A "contributory" benefit is still a benefit.

From The Daily Express:

'Pension is NOT a benefit!' Furious caller rages at Sunak on Jeremy Vine - 'I paid in'

THE ABANDONMENT of the triple lock this year has left many people in fury as their state pension is not keeping pace with inflation...

[Caller] Jean said: "I have a small company pension because I worked from leaving school at 15, but my pension is £189. As far as I'm concerned, it is not a benefit. It is something I have paid for. I have paid National Insurance contributions since I was 15, it is not a benefit.

"To be told that you're living on benefits and for the this man to stand there and say he has given work to hard working people. I'm sorry we were hard working people from the 1960s."

The comments section is a hoot. DGWGA explains it...

It is a benefit. No one has paid into anything. You may have paid tax, you may have paid national insurance but you have not paid into any fund. You just need to look at the only true measure of the government's finances, The Whole of Government Accounts (WGA) to appreciate that there is no fund, and indeed, there is no liability in the accounts for the perceived "accrued rights" which are estimated to be approximately £4 trillion. That is £4,000 billion.

Surprisingly, he or she hasn't been bombarded by haters calling them a Commie. Presumably cold facts and logic went straight over their heads.

Pensioners show us how it's done.

From The Express:

OLDER voters are considering withholding support from the Tories if Chancellor Rishi Sunak ditches the Government's pledge to hike the state pension in line with average earnings, a survey warns today...

In a series of interviews last month, Mr Sunak refused to say whether the Triple Lock guarantee would be honoured this year.

“The Triple Lock is the government’s policy but I very much recognise people’s concerns,” he said in response to concerns about the potential cost. I think they are completely legitimate and fair concerns to raise. We want to make sure the decisions we make and the systems we have are fair, both for pensioners and for taxpayers,” the Chancellor added.

Whatever the rights and wrongs of an issue, the lesson is that if you want something, you just have to vote for it ('green' measures, Brexit, high pensions etc). Voter turnout among pensioners is very high, with corresponding results, so all parties have to be at least as 'generous' as the others.

And if you want the government to collect taxes from land values instead of from wages and ouput, just vote for it. If you're in Scotland, vote for the Scottish Greens; if you're in Yorkshire, vote for the Yorkshire Party and everywhere else, you have to get on the ballot paper for Young People's Party (we are still waiting to hear from El Comm on the name change).

Tokenistic tinkering at the margins

From the BBC:

"Outdated" age-specific benefits for older people should be replaced with support for the young to "deliver a fairer society", say peers...

The peers also propose changes to benefits for older people, including:

* Removing the triple lock for pensions, which raises the basic state pension by the rate of average earnings increases, inflation or 2.5% - whichever is higher
* Phasing out free TV licences based on age (currently free for over-75s) and ensuring the government decides on whether to give free licences based on household income
* Limiting free bus passes for the over-65s and winter fuel payments until five years after retirement age

As daft as the free TV licence, bus passes and winter fuel payment (fka "Christmas Bonus") are, the nominal cost of these things is minimal in national accounts terms and the real cost to those not receiving them is nigh on zero.

The triple lock is a gimmick, but it seems sensible to index the state pensions to wages, and I doubt that state pensions would be much lower had they just been indexed to wages without a "triple lock".

They have deliberately missed the point.

There's no particular conflict between 'young' and 'old' on the spending side, the real battle is between landowners (landlords or homeowners) and tax-payers (businesses, workers and consumers) on the taxation side.

And at present, the landowners are winning, as they have been doing since 1066. Funding public services - which create and sustain land values in the first place - with service charges on land (Land Value Tax) instead of with taxes on output and wages (VAT and NIC) will go a long way to sorting all this out, no need for sticking plasters on sticking plasters.

As long as ALL pensioners get the same goodies, regardless of how much land (by value) they own, there's not really a problem.

Why You Should Vote

From the Telegraph

Pensioners over the age of 75 will be guaranteed same-day access to a family doctor under Conservative plans for a “total revolution” of GP services in Britain.

In an interview with The Daily Telegraph, Jeremy Hunt, the Health Secretary, said that the Tories will deliver better care for the elderly population by committing to a minimum of £8billion of extra funding for the NHS every year by 2020.

The money will pay for at least 5,000 new GPs to ensure that pensioners who require care will be able to see a doctor within hours.

Leaving aside that I think GPs are something that should be scrapped and everyone should just go to specialists for most things, the idea that over 75 year olds should specifically get a guarantee on seeing a GP is frankly nuts.

The people who should get immediate access to a GP are working people and school children. 75 year olds have had their working life, have plenty of spare time and aren't the people who are earning the money that keeps the NHS going. We want kids to be getting back to school or being able to go out and play and working people to be getting back to work or look after their children.

And the only reason this is happening is because 75 year olds vote in such huge numbers and like most people, vote for themselves. Most of them seem to even lack an enlightened perspective that their children and grandchildren are paying for the splurging of government money on them.

So, if you're young and wondering why you can't get a home of your own, it's because you don't vote, and that's all the parties care about. They disregard those who think that they're making a point. If you have a YPP candidate in your area, vote for them, if not, find the least worst option. But for god's sake, vote.

"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.

Problem + problem = solution

Here's the Sally Army's Xmas 2013 TV advert:

Now, let me see if I can reduce the first two problems highlighted to a simple diagram, the solution of which must be obvious to a child of seven…

Fun Online Polls: Syria & Indian Bicycle Marketing

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

Is arming the Syrian 'rebels' a good idea or a bad idea? Multiple selections allowed.

Bad idea - it will only benefit our arms manufacturers - 20 votes
Good idea - it will be good for our arms manufacturers - 18 votes

Bad idea - Arabs will just end up killing each other - 42 votes
Good idea - violent Arabs will be killing each other - 36 votes

Good idea - they will overthrow a dictator - 5 votes
Bad idea - the weapons will end up with Al Qaeda - 74 votes

Opinions on whether the first two likely outcomes - that this will (only) benefit our arms manufacturers and Arabs will just end up killing each other even more - are in themselves A Good Thing or A Bad Thing appear to be evenly split and thus both sides cancel out and can be ignored.

Which leaves us with the tie-breaker question of whether arming the Syrian 'rebels' will lead to the overthrow of a dictator (good) or just fall into the hands of Islamists (bad) and on this one the answer is crystal clear.

There you go, that's how you formulate pragmatic foreign policy. Sorted.

Total number of people taking part = 120, total number of options chosen 195, average 1.6 each. Thank you everybody who took part.
----------------------------------------
Today marks another high point for the Indian Bicycle Marketing practised by the three main UK political parties.

They have now all timidly suggested that some universal pensioner benefits be "looked at" or means-tested or that wealthier pensioners simply waive their entitlement, and been duly lambasted by the other parties for their callousness. Bonus points to the Tories - IDS suggested it, his leader dismissed it, and two months later the Chancellor proposed it again, e.g.

September 2012 Nick Clegg: wealthy elderly should lose winter fuel allowance and other benefits

April 2013 Iain Duncan Smith calls for wealthy pensioners to hand back benefits

Later the same day in April 2013: Cameron dismisses Duncan Smith's idea that well-off pensioners should hand back bus passes, winter fuel payments and TV licences

Early June 2013: Labour would cut winter fuel payments for rich, says Ed Balls

Late June 2013: George Osborne to review winter fuel allowances for the elderly

The whole thing is a joke of course.

Universal benefits are the best kind of benefits as they are the cheapest to administer, and the Winter Fuel payments (known as Christmas Bonus in less PC days of yore) only amounts to £2 billion a year, so if we take them away from the top tenth of pensioners (ranked by current income? Total wealth? Value of home?) that would "save" £0.2 billion a year at the cost of making twelve million pensioners fill in yet another form at huge expense, so the net "saving" will end up at something like 0.1% of the annual government over-spend, but hey.

But it's a good illustration of how Indian Bicycle Marketing works, even though all three parties have a similar policy on x, y or z, they all:

a) Slag off the other parties for having such a policy, and

b) Defend their identical policy on a different but inherently flawed basis. Broadly speaking, the Lib Dems want to do it on the grounds of "fairness", Labour wants to "focus spending on the most vulnerable" and the Tories want to try and "reduce the size of the state".

Anyway sod it, vote here or use the widget in the sidebar.

"Hard working pensioners 2"

Following on from Monday’s discussion the Beeb are reporting on an IFS research study in which it is claimed that UK pensioners' incomes have risen faster than all other age groups in the last 30 years, and also claims that the over-60s are the only age group to have become better off since 2007/08.

 

The Beeb suggests that “the findings may fuel the debate over how much protection pensioners should be given from the government's current austerity measures”.

As yet the actual report Living standards, poverty and inequality in the UK: 2013 does not appear to be publicly available, the IFS website explains that "The Department for Work and Pensions (DWP) has today [13th June] published its annual statistics on the distribution of income in the UK. The latest data cover years up to and including 2011–12.  Tomorrow, IFS researchers will publish a detailed report, funded by the Joseph Rowntree Foundation (JRF), on what these data tell us about living standards, poverty and inequality in the UK."  The link given actually takes you to details  of the Conference organised around the release of the report:-

Living standards, poverty and inequality in the UK: 2013

Date: 10:00 14 June 2013 - 11:30 14 June 2013 Type: Conference Venue: CILIP  [see map] Price: members: Free; nonmembers: Free

On Thursday 13 June, the Government will publish the latest figures on the distribution of income and the extent of poverty in the UK. The figures will cover 2011-12, the current coalition government's second year in office.    The IFS will then release a fuller report, funded by the Joseph Rowntree Foundation on the latest figures and recent trends on Friday 14 June.  Going beyond simply describing the data, it will look at the factors driving the changes in incomes and poverty observed, and will look forward to prospects for income growth and poverty over the coming years.

"Hard working pensioners"

From the BBC:

Labour has said spending on state pensions is likely to be included in its proposed cap on welfare budgets.

Shadow chancellor Ed Balls told the BBC "at the moment" Labour intended to factor pensions into its calculations for a three-year cap from 2015-16. The opposition said it was committed to maintaining the value of the state pension but welfare expenditure needed to be looked at "across the piece".

The Conservatives said the plans would hit hard-working people (1)...

But [Ed Balls] said including pensions, which forms the largest part of the multi-billion pound structural benefits bill, made sense.

"Look across the whole welfare state and ask what are the drivers of expenditure," he explained, "I think many people watching your programme will not realise that actually today the clear large bulk, most welfare spending is in fact going to people over 60. That is the truth.(2) We should look across the piece"...

Treasury Minister Sajid Javid said: "Now we know when Labour say they want to cut welfare, what they actually mean is cut the basic state pension."

And Conservative MP James Wharton tweeted: "Labour plan to cap pensions spending, really? Hitting those who've worked hard all their lives."(3)

1) Most pensioners don't work any more, and if they did, then they wouldn't mind or notice too much if their pension was less.

2) Yes Ed, anybody who bothers checking the figures is perfectly aware of that. But you and your ilk constantly moan about "Britain's bloated £200 billion welfare budget which consumes a third of government spending" to whip up public indignation about the unemployed, without mentioning that two-thirds of cash welfare spending (and indeed NHS spending) is for old age pensioners.

3) That is a wild generalisation isn't it? There must be plenty of pensioners who have in fact been unemployed for large parts of their lives.

Your most 'umble and obedient servant...

From The Daily Express:

 

I BELIEVE you can judge a government's values by how it treats the groups most likely to vote for it.

 

The last Labour government spoke endlessly about looking to restore the link between the level of welfare payments for any particular age group and the likelihood of people in that age group voting, but when it came to it, foolsihly did nothing. Within weeks of walking into the DWP we introduced the "triple lock" to provide a proper mechanism by which we increase welfare payments to core voters.

 

We believe this was the right thing to do for people who have spent their lives doing the right thing – turning up to vote for whoever gives them the most generous handouts. Now there is a debate about whether regular voters should continue to receive benefits like the winter fuel payment, free bus passes and TV licences.

 

The vast majority of our core voters are relaxing at home without a care in the world apart from putting a cross on a bit of paper every year or two. For many, retirement is about careful budgeting and trying to persuade their families to help out. So their votes are relatively cheap to buy and I'm amazed that Labour weren't more keenly aware of this. Again, how government responds to this is a mark of their priorities - like being re-elected.

 

It is that desire to buy votes as cheaply as possible which was behind the Prime Minister's pledge to protect universal voter benefits for the lifetime of this parliament and that's what we're doing. I make no apology for it.

 

For some, the winter fuel payment is not a necessity. The free bus pass an unexpected and welcome extra. But for others these represent valuable lifelines. Ensuring the heating is turned up in winter so that they stay alive to vote for us again the next spring. Making it easier to get to the polling station. For people who would vote for us even without the winter fuel payment and want to return it, then they can do that.

 

But as I made clear on the Today programme this week, I am not asking nor demanding anyone to do this. The policy has not changed. Pensioners have contributed our hold on power throughout their working life and they deserve a kick back in retirement. This government can be proud of having done this simple electoral calculation, of what it has done and continues to do for our core supporters. This is a measure of what we think is important, not only as government, but as a group of self-serving insiders.

 

And if you behave nicely, who knows? Maybe one day you'll start receiving interest on your savings again.

 

Your most 'umble and obedient servant

 

IDS

"Sorry! It was just a joke that appears to have backfired slightly.."

Using a cheery grin to try and disguise his embarrassment Iain Duncan Smith apologised to Sunday Telegraph reading 3rd Agers over comments he had made during an interview with the newspaper, which he said had been wildly misinterpreted.  "I was just having a bit of a laugh after a particularly boisterous Saturday night out with the boys" he said "and unfortunately my remarks were taken as being a serious threat of an intended government crackdown on a section of society which was and is wholly undeserving of it".  He added "Obviously I am a more convincing joker than I had ever given myself credit for being, and I apologise fulsomely for any distress I may have caused by my remarks" continuing " I have promised the Prime Minister I will not do it again, and will concentrate my energies on attacking those that deserve it; which is a long list indeed, but pensioners certainly aren't on it, as as since yesterday I have crossed them off it."   

"We are coming for you next" Iain Duncan Smith warns Sunday Telegraph reading 3rd Agers ...

In an exclusive interview with the Sunday Telegraph the Work and Pensions Secretary informed its elderly readers that if they could afford to pay for the Sunday Telegraph they obviously had far too much money and should not expect to receive "something for nothing handouts from the state" for much longer. 

"It's all very well these people claiming that without Winter Fuel Payments, and free Bus passes and TV licences, they wouldn't have the money to afford to buy the Telegraph" he said "but why should the state be subsidising this stay at home, cosy chair by the fireside reading what is undoubtedly the finest newspaper in the land as a prelude to watching Countdown lifestyle ?", adding "and why should the state provide the means whereby they are able to indulge in reckless gambling by giving them free bus passes to take them to and from Bingo? It's madness."   

In a further indication of how serious a problem he regards it as Duncan Smith also said "Poor Widows in Mansions, I have had them up to here.  I'm going to means test them all in respect of everything until the pips squeak.  Thanks to UC I've now got all the technology to do it you know."

The interview came to an abrupt and unscheduled end when Mr Duncan Smith was suddenly collected by some rather burly gentlemen who said they had been sent from Number 10 to escort him to an urgent meeting with the PM.  Mr Duncan Smith was heard to be muttering something about "pensions triple lock, my arse" as they led him away.

Britain's hard working and thrifty pensioners.

Spotted by Bob E in The Telegraph:

Many still owe hundreds of thousands of pounds on interest-only mortgages, caught between endowments that failed to deliver and lenders demanding repayment.

Those approaching retirement are hitting the milestone in poor financial shape, with nearly one in five expecting to be in debt on the day they receive their gold carriage clock.

Figures from Prudential released this week show that the average owed by [the one-in-five who retires in debt] is more than £31,000, spread over a mixture of credit cards, bank loans, overdrafts and mortgages. Twelve per cent of them do not expect that they will ever clear the debt, while it will eat into the income of others for several years before they pay it off.

The charity StepChange, formerly known as the Consumer Credit Counselling Service, said it had seen a 44pc increase since 2009 in the number of over-sixties contacting it with problems paying their mortgages. "With many older people taking higher levels of debt with them into retirement, this could be the start of a long-term trend," warned Delroy Corinaldi, a director of StepChange.

This is an advertorial for "equity release' schemes of course, but let's take the figures at face value.

From the comments:

alanr: Any pensioner that owes six-figure sums on an IO deal has likely been severely imprudent, rather than unlucky as you imply.

No no no no no Alan, you can't say that! Haven't you realised there is a determined effort underway to establish an "interest only mortgage miss-selling scandal" in order to push for some sort of bail out for all these "unlucky" and certainly not imprudent/stupid/greedy people?

First they came for the unemployed....

... and I didn't speak out, despite being unemployed and unemployable and living off taxpayer funded benefits myself.

In fact, I enjoyed the moral high ground while it lasted, gleefully joining in the witch hunt and kicking those further down the heap, because I was over 65 (or 60 if a woman).

Oops.

Killer Arguments Against LVT, Not (297) (updated)

In the previous instalment, I pointed out that the total tax (flat income tax plus LVT) payable by pensioners assuming a halfway-house tax system could be collected by deducting it from total pensions in payment.

Assuming no exemptions or relieving provisions whatsoever, the total tax withheld (£66 billion a year) would amount to just over a third of pensions in payment, which is (obviously) more than what pensioners currently pay (£42 billion a year, allegedly), £24 billion a year more, to be precise.

Of course totals and averages for all pensioner households are not the end of the story, because the Homeys always like to choose corner cases (The Poor Widow In A Mansion) and wail about "millions of hard working pensioners being forced out of their homes" etc.

So let's confront this thorny issue in a bit more detail and do some like-for-like comparisons:

1. Pension incomes by quartile from here; "Domestic Rates" bills (a one hundred per cent tax on "site premiums", which works out at about 3% of 2012 selling prices) are:

2. According to the Daily Mail, pensioners pay about £42 billion a year in tax, a mixture of regressive (Council Tax, VAT, TV licence) and progressive (income tax), and net incomes for the three main types of pensioners household are thus as follows (based on average overall tax rate 24% of gross income):

3. Now, assuming we want to be fiscally neutral and keep the total taxes paid by pensioner households the same (the idea behind LVT is certainly NOT to tax more, it is to tax differently), how about using up that potential extra £24 billion (from above) to give each of 8 million pensioner households a £3,000 a year flat discount/reduction from their Domestic Rates bills?

Assuming that there is no correlation between gross incomes and the rental value of the plots they live on (of course there is), here are the net incomes:

4. There are two kinds of comparison, a relative one showing the increases and decreases in net incomes for the various categories, and then an absolute one showing who would end up under the poverty line (single £100/week, couple £150/week) and would be "forced" to do something about it, for example: trade down, take in a lodger, ask their family or heirs to chip in, start spending their savings, agree a deferment/roll-up with the council etc.

5. Here's the changes in net income table:

6. Here's the same table as in 3. above with an absolute comparison, with those households now under the poverty threshold (based purely on current pension income) who might be "forced" to do something about it shaded grey:

This gets the number who would would be "forced" to do something down to about a sixth of all single pensioner households (600,000 or so pensioners). Most of those will probably ask their heirs to pay, dip into their savings or ask the council for a roll-up option etc - not a single one of them would be "forced" to actually trade down (even though there is now every incentive to do so).

Very few pensioner couples would be really negatively impacted, and over half of them would be better off (rather unsurprisingly).

Killer Arguments Against LVT, Not (296)

I'm sure we're all familiar with the Poor Widow Bogey, see also "LVT doesn't relate to ability to pay"; "LVT would be paid out of taxed income"; "I've paid for my house out of taxed income"; "LVT is a dry tax"; or the supposedly rhetorical question "How can you collect tax from an asset which doesn't [currently] generate cash income?".

OK, let's answer that question by looking at some actual hard facts and applying common sense.

Let's imagine our half-way house tax system, which could be implemented fairly quickly, where there are only two taxes, which would each raise about £200 - £220 billion a year:

1. LVT on current site-premium rental values (about 3% of the current selling price of UK land and buildings, farmers would be paying about £16/acre/year) in place of Council Tax, Business Rates, SDLT, IHT, CGT, Insurance Premium Tax and TV licence fee, and

2. A flat income/corporation tax of 20% (with no VAT, NIC or higher rate income tax on top).

(Over the next few years, income tax would be phased out and the overall site-premium, and hence LVT receipts, would increase accordingly, that's the easy bit, it's getting started which is trickier).

And let's imagine there are no exemptions or discounts for pensioners whatsoever (local councils can all make up their own systems, we'll see which ones work least-badly). Instead of starting with hardship/corner cases like Poor Widows In Mansions, let's look at The Big Picture:

3. Seven million pensioner households (about 4 million couples and 3 million single, i.e. widowed) own about a quarter of UK homes, so the total LVT to be collected would be about £50 billion a year.

4. Total pre-tax cash pensioner income is about £174 billion a year (£94 billion state pensions and Pensions Credit; £30 billion in public sector pensions and £50 billion in private or employer pensions).

5. The total tax currently clawed back from pensioners is £42 billion, according to The Daily Mail, or £6,000 per pensioner household.

6. The Daily Mail helpfully adds that "average pensioner [household] income is £20,130 a year", and Ros Altman reckons that "Median incomes of pensioners are around £15,000 per year".

What the Lord giveth, the Lord taketh away.

7. My counter-question is thus: "Is it beyond the wit of mankind to simply deduct LVT from pensions in payment, in the same way as income tax is withheld from pensions in payment?" To which the answer is, no, of course not.

8. So the £80 billion in non-state pensions is subject to the flat 20% income tax (as at present) and the £50 billion gets withheld from the net figure of £188 billion. So by and large, there would be a 100% collection rate.

9. For example, our average pensioner household with gross income of £20,000 would get £14,000 state pension paid gross and £4,800 net public sector or private pension and have an average LVT bill of £7,500, ending up with £11,300 a year to live on. Our median pensioner household with £15,000 total income minus a few quid income tax and a median LVT bill of £5,000 would end up with just under £10,000 a year to live on (which sounds like plenty to me).

10. So in the absence of exemptions and discounts, pensioner households would be paying more in tax overall (potentially £66 billion)than under current rules (£42 billion), but that is inevitable, there's still nothing to stop them trading down, taking in a lodger, getting their potential heirs to pay and so on.

11. Of course, our proverbial Poor Widow In A Mansion who receives only Pensions Credit would have a net cash income from the government of precisely £nil* and there would be an annual shortfall which would have to be rolled up and collected from sales proceeds when she dies, and sometimes the shortfall would be more than the selling price of the house, but so what? These cases will be few and far between, tuppence ha'penny in the grander scheme of things.

* No doubt her children and grandchildren will be happy to chip in a couple of thousand pounds a year each to see her right.

For more detailed workings, based on quartiles rather than totals or averages, see the next instalment of this gripping series.

At least he worked for his pension

Submitted by Bob E.

Some commenters are suggesting that it is "a bit ripe" for a Lord to be suggesting that people work for their pension, and are demanding to know what contribution he has made and what he might or will be doing to justify getting his state old age pension … aside of course from the contribution he makes as a Life Peer, turning up to those arduous sittings in the House of Lords with only the prospect of the daily attendance fee to take the sting out of it, which some might perhaps consider "contribution enough", especially when they see what other sterling service Lord Bichard has already provided to his community.

Which is to say "stop carping and whining, Lord Bichard has already put in his shift doing service for the community – that is why he was made a Life Peer".

He became Chief Executive of Brent Council in 1980 – the year of his 43rd birthday - and continued in that role until 1986, before leaving Brent to do service as Chief Executive of Gloucestershire County Council – a much bigger and harder task.

He fulfilled that role until 1990 when he was plucked from Gloucestershire to undertake a national role as Chief Executive of the Benefits Agency, which had just been established. He carried that responsibility out until 1995 when he moved on to the Department of Employment, which was then merging with the Department of Education to become the super big Department for Education and Employment (DfEE) – agreeing to be Permanent Secretary of that monster organisation.

It was while undertaking this service that he was made Sir Michael Bichard in 1999. Not surprisingly by the time 2001 – the year of his 55th birthday - rolled around, and yet further changes to the machinery of government were taking place, and with DfEE being unpicked again, Sir Michael decided that he had done his shift and entered "retirement", leaving the civil service BUT in the same year accepting the position of Rector of the University of the Arts in London and the Chairmanship of the Design Council.

He also found the time to be non exec Chairman of RSe Consulting between 2003 and 2008 and take on the role of Chair of the Legal Services Commission in 2005. And he was of course Chair of the Inquiry into the Soham Murders in 2004. In 2008 Sir Michael dropped the majority of his post retirement activities to concentrate on being Director of the Institute for Government, only leaving that role in 2010 when in the year of his 64th birthday he was made a Life Peer.

There is no public evidence for it, but it is said that all Lord Bichard has to show for his long, well into "retirement", service to the community, are public service pensions which provide him with of £120,000 per annum. And his well deserved state old age pension will top that up nicely.

So, go easy on the "what right has this ****** got to suggest that pensioners have to do community work to qualify for their pension or lose it", diatribes, OK?

Life copies satire

My spoof article of six months ago:

Work unpaid or lose all your state pension for three years - this is the new message from the government to the long-term retired. Employment minister Chris Grayling said he is convinced a new 'work for pension' scheme would help to reduce Britain's £100 billion pensions bill.

From the BBC today:

Retired people should be encouraged to do community work such as caring for the "very old" or face losing some of their pension, a peer has suggested.

Lord Bichard, a former benefits chief, said "imaginative" ideas were needed to meet the cost of an ageing society. And although such a move might be controversial, it would stop older people being a "burden on the state".

The correct answer to this is to simply not exempt certain special interest groups from Land Value Tax and to pay them a fair whack in Citizen's Pension, continue to give them 'free' NHS treatment and so on, but hey.

Killer Arguments Against LVT, Not (244)

Let us turn our attention once again to Poor Widows In Mansions. The arguments often advanced are that "My council tax pays for local services", that "All services should be paid for by a Poll Tax", that "I've already paid taxes during my working life and/or I've paid into the National Insurance Fund" as well as "Do you mean that my parents will be thrown out of their home, which they bought out of taxed income?".

OK. I realise that the Homeys don't do logic or reason, let alone facts, they are the greediest, most blinkered, spiteful and vindictive bunch going, but let's look at it this way:

1. Let's imagine we go half-way and replace 90% of the tax system with a flat tax on the rental value of land (a bit less than 4% of house prices, at current selling values, Business Rates would remain pretty much as they are) and a flat income/corporation tax of 20%. VAT, National Insurance, Council Tax, SDLT, Inheritance tax, TV licence, blah-di-blah etc all fall by the wayside.

2. Of the £200 billion a year collected in Domestic Rates, pensioner households would be paying about a quarter, or £50 billion a year, i.e. 7 million households paying a median of £5,000 and an average of £7,000 a year.

3. The income tax they pay on their (private) pension income of about £50 billion a year and taxpayer funded pensions of £25 billion a year would be unchanged at 20%, call it £15 billion a year in income tax.

4. What would pensioners households get in return for paying their £50 billion Domestic Rates + £15 billion income tax each year?

a) From DWP's Annual Report and Accounts 2011-12 pp 124 - 125:

State Pension - £74.2 billion
Pension Credit - £8.1 billion
Attendance Allowance - £5.2 billion
Carers' Allowance - £1.7 billion
Bereavement Benefits - £0.6 billion
Plus other bits and pieces like Winter Fuel Allowance, add that up and stick on 4% inflation = £95 billion.

For comparison - all working age benefits added together are only £25 billion a year.

b) Other taxpayer-backed pensions, i.e. public sector, civil service and para-statals like Royal Mail, BA or BT, at least £25 billion a year.

b) Non-cash benefits - mainly NHS and old-age care, reports say that half the NHS budget is spent on pensioners, then there's the cost incurred by local councils on old-age care of about £10 billion. Other sources say that these cost on average £5,000 per pensioner per year, so let's call it £60 billion a year, all in. Chuck in free bus passes and so on under this heading for free.

c) And of course, they get to enjoy exclusive occupation of land with a rental value of a bit more than the Domestic Rates they are paying, call it £55 billion.

5. So they are paying £65 billion a year and getting cash, benefits in kind and enjoying land rents of £235 billion, so they are still getting four times as much out as they are paying in, a net transfer of £170 billion. The Poll Tax idea is a nonsense of course, if pensioners were asked to contribute £5,000 a year each for medical insurance/treatment I'm sure they wouldn't take too kindly to that. And clearly, funding the state pension with a Poll Tax on pensioners is a nonsense as well.

6. For sure, most pensioners have paid tax in the past, too much on their incomes and not enough of their land's rental value, but there we are. By and large, the two would have netted off. And yes, pensioners have some sort of moral right to being looked after, but they knew all along that there was no National Insurance Fund and we are where we are, the simple fact is that today's working taxpayers are making net transfers of over £200 billion a year, all I am proposing is that we reduce this to £170 billion. If pensioners want to reinstate the status quo ante, they can all trade down a couple of bands so that they are only paying £20 billion a year in Domestic Rates and hey presto, sorted.

7. And to those people who say "But my parents will end up being thrown out of their cherished family homes etc" I reply, hey, that's YOUR problem. I am perfectly happy to chip in towards that net transfer of £170 billion to all pensioners generally, but if you want extras for your own parents, then you will have to spend some of your own tax saving on their Domestic Rates.

8. ... or we can abandon logic and facts and just say that pensioners' main residences get exemptions, discounts or deferments. Each local council can introduce its own scheme, as long as they make clear to people which services are being cut back - like shutting down all local schools or hospitals or something.

Lib Dem crackpot idea of the day

From The Telegraph:

The Deputy Prime Minister said that at a time of economic strain, it was questionable whether it was right to continue making payments to multimillionaires such as Lord Sugar, the Labour peer, businessman and television star.

But the benefits will continue for the rest of the Parliament, due to come to an end in 2015, because a promise to maintain them was included in the Coalition Agreement drawn up between the Conservatives and Liberal Democrats when they came to power in 2010.

Iain Duncan Smith, the Tory Work and Pensions Secretary, is among those who have previously called for the end of universal benefits for the elderly, regardless of income. The winter fuel allowance alone is worth up to £200 for each pensioner – £300 for those over the age of 80.

As ever, it's a bonfire of prejudices here, but I wonder, what is the point of all this? The winter fuel allowance, free bus passes and free TV licence for over-80s "cost the taxpayer" something like £4 billion a year, if you go through the expense and rigamorale of preventing pensioners with assets of more than £1 million (the suggested threshold), which is maybe 1% of pensioners, that "saves" about £40 million a year, which is f- all, compared to the extra £100,000 million they have been spending each year since the "financial crisis" was started.

And seeing as means-testing is just taxation for dishonest politicians or gullible voters, why not hike Band H council tax by a few per cent and get the £40 million in that way?

Do these people not understand maths: reducing somebody's benefits it exactly the same as giving them the benefits but increasing the tax they pay, only the latter is simpler, cheaper to administer and more honest. This is just like the Child Benefit changes: what they boil down to is that higher earners with children will continue to receive Child Benefit but they will pay a much, much higher marginal rate of tax on earned incomes between £50,000 and £60,000 a year.