Michael Gove is not universally popular. Mention his name to a teacher and it’s likely they’ll react with the face of a cat biting a lemon. This reaction makes Gove ‘box office’ with our news media. To read politics our dumbed-down news consumers need pantomime villains. In the eyes of Fleet Street Gove’s Evil Wizard is storming centre stage and kicking Lansley’s Wicked Stepmother into the wings. Oh yes he is.
Every pantomime villain needs a cunning plan. The Twitter-wisdom, which the Guardian and TES follow rather than lead, is that Gove has leaned on the Exam Boards to lower grades so that more schools fall under floor-targets. They’ll then be forcibly turned into Academies. This will lead to a future of Blofeld-led corporations syphoning the education budget away from the careful stewardship of LEAs and into private coffers to then fund the redevelopment of the sports fields they’ve just sold to themselves into branches of Waitrose. The evidence is out there. Join-the-dots. The grades have lowered, the sports fields are being sold at an unprecedented rate. The man must be stopped. Right?
Oh come on. Get a grip. Gove is no puppet-master. Yes, he’s single minded and does seem to ‘work around’ as much as ‘work with’ stakeholders. But he can’t even rely on his people to count to 31 much less engineer ‘The Grand Conspiracy’. You can only join-the-dots-up in that way if you first sex-them-up. Sexing-up Gove stories has been an Olympian endeavour over the last fortnight. Take the playing-fields storm. Selling at an ‘Unprecedented rate’? Even if the sports field figure is 31 they’re selling 15 a year compared with their predecessors yearly average of around 20. Whilst every sale may or may not be a tragedy, to describe it as happening at an ‘unprecedented rate’ is an outright lie. It’s happening at the slowest rate for 30 years.
I suspect the truth behind these exam results will be equally mundane, boring and ignored to keep the pantomime rhetoric in play. This idea that downgrading is a ploy to make borderline floor-target Schools look worse is a nonsense. Don’t forget Academies enter exactly the same exams. Any downgrading puts the same pressure on them. They’re just as exposed in the same league tables. If anything they’re under more pressure to raise attainment quickly and under more scrutiny. Other things being equal, to introduce downgrading will make the Academy program look like it is failing to deliver. That would be in direct contradiction to the desired ends of our supposed ‘Grand Conspiracy’.
Almost certainly the exam boards will have recognised that grade inflation was an issue people were gunning for and then taken the call to sort it themselves. It seems the AQA in particular has gone a wee bit further than the others down this track. Now I share the demand that the same effort and score in an exam of the same difficulty should be rewarded with the same grade and not be variable depending on exam date. That’s why I’m miffed that my own GCSE results are considerably lower than they would be had I taken them this January. I took mine over 20 years ago. Those kids on the wrong side of the C/D borderline this year would have been on the wrong side of it in 2010 and every year before.
That said, reading the anecdotes from teachers there’s a genuine issue in the way students had their expectations managed. And the students themselves are blameless in that. Had the change not come ‘in year’ and been properly signalled to teachers then that bit at least could and should have been avoided. Conspiracy? No. Cock-up? A little bit. British policy development was ever thus.
I’m no blind Gove fan-boy. I think some of his views on curriculum are plain wrong. It’s as if he asked his Mum what she did at school and has decided that’s what kids should still do now. The idea of ensuring rigour in GCSEs is sound, but the idea that there can only be rigour in traditional subjects doesn’t logically follow. Raise the bar on subjects like ICT and add rigour to them! As an employer I can assure Mr Gove that a kid with a credible ICT GCSE or, if such thing existed, even a rigorous media studies qualification would be more use to me than a kid with Latin.
A side effect of this focus on the 1.5% fall in English (and 0.4% fall overall) is it distracts us from the great August tradition of praising success. Ironically, given this wider context recognising success where we see it is more deserved than ever this time. There are schools out there who had a great year and moved forward without a grade inflation nudge. You wont have heard their head teachers on the radio complaining. There’s one school just down the road from me that against the odds increased its headline 5 A*-C GCSEs rate by 10%. They can be very proud. It’s customary to say that such improvements are down to quality of teaching and a sterling effort from the pupils themselves. This year, for the first time in a long time even the cynics will believe it. And that is no bad thing.
Here’s the reason for this recent tax shit-storm: the morons have mixed up ‘tax loopholes’ with ‘tax incentives’.
It kicked-off with an innocuous story “Millionare Tax Avoiders ‘Shock’ Chancellor”. The Treasury team intended to show they’re tuned into the zeitgeist of public concern over ‘tax avoidance/evasion’ and sought the front-foot. Instead, within a week their imbecilic approach pushed them firmly on the back-foot with everyone. How did they manage such an ‘epic fail’?
Whilst ‘tax avoidance’ is legal, there is no escaping that in common speak the words are always used pejoratively. So if the chancellor is saying he’s going to crack down on it, you imagine he’s going to be going gunning for those offshore ploys, those spurious salaries for director’s spouses, the deferred payment of bonuses in copper futures or whatever; basically all that ‘creative accounting’ malarkey.
Instead they deliberately allowed the ‘tax avoidance’ label to be linked to everything that properly reduces a bill. I quote: “HMRC found the main methods used by people to reduce their bills was writing off business losses, offsetting the cost of business mortgages and borrowing on buy-to-let properties – all against their income tax bills. Others took advantage of tax relief on charitable donations”. My lord. If they’re shooting at that I’m surprised they didn’t lump in ‘paying into ISA’s or ‘making pension contributions’ with equal disdain.
It was Parliament’s intent that folk can offset their business losses against their income before calculating tax owed. That encourages folk to invest in new business which may take time to grow, or may even fail. It encourages folk to stick with loss-making businesses a little longer rather than wind them up and make people redundant. It isn’t a dirty loophole. It is an incentive to help the economy.
It was Parliament’s intent to allow the cost of securing finance (business mortgage interest) to be treated as a pre-profit expense. That encourages people to get business finance, to get business going, to help the economy. It isn’t a dirty loophole. It is an incentive to help the economy.
It was Parliament’s intent that folk give to charity tax-free to encourage folk to give to charity. It isn’t a dirty loophole. It is an incentive to support charity.
The sniping at that last one has generated the most news-print. Philanthropists are right to be outraged, the way the reportage has been framed I’m pretty sure that most UK tabloid readers now believe that their generous giving has been at no actual net cost to them, and they are all ‘tax dodgers’.
It hasn’t hit the news in the same way, yet, but I imagine the networks of ‘business angels’ who risk huge losses by supplying capital to start-ups, at a time when banks will not, are also feeling equally bruised. Is George also going to cap or limit the amount of losses you can offset? Applying the same logic as to the Charity issue that can’t be far away.
I say ‘logic’ but of course there is very little of that. I really do want to believe that the government intended to target the ‘abuse of’ all of these tax incentives rather than the incentives themselves, but what a cack-handed way of doing it, and what a miss in the presentation if that was the real target.
If there is an issue with folk setting up bogus charities overseas and funnelling money to them then the way to deal with that is to treat it as what it is – criminal fraud. The policy on the table is basically saying “we’re going to let it carry on, but don’t worry we’ve allowed people to only use a quarter of their income for this fraud rather than all of it in future”. That doesn’t sound great does it? However it is dressed up they’re also limiting the legitimate donations and making sure that stench of ‘tax dodgers’ for legitimate donors remains.
There are cases to be made for scrapping tax relief for charity donations. A socialist may think that it is the job of the state to do the stuff charities do, so folk should just pay more tax with no relief and let the state do what needs doing. A Conservative may make the case that the state has no business whatever with this attempt to socially engineer through the tax system with all the unnecessary (and costly) complexity added to the self-assessment system. You may disagree with either of these on the basis of philosophy but at least they are intellectually coherent. The government’s current thinking is not.
One feature of this Government, usually described as a weakness but actually a strength, has been that when a U-turn has been necessary it has come very quickly. Nudge politics is central to Cameron’s view of the proper relationship between the state and the individual, the role of charity is another. A proposed policy that acts as counter to both is nuts. He needs to speak to George about that U-turn. And fast.
Imagine a Tory-boy type, essentially a freelancer, justifying his limited company tax arrangements to a journalist: “I am in exactly the same position as everybody else who has a small business. I mean, I get loads of money, all from different sources, and I give it to an accountant and they manage it,” Ah, the Vodafone defence.
The journalist probes, how is income taken and taxed? Words are very carefully chosen; “You pay corporation tax. If you then take out spending yourself, you have to pay more.” For clarity our sharp-suited, silver-tongued entrepreneur emphasises that he pays “the normal rate of tax on the money I take out for myself”.
That ‘take out spending yourself’ line may be a cute way for our man to own-up he takes income in dividends rather than salary. The ‘tax’ difference of doing this is actually pretty marginal, but you do save a chunk of change on National Insurance (there’s a nice table on that here). This company set-up also allows you to drip-feed your money out years after it is actually earned keeping yourself in the lower-tax-bands.
The folk who get most wound up by these things – UK Uncut, Guardian columnists and people who tent-squat at cathedrals would be foaming at the mouth at all this word-play. Instinctively, some keywords above would trigger their Pavlovian attack dogs to bark about ‘ethics’, ‘tax dodging’ and how if we just stopped this kind of thing the ‘deficit would disappear’. This anger would morph into apoplexy if David Cameron then dismissed concerns with a blithe statement that our man “has paid every pound of tax he is required to by law.”
In the playground of that little part of cyber-space filled with political bores this spat has caused a curious role-reversal. The usual suspects are offering Ken, if not full support, then at least a frustrated, restrained, benefit-of-the-doubt understanding. Meanwhile, the Boris camp are wetting themselves with a full-on cry of ‘Tax Dodger’! You just need to read some Guido or Andrew Gilligan to get the gist.
The people who yell loudest about the ethics of taking accounting advice usually moan; “I can’t afford a flash accountant. I pay every penny of my tax”. What they tend to mean is that all their tax affairs are simple and done through PAYE by their employer and they haven’t actually a clue if they have paid every penny or not, nor if their employer is using clever tax reduction strategies on their behalf. Do you have a salary sacrifice mechanism in your pension contributions? Yes? You tax dodger. It comes as a shock if their employer gets it wrong and it turns out they haven’t, as they thought, paid every penny of income tax at all. Several million people found this out to their cost last year when they got unwelcome letters from HMRC.
For small business owners, (like Ken?), it is very easy to get in the same situation through no malevolent intent. Most of us have accountants not just because we can afford them, nor because we’re desperate to find loop-holes to save a quid or two. It’s rather because we cannot afford not to.
Once your turnover crosses a certain level and you employ someone the complexity of the UK tax system is crushing. Without an accountant you end up dedicating hours a week to trying to get the PAYE and VAT right, in fear of inevitable fines if you get it even slightly wrong. That’s before you can even begin to think about getting your annual return in good order. In my first year I tried to go without an accountant. It was a year too long. When I took the plunge and got one the first conversation we had was the same that 99% of people, probably including Ken, have; “Listen, I want to pay every penny of tax I owe, but I don’t want to pay any more. I don’t want you doing anything out of the ordinary on my behalf. I just want to get money from the business in the most sensible way.”
And it will be that set of instructions that has got Ken in this mess, and it’s why on this one point at least I have sympathy for him. His accountants have set him up in ‘a sensible way’. Yet by following their honest advice he may now still find himself inadvertently on the wrong side of the tax-man. No dodgy intent is required. It’s just that our tax system is all so wonderfully complex it catches out even the accounting folk whose lives are dedicated to navigating it. Is the money Ken pays his wife reasonable for the type of work she does? Did the donation he declared to the Electoral Commission (an in-kind donation of around £19k) get declared in his accounts? If so, was it treated as a deductible or non-deductible expense? And so on. He’s paid a professional to get the administration of these things right. They may not have. And there my sympathy for Ken ends.
It’s as inconvenient for him as the rest of us that if his accountants have messed up he is liable– you can delegate responsibility for managing your tax affairs, but you cannot delegate your accountability for them.
There are two charges being aimed at Ken: hypocrite and tax dodger. ‘Hypocrite’ is a home-run. For me the ‘tax dodger’ charge has got mixed and confused. Half the people shouting it (like me) do so with knowing irony, their point is if Tory Boy was set up like Ken then ‘tax dodger’ is what Ken would say. The other half seem to be shouting it with literal application, they genuinely think that Ken’s crossed the avoidance/evasion line. I think the latter is over-reach, but whether ironic or literal, neither shout is going to be helpful to his Mayoral campaign.
Whether you call it tax dodging or avoidance or tax planning or mitigation it all only exists because our system is too complex. The simpler our tax code, the less scope for ‘avoidance’, the easier to be clear what is ‘evasion’ and the less work for the accountants. What is not to like about shooting for all that? And whoever would have dreamed that it could be Ken Livingstone who could, albeit inadvertently, best make that very Conservative point?
Match-goers understand that it’s those life-lasting ‘I-was-there’ moments that keep you going back week-in, week-out despite the dross. You’re lucky if you get even one a season. Real fans know these snatched moments-in-time don’t just mean cup finals or last-day relegation dogfights. Sometimes they happen on a cold, foggy December day in a mid-season, wrong-end-of-the-table, hum-drum match in a place like Leicester. So it was that in 1997 Gary Speed etched himself forever in my brain.
Filbert Street was a dump, and the atmosphere had a slightly narky eighties feel to it. The game itself was scrappy and ugly. Our team at the time was so mediocre I struggle to remember anyone else in our midfield. For context, it was an entire calendar year since Everton had last won an away game. I’ll say that again: an entire calendar year. Muggins had nearly bankrupted himself travelling to, and suffering through every single one of them. Anyway, it was heading to, and should have been a nil-nil draw. Then, right on the brink of injury time Everton got a penalty. Step forward, without hesitation, Gary Speed. I can still remember that adrenalised joy surging through my veins the instant the spot-kick was given and then that equally sudden emotional surge where the joy flicked to heart-thumping, crowd silencing anxiety through those seconds while he waited to take it. He scored. The joy let loose again unrestrained. A whole year of angst felt lifted. It was bedlam in the away section. A couple of thousand Evertonians celebrating as if we had just won the world cup. A chorus of ‘Jingle Bells’ with a line substitution ‘Oh what fun it is to see Everton win away’ sung all the way home. It was a nothing game in the history of football. But any Evertonian who was there will never forget it. Gary Speed gave me that moment.
Gary departed Everton in strange circumstances, never fully explained. Perhaps the stubborn length of time many Evertonians have borne a grudge is actually a telling measure of how highly regarded he really was for us. He was treated as a pantomime villain by chunks of the crowd whenever our paths crossed again (on a par with Steve McMahon, Nick Barmby or Wayne Rooney). It was a sorry end to his spell with the club he supported as a boy, shone for as a player, and was so proud to Captain. Events this weekend add some much needed perspective to all that pantomime villain nonsense.
For an outsider his actions seem unfathomable. Anyone who watched him on Football Focus on Saturday will not be able to reconcile the Gary Speed they saw with a man within 24 hours of ending his own life. The testament of his friends suggests that even aside the theatre of TV they had exactly the same impression. He hid his depression. The consequences of that are unbearable for his friends and family.
Perhaps the best insight we can get comes from another footballer from that era. At around the time Gary Speed took his life, Stan Collymore posted this remarkable description of his own recurring depression on the net: http://www.twitlonger.com/show/ecoqm1 I urge everyone to read it and reflect.
So then, some point this week the people who guess these things reckon the planet will pass the 7 billion people mark.
The debate sparked is predictable. On the one hand you have folk who really, really fret. “Too many people, too few resources”. Their rants will variously make mention of global warming, deforestation, fresh water limitations, the inefficiencies of farming meat over the energy returns from arable crop yields, you’ll often hear the words ‘peak oil’ and increasingly, though it isn’t really linked, ‘the collapse of capitalism’. Yada, yada, yada. Most of all you will hear the word ‘sustainability’.
On the other side you have folk who roll their eyes at this laundry list of angst. They point out the doom mongers have been wrongly banging on about “too many people, too few resources” since even before Malthus wrote his ‘scientific proof’ we passed that tipping point 200 years ago. Malthus was spectacularly wrong because he underestimated his fellow man’s ingenuity and innovation. Breakthroughs in agricultural techniques blew out his calculations on crop yields, just as breakthroughs in GM will blow out the calculations of his modern successors. ‘Progressives’ in the literal sense of the word, rather than the hijacked political version, believe that technological advance will continue to provide answers to the problems we encounter, and acknowledge that at the same time those solutions create whole new issues for the next generation. Thats ok. That’s the cycle. It was ever thus. It’s why we no longer fret about how to spear dinner and instead fret about the weather and iPhone battery life. Yada, yada, yada.
The debate has morphed into a battle of ideas on the natural human condition between two schools of thought: one pessimistic the other optimistic. The trouble with these ideological battles is that they tend to polarise those who engage to the extremes. If you’re a natural pessimist you get lumped with the loons who would have a ‘year zero’ and retreat to Amish or North Korean lifestyles yelling ‘stop’ at history and frowning at human breeding. On the other hand if you’re an optimist, like me, and engage on the debate you quickly get lumped with the loons who would open-cast mine the pristine Antarctic if there was a quick buck in it.
Big issues need clear heads. There are a number of reasons not to panic about the level of population. Not least of which is that the evidence suggests once a society gets to a certain level of development, the rate of childbirth per woman falls bellow two. Once you reach that number you will see the population fall over the span of a natural lifetime. Japan is already there. Britain, France, Italy and the US would be there if you took immigration out of the analysis (2009 ONS stats showed the average UK-born woman has 1.84 children, while women living here who were born abroad have about 2.5 children). Put simply, when they reach a certain standard of living, healthcare provision and opportunity people choose to have fewer kids without government intervention. It strikes me that the best way to stabilise and lower the population is therefore to help under-developed nations develop. It is development that brings that standard of living, healthcare provision and opportunity. That means a firm commitment to global trade and an outright rejection of protectionism.
At the same time, we shouldn’t mock the word ‘sustainability’. Natural resources are indeed finite. Eventually, over the long-term course of history, the doom mongers will be right and man-kind will destroy itself with a generous helping hand from nature. We have an obligation to our children to make sure we’re not hurrying that day along. So the development we strive for does indeed need to be ‘sustainable’. We just need to be very careful that we’re not held hostage to the word ‘sustainable’ by pedlars of bad science. Over-zealously embracing this weeks trendy ‘sustainabilty’ thinking will slow development, delay our goal of population reduction and be harmful to the life outcomes of billions of people. Not paying regard where there is sound science could end the life chances of our entire species. That’s quite a balance to navigate. As I said earlier, big issues need clear heads – I’m never sure when I follow these big environmental debates that the usual spokespeople on either side of the debate have ‘clear heads’. That leaves us all with an obligation to take an interest in these issues and nudge our policy makers to approach these big questions based not on lobby pressure, but upon clear-headed reason.
So, according to the Institute for Fiscal Studies 2.9 million children in the UK will live in ‘Poverty’ by the end of this Parliament (up from 2.2 million at the start). That means 22.2% of the whole child population in the UK. Really? I’ve bitched about the use of the word ‘poverty’ before. Here we go again.
To be crystal clear my rant is not about the methodology applied, policy points, conclusions of the report and certainly not a pop at the authors. It is a sobering read. Nobody will take any comfort from the raw data presented. Every reader will gain a greater sense of urgency to address our economic weakness. I have a wife and 2 kids. I would not want to try to live on a total family income of £347 per week after tax is taken and any benefits added. My rant is entirely about language. Language matters. Particularly when it informs political debate. And so we get to the language of ‘poverty’.
Since at least the early 1990s NGOs, Academics and ‘think-tanks’ have been using various flavours of the concept of ‘relative poverty’ for these types of reports. For example, the definition the IFS use today: “An individual is considered to be in relative poverty if it lives in a household whose income is below 60% of the median in that year”. If you just pause and think about that you realise that it’s not a measure of ability to buy essential stuff – it’s a measure of the income distribution gap. By that model everyone in the UK could get a pay-rise, prices could go down, and you could still see ‘poverty’ go up. Conversely you could theoretically reduce everyone’s wage to 50p a day, with rising prices, and poverty would be deemed defeated. Does that sound right to you?
Without wishing to belittle the quest for more equitable income distribution – I can’t help but think that such subtle manipulation of common language cheapens the word ‘poverty’ and by widening the net draws attention away from those millions in the world (including the many thousands in the UK) who, very literally, do not know where their next meal is coming from. There is an important national debate to be had about income disparity and this data could be used to support the case of those who believe the gap is far too wide – however to hijack the language of ‘poverty’ seems a cheap way to point-score in that debate.
My language gripe isn’t new and the academics always point out that there is a distinction between ‘absolute’ and ‘relative’ poverty that us common muckers are slow to get. To be fair, report footnotes usually do clarify that they are using a ‘relative poverty’ measure and authors will say it is beyond their control if news editors don’t draw the nuance to the reader’s attention (though the editor isn’t helped if they make the definition hard to find in their press release and are banking on ‘churnalism’ reportage of their work to further their agendas!).
Anyway, the concept of ‘absolute poverty’ is what a non-academic would imagine is meant in ordinary language if the word did not have the ‘relative’ or ‘absolute’ qualifier. By example the World Bank used to use the metric of an income of $1.25USD or less per day as their global ‘absolute poverty’ marker.
The freaky thing about today’s report is that it breaks the trend by tracking both ‘absolute’ and ‘relative’ poverty and here’s the scoop: In 2015 more UK Children will apparently be living in ‘absolute’ poverty than ‘relative’ poverty! (see note 8 at this link). Again, if you stop and think about that it sounds nuts and counter-intuitive and raises all sorts of questions. Safe to say they are not using the World Bank metric here. So what calculation are they using for ‘absolute poverty’ to get such a quirk? Well, it turns out their definition is: “[a person who] lives in a household whose real-terms income is below 60% of the 2010–11 median”. Come again? We define our ‘absolute poverty ‘ metric by a ‘relative poverty’ frozen snapshot from the past? What clowns came up with that one? Well – it isn’t the IFS.
Actually, it turns out the clowns who came up with that one are our MPs. The definitions that the IFS are using are the ones that are defined in the UK Child Poverty Act of 2010. It’s there in the Act’s definitions. There is no party political point here – this Act had all party agreement. The legally binding target for the Government is to get absolute poverty as defined in the act down to less than 5%. They are projecting for 24.4% by 2020! Talk about a government making a rod for its back. The whole Act is a political device to compel a focus on narrowing the income gap ahead of prioritising generating more wealth. The two are not mutually exclusive, and many will think that focus on the former is no bad thing – but the point is that it effectively shuts down our ability to have a healthy debate about the relative merits of a priority choice.
That’ s why language matters. Deciding exactly where to draw the poverty line was always going to be subjective – but once drawn and enshrined in law any attempt to query it creates the impression you are ‘in favour of child poverty’ – much as if you query quirky provisions of the Human Rights Act you are ‘against Human Rights’. That invites intellectual dishonesty and stifles the quality of our political debate.
My personal obsession with the word ‘poverty’ aside, we should still heed the report itself rather than just react to the headlines. The last paragraph of the summary:
“The Government might consider whether it would be more productive to set realistic targets for child poverty, along with concrete suggestions for reaching them, verified with a quantitative modelling exercise such as this one. The authors also suggest that the Government consider how best to adjust the absolute poverty line over time to reflect changes in the cost of living faced by poor households.”