Friday 26 February 2010

Roger Thornhill of LPUK on The Citizen's Income

Roger Thornhill left the usual list of objections on my post Citizen's Income round-up:
..........................
Look, I would love the CBI to be simple as opposed to simplistic.

That's a play on words not based in maths nor logic or anything to do with economics.
..........................
Alas I have yet to see a properly thought out set of figures...

I and many others have done plenty of properly thought out sets of figures. Your starting point is to decide what the point is. IMHO the point of a welfare system is the alleviation of poverty with the minimum impact on a free market economy (and yes, there is a trade-off between the two).

As to the maths, first we notionally scrap the entire welfare and old age pension system, plus all those things in the tax system which are there to alleviate poverty. To my mind these are mainly the tax free personal allowance and tax breaks for pension savings. That gives you a notional budget for all this. You then just decide on what you think the CI rate should be for different age bands and multiply it up. Maybe you want to spend the whole of that budget, maybe you want to return some savings to the taxpayer or spend it elsewhere.

I estimate the cash cost of the current system as follows: £163 billion spent by the DWP, £20 billion spent by HMRC on Child Benefit and Tax Credits; £60 billion for personal allowances (30 million @ £2k) and £50 billion for the cost of all the tax breaks for pensions (these are very round figures). That gives me £293 billion to play with.

I suggested a CI of £30 a week for children, £60 a week for working age adults and £130 a week for people over 65 (to be in line with current Income Support and Pension Credit rates) just to get the ball rolling, which would cost £222 billion.
............................
... that work and would not bankrupt the nation. Even if it did not, there is something telling me that such a living entitlement with NO strings would

a) Attract vast numbers of people to the UK to spoof citizenship.

b) Remove any incentive to work for even more people

c) create a movement to raise the amounts higher and higher like some Red Giant star which will collapse and explode.


It's up to you to choose lower or higher CI figures (and a lower or higher income tax rate to fund it) and if you are an authoritarian or corporatist, of course you'll like the idea of tax breaks for pensions (so that £50 billion wouldn't go into your pot), and it's up to you to decide what you'd do with the notional saving of £71 billion (I'd suggest reducing the public sector deficit is the best use of this at the moment).

a) That's why it's called "Citizen's Income", because only legally resident citizens get it. So you just set two conditions: you have qualified for a British passport and you have lived here for a certain number of years (I suggested ten, just to get the ball rolling). I explained that at length in the original post, of course, but will repeat it here for completeness.

b) There speaks the typical Daily Mail reader. Despite the current welfare system, which is more generous that the CI system (at the very lower end) and the savage means-testing/poverty trap (which wouldn't exist with a CI system), most people still work. A CI-system would double or treble work incentives, not reduce them. That is one of the big plus points of a CI system.

c) Agreed. Which is why it helps if we boil taxes on incomes and production down to one flat rate and have on flat rate CI so that people can see the trade-off. Of course there will be pressure from the bottom to increase the CI and increase income tax; there will be equal and opposite pressure from the top to reduce the income tax rate and reduce the CI. It will find its own equilibrium. It's not for me to say what people would decide on.
..........................
Where to start? £2000? Where do you get that from? People have a personal allowance of £6k, so it is more like £1200 and 40m people do NOT all use it. Even if they did, it is not a "cost". What a sick way of thinking about it! So, 40m x 1200 = £48bln, not £80bln

Roger appears to be one of the statists who believe that National Insurance is somehow magically not a tax. Of course it is a f***ing tax, it is more or less the same as income tax. The personal allowance for tax is currently £6,475 p.a., and the 'personal allowance' for Employees National Insurance (cunningly named the 'primary threshold)', just to throw people like Roger off the scent) is £110 a week = £5,720 p.a. (that is how f***ing devious they are - the income tax allowance is always expressed as an annual figure and the national insurance threshold is always expressed as a weekly figure).

Maths bit: (£6,475 x 20% = £1,295) + (£5,720 x 11% = £629) = £1,924. Not quite £2k, but close enough for this debate.

I accept that maybe 40 million people don't use it, so I'm happy to assume that only 30 million people use it.

It's a philosophical point whether the personal allowance is a "cost", but I am trying to be consistent with terminology. If a welfare payment is a "cost" then so is the personal allowance. It's all well and good bleating about the cost of the welfare state to the taxpayer, but, for a given total revenue, the lower the personal allowance, the lower the overall rate of tax.

Ergo, higher earners would actually be better off if the personal allowance were scrapped and tax rates reduced by a few per cent. To a higher earner, the personal allowance is very much a "cost" because he faces a higher tax bill so that low and average earners face a lower tax bill.

As to the amounts, Roger has this to say:
..........................
£60 is barely enough for a single person to share a room in London, let alone heat and eat. Forget clothing or anything else. No, your numbers suck.

OK, as I already said, if everybody is free to decide on a higher CI and a correspondingly higher tax rate. But Roger is now dabbling in another round of one sided economics: remember that further above he said "a living entitlement with NO strings would ... remove any incentive to work for even more people" and now he's saying it wouldn't be enough to live off in London (one of the most expensive cities in the world) without working.

Er ... if you want to live in London, of course the CI won't be enough to live off, so, er ... if you want to live in London you'll need to find a job as well. So either he doesn't like the idea because he thinks it 'destroys work incentives' (which it clearly wouldn't) or he doesn't like the idea because it wouldn't be enough to live on without working (in cheaper parts of the country, it might be, in London in certainly would not be). I wish he'd make up his mind.

Housing costs are a different topic, let's put that to one side for now.
..........................
"IDS estimated the economic and social costs of the welfare system at £100 billion. That may well be exaggerated, but it must be at least half that." But this is not £100bn in lost revenue, is it? At best it is 20% of that."

No I did not say it was 'lost revenues', I said it was 'economic and social costs'. However much they are, they definitely exist. Just because they are difficult to estimate does not mean we can ignore them. You can't ascribe a monetary value to sunshine over the weekend either, but we know sunshine makes us happier and has 'social and economic benefits'.

As it happens, I do not know and cannot claim to know what the dynamic increase in tax revenues would be if millions of welfare claimants had their marginal tax rates reduced from 95.5% to 31% and millions of Tax Credit claimants had their marginal tax rates reduced from 70% down 31% (i.e. 20% income tax plus Employer's NI) without any form-filling, means-testing etc. I suspect it would be rather more than £20 billion in the medium term, but hey.
..........................
"What's not to like?" Your wonky maths, Mark. 1/10 See Me. p.s. I do want to see working numbers for this, I am honest. Someone. Please?

What a patronising twat. If anybody has the energy and patience to try and explain this to him, feel free to have a try.

I give up, frankly.

27 comments:

Anonymous said...

You seem to have been rather patient actually - it was quite a long explanation!

Well done, nice idea, will never be done because politicians LIKE confused and complex systems - they let the politicians lie to and cheat the public.

View from the Solent said...

"That gives me £293 billion to play with."
I'm not arguing, just curious. Is that really the amount? Circa 1/2 of state expenditure?

Tim Almond said...

"What a patronising twat."

Most of the LPUK guys seem to forget the old line about "you get more bees with honey than vinegar" and seem to be incapable of being anything but arrogant, and will never give anyone any credit when they do change their mind.

I don't waste my time on them.

Mark Wadsworth said...

AC, simple is good.

There's always a possibility that an idea is wrong, but if it's simple and wrong, you can tell straight away. If it's complicated and wrong (like Tax Credits or VAT) then if you attack it, The Other Side just says that you don't understand it.

VFTS, no, because I included £80 billion of notional expenditure (on personal allowance or tax breaks for pensions) which under current rules does not count as state expenditure.

JT, it's not just me then, ta.

DBC Reed said...

Prefer the old Social Credit National Dividends : work out the total value of UK productive potential working at full capacity; subtract value of actual production; make up the difference with National Dividends for everybody so there is enough money to run industry at full capacity.

Anonymous said...

Actually Mark, I'm afraid it you who are being the 'patronising twat' here, just as you are when anyone disagrees with you two 'truisms' of CBI or LVT, which is a bit of a shame really.

Rogers point is simple ~ although you do your best to twist it, if CBI is set at a rate that actually allows people two live then it becomes both unafordable and a disincentive to work. Sure it all looks lovely and simple and affordable if you set the figures low enough, but then it doesn't 'alleviate poverty', which begs the question, what the fuck use is it anyway?

Personally, I'd go for celf certification of all tax and benefits... but that's another story.

sobers said...

I like the concept of a CBI, but am afraid of the practical outcome of it when implemented. We have a certain % of people in the UK who are now effectively babies - the State provides EVERYTHING for them. They get a house provided gratis (they have to organise nothing , just get given the keys), the house is furnished for them, rent and council tax paid, cash in their pocket to buy food and neccessities.

I know such a person. He's been in and out of the Mental Health system (sectioned on and off) and currently is outside. He unemployable. But not of pensionable age, and currently not sectioned, so a free adult to do as he sees fit. There is no way he could survive on £60/week, to pay rent, food, heat light etc. He can't get a job, cos no-one would employ him. So what happens to him. Does he starve on the streets?

I think the UK population (or a significant minority of it) is so infantilised that they could not cope with having to fend for themselves. They would literally be begging (and dying) in the streets under a CBI.

Mark Wadsworth said...

HH, hang about here.

I never said it would magically 'abolish' poverty, I said it would 'alleviate' it. You have to take what I say at face value.

I quite agree - if the CBI were so generous that you could live off it comfortably, then this would damage work incentives (and mean a higher rate of income tax, which exacerbates it).

If it were too low, it would not alleviate poverty (but on the plus side, tax rates would be lower and the work incentive would be stronger).

But, by definition, there must be a reasonable mid-point - quite what that is I cannot claim to know, but an adult CI of £60 a week (or whatever Income Support is at present) and a flat income tax of 31% (which is what we have at present - 20% income tax and 11% Employee's NI) seems like a good place to start.

And as a matter of simple fact and observation, LVT does not have the same deadweight costs as other taxes. If you are a free market liberal, then surely you want to have a tax system that drags least on the productive economy, but then again you see yourself as a landowner, so you want 'somebody else' to pay the tax.

Mark Wadsworth said...

S, as I have said before, housing is a separate issue, and for the truly handicapped or incapable, of course we'd still have extra payments, social workers, care homes etc.

And this whole 'benefits culture' has arisen over the last thirty or forty years, and is now deeply engrained. I never said it would disappear overnight, but that's no reason not to start doing something about it?

Anonymous said...

but then again you see yourself as a landowner, so you want 'somebody else' to pay the tax.

Complete horse shit, as I have pointed out to you many, many times. Just for the record, yet again, I niether own any land, or either of the properties I reside in.

But there we are again. Someone disagrees with your LVT holy grail and out come the insults and falsehoods.

Grow up.

Mark Wadsworth said...

HH, in which case, my apologies.

However, you have on several occasions mentioned your "country mansion / unabomber style shack" and I believe an acre of surrounding land, which I assumed you owned as freeholder.

If you rent it, I don't know why you are happy to pay rent to the freeholder and income tax to the government, rather than just paying LVT/rent to the government and no income tax.

Roger Thornhill said...

MW: "That's a play on words not based in maths nor logic or anything to do with economics."

Wrong, by a country mile. There is a VERY different meaning between the two. Ask someone who has spent time thinking about it like Edward de Bono. “Simplistic” is ignoring the details, whereas “simple” can actually be something that solves the problems/works whilst being simple in practice or at the interface.

Your reply to my point a) does not answer it. You are creating a system to attract more fraud and you do not recognise it even when it is pointed out to you.

Your reply to point b) ? I don’t read “The Daily Mail” and why should that have anything to do with what is basically a discussion of motivation and incentives? You go along the route of name-calling to try and discredit. I am also talking about a CBI/CI system which ends means-tested benefits, a generic. Yours, AFAICT, does not even manage that but presumes to dismantle it.

As for c), this also applies to a generic CBI/CI mechanism as in b) above, and my point is that we risk lack of equilibrium in those that do. We do already with Welfare and pressure to buy votes using Tax Credits etc. A cheapskate CBI that cannot replace the welfare system but presumes to take all the funding from one might not distort, but then again it is no fit replacement.

MW “Roger appears to be one of the statists who believe that National Insurance is somehow magically not a tax.”

There you go again trying to label and discredit Wrongly. Your figures conveniently ignore the fact that NI collects around £90bln and we need to fund the NHS with about that, NOT just the £160bln for welfare. Where, pray, will that come from? You are “double dipping”, Mark.

MW: “Er ... if you want to live in London…I wish he'd make up his mind.”

What you are missing here, Mark, is that it is not that simple and you present a false dichotomy of your (incorrect) interpretation/presumption of my reasoning, further proof to the “simplistic” tag I give most CI stuff I see including yours. You have considered CI only as a national rate and not considered it locally, for a start. You have no thought for the realities of transition. That separates ideology (yours) from reality.

MW: “Housing costs are a different topic, let's put that to one side for now._”

No, you cannot, ever. CI to take the funding of Housing Benefit and you want to set it aside? No way!

MW: “What a patronising twat.”

I was beaten to it, but Mark, you are the patronizing twat here. I have pointed out that your numbers do not add up (they do not – see NHS issue and the conceit that £30 pw replaces all benefits including HB, for a start) and you cannot see it even when I do, yet try to belittle.

You resort to name calling, false labelling and slur to try and silence. For shame, Mark, for shame.

p.s. your LVT stuff (again, I wish it might work) is also rubbish but I am too busy right now to respond.

Roger Thornhill said...

p.s. when I say "we need to fund the NHS", I mean that that revenue stream goes towards healthcare (as in NHS or replacement), you cannot bag it as a "cost" for CBI.

Mark Wadsworth said...

Rog,

1. Do you think welfare claimants give a stuff what Edward de Bono says?

2. "You are creating a system to attract more fraud and you do not recognise it even when it is pointed out to you."

We have, in the UK, one particular benefit that is very close to a CBI, it is called Child Benefit (not to be confused with Child Tax Credits). The fraud plus overpayments plus admin costs are negligible, and once you deduct underclaims, the overall running costs are £nil.

In practice, the biggest "frauds" (please do a bit of background reading on
John Page's blog are people claiming welfare and working cash in hand, co-habiting mothers pretending to be single, people inventing fictitious children, people claiming more than one benefit at once, people who are fit for work claiming Incapacity benefi, and most spitefully, being being taken to court for failing to tell the Tax Credit people about pay rises and overtime; people overclaiming Housing benefit and so on.

All of these would melt away if there were a single cash benefit. Sure, somebody will need to make random checks every now and then, but either you are a legally resident British citizen or you aren't. That's not difficult to prove one way or another, is it?

3. "Your figures conveniently ignore the fact that NI collects around £90bln and we need to fund the NHS with about that... You are “double dipping”, Mark."

Oh dear.

a) Presumably you also believe the politicians' lies that the £90 bn National Insurance also pays for old age pensions of £75 billion? NOW that's what I call double dipping!

b) If we are to hypothecate taxes, then it makes more sense to me to allocated National Insurance to old age pensions that to the NHS.

c) In any event, I referred quite specifically to "Employee's NI" which is slightly less than half of that £90 billion.

Mark Wadsworth said...

Rog, continued.

3. "You have considered CI only as a national rate and not considered it locally, for a start."

Yes I have considered it, I have considered at length, and, if when somebody suggests a "London weighting" my thoughts are thus:

a) London is expensive to live because there is high employment. There is a limited amount of housing etc and it is better for that housing to be occupied by people who are working than people claiming a CI plus London weighting. Further, a London weighting would just push up rents and prices for everybody, thus leading to a vicious circle.

b) Other areas are cheaper to live in because there is lower employment. With a flat national rate, people who don't want to work or can't find a job which pays them enough to afford to live in London will gravitate elsewhere, where there is spare housing.

So with more people in these areas, there would be more potential customers and more potential employees, which is good for the economy in those regions.

c) If we had a London weighting, people would 'sign on' in London, collect the extra dosh and then go and live elsewehere. The fraud would be colossal, thus defeating one of the aims of the CI system (see also my point 2 above).

d) Thus a national flat rate would not only be a modest amount of redistribution from rich to poor, but also a modest amount of redistribution from rich areas to poorer areas.

I'd like to see your justification for a London weighting and how you would overcome the difficulties I have outlined.

4. "the conceit that £30 pw replaces all benefits including HB, for a start"

Sigh.

a) I have consistently said that CI for working age adults would be set at approx same rate as Income Support or Jobseeker's Allowance of about £60 a week. Where do you get £30 from? I never said that.

b) Housing Benefit for private tenants can go straight out of the window, as it is a subsidy to landowners. and cost the taxpayer an absolute fortune.

c) If costs the taxpayer next to nothing to have people in social housing. It seems insane to charge them rents and Council Tax with one hand then subsidise them with HB and CTB with the other.

So why not scrap the lot and just have a rule that people in social housing can choose to pay the rent in cash, OR, if they have fluctuating incomes, accept a K-code for PAYE purposes and pay a bit extra as and when they are working?

In case you don't know what a K-code is, see here

Anonymous said...

RT: I have read your original comment and Mark's reply and followed the argument subsequently. As a disinterested bystander I would point out that I find you considerably less convincing than Mark.

To give an example: You state "Your reply to my point a) does not answer it. You are creating a system to attract more fraud and you do not recognise it even when it is pointed out to you"

Said "pointing out": "Even if it did not, there is something telling me that such a living entitlement with NO strings would
a) Attract vast numbers of peopole to the UK to spoof citizenship."

Addressing of this point " So you just set two conditions: you have qualified for a British passport and you have lived here for a certain number of years (I suggested ten, just to get the ball rolling). "

Where's the lack of recognition there?

1/10 See Me.

bayard said...

Mark, could you keep the posts on your blog a bit longer? The original post that set this hare running has now dropped off the bottom.

On CB, you don't seem to have addressed the point that those to whom £60pw would be fiddling small change would probably not bother to claim it.

Mark Wadsworth said...

Anon, thanks, 10/10, take the rest of the afternoon off.

B, if I increase the number of posts on the front page, then it makes it slower to load. I did link to the original post in the first paragraph.

True, some people might not claim it, or they might sign it over to a charity, but that's a) a small number and b) unknown.

bayard said...

ISTR you were against encouraging the tendency not to claim by making it inconvenient, e.g. having to go and collect it in person from the Post Office, as used to be the case with child benefit. Personally, I think that such a measure would both save millions and help the rural Post Office network.

Mark Wadsworth said...

B, I can't remember ever saying that (but feel free to prove me wrong).

If memory serves, I have always said that paying by bank is better, because that way low income people have a bank account and can take advantage of discounts for paying utility bills by Direct Debit.

Roger Thornhill said...

Re Part 1

1. Giving a stuff or not, it is you who dismissed it incorrectly. Just admit you were wrong, Mark.

2. First you say Child Benefit has little fraud then you talk about people inventing ficticious children. If they can do that, then ficticious people can be invented and once done, no questions asked "for life". I totally agree with you on tax credits - they should be abolished and the personal allowance raised to £12k. The need for fake children ties in with housing and in particular state housing (owned or subcontracted).

3. Other people "double dipping" is not the point here - you were looking at costs and tax reallocation. Shouting "over there!" (as you have also done above) does not answer. I think I might owe an apology of sorts in one regard, as I think your earlier unwarranted rant about "NI is a TAX!" etc threw me off. You are considering, are you not, taxing everyone from the first pound at a rate of 33%, no? All other welfare removed? Someone on £6k gets nett £20 a week and no housing. Ouch.

You are right about the scandal of NI, and the faster we disentangle the costs from general taxation the better so we can deal with it.

Part 2. I have no justification for London Weighting as I have not suggested it. I see the problems you do but also other downsides. What is "London" even? South East? Where does it end? Fact is, though, you put forward CI which is, normally, about people being able to "live" and if you expect people to move to cheap areas you need to be open about of the unintended consequences of that. It is not easy at all (see below).

Housing: Your idea has no account for transition from where we are, e.g. your fixation and vendetta against private landlords. If everyone who is poor becomes beholden to the State Landlord, god help them. "Permission to move denied". Disgraceful. How are they to move to other areas for cheaper lives when unemployed(able) when that State organ there has no stock and no HB for rent? Transition and logistics, Mark.

Fact is, this issue is not easy. It is not simplistic. Which is why I kicked off when you said "what's not to like". Mark, quite alot as it stood!

We need to improve things, not just "change"!

Roger Thornhill said...

Anon @14:59

Mark is too generous with his grades and you did not get it.

I am talking about fraud. British passports can be obtained fraudulently or granted via fraud. THAT is the issue here. You put out a honeypot with the lid off and the bees will come.

Mark did not address it.

Anon @14:59 said...

@RT Where did you mention passports before the post above? How does passport fraud compare with benefit fraud (Number of passports currently held that are thought to be fraudulent compared to number of benefit claims per year thought to be fraudulent). Have you any idea of the numbers we are talking about (of illegal immigrants, asylum seekers etc) and what they would cost in CBI, compared to the overall CBI budget? Or is the idea of anyone getting a free ride anathema to you?

And it's wasps, not bees.

Mark Wadsworth said...

RT, following your numbering

1. Edward de Bono is top man, but I'm not aware of his opinions on welfare reform and so fail to see the relevance of all this.

2. That's the strange thing. I actually take an interest in welfare fraud stories, and you sometimes read about people inventing fictitious children for Tax Credit purposes, but not for Child Benefit. In any event, I said Child Benefit would only be for the first three children per mother, which caps the losses, and mothers who are claiming will be sent a letter every few years asking her to fill in what school the kids go to etc so that we can make sure there aren't too many fictitious ones.

"fictitious people can be invented and once done, no questions asked "for life"

Who says there'll be no questions asked for life? I see no harm in the department sending out little questionnaires asking for further proof of ID at random intervals to random people. See also Anon's comments.

3. If somebody earns £6k gross, under my system he would pay 31% tax on all income (I never said 33%) so would have net pay £80 a week plus £60 a week CBI = £140.

"All other welfare removed?"

I said that housing is a separate topic, but seeing as you ask:

We currently have a mad system where the council sets below market rents which a lot of tenants still can't afford, and then asks for C Tax which a lot can't afford either; and then between them the council and the DWP sort out the tenant with insanely means tested Housing Benefit and C Tax Benefit. The total marginal withdrawal rate if tenants find work is in the region of 100%, all the way up to an income of about £15,000.

What I propose is that HB and CTB get scrapped in their entirety and council tenants be given a K-code for PAYE, which means that they pay 50% tax instead of 31% - the extra 19% goes to the council.

Of course some tenants can afford the headline rent, and they can choose to continue paying it as normal.

And before anybody starts bleating about the poor, poor private landlords, when I say "scrap" I mean "phase out", we have to make sure that the rate of private tenants being evicted is rather lower than the number of new units of social housing being built.

Second part:

"If everyone who is poor becomes beholden to the State Landlord, god help them."

Hang about, nobody is forcing poor people to be poor, and 'The State' is already giving them £60 a week each, cash. Why is it so much nobler for the state to pay your rent for you (to a private landlord) when The State can build social housing and put you there?

"Permission to move denied". Disgraceful. How are they to move to other areas for cheaper lives when unemployed(able) when that State organ there has no stock and no HB for rent?"

You answer your own question - build more social housing. Not difficult is it?

There are already four million people on waiting lists, so the sooner we start the better.

Roger Thornhill said...

Anon @14:59

I did not mention passports but that is not relevant, it is about fraud in general. If you can get a fake passport or use fraud to gain a "genuine" one, then any amount of checking or poxy forms thereafter is a bit meaningless, no? The state thinks you are kosher.

As to your request for stats, that is not logical, for we are talking about a potential future for fraud when you change the environment.

Roger Thornhill said...

Mark ,

1. Are you being intentionally obtuse? You say "simple" is the same as "simplistic".

2. Child benefit is harder because it is kicked off by a birth in a hospital! If govt cannot link CB to the tax credit for it...well you think it can solve other kinds of fraud. As per Anon above and you originally (even though you love to drag into specifics) the complaint I have is that it "builds in" the attraction for fraud and you have to go around trying to catch it afterwards. See my reply to Anon above about your forms.

3. I will look at your housing propositions in the entirety before commenting. CBI is not simple and I do not think any numbers should be presented without housing. You might as well present CBI without income tax rates and band(s)!

Mark Wadsworth said...

Rog

1. I read and took to heart de Bono's Six Thinking Hats and these proposals are the outcome. I have read oodles of books, leaflets, other people's ideas (good and bad), left and right stuff, discussed it with left wingers, right wingers, moderates, Christians, the lot, and this is the least-worst way of doing things. Is it perfect? Nope. Is it a lot better than what we've got? Yes.

2. Correct. Which is why Child Benefit is a good model for a Citizen's Income (in fact, it is a CI) and in fact, fraud, overpayments and admin costs are negligible. Is Child Benefit "simple" or "simplistic"? What do I care? It 'works', and that is what matters.

See also subsequent posts.

3. My answers are 'good', 'it is', 'they can' (see subsequent post) and 'you can' respectively. In fact I care more about the principles than the numbers - the numbers are jsut there to show it would work in practice and is not a pie-in-the-sky idea.