Tuesday, 30 September 2014

Johnson takes aim.

 "Boris Johnson takes aim at Miliband and the mansion tax at Tory conference"

From today's Evening Standard

Mr Johnson made housing the centre of his speech, in particular laying into Labour’s plans for a mansion tax on homes worth more than £2 million.

He said: “What is the real answer to our housing problem? To put a new tax on housing, hammering those who find themselves living in a property whose value inflates through no fault of their own, punishing those who have worked hard for years to pay their mortgages and those who hope to pass something on to their children?

[Actually, simple calculations, real life examples or a little logic shows property taxes do indeed make housing more affordable.]

Boris says it's not the fault of homeowners that property values have risen, then he says they are due the full capital gains increase from rising house prices because of their hard work!

Make up you mind, you thick twat. It can't be both can it?

"Private schools benefit everyone"

You can't argue with the numbers.

From The Evening Standard:

Richard Harman, chairman of the Headmasters’ and Headmistresses’ Conference of leading private schools, said [private] schools add nearly £12 billion to the UK’s GDP every year.

"More than £4.7 billion in tax revenue flows annually into the Exchequer from the direct activity of independent schools. And by educating our pupils we save the taxpayer £3.9 billion a year, equivalent to building more than 590 new free schools annually."

Mr Harman said: “We have solutions to offer. But too often those in power are embarrassed to be seen talking with us, preferring instead to threaten us with loss of charitable status or more state control."

You can quibble with them though. If anything I think his £3.9 billion saving to the taxpayer is understated and expressing the total figure in terms of the number of "free schools" which could be built is a bit meaningless.

And to earn the £12 billion which parents pay in private school fees, they have to pay as much again in taxes on income.

But his general point stands.

"Duncan Smith outlines plans for pre-paid pension cards"

From the BBC:

The government is to introduce pre-paid cards to stop pensioners spending all their money on alcohol, tobacco or Lottery tickets.

Work and Pensions Secretary Iain Duncan Smith said it would help those "on the margins break the cycle of poverty". The cards could only be used for some items in some stores, and would not be valid in betting shops or off licences.

The scheme will be initially piloted on a voluntary basis and will be targeted on those with spending problems. The BBC's assistant political editor Norman Smith said government sources said the move was aimed at helping pensioners who smoked or drank and protecting their spouses.

An estimated one in 5 pension claimants in England suffer from addiction to tobacco products, such as cigarettes or cigars, while an estimated one in 4 pension claimants consumes more than the recommended maximum daily intake of alcohol.

Monday, 29 September 2014

Arcane musings about tax

Lola said, here:

Or, you levy LVT on their landlords and scrap all the awful things like VAT, CT NI Withholding Tax etc. etc. and therefore any need for double taxation agreements and off we go to the races.

I was thinking about that recently and it's not that simple.

In UK domestic terms, that's the best thing we could possibly do, but having a zero % corporation tax rate is not necessarily of interest to foreign investors.

This is because foreign countries have two ways of dealing with profits from UK-based subsidiaries in the hands of holding companies based in their country:

1. Some of them simply exempt profits earned by subsidiaries in non-tax haven countries which are then paid to the holding company as dividends.

2. Others tax those dividends again, but give a credit for UK corporation tax paid. So if the corporation tax rate in the other country is 20% or higher, the UK corporation tax is not a net cost.

Basically, any country which charges much less than 20% is probably on the tax haven/CFC/naughty list and gets looked at very closely. But companies don't get any sort of credit for LVT (i.e. Business Rates) paid in the UK.

So, it would make the UK relatively more attractive (for a given amount of tax revenue) if businesses (whether tenant or not) continued to pay the higher of
a) 20% corporation tax and
b) the LVT on its premises,
but the total tax would be expressed as a % of that businesses' earnings. Or they are charged 20% with a full reduction for any LVT already paid.

So if Starbucks has £50 million UK profits and an LVT bill of £15 million, its profits are taxed at nominal 30% (with credit for LVT already paid; net corporation tax £nil); if its LVT bill is £5 million, its profits are taxed at flat 20% (with credit for LVT already paid, so another £5 million UK corp tax to pay).

Or something like that.

Now, these businesses and their tax advisors aren't stupid, they know that their sweet spot is to declare UK taxable profits which are equal to their UK LVT bill x 5; there's no incentive to declare anything more or less than that.

In other words, in reality, the business is paying LVT in the UK (for which it would not get a credit abroad) but to the outside world, the company is paying UK corporation tax at around 20%, (for which it gets a credit against foreign tax, or which means that the other country treats dividends from the UK as tax exempt in their country).

Torys Plan 100,000 New Starter Homes

From the BEEB "First-time buyers under 40 to get 20% off under Tory plan" see here

On closer inspection, it says doesn't say how this 20% off is guaranteed. Unless that means they will  be capping prices. If not, why should the developers not just charge the full market rate? All be it, only to UK citizens, under 40s, first time buyers. My guess is, any "savings" from being granted permission to build on brownfield industrial sites, less green building regulations and no section 106 agreements will only be capitalised into greater profits for the building companies.

We've seen it all time and again. They own land give them money.

Would it not be better if the Government built and sold these houses themselves, but charge the site rental value in perpetuity?

That way, people get to own their own home for less than half the current selling price.

The Government gets to keep the value it creates by granting planning permission and infrastructure it builds. So land rent is not privatised.

Unlike Council Housing the owner would be responsible for the upkeep, and gets to keep the value of improvements made upon sale.

And because a site rent is paid every year, those homes would always be put to their best use. So, couples whose children had grown up and left, would be more likely to downsize.

All the economic benefits of council housing (see Singapore) but with none of the downsides.

Politicians called "Flynn" vs Starbucks

I was Googling around and stumbled across the following two items.

From the FT:

Mr [Patrick] O’Flynn also delighted the [UKIP conference] by promising to scrap inheritance tax. “Tax was already paid on this money in life, it should not be levied in death as well.”

He also took aim at “the Starbucks economic model” as he proposed a new “turnover tax” for large businesses to ensure that companies paid a set proportion of turnover in corporation tax and other taxes. It comes amid political and public anger over tax avoidance by foreign denominated companies such as the coffee giant.

Early Day Motions:

That this House notes that despite having almost one-third of the UK coffee shop market, Starbucks has paid corporation tax only once in the past 15 years; calls for Starbucks and other multinational companies to be taxed on the real value of their production in the UK, not an arbitrary feel-goodamount and, failing this, for each individual outlet to be taxed on its profits, as is the expectation for businesses in Worksop and Retford such as Miss Poppy's Coffee Shop or The Bay Tree...

Signed by, among others, Paul Flynn, a Welsh Labour MP.

Both Flynns, from populist right and populist left have gloriously missed the point(s).

Just to muddy the waters with a few, er, facts:

1. Starbucks outlets already pay a turnover tax, it's called VAT. With their computerised tills and sales records and everything, it is highly unlikely that they evade a penny of that.

2. I have no reason to assume that Starbucks outlets evade or avoid any Business Rates or PAYE obligations either.

3. Many Starbucks outlets are franchises, licensees or other kinds of sub-contractors, who no doubt pay just as much - or as little - tax as Miss Poppy's Coffee Shop.

4. AFAIAA, the reason why Starbucks pay so little UK corporation tax relative to UK sales is because they pay large licence fees or royalties to whoever owns the "brand". Those payments are tax deductible here and taxable in the country of the recipient. (If you ask me, the concept of an overseas entity earning such royalties in the UK without having a UK trade is complete nonsense, so in an ideal world, the royalty owner would be assessed to UK tax as per normal, but leave that aside for now).

The default rule is that the payer has to deduct 20% income tax from such royalties, so if you pay £1 royalties, you pay 20p or 21p less in corporation tax but 20p more in withholding tax, the whole thing is a wash and not a tax avoidance strategy.

But under most double tax treaties, i.e. with civilised countries, the royalty is then taxed somewhere else instead. From the point of view of Starbucks, this is only shifting the liability around but not reducing it. To the extent that Starbucks are evading tax - and I have no inside knowledge on whether they are or aren't - it can only be if they are paying royalties to non-treaty countries without deducting tax.

So if you want to get Starbucks to pay the 'right' amount of tax, then all you have to do is make sure they are deducting and paying the withholding tax where appropriate, and if they are doing this properly, then for G-d's sake, give them credit for it.

There's no need to invent new fantasy taxes, just make sure that the existing rules are being followed.


Killer Arguments Against LVT, Not (338)

From Get Surrey:

Labour's plans to introduce a 'mansion tax' will not just affect the rich but in time "sweep up" middle income families, according to a Conservative MP in Surrey.

Dominic Raab made the claim following shadow chancellor Ed Balls' announcement this week that the party wants to slap an annual levy on properties worth more than £2m...

The MP for Esher and Walton said:

"Elmbridge and wider Surrey are full of people who have saved up for a nest egg, but may not have a particularly high income. It’s bad enough they are being targeted again by Labour and the Lib Dems.

"Worse still, the reality is that over time the net will widen, as it has with stamp duty, to sweep up many middle income families who have grafted hard for years only to be hit by another punitive tax on savers.”

Woah! Proper scientists try to control all factors but one and then compare like with like.

Owner-occupiers up North or in Wales work, or have worked, just as hard as people in London and the south east, and they have paid just as much tax on their earnings (i.e. too much).

The one big difference is that Baby Boomers up North and in Wales have seen the value of their homes increase by "only" £100,000 since they bought them, but plenty of people in London and the south east have seen the value of their homes go up by £1 million.

So however that difference in 'wealth' arose, it is not down the those affected by the Mansion Tax having worked harder to "save for a nest egg", is it? So logic says that the Mansion Tax is not a tax on hard work or thrift or savings. You save money by spending less than you earn; that land value gain was not the result of people down South spending less.

And more recent purchasers in London and the south east clearly do have very high incomes, or else they wouldn't be able to afford to buy. End of.

Reader's Letter Of The Day

From today's Metro:

Half of those aged 20 to 24 can't afford to leave their parents' house (Metro, Fri) while it was recently reported that landlords have earned a massive £32 billion* from private renters.

Could these two facts be linked?

Julian Self, via email.


* Direct Line calculated that landlords' gross rental income is £32 billion per year.

I've calculated that the figure is probably more than £40 billion a year, of which banks thwack off around one-quarter in mortgage interest, and you can double that to £80 billion a year if you include capital gains.

Sunday, 28 September 2014

My few milliseconds of fame

Via Steve, via Robin, from Thursday's Evening Standard business pages:

It's a very positive article, but what's impressive is how they managed to introduce at least three basic, simple errors into such a short article:

1. Council Tax was on the list of taxes to be replaced, not Business Rates.
2. 0.9% x £250,000 doth not equal £1,800.
3. The "rich" would not pay significantly more or less than they do now with a 0.9% progressive property tax, they would pay more in annual tax but save just as much from the abolition of irregular and one-off taxes SDLT, CGT or IHT.

You'd Really Think That Someone, Just Someone, Would Have Cottoned on by Now...

Same same old

Saturday, 27 September 2014

Million Pound Drop

I'm really rather keen on this quiz.

For anyone that doesn't know it, the contestants start with £1 million in bundles of £50K. They have to answer 8 questions, placing the money they have on 4 possible answers. If you're absolutely certain of a question, you stick a million on. If you can't decide between 2 possibles, you maybe put half a million on each. That then means you have half a million for the next question and so on. The last question is simply that all the money goes on your answer (out of 2).

The reason they aren't constantly handing out huge amounts of money is that most people aren't very good at compounding. They'll sometimes get an answer they're certain of, but stick a little on another answer, just as a backup in case, but of course, each time you do that, you reduce the stake.  So, if you start with £1m and place 1/8th of that on another answer, even if you're lucky enough to be quite certain, here's where your money goes:-

After Q1: 875,000
After Q2: 750,000
After Q3: 650,000
After Q4: 575,000
After Q5: 500,000
After Q6: 425,000
After Q7: 375,000

(I've stuck with rounding to the nearest £25K as the game requires that). So, even if you get some certainties and put a bit on "but it might be", you lose most of your money. In reality, there's quite a lot of answers which are 1 of 2, and of course, 3 of those and you've lost 7/8ths of your cash. And on the odd occassion that someone does get the wrong answer and has 125,000 after the first question, they never make it through with anything, because the remaining questions will whittle it down long before the end.

So, typically, people either end up with nothing, or maybe £25K, and a lot of it is because they're overcautious. If people played with calculated risks "I'm really certain of this answer, so we put the lot on it" they'd have better outcomes.

Thursday, 25 September 2014

Not relevant, but they'll say it anyway

From The Daily Mail:

The mother and son who died in a suspected murder suicide after being hit by a train at a packed station were named by police today, as it was claimed the woman had been widowed.

Rubina Khan, 46, and her 10-year-old son Amaar Khan were hit by the 8.41am Bedwyn to London Paddington commuter service yesterday as it arrived at Slough station in Berkshire at about 9.45am.

Relatives of the pair also took to social media websites to pay their respects to the mother, known as Khala, and Amaar - who lived in a £220,000 terraced house about a mile from the station.

Not new, but worth repeating

From The Daily Mail:

* Labour supporters slam party for giving safe seats to children of ex-MPs
* Will Straw, Stephen Kinnock and Emily Benn will all stand in 2015
* Euan Blair was also linked to a safe seat, but another candidate was chosen
* Working-class candidates are overlooked in their favour, campaigners say

Wednesday, 24 September 2014

"Brian Cox: Multiple Brian Coxes makes sense"

From the BBC:

The presenter and physicist Brian Cox says he supports the idea that many Brian Coxes can exist at the same time.

The idea may sound far-fetched but the "many Brian Coxes" concept is the subject of serious debate among ex-members of D:Ream, physicists and television presenters. It is a particular interpretation of quantum talentedness - which describes the often counter-intuitive behaviour of one person at small scales.

In a famous thought experiment devised by the Manchester physicist, you cannot know whether the Brian Cox appearing in a television programme which you are not currently watching is an ex-D:Ream member, a physicist or a television presenter. Or any combination of different probabilities of those careers.

This is at odds with most common perceptions of the way normal people are. Cox' experiment was designed to illustrate the problems presented by one human being blessed with a multitude of talents, better known as the "Things can only get better" interpretation.

This proposes that when we tune in to the television programme, we force it to make a choice. So, for example, when you turn on your television Brian Cox will be either appearing in a 1990s music video, giving a physics lecture, chatting with fellow musician-turned-stargazer Brian May, or fronting a travel show thinly disguised as a science programme, but not all four simultaneously..

Prof Cox says the "many Brian Coxes" idea offers a sensible alternative.

"That there's an infinite number of Brian Coxes sounds more complicated than there being one," Prof Cox told the programme. "But actually, it's a simpler version of quantum talentedness."

Miller Homes - Land Bankers Of The Week

From their Intention To Float Announcement:

Distinctive regional exposure
• In the six months to 30 June 2014, core completions of: 257 units in the Midlands & South; 359 units in the North and 229 units in Scotland.
•Strategic land bank concentrated within chosen geographic locations to benefit from growth opportunities.

Clear strategy to increase margin and ROCE by enhancing quality of land bank and product mix
• completions from legacy land, as a percentage of core completions, are expected to continue to decline relative to completions on sites from new and strategic land (which typically produce higher margins).
• Growing consented land bank (30 June 2014: 8,987 plots).

Significant opportunity from large and well‑located strategic land bank
• Strong track record of delivering planning consents for strategic land bank sites.
• Strategic land bank of 16,553 plots on 56 separate sites held under options with an estimated gross development value (“GDV”) of £3.7 billion at 30 June 2014.
• Strategic land bank represents 8.9 years of supply at 30 June 2014.
• At 30 June 2014, 24% of the strategic land bank was located in the Midlands, 45% in the South of England, 25% in the North of England and 6% in Scotland.

Tuesday, 23 September 2014

Who Should Vote?

From ITV

A pledge to give 16 and 17-year-olds the vote in general elections will be in the next Labour manifesto, Ed Miliband has promised.

The opposition leader said politicians had to address a 'crisis in our democracy' and involving young people more was a 'really important part of that'.

Personally, I think that's a terrible idea. We mostly link rights to being an adult, that by the time you can vote, you can do everything else.At 16 you can't get married without parental consent, buy cigarettes or alcohol, or drive or serve on a jury, appear in pornography, consent to your teacher shagging you, make a will, carry an organ donor card, place a bet in a casino, see an 18 film or get a tattoo. And over the past decade, some of those changed against 16 year olds. When I was a lad, you were considered adult enough to choose to buy cigarettes, appear in Page 3 or shag a teacher.

So, whilst we've revised what we think of 16 year olds as even more fragile creatures who aren't capable of making certain decisions, we're now saying that they are capable of voting. Bizarre.

And what's going to happen to all those laws when 16 year olds can vote? Broadly speaking, this isn't an issue today. Other than adopting children and driving buses, everything else is legal at 18. Most 18 year olds aren't bothered about driving a bus or adopting children. But if you gave me a vote at 16 and a party stood on the ticket of lowering the age of getting in to see The Evil Dead or getting served  cider at Tesco, I'd have voted for them. I couldn't have given too hoots about taxes rising or improving housing at that age.  I was more bothered about trying to get a shag, getting served and listening to the Sisters of Mercy (and at that age, that's what you should be doing).

It'll probably happen, though. Labour are going for it because they see more clients to vote for them, more people who will vote to raise taxes and spend more because they won't pay for it. The Tories know that they'll be accused of hating children if they argue against it and will be too spineless to have an argument.

Daily Mail does Tescogate...

Emailed in by MBK, from The Daily Mail:

Mr McIlwee joined Tesco in 2000 from PepsiCo, although some doubted his credentials because he had no background in running supermarkets. He was promoted to the board in 2009 and, that year paid £2,750,000 for a huge nine-bedroom gated home in the heart of a stunning 5,000-acre National Trust estate in Hertfordshire.

The Staffordshire-born executive lives in the house, now worth £4.2million, with his second wife, Lavinia, 44. The family home had an impressive convoy of cars outside yesterday, including a Range Rover and a BMW. A woman at the property said Mr McIlwee was not available for comment...

Since being appointed Tesco managing director last year, Chris Bush has split his time between a huge country estate in Hertfordshire and a second home in the south of France... Mr Bush, who is believed to be on a large six-figure salary, lives with his partner Tracy Johns, 51, and their daughter Emily, 16, in a huge £2.5million mansion on a private road in a small village...

John Scouler, who is also suspended, is a keen sports fan who spends his time away from work playing golf at top courses and posing with celebrities at football matches. The 46-year-old food commercial director lives with his wife Tanya, 44, in a £1.7million white brick house in Hertfordshire.

UK finance director Carl Rogberg, 47, lives with his partner Amanda Welin, 46, in an old farmhouse in Oxfordshire. The property is largely shielded from prying eyes by an eight-foot hedge line. It also boasts a gatehouse and an old bakery, which used to supply a neighbouring manor house.

Another suspended director, Matt Simister, was previously best known for accusing Tesco customers of being a major cause of food waste. He celebrated becoming a senior executive by moving with his 47-year-old wife Karen into a sprawling £1.735 million house in a village near Ware in Hertfordshire, in late 2010.

They own land! Give them money!

Emailed in by Rob B, from Future Brixton:

The Brixton Townscape Heritage Initiative (THI) will see a £2.6 million investment in historic buildings and the part they play in local culture. The focus is on Electric Avenue – built in the 1880s it was the first shopping street in the country to be lit by electricity and found fame in 1983 through the Eddy Grant single of the same name.

The Heritage Lottery Fund has awarded £1,950,000 to the initiative and Lambeth Council has committed a further £650,000...

The money will see Victorian properties restored and empty upper floor space brought back into use as new homes. Grants of up to 85 per cent will be available to property and business owners in the area for relevant building work. Eligible works will include:
* Bringing empty residential and commercial premises back into use
* Upgrading windows, shopfronts and signage
* Repairing or reinstating historic architectural details

Economic Myths: Why younger people can't afford houses any more.

Exhibit Onw, via HPC Survivors from The Cornishman, an article about the ludicrous house-price-to-earnings ratio in the south west.

Along comes complacent Baby Boomer Home-Owner-Ist Mr C. Freak in the comments:

A deposit was always a year's wages even in the 60s and 70s, but single people didn't expect to be able to buy their own home then.

And now they expect 'years-out', holidays and constant contact with 'iphones' to boot.

Note that the commenter completely ignores the economic issue at hand - the ratio of house prices to earnings.

Even if everything he said were factually true (it isn't, it's all lies actually and ignores the reasons why housing used to be relatively cheap), then there must still be enough younger people prepared to pay the deposit and mortgage repayments on those eye-watering prices, or be prepared to pay enough rent to their landlord for him to be able to pay the deposit and mortgage repayments.

If it were really true that younger people refuse to spend much of their disposable income on housing, then house prices would have dropped quite calamitously, wouldn't they?
Exhibit Two, from the slightly better informed but no less wrong corner, City AM:

House building in the UK has been in a continual state of decline since the 1970s, making it harder to own a home and to pay rent, according to a report released yesterday.

In the several years preceding the financial crisis, just under 200,000 houses were completed per year – half the number that was built in 1970, according to the report published by the Office for National Statistics yesterday...

Strict planning rules and the spread of the green belt are to blame for the shortage of homes, according to former Bank of England policymaker Stephen Nickell.

Even if we go along with the Economic Myth that there is a direct correlation between supply of physical housing and house prices, changes in planning laws have nothing to do with the fall in residential construction.

Private sector builders have been building on average 150,000 - 200,000 new homes each year since the 1950s, we've dropped slightly below that, but not much. That's their optimum level of output; build any more and you lose some of your profit margin.

You risk pushing down new prices slightly on a micro-level*, but far more important is that if they increase supply, that greatly increases the price they have to pay for inputs (bricks, labour, expertise), because the supply of those is price insensitive. if we gave them planning permission for a million new homes, they would still only build 150,000 a year.

The real reason for the fall in new construction is because local councils aren't allowed/encouraged to build mroe social housing, they're being encouraged to sell it off and piss the money away on Housing Benefit for private landlords instead.

* It's easier selling ten houses on a small development than 100 houses on a larger development, but once those houses are all sold and occupied, their prices go back up to whatever the older houses in the area sell for. So the builder is better off building them ten at a time than 100 all in one go.

Monday, 22 September 2014

"BBC apologises for Jimmy Savile's entire broadcasting career"

From the BBC:

The BBC has apologised for airing hundreds of television and radio programmes between 1968 and 1994 in which disgraced DJ Jimmy Savile featured heavily.

Viewed with the benefit of 20/20 hindsight, the footage could be interpreted as giving clues that Savile was behaving inappropriately towards members of the audience.

"Unfortunately this twenty-six year long series of clues was overlooked," said the BBC after seven viewers complained.

"And know we think about it, it was all a load of self-aggrandising shit. Goes to show, eh?"

Can anybody else spot the obvious flaw in their strategy?

From The Mirror:

A “jokey” comic book strip called Hipster Hitler which portrays the Nazi leader as a trendy geek has been slammed by Jewish activists.

The group have pledged to shred all copies of the book that shows the murderous dictator wearing black-rimmed glasses and cardigan...

Fellow member Ilana Katz said: "If we can't get shops to stop selling copies we'll buy and shred them all. Since when was it okay to promote Hitler as a cool person?"

And technically, it would have been funnier had the activists pledged to burn all the copies of the book rather than shred them.

Tony the Football Hooligan

From the Telegraph

Tony "Tone" Blair has said that Bazzer and Dave should listen, "just *listen*, yeah, because we can farkin' 'ave these boys from the ISIS Crew. I'm telling you, I've got into scuffles with them before, and they ain't as tough as they seem."

The former member of the New Labour Firm said "OK, oh-kay, a load of us got the shit kicked out of us" but added that he "knew how to get 'em this time". 

His comments came as Graeme Lamb, landlord of the Dog and Duck in Peckham and former firm member said that "it ain't worth it, Tone, just leave 'em. "

The former New Labour ringleader said that fisticuffs would not be enough to defeat the crew, and that this time, knuckledusters and baseball bats shouldn't be ruled out.

"Blazer at former St James Primary School in Renfrew"

From the BBC:

About 70 fashion police have tackled a man wearing a blazer at a former primary school in Renfrewshire.

Crews were called to the former St James Primary School, near Porterfield Road, Renfrew, at about 20:30 on Sunday. They arrived to find a middle aged man wearing the smug yet casual garment in the single-storey building.

The crews used large volume water jets and aerial appliances to fight the inappropriate item of clothing. There were no reports of anyone being injured.

A pair of deck shoes and a leather clutch bag were also confiscated at the scene.

One of those annoying little suitcases on wheels with the extendable handle was deemed too dangerous to move and a controlled explosion was carried out.

Sunday, 21 September 2014

Shale Fracking Is a “Ponzi Scheme”

So says Washington's Blog.

Who's losing out?

A review of more than 9,000 wells, using data from 2003 to 2009, shows that — based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well — less than 10 percent of the wells had recouped their estimated costs by the time they were seven years old.


The gas rush has … been a money loser so far for many of the gas exploration companies and their tens of thousands of investors.

Well, someone has to be making money from this. Ah, yes, the usual suspects:

Although the bankers made a lot of money from the deal making and a handful of energy companies made fortunes by exiting at the market’s peak, most of the industry has been bloodied — forced to sell assets, take huge write-offs and shift as many drill rigs as possible from gas exploration to oil, whose price has held up much better.


For Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas. The company is now the largest leaseholder in the United States, owning the drilling rights to some 15 million acres – an area more than twice the size of Maryland. McClendon [the CEO of fracking giant Chesapeake] has financed this land grab with junk bonds and complex partnerships and future production deals, creating a highly leveraged, deeply indebted company that has more in common with Enron than ExxonMobil.

Of course, it doesn't really do those who stand to gain any harm if there is a lot of public anti-fracking hype: if anything, it just helps to confirm to would-be investors that Shale gas is the Next Big Thing. So we have landowners and bankers making out like bandits and the general public (in the form of small investors) losing out big time. Hmm, sounds familiar...

Fun with The Famous Five

My little girl brought home some Famous Five books from the school library. I quite liked reading them as a child, so I read a few again to see if they as bad as the literary snobs say.

They are.

Here's a classic bit of muddled English from "Five Go Off In A Caravan", page 95:

"We don't want to come back and find the caravans damaged or half our things stolen" said George.

"I should think not!" said Dick. "… I think we ought to leave Timmy on guard, don't you, Ju?" said Dick.

"Yes I do," said Julian at once, "These caravans are too valuable to leave at the mercy of any passing tramp - though I suppose we could lock them up."

What strikes you most is that the books turn the traditional crime novel plot back to front. In the Famous Five books, the children identify the suspects first, then wait for the inevitable crime to be committed, then pin the crime on the suspects and then have them arrested.

Isn't the crime supposed to happen first and then the master detective works out who the suspects are and narrows the field down to the actual perpetrator?

Inspector Barnaby adopts the latter approach, but doesn't bother eliminating suspects using logic, he just waits for them to be murdered one by one, and whoever is the last suspect to remain alive is the one who did it.

Saturday, 20 September 2014

The world in which we live in…*

* As Paul McCartney sang in "Live and let die".

I saw this in an Argos shop window:

Friday, 19 September 2014

"Dad complains after daughter's talking doll blurts out innocuous phrases... "

From The Daily Mail:

Mark Wadsworth couldn't believe his ears when his daughter's Barbie doll started speaking with language completely appropriate for children.

Mr Wadsworth, 48, claims that he could hear the doll belting out the phrase "Off the hook!" However, Mattel, which makes the £10 toy says the doll is simply being misheard, and is actually swearing.

The doll which is based on Barbie’s web reality series, Barbie Life in the Whorehouse, was expected to launch into a torrent of foul-mouthed abuse when his daughter played with it. But the middle aged father says his eleven-year-old daughter's new toy just launched into platitudes.

"I can tell you definitively that this is not a phrase Mattel would knowingly allow the doll to use," said Alex Clark, a spokesman for Mattel, to The Mirror.

The company claims the doll is actually saying "What the f***!", a catchphrase from the from the web series Barbie Life in the Whorehouse.

"It's understandable that the phrase may be heard differently by some who are not familiar with the show," Mr Clark said.

Cow 1: Astra 0

Spotted by Steven_L on Facebook:
Mr Mills explains "Cow 1 astra 0 looks like I need a new motor after all... Fukin hard cow tho went over my car then a van went over it & still got up & walked off wtf!!!!"

I thought ruminants-attacking-moving-vehicles only happened abroad, it's a bit worrying if it's caught on over here. But the driver appears to have survived OK and that's the main thing.

Short List

Towns in England and Denmark with similar sounding names.

To kick things off: (East) Grinstead and Grindsted

Thursday, 18 September 2014

Unfortunately, my house is the one in the "before" picture, not the "after".

In reply to Dinero's question about the upper storey, I envisage a mansard-cum-gambrel roof/window arrangement with vertical side walls to maximise internal space, a bit like this, but the top bit will be at a flatter angle as our house is twice as deep as it is wide:

I'm calling it: 55/45

That's 55 No, 45 Yes.

anyone else?

"Growth of the turn-up hits jeans industry"

From The Telegraph:

Once shunned by fashionistas as less than de rigueur, turned-up jeans now have the endorsement of hipster and celebrity alike.

I'm wearing yellow socks

Leonardo Di Caprio, George Clooney and David Beckham have all exposed an extra inch of sock with gusto. And thousands of young, fixed gear bicycle-riding, Hackney-dwelling twenty-somethings have followed suit.

I'll see your yellow socks and raise you pink

But the revival of the turn-up could be hurting what had was once seen as an unstoppable growth industry - men's jeans which fit properly.

I'll trump those with one pink and one yellow

Europe has also undergone something of a turn-up renaissance. Stores in Europe sold £72 million less in jeans which  were neither too short nor too long this year than last. However it would be too soon to predict the demise of denim - retailers still sold £2.2 billion worth of jeans and denim jackets and waistcoats across the EU in the period.

Ha! I'm not even wearing socks!

The news was welcomed by the European Association Of Dayglo Sock And Shoelace Retailers who reported surging sales. Sales of black shoe polish have also taken a hit as hipsters made the switch to brown brogues.

Even on Monday to Thursday. With turned-up jeans. FFS.

Fun Online Polls: The Jonah Effect & Exploding pavements

The result in last week's Fun Online Poll was as follows:

Gordon Brown started speaking out against Scottish independence and support for independence surged...

A coincidence - 12%
I think not - 88%

Thank you everybody who took part, I'm with the majority on this one.
I work in London and live on the outskirts, so I'm personally not too worried about cow attacks; so I've decided to start obsessing about exploding pavements instead.

Before you click the link and read the article, see if you can guess how many reported pavement explosions there have been in London in the last three years.

Guess here or use the widget in the sidebar.

Wednesday, 17 September 2014

Scottish Referendum

Many, many years ago, when I was living in a garrett in Sunderland (yes, really) devolution, and even then the putative break up of the UK, was being discussed in political circles. One option mooted was to turn the UK into a Federation under a single Sovereign.   A new acronym occurred to me:

Federation of United Kingdom and Ulster Parliaments.

Killer Arguments Against LVT, Not (336, 337)

I was given the opportunity to wheel out my usual talk recently i.e. we could replace a whole load of 'regressive', 'progressive'* and downright fiddly taxes on residential land and private wealth** etc with a flat tax of about 25% of site-only rental values (or 0.9% of current selling prices, as an approximation) and by and large and over a lifetime, most households would pay much the same.

1. One nay-sayer who was at least well-informed pointed out that s106 Agreements and the Community Infrastructure Levy (aka 'roof tax') raised about £4 billion a year.

I admitted that I hadn't added it to the list because I simply couldn't track down the total figure, which is indeed correct, £3.7 billion for 2011-12 according to the DCLG (if you including notional payments). But I agreed that in principle, s106/CIL, being a transaction 'tax' should be on the list.

2. We also happen to know that the landbankers aka home builders have enough land for about 400,000 homes and there are about 150,000 homes under construction at any one time = 550,000 plots.

3. But... land bankers also get a valuable tax break - their output is zero-rated, meaning that they can reclaim all input VAT but don't have to charge output VAT. HMRC gives the value of this at around £8 billion, but the cash refunded by HMRC to homebuilders is approx. £2.5 billion (150,000 homes a year x £80,000 costs x 20%?). So we can chuck this in the pot as well and knock it off from the £4.8 billion s106/CIL. We can argue the toss about whether that additional input cost is borne by home buyers, builders' yards, the builders themselves or the land bankers, it's a minor issue.

4. So the land bankers are currently paying £3.7 bn and receiving £2.5 bn, net cost £1.2 bn. So we could scrap all this s106/CIL nonsense and the VAT refunds, and just ask them to pay LVT from the day they get planning permission at the same rate as the LVT on each home when finished, i.e. on average about £2,000 per potential home per year.

5. This would level the playing field between buying an existing home (VAT-exempt), having your existing home renovated (with VAT on the cost) and buying a new home (currently zero-rated); the LVT and the VAT would be the same in all three situations.

6. 550,000 plus x £2,000 = £1.1 bn, much the same as what they pay now. Central London land bankers might end up paying a bit more, so what?

7. But unlike s106/CIL net of VAT refunds, LVT would encourage the land bankers to release more land for building, and it would encourage councils to grant more planning (to raise the same amount of money they'd have to grant five or six times as many building permits). But there would not be a flood of new construction because LVT encourages more efficient use of existing land and buildings so we would end up far closer to the optimum i.e. market clearing level, whatever that is.


* I don't really like these terms except in a strict mathematical sense, i.e. 'regressive' means that the tax rate on people with 'not much' is higher than the tax rate on people with 'a lot', although apart from straight poll taxes, people with 'a lot' still pay more in absolute terms than those with 'not much'.

** The usual list: Council Tax less CT Benefit, SDLT, Capital Gains Tax, TV licence fee, Inheritance Tax, Stamp Duty, Insurance Premium Tax, ATED, the non-dom levy and AFAIC income tax paid by residential landlords. Total revenues £52 billion. The longer list includes s106 agreements, the Community Infrastucture Levy and the VAT refunds as a minus, of course.
Another KLN was that we didn't know what the 'distributional' aspects would be. Firstly, as I illustrated with diagrams and tables, it wouldn't be very much, but that is not the point.

The points are that

1. Collecting taxes from land values (rather than transactions in land or anything else) always makes things better for everybody overall. It's like taxes on pollution or any other user charges or price rationing. Yes, motorists pay fuel duty, but this means that they pay less in other taxes, air quality is slightly better and the roads are less clogged (so quicker journeys). Simiarly, does it matter if somebody pays £1,000 more tax a year, if as a result of the shift, his earnings increase by £2,000 and his cost of living goes down by £1,000?

2. Some people were squinting at the bottom end of the chart and saying "It looks to me as if people in £100,000 homes will be paying a couple of hundred quid more than now" and others were squinting the top end and saying "It looks to me as if people in £1 million homes will be paying a bit less than now".

Well, whether that is true depends on how you set the rate or the nil rate band, but so what? As long as the tax on a £1 million home is about ten times as much as on a £100,000 home, that seems right and proper to me. The VAT on an £80,000 Range Rover is four times as much as the VAT on a £20,000 family saloon, nobody complains about that. And what about the one-third of adults who don't even own a £100,000 home? Under LVT, they pay nothing (directly) which also seems right and proper to me. Nobody mentioned them.

3. Of course there would be 'distributional impacts' but a) these would be surprisingly small and b) primarily the transfer would be from people in expensive homes with nothing in savings or with a big mortgage; to people in lower value homes with a lot of savings and other investments with a low or no mortgage. LVT encourages thrift and savings.

So it wouldn't be up- or downward redistribution, it would be sideways. The net transfers between these groups would only be a couple of billion either way as most people would pay the same overall, what they gain on the swings they lose on the roundabouts. And simplicity is always good for everybody except for lawyers and accountants.

4. Just about everything the government does redistributes wealth somehow or other. They can increase teachers' pay or reduce it. They can increase VAT and cut Council Tax. They can run a modest surplus or massive deficits. They can subsidise banks or tax banks etc etc. So a modest sideways redistribution from the rentier economy to the productive economy/people with real savings and investments can hardly be chalked up as a negative.

Tuesday, 16 September 2014

Putting the 'fun' into 'funeral'

I just noticed this at the tfl.gov.uk:

"Apple releases U2 removal tool"

From the BBC:

Apple has released a tool to remove all U2 music from its customers' iTunes accounts six days after giving away the latest U2 album for free.

Some users had complained about the fact that their devices were silting up with old U2 songs which they had never quite got round to deleting, and were prompted to finally get round to doing this when Songs of Innocence was automatically downloaded to their devices.

It had not been immediately obvious to many of the account holders how to delete U2's entire back catalogue. The US tech firm is now providing a one-click removal button.

It is rumoured that the tool will be updated to include the option to also delete all Coldplay tracks.

Killer Arguments Against Scottish independence.

From the Daily Record:

A leading property website has broken its silence about the potential break-up of the United Kingdom by warning Scots that Scottish independence could wipe £31,000 off the average house price.

The middleman, sitting behind a desk in a dark office stroking a cat, then told the Scots that they had lovely high house prices and it would be a shame if something happened to them.

Article template c. The Stigler.

Readers' letters of the day

From today's Metro:

When Alex Salmond first went to Downing Street to discuss the questions on the ballot paper with David Cameron, he wanted Yes/No and devo max tick boxes but Mr Cameron and the other two parties only wanted Yes/No.

Now, suddenly, Gordon Brown comes to Scotland offering the people of Scotland devo max if they vote No. To me, this is what Mr Salmond wanted. Now devo max might be given without the people voting for it.

Andrew Nutt, South Wales.
As I understand it, at the momembet Scottish and other EU students, with the exception of those from the remainder of Britain, do not pay university tuition fees. After independence, the rest of the UK will have to be treated as any other EU country.

It follows that a Scottish government will have to choose between allowing UK students to study without these fees, or introducing fees for all. A hard choice to be made between allowing a flood of English, Welsh and Northern Irish applicatns, or imposing fees on Scottish students.

David Moss, Lancashire.
So health secretary Jeremy Hunt wants to fine people for visiting A&E. What about people who do extreme sports? What about the person who crosses the road in the wrong place?

I don't get drunk but this suggestion is stupid.

Jean Prior, Hertfordshire.

Monday, 15 September 2014

Head of the Windsor Family

From the Telegraph

The Queen has broken her silence about the potential break-up of the United Kingdom by warning Scots to think “very carefully about the future” before casting their votes in the independence referendum.

The Queen, sat behind a desk in a dark office stroking a cat then told the Scots that they had a lovely country and it would be a shame if something happened to it.

Sunday, 14 September 2014


From the Telegraph

EE, which is understood to account for around half of Phones 4U’s £1bn sales, made its decision after a strategic review. Vodafone, which said it would not renew its contract with the retailer earlier this month made up more than a quarter of sales. O2, which only accounted for around 10pc of sales, pulled out in February.

EE reached the decision amid concerns that Phones 4U was selling for only one of Britain’s main mobile operators. It was felt this reduced its appeal for customers who wanted to compare the prices of different operators.


BC Partners attacked the mobile operators.

Stefano Quadrio Curzio of the private equity firm said: “Our overriding concern is for all the dedicated hard-working employees of Phones 4U at a time of uncertainty for the company."

"Vodafone has acted in exactly the opposite way to what they had consistently indicated to the management of Phones 4U over more than six months. Their behaviour appears to have been designed to inflict the maximum damage to their partner of 15 years, giving Phones 4U no time to develop commercial alternatives.

What commercial alternative would you develop to having Vodafone? Vodafone, O2, Orange, and EE paid out for the 3G and 4G bandwidth and and each get to use a bit of it for a period of time. There's no alternative because the bandwidth is taken, and you can't create more of it.

David Kassler, chief executive of Phones 4U, said: “Today is a very sad day for our customers and our staff. If the mobile network operators decline to supply us, we do not have a business. A good company making profits of over £100 million, employing thousands of decent people has been forced into administration.

"The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise. The ultimate result will be less competition, less choice and higher prices for mobile customers in UK.”

The operators are seeking to reduce the number of handsets and contracts they sell through third-party retailers, preferring to deal directly with customers and retain more of the profit margin.

Well, precisely. What were Phones4U adding by being a middleman? People often have so much information about phones that they often know what they want before they even walk into the store, especially on high end phones and contracts.

It's also a thing about relationships that these companies learnt from Apple. The Apple stores were not created so much as shops but as showrooms. They were so disappointed with how shops displayed their products and the poor advice that was given and lies customers were told to make a sale that they set up their own shops to show them off properly.

And that seems to be what my local Vodafone shop is like now. They've got the phones out, all working, beautifully displayed with helpful, well-trained, non-pushy staff. They don't care if you buy that day or walk away and buy online from them 2 days later. The bricks-and-mortar thing is more about trying out devices than buying them.

Saturday, 13 September 2014

Is he trying to tell us something?

From the BBC

Mr Murdoch asked: "Aren't beautiful young women more attractive in at least some fashionable clothes?"

Unless by "fashionable clothes" he means a pair of stockings and high heels, no.

Scottish Independence and Business

There's quite a lot of talk going around about how businesses that are nervous about independence are scaremongering, bullied into it etc. So, I thought I'd check out what businesses are supporting independence on the Yes campaign website:-

For Carole Inglis, owner of Isle of Skye Fudge Company, voting Yes is about Scotland taking control of its own affairs

Like many entrepreneurs, before running my own business I often felt like a square peg in a round hole because when I see a situation, I want to make it better. It’s easy to get bogged down in bureaucracy along the way, but if you can find the strength to adapt and sweep that away, you end up in a far better place. For me, like being your own boss, an independent Scotland is such a liberating idea.

I come from a very enterprising family, so running my own business took only a small leap of faith. My great-grandparents ran a confectionary shop in Glasgow, so when I moved to Skye 35 years ago I started to make and sell tablet using the old family recipe, which had been passed down through the generations.

I've nothing against small businesses. I run one myself. But in the context of Scottish business and post-independence it's important to distinguish where a business sits on the rentier/entrepreneur line. At the most extreme end of rentierism is a teashop outside Windsor Castle that gets a load of trade because people want to put their feet up after walking around it, and they're the first cafe. The most extreme is creating an internet service, which depends on little more than having heating, lighting and internet connectivity.

And 50 odd years ago, before most people had cars, shops were closer to being rentiers. You'd go to the butcher at the end of the road because the next one was a mile or more away. It's why the butchers that are around today are generally excellent - they sell to people coming to them for a product and service out of choice rather than necessity.

Throughout that time I’ve been active in the business community, and have always found that the Scottish Parliament is accessible to me in a way that Westminster could never be. It has a strong record in supporting small businesses, particularly through initiatives such as the Small Business Bonus Scheme.

That's a scheme where small businesses pay no rates. Although any business that has premises should. So, a subsidy to small businesses.

Looking forward, I hope that with independence giving control over tax and regulation, Holyrood can simplify the tax system and design it to meet the needs of businesses in Scotland. I’d also expect further support for employers – hiring staff in an area where there are very few jobs to go around can be scary, and you feel a great deal of responsibility.

Not sure what the author means, but that has a whiff of voting for more handouts.

Connectivity is another really important issue for communities like Skye. That means boosting broadband speeds and providing a universal service through the Royal Mail – both of which we can only see if the Scottish Parliament gets the necessary powers with independence. The same goes for improving access for tourism. It’s crucial to businesses like mine that people can get to Skye easily and see all it has to offer.

In other words, like most little fudge businesses it isn't a business that exists because it makes a great product, but because it's where people go on holiday and need to buy something local to take home to thank their neighbour for looking after the goldfish. Which are not the sort of businesses that leave if the government makes bad economic decisions. It's those that don't have to be there, like a fudge company that sells to supermarkets that operate from an industrial unit in Stirling that could move to an industrial unit in Sunderland.

Why does it depend on who came first?

Interesting story in The Daily Mail:

When Gerard and Christina White moved into their home 37 years ago, they felt the leafy street of detached properties was among the finest in the suburb.

But the couple fear their £275,000 home is now unsellable – after an extension on the house next door effectively turned the Whites’ three-bedroom detached property into a semi.

The two 1930s houses originally stood 4ft apart but are now separated by only inches. They stand so close together that their roofs and gutters overlap.

For a start, the house next door looks a lot nicer in its converted/extended state than it did before. If Mr Nazir can get the right kind of windows, it will look as if it had always been that way:.

But forget about who did what first, if you look at the photos in the article carefully, you will see that the white house is build right up to the boundary and that its gutter is overhanging the plot next door. So if anything, it's the owners of the white house who are taking the piss.

Friday, 12 September 2014

Economic myths: Victorian railways were private enterprise

Sobers repeats the Faux Lib myth:

The State did indeed build the M4, but the growth of Swindon was driven entirely by the building of the railway works by Brunel, which was private enterprise, not the work of the State at all.

Victorian railway companies were indeed privately funded, but without the intervention of the government on behalf of society as a whole ('the State'), they would never have happened; all those railway companies depended very much on the government.


Because to build a railway from A to B you need to be able to buy up lots of strips of land from hundreds of different landowners; without an Act of Parliament giving you compulsory purchase orders (or whatever they were called in those days), the railways could never have been built.

And why would you want to build a railway from A to B? Because there are people and businesses at A and people and businesses at B; by shortening the effective distance between the two, extra value is created and the railways taps into that added value.

So without 'the State', being the sum total of the people and businesses at A and B and the government to ride roughshod over the rural landowners in between holding out for their ransom payments, the railways would never have been built; and although private individuals stumped up cash up front to build the railways, they got their money back from 'the State' in the end (in ticket prices etc).

PS, all the railways ended up going bankrupt and being nationalised anyway, even though this was not entirely their own fault.

I doubt whether this will shut them up, but hey.

As we know, Amazon is under constant political attack from both sides:

1. The lefties complain that Amazon is not paying enough VAT or corporation tax.

Under current rules, Amazon's £4.2bn annual sales in the UK, which rely on a network of eight mega-warehouses across Britain, are routed through Luxembourg. Revenue & Customs has no taxing rights over any profits from those sales.

If they route their sales through Luxembourg, so what? They just pay VAT in Luxembourg instead (at 15%). It was the UK government's decision to increase VAT from 15% to 17.5% to 20% a few years ago; they decided that they'd get more tax from businesses who can't relocate that lose in tax from those which can. That's the Laffer Curve for you.

Also, by and large, the remaining profits are still very much liable to corporation tax in the UK (or else why would Amazon be paying any UK corporation tax at all?). Amazon does not appear to make much in the way of profits, so far their strategy is all about 'grabbing market share', that's why their bill is so low.

2. The rent-seekers complain that Amazon is not paying enough in Business Rates:

Sainsbury's chief executive Justin King has attacked the government for creating an unfair burden on high-street retailers by not doing more to tax online-only rivals such as Amazon.

He called for a level playing field and said politicians should take action or risk seeing the high street shrink further. King said: "The burden of taxation in the UK falls very heavily on bricks-and-mortar retailers versus internet only retailers."

Let's gloss over the fact that Amazon is not "internet only", it's glorified mail order. All Amazon's suppliers pay Business Rates and Amazon has to pay Business Rates on its "eight mega-warehouses" (if we knew the full addresses we could look up the rates bill at the VOA) and existing offices, but here's an interesting bit of news:

Amazon is quitting its UK base of 16 years in Slough and moving to a 15-storey corporate office on the outskirts of the City of London.

The 600,000 sq ft building, known as Principal Place, will be just north of Liverpool Street station.


Average Business Rates in the City of London are £18 per square foot, so that means that Amazon will be, quite voluntarily, be paying £10 million tax to the government, on top of the £30 million privately collected tax it will be paying to its new landlords.

I wonder whether the lefties or the rent seekers will ever give Amazon credit for all the VAT they pay in Luxembourg and all the Business Rates they'll be paying in London, on top of normal PAYE payments and the £4 million-odd UK corporation tax?

Ah... thought not.
This scenario also illustrates that while businesses will do their best to minimise the amount of tax they pay on turnover or profits, they are - by definition - not fussed about paying market rent inclusive of taxes on rental values.

Amazon are prepared to pay £40 million a year to occupy that site. They do not care whether they pay £40 million in rent; £30 million in rent and £10 million in Business Rates; or indeed £10 million in rent and £30 million in Business Rates. The matter is simplified if we assume that their new building belongs to Crown Estates or some other government/national body.

That's another KLN demolished!

"Brain can classify words while hungover"

From the BBC:

The brain is still active while we are drunk or recovering the morning, say scientists, who found people were able to classify words while under the influence of alcohol.

Researchers from Cambridge and Paris introduced participants to a word test while sober and found they continued to respond correctly after having consumed alcohol. The drunk or hungover brain can perform complex tasks, particularly if the task is automated, the study says. Further research will now focus on how to take advantage of our hangover time.

Writing in the journal Current Biology, the research team set out to study the brain's behaviour while sober, drunk and recovering. Using an electroencephalogram (EEG), they recorded the brain activity of participants while they were asked to classify spoken words as either animals or objects by pressing a button.

Participants were asked to press a button in their right hand for animals and in their left hand for objects. This allowed researchers to track the responses and map each word category to a specific movement in the brain.

Then participants were then asked to consume alcohol in a darkened room and continue the word classification task as they drifted off.

Thursday, 11 September 2014

Well, no, not really

From The Guardian

Newspapers and coffee were the lifeblood of an emerging public realm. Public as a definition of spaces and experiences open and shared by everyone: not circumscribed by kin, patronage or client relationships. A truly public place is one where communities and solidarity can be imagined, shaped and built. A place where anyone can deliberate on the political decisions that govern our lives. A place that gives life to democracy.

Wind the clock forward a few centuries and these notions of public are under threat. People are losing confidence in the ability of our public and corporate institutions to serve the collective interest. The forum of the newspaper to hold power to account is under threat too: the digital revolution is disrupting the economic model of producing news.

This is what’s at stake: that a diverse independent media is stripped out, leaving an elite of oligarchs to dominate the distribution of information behind the barrier of a paywall. This amounts to the privatisation of trusted, accurate information, so that it becomes the preserve of a wealthy minority – the equivalent of a gated community.

Go back 20 years and you had less than a dozen national newspapers, Private Eye, The Spectator, The New Statesman, a couple of regionals and a local paper or two in each town. Compare that to today where there are thousands of news blogs, hundreds of news sites, as well as all of that and you'd have to conclude that the past was much closer to "elite of oligarchs dominating the distribution of information".

And I do wonder about this funding of investigative journalism and how accurate and trusted information is. There were plenty of whiffs about what was going on in Rochdale (and Nick Griffin almost went to jail for comments related to what was going on up there), but The Guardian never looked into it despite having hundreds of millions of pounds in the Scott Trust to "hold power to account". On the other hand, they did have money to pay someone to print lies about the News of the World in the hacking story.

I'm generally more impressed with the work on blogs nowadays. I see people who are far more knowledgeable in their subjects, more likely to spot things about government policies than the papers do. And also, genuinely more independent.

So, maybe there's a new model, and maybe it's more powerful. That instead of stories coming from a few journalists paid to look at things full-time, we instead have thousands of people looking at things in their spare time, perhaps not even posting more than something that opens things up, but combined create a bigger picture.

"Watching BBC documentaries likely to make you slim and healthy, says study"

From the BBC:

Watching well made documentaries means you are more likely to be slim and healthy, according to researchers.

Previous studies have suggested a link between watching high quality television and health but the team at King's College tried to establish which genres of television were best.

The findings, published in JAMA Internal Medicine, showed people ate the healthiest food while watching science and history programmes. Fact-based programming is linked to good health because it distracts people from the urge to constantly nibble.

The study followed 94 test subjects who were given bowls of chocolate, biscuits, carrots or grapes while watching television. The scientists then compared how much food was consumed while the volunteers were engrossed in the three part series "Botany: A Blooming History" and then subjected to the ghastly 2005 'action movie', "The Island".

They demonstrated that people consumed only half as much by weight and 40% less by calories during the science programme, as well as engaging in more stimulating banter with their companions.

The difference was most pronounced in people who had been to university and lived in the Home Counties.

Scots referendum, the debate moves down a level...

There was a letter in the Times yesterday suggesting that with the referendum polls so close, Scotland's 16 and 17 year olds could effectively decide her future. Now most of MW's readers probably don't befriend many young Scots SNP supporters on facebook.

But since someone on a rival Aberdeenshire cricket team added me, and fits the bill, I can use copy and paste to give you all an insight into the kind of propaganda the kids are circulating up here:

On oil:

Scotland would get about 90% of the oil revenues. Speaking of revenues; Scotland has generated more tax per person than the rest of the UK in each and every one of the last 30 years and that includes a period when the oil price was as low as $10 a barrel and revenues just a tenth of what they have been in recent years...

Norway discovered oil and gas at the same time as Scotland, and has been able to use this wealth to become one of the very wealthiest countries on earth in terms of GDP per head of population and also now sits at the very top of world wellbeing and equality league tables.

Another important comparison with Norway relates to the establishment of a “sovereign wealth fund”. Unlike the UK, since 1996 the Norwegian government has been investing proceeds from its oil revenues into an investment fund so that future generations can benefit too. That fund is now worth over £500 billion (£100,000 per person)...

Margaret Thatcher's Westminster government used the North Sea revenue to fund tax cuts for the rich. An independent Scotland could still choose to invest in a similar "rainy day fund", building a secure legacy for the future. Remember there are up 24 billion barrels of oil still to be extracted from the North Sea with a wholesale value of up to £1.5 trillion."

On tax and spend:

The Scottish economy made £120 billion last year and only received £32 billion of it to spend while the rest went AWOL...

Let's take it in a literal sense, picture you as the Scottish government and Me as Westminster.. What currently happens is effectively like you getting paid £1000, giving it to Me and only getting you £250 to spend. Then if you give me more powers (ie. If Scotland voting no) then I will only give you maybe £200 next month because there is nothing you can do about it meaning you have to sell your ipad and your phone to make money - it's not being done through choice, it just has to be done for you to get by.

Scotland is massively wealthy so why there are 100,000 kids in poverty is a joke.

Wednesday, 10 September 2014

Killer Arguments Against LVT, Not (335)

We're really running out of raw material for this series, but it's nice to see some good old KLN dredged up again by people who must know that the argument has been disproven by actual recent events, it is null and void on the facts:

Emailed in by MBK from The Telegraph:

A mansion tax could wipe almost £1bn off government revenues [and deter] wealthy investors from buying in London, according to new research from Savills.

The maths on the £1 bn fall in other revenues is shaky at best, so let's ignore that. Let's go with their assumption that the tax would increase the cost of buying in London.

Don't they know that the cost of buying in central London has been increasing at a double-digit compound rate for years if not decades? So each year, the cost of buying in London has gone up by ten per cent, but the foreigners keep piling in, it's a status thing. Maybe the Mansion Tax would add ten per cent to the cost of buying in London, why would that suddenly stop them?

Oh... the Homeys then admit that the Mansion Tax would not increase the cost of buying in London, because prices would fall accordingly:

"The imposition of mansion tax is likely to result in a reduction in the amount people are willing to pay for the assets on which it is charged," said Lucian Cook, head of residential research for Savills.

In summary, the tax would have no effect, or an effect which is so small as to be immeasurable either way. Mr Cook keeps digging:

Both the Liberal Democrats and Labour have rejected early plans to impose a 1pc levy on value in excess of £2m, and now back a banded proposal that mirrors the annual tax on enveloped dwellings (ATED)...

"If it were to be of the order of scale of ATED … [it] has the capacity to put a fairly sizeable spanner in the working of London's prime property market," said Mr Cook...

The Savills report recommended that the Government should scrap mansion tax and add more council tax bands.

The ATED is, in effect, like another four Council Tax bands, being an annual charge of between 0.4% and 0.7% of each home's current selling price. So in absolute terms, the tax is more than Council Tax, but in percentage terms it's less. And although it's calculated differently to the Mansion Tax, in absolute or relative terms it is much the same.

And what effect did the ATED have?

Precisely none, the government expected super-wealthy people to unpick their fancy offshore ownership ruses, but they didn't. They just happily paid the tax and revenues so far have been five times what the government expected. Maybe having a fancy offshore ownership structure and paying the ATED is like a status symbol to these people, like having your fancy Ferrari shipped over for the summer season?
And to round things off, Savills have completely contradicted their own earlier tried and tested KLN of last year:

Ed Miliband has reopened the mansion tax debate, but such a tax would be complex and inefficient, raising little revenue at great potential cost and could unintentionally hurt the asset rich, cash poor long term owners of high value property.

Ho hum.

In their world view, the only people who own homes in central London are either Poor Widows or wealthy foreigners.

These two groups are diametrically opposed in all respects; what's good for one is bad for the other; what applies to one does not apply to the other. So if Mansion tax is bad for one group, it is good for the other.

If we want more wealthy foreigners to buy homes in central London (good for balance of payments etc) then from whom should they buy their homes?

The answer must surely be from Poor Widows, if one wealthy foreigner buys from another, then that does not mean a cash inflow to the UK or more spending here.

The Mansion Tax won't discourage wealthy foreigners from buying, that's borne out by their own arguments and actual facts, but it might nudge the potential heirs of a few Poor Widows to encourage them to sell up.

Win win!

"Were Robin 'Ood from YORKSHIRE, like?"

From T'Daily Mail:

Everything you know about t'legend of Robin 'Ood may be wrong, after experts 'ave claimed t'outlaw were in fact a Yorkshireman.

Refuting centuries-old reports that t'villain lived in Sherwood Forest in Notting'am, a curator from a Doncaster museum states evidence suggests otherwise. She claims literary references put Robin 'Ood firmly in Barnsdale, Doncaster and Pontefract throughout 'is life - and 'e were also buried in Kirklees, West Yorkshire.

"It's more than likely that Robin 'Ood were a Yorkshireman," said Carolyn Dalton, from Doncaster Museum and Art Gallery.

"Robin 'Ood's links t'Yorkshire are far stronger 'istorically. T'oldest and most detailed stories give details o't'north Doncaster and Pontefract area.

"I think over t'years Yorkshire 'a'n't made much o't'connection. In terms of where Robin and 'is men lived, 'istory points to Barnsdale near Doncaster.

"Ee by Gum. Gradely. Where there's muck there's brass. 'E were a great baker, were our Dad. 'Appen."

Smart Meters

From the BBC

"Despite consumers footing the bill, they can on average make a saving of only 2% on the average annual bill of £1,328 by the time the roll out is complete," said Margaret Hodge, the chair of the PAC.

"Even this is conditional on consumers changing their behaviour and cutting their energy use," she added.

And that's a bit of a problem with smart meters: what behaviour can you actually change?

There's a load of electrical devices in the home, but the biggest ones are the non-optional ones. The cooker, fridge, washing machine and dishwasher. If you choose not to use the dishwasher to save energy, you might as well have not bought a dishwasher.

You can say that a tumble dryer is optional, but people know that they use a lot of power and hang their laundry outside on a nice day. And this already has the incentive of producing laundry that's easier to iron.

The optional ones don't actually use that much power any longer. An LED lightbulb is 10W, LED TVs are now about 50W. Laptops around 20-50W (and those generally have power saving technology anyway). Even on the old incandescent bulbs, leaving one on for an hour was only costing a few pennies. With LEDs, it's almost irrelevant.

And yes, you could save money buying a more modern, more efficient fridge, but you've got a capital outlay to consider. A website I visited reckoned I'd save £19.73/year compared to a modern fridge freezer, but a modern fridge freezer will cost me £500. It's going to take decades to pay back.

Supermoon: Fun fact

There have been lots of articles about the 'supermoon' in the past few days, see e.g. the BBC, which is basically trick photography, you just photograph the Moon behind a very distant object and enlarge the image.

Glossing over the fact that the Moon can appear a couple of per cent smaller or larger depending where it is on its elliptical orbit, without looking, which of the following objects, held at arm's length, appears to be the same size as the Moon?

A tennis ball,
A golf ball,
A ten pence piece (or a US quarter or a one Euro coin), or
Your little fingernail?

Click and highlight to reveal below:
Your small fingernail.

Tuesday, 9 September 2014

"Naa na na naa naa!"

Dick digs.

And uncovers some of the awesome persuasive tactics adopted by the bansturbators.

Monday, 8 September 2014

Fun Online Polls: Dealing with ISIS & The Jonah Effect

The responses to last week's Fun Online Poll were as follows:

How should the UK respond to ISIS?

Full military confrontation - 12%
Restrict ourselves to tactical bombing raids - 9%
Provide anti-IS forces with weapons and support - 21%
Don't get involved at all - 51%
Don't know - 7%

That seems pretty conclusive to me and a good turnout as well, thank you to everybody who took part.

Top comments:

DBC Reed: This kind of discussion in a "Fun Online Poll" seems well sick.

Ljh: Nuke Mecca! See if Allah intervenes. A glowing hole in the desert is a huge negative when it comes to future recruitment drives.

Going back to an off the cuff remark by Lola...

15 August 2014: GORDON Brown has said talks on extending devolution should begin the day after the referendum if independence is defeated as he stated that the UK would be a “federal state” within two years with Holyrood and other regions of the UK handed equal status to Westminster.

The former Prime Minister talked about the “sharing of sovereignty” across the UK as he called for Scotland and the English regions to “unite” to demand a shift in power away from Westminster during an appearance at the Edinburgh International Book Festival.

6 September 2014: A poll has given the Yes campaign the lead for the first time during the Scottish referendum campaign...

The poll shows a four-point increase in support for Yes from the last YouGov poll published earlier this week. The No camp were leading by 14 points in mid-August and 22 points early last month, when undecided voters were excluded.

That's this week's Fun Online Poll.

Vote here or use the widget in the sidebar.

This is what you want, this is what you get.

TUC General Secretary Frances O'Grady echoes Max Keiser's tirades only without wit or insight, from the BBC:

Ms O'Grady's speech to TUC delegates in Liverpool expanded on the annual conference's main theme of living standards.

She said: "Are we going to settle for a nastier and poorer Britain - a Downton Abbey-style society, in which the living standards of the vast majority are sacrificed to protect the high living of the well-to-do?

"We are piling yet more riches onto a privileged few. Economic growth is back but there's no sign of it in most workers' pay packets. In fact, the gap has got worse. Top chief executives now earn 175 times the wages of the average worker.

"Silver spoons are ever more firmly clamped in the mouths of those who were born with them. And under this government, class prejudice is becoming respectable once again."

She's missed the point about class prejudice, that was always there and cuts both ways.

Even worse, she's really missed the point with the whole 'silver spoon' thing.

As Max Keiser has pointed out, the real distinction is between the rentier class and the wealth creating class and the problem is that everybody aspires to be a rentier and looks down on wealth creators.

So people who bought their council house in London for a song, have since sold it at a massive profit and retired to Spain on the proceeds belong to the rentier class; the occasional entrepreneur like James Dyson, even if he is a bit posh, belongs to the wealth creating class.

Hugely overpaid corporate executives from whatever social background are rentiers; NHS surgeons from middle- or upper-class backgrounds count as wealth creators etc etc.

The Famous Five and rent seeking

From 'Five Go To Smuggler's Top' by Enid Blyton:

"Why are you telling me all this?" said Uncle Quentin scornfully. "It's of no interest to me. I'm only interested in a plan for draining the marshes, not smuggling goods across them."

"Exactly, my dear fellow!" said Mr Barling [the smuggler], amiably. "I have even seen your plans and read about your experiments and Mr Lenoir's.

"But the draining of the marsh means the end of my own business! Once the marsh is drained, once houses are built there, and roads made, once the mists have gone, my business goes too! A harbour may be built out there, at the edge of the marshes - my ships can no longer creep in unseen, bringing valuable cargoes!

"Not only will my money go, but all the excitement, which is more than life to me, will go too!"

"How do I come into this" [Uncle Quentin] asked. "Why have you kidnapped me?"

"I know that Mr Lenoir is going to buy your plans from you," said Mr Barling. "I know he is going to drain the marsh by using your very excellent idea. You see, I know all about them!

"I know too that Mr Lenoir hopes to make a lot of money by selling the land once it is drained. It is all his, that misty marsh - and no use to anyone now except to me! But that marsh is not going to be drained - I am going to buy your plans, not Mr Lenoir!"

Saturday, 6 September 2014

I spy with my little eye...

... something beginning with "s".

Friday, 5 September 2014

Green Party

From the BBC

Ms Bennett dismissed suggestions it was downplaying its core environmental message, saying the party was in the front line of opposition to fracking and confronting climate change.

She challenged David Cameron to personally attend the UN climate summit in New York at the end of the month. It has been reported that the leaders of China and India will both skip the event.

Surely "by video conference"? Or doesn't it count towards boiling Gaia if you go to a climate conference?

Reader's Letter Of The Day

From The Evening Standard (5 September, page 56):

It was the postwar policy package of rent controls, higher property taxes  and easily available council housing that enabled Lammy's parents to buy a house for £6,000. It was inevitable that house prices and rents would rocket after Thatcher and Blair dismantled and reversed this.

There's much to welcome in Lammy's housing plans. If anything he is too timid. Why not cap private sector rents at 20 per cent below current levels rather than 20 per cent higher, saving billions in Housing Benefit and easing the strain on working tenants.

Mark Wadsworth, Young People's Party

Killer Arguments Against LVT, Not (334)

From PublicFinance:

The coalition government has been told by the Institute for Fiscal Studies that its failure to carry out a revaluation of property values for the purposes of levying council tax is ‘increasingly absurd’...

‘Even if we can’t have perfection something close to coherence and consistency would be nice. In the words of former US Treasury Secretary William Simon we should have a tax system which looks “like someone designed it on purpose”. That feels like a low benchmark, but it is one we are a long way from meeting.’

All good stuff. And up pops Colin Aiken from Isitfair.co.uk in the comments:

A revaluation of property values will result in more people paying more council tax - remember what happened in Wales.

That's simply not true, most people ended up paying a few quid less, a small number of people ended up paying a few quid more. Overall it was fiscally neutral.

Council tax now is too high as it was abused by the previous Government.

"Too high" compared to what? Council Tax is only about five per cent of total tax payments, for crying out loud.

The council tax system itself is absurd. Property values don't always reflect the occupants' ability to pay the tax and council tax benefit is not the answer.

You get what you pay for. Do we criticise landowners for selling or renting land at prices which do not reflect purchasers' or tenants' ability to pay? Do we criticise Range Rover for selling cars which very few can afford? No, because people look for a home or a car which they can afford. The problem solves itself. If this is acceptable - and indeed desirable - behaviour between private parties, why should the government behave any differently?

What is needed (apologies to Sir Michael Lyons) is a new system that is fair to all - e.g. everyone pays for local services.

OK, define "local services". That would be, at the very least, the NHS, schools, roads, police/law and order and refuse collection, total cost approx. £250 billion a year; Council Tax only raises enough to pay for one-tenth of that.

LIT is not the answer and neither is LVT. It's about time we thought 'outside of the box'.

What he means is a Poll Tax, fair enough, in which case let's have a Poll Tax of £6,000 per adult. I'm sure he and his pensioner friends will love that. Or perhaps he means bumping up income tax by a few per cent?

Or, we could ask everybody to pay for the value of what they get from society (the location) and then argue the toss about how that money should be spent or redistributed.

With income tax or Poll Tax, you are forcing people to pay for things which they might not value, regardless of their circumstances. With LVT, you are only asking to people to pay for what they value.

It's the closest you can get to a free-market tax system; and it's not even increasing the amount of tax anybody pays - if land values are not collected nationally they will be collected privately. If they are collected nationally, everybody gets something back. If they are collected privately, then plenty of people get nothing back.

Scottish independence: fun with numbers

A lot of the English politicians and commentators are saying that if Scotland left the United Kingdom, it would severely weaken the UK's global influence blah blah blah. Well, the UK has little global influence and I don't see why we need it, but let's address the issue.

Let's assume the Scots vote 'Yes' (and I will be laughing like a drain if they do); become an independent country; leave NATO; refuse to accept their share of the UK government debt (while merrily taking their share of UK government assets like roads, bridges and buildings, which is a bit of a cheek) and keep all the North Sea oil revenues to themselves.

What would this mean for the rest of the UK?

Pretty much naff all.

1. The ONS says that the UK population is 64.1 million, an increase of about 5 million since the 2001 census. Scotland's population is 5.3 million. So in population growth terms, that has knocked the UK back about fifteen years.

2. NATO members are supposed to be spending (wasting?) about 2% of their GDP on defence. So that's about £32 billion a year for the UK. Even if the residual UK has to pay for Scotland's 'share', that's an extra cost of about £3 billion a year.

3. The National Debt was a very manageable 40% of GDP until 2007 and has shot up to 89% of GDP since then; financial crises don't come cheap! So it's been going up at 7% a year. If the rest of the UK has to shoulder all of it, that will increase our per capita National Debt by about 9%, in other words, it adds an extra fifteen months' worth of deficit. Which is not good, but not a catastrophe.

4. North Sea oil revenues are dwindling anyway. Over the past few decades, the extra per capita spending in Scotland (aka 'Barnett Formula') has been broadly equal to North Sea oil revenues; so the UK would lose a bit of income but lose a larger amount of extra spending, which is a net win for the rest of the UK and will go towards paying for the extra costs from 2.