That's no way to collect Council Tax

From the BBC:

Hundreds of thousands of people have been taken to court in England for non-payment of council tax owing to benefit changes, according to the Labour Party...

Before April of this year, millions of people on low income in England paid no council tax at all, or had their bill substantially reduced. The council tax benefit system was then replaced.

The government said this was part of a wider package of changes designed to control the spiralling cost of welfare (1) - and encourage councils to find ways of helping those on benefits into work.

It reduced the overall level of funding by 10% and said each council should decide how much support to offer residents - although pensioners were protected from any cut.(2)

1) That's simply not true. The amount spent on/rebated for working age and child welfare has been very stable at around one-tenth of government spending since the dawn of mass unemployment/Home-Owner-Ism in the 1970s.

The Tories love saying that it's one-third of all government spending - but that includes the one-fifth spent on old age pensions (a cost which could be more accurately described as "spiralling" although "drifting steadily upwards" would be more apposite).

2) Inevitably.

The main point is this though, the government gives with one hand (welfare, pensions) and takes with the other (in this instance, Council Tax).

Whatever the rights and wrongs of all this, why not just withhold Council Tax at source i.e. deduct it from welfare and pensions payments? That would save a fortune in admin costs and hassle.

The same applies to rents for social housing or whatever nominal contribution a low income or claimant tenant renting from a "private" landlord is expected to make.

That would at least throw into stark focus how much (or how little) money welfare claimants get to actually live in.

We observe the same madness with the TV licence fee:

Southwark Council has issued a mass court summons to 5,800 residents failing to pay council tax, sparking fears that rent arrears could increase in the borough as a result.

The council asked around 19,000 people who previously paid nothing to start contributing £12 per month after the government scrapped council tax benefit in April.

Why not just deduct £3 a week from their welfare or pension payments and leave them in peace? For that matter, they could just add the TV licence to everybody's Council Tax bill and divvy up the spoils between themselves afterwards.

Two can play at that game.

From The Daily Mail:

• Highest paid to contribute almost 30% of all income tax in 2013-14
• Up from just 20% a decade ago as richest shoulder more of the burden
• £1million earners pay 12% of tax, up from 6.4% at the last election

So what? The top one per cent collect (at least) 15% of all taxable income and pay income tax at double the rate of basic rate taxpayers, that's your 30% right there.

Income tax is progressive and other taxes are regressive*. You can pick and choose to illustrate your point:

We could also point out that the top one per cent of earners only pay about one-and-a-half per cent of Employee's National Insurance, or one per cent of all Council Tax or TV licence payments. Or that income tax is only about a quarter of all tax revenues - it doesn't sound nearly as dramatic if you say that the income tax paid by the top one per cent of earners (who get 15% or 20% of all taxable income) is only seven or eight per cent of all tax revenues.

And why would it be so terrible if the top one per cent of UK landowners were expected to pay thirty per cent of all Land Value Tax? Why would that suddenly be so destabilising? Nobody's forcing them to own it and by simply owning land they contribute nothing of value to society as a whole.

* As it happens, the two most damaging taxes - VAT and Employer's NIC are fairly flat if expressed as a percentage of incomes; the people who lose out most from those two are the people who don't pay any at all, in other words, the businesses which go out of business and the people who end up unemployed.

"Mother disgusted when son bit into a Waitrose cupcake and nearly swallowed a dead WASP"

From The Daily Mail:

A mother was left disgusted after her son bit into a Waitrose cupcake and nearly ate a dead wasp.

Sue Weightman, 52, bought the £1.99 pack of four treats for Alex's 22nd birthday. She was stunned when the civil servant apprentice took a bite out of the toffee and banana flavoured cupcake and found a wasp under the frosting.

Yes, that's a bloody outrage.

If you bite into a Waitrose cupcake and find an insect, you'd at least expect something nice and homely like a ladybird or maybe something more upmarket like an Old World Swallowtail butterfly.

Common or garden wasps are for people who shop at Tesco or Sainsbury's.

And Aldi shoppers would bite into something nice and crunchy like a dung beetle.

Doesn't follow.

From The Metro:

COPYING ideas from poorer countries such as India and Ghana is key to saving the NHS, a watchdog says.

Adopting 'industrial engineering' techniques used to carry out cataract surgery in Aravind, India, could save £1.1 billion a year, Monitor claims.

Another £800 million could be recouped if Britain copies Mexico, where two-thirds of patients sort out their problems in a phone call with a nurse...

All good stuff, health spending is a question of diminishing returns to scale, some things are worth every penny, other things aren't and somebody has to draw a line somewhere.

But shadow health minister Andy Burnham said: "This will send a shiver down many a spine.

"It confirms the suspicion many people have that David Cameron is softening up the NHS for privatisation."

How on earth did he work that out? How does he get from "the NHS saving a few bob" to "the NHS being privatised"?

I am really am sick and tired of this false dichotomy that Tories want to privatise everything and Labour want to nationalise everything, it's a bit more nuanced than that.

If you think about it, everything is ultimately privatised at the bottom level. Police officers are private individuals who receive payment from the government for maintaining law and order. Firms who supply the police with stationery, computers or cars are private businesses. But "the police" in the wider sense is quite certainly a national thing.

So it all depends on what level of the organisation is being "privatised".

If Cameron went mad and handed over the keys to the entire NHS to some large corporate and gave them £100 billion a year for doing whatever it is they feel like doing, such as leveraging up on the land and buildings, taking massive bonuses, providing a catastrophically bad service and then disappearing, that'd clearly be a bad move.

But we already have this at a low level with GPs, they get given random amounts of money for doing whatever it is they feel like doing. Are they still an integrated part of the NHS? I would say "yes". Are their salaries and housing subsidies justified or value for money? I would say "no".

What if the NHS realises that procedure XYZ costs them £10,000 but they can send patients to a hospital in Eastern Europe who can do it just as well for £5,000? That's still NHS, isn't it?

So it's all a question of degree.

Well, obviously not.

From City AM:

HOW THE [HELP TO BUY] SCHEME WORKS

Banks pay the government for a guarantee. If the customer defaults on their mortgage, the government covers almost all of the guaranteed portion.

This guaranteed portion will be up to 15 per cent of the mortgage. In the event of a default, the Treasury will refund the banks for almost all of portion.

The scheme is split into three tranches: 90 to 95 per cent mortgages; 85 to 90 per cent; and 80 to 85 per cent. The fee varies for each, at 0.9 per cent of the loan at the top end, 0.46 per cent in the middle and 0.28 per cent at the bottom end.

It is expected that the fees cover the cost of the scheme and defaults exactly, leaving the Treasury with no profit or loss. If it looks like that break-even point will be missed, the Treasury can raise or cut the fee to match.

OK, that 0.9% is one-off fee for seven years' worth of insurance cover = 0.13% of the loan amount per year, and the sum insured (maximum payout) is 15% of the mortgage (other sources say 15% of the price paid for the home).

They say that the Treasury will break even on this, in other words they do the risk pooling and will have to pay out that 15% on about 1 mortgage in 116 each year (15% sum insured divided by 0.13% average annual charge). We also happen to vaguely remember than on average, only about 1 in 300 mortgaged homes end up being repossessed, not 1 in 116.

This is a risk pooling, not a risk spreading exercise.

Seeing as banks create tens of thousands of mortgages each year and will possibly lose a bit of money on 1 in 116, they can self-insure. All they have to do is charge high loan-to-value borrowers an extra 0.13% interest put take a small part of the total interest (call it 5%) paid by good borrowers and use it to cover their own losses.

But they weren't doing that themselves and the interest rate charged on high loan-to-value mortgages was much higher than for low loan-to-value mortgages (One per cent higher? Two per cent?).

Therefore we must assume that the risk is considerably higher than the 0.9% fee suggests.

Or possibly the explanation is as simple as this:

The banks do get some cost relief when they make these loans. Instead of facing a hefty capital requirement charge for issuing risky, high loan-to-value mortgages, the government guarantee means they are treated as relatively safe and so cost less.

In other words, the government is simply disapplying the relatively sensible capital requirement rules (which would lead to less leverage and less gearing up) and telling the banks to get on with Business As Usual.

Or as @notayesmanecon puts it:

Borrow at 0.75 per cent (FLS), lend at 5 (Help to Buy), get taxpayer backing. What can go wrong for banks?

Rail Fare Cap

One of the myths about the Conservatives is that they are the party of the free market, and here's more evidence against them:-

The rail industry's power to increase fares in England is to be curbed as part of a government drive to overhaul the rail fare system.

Until now, some regulated fares could potentially have gone up by 9.1% next January.

They will now be capped at 6.1%.

But campaigners say it is not enough, and point out that commuters will still have to pay an above- inflation increase next year.

Regulated fares are those which the government controls, and include season tickets, "anytime" single tickets around major cities, and off-peak inter-city return tickets.

They will go up in 2014 by an average of 4.1%, a number calculated using an average of inflation - as measured by the retail prices index (RPI) for July - plus 1%.

Rail fares are already as high as they are because they can't put everyone on a train that wants to travel, so, you have to ration supply, and the best way to ration supply is on price. Halve fares at peak time to London and you'll create chaos.

I may have criticisms of rail companies, but one observation I have made is that they know their rail fares. The fare from Swindon to Bristol is much lower than the fare from Swindon to Reading, despite being around the same difference, because the Swindon to Bristol train is about half as full. Trains after 11 are much cheaper, because they're much emptier. So, I think that we can assume that if they want to raise prices by 9.1% on some fares, it's because they know it will raise income, rather than driving people away.

And with that extra income, it makes the rail franchises more valuable, so companies that want to run the rails can pay more (or receive a lower subsify) for it. In other words, most of the extra money comes back to the landlord (the government) that does all the rail improvements.

House Price Crash (Survivors' Group)

M'learned colleague 'Pete Green' and I (and others) decided that the editorial line at HPC was becoming rather more dictatorial so we've set up a Facebook group so that we can keep in touch.

Sign yourself in and one of us will add you as soon as we have time.

Sir David Jason in Closed All Hours

From the BBC

BBC One controller Charlotte Moore said it made BBC One's Christmas schedule "suddenly feel complete".

In the original programme, which consisted of four series, Arkwright was the miserly Doncaster shop owner and his nephew Granville was his put-upon shop assistant.

In the new one-off episode, Granville is working in the Wm Morrison's around the corner, after the shop became non-viable and Awkwright sold it to a chain of tanning salons run by a bloke in Huddersfield.

"Minister threatens Roman Catholic Church with closure"

From the BBC:

The Roman Catholic church in Great Britain has been warned to stop favouring men and boys over women and girls or face closure.

The condition is one of several set out by Baroness Warsi, Minister of State for Faith and Communities, in a letter to the Archbishop of Westminster, Vincent Nichols.

The letter states changes must be made by the 15 October, or the church's charitable status will be suspended.

Westminster Cathedral was closed for a week on the first day of an inspection by the Health & Safety Executive because of "health and safety issues". The HSE released a statement to "clarify media reports" about why the cathedral had closed.

In it, Chair of the HSE Board, Judith Hackitt said: "Inspectors discovered that staff records showing whether priests were cleared to supervise children were either missing or incomplete."

"Lewis Hamilton's poor performance is getting boring for fans, says Sebastian Vettel"

From The Daily Mirror:

The German racing driver compared Hamilton's disappointing drives to that of long-time also-rans David Coulthard, Johnnie Herbert and Eddie Irvine.

The consistent loss of form of former World Champions such as Kimi Raikonnen, Lewis Hamilton and Jensen Button is turning Formula 1 into a snoozefest for fans, according to the likeable young German.

The German romped to his fourth successive victory in a Wacky Races of a Korean Grand Prix to move to the brink of a fourth successive title. The Red Bull racer chalked up his sixth win in eight races and eighth of the year, even if it was not by the 30-second margin of the last round in Singapore.

He also moves 77 points clear of Ferrari’s Fernando Alonso, who is at least putting up a fight.

“I feel for the British fans because I remember watching when Damon Hill threw away Championship after Championship,” said Vettel. “I remember watching the start, going to sleep, then waking up when it ended because I already knew what would happen.

"Hill's car would fail, he'd make an unforced error and hit a tyre wall or Schumacher would shunt him off in the last lap of the 1994 Australian Grand Prix.

"Which was pretty shitty of him, even I as a German would admit that."