What exactly is a "cut"?

One of the much over-used words already in the hours since the official dissolution of parliament is “cuts”.  Simply by using that word implies that whatever level of spending that there currently is should be treated as the norm, the basis from which everything should then be measured.  But why? Who said what we currently have should be the base level?

By way of an example let’s say we spend £100 each year on providing a free at the point of delivery NHS.  But supposing fewer people got ill, the need to spend that £100 diminishes.  So spending less on the NHS in this example is not a cut but a reduction in spending given the reduction in demand.  Now it is just a hypothetical example, but I hope you see the point.  Supposing crime reduced.  We don’t need so many police.  Suppose, well, you can see the thread.  Just because we spend our taxpayers money on certain things now does not mean if we reduce expenditure on them in the future it should be regarded as a cut.

So next time a candidate says we will stop the cuts, give them this example and ask them to explain exactly what they mean.

What is Austerity?

Austerity.  Can you tell me what that word means?

Let’s think of it from a practical point of view.  At home.

By way of an example, if you earn £100 in a month, how much money do you have available to spend?  £100.  Well, of course you can spend more, but that would involve going into debt, borrowing money from someone else, like a bank.  Or a pay day lender.  Or a credit card company that “allows” you to repay money you have borrowed from them when you bought that item at, say, £150.  So you can spend more than you earn in a single month.

But of course you can’t do that every month.  In this example, assuming you repaid the £50 you had borrowed at £10 a month, you would be debt free in 5 months, excluding interest that may also be payable.

To take it further.  Suppose you spent £150 every month.  That would mean you need to borrow £50 each and every month.  So after a year you have borrowed £600.  Now, you realise this is getting a bit out of hand so you decide that you simply can’t keep accruing that kind of debt and you promise yourself to do something about it.  You decide you want to get out of debt, to pay back the £600 (plus interest due).  Now how can you do that?  Well, only two ways really.  Earn more money.  Find a job that pays £120 a month and if you keep your spending at £100, in 30 months you will have paid off your debt.  But supposing you can’t find a job that pays £20 more a month, there is only one solution.  Spend less, say £80 a month out of the £100 you earn, and put the other £20 towards paying off the debt.  Again, 30 months later you will be debt free.

Yes, it will hurt to spend less.  Maybe you will have to walk more rather than get the bus.  Maybe less processed pre-packed meals and start cooking proper food.   Maybe just stop driving at 70mph and drop to 50mph.  Or maybe it may take even harder decisions.  Every little counts.  All this money saving activity to help you to live within your budget. And pay back your loan.

Know what we call that necessary action?  Austerity. 

This is how Labour left the UK at the last election in 2010. In massive debt and spending more than it could afford.  Who can forget the note the out-going Labour Chief Secretary to the Treasury left to his successor.

So next time a politician tells you austerity is bad, tell them this little example and ask them how they would get the family out of debt. 

The people decided last year

Gordon Wilson, former SNP leader, today apparently urges First Minister Nicola Sturgeon to declare independence if the UK votes to leave the EU but Scots back staying in.

In a submission to a think tank he suggest: "If the Tories win (the UK General Election), as is feasible, then the UK will be faced with an in-out referendum on the EU.  This will be decided on English votes given the disparity in populations amongst the component units of the United Kingdom.”

Er, no. It will be decided by a simple majority of votes of the United Kingdom the people of Scotland voted, by quite a margin in the end, to stay a part of.  Therefore they decided to be part of a UK parliament, and part of the UK in Europe.  We had the chance to choose otherwise but didn’t.  The people of Scotland were not convinced that they wanted to be apart from the other three constituent part of the UK and voted accordingly.

So you can’t now come out and say, well, we as Scots don’t agree with what the UK is doing.  We voted to remain part of the UK and that’s the bed we have to stay in.  For Mr Wilson or Ms Sturgeon to think otherwise is delusional and bordering on the megalomaniacal. 

Do we want a leader to go down the UDI route without another vote on, “Do you want Scotland to be an Independent country”.  It’s almost too absurd a concept for words.  

For better, for worse.

The NHS is getting worse under Labour in Wales.  In England the NHS is getting worse under the Conservatives.  And in Scotland the NHS is getting worse under the SNP.  So there you have it, not one of the governing parties can run the NHS in the patch where they are dominant.

Actually, I think this should be no surprise to anyone for three reasons.  First is, our expectations of what the NHS can do are ridiculously high.  It won’t keep us alive indefinitely.  We have to get used to the fact that no matter how much taxpayers money you pour into the NHS, it will never be enough.

Second, whether you think a healthcare system is good or not depends on how you look at the figures.  Washington based Commonwealth Fund for example rates the UK top.  But on a narrow raft of measures.  Many don’t agree with the Commonwealth Fund about what should be measured, and how the results should be weighted.  A survey on health-care efficiency by Bloomberg recently chose Hong Kong, Singapore and Japan as the best performers, based on their efficiency.  Adding greater weight to patient choice, for example, might reshuffle the rankings.  The Commonwealth Fund most values equity and access, and so rewards the systems where it finds these.  But change the weighting given to each category, as Bloomberg does, and you can quickly change the outcome.  So when it comes to judging the world’s health systems, preferences and values guide conclusions, as well as raw data.  So choose what surveys you look at carefully.

The third point is this.  Governments simply are incapable of running an NHS.  I think that’s pretty obvious to most people.  How about all a government should do should be to set the parameters, give the money to a commissioning body on a 20 year rolling contract and let them get on with it.  Free from political interference.  Let the NHS concept of free at the point of delivery flourish.  But endow it with the opportunism of innovation and free thinking.   But for that to happen the politicians have to agree that the NHS needs to end its monolithic sole provider status.  Only then will innovation and fresh thinking waft through the wards.  

But of course, that will never happen.  The politicians have no desire to get together and give up the one thing they can use as an emotional battering ram come election time against each other.

So, over the next few weeks, think what you will be asking the candidates in your constituency, assuming that actual candidate ever comes to your doorstep.  If they start to warble on about investing your taxpayers money, or waiting times or whatever, just stop them and ask them one simple question.  “If you care about the NHS, will you agree a consensus with the other parties for the long term and agree a funding strategy and have no political interference for 20 years and allow the clinicians, health economists and health management professionals the freedom to make the NHS do what it was intended to do.  Care for us at our point of need.”

I think we know what their answer will be.

Once upon a time in a land far far away.......

Once upon a time, in a land far far away, the people realised there were a few bad eggs amongst them.  So they decided to give some people within their community “special powers” to deal with these bad eggs.  They could arrest them.  And all with the consent of the people who appointed them.    

And so it went on for many happy years.  Until one day one of these people who had been given these "special powers" decided that, well, maybe he could push the boundaries just a little bit.  And so over time he began to think, "this is easy".  And so corruption slowly invaded the system.  Others who had been given similar “special powers” saw this and thought, “well, if they can push the boundaries, so can I”.   

And last year in this land far far away there were 3,000 allegations of “special powers” people having behaved corruptly.  And anyone who tried to expose this was hounded and persecuted.  But it gets worse, only half of these allegations were properly investigated — because for “special powers” people, corruption was becoming routine.  

So you are asking, where is this land far far away.  Russia?  North Korea?  Israel?  India?   Er, no.  The United Kingdom.    

So, how do we know this?  Well, it was all in a little-noticed report by HM Inspectorate of Constabulary for England and Wales. It went on to tell a sorry story.  Nearly half of 17,200 officers and staff surveyed said that if they discovered corruption among their colleagues and chose to report it, they didn’t believe their evidence would be treated in confidence and would fear ‘adverse consequences’.  Only two things flourish in such a climate.  Dishonesty and malpractice.  

The current MET Commissioner Bernard Hogan-Howe leads from the top.  One of first moves after arriving at the MET was to use the Official Secrets Act to try to compel a Guardian journalist to reveal the source of a story. The Official Secrets Act is meant principally to be used to trap spies, traitors and those who threaten the defence of the realm, real seriously bad eggs — not reporters going about their business.  Surely this was a disproportionate and oppressive use of the law.   

Similarly, legislation designed to combat terrorism and serious crime, such as the Regulation of Investigatory Powers Act, is used with alarming frequency by Hogan-Howe and other police chiefs to snoop on the internet and phone records of law-abiding citizens.  This is the tactic of the police state. Not so much total policing as totalitarian policing.    All in the cause of necessity, they claim.  So little wonder his officers push the boundaries of what’s right legally but forget what’s right morally.   

And, as Neil Darbyshire writes in the Spectator this week, “One of the consequences of a heavy-handed police leadership stretching the law and using their power to bully and intimidate is that rank and file officers are encouraged to think they can do the same.  Once ordinary officers start abusing power, a culture of semi-criminal behaviour becomes normal and whistle-blowers are treated not as honourable but as traitors.”  As we saw in my earlier blog, What would Peel think?, officers already think they can make up the law as they go along.  That should worry you.

To quote Pitt the Younger, “Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.”. 

Mind your language

Was it strong language or shocking language the iPlayer helpfully asked if I was ok about before I clicked download?  I can’t remember.  But the script of The Great European Disaster Movie (BBC) was more comedy than anything else.  Not so much offensive in a swearing sort of way, more offensive in its patronising tone.  The EU is right and you’re a bigot / racist / insert your own word if you think there is the tiniest thing wrong with the great god of European union.

Which is fine if you watch a programme like this without engaging your critical faculties.  But those who prefer dialogue rather than diatribe will have been disappointed.  Rather than a reasoned and critical examination of the real issues, it dared to suggest that civilisation itself would virtually fall apart if the UK exited the Europe Union.  Which of course is utterly fanciful for surely even the most committed EU enthusiast.  Yes, there would be issues that needed to be resolved.  That is clear.  But we have heard these gloom merchants before.  The UK will be a backwater if it doesn’t join the European Single Currency.  Oh yes?  Who’s laughing now?  Although it’s no laughing matter that most of Europe is still living in the aftermath of the crash while the rest of the developed world, the UK included, and interestingly all European Free Trade Association Nations, whose members top the global league tables on wealth and quality of life, and whose peoples have made up their minds against EU membership, are all slowly but surely getting on their feet again.  Sustainably.

Of course, the last thing the Euro-zealots want is to compare the merits of their bloc – the euro, the tax harmonisation, the Common Agricultural Policy, the swatting aside of national referendums – with prosperous and happy EFTA nations.  Hence their near-hysterical insistence that the only alternative is economic collapse.

And that is the problem with zealots.  They only see things from their angle, refusing to acknowledge that anyone else may have a point of view.  And we all know where that sort of talk leads. 

What would Peel think?

There was a curious news item the other day about the “special edition” Charlie Hebdo magazine that was distributed.  Apparently constabulary in England had been put on alert to be ready for any trouble that may flare up as a result of the publications sale in the UK.  So far so good.  Then a constable asked in a newsagent for the names and addresses of all those who bought the publications.  The names and addresses of the buyers were added to an intelligence note and fed into a police crime and intelligence system, police confirmed. Yes, you heard that right.

The said force was sensible enough to see this had been a pretty stupid thing for the officer to do and quickly apologised. Wiltshire police subsequently confirmed that it had deleted the names of the buyers from its system. No formal complaint has been made against the officer who will receive “words of advice” but is unlikely to face any disciplinary proceedings.

But it’s the assumption the officer made that is worrying.  Clearly a policeman is walking our streets thinking he can make up the rules as he goes along.  If you don’t find that worrying you should.

When you combine that with Police Scotland, for “operational reasons”, (that is a useful set of words to cover just about anything the police want to cover) routinely having armed officers on our streets, you can't help but think there is something seriously wrong at the top of our police forces.  And when they encourage the talk of the “police community” they forget there is no such thing.  All police officers are members of the community they serve. All we have done is we have given them permission to exercise the power of arrest.  Nothing more.  Nothing less.  They are certainly not part of a separate community. 

Sometimes I think the training of police offers must be somewhat wanting.  They seem to forget in the UK, policing is by consent.  It's one of the original fundamental concepts of British Policing dating back to Sir Robert Peel.  It essentially means the police can only operate with the support of "their" public.  Not by force.   So why does it seem a random officer in Wiltshire thinks differently? And if he was like that, how many other officers are too.

It's outrageous

Richest 1% to own more than rest of world, Oxfam says.

It was quite some headline.  It seemed so unfair.  The top 1% owning all that.  The charity's research  shows that the share of the world's wealth owned by the richest 1% increased from 44% in 2009 to 48% last year.  On current trends, Oxfam says it expects the wealthiest 1% to own more than 50% of the world's wealth by 2016.  And it was neatly timed to coincide with the start of the World Economic Forum in Davos.  The implications were obvious.  

But, wait a minute.  The BBC's head of statistics, Anthony Reuben, said in order to be part of the wealthiest 1% of the world's population, an individual would need to be worth just over half a million pounds.  Yes, everyone with wealth of £530,000 or more.  That includes many people in rich countries who may not regard themselves as particularly wealthy, but who simply own their house outright or have paid off a significant chunk off their mortgage.  In fact it accounts for 2.9m people in the UK.  So the finger pointing at Davos was, at best mischievous.  Like it or not these people have the skills that create successful businesses. And jobs.

Charities like Oxfam have to be careful.  They have a good story to tell.  But they spoil it by sensationalising.  And that not only undermines the credibility of the charity, it also damages the people we seek to serve, the poorest in the world.

The Apple of your eye? Think twice before you buy.

Apple.  In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn.   Debt?  Sorry, a business with such level of income and profit, and a large amount in the company piggy bank, debt? Why?

Well, it’s really a very simple answer.  They don’t like paying tax and will do all they can not to pay tax.  Apparently 89% of it lies offshore out of the hands of the Internal Revenue Service.

So they could bring it back.  But won't because they don’t want to pay tax unlike like everyone else and every other business has to do.  So they are stuck by their own greed using complex structures including debt to avoid it.  How weird is that?  Think what you could do with that cash. You could wipe out poor water quality in developing countries.  

So next time you are looking for a new device, remember Apple don’t want to be like you, a responsible citizen who pays tax. Now, make your choice.

Alternatives to consider when you vote

A free market economy promises equality of opportunity, and a planned socialist economy promotes equality of outcome.  Which is best for the UK?  Discuss.

What a tangled web we weave....

Did you hear what Ed Miliband had to say about electricity and gas bills a while ago?  It’s pretty clear.  No room for wiggle.  A straight talking politician telling you exactly what they are going to do. Here are his words.  Exactly.  “The next Labour government will freeze gas and electricity prices until the start of 2017.”  That's what he told you and I the voters. And then backed it up with an advert. 

But wait a minute, what’s this in the small print that he didn’t tell the voters.  Labour spin-doctors wish to point out that they said in September 2013 that they would set up a body with “the power and remit to force energy companies to cut their prices when there is evidence of overcharging, for example when wholesale costs fall and the market fails to respond.”  Er, what?

The same note also stated: “we will put a stop to unfair price rises by freezing energy bills up to January 2017 for people coping with a cost of living crisis.”  Got that?  But that’s not the same thing as what Ed said.

So what Ed said to the voters and what Ed's spin team are putting out as small print on the story are rather different.

When the Labour party tweeted today "It’s pretty simple. When energy prices go down, your energy bills should go down too." they showed the Labour Party is complete ignorance as to how the energy markets actually work. Worrying for a party that aspires to government.

But that’s a story for another day.

What is wrong with the NHS in Scotland?

A friend of mine who was an anesthetist in NHS Scotland once lamented at the waste in the system.  £30m a year out of your, the taxpayers, pocket for example, went straight down the drain when people, amazingly, didn’t turn up for operations.  Of course there are cases when at the last minute a person can’t come.  For example, if they have caught a cold.  But they were in the tiny minority. 

And GPs experience the same sort of thing.  People not turning up for appointments.  You would be staggered if you knew how common this was. And the cost?  As a taxpayer it is costing you £16m every single year in Scotland. If you were ill enough to want to see a doctor, why on earth would you just not turn up?  And by not turning up in both cases you have cost the rest of us taxpayers money and you have deprived someone else of an appointment they desperately wanted.

So that's us just saved £46m a year.

Then when I pop into my local hospital for a regular check-up I’m met by a clerk who asks my name, then asks me to go to sit down and wait.  Past another person who is sitting waiting to call out patients when their time has come.  Why are two people doing a job that could be done by one person?  You can see where this is going. We are wasting money that should be going into patient care.

The real problem with the NHS is that it is a monolithic throw back to days when it was thought the State had to be cradle to the grave in its provision.  These days have long gone in most peoples minds.  But not in the minds of those who benefit most from a monopolistic health service.  I’m not referring to the nurses and doctors and porters and clerical staff as being the ones to blame.  No, the real problem lies in the place where change and reform are dirty words.  The Unions who are bankrolled by the millions of NHS staff and the Government who, no matter the political colour, are scared to do anything significant to reform the NHS.  No competition means no innovation.  No innovation means things never change.

Everyone wants a better NHS.  But we will never get what we wish for if we keep living in the past.  The NHS should be a concept, a vision, an ideology.  Not a monopolistic delivery service.   We have made it an institution with none of the disciplines and tools that would allow it to become what we all want it to be.  The best in the world.

Oil and taxation

So the price of Brent Crude goes down.  And every one is saying this is terrible.  Except when you go to the petrol pump and discover that petrol is now 20% less that it was a month ago.  So is the drop in the price of Brent Crude good or bad?  Well, it depends where you stand. 

For you and I it means we have more money in our pockets to spend as we see fit.  Which ultimately creates jobs in the productive private sector.

For the Government, it means less tax revenue.  Or does it? Despite George Osborne’s best efforts, petrol retailing remains a joint venture between the taxman and the private sector, with the latter merely a minority shareholder.  As a result, one ought to expect only a small proportion of any fall in the price of oil to filter through to the cost of petrol.

To illustrate what happens, let’s go back to when the price of a litre of petrol was around £1.33 – in other words, before the prices fell.  At the time, duty accounted for 58p, VAT for 22p, the companies that supplied the crude and refined it got 48p and the distributors (the petrol stations and trucks) got just 5p.  Since then, the price of petrol has dropped by 9p, almost all of which has been absorbed by the private sector and very little (bar a dip in VAT) by the Treasury.

The Treasury is still collecting 58p from duty, its take from VAT has dropped slightly to just under 21p, the oil companies get just over 40p (which means that their revenues are down by around 17pc) and the retailers still make as little as 5p.  Needless to say, none of these figures include the massive tax that the Government grabs on oil companies’ profits.

So what does this mean?  Well it means on current pump prices, tax accounts for 63.4pc of the money handed over by you at the petrol station.  This is a ludicrously high percentage.  Can you imagine that level of tax on any other product that you buy?  Yet it is the politicians who are taking the moral high ground, and pinning the blame for high prices on the private sector.   

The stark reality is that even if there were collusion of some sort – a point entirely unproved – the worst case scenario probably would be that prices are 1p-2p too high some of the time, a trivial problem compared with 79p “overpricing” caused by taxes.

Counting the days

I suspect there is an election on the way any time soon.  Sounds like it from the crawling to the TV and radio studies of the leaders of the main parties.  In England there is a pretty straight forward choice.  Vote UKIP, get Labour.

North of the border we have a different set of parties.  But the results may be similar in the sense that how you cast your vote will not so much decide whether the party you voted for gets into power at Westminster but some other party.  So with the SNP and Labour in Scotland virtually walking up the aisle together already it looks like a similar outcome north of the border.  Vote SNP, get Labour.

Now I happen to believe the SNP government in Scotland are a pretty competent bunch.  Indeed, I would vote for an SNP member of the Westminster parliament to ensure that the voice of Scotland is heard.  However, if it meant that it would bring Labour back to power in Westminster after they virtually bankrupted our country last time they were in power my vote will be going elsewhere.  Love or loath them, the Conservatives have tried, with varying degrees of success it has to be said, to bring some economic reality to the economy.  And it’s to the economy I will return in other posts.  But think of this before you go and make a cup of coffee.  The government has no money.  It only has ours, taxes from money earned by us.  

So, who is better at deciding how our money should be spent?  A government ?  Or us?  Discuss.

Taxing your brain

There has been rather a lot of ink spilt and blogs filled with righteous anger at the proposal of the government in relation to tax.

But, wait a minute, what short memories we all have.   The PM’s forward promise to move the 40% threshold up to £50,000 means that the rate will kick in at the boundary level last seen in 2009/10 under, yes, him, Gordon Brown.  

Let's look at the details. In 2009 the 40% rate kicked in after £37,400 of taxable income.  Under a Conservative government in 2020 after a decade in office it would kick in at £37,500 (£50,000 – £12,500). A move in the right direction of £100… 

Confused?  

Well the threshold drag has been a hard-to-headline stealthy massive tax hike by this government. With no other deductions and no change in the N.I. rate (which surely will be abolished in a final Lawsonian type reform towards which George Osborne is ideologically inclined)  the net take home figure would only be improved by some £2,100 for a £50,000 earner in 2020 compared to 2010 – a 4.2% relief. 

Whereas someone on minimum wages making £12,500 in 2020 compared to 2010 will see nearly a 100% improvement in their net take home pay…

And how are you going to vote in May 2015 if you are not in the higher wage bracket?  Bit of a no brainer really.

What would £420 million buy?

This is quite extraordinary.  

Today in the Scottish Parliament the First Minster announced that he was introducing legislation that was not in his manifesto and therefore, to paraphrase the SNPs words when referring to Westminster, no one voted for, to stop a properly constituted and statutory legal authority from going about its lawful tasks.  Indeed, it is not just a lawful task, it is their duty.

To what am I referring?  Well, there has been a bit of a stooshie now people have realised that there are responsibilities that go with voting.  Paying your fair share of tax being one of them.  No taxation without representation and all that.  It is a two way street.  Don’t pay your lawful taxes and you really shouldn’t be having a say on how taxpayers money is used.

It seems that many people applied to vote in the recent Referendum who haven’t been contributing their fair share over the years.  May be some couldn’t afford to.  That’s a different debate.  Let’s take a car.  You need to be insured to drive it.  So if you get caught without insurance you pay the penalty.  And there is good reason for that.  Uninsured people cause you to pay £33 more every year on your insurance.  However, it’s more than just the financial cost that counts.  As James Dalton from the Association of British Insurers says, “the cost of crashes caused by uninsured drivers pushes up the insurance premiums of honest motorists, as well as being a danger on the roads.”   Uninsured drivers have been shown to be more likely to have an accident and are more likely to be driving an un-roadworthy car.  These drivers kill 160 people every year and cause 23,000 injuries, all without any means of compensating their victims or paying for the cost of living with their injuries.

And my point is?  It’s not the wrongdoer who pays.  It’s you and I.  And so it is with money to local authorities.  Those that don’t pay are making those who do pay pay more. £420m unpaid at the last count.

I can understand for political reasons the bogey man of the Community Charge (aka the poll tax) being wielded out to try and stop local authorities rightfully reclaiming money from that period. 

"However, the relevance of information from the current electoral register to the position of debts from 25 years ago is difficult to fathom, except through some misguided political intention."  So said the first Minster. 

I'm really not sure what planet he is on.  The law is the law.  If people broke it they will eventually have to pay up.  Now is that time.  It’s a slippery slope he is going down.  What else can we look back 25 years and say we are not going to follow up and pursue some other wrong doing?  

Revisionism is creeping in.  People will say, the Community Charge was different.  It wasn’t.  It was a piece of legislation approved by Parliament.  Like it or not (and I don’t), the UK was and remains the parliament for the whole UK.  Until the day Scotland is a nation again, I’m afraid we have to bow to the legislative chamber of the UK.

I suspect I will not be alone in asking the  Scottish Government for moneys that I had to pay to subsidise those who refused to pay repaid to me.  Sounds fair.  Or are we seriously going to allow the Scottish Government to pass a bill that effectively endorses wrongdoing?