Monday, 24 September 2018

Spiteful!

From the BBC:

Controversial four-weekly bin collections will be rolled out across a county on Monday - the first area in England and Wales to make the move...

It has been met with controversy, with residents and councillors calling it "unfair" and claiming the trial brought more rats, seagulls and flies. Conwy council said it had addressed concerns and it could save £390,000.

Many parts of the UK are now moving towards three-weekly bin collections in a bid to cut down on residual waste and increase recycling.


Conwy County Borough has 116,550 residents, so about 50,000 households.

Divide £390,000 (let's assume this is an annual figure) by 50,000, that's £7.80 per household, or about 1% of their Council Tax bills. Not clear if they are moving from two- or from three-weekly collection to four-weekly, but it works out at 60p or £2 per bin collection.

So clearly, cost savings are not the motivation:

Conwy County Borough say:

A year-long trial showed that putting recycling at the heart of the service has really paid off, with residents’ recycling more than ever since their refuse collection went to 4 weekly...

The service change will mean that all Conwy residents will have:
* a weekly collection for food waste;
* a weekly collection for paper, card, Tetra Paks, cans, aerosols, foil, glass bottles and jars, plastic bottles, tubs and trays and batteries;
* a fortnightly collection for green waste, textiles and small electrical waste;
* a refuse collection every four weeks; and
* a weekly nappy or incontinence products collection for those who need it.


So in defence of the council, you should only be putting "stuff that doesn't rot" into your four-weekly bin anyway. Where I live, they empty the green bin (food and garden waste) weekly and alternate between the recycling and the black bin (general waste), so the black bin is emptied once a fortnight.. Our black bin is hardly ever more than half full, and probably never more than half full two fortnights on the trot, so in theory, four-weekly is just about do-able (depending how big the bins are).

Going against the council is the fact that they are already spending all that extra money (rightly or wrongly) doing all the weekly collections. Ultimately, they are relying on people's public spiritedness to put the right stuff in the right bin and not in the general waste; only picking up general waste once every four weeks has a purely punitive aspect to it.

That is the spiteful bit. It's not just the naughty people who put food waste in the general waste bin who are being punished, their immediate neighbours suffer too.

Friday, 21 September 2018

"How embarrassment may be Putin's downfall"

Sven Hughes in City AM, three days ago:

When serving as a British army reservist within Psychological Operations, we used to refer to these subtle divisions as “fissures”.

These fault lines in enemy audiences could be exploited to create great chasms between the authoritarians and the minions that sustained their power. Quite simply, the minions love the sense of associated status they get from being in cahoots with the authoritarian – they don’t like to be laughed at.

The RT interview seemed to reveal this exact fissure – Putin’s arrogance is starting to make even his most loyal supporters feel social embarrassment.

This could be the one silver lining for the west from the Salisbury incident. Information warfare only works when you have the broadcasters and re-broadcasters in place to disseminate your message. One break in the chain, such as a pair of agents becoming an international laughing stock, and the whole propaganda machine quickly suffers a complete malfunction.


An interesting but very bold prediction, I thought.

To my surprise, from the BBC today:

... the cover-up seems to have backfired as badly as the actual operation. Instead of quaking with fright, many Russians are laughing at their spies instead.

"It's not just teasing, it's mockery. I have friends who couldn't believe our lot could be so rotten," Gennady Gudkov admits. "Now they call me, and they believe."

With jokes and memes flooding social media, some commentators suggest a line has been crossed.

"What seemed morally unacceptable before has become the new norm, it's routine," Andrei Kolesnikov wrote on Gazeta.ru, calling the Salisbury suspects' appearance a "clown show" and their story "obvious, evasive lies".

But he sees another new norm in response.

"Society is laughing at the authorities," the journalist wrote. "State propaganda is becoming genuinely comic and that discredits and weakens those in power."

Thursday, 20 September 2018

Total Irony Fail

Classic piece of self regarding nonsense from Haldane at the Bank of England.  He is blaming 'groupthink' by the Great Unwashed driven by social media for future crises.

It does not occur to the tin eared numpty that he and his cronies are just as vulnerable to groupthink as are us poor plebs.  You only have to read the article and see his ongoing adhesion to punk Keynesian claptrap as believed by every other Central Banker to know that he is not capable of thinking outside his own box.

As for the notion that "...the Bank can learn from “folk wisdom” of ordinary people to help it understand the economy better.  is just a delusion.  In any event if us plebs know more about the economy than the Bank does as this remark implies, just why are they bothering?

Epic fail.

Nobody move or law-abiding citizens get hurt!

From the BBC:

A no-deal Brexit would make it harder to protect UK citizens, a leading police officer has warned. The Home Office has given £2m to police to work on replacing systems such as the European Arrest Warrant.

Sara Thornton, chair of the National Police Chiefs' Council said fallback systems would be slower. She said it could be harder to pursue suspects like those blamed for the poisoning of a former Russian double agent and his daughter in March.

EU chief negotiator Michel Barnier has ruled out Britain using the European Arrest Warrant after Brexit. At the moment, it is used more than 1,500 times a year.

UK Police face losing access to 40 law enforcement tools under a no-deal Brexit, such as the Schengen Information System, an intelligence database used 539 million times last year by British authorities to look up suspects and vehicles. The fallback is an Interpol system which is not automated.


For sure, if 'they' want to be spiteful, they will chuck the UK out of these information-sharing and co-operation agreements to everybody's overall detriment, which is 'their' call, not ours.

But as per usual, the argument ignores the big difference between deportation and extradition.

Most people (including me) get much more upset about foreign criminals whom we can't deport than about UK criminals who have absconded abroad whom we can't get back.

Leaving the EU will make it easier for the UK to deport foreign criminals (less of this human rights crapola). If the quid pro quo is that it is harder to get other countries to extradite criminals back to the UK to face punishment here, that is a price worth paying IMHO. Good riddance.

Logic also tells us that even if it is 'harder' for the UK to get other countries to extradite criminals back to UK, if we tell those other countries who they are, they will be happy to deport them anyway, achieving the same result.

Wednesday, 19 September 2018

The Sun on top form.

From The Sun:

Witness Felipe Carvalho, 31, was riding home from Islington on his moped when he saw two men arguing in the street where houses cost £1million.

He told the Sun Online: "A man had a large rucksack on and I saw another man shouting at him saying 'give me my phone back'.

"The man then pulled a huge knife out of his bag - it was about 60cm long.

“He showed it to the other guy and seemed to be threatening him. I shouted ‘leave it, it’s just a phone’ but they kept on arguing."

He added: "I tried to help. It’s so sad that a man has lost his life over a mobile phone."

Outbreak of common sense in Wales!

Emailed in by John D, from the BBC:

Wales should slash income tax rates to the lowest in the UK, according to one of the candidates challenging Leanne Wood for the Plaid Cymru leadership.

Adam Price said the basic, higher and additional rates could be cut by 9p and business rates and council tax ditched*. New land value taxes on residential, commercial and industrial residential land would fund the changes**, he said...

The Welsh Government is getting more tax powers next April, including partial control of income tax...

In proposals published on Friday, Mr Price said "introducing a National Land Value Tax on residential, commercial and industrial land (agricultural land would be excluded) could generate £6bn at a 3% rate on current values. This would enable us to abolish business rates, council taxes and lower income tax, at the basic, higher and additional rates, by 10p," he said.***


* His proposals don't mention ditching Land Transactions Tax as well, unfortunately.

** On a political level, it is better to say the Land Value Tax would fund those public services which increase land values, which is the fair way to fund them and which in turn would enable income tax to be reduced.

*** Something has got lost in translation here. Rhys ap Gwilym's original proposal worked on the basis of total council tax, business rates and income tax (basic and higher rate) revenues in Wales at £4 bn a year, so the LVT revenues required to replace council tax and business rates, and reduce income tax by 10% would be less than £4 bn, not £6 bn.
------------------------
Sobers of course runs with the messed up numbers in the comments, knowing full well that they are messed up. He also ignores the distinction between land value and total value including buildings.

Suffice to say, on a fiscally neutral swap, more than half of people would be better off, as wages are distributed more evenly than land ownership.

Total required revenues from LVT on housing (assuming revenues from LVT on commercial = same as revenues from Business Rates) = £2.7 bn.

£2.7 bn divided by 1.34 million households/homes is average £2,000 per household/home (up from current average just under £1,000), not Sober's wild overestimate of average £4,100 per household/home. So all tenants end up better off; a single earner who owns an average value home earning £22,000 or more; or a two-earner couple which owns an average value home earning £17,000 or more each.

Tuesday, 18 September 2018

Prolong The Chaos!

Gina Miller has set up a new site called End The Chaos "to give people the facts on Brexit" or some such slogan.

I dutifully watched the first video,which purports to explain WTO Rules. It states that if the UK chooses to trade under WTO rules it will have to impose a standard level of tariffs on imports and it will have equal and opposite tariffs imposed on exports from it.

Which is of course complete nonsense and lies from start to finish.

Fullfact.org explains it correctly. A country which is a member of the WTO can impose whatever import tariffs it likes, (subject to WTO overall upper limits, which the WTO is gradually reducing).

The actual WTO rule is that a WTO member must apply its tariffs equally to imports from all other countries. There's an exception if a country is also in a regional free trade area, in which case a country is allowed two tiers - a lower tier for imports from members of that FTA and a higher tier for imports from outside. (Quite where bilateral free trade agreements fit into this is anybody's guess).

What tariffs other countries or FTAs choose to impose on exports from the UK is entirely up to the other countries or FTAs.

Sunday, 16 September 2018

Life copies satire

Kj, on Facebook, 5 September:

Hey UK Labour-supporter, let me offer a humble suggestion:

If someone is accusing Jeremy Corbyn and portions of the party of being anti-semitic, you ought to just reply "no I don't believe that's true, the track record shows it etc." and leave it at that.

If you instead run with it and end up hammering the point that these suggestions are nothing but the work of the Israel lobby, and part of an elaborate scheme to discredit any opposition set in motion by a cabal placed in multiple levels of the political system - maaaaybe it's time to take a step back and think about how and why you ended up with that conclusion in this particular matter...


From the BBC, 14 September:

A trade union leader has been recorded suggesting that Israel "created" the anti-Semitism row in the Labour Party.

In a recording published by the Independent, PCS general secretary Mark Serwotka suggested the country had created the story to hide what he called its own "atrocities".

Friday, 14 September 2018

Well there's a surprise...

From The Times:

Taxpayer cash pouring into the housing market under the government’s Help to Buy scheme is creating a bubble that risks leaving a generation of homeowners stuck in negative equity, an investigation by The Times has found.

Analysis of house prices in ten towns and cities across Britain has found that homes available under the scheme cost an average of nearly 15 per cent more per square metre than comparable properties that are not eligible.

Experts say the figures show that housebuilders are using the higher budgets of Help to Buy purchasers to ramp up prices and profits, while young people are being left in overpriced homes that they will struggle to sell.

Taxpayers have pumped more than £8 billion into the Help to Buy scheme...

Nobody move or the house prices get hurt!

They were really ramping up the propaganda yesterday (giving me raw material for this series for a whole week). This is clearly co-ordinated, by whom or what we might never find out.

From Sky News:

Bank of England governor Mark Carney has warned ministers that a "no-deal" Brexit could see house prices crash by a third, Sky sources say.

Briefing Theresa May and her top team in Downing Street, Mark Carney laid out three different scenarios the Bank believes could come to pass if Britain leaves the EU without a withdrawal agreement.

The worst case scenario would see Britain go into recession, a slump in the value of the pound and a crash in house prices.

Sky's political editor Faisal Islam said a source characterised the governor's comments as "not a prediction, a worst case scenario", adding Mr Carney's comments were received "respectfully" by those around the cabinet table.


It's well-tailored though.

Brexit = food prices will rise! That's bad!

Brexit = house prices will fall! That's bad!

Nope, the former is clearly bad (unless you're one of these obesity crisis wankers); the latter is A Very Good Thing Indeed.

Thursday, 13 September 2018

Nobody move or the car drivers get hurt!

From the BBC:

UK drivers may have to get an international driving permit if they want to drive in some European countries after a no-deal Brexit.

The government says that after March 2019 "your driving licence may no longer be valid by itself" in the EU, in its latest no-deal planning papers.

It also warns that Britons travelling to the EU may need to make sure their passports have six months left to run.


That's it, chaps. They've got us game, set and match. Let's have a second referendum and vote 'Remain'. But wait...

International permits cost £5.50 and are available at some post offices.

Ah, right.

New car list prices v headline rents

Good news is, Her Indoors went to look at the big new car the dealership offered her in place of the 'old' (i.e. new, she's only had it for two and a half years) one. It was more or less identical, except the front seats are a bit comfier so she's going to stick with what she's got.

Which brought us onto the topic of list prices. These are fantasy numbers. Most people either haggle a discount for cash; receive an overly generous trade-in for an old banger; a load of extras; and interest-free finance deal with 'deposit paid' or whatever. The ones the dealers really can't shift are sold to themselves for list, and then bought back second-hand and sold as ex-demonstrator models (or something, it's more complicated than that).

We have a client which arbitrages this. They buy such cars for their list price and (for example) also buy bulk advertising space in newspapers for a discount to the rate card. Instead of paying the dealers cash, they give the dealers a credit, which they can use to buy advertising space at below rate card (but above what the client paid).

It's all about keeping up appearances.

There was a fine article in the FT a week ago that says commercial landlords do exactly the same thing:

Something strange happened in UK retail property this spring. Stores fell like dominoes: Toys R Us UK and Maplin, the electronic outlet, entered insolvency; fashion retailer New Look closed dozens of shops in a company voluntary arrangement, followed by Poundworld and maternity and baby outlet Mothercare; retailer Marks and Spencer has announced store closures; and department store House of Fraser began preparing for retail closures. But despite the exodus of tenants, according to listed companies and published indices, rents on retail stores appeared to be rising.

When demand takes a plunge, intuitively one would expect the opposite. So how was that possible? MSCI, the index provider, reported retail property rental growth of 0.9 per cent for the three months to the end of March and 1 per cent for each of the two quarters before that. Intu, a shopping centre landlord, said in February that its estimated rental values were up by 1 per cent in 2017. The property agency CBRE said rents for shopping centres were up 1.4 per cent in 2017 and 0.1 per cent in the first quarter. There is value in these numbers, but they do not tell the full story.

The figures are based on what property people call “headline rents” — a figure that appears in contracts between landlords and their tenants. But headline rents do not take account of the various incentives from the landlord to the tenant. For example, it is standard to offer a rent-free period when a store (or office) opens, which generally lasts six months and can be as long as a year. At the same time, leases are getting shorter and lease breaks more common. If a landlord rents to a shop on a 10-year lease that can be broken after five years, with a one-year rent-free period, that incentive suddenly amounts to a fifth of the income a landlord can rely on receiving.

But there is more. Landlords also offer cash incentives to businesses, so a lease might actually begin with a transfer of money from landlord to tenant, not the other way round. This contribution, often used to fit out the store, can amount to another 10 per cent of the value of the lease — or sometimes even more, agents say. Like the rent-free period, it is not included in the headline rent, which may in turn be used to calculate the “estimated rental value” of properties, a figure representing the rent you could reasonably expect to receive on a new lease. 


Incentives tend to vary through the property cycle, increasing when conditions for landlords are tough. For obvious reasons, landlords can be reluctant to share what incentives they are offering. So the total cost of renting a store is likely to fall when chains are closing and landlords are struggling to fill space — without any effect on the headline numbers...

For more specifics in the UK, try the latest results from Next. The retailer has more than 500 shops in the UK and Ireland and is vocal about the rent drops it is securing from landlords. Among 19 stores where leases were renewed in 2017-18, Next said net rents, taking into account capital contributions, were down 28 per cent. During the same period, indices showed rents across the market rising about 1 per cent. In 2018-19 Next anticipates it will secure rent drops of 27 per cent, not including the 10 shops it will close altogether.

Wednesday, 12 September 2018

The Revolving Door, still spinning.

From The Telegraph:

The former head of the Serious Fraud Office (SFO) is joining a City law firm that acted on some of the agency's most high-profile cases while he was in charge.

Slaughter and May, one of the UK's so-called "magic circle" firms that can charge clients more than £1,000 an hour, has hired Sir David Green as a senior consultant despite fears that there could be a conflict of interest.


*could*

Monday, 10 September 2018

"Would a bigger house make you happier?"

Good article by the BBC:

It is common to hear concerns about pokey new-builds and sky-high rents forcing people into ever smaller homes. But the reality is that living spaces in England and Wales are actually larger than ever, with the average home increasing from 88 to 90 square metres between 2004 and 2016.

Instead, the issue is that the distribution of space has become more unequal.

Owner-occupiers often have a lot of space compared with younger renters, who may be sharing a home with several others. In 2017, about 28% of UK households contained one person, up from 17% in 1971.

Meanwhile, the proportion of families and individuals sharing private rented housing has almost tripled since 1992 to 6.6%, according to research by the Resolution Foundation think tank.

---------------------------
UPDATE, responding to comments.

Ontheotherhand: No it's not a good article. It's sloppy. Especially the bit that you quote.

Click through to the underlying ONS article as the journalist clearly did not, and you will find that the whole premise of the article is flawed. The average size of homes is not being measured. It is only the size of those homes that have been sold that year, and it is not mix adjusted.

"Both (habitable) rooms and floor space have seen small increases over the period with the biggest shift seen between 2008 and 2009. During this period there was an increase in the proportion of detached properties purchased (Figure 3) and a respective fall in the proportion of flats."

Britain has the smallest average room size and also we have the smallest newly-built dwellings in Europe. Only England and Wales have no minimum space standards for housing. All other European countries do.

https://web.archive.org/web/20171205092304/http://www.swingacat.info:80/facts_figures.php


Agreed, the UK has the smallest homes, room sizes in Europe etc. No dispute there. But if you read the full article, it explains that it is all relative ("keeping up with the Jones's"). The old lady from Hong Kong thought our flats were generously proportioned, and I have heard Japanese people say how large London back gardens are by Japanese standards, even though they are small by English standards.

Even if the statistics on room sizes only relate to new builds and not overall average, if new builds are larger than the existing average, then overfall, the average must increase, however slightly.

L fairfax: I thought this bit was strange

"As a nation, we do not seem to be getting any happier with our housing, even though living space and housing conditions have improved for many people. "

Has living space really improved compared to 20-30 years ago? I find that hard to believe. (I know it is better than 100 years ago).


Let's assume, for sake of argument, that total living space per person is pretty much constant (new builds have - as a matter of fact - exceeded population growth in most years). The main point of the article is that the space we have is woefully unevenly and hence inefficiently distributed, it is not the happiness maximising distribution.

There are about 75 million bedrooms in the UK, that's enough for one per person/couple plus one spare bedroom per household. If we all had that much, we'd all be reasonably happy.

I was pleasantly surprised to see this in The Daily Mail.

The radical real estate solution that's helping Australians in one major city save MILLIONS on housing costs every year

A radical real estate solution helping Australians save millions on housing costs has been revealed. About 1,000 households in Canberra are saving $9million every year by renting the land their houses sit on instead of buying it...

Economics lecturer Cameron Murray said it helps renters secure long-term home ownership while saving 'about half' their housing costs. Renters pay two per cent of the market price of their property each year to the government. 


"As long as they pay the [ground] rent, they can occupy it for life," Mr Murray wrote in a post for The Conversation.

So what's the downside..?

"The downside, for them, is that they forgo the increase in the value of the land. The upside is that it costs them two per cent per year instead of the five per cent interest rate they would pay if they had a mortgage. When they sell their home they built on the land they pay out the land value to the government." Mr Murray said the scheme 'works out pretty much even' for the government.

That's not a downside, future residents will be making savings equal and opposite to their notional loss.

Thursday, 6 September 2018

Either the observations are wrong or the theory is nonsense.

The observations

1. The larger the conurbation-the denser the population-the better the links to other places, the higher the average productivity-wages-profits. This is partly because of synergies-specialisation-agglomeration benefits; and partly because higher wages at the top of a pyramid depend on how wide the base of the pyramid is. This pulls up the overall average while widening the difference between top and bottom. The fag packet calculation is double the size of a conurbation and average wages go up by 5%.

2. Within any country, there is free movement of people and workers. Between leaving home and 'settling down', plenty of people are willing move from lower wage to higher wage areas. Once all housing in the higher wage area is occupied, this pushes rents up to the point where a new equilibrium is reached and the rent differential is equal to the wage differential. At this stage, there is little financial advantage in moving and net internal migration falls to a trickle.

3. This is easily measured by looking at average wages minus average rents in different regions of any country, this 'basic minimum' is much the same anywhere.

See for example here

(Clearly, rent and wage differentials between countries if there is no free movement of people and workers between them can be sustained almost indefinitely.)

Anybody who disputes this can leave the conversation right now.

The theory

1. Supply of housing is kept below its optimum level by one or more of the following:
i.  Councils' planning departments (for reasons unspecified) not handing out enough planning permissions.
ii. NIMBYs putting political pressure on councils not to hand out planning permissions.
iii. Land owners holding on to land as long as possible to bank the biggest gains.
iv. Home builders restricting new supply to keep prices up.

Choose your favourite according to political bias!

2. Housing is a perfectly ordinary good, like coffee beans, cars or carpets. If there is an increase in supply, prices will fall, and vice versa. This is easily observable in the short term, like if there is a coffee glut, or in Germany post-unification when East Germans sick and tired of Trabis, were itching to buy decent second hand VWs and second hand car prices doubled for a year or two. This levels off very quickly, as manufacturers make a certain minimum profit margin. Any less than that and some go out of business, any more than that and they manufacture more, or new players enter the market.

3. Therefore, if somehow home builders/land bankers could be persuaded to increase output (despite it being against their interest to do so), prices and rents would fall. Simple, 'housing crisis' solved! Duh, why did nobody think of that before?

(I always ask these people, OK, if it's all about supply, and there are more homes within the M25 than in the whole of Scotland, why are prices so much higher within the M25? None has ever answered that, the closest they ever get is 'it's different this time'.)

Either the observations are wrong or the theory is nonsense

OK, let's measure 'affordability' in terms of how much disposable income working tenants (actual or potential internal migrants) have left over after paying rent ('the basic minimum'). We know from observation that within any country or area with freedom of movement, this is pretty much the same everywhere and however many homes there are in any area, the basic minimum will still be the same all over the country.

(This is why people at the bottom of the wage pyramid in a wealthy country are negatively impacted by freedom of movement - they are competing for jobs with people with a much lower basic minimum expectation, who are happy to accept lower wages or pay higher rents).

This is where is becomes nigh impossible to reconcile the theory to the observed facts:

Probability A. We increase supply of homes in high wage-immigration areas, there will be more agglomeration benefits = higher average wages, so the trajectory is that rents there will increase rather than fall. Assuming that in emigration areas there is the opposite effect and wages fall, then the basic minimum must fall. This actually exacerbates the whole thing.

Possibility B.We increase supply of homes in high wage-immigration areas, people move there but there are no agglomeration benefits. Wages, and hence rents, and hence affordability stay the same.

Possibility C. A greater mind than mine can actually reconcile the theory with the observations.

Wednesday, 5 September 2018

Cheeky bastards

From yesterday’s City AM:

Property heavyweights vent frustration in light of new Crossrail delays

Senior property executives expressed anger and frustration at the delay in the opening of Crossrail, as it emerged the postponement of the new line could result in a series of setbacks for London developers.

Emoov research carried out for City AM suggests property values could sink by as much as £10,000 in the short term, with hopes that falling house prices would rise after the Elizabeth Line’s opening now being put on hold.

Meanwhile, with the £15 bn project’s launch being pushed back from December this year to Autumn 2019, commercial developers within London’s West End are also worried that an eagerly-awaited bump in retail footfall will come nine months later than expected.

“We were massively disappointed when we found this out. For our retail side it is probably far more damaging, as a lot of their business models were based on new customers coming in. It’s tough enough for these guys at the moment being squeezed by business rates,” said Jace Tyrrell, whose firm New West End represents retail giants along Bond Street and Oxford Street.

He added: “We’ve known for some time there would be issues but never to this extent.”

Last week Ireland’s largest hotel group Dalata unveiled plans for a £91m new site in Aldgate, with deputy chief executive Dermot Crowley saying the transport links were a large factor in the decision to move to the area.

However, Crowley told City AM yesterday that while the delay does not change their investment decision, “it is frustrating when things like this get delayed – you’re told one day it’ll be ready in three months, and you find out the next day it’s 12 months.”

Tuesday, 4 September 2018

"Free childcare scheme 'closing' nurseries, education charity says"

From the BBC:

A scheme offering 30 hours of free childcare a week has had a financial impact on providers, a charity says.

It's not a charity, it's a trade body/lobbying group, but their point stands.

The government pays a national average of £4.98 per hour for places to local authorities, of which a minimum of 94% is passed on to providers.

As background, until a year ago, parents received a subsidy for 15 hours 'free' nursery care but at a higher hourly rate. Of all the various overlapping schemes for subsidising private childcare, this was the best, being universal, non-means tested and with a minimum of bureaucracy. (Even better/cheaper would be more pre-school places at local state primary schools, but that's a separate topic).

The [Pre-School Learning Alliance] charity surveyed 8,000 nurseries and childminder firms between 17 July and 23 August.

It received answers from 1,662 providers and found 46% of them felt the scheme "had a negative financial impact on their business", while two-thirds said funding for child places did not "cover the full hourly cost of delivering the places"...


It doesn't take a rocket scientist to work out that price controls (which is what this boils down to) will increase demand and reduce supply (unless it simply prevents rent-seeking, in which case the impact on supply is negligible, but that does not appear to be the case here).

In a statement, the DfE said it had provided "£1bn extra funding a year to deliver all of this government's free childcare offers... We continue to monitor delivery costs and we have commissioned new research to provide further information on the costs around childcare," it added.

The DfE said parents were saving up to £5,000 a year on childcare costs.


That "saving" consists of two things - the amount by which nurseries' incomes are squeezed and the value of the subsidy, which those working parents are partly paying for through their taxes anyway.

Badly calibrated test of the week

From the BBC:

Almost two million people have taken the heart age test and 78% of participants have a heart age higher than their actual age.

Of those, 34% were more than five years over their actual age and 14% at least 10 years higher.


Tossers.

Monday, 3 September 2018

Car Finance Fun - seems a bit mad to me

Her Indoors bought one of those big white SUV cars two-and-a-half years ago on the never-never (HP or finance lease or PCP or whatever names they dream up for what is essentially the same thing).

I don't know the exact numbers, so I'll simplify a bit.
List price = £27,000
Deposit = £5,000
Three years @ £333 a month = £12,000
Final payment* = £12,000

* Depending on which whizz bang never-never scheme she's on,  this might be called 'loan outstanding', 'residual value', 'balloon payment', 'purchase option price' or whatever. She can also pay this  off over three years, @ £333 a month.

I've checked Autotrader and the second-hand value of that make and model is about £12,000 for three years old and £7,000 for six years old. Let's ignore VAT for now, it sort of nets off.

So if she sees it through, the total finance cost was negligible at £2,000 (works out at about 3% per annum) and she owns a car worth £7,000.
------------------------------------------------------
Here's where it gets weird, looking at it from the point of view of the dealer/manufacturer.

The chaps from the dealer rang her a couple of days ago, and said that if she pays another £1,000 she can swap it for a similar new big white SUV car (even though she's only two-and-a-half years into the initial three years) and the monthly payments stay the same. The current second hand value (two-and-a-half years) old is £14,000.

Let's assume this repeats itself, for ever. Every two-and-a-half years, she pays them £11,000 (£1,000 cash plus 30 months @ £333) and 'enjoys' £13,000's worth of depreciation (£27,000 list minus £14,000 residual)

The dealer/manufacturer collects £11,000 and loses £13,000 of depreciation, i.e. they give up £2,000 of the nominal profit margin when they sell the car, a kind of negative interest rate.

Saturday, 1 September 2018

Sympathy for the Devil Cautious Criminal

From the Evening Standard:

Bob Neill, chairman of the Commons Justice Select Committee, reacted to the case with dismay. “We are having a perverse consequence where the spendthrift criminal gets more out of it than the cautious one and I don’t think that can be very sensible,” he said.