Friday 31 August 2018

Killer Arguments Against LVT, Not (445)

In response to Vince Cable's LVT for Business Rates swap idea, let's watch a professional KLN-disseminator at work:

John Webber, Head of Business Rates at Colliers International... said: “Whilst it is good to see the Lib Dems are taking the issue of business rates seriously, it is a shame they did not think through the disastrous decision to delay the business rate revaluation from 2015 to 2017 which has caused so much trouble when they were in Coalition and Vince Cable was business secretary!”

The Lib Dems had little say in the Coalition, that was the Tories staving off the inevitable.

"... the idea to replace business rates with a full commercial landowner tax is not the answer. And reading the report in depth makes you think the Lib Dems have drifted into Alice in Wonderland.

Strange jibe, seeing as he takes guidance from Through The Looking Glass: ‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean–neither more nor less.’, as we shall see below.

"Business rates were set up to pay for the amenities and services businesses use in the community.

Outright lie. They are a successor tax to Poor Rates which Queen Elizabeth I introduced to pay for a rudimentary welfare system. But let's assume it's true, LVT is just a charge on the "amenities and services" provided at that location, for which the landlord then charges rent. Nobody has ever managed to explain why landlords should get most of their 'raw material' for free.

There is surely no dispute that they should pay something for these services. To replace the levy with a total land tax on landowners would impact on land values...

That's a feature not a bug.

... and discourage investment into property generally...

No it wouldn't. LVT is a sunk cost, for investors it is balanced out by the fact that land is cheaper (which is a bad thing, according to him). Unlike Business Rates, it would not deter improvements, buildings and so on.

... (among other things, this would not be good news for pension fund holders).

As if pension funds don't also invest in proper businesses, who will benefit from this. It all averages out.

"The additional tax would also result in landlords getting the money back by hiking up the rents they charge to occupiers...

Woah! If landlords can simply pass on the tax, then his first claim, that land prices would fall can't be true. Make up your mind, dickhead.

And funnily enough, when it suits them, the Vested Interests are happy to argue that Business Rates is economically borne by landlords in terms of lower rents (see Executive Summary on page 6 of this).

It's a a bit Humpty Dumpty, isn't it?

"We would therefore have a system whereby businesses would end up paying more to the landlord but unlike the present system would be unable to appeal against their combined rent and rate bills that the landlord would introduce. So how would they benefit?

Market forces, you twat. The same market forces that makes landlords bear three-quarters of Business Rates (link above) would make them bear an even larger share of LVT. The landlord in turn is perfectly entitled to appeal if he wants, the tenant couldn't care less as he is unaffected.

"Other parts of the report also show naivety. The Lib Dems claim that land will be valued on its "best permitted use" and that this would encourage landowners to work their land better. This implies they are not doing so now and ignores considerations of commercial viability. They seem to think that without a land tax, land will be sitting empty and largely undeveloped, again ignoring the commercial realities of development in today’s marketplace.

Jolly good, if it is true that all landowners are already putting land and buildings to their "best permitted use", then they have nothing to worry about, eh? He's the expert, and must know that most landlords are making the best of it, but a minority clearly are not.

"Even more concerning is that they admit the system would not produce enough tax income and the gap would need to be filled by also raising corporation tax. Again, I question how businesses would benefit from that?

This is more DoubleThink. Elsewhere in his screed he calls for Business Rates freezes and reductions; he then claims that Vince's suggested LVT revenues would be overall lower than total Business Rates i.e... a freeze and reduction, overall. Why is the former good and the latter bad?

"This leaves a 'gap' which would also need to be 'filled' by hiking other taxes, like corporation tax."

He is silent as to which taxes he would increase to compensate for freezes and reductions in Business Rates. (I've seen this Home-Owner-ist magic before - LVT would simultaneously be unaffordable, yet bring in insufficient revenues.)

“...What the Lib Dems are therefore suggesting is a complicated system that many would struggle to make evidence based. The only other land tax systems currently in Europe are used in Denmark, Estonia and Russia. Do we really want to follow them in our approach to land?”


Thursday 30 August 2018

"Walsall Council plans to install street skips to tackle fly-tipping"

From the BBC:

Skips could be placed on streets in a bid to tackle repeated fly-tipping, a council has announced.

Last year, there were more than 4,000 reports of illegally discarded waste across Walsall, with 2,000 tonnes of rubbish removed from the borough.

The local authority has now proposed putting a skip in each of its 20 wards every Saturday*. Clearing up fly-tipping cost the council more than £400,000 last year, bosses said.

And why on earth wouldn't they?

1. The cost of collecting rubbish is about 1% - 2% of the selling price of new goods sold, and so anybody who wants to chuck something away has paid for the cost of having it collected ten or twenty times over via VAT.

We take our larger items to a council recycling centre; they have signs up saying "Household refuse only". I really don't see why they draw this distinction, businesses have paid VAT just like anybody else and have the same entitlement to dump their rubbish.

2. The test of whether something is a good idea is to imagine the opposite situation, i.e. there are plenty of skips dotted around for people to dump larger items in, and let's assume most people do the decent thing and use them. Would any sane council announce that it intends to save a few quid by withdrawing the service? You'd hope not.

* I don't quite understand that sentence. Will the skips be there on Saturdays, or will they be emptied on Saturdays?

City AM - gloriously missing the point.

From page 2 of today's paper edition:

Land and housing boom The UK's net worth rose £492bn last year due to surge in property prices and the value of land... Almost all of the rise was fuelled by a £450bn land value rise, while housing added £40bn

The UK's net worth clearly does not change one single penny because land values change. At best, land values are an indication that the productive economy is doing well and the country is being well run.

Firstly, the value of land fluctuates inversely to interest rates (or proportional to credit availability) so it is not real, hard capital. Do we as a nation become wealthier just because interest rates fall? I doubt it.

Secondly, land values are merely the net present value of wealth that will flow from elsewhere to today's landowners, whether that flow is direct (rent or selling prices) or indirect (all the public services funded out of taxes on output and employment).

If you take into account the net present value of the equal and opposite flows of wealth from tenants, buyers and taxpayers, the net value of land is at best £nil, and probably a negative.
UPDATE, Dinero, in the comments:

I don't deny that defining wealth is a subtle point, but I don't see that it is obtuse to define expected future income as wealth.

Money is an IOU from the bank financed from its creditors future income and that is considered wealth.

Even physical commodities like oil and gold are valuable because of the expectation that someone will them it in the future.

If you are going to include future income from other people as wealth, then you must also include the future expenses to be incurred by those other people as negative wealth, in which case the net value of land is still nothing.

Money, like land, is wealth from the point of view of the depositor or landowner. But money is even less net wealth than land is. If one person has 'money' then somebody else somewhere owes the same amount, if you take all positive money balances and all negative balances (debts, mortgages) it nets off to precisely zero. Money is merely a measurement of indebtedness from one person to another and not net wealth.

Oil and gold are actual, useful things. They are real net wealth. Just because one person has oil or gold doesn't mean that somebody else has negative oil or gold, i.e. it would be theoretically possible for everybody in the world to own a small amount of gold and a small amount of oil. It is impossible for everybody to have a positive money balance.

Wednesday 29 August 2018

Me in The Guardian

From The Guardian:

Mark Wadsworth, the head of the Campaign for Land Value Taxation, said: “The minority with a vested interest in high land values will no doubt celebrate higher values, saying that is shows the importance of land to the UK economy.

“In truth, land values are not a net addition to national wealth, they merely represent the benefits that accrue to landowners because of government spending on public services funded out of general taxation; land values are actually just a measure of ongoing transfers of wealth from taxpayers to landowners and a zero-sum game.”

It's nice to have a journalist contact you for a quote and then publish it verbatim, unlike my experience with The Telegraph who twisted everything on its head (not that I didn't expect it from them, but all publicity is good publicity).

So why do Mum and Dad keep voting for this?

From Moneywise:

A survey carried out by insurer Legal & General and the Centre for Economics and Business Research (CEBR) has found that 17% of so-called ‘Bank of Mum and Dad’ lenders are already worse off, or would be, after providing financial help to the younger generations.

One in 10 (10%) said they felt less financially secure, while 4% postponed retirement after supporting their family to get onto the housing ladder. The research showed that more than a quarter (26%) of women felt they had sacrificed their living standards versus 13% of men.

More than a quarter of homes bought in 2018 backed by the 'Bank of Mum and Dad'

Funding public services out of a 'service charge' on land values (aka Land Value Tax) instead of imposing taxes on output and employment might well reduce selling prices, but every £1 paper loss incurred by Mum and Dad saves each child £2 in future mortgage repayments.

Even if selling prices didn't change much (as is quite possible), every £1 paid in LVT will save the next generation £1 in mortgage payments, as well as saving Mum, Dad and every child about £1.50 each in other taxes.

That's what I call "helping your loved ones get on the housing ladder"!

Ransome values

From The Daily Mail:

A group of 26 ambitious homeowners are hoping to sell their properties as one big 'super site' to maximise their profits.

The residents in Baulkham Hills, in Sydney's north-west, have joined forces to create what they are calling 'Hillsview Central', a site almost two hectares in size... The average median house price for the area is $1.15 million, but residents are hoping to get approximately $2.3 million per property if the new deal goes through.

Well done Mrs Papas for getting this all off the ground! That planning uplift has to go somewhere, and (in the absence of LVT), if the current owners do the site assembly themselves, then they get all get a share of the gain. This must be preferably to a large developer mucking about for years or decades buying up the sites piecemeal in the hope of banking the entire gain for himself - but making himself more and more vulnerable to a ransom demand as time goes on.

This illustrates the point that all ultimately all land values are ransom values, despite RICS' flummery, in the criminal sense. Every landowner is holding everybody else to ransom.

As we see from the photograph, there are two gaps along the front row, let's call them Plot 2 and Plot 13. This puts Plots 1 and 14 in a very weak position, as I doubt a large developer would be interested in such a wonky shaped plot.

Heck knows what the (owners of) Plots 2 and 13 are playing at. Are they:

1. Just complete spoilsports who don't understand the maths of all this and who don't care if they ruin things for Plots 1 and 14, and probably dilute the gains for everybody else?

2. Hoping to do private deals with Plots 1 and 14 whereby those two have to hand over a chunk of the marriage value to Plots 2 and 13?

3. Gambling on the developer buying all the plots including 1 and 14 and then holding him to ransom for an even larger amount?

4. Risking the developer just buying up plots 3 through 12 and cracking on with it, in which case Plots 2 and 13 fall in value considerably and have to put up with being next to a building site for a year or two? Plots 13 and 14 in isolation have little marriage value and will be stuck between a block of flats and an office block, so Plot 13 is playing the more dangerous game.

It might be a long time or never before there's an opportunity to sell Plot 2 to a future large developer who wants the land to the left, in which case the boot is on the other foot and Plot 1 can hold Plot 2 to ransom.

Tuesday 28 August 2018

Killer Arguments Against LVT, Not (444)

Back to the tried and tested: "But land doesn't generate income!"

The traditional rebuttal is that if you own your own home and you could rent it out for £10,000 but prefer to live in it, then clearly it is generating value worth more than £10,000 to you personally, or else you would rent it out, rent somewhere cheaper and pocket the difference. And try telling that to 1.4 million private landlords in the UK (the group which campaigns most solidly against LVT).

"But I've paid for my land out of taxed income"

Maybe you did, but that's all in the past. The point is that the UK government spends at least £350 billion a year on public services which increase rental values. Somebody has got to pay for that, and at present, most of that is paid for out of taxes on output and employment. An LVT is just a pro rata contribution towards that £350 billion, like a service charge.

I might as well give a counter example that I paid for my cars out of taxed income, without expecting all the repair and insurance costs to be paid out of taxes on other people. So why should non-landowners be forced to pay for things which only benefit landowners? If non-landowners want to benefit from all this, they have to pay rent for it (i.e. pay for it twice).

"What about ability to pay? What's wrong with taxing higher earners to pay for services which benefit lower earning homeowners?"

Nothing wrong with that at all in principle, but why focus redistribution from higher earners to lower earners... who happen to own land? What about lower earners who don't own land, who are clearly worse off? What's wrong with universal benefits/redistribution (or indeed none at all)?

And, given the actual distribution of earnings and concentration of landownership, the overall redistribution is not downwards but upwards, from the majority working population (all but the lowest earners make a small net contribution) to the minority who own the most land (by value).

Of course plenty of the working population are also home-owners, in which case it's not redistributive at all (hooray), a tax shift just means that they pay directly rather than indirectly for the value they receive qua landowner.

Friday 24 August 2018

Nobody move or the bottom of the barrel gets hurt!

From the BBC:

What's in the no-deal Brexit plans?

In the 24 documents, which cover industries including medicine, finance and farming, it says...

* New picture warnings will be needed for cigarette packets as the EU owns the copyright to the current ones


Von ThĂĽnen's/Ricardo's Law of Rent, part the manieth.

From The Metro:

Jobs website Adzuna compared average advertised salaries with average rental figures across the UK to find the most and least affordable towns and cities for renters to live. In Swindon, workers typically spend 11.5 per cent of their take-home pay on rent, compared with a national average of 22.1 per cent.

Bradford, Hull, Dudley and Durham complete the best-value top five, with workers in these areas typically paying less than 13 per cent of their net wages on rent. At the other end of the spectrum, Londoners typically shell out 41 per cent of their pay on rent while those in Oxford can expect to see it swallow up 39 per cent of their take-home wages...

Andrew Hunter, co-founder of Adzuna, said: ‘Even though workers may be paid a higher monthly salary, their left-over cash is often smaller after paying steep living costs and local property premiums.’

Correct. Why would you expect any other outcome?

They list the areas with the lowest and highest rent-to-income ratios, quite unsurprisingly, these are pretty much in line with the local average wages that people in their twenties and thirties can earn.

Thursday 23 August 2018

Nobody move or the pensioners get hurt!

They're softening us up for a second Referendum, so have embarked on Project Fear #2.

From The Sun:

EXPAT Brits who have lived and worked in Europe face losing access to their pensions in a No Deal Brexit scenario, Ministers will admit on Thursday.

Most at risk are Brits who have worked in EU countries and built up pension funds abroad that are then paid into a UK bank account. Under Brussels pensions rules, funds that cross borders can only be paid into a bank account registered in an EU country.

Pensioners who have worked in the EU and now live in countries outside the union are currently made to open bank accounts in an EU state to collect their funds.The UK will become a “third country” on 30 March 2019, sparking the risk of expats and former expats with British bank accounts having their payments cut off.

That rule sounds plausible, it's basically protectionism for banks in EU Member States. But all people need to do it open another bank account in an EU Member State, that's hassle and a few extra Euros in bank charges every month, but not the end of the world.
Rather less plausibly, from This Is Money:

A technical paper published by the Department for Exiting the EU raised fears that UK citizens in Europe may lose access to insurance contracts and other financial services if British-based companies cannot use passporting rights, as is likely to happen if the UK and EU cannot agree a deal.

At a press conference following the publication of the government’s technical papers regarding a no deal Brexit, Raab said British expats' access to their pensions would be 'a practical issue that we will be able to resolve'.

Again, I can imagine that insurers in the remaining EU Member States will be pushing their governments to deny British insurers from peddling their services in their countries, and why wouldn't they? I've no idea why any sane person would want to take out insurance with a foreign company anyway, they are slippery bastards at the best of times, but getting an insurance company abroad to pay out must be a nightmare.

Existing pensions contracts are under UK law, UK based savers paid in their premiums under UK law (before they went abroad) and are entitled to their pensions payments under UK law. If the remaining EU Member States really were to do the stupidest thing imaginable and block such flows of money into their countries (a kind of invisible export), then all expat pensioners need to do is have their UK pension paid into a UK bank account first, and then take the money from there.

The interesting point is that under tax law in most countries, a UK pension received by a UK expat is taxable income in the country where the expat lives, so the other country should be encouraging people to declare them. If they do what is threatened, they would be actually encouraging tax evasion (having hidden the source, the expat would be daft to then tell the authorities that they receive it).
While I'm on the topic, I saw a related headline on BBC News 24 today, to the effect that EHIC cards would no longer be valid. The most up-to-date article I can find on the BBC is this, which is as misleading as is possible without actually lying:

If you are getting ready to go on holiday to another EU country or Iceland, Liechtenstein, Norway or Switzerland, you are likely to be packing your European Health Insurance Card (EHIC) along with your passport. The EHIC entitles you to state-provided medical treatment* should you need it while visiting one of those countries...

A House of Lords report in March 2018 warned that "in the absence of an agreement on future relations that covers this topic, the rights currently enjoyed by 27 million UK citizens, thanks to the EHIC, will cease after Brexit".

* Not true, the cards just entitle you to medical treatment on the same terms and conditions as people in the other country would get, so if a country has prescription or treatment charges for its own residents, a British tourist has to pay the same charges. And by and large, there is no 'state-provided medical treatment' in most European countries. It is usually privately provided (even if that is by government bodies acting as private businesses) and funded/regulated by the government (or some quango or other, which is controlled and regulated by the government).

But it only takes two minutes to find the actual official UK government website which explains that EHIC cards have fuck all to do with the EU:

An EHIC lets you get state healthcare* in other EEA countries and Switzerland at a reduced cost or sometimes for free.

* Same mistake again, but hey.

Wednesday 22 August 2018

Indian Bicycle Marketing* vs Diagonal Comparisons

From the BBC:

A windfall tax could be levied on tech giants such as Google, Amazon and Facebook to pay for public interest journalism, Jeremy Corbyn is to say.

The Labour leader will call for radical reform of the media landscape in a speech at the Edinburgh TV Festival. He will say digital "monopolies" which "extract huge wealth" could pay for non-profit, investigative reporting.

Well, that's all lovely, but illustrates yet again that May's Tory government and Corbyn's Labour opposition aren't that far apart, they are still nicking each other's ideas.

Wasn't it Tory Chancellor Philip Hammond who mooted an Amazon Tax about two weeks ago "to ensure there is a more level playing field for high street retailers"?

Which gives us a nice diagonal comparison** to complement the Indian Bicycle Marketing.

For some reason, people have succumbed to the Big Numbers Fallacy and think that Amazon et al are the most mightily profitable businesses in the world. Taken in isolation, maybe they are, but those are global profits; the total income of UK buy-to-let landlords vastly outweighs the total profits of Amazon, Facebook, Google. But we all are agreed They Are Evil And Must Be Taxed More Heavily.

So the voters' choice is now narrowed down to this: what should the government do with the revenues from the Amazon Tax. Subsidise 'High Street retailers' or subsidise news outlets? What if we think that both are stupid ideas? The obvious other choices, like don't invent new taxes; or spend the revenues on something else entirely, which could include cutting other taxes or paying off the National Debt, are off the table.

* A political strategy where one party proposes very similar policies to that of the opposition, but gives a diametrically opposite reason for doing so.

** When people (are asked to) make comparisons between two completely different things, in extreme form, the Poor Widow in a Mansion living next door to a millionaire in a small flat.

Tuesday 21 August 2018

Mike Ashley - 1: Landlords - 0

From the BBC:

House of Fraser's flagship Oxford Street store will now stay open after the chain's new owner agreed revised terms with its landlord. The store had been due to close under a restructuring plan that House of Fraser announced in June...

The store was one of the 31 earmarked for closure under the CVA restructuring deal that was first struck before Mr Ashley stepped in with his £90m rescue bid...

Property giant CBRE, which is advising Sports Direct, said negotiations over the Oxford Street outlet had been conducted at "great speed.. This deal only happened because all parties realised it was better to keep the store open and fully operational. It was a real case of landlord and tenant genuinely working together and at great speed. Everyone was sensible about the terms of the transaction."

It's about making a credible threat. The landlords blinked first. Well done, Mr Ashley.

Thursday 16 August 2018

Criminologists baffled by new crime stats.

From the BBC:

Gang-related violence has plummeted in London since the 2011 riots despite a recent spike in violent crime, according to new figures.

There have been 89 violent deaths in London since January and violent crime has risen by 40% since 2010. Gang-related violent crime has nearly halved over the same period, according to Met Police figures obtained by the BBC.

Meaningless comparison as per usual, all violent crime (probably a reliable figure) is up to 200,000 incidents a year.

For reasons best known to themselves, the Met are categorising a much smaller share as 'gang-related', from half a per cent of all violent crime in 2010 down to a quarter of a percent in 2017.

They might as well classify no violent crimes as 'gang-related' (however defined) and trumpet the fact that they have eradicated it.

'Cause London taxi drivers care so much about reducing pollution, innit?

From the BBC:

The mayor of London has urged the government to follow New York's example and allow a cap on the number of minicabs in the capital. Sadiq Khan said an increase in private hire cabs needed to be halted to combat congestion and improve air quality...

In 2010-11, TfL counted 61,200 private hire drivers and 50,663 private hire licensed vehicles in London. This went up to 113,645 drivers and 87,921 vehicles in 2017-18 - an increase Mr Khan described as "massive" and "unsustainable".

Blatant protectionism of course. For some reason, London mayors - of whichever political party or none - always kow tow to the London cabbie lobby.

Steve Wright, chairman of the LPHCA, said a cap would only push up prices, make it harder for companies to recruit drivers and leave minicab users stranded: "This is a ridiculous proposal. It's just a draconian thing from years gone by. It's protecting the black cab industry and will be detrimental to consumers."

Nailed it.

The final insult is hurled from the parapets of the cosy protected cartel, from the FT:

Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association, said: “We support the mayor in calling for a cap in private hire vehicles in London. With the number of PHVs on London roads nearly doubling in recent years, Londoners have seen a rise in congestion and a negative impact on air quality.” There are 23,800 licensed London taxi drivers.

Funnily enough, official London taxi drivers all drive diesel vehicles and leave their engines running while in the taxi ranks.

Wednesday 15 August 2018

"Dorchester car park spaces to cost £40,500 each"

From the BBC:

A council which spent nearly £1m buying and relocating a church wants to use the site for 23 new car parking spaces... Council documents valued the church at £350,000 but, at the time of purchase, the site's redevelopment potential pushed the value up to £700,000.

The Conservative-led authority also agreed to pay the church £205,000 for its new building next to Damers School in Poundbury and £25,000 in professional fees.

Liberal Democrat Ms Hosford, who represents Dorchester North, said: "The projected income from the extra spaces created cannot possibly justify the huge amount of expenditure that will have gone into producing them."

A council paying for 'redevelopment potential' is madness, because quite what the permitted development is is up to the very same council to decide. Had the council made it clear that they would refuse all planning applications, they could have bought the site for peanuts. Had the council granted permission for a twenty-storey tower block, the redevelopment potential would have been much higher, so why not grant that permission and then pay £10 million for the site?

Be that as it may, the Lib Dem lady is succumbing to the 'big scary numbers' fallacy. Google Maps shows that the church is in the corner of an existing large car park with an awkward layout in the church corner, so they can now re-jig the layout and increase capacity by 30 or 40 parking spaces, not just 23.

The council ought to know its average income per parking space, let's assume it's £5 a day, Mon - Sat, 52 weeks a year. Potential income from 30 extra spaces = £46,800, which in this day and age is a reasonable return on an outlay of £1 million.

Who buys new cars?

Emailed in by MBK, from The Times:

Here’s a surprising thing. The average age of a new car buyer in the UK is 54. The majority of new cars are bought by people in their fifties, sixties and seventies. The average age of a new Ford buyer, for example, is 56. For Volkswagen it is 54. For Toyota it is 63. Even cheap, fun, youngster-friendly Fiats are bought by people whose average age is a relatively ancient 49.

That doesn't surprise me at all and I'd always assumed this was the case:

1. Older people have more money, less sense and are more averse to risk and hassle, so are more likely to buy new. Younger people vice versa.

2. Assuming people pass their driving test in their twenties and pack in driving when they are 70 or 80, the average age of all car drivers is about 50, so we'd expect the average age of all car buyers to be about 50, with a slightly younger average for second hand car buyers and a slightly older average age for new car buyers.

If these ages seem high, it’s because we have been conditioned to believe that it’s the young who buy new cars, thanks to those jolly TV commercials featuring carefree twentysomethings heading to the beach together in a gleaming convertible. Even the ads for high-end roadsters shot in moody empty landscapes seem to favour wrinkle-free granite-jawed chaps well under 45.

Amen brother, most car adverts are vacuous crap. Apart from the one for the MX-5 where the bloke drove from the suburbs to a petrol station in the middle of the desert, bought a pint of milk and drove home again.
The surprising thing about the articles is the Baby Boomer vitriol in the comments:

Well the young don't typically really own cars do they.

They lease them and lots of my friends talk about how "its only £320 a month" as if its not a great deal of money. When you point out to them that often at the end of the deal they have nothing to show for it, they don't seem too bothered.

Furthermore plenty of young people don't even consider the purchase of a car (let alone a new one) possible, with sky high insurance, tax and fuel costs. If they live in a city they may as well forget it and uber/bus/cycle everywhere.

Jeez. In commercial terms, it makes little difference whether you are renting a new car for £320 a month or actually own it outright and are losing £320 a month in depreciation. Is he accusing young people of wasting their money on cars, or slagging them off for turning up their noses at them? Does he not realise that the statistics on car buyers include HP and FL deals? Or is this some sort of projected self-loathing? Lighten up, mate!

The young need to work harder - I've been buying new cars since I was 25.

The first Boomer says young people can afford to buy cars but a lot of them don't want to waste their money on them (and good for them). The next Boomer says they can't afford to buy new cars because they don't work hard enough. This was not an income comparison, you fuckwit, it was about who buys new cars.

Tuesday 14 August 2018

Ruth Davidson: Maths Genius

H/t Lola, from The Herald:

Business leaders have warned the tax burden on high street shops is disproportionately high. Ms Davidson said: “The retail sector currently makes up 5 per cent of the UK economy but pays 25% of all business rates, over £7 billion per year.”

That's about as helpful as saying "The haulage industry pays 90% of all diesel fuel duty" or "Smokers pay 100% of all tobacco duty". Business Rates is a tax on valuable locations, and retail premises are usually in the most valuable locations (town centres). It's as broad as long, if there were no Business Rates, rents and purchase prices would be correspondingly higher.

Having flunked the logic bit, she's wrong on the facts as well. From the House of Commons retail briefing paper:

In 2017, consumers in the UK spent around £406 billion in retail purchases [about 20% of GDP]. In 2017, the retail sector as a whole contributed £194 billion to UK economic output (11% of the total), measured by Gross Value Added or GVA3; this was an increase from £190 billion in 2016.

In 2016, the sector employed 4.9 million people (20.5% of the UK total), and contained 374,000 businesses (15.5% of the UK total).

We can argue whether the retail sector is 11% or 20% of the UK economy or anything in between, but either way it's more than 5%. I could have guessed that without looking it up.

Please note: £7 billion Business Rates divided by £406 billion sales = 1.7p for each £1 of sales on average or about one-tenth as much as the VAT thereon.

"Statistics misuse 'biggest health problem in Northern Ireland'"

From the BBC:

Figures obtained by BBC News NI show the number of alcohol-related deaths in Northern Ireland is the highest on record. Between 2001 and 2016, more than 3,500 deaths in Northern Ireland were attributed to alcohol.

Coroner Joe McCrisken said: "We have an enormous problem with alcohol use, misuse and abuse in Northern Ireland. The figures are frightening because they show that the number of alcohol-related deaths is increasing, so it's important to raise awareness about the dangers."

Okey doke.

Northern Irish population 1.9 million, average life expectancy 70 years, makes about 25,000 deaths a year.

3,500 'alcohol related' deaths (whatever that means) in 16 years = 220 per year.

In summary, only one in a hundred deaths has been accelerated by 'alcohol misuse' or is 'alcohol related'.

Dealing with alcohol-related illnesses costs the health service about £250m a year, said Dr George O'Neill, the chairman of Addiction NI.

And how much does VAT and duty on alcohol sales raise? About three or four times as much as that.

He added that 12,000 people were admitted to hospital each year with alcohol-related problems in Northern Ireland...

£250 million a year divided by 12,000 hospital admissions = £20,000 per admission. That is surely a completely made-up number and at least four times as much as the overall average cost per admission.

... where 170,000 people drank hazardously and 47,000 drank harmfully.

And out of 170,000 'hazardous' drinkers, only 220 die a year (see above) and 99.9% will survive quite happily, so it can't be that 'hazardous', can it?

Monday 13 August 2018

"Builder charged over £4m new homes digger destruction"

From the BBC:

A builder has been accused of causing £4m of damage by ripping apart five new homes with a digger... Daniel Neagu, 30, from Athelstone Road in Harrow, north-west London, has been charged with causing criminal damage.

I call bullshit.

I'm happy to accept that those five homes could have been sold for £800,000 each, but not in a million years is the (re)build cost £800,000 each, probably more like £200,000 each, tops. The rest is land value and profit margin. So by all means do him for £1 million's worth of criminal damage, but not £4 million.

President Erdogan does glorious mixed metaphors.

He's the gift that keeps on giving.

From the BBC:

Mr Erdogan told a news conference in the Turkish capital, Ankara: "You [the USA] act on one side as a strategic partner, but on the other, you fire bullets into the foot of your strategic partner. We are together in Nato and then you seek to stab your strategic partner in the back."

You shoot yourself in the foot, not the other person. And clearly Trump hasn't stabbed them in the back, he has stabbed them quite openly in the face.

Buying weapons off the Russians, like Turkey has started doing is pretty sneaky, that is more akin to a stab in the back. And if he thinks he can defend the Turkish currency against a determined onslaught, he's got another think coming.

President Erdogan does a glorious diagonal comparison.

From City AM:

US President Donald Trump has taken a hard line against Turkey over the fate of American pastor Andrew Brunson, who has been detained in Turkey for the last two years, accused of links to the banned Kurdistan Workers Party (PKK) and the Gulenist movement which has faced a crackdown after a failed coup in 2016...

In a New York Times article at the weekend Erdogan threatened that NATO-member Turkey could “start looking for new friends and allies” if the US did not reverse its trend of “unilateralism and disrespect”. Turkey also wants the US to hand over Pennsylvania preacher Fethullah Gulen which it blames for the 2016 coup attempt.

Woah! That's not how prisoner exchanges work.

Brunson is an American held in Turkey against his will; he wants to go back to America.

Gulen is a Turk in exile in America very much under his own will; he does not want to back to Turkey.

Saturday 11 August 2018

Farmer 'killed in field by cattle' in Groombridge

From the BBC:

A farmer whose body was found in a field may have been trampled to death by his cattle, Sussex Police said.

The 64-year-old's body was found in a field with his Aberdeen Angus cattle and he died at the scene.

Mr Sandys's partner, Christine... found him on the ground in the field with the cows and a nine-year-old bull which had been born and raised on the farm, she said.

The bull was snorting and stamping and it was not safe to get close to Mr Sandys, she added.

I know the police shouldn't jump to conclusions, but "May have been trampled to death"??

Amazon's tax bill (here we go again)

From The Independent:

Philip Hammond has said he will consider tax changes hitting online businesses to ensure there is a more level playing field for high street retailers.

The hint at a so-called Amazon tax for online companies that sell products over the internet comes as high street stores – under pressure from soaring costs like business rates – demand a fairer system.

The only logical way that a special 'Amazon tax' would help high street retailers is if the tax is so high as to discourage people from buying online; or so high as to push Amazon into a permanent loss-making situation.

Mr Hammond added: “The European Union has been talking about a tax on online platform businesses based on the value generated. “That’s certainly something we’d be prepared to consider.”

Amazon already pay two kinds of taxes on 'value generated', being normal VAT at 1/6 of their turnover and corporation tax on their residual profits. Do they play fast and loose and book profits sideways elsewhere? Quite possibly, says The Murphmeister, but that's a different topic. Try enforcing existing laws first before you start inventing new ones on an ad hoc basis.

The Guardian is of course going to town on this:

The company... revealed that pre-tax profits at its UK business tripled from £24m in 2016 to £72m last year. The figures were reported by Amazon UK Services, the company’s warehouse and logistics operation that employs more than two-thirds of its 27,000-plus UK workforce, in its annual financial filing to Companies House. The company almost halved its declared UK corporation tax bill from £7.4m in 2016 to £4.5m last year.

Amazon UK’s warehouse and logistics staff and management enjoyed a bumper $164m (£125m) payout from the company share scheme – a rise of almost a third on 2016’s £95m bonanza – thanks to the company’s surging share price... The payouts will have reduced Amazon’s tax bill because under UK tax law companies are required to deduct the vest value of the shares provided to employees.

Companies aren't *required* to claim this deduction, but they would be stupid not to (I've submitted such claims for my own clients, it's great fun). The value of those shares is liable to PAYE in full as if it were a cash payment.

PAYE rates are much higher than corporation tax rates, so these share-related gains don't *reduce* Amazon's tax bill, they significantly *increase* it, i.e. that £125 million was probably taxed at about 40%, meaning Amazon paid £50 million extra PAYE in addition to the £4.5 million corporation tax. Which is a pretty high overall tax rate when compared to £72 million profits.

For accounting purposes Amazon Services UK reports turnover as a charge to its parent company for the cost of delivering products, which hit £1.98 bn last year. Amazon will not reveal how much it paid in total to HMRC last year, beyond what it paid through Amazon Services UK.

That's turnover net of VAT, so Amazon will have paid about £400 million in VAT as well. Makes a total of £454.5 million tax paid. And we have no reason to assume that they don't pay full Business Rates on their offices and warehouses etc.

All the mugs who believe that 'the consumer bears the VAT' can go back to the remedial class. VAT is a tariff, just like the tariffs that Trump imposed on lots of stuff recently. Did all the businesses affected by them just shrug their shoulders and say 'Not to worry, consumers in the USA will pay the tax'? Of course not.

Friday 10 August 2018

Economic Myths: Supply and demand - planning permission vs Premiership football players

The usual suspects keep insisting that if we abandoned all planning restrictions, then the value of land would fall. "It's simple supply and demand, innit?", they sneer.

Clearly not true, but I can't be bothered explaining how land prices arise in real-life for the umpteenth time, so let's use an analogy:

1. 'Demand' for footballers (as measured in £££) is mainly all the people who subscribe to Sky Sports, so Sky Sports is prepared to bid a lot of money for Premiership TV rights; it needs that content to get the subscriptions.

2. Premiership clubs can hold out for huge sums of money (or else they sell to the BBC or ITV or whoever).

3. Premiership clubs in turn need the best 200-300 football players they can afford (to stay in the Premiership). There can be - by definition - only 200-300 of such players, so the best 200-300 players can in turn hold out for huge sums of money i.e. all the club's receipts minus the actual costs of maintaining the stadium, selling tickets and so on.

4. It would be fatuous to say that Premiership player wages are so high because there is a lack of supply of footballers. Tens of thousand of people play football regularly with a reasonable degree of skill and proficiency. Premiership players aren't actually much better than the average, they just have to be in the top 200-300.

5. It is not the skills of the players (in absolute terms) which dictates their salaries (they are not ten or a hundred times better than First Division players in the 1970s or 1980s), is is the fact that Sky Sports can monetise what you used to be able to watch for 'free' on the BBC/ITV.

6. Thought experiment: all Premiership players are in the same aeroplane crash and die. So Premiership clubs quickly go out and recruit the best 200-300 players who are left. By definition, these players aren't quite as good as the recently deceased but they can still hold out for the same salaries.

In case people don't get the analogy:

* Contracts with a Premiership team = the best locations
* Contracts with a Championship team = the next best locations
* All the way down playing for your local pub team = zero location value (in £££)
* Premiership players = people who 'own' the best locations = rent collectors/landlords (If a landlord dies or sells, the next owner collects the same amount of rent.)
* Increasing supply of footballers/number of teams in lower divisions has no impact on wages further up the chain = liberalising planning laws increases value of the land now unburdened, but has no impact on value of more favourable locations (which were developed first).

Killer Arguments Against Citizen's Income, Not (18)

The Centre for Social Justice have gone full retard:

This paper argues that UBI is a false hope. While offering low income individuals better financial support is something the CSJ endorses, UBI:
• Is unaffordable, putting at risk the provision of important services in healthcare and education.
• Doesn’t meet the needs of low income households facing complex problems such as drug addiction, dangerous debt, and family breakdown.
• Provides a major disincentive to find work, which is the best route for many people out of poverty.
• Is no more generous to the most disadvantaged households than the provisions under Universal Credit.

They have decided to completely abandon things like facts, logic, basic maths, knowledge about the current tax and welfare systems, for example:

UBI removes any disincentive to declare income [true] but has an effect on the incentive to find work, increase hours and increase pay (dependent on the generosity of UBI) [untrue unless it is a stupid high amount which nobody is proposing]. Lastly, UBI is not tax deductible [WTF?], meaning it is paid out and taxed at the applied marginal rate [not true].

The chart below plots the weekly earnings profile of our minimum wage worker under Basic Income that offers £313.80. It shows how the universal nature of Basic Income has no impact on the marginal tax rate (MTR)
[the chart shows this, but only if you completely ignore means testing under current system]. It also shows that no-one can expect to earn less than £320 per week [not true].

Emailed in by BenJamin'.

Thursday 9 August 2018

"Beyonce's family tree reveals her great-great-great grandfather was a wealthy white merchant who married a slave in a 'love match'"

It doesn't take much imagination to re-write the Daily Mail's rehashed spin.

The whole thing is about how her black female ancestors were slaves bought and exploited by wicked white men.

For sure they were, but you might as well say that she is descended from wicked white men who forced themselves on female slaves.

Or, she might accept that whatever happened two centuries ago is pretty irrelevant to her.

For example, one of my grand-dads was a quartermaster in the British Army in India 'handing out underpants' as he liked to say; the other developed photographs for Luftwaffe reconnaissance on the Eastern Front. The bit I'm proud of is that neither fired a shot in anger, and my German grand-dad actually deserted a few days before the Russians overran them (a superbly brave thing to do in the circumstances, as the SS were routinely murdering deserters on the spot). But nobody should take the credit or the blame for what their ancestors did.

Another cliff tragedy

From the BBC:

A nine-year-old girl died from serious head injuries when rocks fell from a cliff at a beach in North Yorkshire...

Onlookers described the fall, which they said was near warning signs about the cliff, as "particularly serious".

If it's not cows trampling ramblers or cars hitting houses, it's cliffs collapsing and injuring or killing people. I don't go anywhere near cliffs nowadays.

Wednesday 8 August 2018


Emailed in by Lola, from The Telegraph, which devotes a lot of column inches to pushing 'equity release' schemes:

Interest-only mortgage holders with no way of paying off their loan could be handed a lifeline, as major banks look to get these troublesome customers off their books.

Virgin Money has signed a deal with one of the biggest equity release providers, insurer Legal & General. It offers customers the opportunity to switch from an existing interest-only loan to a lifetime mortgage with the insurer.

(And yes, the article contains a link to another paid for puff piece pushing this.)

Hey ho. It's a sliding scale of twattery:

1. In the good old days, you could pay off a mortgage in ten or fifteen years, most of the monthly (or weekly?) payments were principal and some of it interest. The outstanding loan was paid off quickly.

2. House prices have been pushed ever higher and nominal interest rates ever lower, so a normal first time buyer mortgage can only be paid off over twenty-five to thirty years. Most of the monthly payments are interest and some of it principal. The outstanding loan is paid off more slowly.

3. Take it one step further, we have the interest-only mortgage. All of the payments are interest on none of it principal. The outstanding loan is not paid off at all.

4. The final step is equity release; there are no regular payments and the outstanding loan increases over time until it has swallowed up the entire value of the home. The interest-rate is correspondingly higher.

So, having mucked up by allowing people to move to level 3, they think they can fix things by letting them move to level 4.


Fits in nicely with the Home-Owner-Ist narrative, hard working home-owners with their justly deserved unearned land price gains, for which they clearly never paid, victims of those evil banks (who pumped up their unearned land price gains) being bailed out by those generous insurers, who will ultimately claw it all back again, if not, they'll just be bailed out by the taxpayer.

It was more dust than rain.

It rained for a few minutes, just long enough to wash all the dust out of the air. It dried very quickly and gave my car a surprisingly regular mottled effect.

Tuesday 7 August 2018

Trump's point of no return

Caveat One: Trump might not the bumbling egoistical educationally sub-normal maniac we are told to think he is, he might be an all-seeing, all-knowing genius whose only aims are free trade and world peace and who can predict his opponents' moves several moves in advance.

Caveat Two: Countries don't trade with countries; individuals and businesses in Country A buy stuff from, and sell stuff to, individuals and businesses in Country B. But for short-hand, let's accept that Country A trades with Country B.
OK, here goes, from the BBC:

US President Donald Trump has issued a strong warning to anyone trading with Iran, following his re-imposition of sanctions on the country.

"Anyone doing business with Iran will NOT be doing business with the United States," the president tweeted.

If a large country or trading bloc imposes sanctions on a smaller country, then the loss, in absolute terms is probably the same for each side, but the larger country/bloc only loses 1% of its GDP and the smaller country loses 10%. So the larger country/bloc should ultimately 'win'.

So if the choice is between trading with the USA or trading with Iran, most countries would prefer to trade with the USA. But the USA has imposed sanctions on Cuba, Iran, North Korea, Russia, Sudan, Syria, and Venezuela and imposed fairly hefty tariffs on certain imports, especially those from PR China. By extension, any country - if not already the victim of the USA's import tariffs - that trades freely with those countries ends up itself on the USA's naughty list.

Surely, there must come a stage at which so many countries are on the naughty list, that they form a trade bloc which is actually larger than the USA, so third countries can benefit by turning their backs on the USA and freeing up trade between themselves and 'everybody else', thus accelerating the long term fall in USA's GDP as a percentage of global GDP?

Unlikely to happen, but theoretically possible.

Kiki and Bouba; Vic and Bob

It would appear that I am not completely abnormal. When I watched Vic and Bob in the 1990s, I automatically - but wrongly - assumed that the small sharp one was "Vic" and the big round one was "Bob". Even their surnames follow this pattern, "Reeves" sounds sharp and "Mortimer" sounds ponderous. It took me years to remember to remember that they were the other way round:

I saw an experiment run on telly a while back, I think it was Supershoppers looking at brand names. Members of the public were asked which of these two shapes was "Kiki" and which was "Bouba" and most thought the pointy one was "Kiki" and the blobby one was "Bouba", which is exactly how I would have answered. Possible explanations for this are on Wiki.

Monday 6 August 2018

Daily Mail on top form

From The Daily Mail:

A great grandmother was bitten three times and had her finger broken in a terrifying attack by a fox that crept into her home as she read a newspaper...

Mrs McMahon said the animal also bit her on the foot in the random attack that has left her with a sense of 'trepidation' in her £500,000 detached cottage in the Essex countryside.

They're serving up a double-helping today:

A group of locals in a leafy Surrey village are threatening to form a 'posse' to take on a group of 200 travellers who have stolen boules and lawn tennis sets and defecated in their manicured gardens...

The village boasts an average property price of £1.1million and is home to celebrities including Andy Murray, actor Antonio Banderas, footballer John Terry and singer Louise Redknapp.

Sunday 5 August 2018

Novel way of building a new roof - update

I posted this two months ago:

We were back again today, and it looks like this:

I had assumed the wooden frame was a new roof, and they'd get rid of the existing one, it appears not.
Re Dinero's comment, here's a screenshot from Google maps of what it used to look like:

Saturday 4 August 2018

Cars, cows... and now cliffs.

From the BBC:

A teenager was hurt when part of a cliff crumbled on top of her at a beach.

The girl had been standing at the base of the cliff on Happisburgh beach, Norfolk, when she was hit at about 16:30 BST on Friday.

She was airlifted to the Norfolk and Norwich Hospital with suspected head and back injuries, the coastguard said.

Friday 3 August 2018

And... it comes back to bite them.

From the FT:

First-time buyers who used the government’s Help to Buy scheme to get on the property ladder are finding they need help to remortgage, as many big lenders refuse to offer them finance. Under its flagship home ownership scheme launched in 2013, the government offered borrowers an equity loan of up to 20 per cent of the value of a new-build home, rising to 40 per cent in London.

These loans are interest free for the first five years. Following that period, borrowers must then pay interest of 1.75 per cent, increasing by RPI (retail price index) plus 1 per cent, on top of their normal mortgage repayments.

Only eight out of 25 lenders said they would offer remortgages to new customers who had yet to pay off their government loans, according to figures provided to the Financial Times by Homes England, the housing regulator. This could leave buyers and “second steppers” who used the Help to Buy scheme facing reduced choice and higher fees when they come to remortgage.

Well, colour me surprised. No doubt the government will launch Help To Remortgage to keep the plates spinning for another few years.
Via Lola, a primo bit of squealing from FT Adviser:

Calls to scrap the Lifetime Isa (Lisa) have been branded "nonsensical" by investment providers.

Last week (26 July), the Treasury select committee (TSC) recommended abolishing the Lisa. However, industry figures such as Martin Stead, chief executive at Nutmeg, have questioned the financial and ethical implications of doing so.

He said Nutmeg has more than 11,000 Lisa customers, managing in excess of £50m, with high levels of customer interest since launch. He said the popularity of their Lisa has resulted in roughly £12.5m in government bonuses for Nutmeg's customers and he called the TSC’s report, calling for its abolition, "nonsensical".

"Resulted in £12.5 million of bonuses"?? More like "resulted in additional costs to the taxpayer of £12.5 million and higher house prices somewhere down the line".

Thursday 2 August 2018

Complete lack of self-awareness.

From The Metro:

THE father of a Team GB snowboarder who died on her 18th birthday has said missing a flight to a training camp tipped her ‘over the edge’. Tony Soutter said Ellie had battled mental health problems and struggled with the pressure of top-level sport.

He said: "Unfortunately it all came about from missing a flight, which meant she didn’t go training with the GB squad. She felt she had let them down, she felt she had let me down. And tragically it just takes one silly little thing like that to tip somebody over the edge because there’s a lot of pressure on children...

"That was a lot to do with the fact that she wasn’t able to compete last season and do what she would have loved to have done through a total lack of funding. I have lost my best friend. She was my rock. I’ve done nothing but live for her for 18 years. Now I’ve got to start all over again really. If I didn’t she’d be mortified."

Wednesday 1 August 2018

Here we go again...

We appear to be reaching the mid-cycle dip in the eighteen year credit/land price bubble cycle and land prices seem to have flattened off (at a high level), not just in the UK but globally.

What they plan is not so much pouring fuel on the fire as spraying napalm on smouldering embers to try and get things going again:

1. Young people should get government loans to pay for first house deposit, new report suggests This is tinkering at the edges, all they'd need to do is extend the Help to Buy scheme (or 'Help to Sell', from the point of view of home builders) to 'second hand' homes and abandon the requirement that people wishing to use the scheme have to drum up at least a five per cent deposit.

2. The Halifax is offering to lend customers up to six times their income to help buy a house. Enough said.

3. And to nail things down and enable a lifetime of debt slavery (via Lola)... New mortgage offers financial help for struggling retirees.