Friday, 31 December 2010

UK government interest payments since 1750

How much does government debt cost us?

Corrected for inflation [1], it seems we now spend more on interest payments than ever.


According to figures from ukpublicspending.co.uk, taxpayers should expect to pay 37.07bn in 2011, up from 28.1bn in 2009.

In the 19th century, only once did interest payments breach 4bn [2]


In the 20th century, interest payments peaked not in the aftermath of WWI or WWII, but in the period after 1970


Interest payments breached 34bn in 1986, then again in 1998 [3]


After 1998, interest payments fell steadily to 22.16bn in 2003, but even this level was higher than in any year prior to 1968 [4].


The Office for Budget Responsibility predicts that debt interest payments will rise every year to £66.5bn in 2015-16 [5] — 48% more than 2010-11. If the 2015-16 figure is in 2010£, it's equivalent to 58.3bn 2005£ [6]. If it's in 2015-16£, then the 2005£ equivalent depends on the government's inflation expectations, which are surprisingly difficult to extract from the OBR report. If we assume yearly inflation of 4%, £66.5bn in 2015-16 is the equivalent of 54.7bn in 2010-11 (47.9bn 2005£). Here are some possibilities:


Yearly inflation2010-11 equivalent2005£ equivalent
2%60.252.8
3%57.450.3
4%54.747.9
5%52.145.7
10%41.336.2
15%33.129.0

On any likely scenario, we're looking at unprecedented levels of taxpayers' money spent servicing the national debt. Inflation would have to run at a horrific 15.7% a year for the 2015-16 payments to be equivalent to the already-high 2009 payments of 28.1bn 2005£. Even if inflation is 'only' 10%/year, we're looking at interest payments of 36.2bn 2005£ — higher than at any point in our history.

I sincerely hope I've made a mistake somewhere, but I fear things really are this bad.

The same OBR report that shows debt interest payments of £66.5bn in 2015-16 anticipates £54.4bn in Corporation Tax receipts and £11.5bn from Stamp Duty Land Tax. Without a national debt to service, we could scrap both of these taxes. Alternatively, we could scrap Fuel Duties (£35bn expected) and Council Tax (£31.2bn). Or we could scrap a wide range of little taxes: £55.4bn from Wine Duties, Beer and Cider Duties, Spirits Duties, Tobacco Duties, Vehicle Excise Duties, Stamp Taxes on shares, Capital Gains Tax, Air Passenger Duty, Inheritance Tax, Environmental Levies, Landfill Tax, Climate Change Levy, Aggregates Levy, Betting and Gaming Duties, and Customs Duties and Levies, and a further 8.3bn from unnamed "other taxes".


Personally, I think I'd vote for killing off the little taxes. Imagine how much simpler life would be for thousands of businessmen, and how much freer you'd feel. Free to invest in worthwhile companies without the government taking a cut. Free to smoke or drink or gamble, without a scornful slap from nanny. Free to drive your car (perhaps putting some money aside for when Peak Oil does eventually arrive). Free to keep your house until you die, safe in the knowledge that the whole estate will go to your heirs.

How can we rid ourselves of our expensive debt? I see no moral obligation to honour the debts run up by previous governments, so I'm attracted to the idea of outright repudiation, followed by a prohibition on government debt. The danger here is the moral hazard of giving socialists an easy way out. How long before they call for the restrictions on government borrowing to be relaxed?

The more difficult route is to reduce government spending to the point where we run a surplus rather than a deficit. The reduction would be a good idea in any case, so this approach has its merits. Once we have accustomed the nation to living within its means, perhaps for a couple of decades, we may reconsider the option of repudiating the remaining balance.

What we must not do, and what the government will be strongly tempted to do, is inflate our way out of debt. It amounts to a stealth tax, which unduly punishes those who have behaved responsibly.

NB: Socialists prefer to express our debt, deficit, and interest burden as a percentage of GDP. I have deliberately avoided this, as I see no reason why government spending (and its attendant costs) should grow with GDP. Our noble public servants can do everything they do today if we hold government spending constant in real terms. Any increase in national wealth rightly belongs in the pockets of the people.

[1] All ukpublicspending figures are in 2005£
[2] 4.09bn 2005£ in 1882, falling to 3.84bn in 1883.
[3] 34.87bn 2005£ in 1986; 35.18bn in 1998.
[4] 22.77bn 2005£ in 1968, increasing to 23.03bn in 1969 before falling to the next local minimum of 20.37 in 1972
[5] Economic and fiscal outlook – November 2010 (PDF 3.9MB)
[6] 30.96bn 2010£ = 27.04bn 2005£ according to the ukpublicspending reckoning, so £1.14 2010£ = 1 2005£, and 66.5bn 2010£ = 58.3 2005£

Thursday, 30 December 2010

EU bans herbal remedies: another victory for corporate interests

An excellent article today from Daniel Hannan:

When the EU does something truly unpopular, it usually builds in a delay. Eurocrats know that national ministers are likelier to agree to measures which will blow up on the laps of their successors. Thus the restrictions on natural and alternative medicines, which were passed in 2004, will hit herbalists’ shelves in April.

The Independent reports that hundreds of traditional plant remedies are under threat, including Meadowsweet, Cascara Bark and Pau D’Arco. Some products will be proscribed outright; others subjected to a prohibitively expensive licensing regime.

Why is the EU criminalising a harmless activity pursued by 20 million Europeans?
...

Three factors are in play. First, Eurocrats love regulating things. The argument that you should leave well alone – that herbalists have no interest in poisoning their customers, that the presumption of innocence should apply in this as in any other case, that the trade has flourished for centuries without state oversight – is anathema to them. To the EU official, “unlicensed” is synonymous with “illegal”.

Second, the EU has fallen for that modern idiocy known as “the precautionary principle”. As I wrote when this ban was first mooted, you can’t prove a negative. At the beginning of the nineteenth century, it was widely believed that the noise of a passing train would cause a pregnant woman to miscarry. Had we applied “the precautionary principle”, we would never have laid a single inch of track. After all, the rail operators of the day couldn’t prove that they wouldn’t cause miscarriages, any more than today’s health stores can prove that their wares are not toxic.

Third, and most important, the ban suits the big pharmaceutical corporations, who lobbied openly and enthusiastically for its adoption. The large chains will be able to afford the compliance costs. Smaller herbalists will not, and many will go out of business, leaving the mega-firms with something close to a monopoly.

Discouraged from attending university?

I've been catching up with some articles on Critical Reaction. The one by Graham Stewart on 14 December is worth reading:
Remarkably, much of the electorate remains under the impression that increased student fees will put off applicants from deprived backgrounds. If this claim is made often enough then there is a danger it becomes self-fulfilling. Yet, how could it be true? The amount a graduate repays annually is dependent on how much he or she earns after graduation. No part of the burden of repaying fees falls upon the student’s parents. To repeat, it is how much a graduate earns that is the consideration, not how few savings there were in the house in which he or she grew up. So how is a deprived background relevant? If there is any perverse logic in the student loans scheme it is that because graduates earning low incomes do not have to repay any of their loan there is actually an incentive for them to remain in low paid employment.
Indeed. The scheme does little to discourage people from pursuing useless degrees.

Tuesday, 28 December 2010

Ambassador Miliband?

Downing Street is considering offering David Miliband the post of British ambassador in Washington, the Guardian has learned.

The former foreign secretary, still recovering from being beaten to the Labour leadership by his brother Ed, has the skills, contacts and abilities to make a success of the post, it is believed.

Incredible.

Before the general election Miliband was in line to become the EU's chief foreign policy representative, but he rejected the posting to concentrate on making Labour electable.

The post instead went to Lady Ashton, the former leader of the Lords.

Thankfully, brother Ed is busy ensuring that Labour are totally unelectable.

Guardianistas and Democracy

Thanks to Daniel Hannan, I discovered a revealing Guardian article:

The government is to follow the lead of The X Factor television programme and allow the public to decide on legislation to be put before MPs.

In an attempt to reduce what is seen as a disconnection between the public and parliament, ministers will ensure that the most popular petition on the government website Direct.gov.uk will be drafted as a bill. It is also planning to guarantee that petitions which reach a fixed level of support – most likely 100,000 signatures – will be guaranteed a Commons debate.

Ministerial sources acknowledge that the proposals have the potential to cause headaches for the coalition because populist causes célèbres – such as a return of capital punishment or withdrawal from the European Union – could come top of the list.

The leader of the Commons, Sir George Young, has signalled he wants to press ahead with government by petition in the new year.

Hannan posted a selection of Guardianista comments:
Populist tripe of the worst kind.

Govt by petition oh dear, soon the Daily mail Tax payers allience and Talk sport nutjobs will get to say who eats has a home and care and who doesnt. pandering to the mob and Pontius Pilate springs to mind. they are evil beyond belief

Next up, lynch mobs.

Now for clamourocracy. Unbelievable.

What a bunch of tossers.

In a word: pathetic.

So, hanging back in by next christmas then....

Oh my god!!!!! I don't believe what I am reading. If this government think this is the way forward, so help us all.

Govt by petition? Gods teeth a Nation run by Mr & Mrs semi detached chip on shoulder DailyMail cardigan kendal mintcake hang em and flog em let em starve send em back. oh my were so foooked
Confirmation, if it were ever needed, of the educational gulf between militant lefty Guardian readers and the champagne socialist, technocratic 'elite' on their editorial staff.

Here are some more of my favourites (uncensored):
DanielFrisbee 27 December 2010 9:07PM

My god, please let the revolution come soon! This foul bunch raping the country need to be strung up pronto.

Acephalic 27 December 2010 9:21PM

If they really mean this, it's time to petition to nationalise the utilities and the banks.

mrStringvest 27 December 2010 9:24PM

expect DailyMail types to set up numerous e mail addresses and wear their little fingers out untill they get 100,000 hits
Im sorry Dave but you just havent got afoooking clue what your doing

shatnersbassoon1

27 December 2010 9:27PM

FFS...expect hanging to be back in the UK in 2011.
Mob-rule has just been legislated.

Cuse 27 December 2010 9:29PM

Is this the same as their website for deranged socio-paths? You know, the one that asked for public ideas that got turned off after a few days because it was so stupid?

This Coalition can't decide whether it wants to take us back to Thatcher's '80s or into the weird La-La land that Cameron resides in his head.

You know, the one where you can take billions out of the NHS and call it a cash increase and then claim they are the party of the NHS?

Christ this Country is going to be a shit place to live, be educated in, work, look for work in, be poor, invest in or be ill in within a few short years. Its depressing.

MERidley 27 December 2010 9:31PM

So soon public flogging and hanging, what are these people good for.. 'absolutely nothing'

ADeadSeagullInABin 27 December 2010 9:36PM

dreaming of guillotines.

easternstrix 27 December 2010 9:37PM

Is this some kind of a nightmare coming true?

What would you rather have, one lion ruling over 100 oxes or the other way round? This is the most irresponsible idea I have ever seen!

1tsirhcitna 27 December 2010 9:39PM

red/ blue/ green/ pink /black /yellow /etc .....you are all fucked if you follow the idiots that think they know how to lead a populus...BE subversive right now .. the collective subversive can make a difference.. its called war.. change the future for your children

KenBarlow 27 December 2010 9:47PM

"So if the majority of the people want to withdraw from the EU, politicians should... ignore them?? "

What I would have is tests to weed out the nations morons. Only after passing tests does your vote count.

So, for example, when my parents say: "We need to withdraw from the EU and kick out all the blacks" in an X Factor ad break, they should be made to sit some kind of test so they can actually prove they know why it is we must withdraw from the EU - prove it's not just cos they're a bit racist, Daily Mail readers and people who don't really know that much about the EU, the alternatives and the consequences (if any) of withdrawal.

The danger is in a democarcy you'd end up with people like my parents setting policy - my parents are lovely but they ain't 'alf as smart as they think they are. Tey are not experts o naything - they just have their tabloid fuelled opinions - the wisdom of the cab driver, the "common sense" of those who know the easy way to deal with peadophiles, benefit fraud and students...

HassledinHastings 27 December 2010 9:53PM

Cannot believe I am reading this. What more is their to say? A bunch of fecking corrupt clowns. We need more people on the streets. Perhaps when the Houses of Parliament go up in flames and the bastards get chased out of the country they might start to get the message.

ThermidorRequiredNow 27 December 2010 9:56PM

There is no answer to this nonsense that does not start and end with mass killings of the privately educated.

And more encouragingly,

1tsirhcitna 27 December 2010 9:20PM

we are all fucked ... please go to your nearest suicide booth ..

WillSum 27 December 2010 9:21PM

Can anyone suggest good places to emigrate to please? (Seriously)

To be fair, I have my own doubts about democracy. But it's amusing to see how keen the socialists are to quash debate on issues they find unpalatable, how easily their thoughts turn to bloody revolution, and how quickly they expose their utter contempt for the 'common people' they claim to represent.

Thankfully, there were a few 'Tory trolls' around to inject some rational contributions:

MrBendy 27 December 2010 10:09PM

Laid bare on this page is the deeply ambivalent attitude of Socialists towards the appropriate relationship between what the electorate wants and what politicians should do.

Where the public seem reliably left-wing in their instincts, giving the majority of the people what they ask for is apparently not only desirable but essential. Hence on bankers' bonuses, on fat cats, on the NHS, where the left are entirely comfortable with the opinions expressed, the demands of the clamouring masses are deemed to be based on considered values and sincerely-held moral convictions and so should obviously be assuaged by responsible politicians.

But when the public is infuriatingly right wing, Hell should, of course, freeze over before politicians respond accordingly. On immigration, crime or the EU, the public's views, disliked by the left, need to be dismissed as the superficial product of manipulation by Murdoch's media outlets and any responsible politician ought to do everything possible to ignore them. Doing what the majority of voters want in such cases is, to use the ritual insult, merely "kneejerk populism".

As Kolakowski, who knew more about the modern intellectual history of leftism than most, correctly said, democratic socialism is ultimately "as contradictory as a fried snowball".

Friday, 24 December 2010

Far right?

On the 19th, Daniel Hannan highlighted a shocking exchange on BBC radio:
On Radio 5 live yesterday, David Baddiel described the Freedom Association, a libertarian campaign which, in the 1970s and 1980s, led the battle against the trade union closed shop, as being “a very, very right-wing, kind of sub-BNP, slightly posher version of the BNP organisation”.

Alan Davies, who was interviewing Baddiel about his new film, The Norris McWhirter Chronicles, went on to ask whether Norris McWhirter, who ran the Freedom Association as well as the Guinness Book of Records, might have been “a brownshirt [sic] with Mosley”. (Thomas Cranmer has the full story, with a link to the programme, here.)
...
For what it’s worth – and this really shouldn’t need saying but, since Mr Davies has decided to bring up brownshirts and Mosleyites, it’s worth straightening the record – he played his part in the war against Hitler, serving in the Royal Navy. He was, above all, a lover of freedom: he could see that the corporatist Heath-Wilson state was deleterious to personal liberty as well as to economic prosperity. His was a lonely voice in the 1970s, although almost everyone now accepts that he had a point. Indeed, one of the few political movements which still hankers after the subsidies, protectionism and nationalisation of that era is the BNP, whose ideology is, in many ways, the polar opposite of the Freedom Association’s (see here).
On Thursday, Hannan blogged about the BBC's response to his official complaint.
A fundamentally decent man, a man who had served his country in the war against Nazism and had been awarded the CBE, was traduced on air, linked to Mosley and compared to the BNP. No one challenged the remarks: on the contrary, Alan Davies, the presenter, amplified them. But it’s OK, apparently, because it’s lighthearted.
Sadly, this is par for the course with the BBC. I was shocked, however, to see such careless (or cynical) use of the term "far right" over at The Register.

On the 20th, Chris Williams wrote
The personal details of English Defence League supporters have been stolen in a hacking attack on its website, it was reported today.

The far-right group's leadership emailed members in recent days to warn them of the breach, the Daily Telegraph reports.
The Telegraph article itself was just as sloppy:
Police are believed to be investigating the security breach, which also included the far-Right groups’s payment system being illegally accessed
...
The weekend’s incident is similar to a security breach involving the far-right BNP in 2008, where the names, addresses and contact details of some 10,000 of its members were published online.
Thankfully, objections were voiced in the Register comments section.

Andrew Martin observed:
Far-right" really doesn't mean anything. It's shorthand for "polite people don't share these views, and while we're at it why not smear the Tories, UKIP, and all for being on the right and therefore a bit like far-right-lite
While an Anonymous Coward opined:
People on the "far right" actually tend to be authoritarian left, as they believe in jobs for everyone of the correct colour (managed economy) they also tend to be strong believers in state control. State control is of course easier in a managed economy. The more GDP the state controls the more power they have over the population (as they employ more people, take a greater wedge of your earnings, possibly own your home/power supply/etc.)
The socialists were having none of it, so Andrew Martin weighed in again:
"Far right" is invoked to denote extreme libertarianism - small state, deregulation, open borders but no benefits etc.

"Far right" is also invoked to denote heavy regulation (generally based on some notion of 'race'), and all the very interventionist policies of the BNP.

The term means contradictory things, ergo, it means nothing.
For my own part, I dragged up some quotes from the BNP manifesto:
- The BNP will ensure that the National Health Service is used to serve British people and not used as an International Health Service.

- The BNP will reverse the budget cuts on education and prioritise this sector as vital to the rebuilding of our nation.

- The BNP will offer free university education to deserving students who have completed their period of Community Service.

- The BNP will make rail travel affordable once again by reversing the disastrous privatisation process which has grossly inflated ticket prices.

- The BNP would take some of these savings and invest them in rebuilding British industry and skills through an active protectionist policy as many other European nations already do.

- The BNP will therefore introduce legislation to ensure that a foreign acquisition of any significantly-sized British company is judged to be in the public and national interest before it can proceed.

- The BNP will oppose the privatisation of natural monopolies such as Royal Mail.

- The BNP will reinvigorate the IT sector in Britain with massive investments in technology universities.

- The BNP will institute a policy of protectionism for the local IT industry and jobs.

- The BNP will nationalise the telecoms infrastructure to enable the creation of a not-for-profit 100Mbps broadband service across the country.


To be honest, their manifesto is a bit of a handbag of unrealistic populist policies (including 200mph maglev trains). Not all of it is socialist, and some of it is sensible, but it's clear that they believe in a big, redistributive, interfering state. They favour protectionism, nationalisation, and welfare (for those who meet their definition of British), rather than free trade, privatisation, self reliance, and genuine charity.

To characterise the BNP as "far right", as if they are a little bit further along Lady Thatcher's road, is grossly misleading. They have a lot more in common with Old Labour.
If Chris Williams read these comments, he wasn't prepared to pay them any heed. He wrote a follow-up article on the 22nd about a caretaker who'd been duped into donating to the EDL:
The page had a button labelled "support the troops", and he donated one pound. It gave no indication the money was destined for the far-right EDL, he claimed, but the caretaker admitted he had been "stupid".
I couldn't resist a further comment:
I thought we'd done this one to death in the previous article.

I was prepared to accept that Chris Williams was just being careless, but his continued use of the term "far right" to refer to fascist groups suggests malice rather than incompetence.

You can hate fascist thugs, and you can hate Thatcherites, but don't suggest that their political philosophies are similar.

"far right" is a grossly misleading term. I expect it from the BBC and The Guardian, but not from El Reg.
I don't like repeating myself, but I fear that it is the only way to get the message across.

Thursday, 16 December 2010

Ainsworth: ''The war on drugs is not working''

BBC News reports,

Bob Ainsworth, who oversaw the issue at the Home Office in Tony Blair's government, said the approach of successive administrations had failed.
...
Mr Ainsworth is the most senior politician so far to publicly call for all drugs, including heroin and cocaine, to be decriminalised.

He said he realised while he was a minister in the Home Office in charge of drugs policy that the so-called war on drugs could not be won.


The big question, unasked by the BBC, is why Mr Ainsworth didn't do anything about this when he was in a position of power. This smells of politics.

Still, if this puts pressure on Lib Dems to put pressure on the government in favour of decriminalisation, that can only be a good thing.

Prohibition is immoral as well as ineffective. Adults should be free to weigh the risks, and decide for themselves which substances they consume. The government has neither duty nor right to intervene.

UPDATE: DK has an excellent post on the same subject here.

Friday, 10 December 2010

Worse than your average thug - Part II


In an amateur video of the attack on Prince Charles's car, you can hear the mob chant

"To-ry scum"

"Off with their 'eads"

In a video taken by an MP at Parliament Square, you can see communist flags waving, and fires burning, to the tune of militant drums.




YOUNG COMMUNISTS DECLARE:
  • NO TO TUITION FEES
  • NO TO AUSTERITY
According to Sky News,

Parts of London became a battleground as a demonstration by students became violent on Thursday evening.

Benches in Parliament Square were set alight, Winston Churchill's statue was vandalised and were windows smashed at the Treasury and the Supreme Court.

Students hurled missiles at lines of heavily armed police, who responded by striking protesters with batons and charging them on horseback.

Why are they protesting? Because they feel that they have a right to your money. Because they believe in theft and redistribution. Because they're not afraid to resort to violence in pursuit of that goal.



This morning, Clare Solomon appeared again on BBC Breakfast. Again, she refused to condemn the violence and destruction of private property. She is far worse than your average thug.

Government meddling in private pensions

The Telegraph reports,
Millions of baby boomers now have just a 10-year period in which they can either make or break their retirement plans.

According to new research, seen exclusively by The Sunday Telegraph, only one in four fiftysomethings is financially prepared for retirement and one third have no retirement savings at all.
...
many have seen their pensions and savings squeezed from all sides: company pension schemes have cut back while the value of the state pension has fallen.

But it is private savings that have been hardest hit: those in this age group have suffered a toxic mix of poor investment returns, rock-bottom interest rates and ever-declining annuity rates, so even those who manage to build a decent pension fund find that it secures a smaller income in retirement. MetLife's survey showed that those in their fifties were on average hoping to retire on an income of £18,100 a year.
Things aren't likely to get better. According to research by The Independent in 2007,
Mr Brown's 1997 decision to tax dividends paid into pension funds will have far greater consequences than previously thought.
...
The accountants also concluded that the 25-year-old would receive £6,000 less in annual pension payments on retirement, while the 35-year-old would see his pension reduced by £5,000 per year.

Even taking into account future inflation of 2 per cent per year, the reduction in the size of the two pension funds would be £60,000 for the 25-year-old and £57,000 for the 35-year-old.

Prior to 1997, for every £80 of dividends received by a pension fund, a further rebate of £20 would be received by the fund from the Inland Revenue.

When Labour came to power in 1997, pension funds rarely showed a deficit and looked ripe for taxation.

Mr Brown is set to retire on a guaranteed pension of at least £100,000 a year, thanks to the generous final-salary pension scheme enjoyed by MPs.
Relentless taxation, inflation, and interest rate manipulation has left pensioners reliant on a wide range of complicated benefits, such as free bus passes and winter fuel allowance. If these people had simply been allowed to keep more of their own hard earned wealth, they would be self sufficient. Instead, they rely on current taxpayers.

Gordon Kerr has a written a great article for the Cobden Centre opposing government intervention in the pensions system.
When will our new leaders stop following in the footsteps of the Old Labour belief that the Government can regulate and legislate to fix the economy? Does our Government believe that the best of all worlds is one in which a civil servant interferes in every limb of business?

Thursday, 9 December 2010

An overcomplicated tax system

The Telegraph has an article on Ten ways to beat tax hang-ups.

Useful advice, I'm sure, but the fact that "the taxman has made systemic errors in so many cases" suggests that our tax system is far too complicated.

For example:
Roy-Chowdhury of the Association of Chartered Certified Accountants said: "Check all the items and amounts carefully in any letter you receive, and do not be scared to challenge HMRC. For example, do you agree that you had a company car of a specific value and with the carbon dioxide emissions as stated? Did you have private medical insurance?"
Why should HMRC know or care whether you have private medical insurance? And if the politicians are concerned about carbon dioxide emissions (god only knows why), then why not handle this through fuel duty — the more you burn, the more you pay.

Of course, our complicated tax system is great for accountants (visit tax.org.uk) and HMRC contractors.

According to publictechnology.net,
HM Revenue and Customs spent 44% of its 2009-10 supplier budget on its Aspire IT outsourcing deal led by Capgemini.

Overall HM Revenue and Customs (HMRC) spent £1.75bn on suppliers in the last financial year, but spending was dominated by two outsourcing deals
HMRC's overall budget is in the region of £4 billion [1].

That's about £18 million for every day HMRC works [2].

Great for those who get a cut; not so great for the rest of us.

[1] It's not easy to tell, because their 2009-10 Net Operating Cost of £16,492.8 million includes £12,460.3 million of "Payments of Child Benefit, Child Trust Fund endowments and Health in Pregnancy Grant". The accounts don't show a subtotal, but the difference — chewed up by HMRC itself, rather than redistributed — seems to be £4,032.5 million.

[2] 52 x 5 - 33 days starting holiday = 227;
£4,032.5 million / 227 = 17.76 million

Wednesday, 8 December 2010

Privatise higher education

I can't fathom the sense of entitlement exhibited by the student protesters. It's as if they don't know, or don't care, that every penny of 'government' subsidy is achieved by confiscating other people's hard-earned wealth, which they would rather have spent on their own children, their favourite charity, or themselves. Actually, it's worse than that: because the government spends beyond our collective means, today's subsidised degrees come at the expense of future generations.

And they seem blind, too, to the fact that government subsidy for thousands of Mickey Mouse degrees distorts the market price for higher education. Meanwhile, many of those who pursue these degrees seem to value them as little as your average employer does, for over a fifth of students drop out, as Gerald Warner reported back in May:
With a 22 per cent wastage rate, we should be reducing university provision by around that figure, thereby making enormous savings in taxpayers’ money. Beyond that, we should be making even larger savings by closing down sink universities whose under-performance is notorious. How, exactly, will our international competitiveness be impaired by denying young Darren two years of getting paralytic in the students’ union bar before he drops out? There is an unconscionable amount of po-faced nonsense talked about expanded access to university: it is predicated not on academic but on political and social engineering imperatives.
Of the students getting excited about £9k/year tuition fees, I wonder how many have seen this chart from the University of Buckingham,

Value for money

Our full honours degree in two years means that we can be competitive in price with other universities. Fees and maintenance costs are incurred for only two years instead of three elsewhere (see below).

From January 2010 annual tuition fees for home students at most UK universities will be £3,225 – a total of £9,675 for a 3-year degree. Buckingham's tuition fees are £8,640 per year (January 2010 start) but taking into account the year's saving on living costs afforded by the 2-year programme, the total cost of a 2-year degree can offer a saving compared with 3-year degrees at other universities.

For example, taking the sum of the loan and maintenance grant to represent a typical year's living costs (£4,950 + £2,906 = £7,856):


Buckingham Other universities
Tuition Living costs Tuition Living costs
Year one £8,640 £7,856 £3,225 £7,856
Year two £8,640 £7,856 £3,225 £7,856
Year three 0 0 £3,225 £7,856
Sub-total
£32,992
£33,263

This is exactly the sort of innovation you'd expect from the private sector:
Buckingham remains unique because, unlike other UK universities, we do not receive direct subsidy from the Government and so we can focus on the student rather than worrying about regulatory interference.
Unlike Warner, I don't think the government should be trying to identify "sink universities" and close them down. Instead, they should get out of the university game altogether.

Airforce bug bots - the perfect assassins

The Register reports

The US Air Force is engaged in wacky research on fruit flies manoeuvring within a heavily instrumented "simulation tunnel" in order to develop tiny, potentially murderous insect-sized flying robots.

According to a statement issued yesterday by the Air Force Office of Scientific Research (AFOSR), research underway at in Californian labs will teach military designers how to build tiny robot aircraft which can fly around indoors or in built-up areas the way flies do.

They link to a 4 1/2 minute promotional video for the the Micro Air Vehicles: "Unobtrusive, Pervasive, Lethal".



The scene is set:
tiny military swarm droids scattering across towns or cities to locate or spy on persons of interest to the US authorities. They might even, as shown in the vid at around three minutes, be able to land on the back of your neck and blow your head off using some kind of tiny warhead. Amazing what they can do nowadays.
Indeed. Very cool tech in the right hands. Very scary in the wrong ones.

There are a good many fatal poisons in nature, so they wouldn't need to resort to anything as dramatic and potentially incriminating as a kamikaze bomb bot.

Use a sufficiently exotic venom, and a coroner would almost certainly declare death by natural causes. A spontaneous heart attack? These things happen. Or if you're driving a car at the time, an untraceable but powerful sedative would suffice. Or if you're leaning precariously over a well of freezing Arctic water, as in Dan Brown's Deception Point, perhaps all the spybot would need to do is set you off-balance by flying into your eye. So many potential accidents. Dissidents beware.

Tuesday, 7 December 2010

A referendum to default

I recently commented on an article by Daniel Hannan:
Mr Hannan, do you believe the Irish people should be offered a referendum on whether to repudiate the debts run up by their bankers and politicians?

Offered such a choice, there would be very little doubt of the outcome. 93% of Icelanders were disinclined to honour other people's debts.
I'll post an update here if anyone provides a convincing reason why the Irish should not be offered this referendum.

In a Money Week article prior to the Icelandic referendum, Matthew Lynn explained why he thought Iceland would be right to default on its debts:
The debts were not, let's remember, run up by the Icelandic government, or by the Icelandic people. They were run up by a few wild bankers who swallowed too much of their own propaganda, and expanded with a recklessness that makes even Sir Fred Goodwin's reign at Royal Bank of Scotland look sober and responsible by comparison.
...
If Iceland voted no, it would give people pause for thought right around the world. Why, for example, should the British taxpayer have to spend billions bailing-out the mistakes made by RBS?

The case against Iceland rests on the idea that national governments should stand behind the liabilities of banks that happen to be domiciled in their country. And that taxpayers should always ultimately pay for bankers mistakes. Yet that is precisely what we should be trying to change.
Following Rothbard, I'd argue that even if the debts had been run up by the Icelandic government, the Icelandic people shouldn't feel obliged to pay.
Consider this question: why should the poor, battered citizens of Russia or Poland or the other ex-Communist countries be bound by the debts contracted by their former Communist masters? In the Communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class. But this injustice only differs by degree from "normal" public debt. For, conversely, why should the Communist government of the Soviet Union have been bound by debts contracted by the Czarist government they hated and overthrew?
The Irish should be offered a referendum on whether to default. So should we. Anyone who would deny such a referendum is not a believer in democracy.

Tebbit: Dangers Seen and Unseen

In his latest article for Critical Reaction, Norman Tebbit digs up some good old quotes from ze germans:
"an economic union will survive only if it is based on political union"

Helmut Kohl, January 4th, 1993
"The introduction of the Euro is probably the most important integrating step since the beginning of the unification process. It is certain that the times of individual national efforts regarding employment policies, social and tax policies are definitely over. This will require to finally bury some erroneous ideas of national sovereignty"

Gerhard Schröder, January 19th, 1999

Assange arrested in London

On Saturday, Tom Paine wrote about the charges against Wikileaks founder Julian Assange:
The most interesting thing about the Wikileaks story is not the information published (was anyone really naieve enough to be surprised?) but the responses of state power everywhere. Totalitarians, kleptocrats, democrats; their angry reactions barely differ. The criminal charges brought against Julian Assange in Sweden, for example, are not so much stitched up as haute couture. All the casual observer will recall is that he was accused of rape. So much for the benevolence of states.
Today, the BBC reports that Assange was arrested and refused bail:
Mr Assange was arrested by appointment at a London police station at 0930 GMT.

Police contacted Mr Stephens on Monday night after receiving a European arrest warrant from the Swedish authorities.
...

Gerard Batten, a UKIP MEP, said the Assange case highlighted the dangers of the European arrest warrant.

He said: "I don't know of the quality of the evidence in Mr Assange's case but it does seem that he is involved in political turmoil and intrigue and there are a lot of people keen to shut him up and there is nothing a court in the UK can do to look at the evidence before they extradite him."

Mr Assange is an Australian citizen and his supporters have written an open letter to Australian Prime Minister Julia Gillard, asking her to protect him.

Mr Pilger, who appeared in court to support Mr Assange, said Ms Gillard's threat to remove his passport smacked of "totalitarianism".

The charges against Assange are deeply suspicious, but whatever their veracity, it is concerning that British politicians can't be held to account for allowing the extradition. Not our choice, gov.

We've come a long way since the European Economic Community. When will the people rise up and demand a referendum?

I fear that unlike the students who have recently been calling for a revolution, horrified at the prospect of paying for a greater proportion of their own education, the ordinary decent hard-working taxpayer is too busy trying to make ends meet.

Monday, 6 December 2010

Garrow's Law

It's only fair for me to acknowledge when the BBC produces a programme that I enjoy. Garrow's Law is one.

William Garrow, as portrayed, is the sort of hero that libertarians can cheer. He practised law at a time when slavery was legal, and sodomy was punishable by death. He defended the genuine rights of individuals against a corrupt establishment.

According to Wikipedia, it was Garrow who coined the phrase "innocent until proven guilty", in 1791.

Predictably, the real life Garrow did not always live up to the high principles shown in the BBC drama. He was willing to reach parliament as an MP for the rotten borough of Gatton in 1805.

Still, he seems like a decent chap, and I'm glad that the BBC has highlighted this part of our history. Even so, I'm with Alex Deane when he calls for an end to the licence fee.

Tuesday, 30 November 2010

Ireland vs Iceland

Last Wednesday I asked "Why shouldn't Ireland just default?"

Today, I found an interesting article from Guido:
Iceland’s President, Olafur R. Grimsson, told Bloomberg TV on Friday that his country is better off than Ireland because they allowed the banks to fail two years ago and devalued the krona:

“The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

The Irish bank bail-out is being foisted on them by the EU and the IMF whereas sovereign Iceland let the banks go bust and restructured the financial sector to keep the commercial sector serviced. As a consequence, “Iceland is faring much better than anybody expected” says Grimsson:

“How far can we ask ordinary people – farmers and fishermen and teachers and doctors and nurses – to shoulder the responsibility of failed private banks… That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”

Hannan on Britain's contribution to the Ireland bailout

Daniel Hannan writes:

The figures for the Irish bail-out are now available in full.

The euro-zone countries are contributing €17.5 billion – which is fair enough, I suppose, if they see the survival of the single currency as being in their own interests. But the EU as a whole, including non-euro states, is contributing a further €22.5 billion. Despite having kept the pound, Britain is liable for nearly €3 billion (£2.5 billion) as part of a contingency reserve that was supposedly set up to deal with natural disasters, such as floods and earthquakes.

The three original countries which have rejected the euro, Britain, Denmark and Sweden, are all additionally making bilateral contributions equivalent to what they would have paid as members of the euro-zone fund. Indeed, the United Kingdom is paying slightly more than its share: an additional loan of €3.8 billion (£3.2 billion). As Douglas Carswell keeps telling anyone who’ll listen, we may be outside the EU’s monetary union, but we are not outside its debt union.

It will be interesting to see what excuses George Osborne provides when he gets drawn into a EU-led bailout of Spain.

Saturday, 27 November 2010

No such thing as an accident

BBC News reports:
A farmer has been killed by a charging bull in Hampshire, the National Farmers Union (NFU) has said.

The 58-year-old, named locally as Ian Rook, was said to have been "tossed in the air" when his animal charged at him at Manor Farm in Clanfield on Friday.

He was taken to the hospital but died. The Health and Safety Executive has been informed of the incident.

Do charities need government support?

I recently rediscovered a truly shocking Times article from 2009, by Monique Bateman, director of the Royal Navy and Royal Marines Children's Fund:
We understand that local authority budgets are tight and that if a charity is willing to help them to fulfil a role, this enables them to put more money into other areas.

Surely, though, during a recession, when help is needed to continue providing the support, they or the Government should step in to help these families, or at least to provide funds to charities such as ours to enable us to continue our work?

There is simply not enough aid available for charities fighting desperately to keep up their levels of support despite an increase in demand and a decrease in donations.

I therefore call for help, not just from the Government but from local authorities and, where possible, the public. It may sound a cliché, but we are now in a time when every penny donated to charities really does count.
I'm sure she means well, but it's disturbing that she draws no distinction between true charity (the freely-given donations of individuals) and 'government' funding (the redistribution of confiscated wealth).

The pursuit of happiness

A good post from Daniel Hannan:

The argument isn’t about what makes us happy; it’s about what governments can do about it. And here, a certain modesty is called for. As Dr Johnson put it:

How small of all that human hearts endure
That part which laws or kings can cause or cure

What can governments do to make us more content? They can create a climate where we are unlikely to be victims of crime. They can prevent us from being invaded, or defeated in war. They can guarantee that property rights are secure, contracts fairly enforced, disputes impartially arbitrated, the law open to all seeking redress. They can ensure that children receive a decent education, whatever their parents’ means. They can do these things without confiscating any more of our assets through taxation than absolutely necessary.

Friday, 26 November 2010

Saving feels good?


Today we received a letter from ING to say that our "bonus rate" has ended. From now on, we'll be getting their "standard variable savings rate", currently 0.5%.

So what's on offer?
  • A Bonus Saver account at 2.00% until 31 December 2011 ... if we don't make a withdrawal. Make a withdrawal, and the rate drops to 0.40%.
- or -
  • a "range of Fixed Rate Savings Accounts" where we can earn "up to 3.0%" !
This with CPI at 3.2%, RPI at 4.5%, and RPIX at 4.6%.


Of course, that won't stop HMRC from taxing us on the interest!

And ING has the chutzpah to suggest that "Saving feels good".

Wednesday, 24 November 2010

End the 'National Insurance' pretence

Readers of my previous post may have wondered why I didn't provide any examples of how the deficit could be reduced by raising National Insurance contributions.

The answer is that NI is a sham. Employee's NI is a complicated form of Income Tax. Employer's NI is a complicated form of Corporation Tax that biases business decisions about employment vs capital purchases (it discourages job creation, and favours investment in machinery).

NI contributions are expected to bring in £97 billion for 2010/11 — almost twice the £50 billion held in reserve in the National Insurance Fund [1].

In this same period, £117.2 billion will be paid out in pensions alone. Pensions are paid not from previous savings, or returns on investments, but by current contributors. Most people would recognise this as a Ponzi scheme.

According to the House of Commons Note [1],
The National Insurance Scheme was established on 5 July 1948 to provide unemployment benefits, sickness benefit, retirement pensions and other benefits in cases where individuals meet the contribution and other qualifying conditions
One year's pensions payments wipe out the NIF in its entirety, and leave £35bn of current contributions, which doesn't come close to covering the annual £119bn spent on healthcare or the £60.4bn spent on other welfare payments.

We should end the ridiculous pretence that National Insurance funds our Welfare State, and roll NI into Income Tax.


[1] National Insurance Fund: 1975-2010, House of Commons Library, Standard Note 797, Last updated 14 June 2010.

An important debate avoided

For the sake of argument, let's accept the ONS figure for the 2009/10 deficit:
In the financial year 2009/10 the UK recorded general government net borrowing of £159.8 billion
That is, the government kicked a £160bn can down the road, for future generations to pay.

What if this option had not been on the table? What if, instead, the public had faced an honest choice between tax rises and spending cuts?

The deficit could have been eliminated purely by tax rises. Consider this government analysis:

Estimated direct effects of illustrative tax increases in 2011/12:

Income tax:

  • 1p on basic rate: £4.75bn
  • 1p on higher rate: £0.78bn

National Insurance:

  • 1% pt on main employees rate: £3.6bn
  • 1% pt on employers rate: £4.3bn

VAT:

  • 1% pt on standard rate: £4.75bn

Corporation tax:

  • 1% pt on main rate: £0.75bn

HM Revenue & Customs

By way of comparison, increasing the rates of duty on alcohol, tobacco and road fuel by one percentage point would raise only £0.36bn in total.

So to eliminate a shortfall of £160 billion, we could raise
  • basic rate income tax by 34p on the pound (from 20p to 54p); or
  • basic rate income tax by 17p (to 37p), and VAT by 17% (to 34.5%); or
  • higher rate income tax by 53p (from 4op to 93p), and basic rate by 25p (to 45p)
  • etc ...
Okay, so it's not actually that simple. Increased tax rates have dynamic effects (increased tax avoidance, decreased economic activity) which can actually decrease total tax revenue. If the government were to confiscate nearly 100% of income over £44k, very few people would push themselves past that barrier. If VAT goes up, people will buy less from shops, and more from the black market. A committed socialist would have to focus on taxes that are difficult to avoid, like property tax.

But the point remains: why not force governments to spend according to what they take? To bribe people with their own money, rather than their grandchildren's.

If the socialists are right, and people want high tax rates and generous benefits, they will get elected. Laffer-curve conservatives can make the counterargument that tax revenues could be increased by simplifying taxes and lowering rates. Libertarians can argue that the important goal is to roll back the state — to reduce reduce tax revenues, and leave more money in the hands of the private sector.

Government borrowing avoids this debate. Why do we allow it to continue?

Why shouldn't Ireland just default?

It always worries me when I find myself agreeing with something I read in The Guardian:

even a relatively small country like Ireland has options. Specifically, they could drop out of the euro and default on their debt. This is hardly a first best option, but if the alternative is an indefinite stint of double-digit unemployment, then leaving the euro and default look much more attractive.

The ECB and the IMF will insist that this is the road to disaster, but their credibility on this point is near zero. There is an obvious precedent. Back in the 2001, the IMF was pushing Argentina to pursue ever more stringent austerity measures. Like Ireland, Argentina had also been a poster child of the neoliberal crew before it ran into difficulties.

But the IMF can turn quickly. Its austerity programme lowered GDP by almost 10% and pushed the unemployment rate well into the double digits. By the end of the 2001, it was politically impossible for the Argentine government to agree to more austerity. As a result, it broke the supposedly unbreakable link between its currency and the dollar and defaulted on its debt.

The immediate effect was to make the economy worse, but by the second half of 2002, the economy was again growing. This was the start of five and a half years of solid growth, until the world economic crisis eventually took its toll in 2009.

To be sure, this insight came amidst the usual nonsense about unemployment as the Ultimate Evil, government spending as a means to boost the economy, and central banks as a positive force, but why shouldn't Ireland default?

Murray Rothbard set out the case for a US default in a June 1992 Chronicles article, Repudiating the National Debt.

Ever since I read that article, I've been wondering why we in the UK do not follow Rothbard's advice.

I can understand the reluctance of Guardian readers to honour the debts of the bankers. It is wrong. I am likewise reluctant to honour the far greater debts of socialist politicians.

Some argue that it would be unfair to innocent 'investors' in government debt, but our first duty should be to the slaves, not the slave-owners (witting or otherwise).

Others suggest that it would forever tarnish our national reputation, and make future borrowing more difficult and expensive. But history does not bear this out. As I wrote in August,
Sadly, as Argentina and other countries have found, it seems likely that people would lend to us again even if we were to default on our debt. We would need a strict constitution to forbid future governments from running up new debts, and eternal vigilance to avoid corruption of the constitution.
Attempts by the government to bind itself are always imperfect, but that doesn't mean they're worthless. A constitution can buy time in periods of stress, when the legislators would otherwise be swayed. A constitution provides an excuse for legislators to do what is right, even when it is unpopular.

Our constitution could outlaw government borrowing altogether. Or if more flexibility were required, it could insist that government cannot roll over debts for more than one year, so that any borrowing in 2011 would have to be repaid in 2012. The constitution could also stipulate that amendments require the approval of both Houses, followed by a national referendum.

The trouble with talk of constitutions at this juncture is that any constitution drafted by our current politicians would cement the statist, socialist principles that have impoverished and dehumanised our society.

Anyway, if anyone reading this knows a convincing reason why Ireland shouldn't default, and we shouldn't follow suit, please let me know. If I ever hear one elsewhere, I'll post an update.

UPDATE:

Those considering the issue may be interested in the latest quarterly report from the DMO: Quarterly Review for Jul-Sep 2010, published October 2010.

I haven't yet gone through it in detail (and I'm not an expert in any case), but some key points stand out:
  • the nominal value of our debt ("the gilt and Treasury bill portfolio"), as of 30 September 2010, is £1,058.29bn
  • 20.4% of this debt is index linked: it can't be inflated away
  • 30% of gilts are held Overseas: defaulting on this portion of our debt would not directly impact UK citizens, but might prompt retaliatory action by foreign governments
  • 29% of our debt is held by Insurance companies and pension funds (as of 30 June 2010)

Tuesday, 23 November 2010

Perspectives on the Irish Bailout

Daniel Hannan writes:
Britain’s share of the Irish bail-out is reported to be £7 billion. Let’s just remind ourselves of what £7 billion means.

Seven billion pounds happens to be the total saving that would be made by all the welfare cuts put together. You know: the cuts that the BBC, the Guardian and the Labour Party insist will destroy social security. The cuts that Tristram Hunt says will mean a return to the Victorian workhouse. The cuts that John Cruddas says will drive a million people from their homes. The cuts that Polly Toynbee calls a final solution to the poor.

So now we know: every penny saved by these cuts will go to prop up the euro. To put it another way, at a time when Britain’s public sector debt stands at £850 billion, we are borrowing a further £7 billion to send to Ireland.
...
It’s true that some British banks are exposed in Ireland, but the interests of an international bank which happens to have its head office in London are not synonymous with those of the United Kingdom. And even if they were, it must surely by now be obvious that bailing out banks is a mistake.
Liam Halligan's earlier piece in The Telegraph is also well worth reading:
In September ... the Irish finance minister, Brian Lenihan, sought to tackle the situation head on, forcing Ireland's banks to come clean about the extent of their sub-prime losses to a greater extent than in any other European economy. As a result, some €50bn of Irish taxpayers' money was committed to stabilising the banking system over a number of years, allowing for a programme of genuine and necessary bank restructuring.

This was a staggering number – equivalent to around a quarter of annual national income. But at least the losses were no longer being denied – as in many other eurozone countries, to say nothing of the UK and US. Jean-Claude Trichet, European Central Bank President, called Ireland a "role model" urging other countries to "face up to their problems, as the Irish so clearly have done".

Recognising the bulk of the bank debt, making a genuine assessment of the potential stabilisation costs, then bringing those costs on to the state's balance sheet caused Ireland's projected budget deficit to balloon to an unprecedented 32pc of GDP. This figure has been widely remarked upon. Less well-known is that if several other and much larger European economies included their bank bail-out costs in their national accounts, rather than burying them off-balance-sheet, their projected deficits would be similar.
...
The European bigwigs are forcing a bail-out on Ireland not because the Irish state is bankrupt but because, as Ireland faces up to the extent of its banking sector losses, other nations aren't yet willing to do the same. The Irish are discovering, once again, how it feels when a spirited and determined people are denied their own sovereignty.
Of course, the Irish would have been much better off if their government had stayed out of the banking business altogether. The hit should have been taken by the bank's creditors, not the Irish taxpayers, as Morgan Kelly noted in the Irish Times:
September marked Ireland’s point of no return in the banking crisis. During that month, €55 billion of bank bonds (held mainly by UK, German, and French banks) matured and were repaid, mostly by borrowing from the European Central Bank.

Until September, Ireland had the legal option of terminating the bank guarantee on the grounds that three of the guaranteed banks had withheld material information about their solvency, in direct breach of the 1971 Central Bank Act. The way would then have been open to pass legislation along the lines of the UK’s Bank Resolution Regime, to turn the roughly €75 billion of outstanding bank debt into shares in those banks, and so end the banking crisis at a stroke.

With the €55 billion repaid, the possibility of resolving the bank crisis by sharing costs with the bondholders is now water under the bridge. Instead of the unpleasant showdown with the European Central Bank that a bank resolution would have entailed, everyone is a winner. Or everyone who matters, at least.

The German and French banks whose solvency is the overriding concern of the ECB get their money back. Senior Irish policymakers get to roll over and have their tummies tickled by their European overlords and be told what good sports they have been. And best of all, apart from some token departures of executives too old and rich to care less, the senior management of the banks that caused this crisis continue to enjoy their richly earned rewards. The only difficulty is that the Government’s open-ended commitment to cover the bank losses far exceeds the fiscal capacity of the Irish State.
I'll give the last word to Philip Booth:
Europe is trapped in a cycle where debt is being passed round and round in circles – the banks are bust so the Irish government bails them out; the Irish government’s debt is owned by other banks and if the government defaults, they go bust; the EU as a whole then tries to rescue both in opaque arrangements which are only sustainable because Ireland is so small; now Britain is getting involved.

Responding to debt crises in this way is entirely unsustainable, we potentially have crises in Italy and Spain around the corner and nobody can shoulder their indebtedness.

The EU has been sitting around doing very little for the last two years (except for dreaming up new regulations for the banks, hedge funds and private equity). What it and the nation states involved should have been doing is ensuring that banks can be wound up in an orderly fashion so that all providers of capital and credit potentially lose money except for depositors who were insured at the beginning of the crisis. The EU governments are simply underwriting mistakes made by private businesses and then blaming it all on “casino capitalists”.

The Irish government’s debt position would not, in fact, be that bad if it were not for the bank guarantees. Ireland is not another Greece (or Italy) – its underlying position is sound. The key issue has not changed since the beginning of the crisis – it is the need to recognise failed financial institutions for what they are and not load the cost of their bad loans onto taxpayers in general. At the beginning of the crisis, the bail-outs were understandable; we have now had two years to sort out proper legal mechanisms for winding up banks.

Saturday, 20 November 2010

£18 trillion raised for Children in Need?


Pudsey says: "You have raised an incredible £18,098,199 MILLION!"

£18 trillion! That really would be incredible.

I suspect Pudsey really meant the rather more modest sum of £18 million, which is about what the government borrows every hour.

Still, unlike Oxfam, Children in Need isn't an obviously fake charity. The donations come from the public, and are freely given. However, they receive support from the BBC — an organisation that is most definitely not funded by voluntary exchange.

Here's note 18 from their 2009 accounts,
The BBC Children in Need Appeal is the principal UK corporate Charity of the BBC and as such is supported by the BBC in a number of ways including but not limited to:
  • the provision of office space, postage and other services at no charge
  • the preparation and broadcast of the annual BBC One Appeal Show including national and regional programming content
  • the extensive support of BBC Radio 2 both on the day of the Appeal and in the build up through promotion,
  • competition, 24 hour music marathon and the “things that money can’t buy” auction on the Terry Wogan show: ’Wake up to Wogan’
  • significant promotional support and coverage of the Appeal across the BBC local television and radio network in the days before the Appeal and on Appeal night
  • the provision and maintenance of the BBC Children in Need pages of the BBC’s website
The costs of support through the provision of office space, postage and other services have been valued at £510,205. Many of the other elements of the support are very difficult to quantify as they are not discrete activities but embedded, partly as newsworthy and entertainment content, within the operations and business of the BBC. The Appeal show provides valuable content, which attracts a large audience, and without it the BBC would have to produce alternative content. As such the value of support provided by the BBC has not been included in the Charity’s Statement of Financial Activities
So, setting aside the unanswerable question about whether licence-fee payers believe that CiN-related broadcasts provide "valuable content", there is at least half a million pounds worth of "office space, postage and other services". We all support CiN, whether we want to or not.

Why grumble, though? It's for the children, after all. And they are so very needy.

Well, some of them are, yes. But viewers might be surprised at where much of the grant money ends up. Here's Ross Clark, from a 2007 Spectator article
You know the format: Terry Wogan introduces an evening of smiling kiddies overcoming misfortune and meeting celebs: please give generously.

And give generously viewers do: £18,300,392 on the night of last year’s event. But it would be a mistake to assume that the smiling kiddies were getting all the money. What’s this? A sum of £59,521 went to something called the Womenzone Community Centre in Bradford, which offers training for local women, plus a gym and steam room. Another £20,000 went to Until the Violence Stops, the domestic violence pressure group started by Eve Ensler, writer of The Vagina Monologues. Other handouts went to Brent Women’s Aid, Angolan Women’s Association and numerous local women’s groups. Perhaps most remarkably, £12,481 went to Women in Prison, a pressure group that campaigns against the incarceration of females, declaring, ‘Prison does not work. The best way to cut women’s offending is to deal with its root causes.’

In other words, some of the money you thought was going to buy wheelchairs for stricken children is really going to campaign on behalf of jailbirds. I am sure many of these charities do valuable work but, even so, to invoke images of sick children — the emblem of Children In Need being a bandaged teddy — and then to give much of the cash raised to battered women does seem a little underhand. To paraphrase the Ronseal advert, Children In Need doesn’t quite do what it says on the collection tin.
Quite.

You can see for yourself where the money goes. It's all very politically correct:

£20,000 for Bradford Trident: "This project will provide activities to promote community cohesion for eastern european children living in Bradford"

£99,782 for the Bangladeshi Community Association Bradford (BCAB): "This project will improve the self esteem and aspirations of 160 young people in Bradford by providing a range of activities including sports, social inclusion, citizenship and life skills"

£109,164 for the Indian Muslim Welfare Society: "This project will provide activities three times per week for disadvantaged Asian children in Batley."

£82,910 for Gay and Lesbian Youth in Calderdale.

£118,597 for a project to "provide play work support for children who are visiting their mother whilst she is resident at HMP New Hall"

That's quite a lot of money, especially compared to the £7,200 for "Down Syndrome Support Group Bradford".

Whatever you may think about the value of the projects listed above, Ross Clark is right: "Children In Need doesn’t quite do what it says on the collection tin".
Perhaps of greatest interest to donors to Children In Need was the £56,123 which went to a charity called the Children’s Legal Centre, a group which offers free legal advice to children — or in some cases to fund legal cases. Most notable of these was the case of Shabina Begum, who took Denbigh High School, Luton, to court over its refusal to allow her to wear a jilbab — a full-length Islamic gown — in contravention of the school’s uniform policy. Shabina, who was represented by Cherie Booth, eventually lost her case in the House of Lords a year ago.

Was that really what donors had in mind when they whipped out their credit cards in reaction to the stories of juvenile cancer victims: that a slice of their donation would be going into the pockets of Cherie Blair to help a teenage girl sue her school over her refusal to wear a school uniform? I am all for charitable giving, but I do wish that BBC viewers would take a little more care to read the small print before falling for emotional blackmail of the corporation’s big charity campaigns.
The other offensive thing about Children in Need is that it boosts the egos of overpaid celebrities. The newsreaders prance around, donating their valuable time for the sake of the children. So noble. Then they go back to their day job of protesting government cuts.

If they really cared about the children, they'd worry a little more about the national debt.

Friday, 19 November 2010

Plundered to pay off others' debts

Another great article by Tom Paine at The Last Ditch:

Years ago, when I was a hard-working young family man of limited means and many outgoings, my wife and I lived in the other half of a semi-detached house from a retired industrialist and his wife. They were a lovely old couple and charming neighbours. Labour's hyper-inflation of the Denis Healey/IMF bailiffs era had reduced them from comfortably living on the interest from their life savings to genteel poverty on devalued and dwindling capital. This was the same inflation that wiped out the mortgages of my parents' generation, allowing them to pay for good houses with bad money.

My neighbours' life of work had been plundered to pay off others' debts. It was trans-generational piracy. Little did I know, foolishly confident as I was in the (then) political success of the doctrine of monetarism, that I was looking at my own fate. Yet "quantitative easing" is nothing but a fancy name for such inflationary policies and the gods of the marketplace will not be fooled by euphemism.

Tuesday, 16 November 2010

Who should support young carers?

I felt very sorry for the young carers featured on BBC Breakfast this morning, but my compassion was tempered by anticipation of the BBC's angle.

You just know that this wasn't an effort to encourage true (voluntary) charity to support these young people. Sure enough, here's the corresponding article on BBC News:
The four UK Children's Commissioners (one each for England, Wales, Scotland and Northern Ireland) said, in a joint statement, that young carers are "often caught in the middle of a well-meaning muddle".

It said they can miss out on vital support and called on governments at Westminster and in the nations to "properly identify and meet the needs of young carers, so that this largely invisible and often vulnerable group can get the support they need."

The Shadow Education Secretary Andy Burnham said it was "absolutely crucial" that young carers were identified and supported.

He warned that "ill-thought-through reforms" in health and education could result in "disjointed and fragmented local services".

Other campaigners are worried young carers' services are being cut by councils and other bodies trying to rein in the country's debt after the recession.

The National Young Carers Coalition says there should be no cuts for services that support young carers, "so that they are not forced into caring roles that are inappropriate and damaging to their health and wellbeing".

Ms Teather said the government wanted to help.

Its new strategy, to be launched later this year "makes it clear that everyone working with young people and their families, including GPs and teachers, must do more to identify and support young carers," she said.