transferred to the Bad Bank, which is owned by the shareholders and bondholders of the original bank in the same terms and conditions?**
This completely obviates the need for any sort of insurance scheme at taxpayers' risk (and hence Moral Hazard). The depositors' 'insurance' would be that they will always be given priority in repayment.
* Sure, some banks like Barclays and HSBC may be net creditors of the government, so the true figure must be higher than £81 billion, but I am trying to illustrate the principle.
** The Good Bank would also be set up with proper share capital (as a balancing figure) and these shares would of course belong to the Bad Bank, to be auctioned off to Bad Bank's shareholders and bondholders under a Dutch Auction system, thus breaking the link between the two new banks.
Friday, 19 March 2010
Here's one for parents of kids who were into Bob The Builder - they were poisoning their little minds with full-tone truck driver's gear-changes at 2 minutes 31 seconds* into an otherwise passable song:
* One could argue that the gear change is actually at the start of the middle eight. The song is the chords E, A & B, but the middle eight is C sharp seventh, which then resolves itself into F sharp (even though that chord 'should' be E). Ho hum.
From The FT:
Downing Street rejoiced at what it portrayed as a diplomatic coup for Mr Brown. "Gordon has spent years building up political capital..." said one aide.
OK. Guess what the coup was. Was it
a) A guarantee of support from the USA in any possible unpleasantness with Argentine;
b) The release of Aung San Suu Kyi from house arrest and the announcement of free and fair elections in Burma;
c) Iceland's solemn undertaking to refund UK taxpayers for the billions it cost them to bail out reckless depositors; or
d) "... a last-minute reprieve from contentious new European regulations... after Gordon Brown pleaded that the issue be shelved until after the election. The personal intervention by the prime minister staved off certain defeat for the UK at a finance ministers' meeting in Brussels, where France leads a powerful coalition that is calling for tough regulation of the sector."
Make of that what you will. I shall be spending the rest of the day in sunny Milton Keynes.
Thursday, 18 March 2010
While trying to find out whether Landfill Tax (a completely insane tax) is EU-imposed (which appears to be the case, but it's not 100% conclusive) I stumbled across this nugget on the BBC:
Under new EU legislation the UK will have to ensure that less than a third of its waste is sent for burial in landfill sites... The figure at present is about 80%. Even then, there will still be large amounts of waste which can neither be recycled nor sent to landfills.
The Environment Agency says space for landfills in south-east England could run out within seven years.
Guess when that article first appeared?
Click and highlight to reveal....
Wednesday, 27 November, 2002, 21:27 GMT
... and a sideswipe at taxpayer-funded Product Placement, over at Dick Puddlecote's.
Just when you thought they couldn't come with something more insane than their last bright idea, comes this, from Dash 24:
Food waste could be banned from landfill under proposals being put out for consultation by the Government today. Environment Secretary Hilary Benn is launching a consultation into preventing an array of different types of rubbish which could be recycled or reused from going into the ground.
The Environment Department (Defra) and the Welsh Assembly are looking at the case for landfill restrictions on paper and card, food, textiles, metals, wood, garden waste, glass, plastics, and electrical and electronic equipment...
I struggle to think of much that isn't on that list, apart from disposable nappies. Any ideas?
On a good day, the Righteous seem to accept that smokers pay a shedload in extra taxes (although they prefer to focus on a non-existent figure, being the amount of tax 'lost' due to smuggling*, which is about as relevant as the number of goals I've never scored in a Cup Final).
But a figure that the Righteous are determined to ignore when wailing on about 'the cost of smoking' (to the NHS or the economy or the taxpayer or whomever) is the saving in old age pensions.
In a fairly unscientific manner, I would guesstimate the saving as follows. In round figures, there are 12 million pensioners, a fifth of whom have smoked (sure, more will have smoked in the past; but those that did are less likely to live to pension age and/or die earlier so on). The smokers live an average of 12 years in retirement and the non-smokers live on average 22 years. This averages out at twenty years claiming a pension (which is 'about right').
If the smokers lived as long as non-smokers, the total number of smoking pensioners would be 2.4 million pensioners x 22 years/12 years = 4.4 million pensioners, so there'd be 2 million more pensioners.
The total average taxpayer-funded pension is (let's say) £10,000 a year (not just state pension but public sector pensions, other benefits and so on), 2 million x £10,000 = £20 billion, which dwarfs even today's made-up figure of total cost of smoking £13.74 billion, even ignoring £10 billion-plus in VAT and duty on tobacco.
Unless of course, smokers' life expectancy is not ten years shorter than otherwise...
* For a timeless classic of the genre, try this one in the Grauniad: "Poor people and children are most at risk from contraband tobacco..."
From the BBC:
The government spent £780m reorganising its departments and agencies in the four years after the 2005 election, Whitehall's spending watchdog says. The National Audit Office says more than 90 such moves happened, some of which may have been unnecessary...
Conservative MP Edward Leigh, the chairman of the Commons public accounts committee, which oversees the work of the NAO, said: "Designers of logos and makers of nameplates have had much reason to be grateful for central government's passion for constantly reorganising and renaming its departments. No one else seems to be very keen - especially the hard-pressed civil servants who have to cope with the fall-out while still trying to do their day jobs. Whether this frenzy of reorganisation and renaming gives value for money is entirely mysterious."
He only let himself down with 'hard pressed civil servant', which is a contradiction in terms.
The 'cost-of-smoking-to-the-NHS' continues to soar...
ASH, October 2008: "The annual cost of smoking to the NHS in England has soared from £1.7 billion a year in 1998 to £2.7 billion this year."
The Daily Mirror, June 2009: "Shocking new figures today reveal that smoking costs the NHS more than £5 billion a year – five times the current accepted figure."
The Daily Torygraph, March 2010: "Research conducted by Policy Exchange found found that while tax on tobacco raised £10 billion a year for the Treasury, the annual cost of healthcare and other consequences of smoking totalled £13.74 billion.
"That total includes £2.7 billion of NHS care, £2.9 billion lost in productivity during smoking breaks, the £342 million cost of cleaning up butts and £507 million spent putting out fires. Lost productivity due to the deaths of smokers and passive smoking victims costs £4.8 billion and £2.9 billion is lost in increased absenteeism, their report - Cough Up - concluded."
Notwithstanding that the figures on that non-exhaustive list add up to £14.149 billion and not £13.74 billion, how on earth is a smoking break a 'cost to the taxpayer'? That's like saying that since most people don't work at weekends, weekends cost the economy about £400 billion per annum. Further, even if the cost were £13.74 billion, that works out at about £3 or £4 per smoker per day, which is less than the total tax on a packet of fags (VAT, tobacco duties etc etc) - the £10 billion figure does not include VAT, of course.
Headline on the BBC:
Second-hand car dealers shamed
I'm sure that the car dealers are no more 'shamed' than the Office of Fair Trading, who've just wasted taxpayers' money on compiling a random list of prejudices-which-appear-to-have-some-basis-in-fact.
But we aren't told who's exempt.
Wednesday, 17 March 2010
It was reported last Friday that the Tories say that they would spend one per cent of GDP less than Labour by 2015-16. Ken Clarke has apparently upped the ante a bit and promised to to spend one-and-a-half per cent less.
Well whoopie do.
I've no reason to assume that yer average Daily Mirror reader is stupider than anybody else, but I doubt whether maths is their strong point. The article insists that this spending cut is equivalent to half of the education budget. If one-and-a-half per cent of GDP = £20 billion = half the education budget, then the education budget must be £40 billion. According to HM Treasury's Public Sector Finances Databank, it's £87 billion.
But given that the government plans to spend £671.4 billion this year, are Daily Mirror readers happy with the fact that only £40 billion of that goes on education? Do they not wonder where the rest goes? Or all they all public sector workers, like Grauniad readers?
The whole thing then descends into parody from there on in. Especially Liam Byrne saying that "It would mean we would have to take £20billion out of public services by 2014. That would do irreparable damage to public services or to taxpayers." Possibly the most injudicious "or" of the week.
OK, two kids ingested an inappropriate substance and died.
All very sad.
But where's the politician with the nerve to paraphrase Phil Mogg's off the cuff remark in an interview with Sounds magazine circa 1980: "Sid Vicious was a wimp who couldn’t take his drugs”?
From The Stockport Express:
... Francis died despite frantic attempts to save him when the lolly became lodged in his throat... The lolly had no warning on its cellophane wrapper. It came from an assortment bag which carried a warning on its reverse. It read: "Lollipops are a potential choking hazard. Not suitable for children under 36 months."
Mr Dean, an NHS gym instructor, said the warning should be more prominent. He said: "They told me they sell 40 million of those lollies. Even if this is a one-in-a-million thing that’s 40 kids. The warning needs to be made bigger and it needs to be put on the front. It might have saved Francis, it might not have done, but something needs to be done."
Yeah, but it's not forty kids a year choking to death, is it? It's one kid and counting out of forty million lollies x a lot of years they've been selling them.
KMcC left a comment on Please sir, may we take the piss?:
... your antipathy to pension saving is well-known to regulars here - but I do worry for your old age. What are you doing to provide for your golden years? (Any tips we happen to pick up in passing would be simply a bonus.)
As the world's most frugal man, I am all in favour of people saving up for rainy days, old-age etc. My antipathy is towards the propaganda that the only way of saving for your old-age is via "pension funds" (as defined). The best forms of saving are ...
1. Don't run up debts in the first place.
2. To the extent that you do (student debts, mortgage etc) then pay them off as quickly as possible, and pay off the one with the highest interest rate first. It is madness to have anything more than emergency money in the bank earning two or three per cent less interest than what you are paying on your mortgage. Ditto shares. The long run rate of return on shares is rather less than the average interest rate on a mortgage (unless you are a talented stock picker, which I am not ).
3. When, and only when, you are completely debt-free, do you start saving properly. Whether that's cash in the bank, currencies, shares or property is up to you - there's no right or wrong answer to this and you have to be prepared to shift from one to the other from time to time. This gives you the ultimate flexibility - you don't need to worry about retirement age, annuity rates, changes to the tax system, compulsory annuity age and the like. You are free to leave the UK taking everything with you, unlike a UK pension which will always be subject to UK tax at source, wherever you live
4. The value of any tax-breaks is largely illusory - to a large extent it is merely a timing difference/deferral, and most of the supposed tax saving is swallowed up by the pensions industry. And the value of this modest tax saving pales into insignificance compared to the loss of flexibility (see 3).
That's my plan, and I'm sticking to it. Don't worry about my old age, worry about your own :-)