Thursday 30 April 2015

Reader's Letter Of The Day

From The Evening Standard, page 57:

The arguments against rent caps ignore all the hard evidence.

For most of the twentieth century, the UK had quite strict rent controls and better tenant protection. Yes, the result was that rented accommodation was of lower quality - but landlords were no longer outbidding owner-occupiers, keeping a lid on house price inflation.

[This para was edited out: As a result, the number of households renting from private landlords fell from 90 per cent to 10 per cent between 1900 and 1990; and the number of owner-occupier households went up from 10 per cent to 70 per cent. Social housing took up the slack.]

The most worrying statistic is that among the under-35's, owner-occupation levels have fallen from two-thirds to one-third over the past ten years. So reintroducing strict rent caps is a core part of YPP's housing and economic policies.

It is not just about protecting tenants - to borrow some Tory slogans, it is about putting money back into people's pockets and having a property owning democracy.

Mark Wadsworth, Young People's Party PPC for Epping Forest.

In response to the comments, replacing taxes on income with taxes on land is a much better way of doing everything and would sort out most so-called economic problems, but on the narrow issue of high rents/house prices and wealth inequality, a combination of mortgage restrictions and rent caps are a reasonably good second-best way of doing things - they largely solve these narrow issues (but not much else).

Life copies satire

The Daily Mash, 21 November 2014:

TACTICAL voters no longer have any idea who they are meant to be voting for or who they are trying to keep out, they have admitted...

Political blogger Susan Traherne said: “UKIP’s growing power, the Greens overtaking the Lib Dems and the willingness of every party to go into coalition with every other means tactical voting is over.

“Voters are now advised simply to cast their vote for the party they would most like to see actually running the county. Which admittedly doesn’t make the choice any easier.”

The Daily Mail, 30 April 2015:

Baffled voters are switching between all of the main parties or giving up on the election altogether, pollsters have warned...

Gideon Skinner, from IpsosMori, said: "Swing is a very useful concept, but never forget that it is now a misleadingly simple name for a very complex business. Most of the shift in votes these days is unlikely to involve many people who voted Conservative five years ago now having decided to vote Labour instead.

‘Today, most of the movement is between the two big parties and the smaller parties, of 2010 voters thinking they will not turn out this time (or vice versa), or people moving between the smaller parties. Rather than thinking of a swing, it is probably more useful to picture a roundabout - or as an overlapping flow of voters between multiple parties, as we show here."

It was the Sun what won it!..... by backing both sides

Fantastic double think from the Sun.

Wednesday 29 April 2015

Labour-Conservative 'grand coalition' negotiations progressing smoothly.

From The Daily Mail:

David Cameron today announces a Tory promise not to increase VAT, income tax or national insurance over the next five years.

The Prime Minister says the tax-free personal allowance should rise to £12,500 by 2020 while the 40p tax threshold will increase to £50,000. The Conservatives have repeatedly accused Labour of leaving the door open to freezing or lowering the 40p threshold, trapping millions more into paying the tax rate created to hit the rich.

Today Mr Balls insisted he would ensure the threshold rose at least in line with inflation every year and 'would like to go further'.

Simon Jenkins on top form

From the Evening Standard:

I visited Brixton as a young reporter, to witness old residents fighting landlords who were winkling them out in order to turn their terraces over to West Indian multi-occupation. Resistance was so fierce that in the early Seventies Lambeth council went Tory. A local councillor by the name of John Major became housing chairman. Such was the turmoil that by the Eighties Brixton had become synonymous with riots.

The urban wheel keeps turning. Brixton is no different from Islington, North Kensington, Camden or Stoke Newington. Yesterday’s migrant is today’s gentrifier. Inner London has always been a place of change and renewal. When its economy lags, housing tenure tends to stabilise. When the economy booms, “gentrification” sweeps across the city like a hurricane…

Yet it is hard to see what anti-gentrification protesters hope to achieve. Subsidising housing for the genuinely poor is sound welfare. But the idea of “local people” as such being entitled to housing security [in one area] for life was a socialist whitewashing of anti-immigrant prejudice. Romantics may proclaim the need for rural villages to keep out “foreigners” but in a city this makes no sense. It is London’s role as a national melting pot.


There's a lot of talk about apprenticeships out there. They're the sort of thing that sound like a great idea. You know, the sort of thing where a young lad or lass come in, maybe not brilliant at school, but keen, hard-working, practical. Join a company and get a trade.

So, I thought I'd take a look at some of the apprenticeships out there by typing in a postcode in Northamptonshire into the Apprenticeships website and seeing what came up.

So, here's the first 2 pages I got:-

Apprentice Nursery Assistant required to work in an Ofsted grade 1 (outstanding) day nursery in Hunsbury, Northampton. 
Main Duties: 
• Caring for children. Ensuring that children are safe and relating well to each other. 
• Being creative and helping to plan activities for the children. 
• Enabling play and participating in play. 

No, that's a job. You hire someone who is good with kids, spend a little time sorting out activities.

Apprentice Teaching Assistant

That's a government job.

Apprentice Mechanical Engineer (Fork Lift Truck Maintenance)

That's an apprenticeship - lots of training needed. Good.

Apprentice Barber

That's "trainee hairdresser", something we've always had jobs in. The job even prefers standard hairdressing qualifications.

Apprentice Nursery Assistant

No, job.

Apprentice Office Administrator

With duties like "Organising and Management of various production paperwork forms for the running of day to day business" that's just an office junior job. Nothing in the job suggesting something more skilled other than that.

Apprentice Machinist Engineer

Some machining, learning some welding. That's an apprenticeship. Good.

Childminding Apprenticeship

Again. Job.

Apprentice Pizza Chef

At Pizza Hut. You're going to be putting toppings on some shipped-in pizza dough. Something a child can do in 30 minutes.

Business Administration Apprentice

"Generally assisting the MD" "filing scanning and photocopying". That's another "office junior".

It's really dispiriting. These are nearly all low-paid jobs, and jobs that require little training investment, which was always the problem - employers wouldn't train people because they could leave and go elsewhere. And a grant of £1500 isn't going to incentivise more advanced apprenticeships. It's just another jobs scheme where you get some money and the government picks up some low-grade training.

Tuesday 28 April 2015

Moneyweek on top form

John Stepek nails it here, summing up Labour's latest bright idea, rent controls, and the government's (of whatever hue) attitude to house (land) prices generally:

But while it might be economic stupidity, it’s pretty smart politics – which sadly sums up the general tone of this election campaign nicely.

We all know that housing – specifically, house prices – is one of the most important issues to the British electorate. That’s why politicians like to make sure that they keep on rising.

If your average British homeowner sees that the price of their property is going up, then all must be well with the economy, and therefore they should vote for whoever is in power. That’s the simplistic – but I suspect, highly accurate – political calculus involved.

But there’s a twist this time around. Prices have been going up for so long that an ever-increasing group of people is feeling somewhat disenfranchised. In 2005, 70% of people owned their own homes. This year it’s down to less than 65%.

Those left at the foot of the ladder still aspire to own property. They still dream of the day when they too will benefit from an unearned, tax-free windfall resulting from a leveraged bet on house prices, as is every hardworking British family’s birthright.

Trouble is, they can’t see how they’ll ever get on to that ladder. And it’s clear that their parents are worried too. Apparently, 80% of the public believes Britain faces a housing crisis, says Mori.

Nigel Farage on top form

From the BBC:

Nigel Farage says he is "really rather bored" with the media's "obsession" that depicts UKIP as a racist party.

Shadow business secretary Chuka Umunna told the Independent on Sunday that a "virus of racism" runs through UKIP. But Mr Farage described the claim as "complete and utter rubbish".

Farage then sort of proves Umunna's point by quoting Hitler*:

He said the Labour votes in the north of England were "incredibly soft", like a "rotten window frame" that if UKIP pushed, would collapse.

* The original quote was of course “You have only to kick in the door and the whole rotten structure will come crashing down.”

The new Indian Bicycle meme: Doing X to fund Y

The Tories have taken this pre-election silliness to new levels today:

A Conservative government would use fines imposed on Deutsche Bank for its involvement in rigging interest rates to fund 50,000 apprenticeships, David Cameron has announced.

This reminded me of Labour's last desperate attempt to bribe Scottish voters:

Jim Murphy claims UK mansion tax will pay for extra nurses in Scotland

This is quite a popular meme actually, so I did a quick trawl. Here's a selection of all the silly "doing X to fund Y" proposals they have dreamed up over the past year.

First, they all had their ideas about scaling back subsidies for the City of London pension tax breaks:

The Liberal Democrat party "claims around £1 bn [extra NHS] funding for the following year (2016-17) could be found in a pension tax relief for the wealthiest and a dividend tax squeeze on those earning more than £150,000. Ending the Conservative "shares for rights" policy would also bring in extra revenue."

The Tories
"have just announced that if they win the May election, main family homes worth up to £1million would escape inheritance tax if they were left to children or grandchildren. But the policy would be paid for by cutting back the amount higher earners are able to pay annually into their pension and still qualify for tax relief."

Labour leader Ed Miliband
"has announced plans to take £2.7 billion from pension savers in order to fund a cut in student fees, if he wins the general election."

Greens and UKIP went a bit left field:

The Green Party "would introduce a new wealth tax, rigorously clamp down on tax avoidance and evasion and introduce a financial transaction tax - a Robin Hood Tax, and we are not ashamed to say that those on incomes above £100,000 should pay more income tax. Providing free social care for the over-65's means security and freedom from fear, suffering and loneliness for many, and it means 200,000 new jobs and training places."

UKIP of course have promised to spend the savings from leaving the EU and slashing the aid budget ten times over in various pre-election promises/giveaways.

One exception to the rule that these "doing X to fund Y" proposals have to be totally plucked out of the air and not in any way intellectually coherent is this one:

UKIP "is preparing a manifesto pledge to slash billions of pounds from Scotland’s budget to help to pay for tax cuts for English voters."

And as a nice book-end to the first one, here's how the Tories said they would fund all those extra apprenticeships last year:

The Conservatives "would cap benefits further to fund three million apprenticeships if they win the general election, the prime minister has said."

The missing homes conundrum; outright lies

Labour's timid ideas about modest rent controls/tenant protection have provoked the usual Homey backlash.

Top of the list of counter-arguments is the missing homes conundrum:

Labour was accused on Wednesday night of attempting to introduce rent controls like those blamed for damaging the property sector during the 1960s and 1970s.

The Conservatives said the policy had been tried unsuccessfully by Socialist governments in Venezuela and Vietnam, and would result in low quality accommodation and fewer homes being rented out.

What damage to the 'property sector'? We were building a lot more houses than now and a lot of people were buying them for affordable amounts. Rent controls simply made housing more attractive to owner-occupiers than to landlords, which is why the number of households renting privately fell from 90% to 10% between 1900 and 1990.

Unlike the author of The Telegraph article above, the Tory housing minister couldn't even be bothered to look up rent controls on Wikipedia comes out with this:

Conservative housing minister Brandon Lewis dismissed the plans, claiming only building more homes would lead to affordable rents. 'Rent controls never work - they force up rents and destroy investment in housing leading to fewer homes to rent and poorer quality accommodation,' he said.

For sure, the quality of rented accommodation might go down, but so what?

People are happy to put up with a few years of slumming it when they leave home, get their first job, go to Uni etc. What's really important here is reversing the decline in owner-occupation rates. Among the 24-35 age group, owner-occupation rates have collapsed from a two-thirds fifteen years ago to only one-third today.

To round this off, more bollocks from the end of the first article:

Grant Shapps, the Tory Party chairman, said: “Evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need.”

He is just making this up as he goes along. There is no real life evidence for any of this. We could present counter-evidence from Germany, which does have implicit and explicit rent controls and much better quality housing.

Sam Bowman of the Adam Smith Institute said: "Rent control is a stunningly bad idea that could devastate Britain’s cities and clobber renters. To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them."

Rent controls do not 'clobber renters', they turn them into owner-occupiers, which I thought we all agreed was A Good Thing? Further, cities recover surprisingly quickly after being bombed or struck by an earthquake, provided the economic conditions are right. Even by his own admission, rent controls have a lot less impact than that.

Simon Walker, Director General of the Institute of Directors, said: "Basic economics tells us that if you artificially hold down the price of something, you get less of it in the market. This is as true for housing as it is for anything else. At a time when we appreciate there is a housing shortage, this policy is particularly short-sighted."

"Basic economics" tells us that there will indeed be less to rent, but the amount of housing is fixed, and there is no shortage in an absolute sense, so when landlords try to sell up, prices will fall to a level which former tenants can afford. Sorted.

(Obviously, shifting to LVT would sort this out much better, but that's not under discussion here).

More Serendipity

Before I start I want to make it plain that I am not having a pop at anyone in particular I am though at having a pop at prejudice, received wisdom and those that deny the bleedin' obvious.

Referring back to an earlier post we had a discussion on the efficiency or otherwise of the NHS. My contention is that the bloody thing is structurally unsound and will never be 'efficient' and other people held that it was 'efficient' in comparison with other nations health care systems.

I then said that I suspected that other health care systems were equally inefficient in themselves, so that any comparisons were likely to be meaningless.

Serendipitously and joyfully we now get  this, which links to this.

I have not had the time yet to read the OECD report in full, so I am readying myself for all sort of opprobrium.

Personally, I think the whole damn' NHS needs denationalising. Competition between providers must not be prevented and pressure from special interest groups must be ignored. And as a safety net we can do the health vouchers thing, if you absolutely insist.

Monday 27 April 2015

Fun Online Polls: Most annoying phrases of the election campaign & The next UK government

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

Most annoying phrases of the election campaign
Hard-working families - 56 votes
Let me be clear - 40 votes
Long term economic plan - 22 votes
The Great British people - 21 votes
What we've said is... - 16 votes
The economic mess - 13 votes
Up and down the country - 13 votes
Other - 8 votes

There were some excellent 'others':

EarthvsTheSlimePeople: Renegotiating the EU treaties
James James: Let me be absolutely clear...
Bayard: Paying off the deficit
Graeme: Companies and individuals needing to pay "their fair share of tax"
Evilc: Look...
Bayard (again): The housing crisis
Wigner's Friend: (Did/do/done) the right thing (to do)
Me: Any statement starting with "Well..."

Continuing the general theme - the most likely outcome.

Going by reliable forecasts, the three least-unlikely possibilities for the next government are:

a) Labour minority government. I'd rule that out, John Major struggled along with that for a bit at the end and nobody thanked him for it (at the time - with the benefit of hindsight he was the best PM in my lifetime).

b) Labour-SNP coalition. Hmm, sounds a bit fractious...

So the Sherlock Holmes principle leaves us with only one workable outcome:

c) A Labour-Conservative 'Grand Coalition'.

Labour will abandon their Mansion Tax and 50% income tax ideas in return for the Tories agreeing that the 45% income tax will stay in place instead of being cut to 40%; the Tories will row back a bit on the Bedroom Tax but be secretly delighted not to have to hold an in-out EU referendum; the Tories might go halfway on tuition fees and cut them to £7,500; Labour will merrily join in welfare claimant bashing and persecution of under-25s; more bansturbation generally. Etc etc.

Apart from those relatively minor niggles, I can't really see any big areas of disagreement between Labour and the Tories.

They're 100% in agreement on increases to NHS spending (waste); the pensions triple-lock; replacing Trident; building HS2; VAT and NIC tax rates generally; crapola about 'helping first time buyers'; allowing mass immigration from the EU and elsewhere while promising to 'do something'; retaining the Union with Scotland; running masive bloody deficits; on no account ever liberalising drug laws. Etc etc.

If anybody is aware of any big disagreements on policy or direction or rhetoric which can't be solved with a quick back room compromise, then please leave a comment.

Vote here or use the widget in the sidebar.

"We had hundreds of family meetings..."

From The Daily Mail:

The Kardashian family had hundreds of intense, emotional meetings to deal with Kanye West's decision to transition into a twat, Kim Kardashian has revealed.

The reality star told Monday how she, her sisters and her mother Kris Jenner would open their hearts to each other to process the emotional turmoil prompted by the 37-year-old former rap star's decision to consider himself a twat.

She also admitted that the issues of being married to a twat are 'not something... I can fully understand' - but added that understanding wasn't necessary for her to 'support him 100 per cent'

A portion of the interview, with NBC's Today show, which was released over the weekend had already revealed that the whole Kardashian clan is also in therapy to help them deal with the change.

Sunday 26 April 2015

Things which most people accept as a given...

… but which are actually a result of lots of self-reinforcing least-bad decisions taken collectively:

- The nation-state with fixed borders
- Land ownership
- Taxation
- Currencies/money
- Democracy
- Banking
- Government spending
- Peace
- National identity and immigration control.

You can't really have any of these without the others.

For example,
- the nation-state with fixed borders and land ownership are more or less synonymous;
- autocratic nation states/dictatorships are inherently less stable than democracies;
- democracies are less likely to wage war on each other than dictatorships or autocratic states;
- democracy isn't much use if there isn't a defined area within which the rules will apply, to be defended;
- there can be no taxation without government (even though the reverse is just about conceivable);
- democratically elected leaders like to be seen to spend money for the benefit of the masses;
- more spending/redistribution means higher taxation;
- peace is cheaper than war, enabling higher spending for a given level of taxation;
- nation-states themselves are a bit of a confidence trick, they require a national identity/sense of collective, which in turn means some brakes on immigration.
- tax and spending is more or less synonymous with currency;
- which people then use as a unit of measurement for everyday trading;
- which banks then use as a unit of measurement for creating debts i.e. money in the narrow sense;
- but banks are a huge confidence trick, they can only work as long as there is a government to enforce debts for them.

And so on and so forth.

Saturday 25 April 2015

Glorious, just Glorious

Tony Hazell here.

Criticise - sort of - buy to let subsidies.

Then praise greenie subsidies. Which admittedly he then decries.

What can I say that has not already been said...?

I suppose that it is at least a start in the mainstream.  FT Adviser is part of the FT group.

Friday 24 April 2015

"Cockroaches in infested halls refuse to pay rent until the students are gone"

From The Evening Standard:

Cockroaches and mice living in halls infested with students are refusing to pay their rent until accommodation managers get rid of the humans. Cockroaches living in Dinwiddy House and Paul Robeson House have been plagued by students from the School of Oriental and African Studies in their flats since the start of term in September.

The halls, located in Pentonville Road, Kings Cross, are managed by university accommodation providers Sanctuary and cost £147.28 a week to rent a single en-suite room. "The only way we can afford this is by sharing thousands to a room," added a spokesroach. "The mice chip in what they can, but that isn't much."

One cockroach claims that 38 of his friends and family were killed by a student in an unprovoked, sustained and violent attack on her first day of moving in, while mice scuttling in the kitchens have complained about being tricked into ingesting poisonous substances which have led to dozens of slow, lingering deaths.

Thursday 23 April 2015

Have they changed the rules of Victimhood Poker?

According to the Virtual Poker Bible, "slow metabolism" now trumps "black and minority ethnic".

The BBC has a good article on Indian Bicycle Marketing.

Following on from The Stigler's recent post on the alarming similarity between the major parties' policy on old age pensions, the BBC compares their NHS policies. I can't say 'compare and contrast' because there don't appear to be any contrasts:

We will give "mental health parity with physical health". Can you guess which party says this? The Liberal Democrats, who have flown the flag for mental health services?  Yes. But these exact words were actually taken from UKIP's manifesto. Labour's manifesto said the two should have the "same priority", while the Tories opted for the phrase "equal priority".

What about this? We want to integrate health and care. Labour? Tories? Yes and yes - along with the Greens, UKIP and Lib Dems on the campaign trail.

There are plenty more examples like these on everything from improving access to GPs to tackling the A&E pressures and employing more staff. In fact, it could be said, the ambitions are remarkably similar...

Fuel Economy

From The Telegraph

Consumers could be spending an average of £133 more on fuel a year than they thought they would as a report by independent consumer company Which? suggests manufacturers are misleading consumers by overstating the fuel-economy figures to make their cars seem more efficient.

They aren't overstating their fuel-economy figures. They're figures that are the results of standard tests. What the car makers do is to set up their cars in the best possible way for those tests.

The report found that only three of the 200 models tested by the company across 2013 and 2014 reached the official miles-per-gallon (mpg) figure stated in information supplied by their manufacturer, with cars falling short by an average of 13 per cent.

Yes. Because you aren't optimising cars like car makers are

In addition, the test is carried out with all ancillary loads turned off, meaning that air conditioning, heated windows and lights are all turned off to increase efficiency.

Roof rails, extra lights and door mirrors can be removed to make the car lighter and there is no restriction on the air pressure of tyres.

Like that...

As a result, Which? is calling for the European Commission to introduce its new testing procedure in two years’ time, as scheduled, despite it "facing heavy pressure from the car industry to delay the change until 2020".

It says the process "needs to be completed properly without rushing to meet unrealistic deadlines, so that it is robust".

Why? The tests work fine as they are. Every manufacturer pulls the same tricks which means that in general, comparing cars still works. Except hybrids. And if you're driving one of those, you aren't thinking much about money anyway. OK, there's that £133 but it's not like that's much of a deal breaker when you're spending £15K on a car.

If you're money-conscious you don't buy new cars anyway but let some other schmuck another driver subsidise your driving.

Fast & Furious Show 7

From Wiki and Wiki:

After breaking into the secure hospital where car salesman Swiss Toni is being held, Toni’s older brother, Rowley Birkin QC, a retired barrister, swears vengeance against "the team that will nick anything". Meanwhile, Ron Manager, Patrick Nice and the rest of the crew, having been able to return to the United States, are now trying to live normal lives again.

Soon, Rowley breaks into Ted and Ralph’s secure DSS office to extract profiles of Ron Manager’s crew, but is caught by Ted and Ralph. After revealing his identity, Rowley engages Ted and Ralph in a fight, and escapes when he detonates a bomb that sends Ted and Ralph flying out of the building and onto the roof of a car.

Severely injured, Ralph is rushed to hospital by Ted, who escaped serious injury. Meanwhile, Rowley learns from his great-niece Janine Carr that she is pregnant by the Headmaster again; despite her objections, he convinces her to tell Chris the Crafty Cockney about it. Their heart to heart is interrupted by a phone call: Rowley, calling immediately after having killed John Actor, formerly of their crew, in Tokyo.

This tips off Rowley that the package he has seen on his doorstep is, in fact a disguised bomb; it explodes, destroying the Manager house but leaving Patrick and his family unharmed. Which was nice.

More glorious Home-Owner-Ist DoubleThink.

I do not know who decided to call the proposed annual tax on high value dwellings a 'Mansion Tax' but it was a bad idea (singling out one particular cut-off price level was also a terrible idea, but we all know why that happened so that is not at issue here).

It is possible that the Home-Owner-Ists themselves coined the phrase 'mansion tax' in which case it was tactically a brilliant idea - if my wife buys a tin opener and I decide to call it 'a pair of scissors' then I can moan at her every time I try to cut cloth or paper with it, telling her that the 'scissors' she bought just don't do the job properly. See also Labour/Bedroom Tax.

So the Homeys do the same thing and bombard us with articles like this:

Agents condemned the tax as “completely unfair” claiming that it will catch thousands of modest family homes in central London while the owners of large country houses in cheaper areas of the country will pay nothing.

In other words, 'Mansion Tax' is badly named tax; the Homeys then say 'Therefore it must be a bad tax'.

Anyway, Ed Miliband must be tired of hearing this crap by now and agreed that his own high value dwelling was not, in the traditional meaning of the word, 'a mansion'. It clearly isn't, it's a fairly big London townhouse. Ed also cheerfully said that he didn't know who had invented the phrase 'mansion tax'.

The Homeys, having spent the past year or two repeatedly making the same point, then go completely mental:

Nigel Adams, Conservative candidate for Selby and Ainsty, said:

“Ed Miliband’s desperate to come across like the man of the people – but these comments are yet more proof he’s completely out of touch with ordinary people. Is it any wonder Ed’s happy to slap a homes’ tax on hardworking families while at the same time hiding his nanny in the downstairs kitchen?"

Look, you Homey fuckers, is Ed's house a 'mansion' or isn't it? It's a simple question. He was agreeing with what you have been saying all along, is all. Do you mean that you are actually out of touch as well?

Good to see 'hardworking families' getting a mention, makes a change from Poor Widows In Mansions.

Wednesday 22 April 2015

Glorious bit of Home-Owner-Ist DoubleThink

From an article in The Daily Mail on the Mansion Tax:

House price rises good; house price falls bad

Despite the setbacks caused by the global financial crisis, many in Britain have become used to the idea that the value of their homes will always go up...

Given the uncertainty over the valuations of property and concerns over whether more properties might get sucked into the tax at a later date, it is likely that the freeze will reach well below the £2 million threshold – and may even blight sales down to £1.75 million.

With buyers scarce, prices will tumble. For properties above and just below the threshold, an average fall in prices of more than five per cent seems likely. A much more severe fall in prices of up to ten per cent is possible. Ultimately this means that families could see hundreds of thousands of pounds wiped off the value of their homes.

House price rises bad; house price falls good

But the effect will not end there. With fewer people wanting to move up the property ladder because they would be whacked by the tax if their new home was above the threshold, competition for houses below the threshold will intensify.

Given that there is already a shortage of such houses, this can only mean that prices will be driven up, possibly by as much as ten per cent, pricing out many middle-class families. So the perverse consequence would be that the squeezed middle will be squeezed even more.

So there you have it: House price rises are simultaneously good and bad. If we apply their non-logic, the ideal policy must be to increase Council Tax on cheaper houses and exempt really expensive ones...
The premise is nonsense of course.

Yes, the Mansion Tax will depress prices at the top - wiping out up to six or seven months' worth of recent capital gains. Boo hoo.

But the tax will have absolutely no effect on the price of houses further down the scale. There will be an mild upward push from those few thousand Poor Widows who might finally decide to trade down and an equal and opposite mild downward push from the few thousand people who can now trade up.

The search for the elusive Poor Widow cools down again.

MBK and Thomas B Hall both alerted me to this statistic:

New research released by Barclays shows that the over 65s added £37 billion to the UK economy through spending on the Hospitality & Leisure sector in the last year.

Based on LVT/Domestic Rates of average 3% - 3.5% of the value of your main residence, pensioners' main residences would incur bills of about £40 billion a year.

So that's "ability to pay" sorted.

UPDATE: To put this in perspective, UK pensioners receive approx. £100 bn a year in state pensions, pension credit and other bits and pieces; £30 bn a year in public sector/civil service pensions; and £40 bn in private sector pensions, total = £170 bn.

According to HMRC, £14 bn is deducted in income tax (i.e. public and private pensions x 20%).

Dunning Kuger, Adam Smith, Competition and the NHS

We had an interesting debate on here recently which drifted into a discussion about the efficiency of NHS and related matters.

At the time one of my antagonist quoted Adam Smith. And at that time I did not have the facts to hand although I was sure that he was wrong and therefore I did not engage in that piece of the discussion. This is the Dunning Kruger effect.

The quote concerned was the one where AS states something on the lines of "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

This is often used by lefties to justify that regulation of free enterprise is necessary as otherwise 'market failure' will ensue and capitalists will compound to overcharge by creating monopolies and cartels.

I returned to Wealth of Nations to remind myself why this was not what AS had in mind. In fact this is part of his argument against regulations. In that what these businessmen are seeking is for the State to erect rules and regulations to protect them from competition.

Which brings us back to the NHS. Efficient it may or may not be. Personally, I think that measuring how 'efficient' it is in comparison with other probably inefficient health care systems proves nothing. AS would argue that what is need to make health care 'efficient' is less special rules favouring special interest groups, doctors say, and more competition. In other words it is not money, it is structures that are holding back efficient heath care.



Tuesday 21 April 2015

Plaid Cymru

The search for the elusive Poor Widow warms up

Via MBK, from The Times:

Of the 97,000 [homes worth more than £2 million] that would be subject to the levy, a third have been owned for more than ten years, including 19,000 owned for more than 20 years and 10,400 owned for more than 30 years.

My favourite Indian Bicycle Marketing of the day.

Ed Miliband, on super tip-top form, promises an emergency recruitment drive to get 1,000 more nurses into training this year if they win the election.

According to the NHS Confederation, NHS England alone employs 377,191 qualified nursing staff.

According to the Daily Mail, about 5,500 NHS nurses left to work abroad last year.

Assuming a nursing career of forty years, about 10,000 new nurses start each year and 10,000 retire.

So 1,000 nurses is not even a bloody rounding error, is it?

Why You Should Vote (2)

From the Conservative mainfesto (p65):

continue to increase the State Pension through our triple lock, so it rises by at least 2.5 per
cent, inflation or earnings, whichever is highest

From the Labour manifesto (p48-9)

We will keep the triple-lock so that the state pension increases by inflation, earnings, or 2.5 per 
cent, whichever is highest

From the Libdem manifesto (p49)

Legislate for the Liberal Democrat ‘triple lock’ of increasing the State Pension each year by the highest of earnings growth, prices growth or 2.5%.

From the UKIP manifesto (p20)

The ‘triple lock’ now guarantees the state pension will increase each year by the higher of inflation, earnings or 2.5 per cent.

There's no good reason for pensions increasing by a minimum of 2.5%. If wages and inflation are rising by less than that, it's simply a giveaway. And it's being done for one reason and that is that pensioners vote a lot more than young people. Over 65s had a turnout rate approximately 1.5 times higher than 18-24s and approximtely 1.3 times that of 25-34s (section 2.3 of this).

All that parties care about are people who vote. That's how they win. They might pay lip service to the concern of people not voting, but unless they think it's affecting a group that generally votes for them, they aren't going to care too much.

A good post about Indian bicycle marketing

Over in The Shed.

Monday 20 April 2015

Voting Thoughts

Bit of a personal post, but I'm looking at all my options, and here's my current thinking:-

Greens: right out. completely hatstand (except CI and a couple of other things)
UKIP: out. A complete mess of policies including things like anti-Greenbelt building and turnover tax. They've even softened their views on smoking in pubs to "smoking rooms".
Lib Dems: Mostly, not too bad. Bit too much of the state expansion, bit too pro-European for my liking. Bit not much chance in my seat.
Labour: In many ways, a competent manifesto. Good on house building, mansion tax, but all this "bankers bonuses" and "tobacco levy" is nonsense. Plus, I'm not at all keen on 16 year olds voting (especially at the same time that we have put restrictions on the choices that 16 year olds can make regarding work).
Conservative: Generally think they may be more competent than any party on economy, but too pro-homey and spending.

I'm almost tempted not to vote, the choices are so weak. So, it's really coming down to the SNP. Labour will have to deal with them, and they won't be that much of a junior partner. If this means they get another referendum and I thought the Scots would do the right thing, I'll vote Labour. But I think they'll still vote to stay in the union, and we'll have a bunch of even higher spending types pushing Labour leftwards.

Any thoughts?

Fun Online Poll: The most annoying phrases of the election campaign

Inspired by an article in The Metro which I can't find online, based on a survey carried out by

Make your suggestions and selections here.

Fun Online Poll: The value of a place in a queue

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

What has more influence on the value of your place in a queue?

The number of people in front of you - 40%
The number of people behind you - 60%

That's a bit disappointing, given how easy the question is. If people had chosen at random, the result would have been barely different.

It is also strange that the known Georgists get it straight away, but the known Homeys twist and turn and say "Ah yes but…" and bring all sorts of other variables into the question.

Clearly, the answer is that the number of people behind you has a more influence (everything else being equal).

James James: ... the price you will have to pay to get to the same position again in the queue if you leave it, is the number of people behind you.

Thomas Hall: If you join a queue of ten at a bank, and you wait ten minutes and all the time no-one else joins, you might feel annoyed/the biggest loser.

Conversely, if you join a queue of ten at a bank, and immediately afterwards loads more people join the queue, you feel happy you got in at the right time- even if in both instances you wait identical times to be seen.

How do we measure the value of a place in a queue? How likely you are to leave it and start again.

If there is nobody behind you, you are quite happy to nip off and do something else and come back later. If there are loads of people behind you, then you are more likely to stay put. That is entirely independent of how many people are in front of you.

Equally clear is that nearer the front you are, the more your place is worth, but that is because the nearer the front you are, the more people are behind you.

Sunday 19 April 2015

Modern Monetary Theory and Land Value Tax

Random left the following lengthy comment on Lola's post on why LVT is inevitable, tidied up as follows:

Every pound of govt spending comes back as taxation.

To realize this you have to think harder about what taxation really is for. It certainly is not to 'fund' spending. It is to stop spending become inflationary. Once you realise this you see people voluntary tax themselves - it is called 'saving.' In MMT it is referred to 'voluntary taxation.'

So we get the equation Govt spending = local saving + net imports (foreigners saving) + tax.

Now we can argue over who gets compulsory taxation and who gets voluntary taxation. But it has nothing to do with public services.

The main power of billionaires (even if they don't know it yet, and if rich people are reading this, then yep) is the ability to spend their billions on real resources and cause inflation. Then govt has to cut spending/raise taxes to stop it.

Once you see things from the MMT point of view it is very clear. For example in developing countries capital controls won't be all that is needed. The govt needs to ban imports of luxury goods as rich people spend money on foreign goods and the exchange rate declines. There is tons of material on this - Neil Wilson's site on economics displays things very clearly to accountants and he hammers these types of points home. Bill Mitchell's blog is good as well.

There is a lot of truth in that, but all roads lead to Rome, and the kind of tax which dovetails most neatly with that is a tax on rents and monopolies (mainly land) i.e. LVT.

Why is LVT therefore vastly preferably to taxes on income, assuming its main aim is to address inequality, lack of private saving and current account deficits?

1. Equality is A Good Thing in an of itself, provided the 'costs' of achieving equality do not outweigh the benefits - there is no point levelling people down, the idea is to level people up.

The prime driver of inequality is land ownership, that is between Baby Boomers and younger generations; but more importantly, the really rich people get most of their wealth or income from land, banking (80% of bank loans are secured on land) and other monopoly rights (landing slots, broadcasting rights etc). As others have pointed out, in the UK there are more estate agents/letting agents than school teachers.

2. Private saving is generally regarded as A Good Thing and there is plenty of evidence to show the negative correlation between land prices and the savings ratio. So keep land prices low and stable and you get more private saving; keep taxes on profits low and you get more investing. Win-win.

3. Constant current account deficits are A Bad Thing, they are a sign that the domestic economy is running below potential. The UK's current account deficit is running at about 6 per cent of GDP. How would LVT help..?

i. Removing taxes on economic activity helps the economy grow; reducing the average overall rate from about 50% to 20% would mean that the economy expands by about 12% (the deadweight cost of taxes are the tax rate cubed). So people are more likely to spend their money in the UK because there is more to spend it on. So that's the trade deficit sorted (see Denmark in the 1960s).

ii. More private saving = less importing.

iii. The bulk of monetary inflation is down to land prices; with LVT in place, this kind of inflation would not be an issue. The natural tendency of free markets and dynamic capitalism is for prices to fall gradually over time (relative to wages i.e. people are more productive).

As to the last paragraph:

4. With LVT, you don't need 'capital controls', which are a recipe for inflation and all sorts of other skulduggery. When foreigners 'invest' in the UK, they seem to love investing in land and other monopolies, as their current profits would largely be collected as tax, there would be less leakage that way. Money which foreigners have earned here fair and square will be taxed lightly and they should be free to take their profits abroad.

5. LVT follows the principle of territorial taxation. Income should be taxed where it arises and not where it is spent. Simple observation tells us that really wealthy people are heartily indifferent to lump sum taxes on housing, what they are very sensitive about is the tax rate on income, especially on remitted income. Leaving remitted income untaxed would therefore encourage them to spend more money in the UK (until the countries they are plundering wise up and impose their own LVT).

6. Banning imports of luxury goods is a nonsense and barely enforceable in practice, in any event, what's wrong with it?

7. LVT is voluntary taxation; nobody is forced to live exactly where they do (and nobody is forced to be a landlord!), it is a tax on consumption of land. If you don't want to pay tobacco duty, don't smoke (or smuggle); if you don't want to pay so much LVT, then trade down, there will always be somebody prepared to trade up (you can't smuggle land into the UK). Everybody therefore has a choice between spending their money on other people's output or on land.

Friday 17 April 2015

Short List

Leaders of the SNP named after a fish.

Bonus: Leaders of the SNP named after an animal.

Sleazy News

From the Daily Mail:

The 46-year-old had worked at a red light district window in Amsterdam for eight years. However, for the past six of them, she has also been offering her banking services at more than £50 an hour.
Identified only by her ‘professional’ name, she asked clients for requests, saying ‘the sleazier the better’.

She describes her greatest passion as ‘ripping off strangers with PPI, pension charges and subprime mortgages’. Quote, a Dutch magazine, reported that she had a sexual role in a knocking shop while specialising in sadism in her spare time. 

After the magazine broke the story, the brothel confirmed it had fired her over ‘integrity issues’.

Banking in Holland is legal although workers at the De Wallen are not allowed to engage in any activities which could bring the industry into disrepute, such as ‘indecent behaviour’.

Thursday 16 April 2015

Green Party on top form.

From Professional Pensions:

The Green party wants to halve the amount of tax relief given on pension contributions to fund a non-contributory ‘citizen’s pension’.

In its manifesto, published today, the party said tax relief amount to a "£40bn pound government subsidy" for a failed pension system.

It said: "The performance of the private pensions industry is dismal - the total paid out in private pensions each year is no more than the subsidy that the government gives the industry."

The Greens said they would halve the amount paid out in tax relief and would further limit the annual allowance to make the sure more of the subsidy went the low paid.

It's almost as if they have been reading this 'blog... (plenty of others from left to right have said the same thing, of course, there's no copyright in facts).

"Tory housing minister Brandon Lewis said"

From The Daily Express*:

"Thanks to our long-term economic plan, house building in England is at its highest level since 2007.

"Our schemes are helping hundreds of families every month to buy their own home and we will go further by allowing new homes to be built specifically for young first-time buyers.

"Our Government-backed schemes will help a million more people become homeowners in the next Parliament.

"Our long-term economic plan is getting Britain building again and is helping people achieve their dreams of home ownership – the biggest threat to this is Ed Miliband in government."

The English Housing Survey said:

25 to 34 age group
Owner-occupiers - 47%
Private renters - 36%

25 to 24 age group
Owner-occupiers - 36%
Private renters - 48%

To me that looks like a catastrophic fall in owner-occupation rates with a corresponding catastrophic increase in private renting. Clearly Mr Lewis knows something we don't.

The fact that the rot set in under New Labour is a separate topic, the 2013-14 survey tells us that the figures for 2003-04 were::
25 to 34 age group
Owner-occupiers - 59%
Private tenants - 21%

* Emailed in by MBK who knows I love this shit.

LVT is inevitable...

I have a little hobby of spotting bits of news about how taxes are getting harder to collect on labour and capital.  A good bit on that is here.

Given things like this you think that Governments would eventually be forced to tax the things that can't be off-shored, like land say.

Either that or you'll get a lot of government hysteria to push for 'global' taxation.  I seem to recall the EU banging on about that.

But overall, I think that some form of LVT is going to arrive.

Greenbelt Quiz

Mark's quiz on manifestos that he linked to reminded me of this fun quiz on Estates Gazette about Hallowed Greenbelt. It's not that hard to get full marks (tip: the dull countryside around Oxford is greenbelt, the beautiful countryside around Chipping Norton isn't).

The Laffer Curve in action

From City AM:

Corporation tax rates have been falling globally for decades. In 1981, the average rate across the OECD was 48 per cent. It has now plummeted to 24 per cent. In the UK, the decline has been even more stark, with the rate dropping from highs of 52 per cent to just 20 per cent today...

Despite the reduction in the UK’s main rate of corporation tax since 2010 from 28 per cent to 20 per cent, revenues have remained remarkably resilient. In 2013-14, onshore corporation tax receipts (excluding the volatile North Sea oil and gas sector) were £35.7bn compared to £35.3bn in 2010-11.

In the year so far, onshore corporation tax receipts have been 10 per cent higher than over the same period last year – despite a further two percentage point reduction in the rate. The simple truth is that higher taxes do not always lead to higher revenue.

Also from City AM:

Changes to stamp duty in December’s Autumn Statement mean that homes worth below £1m received a tax cut, but those at the very top end of the price scale have to pay a far bigger levy. Under the tax changes, the average London home selling for £510,000 saw its tax bill cut by £4,900. But a property worth £2.1m saw its tax bill rocket by £18,750.

In the first quarter of 2015, there were 638 prime London transactions, down from 949 in the same period a year earlier – a fall of 33.1 per cent. And the stamp duty haul raised from those sales fell from £125m to £93m, down 25.6 per cent.

Of course, this is City AM, so they pretend that corporation tax and SDLT are the worst taxes; they are bad taxes but far from the worst.

So they seldom mention the Laffer Curve as it applies to the worst taxes VAT or National Insurance; the trick here is to look at total tax receipts from all taxes on economic activity. So while a cut in VAT or NIC rates would no doubt mean a reduction in VAT or NIC receipts in isolation, you have to balance that with increased revenues from income tax or corporation tax (the rather less bad taxes).

(With good taxes there is no Laffer effect whatsoever, of course.)

"Do you know your Conservative manifesto from your Labour one?"

There's an excellent online quiz at the end of this load of shite at the Telegraph.

I got 9/10 by simply assuming that whichever party actually said it is the opposite of the one which you would expect to say things like that, apart from a couple which I knew for sure.

Wednesday 15 April 2015

NHS - Fun with numbers

Conservatives pledge another £8 billion a year on the NHS.

Labour say that they would only spend another £2.5 billion a year on the NHS.

Lib Dems match the Tories' pledge of £8 billion a year more on the NHS.

Greens promise to employ an extra 400,000 people in the NHS, cost unspecified, £20 billion a year, maybe?

UKIP plans an extra £2.4 billion a year for the NHS (over five years = £12 billion headline figure).

What nobody can explain is that one-third of the NHS budget (over £100 billion a year) goes on doctors' and nurses' salaries and actual medicines, but nobody knows where the other two-third goes.

I am sure that there is plenty of other worthwhile stuff in there, like ambulances and ambulance drivers, cleaners and so on; and there is plenty of crap like translating anti-smoking leaflets into 128 different languages and all the PFI fraud and waste, but is there a breakdown of it?

The Taxpayers' Alliance have scratched the surface occasionally, well done them.
The comments thread here has descended into a flame war about completely different topics.

Fact 1: the NHS is just as good as most other healthcare systems in terms of value for money. We spend a bit less and get a bit less.

Fact 2: there is a huge amount of waste and fraud in the NHS.

Conclusion: there is a huge amount of waste and fraud in most healthcare systems. That's what we should be addressing.

Tuesday 14 April 2015

"David Cameron to pledge right-to-buy extension"

From the BBC:

David Cameron is to launch the Conservatives' general election manifesto, with a pledge to allow housing association tenants to buy any extension to their homes.

The PM will say up to 1.3 million tenants could buy loft conversions, front porches and conservatories as a result, insisting the Tories are the party of working people.

"We're keeping the original part of the house though," added the Prime Minister, "We're not stupid."

"Boat Race spectators rescued by emergency services after becoming trapped by rising turd"

From the Evening Standard:

Dozens of overeager spectators had to be rescued after they became trapped beside the River Thames while watching yesterday's Boat Race. An eight-year-old boy who became submerged in sewage after losing his parents was one of about 80 people who were carried to safety. Lifeboat crews from the RNLI saved 60 people alone while the Metropolitan Police's marine unit and the Royal Marines brought several out of the doo-doo.

The spectators were standing on the foreshore of the Thames when they became stranded by the rising turd and the large wash from the flotilla following the rowing teams from Oxford and Cambridge. Large crowds were caught short at the foreshore in Hammersmith and Barnes and a smaller group was rescued in Chiswick.

David Clarke, of the Chiswick RNLI, said:

"They were people on the foreshore just caught out by the rising turd and substantial wash from the flotilla that follows the race.

"Normally, the Thames is well spoken, but this twelve-hourly peak in water level definitely had a northern accent, Black Country maybe, and it all turned to shit."

Monday 13 April 2015

Fun Online Poll: The stupidest manifesto pledge yet.

Please nominate your favourite stupid manifesto pledge in the comments and I'll sort out the Poll this evening.

Don't worry so much about whether any of these are worthwhile or make economic sense; focus on whether there is the slightest chance that the party proposing it actually means it (or is just saying to try and grab a few extra votes) and would actually make happen on a practical/administrative level were they to get into government - remembering always that the next government is almost certain to be a coalition anyway.

My favourites so far are:

Lib Dems - £1,500 loans for tenants' deposits
UKIP - reduce VAT on 'women's sanitary products' to zero per cent.
Tories - three days a year paid leave for volunteering.
Labour - The 'Budget responsibility lock'.
Greens - Increase minimum wage to £10 an hour.
SNP - keep retirement age in Scotland at 65.

But that's just off the top of my head and I'm sure there's worse.

"HSBC rapped for doing something sensible"

From The Daily Mail:

A couple in their 40s became unusual victims of common sense after their bank rejected an interest only £250,000 mortgage equity withdrawal application because it deemed the husband to be too old.

HSBC was ordered to pay them compensation after the banking industry watchdog found it ‘relied on sensible assumptions and were acting in the couple's best interests' in the case.

The banking giant was criticised for refusing to hand over £250,000 secured on unrealised and unearned capital gains on a home on which the purchase mortgage had not even been paid off yet because the husband would have been over 65 when the 18-year-deal finished, according to The Sunday Times.

Probably Apochryphal, but...

Mrs L copied me into an article on Facepage which tells a story about an old lady perpetually on a cruise ship because, for excellent 'care', it is far less costly than a care home on-shore.

So, what's the one cost that the care home has to pay that the ship doesn't?

And what is the way in which this could be adjusted?

Paint Brushes

I know a lot of people who don't, but is there anyone else apart from me that just bins brushes and rollers after decorating? It costs nearly as much in cleaners as the brush costs and then you've got to do the cleaning, and then they're stiff and useless for the next job anyway.

Also, does anyone else keep paint? I do, but I'm realising that other than white gloss and radiator paint, I never use it again.

Sunday 12 April 2015

Authoritarian Madness


Have they ever thought that the bloody limits might be too low?  The responsible 'man on the spot' will always know more than the remote bureaucrat; be more informed about the actual circumstances prevailing at the time.

I recently drove from Ipswich, down the A12 around the M25 anticlockwise and onto the M3 then A303 to get to Thruxton. And back the day after.  The whole exercise was made more unsafe for me by either mass bunching of vehicles terrified of the 'grey' cameras, or just trying to keep within the indicated speed limit by constantly checking my speedo. If you drive under the speed limit you get in amongst all the heavy vehicles with drivers sitting with their pedal to the metal using their governors to  stick at 56 / 60 ish.

There clearly is a place for advice on speed - where road alignments make it impossible for drivers to know the circumstances; around live roadworks; as advance warning of an 'incident', for example.

Similarly many speed limits are 'too high'.  In my town there are lots of narrow cross streets with cars parked on both sides where to do  more than 20 is dodgy, yet the 'limit' is 30.  I cannot recall any news story of any incident in such streets.

But clearly what we have now is just persecution to satisfy the small minds of a small clique of authoritarian police and 'planners'.


As an ex-highway engineer, I know that there is a good case for lowering - or recommending - lower speeds in periods of high demand on, at that instant, under-capacity roads.  It is a proven fact that more traffic will get through any stretch of road under those circumstances as it can bunch up safely. But this does not need to be policed by cameras, especially if you explain to drivers what is happening and why.  It's all about trust.

This fact is also useful when we think about self driving cars. Such vehicles will be able to safely 'platoon' (in the jargon).  Which in turn leads eventually to the argument as to why HS2 should be killed stone dead.

Saturday 11 April 2015

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.


From the BBC

A Conservative government would offer up to 15 million workers three days' paid leave a year for volunteering.

Under the party's plans, a new law would be passed requiring public sector employers and companies with more than 250 employees to give staff up to three days a year to do voluntary work.

David Cameron said the plan would help to "build a stronger society".

But Labour called the plan "irresponsible" and asked where the funding was "going to come from".

Let's go with an approximate number, of people working approximately 4 days a week. Once you take out holidays, bank holidays, sick days, staff meetings and training, that's about the useful stuff you get left with. So, that's around 208 working days a year. If 3 of those are now training, that's effectively like those employers having 1.5% extra on employer's NI, or in the case of state employees, an extra 1.5% on the tax burden. Seriously, good luck with many UK companies remaining as bigger than 250 employees as opposed to split off into separate companies after you do this.

Now, I know that people think this helps employers, but that's just bullshit. I've worked with people who went off to Peru with Operation Raleigh to help people build bridges and they came back the same, but with nice photographs. You learn better how to write software by writing software than by building wooden bridges.

As it happens, despite being a "pledge", I'd be surprised if it happens. It's just some half-baked Cameroonian nonsense.

Friday 10 April 2015

Friday night gearchange

The Green PBB is a wonderful spoof of a boyband video, and true to form, includes not one but two completely tacky gear changes at 2 min 20 and 2 min 37.

The basic tenet, that all the big parties are much the same is a valid point as well, of course, but Nigel Farage has been saying that for years.

At which stage we go around the clock: UKIP accuse the Greens of being the same as the big parties and the Greens accuse UKIP of being the same as the big parties etc.

The Lib Dems latest whacky proposal

Appears to be that the government will pay tenant deposits of up to £1,500 or £2,000 in London more or less directly to landlords, without asking the landlord for the money back; if they can't get the money back from the tenant, the government will just write it off.

So presumably those landlords who currently would have demanded a smaller deposit will promptly bump it up to £1,500.

See how many other holes you can spot in Clegg's logic.

The Non-dom "tax loophole"...

... is only a "loophole" to the extent that it can only be used by a very small and randomly selected group of people.

In the spirit of fairness - and many countries do this - why not exempt truly foreign source income from UK income tax altogether? It is called the 'territorial principle' or 'taxation at source'.

We now have this rule for UK resident companies. By and large and as long as there is no skulduggery involved, they are not charged to tax on dividends from foreign subsidiaries or profits and gains from foreign branches. And neither do they get tax relief for overseas losses.

So in theory, everybody could have his own non-dom tax loophole by setting up a UK company which accumulates all the foreign income, if and when he wants some cash, he pays himself a dividend, with an effective UK tax rate of 25% or 30.6%.

Either way, we ought to be pleased if people bring in money from abroad and spend it here, it's all good.

The really big tax leakage is when people (primarily corporate groups) do not pay tax on their UK-source income by siphoning it off abroad, and there are various tried and tested methods of combatting this such as applying withholding tax to payments out, transfer pricing rules, tightening up on the grey area between 'representative office' (not taxable) and 'permanent establishment' (taxable) and the new-fangled 'diverted profits tax'.

UPDATE: Kj, who is usually one step ahead of me, adds the other obvious counter-measure: "A protectionist but simple enough solution would be to just disallow deductions for purchases from a foreign entity, making it in effect a x% VAT on imports only."


Instead of chasing Google for the tax on income from the UK, just make payments to Google (or any business operating from a tax haven which has a UK presence) a disallowable expense (the same as fines or entertaining) from the point of a UK business which paid it. The net additional receipts are pretty much the same as getting Google to pay the tax and there is no form filling involved.

Thursday 9 April 2015

I didn't realise that "in your face taxes" was a widely used term.

I pinged off my submission to The [Scottish] Commission on Local Tax Reform, which they have put online here.

Out of interest, I read the first submission by Kenneth McKay, which merrily demolishes The Poor Widow Bogey thusly:

14... Arguments against Domestic Rates and property-based taxation in general have included that tax liability should be based on income rather than the value of property occupied and the classic comparison between a widow living alone with 4 adults living next door which brought us the Poll Tax. There are in fact very few households consisting of 4 adults!

15. Although there is not a direct link between house values and income there is reasonable correlation...

But what cheered me up most was his description of Council Tax, Domestic Rates etc. as "in your face" tax in para 12.

I always assumed that we on this blog had coined this term, perhaps not after all.

I couldn't solve the 'challenging' Sudoku in this morning's Metro...

... because I didn't have a bloody pen with me.


Book Review: Before I Go To Sleep

One of my sins is not reading enough novels. I do lots of it on holiday, but the rest of the time, I'm terrible at it.

Anyway, I decided to give SJ Watson's Before I Go To Sleep a go. It was cheap on Amazon for a day and I heard Nicole Kidman praising the book (she was promoting the film) about a woman losing her memory each day. Anyway, I'm rather biased towards Ms Kidman and so tried it.

And it's a very good mystery thriller. I did consider various possibilities, but the one that happened wasn't quite what I expected, and the unfolding of it was brilliant.

Wednesday 8 April 2015

More Picketty-related nonsense

James James refers us to this article about Matthew Rognlie, which contains the following embedded chart:

Although Rognlie is closer to the mark than Picketty He's got the shares going to 'capital' and to 'housing' completely upside down. Let's just look at UK household income not business profits (which is a bit artificial but avoids the need for adjustments for double-counting).

According to HMRC tables 3.6 and 3.7 for 2102-13, total taxable employment and self-employment income was £711 billion and total household income from capital (dividends and interest) was £53 bn. I'll ignore pension income because that is just a confusing mix of taxpayer-funded, deferred employment income, dividends, interest and rent.

The total annual rental value of all residential land is £200 bn. The return on bricks and mortar (the actual capital) is something in the region of £50 bn, which we can add to the £53 bn from above.

So... total income = £1,014 bn.

The percentages are actually as follows:
Employment and self-employment = 70%
Capital = 10%
Land = 20%.

If you want to treat 'housing' as a separate category, the split is:
Employment and self-employment = 70%
Capital = 5%
Housing = 25%

In other words, on average, one-third of tenants' gross earnings goes on rent, which we knew anyway. Rognilie's chart suggests that it is only one-seventh, which is clearly bollocks.

Monitor lizard

Tuesday 7 April 2015

"Critics have said it could cost £280 billion"

From the BBC:

Every adult in Britain would be paid a basic income regardless of wealth or earnings, the Green Party will say in a commitment to appear in its manifesto.

But Natalie Bennett, the party's leader in England and Wales, told the BBC a Citizens' Income of £72 a week would take time to implement...

Critics have suggested it could cost £280bn.

That depends how you define 'cost'.

The total amount nominally paid out (including lower amounts to children and double that amount to pensioners) plus running costs, fraud and error would be approximately £280 bn. Nobody's disputing that.

It would all be 'paid for' by scrapping an equal and opposite amount of existing state pension/welfare payments and tax reliefs (notably the tax-free personal allowances for income tax and NIC) and reducing running costs, fraud and error. (Housing Benefit and disability related benefits would continue for the time being) In other words, the cash 'cost' is exactly the same as the current system. That's the whole point.

It would take no time at all to implement; for pensioners and children we use the existing system as for state pensions and child benefit; existing welfare claimants continue claiming what they are getting (but in return they get a BR tax code so pay full income tax and NIC on all their earnings, if any).

The majority of adults who are in work just get an appropriately higher personal allowance (i.e. £72.40 x 52 ÷ 32% = £11,765) but no cash paid out (it nets off with the PAYE they would have had deducted). There's a bit of faff with people who less than the new higher personal allowance, but it is a lot less faff that the existing system, in particular working tax credits.

There will be a few winners and losers, but we are talking relatively few people affected and relatively small gains or losses. A really simple system like this is inevitably slightly less 'progressive' or redistributive than the current system because on the whole, low to middle earners are likely to gain at the expense of non-earners, but so what?

The only debates to be had are whether £72.40 per week is too low or too high; what to do with Housing Benefit; and whether we ought to start tinkering with 'transitional measures' for the small number of people who end up with less money in the short term.

Job done.

Daily Mail on top form

They don't even make you skim read the article to find out what the flat was worth:

Wealthy British expat arrested after his 'secret' 15-year-old daughter plunged to her death from £7.5m Hong Kong flat

The Daily Mash does Home-Owner-Ism (again)

From The Daily Mash:

Renter Emma Bradford said: “When owning a house becomes an impossibility*, at first it’s depressing but then your mind turns to things other than mortgages and floor plans.

“It’s like taking a massive dose of some powerful hallucinogen and seeing everything incredibly vividly. You realise universal truths like what materialistic shits your friends have become.”

* The article is based on a recent Halifax report, from City AM:

Overall, the Halifax data suggested that more people may be giving up the idea of owning their own home.

People saving for a deposit has dropped six percentage points to 43 per cent compared with 2013. At the same time, those who are saving expect to have to put in more effort to save than existing homeowners.

Potential first-time buyers are now prepared to save for an average of 5.35 years whereas recent home buyers saved for an average of 3.6 years.

Monday 6 April 2015

Killer Arguments Against LVT, Not (358)

At the end of an otherwise supportive article in The Economist:

Some categories of land (private golf courses and urban car dealerships, for example) are likely to be hit especially hard.

That all depends where they are and whether this is the optimum permitted use. A golf course out in the countryside is not depriving anybody of anything or causing any inconvenience, so the LVT would be minimal. A golf course in the middle of town is in the wrong place.

So too are urban homeowners with gardens: the tax will encourage them to build on them, which is good for the housing stock but bad for the environment.

Jesus! At present, land value uplifts from change of use are lightly taxed, if at all, so homeowners with large gardens have every incentive to replace their single house with a block of flats or a couple of smaller houses. I live in an area where this happens every year or two.

What's stopping them? Planning laws, zoning restrictions etc. Nobody said that we'd get rid of those. And overall, small areas with denser housing are better for the environment overall.

If anything, that is an argument FOR LVT - if somebody applies for change of use for more dense construction, then the annual LVT bill goes up accordingly, and that of his neighbours goes down slightly. You get what you pay for; you are compensated for what is taken away from you.

Some pensioners may own a valuable and much-loved house but not have the means to pay the levy.

Poor Widow Bogey.

The temptation to tweak the tax to soften these problems is great. Even fiscally purist Estonia, which adopted a land tax after it regained independence in 1991, now has multiple bands, including an exemption for homeowners.

True, actually. The simpler the system is and the fewer the exemptions the better, but there is a difference between a personal exemption and one attaching to the land. If a council says, OK, pensioners and short term unemployed get a discount or an exemption, that all sorts itself out in time, everybody else has to pay a bit more while they are working and gets relief when they are not. Which is what National Insurance was supposed to be for.

A third problem is that valuation of the high-priced urban land (rarely sold as vacant plots) may be tricky—and controversial. Wealthy commercial landlords could tie the assessment process up in costly legal knots.

The theoretical selling price of bare land has very little to do with it. You calculate the annual rental value of a building at any "location, location, location" by subtracting the total rental value of a a similar one in the most marginal area with zero location, it's child's play.

Total rent in Area A = Location rent + Building rent = £10,000
Total rent in marginal area = Building rent = £4,000.

Hence location rent in Area A = £6,000.

Saturday 4 April 2015

Steamy Movie

From the Telegraph

A vintage railway operator has been branded "disgusting" after allowing a hardcore porn film to be shot on its historic train track. Parents have slammed the decision to allow American adult film company, Brazzers, to shoot a 28-minute film on the Epping Ongar Railway - a heritage railway in Essex.
Amanda Mendel, a mother-of-two from Ongar, Essex, said: "They advertise it as a family-based business but one minute it's Peppa Pig and Father Christmas and the next it's an orgy train. You can't stop businesses doing what they want but it doesn't seem right."

"It makes you wonder what went on in the train."

You're a mother of two and you wonder what went on?

Leader's Debate

I didn't watch it. Apparantly Nicola Sturgeon did well, though, no doubt promising the Scots a pony for all based on some inflated numbers on oil prices, but something that stuck out was what Farage said.:-

Nigel Farage was rounded on by other party leaders on ITV’s Thursday night debate after he complained about foreigners with HIV costing the health service up to £25,000 per year per patient.

The Ukip leader steered the debate on to the topic of health tourism when he was given the opportunity to talk about the NHS.

Plaid Cymru leader Leanne Wood tackled him on the subject during the seven-way discussion, saying it was scaremongering and that he should be ashamed of himself.


SNP leader Nicola Sturgeon responded saying: “One of the things we’ve learned is there’s nothing Farage wouldn’t blame on foreigners.”


Having not intervened during the debate, Labour leader Ed Miliband tweeted afterwards that Farage’s comments were “disgusting”, adding: “He should be ashamed. The fact he isn’t says so much.”


Liberal Democrat leader Nick Clegg also took to Twitter to condemn the remarks, saying: “Farage’s comments about foreign people with HIV were simply vile and desperate. Politics of the lowest form.”


David Cameron remained silent, but when asked to comment, chancellor George Osborne said he would not dignify them with a response. Later, on the BBC’s Newsnight, he refused once again to rule out the idea of a post-electoral pact with Ukip.

I think this sums up a problem we have in this country, that our political class have contempt towards the public.

I wouldn't mind if Cameron, Clegg or Miliband had challenged Farage to show his numbers (which it turns out are about right).

But what they're really saying is that it's beyond the pale to even discuss something that the government spends money on. Now, I know the game that Farage is playing, but that doesn't mean that it doesn't dignify a response. This is public money being spent. Maybe not as much as Guido reports, but based on House of Lords numbers, it's around £500m/year for England. Personally, I'm not at all happy if some Africans are coming over here just to get treatment for a disease (if we're saying it's OK, should we therefore be treating all Africans)?

And I'm not against people arguing that this is morally OK. I'm not against a politician saying that it's morally wrong to screen people coming to the UK, or that it's not worth it, but to just say that something costing half a billion of public money is off-limits for discussion is contemptible and shows the political class at its worst.

Friday 3 April 2015

Fun Online Polls: Your favourite season & the value of a place in a queue

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

Which is your favourite season?

Spring - 27%
Summer - 36%
Autumn - 33%
Winter - 4%

So, summer it is then, by a fairly narrow margin.
Another little brain teaser this week.

What has more influence on the value of a place in a queue? The number of people in front of you or the number of people behind you?

Take part here.

Clue: you are in the queue in the supermarket and you realise that you have forgotten to buy XYZ.

There is a nuisance cost to you of doing without XYZ for the next few days. If you leave the queue to get it, there is a time cost of starting again at the back of the queue; the value of the place is equal to the time cost of starting again at the back.

If the value of your place in the queue is lower than the nuisance cost, you will leave the queue, go and get XYZ and start again.

If the value of your place in the queue is higher than the nuisance cost, you will stay in the queue and do without.

When working out the value of your place in the queue, do you count the number of people in front of you or the number of people behind you?

Thursday 2 April 2015

Zero-Hours Contracts

Julia Hartley-Brewer in the Spectator:-

And this is where we get to the truth. Because not only does an employer enjoy far lower bills for holiday and sick pay entitlements, as well as pension contributions, for zero hours and part-time employers, they enjoy other benefits too. The employer’s National Insurance contribution liability doesn’t kick in until an employee earns £156 or more per week, so many companies now ensure they limit employees’ hours to below that threshold. When extra hours are available, instead of offering more hours to existing part-time staff, some of whom are desperate for full-time work, these companies simply hire more zero-hours or part-time staff.

And what's her solution?

If Ed Miliband or David Cameron really want to tackle the dark side of zero hours contracts, they should pledge to impose a legal limit on the percentage of staff that any company can employ on zero hours contracts. That maximum should not exceed 10 or 20 per cent, which allows ample room for flexibility. After all, when companies pay less in tax and NICS, the Treasury loses out on vital funds. And when people can’t get the full-time work and job security they want, it is taxpayers who end up footing the bill for their tax credits and housing benefit to make ends meet. That means less money going in to Treasury coffers and more money going out.

Why so complicated? Apart from the fact that cafes and cinemas have a lot of "peak" staff and a few staff with regular hours, why not just scrap employer's NI and just stick it on income tax? Or worse, set the floor to £0.

Killer Arguments Against LVT, Not (357)

MBK emailed in this one from Forbes to add to the collection:

If you take an empty city block and fill it with dense, beautiful buildings, nice restaurants and bars and other sources of entertainment then the value of the land will go up. This reflects the reality that there are a significant amount of spillovers in local real estate investment. Land value is not just capitalized value of publicly provided public goods, but of nearby privately provided positive spillovers.

It’s widely recognized that when individuals clean up a property, or open a popular business, there are often spillover values in the neighbourhood. Urban economists recognize that the collective value of these spillovers is huge, and in fact makes up a significant amount of land value... The fact that private amenities have positive spillovers suggests that they will be underprovided by competitive markets.

All good and proper so far.

However, by allowing some of the value of spillovers to be captured, higher land values provide real estate developers, businesses, and even households with incentives to create them.

1. Even if that conclusion were correct (which of course it isn't), taxing such uplifts discourages economic activity a lot less than taxing earned income.

2. LVT assessments do not work on a plot-by-plot or street-by-street basis, they work on the basis of averaged out values for a whole area, which one individual land owner can only influence very marginally.

So if you own one out of a thousand buildings/plots and you manage to increase the rental value of yours and a few surrounding ones by a thousand pounds a year, the average increase in your LVT bill is only a few pounds.

The same applies to everybody else. And if you allow yours to fall derelict the reverse applies, but few people will be able to afford to allow a building to fall derelict, so they won't. The overall incentive is to improve or at least to maintain, unlike the current tax system where the incentive is to piggy back on what everybody else is doing.

3. We could do this with income tax as well, of course. If everybody has to report and pay tax on his personal income, that's a disincentive to earn more and an incentive to lie. But what if we averaged out everybody's income in the area and everybody paid income tax on the average? There is very little disincentive to earn more and barely any incentive to lie, because if you dutifully report a £10,000 pay rise, that only pushes up the average income in your area and hence your personal tax bill by a couple of pounds.

4. So with LVT we quickly reach a steady state in each area i.e. all the buildings in any area will be done to a similar standard, whatever is appropriate for that area, job done. It would be the same with averaged out income tax; low earners would end up living in some areas, medium earners in others and high earners in others. High earners would be prepared to pay more in return for living in nicer areas, so ultimately the effect wouldn't be very much different to LVT.

UPDATE 5. Mombers reminds us that LVT doesn't need to be 100% anyway, very few people ever said that. But this is typical Home-Owner-Ism - when you mention LVT they always attack it with the same venom, whether you suggest very modest LVT or 100% LVT.