Fakecharity hopes that nobody spots the irony...

From The BBC:

Some parents could be forced out of work and into poverty as the rising cost of childcare outstrips wage rises, says a report.

A survey by the Daycare Trust charity showed that the average cost of nursery care in Britain for children under two rose by nearly 6% last year. Average wages rose by just 0.3%. The government said it was investing an extra £300m to help families with childcare costs and increasing places in free early years education...

Their whole logic is flawed; if a woman can earn £15,000 net and spends £10,000 net on childcare, it's just about worth going to work for incremental extra income of £5,000 against staying at home; if the cost of childcare increases by a couple of thousand, then it might no longer be worthwhile going to work, but there is no cut-off point at which women are 'forced into poverty'; every £1 increase in childcare costs is, at worst, a £1 fall in net income of the parents, it doesn't suddenly tip over from happily working to abject poverty.

But glossing over that, who is The Daycare Trust? By and large, it is a pressure group acting on behalf of its members - being the self-same nursery providers who are 'forcing people into poverty' by hiking their prices. A normal person would say "Well stop hiking your prices then!" but nope:

The Trust wants the government to boost the value of childcare tax credits to the poorest families and to commit itself to free nursery education to all two, three and four-year-olds by 2015.

The BBC use their official fakecharity template for this article; the giveaway is that the article ends with a government minister agreeing that 'something must be done', in other words the whole thing was co-ordinated between them beforehand.

And, just for completeness, who funds The Daycare Trust? Their members, perchance..? Page 10 of their 2011 accounts tell us that they get £1,003,000 a year (over eighty per cent of their total income) for "Policy, research and other projects", "Consultancy" and "Advice and information".

Pages 15 and 16 provide a bit more detail on who their paying customers are: nearly all of that £1,003,000 is from The Department of Education, London Councils, The Big Lottery etc.

Small number x large number = large number - shock!

From the BBC:

Independent schools are using a "tax payer subsidy" to provide luxuries like golf courses, beagling and shooting for their pupils, a court will hear. Private schools in England and Wales have to show they provide a "public benefit" in exchange for their tax-free charitable status.

... on Monday the court will receive evidence from a group of educationalists and lawyers, the Education Review Group, which argues that independent schools are being allowed unfair tax advantages through their charitable status. The group claims that private schools enjoy tax breaks worth £88m per year - with some of these schools providing a luxury "gold-plated" service at a cost that is prohibitive to most families.

OK, there are about 700,000 children at private school, so that £88 million (about 0.1% of the education budget) works out at £125 per pupil per annum, i.e. nothing, in the grander scheme of things, and a tiny fraction of the PAYE that private schools pay.

If you think about it, the 'charity tax break' is a stupid tax break, because what it means in practice is that most private schools are exempt from paying corporation tax on their profits, i.e. while the money they spend on actual education (teachers' salaries) is liable to tax in full, i.e. PAYE, the income they don't spend (the profits) is tax exempt. For this reason alone it would be better to scrap the tax break and hand out education vouchers of £125 per pupil.

And what these Righteous also forget to mention is the subsidy which private schools don't get, i.e. the £8,000-odd per pupil which state schools are given*. If parents were given this subsidy in cash, then we'd find that the net cost of private education is 'prohibitive' to very few families indeed.

* OK, I'm cheating a bit here, the schools themselves are only given about £5,000 per pupil, and £3,000 per pupil disappears in admin and overheads.

Killer arguments against LVT, not (73)

Sobers is starting to ask the right questions in the comments to an earlier post:

I feel honour bound to break up this little LVT lovefest with some contrary views.

While I agree the State in effect guarantees private property ownership, I do not see that there is any necessary link between what the State does, and what it taxes. I can see no reason why the State cannot be funded by means other than LVT and still manage to enforce private property.

Well there's your answer.

A car factory funds itself by making cars. A plumber funds himself by fixing taps. Everyody does what he does best. So why doesn't 'The State' charge for the value of services it provides and in which it has a monopoly, i.e. protecting exclusive possession of land?

The State is involved in many things, should LVT fund them all? Why is it 'better' to fund the NHS from LVT than income tax or VAT?

Sobers is getting ahead of himself and is jumbling 'taxing' with 'spending'. I trust he's happy with the concept of the NHS charging patients for services, in which case why can't 'The State' charge landowners for services? Where's the big difference? Anyway, I'll deal with this point further down.

'The State' is not a thing in itself. It is merely a convenient way of people organising things. Most of us are happy to stick to the rules and we employ policemen, army and so on to protect us from those that don't. This is a mutually beneficial state of affairs and enables us to become wealthier, happier etc that if we all hand to stand guard 24/7 over 'our' land with a shotgun.

Going back to my car factory, the factory owner charges customers market rates for the cars he sells; he pays the workers market wages; and he keeps the profits for himself.

With land, it is people and the productive economy (with the government as referee or coordinator, i.e. to ensure that roads and railways and sewage works get built) which creates the value. Landowners are merely consumers of that value - so why should all the value created by 'The State' accrue to landowners (by massively undercharging them)? Remember that without people and a productive economy and a peaceful 'state', land would be worthless.

In Sobers' view, it is preferable for the car factory to provide their cars for below cost (or even free) so that all the value accrues to the lucky owners of cars (whoever they are); for the workers to be taxed on their wages (to pay for the roads, petrol and repairs for the car owners); and for the owner of the factory to go empty handed.

It is quite easy to explain why Land Value Tax is "less bad" than income tax, so by replacing income tax with LVT, we have sorted out 'the workers' (who thus pay rent on land they consume, and not rent on their own skill and efforts). The productive economy would not be affected by LVT, it would merely pay for the privilege of occupying more favourable locations (so hands back the extra income it receives from exercising that privilege and excluding competitors).

You are making the arbitrary link that the State makes private property possible, therefore the property should be taxed to fund the State, in its entirety. This makes no logical sense to me.

OK, we've dealt with the position of the 'consumers' and the 'workers' in my car/land analogy, we now have to deal with the 'owner'.

It is quite clear who owns the car factory (the entrepreneur, the shareholders etc) and in a normal world, they receive the net profits or dividends. Would these shareholder tell their sales teams to drop the prices they charge as they are happy to do without profits? Methinks not.

But who is 'the owner' of 'The State'? Surely it is all of us, whether 'land owners' or not (and most of us are, to some extent). So if each of us owns a 1/62 million share of the ownership of 'The State' and 'The State' has the power of charging for the value that we all create (either in our capacity as productive workers, law abiding citizens or as voters) why should it not do so and dish out the 'profits' as a Citizen's Dividend?

At a push I can see that perhaps land should be taxed to the extent it costs the State to run the Land Registry etc. But why should land taxes pay for education, health, defence, social security?

We've covered defence already (on which we spend tuppence ha'penny, it's the foreign wars and macho posturing that cost the big bucks).

A Citizen's Dividend is an admirable replacement for the welfare state.

Of course, the government is pretty useless at running things in which it does not have a monopoly, such as education and so on, and we'd do far better to accept that education is a merit good, and dish out a certain amount of cash as 'education vouchers' (and pay a slightly lower Citizen's Dividend) or we would go the whole hog and just pay out a full Citizen's Dividend and leave it up to people to decide for themselves (personally I prefer the former option).

The same goes for the NHS. It is up to citizens to decide, democratically, whether they would rather have a lightly lower Citizen's Dividend and for the government to provide a basic level of healthcare, or whether they would rather take a higher Citizen's Dividend and take their chances with insurance companies and competing providers (or any combination of the above, whereby we recognise that health is a merit good and subsidise it with health vouchers).

The Tories happen to be right on some issues*

Issue 1:

Gordon Brown has attacked the Tories over reports they plan to introduce "top-up fees" for nurseries in England. The prime minister said to demand more money from parents at the same time as raising the inheritance tax threshold for the rich was "simply not fair".

The Conservatives accused Mr Brown of hypocrisy, saying nurseries were closing due to Labour underfunding the weekly entitlement to free childcare. Representatives of non-state sector nurseries have backed the Conservatives' argument and say many will go out of business if current funding arrangements continue.

Indeed. It was the Tories who introduced nursery vouchers in the early 1990s and the system worked a treat (on a day to day level). But there are now bizarre rules which prevent nurseries from charging 'top up fees' (most do it, but they have to rejig their invoices so that it is not immediately obvious). If the government goes round taking a closer look, then a lot of them would be in trouble. Nursery vouchers are half-way to education vouchers - they just 'work', parents understand them and parents are happy to pay the difference - or happier paying the difference than doing without a nursery at all - sorted.

And I doubt whether nursery vouchers represent any great cost to the taxpayer either, remembering that they only cover about half the cost of nursery places - they allow mothers to go back to work, so the mother is paying income tax; the people working at the nursery are paying income tax; the nursery is paying more income or corporation tax on its profits. I'd guess that all those extra income taxes added together is roughly equally to the face value of the vouchers (it might well be more).

Issue 2:

Conservative plans to allow parents and charities to set up their own schools have been called into question by two senior Tory council figures. Paul Carter, leader of Kent County Council, said funding parents to start their own "free schools" would threaten the budgets of other local schools...

"Secondary schools [cost] around £4,000 plus per pupil. If 10%, 12%, 15% of that would be taken away from maintained schools and given to free schools and academies - local authorities still have statutory functions to perform. They have to arrange and organise school admissions, statements for special educational needs pupils - a whole range or services that need paying for. That can't be taken away from us and given to free schools or academies because they don't have the statutory duty to carry out these responsibilities."

For sure, Mr Carter. But it can't be rocket science to work out the marginal cost of a 'normal' pupil and just pay that over to a "free school", thus leaving some extra money with the council to deal for extra stuff. The Tories weren't suggesting using the police budget or the old age care budget to fund "free schools" either. Pointing out that local councils have to 'arrange and organise school admissions' is really scraping the barrel - firstly you won't have to worry about admissions to "free schools" and secondly this can't be such a huge item, a few hundred quid per pupil twice a lifetime?

I'm also surprised he admits that the cost per pupil is as low as £4,000, that gives us a good idea as to what level to pitch schools vouchers in future.

* I hasten to add that UKIP's policies are even simpler and better than what the Tories propose.

Please sir, may we have some more?

Just as a book-end to this morning's post, private healthcare providers are just as corrupt.

Remember always that the MW manifesto is based on flat, and preferably low, rates of income tax and flat-rate universal distribution (which includes health or education vouchers), of course. From the FT:

"Tax breaks for private healthcare (1) and new charges or co-payments for NHS services will have to be considered by the next government despite the parties' current promises to protect NHS spending, the head of Britain's biggest private hospital group said yesterday.

Adrian Fawcett, chief executive of BMI hospitals , said the NHS would not be able to cope with the spending squeeze to come (2). Mr Fawcett said NHS productivity had fallen during the years of big spending increases ...(3)

Contributions to private medical insurance should be made tax deductible (1), he said, and co-payments should be allowed for NHS treatment. That meant, for example, that if someone was being treated on the NHS but wanted a different hip joint, or a more expensive lens replacement, or a drug that the NHS did not provide, they could pay the difference, without having to pay for the whole of their care privately, as NHS rules normally demand... (4)

1) Twat. Tax breaks for things that only wealthier people can afford pushes up the overall tax rate for everybody else; and is clearly redistribution upwards rather than being flat-rate and universal. So this goes completely counter to the MW manifesto. I suppose at least he didn't suggest means-testing it somehow, which would just churn money back in the other direction again, as well as hiking effective tax rates even further.

2) Yes it will, see this fine article on the same page of the printed FT explaining how the NHS could reduce its healthcare costs by nearly a fifth without affecting patient care one iota*. Cut out the fifth of NHS spending that is spent on quangoes and propaganda, and we're really motoring! Either way, what he is proposing is diverting taxpayers money into subsidising private insurance (and the only people I trust less than the government are insurance companies) and away from the NHS, thus contributing to that self-same squeeze.

3) Agreed, the waste is quite criminal.

4) Completely agreed, I recommended that this morning (in a different context). This is the European system and it works fine, I've always supported this. But as these vouchers would pay for the bulk of private provision, why do they need tax-breaks as well?

* The report's author, Penny Dash, looks quite hot, in a Germanic ice-princess sort of way (if that's not a contradiction in terms?).

The New Maths: Two minus one equals zero

It's little surprise that our state-education is churning out innumerates when our Children's Secretary (i.e. Education Minister) Ed Balls comes out with rubbish like this:

... Children's Secretary Ed Balls warned many parents would be left disappointed by the Tory promises [to allow parents to set up their own schools and get government funding] as they would struggle to find funding for the reforms without making swingeing cuts elsewhere in the education budget. He said: "The Tories need to come clean with parents about what their plans really mean. Michael Gove can only pay for his Swedish schools experiment by cutting billions from the budgets of existing schools and slashing our school rebuilding programme."

Assuming the new schools are funded by some sort of voucher-scheme, however heavily disguised, then for a fixed education budget, you could easily engineer an increase in funding per pupil who remains in a state school by setting the value of the vouchers at less than the cost of a place in a state-school.

Lord Pearson hits the ground running ...

From The Daily Express:

... We are also deeply sceptical of the new religion of man-made global warming. It’s the focus group favourite. It is also the most catastrophic misuse of dubiously collated statistics yet unleashed upon the world. That climate changes is not in doubt. That we must conserve, protect and care for our environment is a must.

But to pillage the public purse and come over as moral superiors takes a special talent and establishment talent at that. As always with science the jury is out. UKIP takes the scientific method seriously. Then there is the issue of tax.

All parts of the Lib Lab Con are planning yet more tax rises for after the election. We beg to differ. This summer the Chancellor of the Exchequer charged the taxpayer to employ an accountant to sort out his own taxes that he didn’t understand. When you have a taxation system that taxes those on the minimum wage it’s time for change. No tax system should be too complicated for us to understand.

To that end UKIP proposes a flat tax system, a near doubling of the personal allowance and an end to the fiction that national insurance is different from income tax. All will gain but those who gain most proportionally will be those who work hard for modest pay.

On education I believe in parental choice and rigorous academic standards. I support the creation of new grammar schools so that bright children from modest backgrounds can fulfil their academic potential. Such an opportunity should not be the sole preserve of children of the wealthy as is increasingly the case.

The family in a council estate deserves the chance to have the best education that this country has to offer, not to be condemned to accept what the local council deems they must have. Parents in the state sector should have taxpayer-funded vouchers so the onus is on schools to compete for pupils and not the other way round...

Putting the cart before the half-truth

From an article in The Evening Standard on the topic of those pesky employer childcare vouchers:

"Londoners will be more heavily affected because salaries are higher in the capital to reflect [higher] housing costs (1), without necessarily making families significantly better off than people outside the capital (2)."

1) Horse/cart switcheroo: higher housing costs are a function of higher wages and productivity (itself a function of far better transport links, agglomeration etc) and not the other way round.

2) Half-truth: Net incomes of young people after tax and housing costs are of course pretty much the same all over the UK, because the additional income is largely soaked up by the housing/land market (see point 1). But people who bought a house in London before the house price bubble win on both sides of the equation - higher incomes and higher house prices to fund their eventual retirement, all to be paid by future generations of people who move there. So a lot of families in London are "significantly better off"

"Up to" of the week

From the BBC:

More than 300,000 families use them to save up to £2,400 a year through tax relief on the cost of childcare...

It involves parents sacrificing up to £243 of their salary - before tax and national insurance are taken off - in exchange for electronic "vouchers" which are then paid to Ofsted-registered child carers, from au pairs to nurseries. The Treasury wants to phase out this tax break, which is equivalent to a 31% saving on the first £243 spent on childcare costs each month for basic rate taxpayers, or 51% for those paying the higher rate.

So that really was lazy journalism - all the facts are there in the second paragraph, so you don't need to be a maths genius to work out that the absolute maximum tax/Employee's NI saving is 51% x £243 x 12 = £1,487 a year, and for a basic rate taxpayer it's £904, so saying "up to £2,400 a year" is either downright laziness or deliberately misleading.

The rest of the article is the usually blah, whine, moan special pleading - you must realise that a whole industry has grown up around administering the vouchers, which is exactly what was intended. Wouldn't it be far simpler to just stick an extra £20 a week on the cash-equivalent "nursery vouchers" (that are officially called something else, of course) and have done with it?

Nurses for Reform

I've just stumbled across this fine manifesto at Nurses for Reform:

NFR believes it is no longer acceptable for nurses to sign up to careers in public sector healthcare only to find they are unable to access the resources and autonomy they need to do their work. It rejects bland egalitarianism in favour of competition. And it believes in people - not politics.

NFR believes that the government should re-cast the NHS as simply a funder of last resort alongside an insurance and self-funder based market. It believes that the state should set free – through a range of full blown for and not-for-profit privatisations – all NHS hospitals. Moreover, NFR believes that all hospitals in Europe should be allowed to openly compete with each other. If a hospital fails in this market it should either close or be taken over by a more successful organisation.

Significantly, NFR believes that all hospitals - as independent entities - should be allowed to pick and choose from a dynamic and fluid labour market. The totally counter-productive idea of national pay agreements should be abandoned forthwith...

Today, too many nursing trade unions and representative bodies fail nurses because they invariably stick to old and out dated agendas. Instead of championing substantive reform - and in doing so, championing the rights of consumers - they default to short term platitudes such as demanding more tax payers’ money or new forms of legislative favour. Such an approach is not only disastrous for nurses but it is catastrophic for patients...

I particularly like the closing sideswipe:

For NFR America does not represent a free market healthcare system. It has a highly planned, regulated and government funded system which takes - through state programmes such as Medicaid and Medicare – a historically greater proportion of GDP than our own NHS.

This is much the same as Health Minister Dick's manifesto, and the bit I've boldened is much the same as what I have always said, e.g. yesterday at LFAT:

The NHS is two completely separate issues, which the Lefties in particular like to conflate and the Tories are too thick to counter it.

Issue 1 is how healthcare should be funded. I’ve nothing against ‘the taxpayer’ funding a large part of it, e.g. via vouchers (quite how large that part should be is open to debate); with voluntary private payments out of your own pocket or out of private insurance.

Issue 2 is who should provide healthcare. As we know, The State is pretty **** at providing anything apart from ‘core functions’ (which are always worth doing, however badly). Ergo healthcare should be provided by competing providers.

A bit like in most European countries. Or possibly New Zealand.

Where the Lefties have hijacked the debate to say that healthcare has to be provided by The State because IF NOT then poor people won’t be able to afford it – that’s actually only addressing the funding side (and I tend to agree with them on this) AND NOT the provision side (and I hotly disagree with them that The State should be the main or sole provider).

Fun Online Poll Results, policy costings

Thanks to everybody who voted. The results are pretty clear: excluding the twelve people who already send their children private*, fifty-seven per cent said they'd send their children to an independent school if they were offered a £4,000 per annum voucher instead of a 'free' place at a State school. Only twelve per cent of people with children at State school were happy with it and thirty-one per cent still wouldn't be able to afford a private school.

So let's get out the magic fag packet and work out what this might cost the taxpayer. If 600,000 children already at private school took the voucher, that would cost about £3,000 each (assuming various other subsidies and tax breaks for private schools were scrapped as a quid pro quo) = £1.8 billion in total. But if fifty-seven per cent of eight million at a State school took up the voucher, that would save about £18 billion (assuming that the quangocracy could be culled pro rata, which brings up the average cost per State pupil to around £8,000, a £4,000 voucher actually represents a saving of £4,000 to the taxpayer), so overall, that would pay for a tax cut of around £500 per taxpayer. If we did this by hiking the tax-free personal allowance accordingly, then hopefully that would enable a few more parent to afford it, and so on.

Everybody wins. What's not to like?
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The results lead me to ponder a wider question, which is the subject of this week's Fun Online Poll. The question may seem unduly simplistic, but it is useful to spend a few seconds thinking about what the blindingly obvious answer must be.

* This makes the results slightly suspect, as only about seven per cent of children in the UK attend a private school, but hey.

This week's Fun Online Poll - Education Vouchers

My magic fag packet says that if the government offered people the choice of an education voucher worth £4,000 a year instead of a 'free' State school place, it would be fiscally neutral if twenty per cent of pupils took them up (i.e. the seven per cent who already go private plus another thirteen per cent currently in State schools).

If more than twenty per cent took vouchers, there would be an overall saving to the taxpayer (assuming that the massive overheads in State education that bring up the average cost of a State school place to about £8,000 could be scaled down pro rata), so that would enable taxes to be cut (at its simplest by increasing the personal allowance so that everybody benefits equally, enabling more parents to afford take up the vouchers, thus producing more tax savings etc. until some sort of optimum trade-off is reached, i.e. the maximum number of children going private at the lowest cost to the taxpayer).

I know from talking to other parents at the private schools where my children go, that most are pretty much in favour of vouchers (except for the super-snobs); that those parents who aren't happy with their child's State school (most of them) are certainly interested; and that surveys show that more than half of parents would send their children private if they could afford it, but there's no point proposing policies in a vacuum, so this week's Fun Online Poll asks whether you would take the vouchers (or, assuming your children are now grown up, whether you would have taken them).

NB, as a guide, average school fees are about £7,800 a year at primary schools and £9,000 a year at secondary schools (see here). But there are huge variations between the poshest and the most basic; as well as regional variations, so the better-value ones outside London/the South East might be only £5,000 to £6,000 a year. Minus off a £4,000 voucher and millions of parents would be able to afford to send their children to an independent school.

This week's Fun Online Poll - more examples

To help people decide how to vote in this week's Fun Online Poll, here's another example - the State education system and why the MW policy is as it is.
------------------------------------------
I have to trot out a few basic assumptions/observations first, but you can skip to the end of this section to get to the point. These are:

a) Education is A Good Thing - not only to enable each individual achieve more, but also from the point of view of society as a whole - you're better off as an also-ran in a well-educated society than in a poorly-educated one,
b) Competing providers will always be better than a State-run monopoly, however they are funded,
c) The full cost of an average State school place (including the quangocracy and teachers' pensions) is about £8,000 per pupil, not much less than private school fees at the better value private schools in most parts of the country,
d) Taxes on turnover, employment and incomes* are A Bad Thing because of the "deadweight costs" - not only is each individual taxpayer worse off, but the economy as a whole suffers.
e) What we have is a situation where the State spends about £80 billion of taxpayers' money on educating about ten million schoolchildren not very well (John B will no doubt differ on this point).
f) The poor standards and the higher tax burden make it doubly difficult for the ninety three per cent of people who come out of a State school to get on in life and become wealthy.
g) About seven per cent of parents can scrape the money together to have their children educated privately. On the whole these children get a better education, but the parents are paying twice over - once for the State school places they do not use (via taxes) and again directly to the school. That's bitter, but at least it enables the wealthy to stay (relatively) wealthy, and rather bizarrely, relative wealth is as important to people as absolute wealth.
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So much to the assumptions.

If we rule out the option proposed most eloquently by e.g. Brian Micklethwait, to scrap all State involvement in education - both the funding side and the provision side - and rule out staying with the status quo, the way forward has to be education vouchers.

As a moderate in all things, I wouldn't even initially propose scrapping all State schools and giving everybody a voucher - I'd let parents choose to waive their children's free State school places and take vouchers worth £4,000 a year (half the cost of a State school place) to be used against the cost of private school fees. Even if only a fifth of pupils took them up, there'd be no overall cost to the taxpayer (workings here), but if half of pupils took them up, that'd save £12 billion. Not a huge amount, but enough to raise the personal allowance by £1,500 each or so for a start.

And for every £1 of income tax cut, there would be a few more parents who can afford to put their children into a private school, thus further savings to the taxpayer, thus more tax cuts and so on in a virtual circle until some sort of optimum is reached, where the "deadweight costs" of the taxes are rather less than the overall benefit to society from having a better-educated population than would otherwise be the case.

What would the results of all this be?
1. Lower taxes, so it's slightly easier to become wealthy (benefitting each individual as well as the whole economy).
2. Higher educational standards (ditto)
3. There would no longer be a privileged and/or dedicated elite who send their children to private schools, who then earn more, send their children to private schools etc; the lines would be far more blurred, so there would be more 'social mobility' in both directions (but hopefully more upwards than downwards).

* Of course, if we replaced Council Tax etc with Land Value Tax, there would be a real incentive for councils to either improve their own schools; allow more competing providers to take them over; or even to top-up the vouchers with local money. As we well know, house prices and rents are much higher in the catchment area of good schools, ergo LVT receipts would be higher, so up to a certain natural level, improvement in schools would be self-financing. But that's a slightly different topic.

"Nationalise private schools plans"

OK, the headline hams it up a bit, but it just goes to show why proper lefties love recessions - it gives them an excuse to go round nationalising, subsidising and regulating stuff, thus keeping everything permanently frozen in the whatever poor condition it happens to be in, thus locking us in to a permanent state of recession.

As to the issue of private schools, all I can say is "vouchers", that way many more, possibly most, parents would be able to afford it.

Post Xmas quandary

Just what am I supposed to do with all the gift vouchers I got from Zavvi, Woolworths, MFI, Adam's, The Officer's Club and Whittard of Chelsea?

Half a free market is better than none (1)

If at all possible, it would be nice to have a free market in everything. You can't really have a free market in public goods or core functions of the state*, but that's only five or ten per cent of the economy or overall activity.

The only other half-way sensible thing that a government can do is redistribution and/or subsidising merit goods, i.e. education and health. Given our starting point, it is politically a non-starter to call for the entire welfare state, NHS and State education system to be scrapped, but we can arrive at something approaching free markets via universal benefits and vouchers.

Completely private schools, barring the usual collusion, would compete to provide the highest standards at the lowest cost; but children of poor families who aren't lucky enough to win a free place at a posh school would have to make do with a much more basic education, or end up in schools run by sects. 

OTOH, if you give all school age children a voucher worth £5,000-plus, then as far as I can see, everybody wins. It would shave £20 billion off the schools budget (overheads and waste are enormous) so the taxpayer's happy; wealthy people with kids at private school are laughing because they no longer have to pay twice for education (once for the 'free' places they don't use and again in cold hard cash); the not-so-wealthy can now afford private education and children of poor families who can't afford much of a top-up to the vouchers still have a much wider choice of school - even if it's only a choice of state run schools without top-up fees.

Remember also, education is to a large extent a common good, i.e. having a good education is primarily for your own benefit, but even if you are an under-achiever, you are better off in a well-educated than in a poorly-educated society.

The same sort of principles apply to health vouchers, as ably expounded by Health Minister Dick P.

For some reason education and health vouchers are seen as right-wing, probably because they have been proposed by the Tories. But exactly the same principles apply to the Welfare System. The Citizen's Income idea is seen as left-wing because it involves (forcible) redistribution, but it is no more redistributive than education or health vouchers, and the same general rules apply.

In the absence of a Welfare State, we'd have hardly any single mothers (which is the root of a lot of problems) and more people working, albeit for low wages. But it is not fact that we have redistribution that causes this, it is the way the Welfare State has been designed, for example:

a) It actively rewards the feckless, i.e. an unemployed single woman boost her income by £120 or so a week if she has two children. If a married, working woman with a working husband gives up work to have two children, they lose the mother's income (obviously) and the welfare state gives them a derisory £24 or so.

b) It actively discourages stable families.

c) It actively discourages taking up temporary, part time or low paid work (to the extent that the National Minimum Wage hasn't destroyed many of those jobs anyway) because you lose as much in benefits as you gain in net income.

The idea behind the Citizen's Income scheme is, broadly, 1. Take the entire amount that 11 million pensioners, 5 million working age adults, 1 million students and 12 million children currently receive, plus the billions lost in fraud and administration costs; 2. Extend the class of those entitled to stay-at-home parents (of which there are only about a million or two) and better-off students (of whom there are only a few hundred thousand) and 3. Dish it out as non-taxable, non-means tested weekly payments (lower rates for children and higher rates for pensioners, obviously). To avoid overlaps with the tax system, there'd be a choice - claim the CI payment or a much higher personal allowance.

This would still be redistribution and a safety net against poverty, but the way I see it, would completely avoid problems a), b) and c) listed above, provided of course that Child Benefit were considerably less than the cash cost of bringing up a child to prevent 'baby farming', to reinforce this, it could be restricted to the first two or three children-per-mother.

* Although you could have half a free market in e.g. police, street lighting, refuse collection if local councils had one source of revenue and one source only, i.e. Land Value Tax. Property prices in areas with cleaner, safer and better lit streets would of course be higher than in crime-ridden areas. If the council in the crime ridden area wants more revenue (which is just human nature) they will have to concentrate on doing those things which push up property prices, i.e. make it more desirable, i.e. that add value - like reducing crime and so on. To the extent that councils make a surplus by concentrating on doing sensible things, you would hope that this is returned to the voters in tax reductions or spent on other stuff that adds value, so that ultimately cost to taxpayers = value of services they receive = cost to the council of providing those services, which is the ideal of free market capitalism. 

If the mood takes me, I shall explain why LVT, unlike existing property and wealth related taxes (which are pure revenue raisers and/or jealousy surcharges) makes the land market more like a free market in a later post.

NewLabour's education policies are still failing

From the wealth of statistics charting the decline of the UK's education system and limited personal experience (as well as professional experience of recent university graduates), I had assumed that New Labour had achieved their aim of wrecking the State education system.

Not so, it would appear: a report published today suggests that half of State schools are still desirable enough to be able to operate some sort of entry criteria - even if this is only as crude as sounding out whether a candidate's parents are married.

My wife decided a couple of years ago that 'she only wanted the best' for our children and they went private*. The fees are hideously expensive of course - about as much as the equivalent cost of a State school place, once you factor in the costs of a seemingly endless number of layers of bureaucracy and quangoes and the hidden cost of Teachers' Pensions - but to be fair, the admissions process was dead simple. They did not ask for proof of address, marital status, religion or anything like that; they just had us in for a chat and then allowed our children in for a half-day to see how well-behaved they were and that was that.

Hey ... here's a thought ... if we gave parents the choice of vouchers instead of a State education, then every child could have that privilege ...

Just sayin', is all.

* We're a normal married couple in that respect. I make the big decisions like whether we should leave the EU ...

State schools 'cost more than private because of Labour's red tape'

OK, the Independent School Council are hardly impartial, but they've hit the nail on the head with this, as reported in The Daily Hatemail:

The cost of educating a child in the state system is greater than in many private schools, it has been claimed. Fee-paying schools work out cheaper because millions [billons, shurely?] of pounds of public money is being spent on bureaucracy, a headteachers' leader said. And he warned that, despite the huge sums being pumped into state schooling, 'an awful lot of money never gets close to a child's education'.

The Rev Tim Hastie-Smith, chairman of the Headmasters' and Headmistresses' Conference, made the claims as research by the Independent Schools Council suggested the cost of educating a child in the state system is in excess of £9,000 a year. This compares to the findings of a recent census, which revealed average fees for pupils at independent day schools stand at £9,069 a year, although dozens [slightly more than half, i.e. hundreds, shurely?] charge less.

As ever, you read it on this 'blog seven months ago, picked up by Tim W at The Spectator.

Dearieme's comment was prescient: "I was just hoping that one further tweak would get it above £10k. Then you could get the Daily Mail to carry the story." It seems that £9,000 was the magic figure that The Mail was looking for. Ah well.

UPDATE: And don't get me started on 'Academies'.They are even more expensive than anything else and educational outcomes are just as bad as anywhere else in the State sector. Vouchers is the way forward.

Tax credits - update

Bill Quango MP asked: Any ideas what the Tories plan to do with tax credits? If its what is required I fear they may face a fine for seriously overfilling their wheelie-bin.

To which I replied: Don't forget that Tax Credits is just Family Credit, (which the Tories introduced in 1987, which itself was probably just a replacement for something else), but repackaged with extra complications. The Tories will just invent dozens of additional amendments and tweaks, fill a wheelie bin or three with the daftest ones and then introduce the rest..

And here we have it! According to a pre-released speech, George Osborne will announce that the Tories will: strengthen tax credits by tackling the "couples penalty" which he says disadvantages couples who live together - and improving administration of the system. "There is absolutely no Conservative plan to in any way get rid of tax credits, indeed if anything we want to strengthen tax credits."

Further, since when does the gummint engage spambots to disseminate propaganda on 'blogs? Following the above exchange, this was posted: Ben said ... "Hi Mark, Really interesting post thanks. There's a load more links on Government legislation, impacts on tax, etc here:
http://www.childcare-vouchers.net/benefits/legislation.aspx
I hope it helps, thanks again,
Ben.

I'd normally delete that sort of crap, but in this case I'll keep it as evidence.

Lies, damn lies and Early Education Funding

Besides the Employer Vouchers and the Childcare Element of Working Tax Credits, there is of course the grandaddy of them all, Nursery Vouchers, introduced by the Tories in the 1990s, subjected to the usual local/national government and left/rights spats, and promptly scrapped by Labour in 1998 and replaced with ... er ... Nursery Vouchers. Only they were renamed, then rebranded Sure Start, then split off again as Early Years Funding and for the past couple of years have been known as Early Education Funding.

As an alternative to Sure Start (two-and-a-half hours free nursery a day at a State nursery for three and four year olds), which might give Mum a nice break in the morning but is no use to a woman with a job, you can choose the vouchers instead. Despite some confusion over how the amount affects your nursery bill, in practice it's relatively straightforward. All the parent has to do is tick a box and the nursery claims 39 weeks a year x 12.5 hours x £3.30 (the £ figure appears to vary by local authority), divides it by 52 and knocks £30-odd off the weekly nursery bill for kids aged three or four.

The vouchers are non-contributory, non-taxable, non-means tested, and in my experience, the scheme works fine. As The Lass started private school before she was five, her school deducted the vouchers from the first term's fees. Sweet.

So what have we got ... the vouchers worth £30 per child per week (as long as they're three or four years old); the Childcare Element of Tax Credits that are worth a maximum of £44 per child per week (much less in most cases) for an average income family (but are savagely means-tested); and Employer Vouchers which are no use to an average income family but are worth about £23 per week to a higher rate taxpayer (let's assume one working parent per child for simplicity) who qualify for next to nothing in Tax Credits.

Hey ... I've an idea, can't we scrap all the overlaps, chuck all the schemes into a pot, stir it round a bit and replace them with vouchers worth £70 a week for each child aged two to four or something?