Category Archives: UK Politics

This Gove Grand Conspiracy

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.

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Filed under Center right, Centre Right, Education, Politics, UK, UK Politics, Uncategorized

Mixing up ‘Loopholes’ with ‘Incentives’

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.

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Filed under Economy, Politics, UK, UK Politics

Ken’s Taxing Problem

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.”

You’ll have guessed that in real life these quotes are not from some ‘Tory boy’ and David Cameron.  They are of course, word for word, Ken Livingstone and Ed Milliband.  (Sources here and here).

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?

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Hurrah For Weekly Bin Collections

Eric Pickles is Coalition marmite.  His bluff northern manner oozes the kind of ‘tell it like it is’, ‘no-nonsense’, ‘wont suffer fools gladly’ demeanour that the traditional Tory faithful love.  Those who don’t love him will instead perceive him as arrogant, aloof and missing any emotional intelligence.   He is the John Prescott of the right.  I’m sure both men will be aghast at the comparison but there it is.

Being a ‘character’ in a political landscape devoid of them can be a real advantage climbing the greasy pole.  The flipside is the rod for your own back when you’ve made it and it’s time to start delivering stuff.   Eric has a twin curse.  His lovers all have unrealistic expectations that he can and will ‘just wade through the crap and get stuff done’.  His haters meanwhile will leap on his every effort with extra venom to ensure anything he comes up with will fail.

The announcement by Pickles on the weekly bin collection underlines his personal challenge.  You can feel tangible disappointment from his supporters in Manchester that he had to go down a very costly incentive route.  The old guard can’t understand why ‘no-nonsense Eric’ couldn’t just impose it as a ‘must-do’ for councils.   Aside the legislative challenge of making such a requirement there would also be the glaring contradiction between being champions of localism and any top-down dictat.  It had to be an incentive route.  The trouble is that this requires the money to be seen, and this is an absolute gift for his detractors to yell ‘fiddling while Rome burns’ and point out all the other things that a Government could spend a quarter of a billion pounds on in a time of financial crisis.  He’s been on a hiding to nothing.

For all the reality of the politics I really believe he’s done the right thing.  Refuse collection is the most basic core service for a council to deliver.  Yes, you absolutely can just about get by leaving your rubbish fortnightly but the reality for many of us nowadays with shift work or working away from home in the week is that it is often impossible to get your rubbish out every time on the specific due day.  On a fortnightly cycle if you miss one collection you’ll go a full month.  Never mind the stench – that is a public health issue.  The biggest winners from fortnightly collections are rats and foxes.  Public sanitation gains have been hard won over the last century, the national drift to fortnightly collections has risked surrendering them.

And yes, I know there are many out there who take huge pride in their recycling efforts and somehow manage to get their rubbish so that they only actually have to leave black bags out once a year or whatever.  Hey – all power to your elbow.  Well done.  I salute you.  You’re great, and I’m sure you feel it.  But for the rest of us flawed lot, who honestly recycle with best endeavour rather than fervour, who have kids with disposable nappies, and who shamefully do buy convenience food and takeaways and other modern stuff that generates waste – and carry our share of liberal guilt for doing so – we nevertheless don’t want that (or our equally guilty neighbours share) festering in our neighbourhood.  So hurrah for the weekly bin collection, and hurrah for Eric for doing whatever he realistically can to preserve it.

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Those Tiresome Attempts to Justify the Tottenham Riots

The riots in Tottenham are hooliganism pure and simple.

For the British commentariat that is far too simple an analysis to be allowed to stand. Cue, thousands of column inches attempting to frame last night as an inevitable expression of the ‘class-war’ stoked by this Government. Please spare me that bullshit.

I’m sure that the Chinese whisper ‘on the street’ will be “cops kill family man, Mark Duggan, in cold blood”.  That will have been enough for bored youths, who are no doubt suffering crappy prospects with a combination of the recession and poor education to go out and have ‘a good old fashioned riot and loot’. To some small extent they will also be emboldened by pictures of ‘Arab Spring’ that bombard our news, and to an even lesser extent be more against the Met than ever after the hackgate coverage.

Pseuds will over-analyse all the above ‘reasons’ and offer them as ‘excuses’. There will be more than a hint they are on the rioters side. In this over-analysis they will ignore the role played by the local gang leaders in stirring this up and the opportunistic criminality they engage in whilst it is kicking off.

We don’t know the circumstances of Duggan’s death – and it may well be that the police could have handled the operation far better. Someone has lost their life, he is a father, and no matter what he was up to that is a cause of sadness. Nevertheless, the fact the chap was carrying a gun and if reports are to be believed shot at a police officer, suggests the police were right to be moving in on him. Whatever, it will be far more constructive to wait for the outcome of the IPCC investigation before rushing out and burning down the local branch of Aldi.

The real damage the pseuds cause in their post-event rationalisation and politicisation of events is to foster a sense of justification amongst the riotors. There is no justification, there should only be shame.

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Filed under Center right, Class, Crime, UK, UK Politics

What was this ‘Wilful Blindness’ Stuff?

Midway through their mammoth testimony, long before the custard pie, James Murdoch was asked if he had ever heard of ‘Wilful Blindness’?  He gave an out-of-place smirk and shrugged.  His father chipped-in that whilst he’d heard of it “we’ve never been guilty of it”.   Hold that thought.

Later, during Rebekah Brooks testimony, she was asked how payments to private detectives were authorised.  The gist of her reply was that News International set an overall budget for a newspaper,   the editor would then allocate budgets downward to ‘managing editors’, they would fund individual reporters and so long as everyone stayed within their authorised threshold they were accountable for their own spend.  Underlings were trusted.  If you were within your limits it seems no questions would be asked.  None of the witnesses had any idea as to the actual transactional mechanisms -cash, invoices or whatever – that allowed their reporters to pay private detectives (or actual detectives come to that).

Now, I’m no lawyer.  I’m not clear on the line that has to be crossed in corporate governance or financial control arrangements before executives fall legally foul of neglecting their duties.  However, I’m pretty sure the MPs were trying to establish if the delegated payment authorities were so piss poor as to appear manufactured to ensure there wasn’t visibility of how junior staff were spending the company’s money.  Our inquisitive MPs danced around this.  The questions, though never framed in such direct terms, were steering them to infer they had therefore allowed ‘plausible deniability’ to become institutionalised at the News of the World.  No wonder they  introduced James Murdoch to the phrase ‘wilful blindness’.  In the US folk go to jail for that sort of thing.   If the committee smelt blood on this point they chose not to go for the kill.  For now.

Regardless, the testimony painted a picture of executives who simply didn’t grasp whole chunks of the detail you might expect. I’m happy that they wouldn’t have been in the micro-detail at the time, but troubled that given the magnitude of what has happened they still didn’t seem to have really drilled in on it since. The more mundane narrative to explain this  is that the Murdochs and Brooks had a lax grip on the internal controls in their company, they delegated to the wrong people (you can delegate responsibility, you can’t delegate accountability) and they failed to assure a culture of ethics, audit and active management on a high profile part of their stable.   If it isn’t conspiracy (and to be honest, on balance I don’t think it is) then there is still a measure of old fashioned incompetence.  Either way,  it is no wonder Rupert feels humbled.

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The best arguments for and against AV

The public ‘debate’ on the referendum for the alternative vote has been shameful. Red herring and dishonest arguments have been pushed by both sides. I’d have rather they kept the debate on the following terms:

The best case for the YES Campaign

  • Today it is common for an individual MP to be elected with a minority of the vote in their constituency. This ‘sounds’ undemocratic. AV keeps the model of an MP representing an individual constituency (which is a good feature of our system) but means that they will have had a positive vote from over 50% of valid votes counted*. It allows those of us who have tactically voted for years under the existing system to now vote with our hearts and know our votes will be counted. That ‘sounds’ more democratic.
*yes, because you don’t have to rank everyone on the paper the number of votes that constitute 50% of the valid vote will get smaller each round as some people decide they couldn’t vote for anyone else on the paper beyond those they have – so 50% of valid votes in a round may be less than 50% of the total vote. yawn. It is still a clearer mandate than winning with a fringe agenda with 20.1% over four other moderate candidates who people struggled to choose between each polling 19.8%.

The best case for the NO Campaign.
  • Just because something ‘sounds’ more democratic in theory, does not mean it will ‘be’ more democratic in action. It is reasonable to assume that AV would result in Coalitions being more common. True, not to the extent that full PR would, but the case can still be made: If you like parties to be judged against their manifesto pledges then post-general election Coalition negotiations can be a nasty surprise. Ask a Lib Dem who is horrified by the new level of tuition fees or a Tory who is horrified by this very referendum. In reality, we already operate broad coalitions WITHIN our main parties. Labour had diverse views such as George Galloway and Tony Blair together for decades, the Tories had Tebbit and Chris Patten together for an age. The parties had their debates before the election and had a transparent process to put together their policies before presenting them to the nation ahead of the vote., You are clear what you are going to get if x,y or z wins. As a party member you would even have been able to have some influence and input to the process of policy formation. Coalitions BETWEEN parties instead lead to Government programs being put together in a smoke-filled room contrary to anything the electorate thought they were going to get. The deal brokers may not be the cuddly types at the center but may just as likley be the parties at the margins – the nutters. Anything that increases the likelihood of that kind of policy formation is less democratic than what what FPTP has delivered for most of our history.

Everything else – the gumpf about cost, simplicity, one person’s vote being counted more times than anothers etc. etc. is just bullshit frankly. As it happens I’m persuaded by the NO argument above as a case against full PR, but not quite as a case against AV. I think AV would be a small, incremental improvement to our voting system, and I don’t think we’g get a glut of coalitions at all. I voted YES already by post. However, I fully expect the NO vote to win – the YES campaign have had their chance to make their case in the face of a terrible NO campaign. They didn’t up their game, if/when they lose they need only look at themselves, I’ll not lose sleep.

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