An easy guide to reducing poverty

 

I have a sure fire way to reduce poverty in the UK. It would be quick. It would be cheap. And it would involve not one single human right being violated.

My simple idea would probably end poverty in time for next Christmas. And best of all it would mean handing more than £100billion back to the taxpayer. We don’t need to kill anyone. We don’t need to massage the figures. We don’t need to rob from the rich and the wealthy and give to the poor.

I’m not even talking about some insane judgement of what poverty. I’m talking about standard poverty. I’m talking about all those people on less than 60 percent of the mean income in the UK.

Indeed I much prefer the quite sensibly weighted, and widely used measure of poverty that only counts disposable income after income tax, with housing costs are stripped out as well.

www.poverty.org.uk has an excellent explanation of this measure, and how the weighting works. But put simply it means a man living alone needs £115 a week after housing and income tax costs to avoid being in poverty, while a couple with two children need £279 a week.

By that measure a little over 20 percent of households are in poverty in the UK. And that brings me to my solution. Let’s sell off the NHS and give an equal share of its annual cost to every man woman and child in the country. Doing so would mean a hand out of £33 per week to everyone, effectively eliminating poverty all together.

Sound crazy? Well here are the figures.

The NHS presently costs us £110.5billion per year. And there are 61.4million men, women and children in the UK. That equates to a £1717 per person this year that we could save by not paying for healthcare anymore.

Meanwhile the mean annual income from which the above poverty level is calculated is £14,317.

Those of you good at maths will have worked out already that £1717 is just 12 percent of the mean income. So if we distribute it equally to absolutely everyone, the mean would rise by 12 percent too.

That means every weighted level of poverty would rise by twelve percent. So the man on his own would now be in poverty if he had less than £129 per week. The two adults with two children would now be in poverty with less than £312 per week to spend.

But think about what £33 per person does to the incomes of our two hypothetical examples.

The man on £115 percent, literally on the poverty line, would now have £148. That is a 29 percent rise that takes him well away from a poverty line weekly income of £129. To stay in poverty under my proposal he would have to be living on less than £96 today.

The couple with two children would see their income rise 47 percent from £279 to £411. Yet the poverty line for them would have risen only to £312. They would have to be on just £147 per week right now to still be in poverty under my plan.

However, I have to ask, do you see the flaw in this plan?

We would solve poverty at a stroke. We could even do to education what I’m suggesting for the NHS and add another £80billion d to the poverty beating pot. We could then means test the payouts to give more to the poor and less to the rich.

And yet those we help out of poverty would almost certainly end up far worse off because of it.

This has of course been a long winded way of saying we need to rethink poverty entirely.

We need to rethink the situation in which poverty is merely a matter of cash. After all, our reasons for thinking poverty is bad are not about cash anyway. We want an end to child poverty because poverty in our youth correlates strongly with an adulthood of drug addiction, criminality, physical and mental ill-health, worklessness, and family breakdown.  

So in poverty we take a social problem and monetarise it in a simplistic way. And that can’t be good for policy making.

For example, if the Government has to cut £10billion of spending, would you choose to cut it from the NHS or financial support for the poor? Far more importantly, would the poor be better off if it was cut from the NHS or from support for the poor.

That’s a tough question to answer. But it is one worth asking. You see, no party and no campaign group has tried to answer it.

I don’t have the resources to do so for this blog. I don’t know the cost of drug addiction to a person’s life, or of dependence on benefits. I also don’t know the extent to which those things can be attributed to degrees of poverty. But if free vocational training for children in poverty was found to better improve their future employment prospects than handing out cash, should poverty campaigners, the left, the right, and the centre not all want to know that?

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Please aim low at Copenhagen

 

 You may have read a lot of articles recently debunking climate change as a myth, scandalising it as a conspiracy, or simply casting doubt on its extent. This is no such article.

It is easy to cast doubt on climate change. Just lie. The public don’t understand the science and are far too busy to learn it. So tell them that it is not real, exaggerated, or unproven. Some will believe you. Many others will consider your codswallop somewhat valid in the grand scheme of a scientific debate they play no part in. 

However, climate change campaigners, and by that I mean the very-progressive left, are a bigger problem than climate change deniers. These people will destroy the world. 

Now I’m not going to criticise campaigners who pitch tents in high profile places for a protest of scruffy clothes, agitating the police, and oodles of dope-fuelled al fresco sex with other scruffy, young, wannabe bohemian types.   

That image might have been damaging because the working and middle class majorities tend only to buy into aspiration. Just look at the many well respected and well dressed famous people in advertisements that scream luxury from our tellies and magazines. But fortunately a gaggle of clever scientists and well dressed politicians, journalists and businessmen and women lined up to express alarm and make climate change an aspirational issue anyway. 

Instead the problem is the morality arms race that leads some left wingers to more and more radical and ill-informed views.

The Copenhagen deal is the first global climate change agreement in which the world’s major polluting countries will agree to cut emissions and so reduce global warming. And yet some people, as part of their moral arms race, are now claiming the climate would be better off without a deal. 

The logic here is obviously weak. A deal involves nations saying they will cut emissions. No deal means no one says anything. As such if only one country takes its promise seriously Copenhagen at least achieves something.

But while the logic is weak, the process of arriving at the argument is overwhelming and inevitable. 

Take two people who feel the need to prove they care more and have greater insight about climate change. They will both start by saying the deal is too weak. That much is obvious since the deal will never be perfect. So to outdo the other, one of them can then argue that it will achieve even less than it claims. The other can do likewise until one of them has argued that it will actually achieve nothing at all. After that the other of the two has only one option left. He or she must argue that Copenhagen will damage the environment. 

This is not a new phenomenon. Karl Marx, after years of arguing that revolution was an impossible path to socialism, famously changed his mind in the Communist Manifesto. He did that to win favour with other radicals so his description of communism would be widely adopted as the core basis of the moment. Of course Marx was exceptional. He knew he was playing this game. Most columnists and bloggers don’t share that awareness.

And here is what Marx knew. He knew that once people had bought into his interpretation, they would stay with it and could be carried further. Likewise the anti-smoking lobby knew that once they convinced the public that smoking needed restricting on public health grounds, they would buy into that logic and take it further. Hence the long transition from filters, warnings on packets and an advertising ban, to a ban on smoking in pubs and perhaps requiring shops to keep cigarettes under the counter – as they once did with porn. 

Kyoto should have been that first step. It should have been the Communist Manifesto for Marxism, or something akin to warnings on packets for cigarettes. But it failed. It was too ambitious and so people, or in this case countries, didn’t sign up and buy into the logic. As such we are trying again with Copenhagen. 

If Kyoto had been weak enough to get the Yanks on side then maybe the logic would be well enough established in North America for a stronger Copenhagen deal. The politicians there would have had to justify the (all be it limited) Kyoto agreement and laud it as a positive. They would have had to justify measures that at least appeared to help achieve emission cuts. They would, in short, have got the establishment in America making the climate change case to its people. 

If Copenhagen fails to get China, America and the other countries not yet signed up on board, then in 20 years time we’ll be trying to take this first step again. 

The world can’t afford that. So let’s be realistic and treat this as a campaign and focus on the strategy. Let’s just get a deal, and by that I mean any deal that gets most of the world’s polluters involved. Then, perhaps, we can go further in future instead of having to start from square one again and again and again.

An independent Scotland? RBS and Iceland suggest not

An independent Scotland? RBS and Iceland suggest not  

Alex Salmond today published Scotland’s independence White Paper. He offered his countrymen the chance to keep the status quo, take more powers to Edinburgh, take a lot more powers to Edinburgh, or leave the United Kingdom all together. Sadly for him that last option is pie in the sky.

The last year or two have been unkind to the cause of Scottish independence. The SNP won its first Scottish election victory, but only won well enough to form a minority administration. Because of that, independence has gone no further than renaming the ‘Executive’ the ‘Scottish Government’.

But while the other parties would vote down independence anyway, the SNP have made the strongest case for staying within the UK.

It seems an age ago that Scottish Nationalists could barely open their mouths without repeating the examples of Iceland and Ireland. Those were two fast growing, prosperous and independent nations that Mr Salmond and his colleagues promised Scotland would mimic. Once it was free of the imperial city’s rule of course.   

Then the world economy wobbled.

You can barely get SNP members of the Scottish Parliament to even admit Iceland exists nowadays. And that is hardly surprising. It was a small independent nation with a fast growing economy thanks to, among other things, a thriving banking sector.

Then the banks collapsed. By early 2009 Forbes was reporting foreign held national debt levels of up to 200%. Its banking assets in the UK were frozen. Its unemployment rate jumped from effectively zero to over ten percent in mere months. Eventually Iceland had to be bailed out and saved from possible national bankruptcy by a clutch of European nations and the IMF.

Contrast that with Scotland and the case for the union becomes clear. The banks collapsed and by early 2009 they were operating under effective state ownership. The UK, or London as the SNP tends to call it, was able to underwrite vast liabilities that totalled far more than Scottish national income. The banks remain in bad shape, but no one imagines Scottish unemployment will hit ten percent any time soon. Recovery, though likely to be slow, is now widely predicted and probably underway.

Then there was Ireland.

The same politicians have gone quiet about the Republic, though they are less willing to give up that example as they have little else to offer. It helps that most people know little of Ireland ’s problems as it just isn’t big news in Britain.  

But Ireland ’s example is more worrying. Iceland could be written off as one bad example where banking was too big a part of the economy, and where new cash was overspent on expensive foreign assets. That Scotland’s banking sector did the same doesn’t negate that Ireland was everything an independent Scotland was meant to be. It was fast growing, global in outlook, and even developed modern companies of world acclaim.

So, with globaleconomiccrisis.com reporting eleven percent unemployment earlier this year, and an economy still shrinking having already shrunk by nearly double digit percentages, the SNP case for freedom was in tatters.

Ireland’s case was also alarming for another reason. The public spending deficit there rose to around 14 percent of GDP without the large stimulus measures seen in the UK. The rise was primarily a result of falling revenues and higher benefit costs. Indeed the price of servicing Irish debt has also risen recently, along with many other small European countries, as the risk of default is emphasised by Dubai World’s turmoil.

In the UK meanwhile, we have similar deficits, but with a great deal of that allocated to initiatives to keep the economy moving, keep people in jobs, and to keep a rather large Scottish bank afloat.  

And that leaves the long term problem of public spending north of the border.

According to the IFS, annual per capita public spending is £9,162 in Scotland. In the UK it is £8,219. So Scotland spends 11 percent more per head than the UK average.

The trouble for an independent Scotland is that Tax in the UK is raised universally, not at different levels in different regions. So to make up the difference Scotland would have to hike up taxes, or cut spending by eleven percent. That would get the deficit down to the UK’s present 14 percent. And that would only be enough if the Scottish tax take matches the average for the UK as a whole. Given our London centric economy even that assumption seems generous.

Likewise, with ongoing trouble in the world economy, and the high prices of debt for small countries, Scotland may face higher servicing costs on it’s share of the UK ’s £800billion accumulated debt.  Its population is eight percent of the UK ’s so it might be expected to take on around £70billion of that debt for itself.  

At least it seems unlikely the British would be quite so cruel as to give Scotland its share of the banking liabilities as well, or worse still all those losses associated with RBS.

So should Scotland go independent? No, clearly it should not. There might be a time when it is in fine shape and has a fair wind behind it. But that seems further away now than at any point in my lifetime, or Alex Salmond’s.  And the Nationalists probably know it.

Hence the three other options in the White Paper.

Will the real Shadow Chancellor please stand up?

Philip Hammond launched Conservative plans for public service reform on Friday. The announcements received some press coverage, yet one of the most interesting aspects of the morning appears to have been ignored.

Luckily Westminster Village was part of the packed audience at the Policy Exchange event, because the Shadow Chancellor did something very interesting. To our reporter it almost sounded like an admission of his limitations. It might even have been an acknowledgement that the heir apparent to the Osborne baronetcy may not be entirely suited to the role of Chancellor-in-waiting.

The previous day an invitation had been sent to the great, the good, and us, announcing that the Shadow Chief Secretary to the Treasury would be launching Tory plans to ‘do more with less’ at the right-wing think tank. The invite added that George Osborne would be introducing Mr Hammond.

Intrigued at the prospect of the Shadow Chancellor playing a bit-part role in a launch designed in part to overshadow leaked reports of the government’s work on the issue, we went along – curious to hear what the Boy George had to say.

Sweeping into the room Osborne took his place at the podium and provided us with a short summary of his conference speech. Again. Thankfully there was no repetition of the Disney-lite catchphrase reminding us how “we’re all in this together”.

Usual spiel over with, the Shadow Chancellor had a complaint to make. Labour, he said, had completely downgraded the role of Chief Secretary to the Treasury during their time in office. All of this would change under his reign, he pledged.

To what extent, we wondered.

Well, George told us, Philip Hammond would be at the heart of the Treasury. His role would be “one of the most important” in government. A quick grin and George took his place in the front row to allow Philip cover what mattered most after the buzzword-filled opening. The detail.

So had George admitted what we presumed all along? That he would be the one holding the red box and grinning inanely for the cameras whilst Hammond poured over the figures and hatched plans to restore Britain to more halcyon times.  

The speech was somewhat light on specifics beyond the ‘transparency, efficiency and culture change’ the party pledged to implement. The biggest announcement was the establishment of a Shadow Public Services Productivity Advisory Board which sounds more than a little similar to the PSA that Thatcher abolished.

Hammond also made some rather lofty claims that Labour had wasted £60bn a year on the public sector which conveniently ignored the state it had been reduced to by 1997.

Regardless of the issues we have with the content, what was more interesting was Hammond himself. He spoke with a confidence and competence that Osborne has yet to demonstrate.

Despite protests that he would never write Osborne’s budget for him, a telling moment followed. Using a rather stretched metaphor, he announced that he saw his role in the next Tory government as that of “ensuring that the machinery in the engine room of government is calibrated to deliver a continuous stream of productivity improvements”.

A convoluted way of telling us he was the power behind the throne? Judging by Friday morning’s performance it appears so.

Of course George Osborne’s credentials have been called into question on numerous occasions. He has also been accused of retaining the job either because of his close friendship with David Cameron or because of the sway he holds within the party due to his vast wealth and useful contacts.

There are even some who argue that Hammond is preparing to do the real work at Number 11 whilst Osborne merely ratchets up his rhetoric. And for the first time both men appear to have tacitly acknowledged there is more than a degree of substance to that.

‘Final solution’ to climate change agreed

World leaders posed for a joint photograph in Copenhagen today, and hailed their new climate change deal agreement as a great day for polar bears everywhere, and for about five billion people worldwide.

Agreement came after years of deadlock about carbon trading, green taxes, and how on Earth to get the Yanks to sign up. Then the German Foreign Minister Herman Schroder read a report about how going vegetarian could save the world.    

Schroder told Westminster Village “Campaigners said that if we wiped out all the cows and pigs we would reduce emissions from farming and save the planet. Trouble is there aren’t many votes in telling people they can’t have tasty sausages or lovely cheeseburgers covered in relish and bacon.

“Fortunately I’m having a bit on the side with a saucy little intern who is also a history student. And she said ‘you know what the public would let you kill instead of cows and pigs? The Jews.’”

When the draft Communiqué was first put to EU leaders it quickly became apparent that there were just not enough Jews in the world to make the plan successful. This had to be a cull of around twenty percent at least. Then the British suggested including the long term unemployed, the disabled, and the French.

After months of negotiations an EU position was agreed. The Jews, unemployed and disabled remained part of the proposal, but the French were dropped for the Swiss, and blacks were added in to keep the Irish from voting no in yet another referendum.

The new deal was presented at Copenhagen and most of the Middle East immediately announced weeks of festivals to celebrate. China agreed this was a sensible way to tackle climate change, though Taiwan should probably be added. India meanwhile promised it would sign anything that saved that many cows. 

“It was all going really well” said Russia’s Prime Minister Putin. I even joked with the Americans that when we added Georgia we should be sure we meant the country, not the US state. But Barack Obama just kept glaring at us all.”

Angela Merkel of Germany agreed. “We just couldn’t figure it out. He’s progressive. He cares about climate change. But he was silent and kept looking at us with a raised eyebrow, and then looking down at the proposal in front of him, and then back at us. We thought perhaps the US car industry had got to him.”

Ban Ki-Moon eventually solved the problem. “It suddenly occurred to me, he’s fkng black ain’t he! I mean there he is, a black man in charge of a country. And not just a made up African country. A real one like America. Obviously that threw spanner in the works I can tell you.”

Canada were credited with saving the deal when it suggested Blacks be replaced with tall and short people, criminals, and a few other small groups no one would miss. And so the world saving treaty was signed. Except by Israel. Who seemed to be on their holidays.

The agreed list

 Jews

Gypsies

Tibetans

Homosexuals

People who own colourful bowties

The disabled

Criminals

The Swiss

Anyone over 200cm tall

Left handed people

Anyone under 150cm tall

Gingers

Ant and Dec

Bank charges stand up in court

For a long time banks have charged seemingly illegal levies for exceeding overdraft limits. Today they have been told by the highest court in the land that they can carry on doing so.

Unfair?

Banks are allowed by law to levy an admin fee against account holders who exceed their overdraft limit. They were not however, thought to be allowed to penalise customers for doing this. As such it was generally understood that a charge of one or two pounds might be OK, while the typical £30 charge was illegal.

To put that into context, take the example of one man I helped successfully reclaim illegal bank charges two years ago. One morning four direct debits went out of his account. The first and largest pushed him beyond his overdraft limit. The three subsequent debits sent him further into the mire. Charges were thus levied for each of the four transactions. That makes eight transactions in one morning. Then, a ninth transaction saw his monthly wage go into his account and clear his overdraft.

The time in which all nine entirely automated transactions took place was less than ten seconds. Yet the admin charge cost the account holder £120.

Delaying the inevitable?

The odd thing about the test case ruling is that the case was generally seen a delay tactic before inevitable defeat for the banks.

It was around three years ago now that consumer power started to mobilise against bank charges. Sites like http://www.moneysavingexpert.com even published template letters that people could print out and post to get their money back. Naturally the banks tended to reject all first letters in the hope that the account holder would be fobbed off and not bother to pursue the matter. Yet this widespread, valuable and successful business practice for dealing with complaints failed miserably. The individual sums involved were too big an incentive to keep sending letters.

Because everyone thought they had probably broken the law, a second or third letter was usually all it took to be refunded. So the banks sought another delay tactic, and were saved from the torrent of letters by the umbrella of the state.

A memorandum was signed between major banks and the Office of Fair Trading. This said that in return for agreeing to a test case, the banks were permitted to delay repayment until a ruling had been made. The ruling was formally on whether the OFT could investigate bank charges as illegal.

This accord meant repayments ceased. However, the memorandum was such a transparent delay tactic that it even included a special clause negating itself where the account holder faced unique hardship. In those cases repayment was expected to continue. As such a new widow whose financial situation was in turmoil would not have to wait to get her seemingly stolen money back.

Empty threats!

During the delay the banks prepared the ground for their defeat with empty threats. It was menacingly pointed out that the UK is unusual for having free banking as standard. Likewise in the last month banks have hinted at plans to charge customers for using cash machines. The message was simple. Take away one fee, and we’ll charge another.

Neither such threat looks plausible.

The structure of the LINK, the world’s busiest ATM network, makes charging very difficult. The contracts that member banks sign to use it do not allow them to charge other member banks for using their machines. As such banks can only charge their own customers for accessing their cash. That would allow one bank, and last time charging arose it was Nationwide, to oppose charging and win plaudits and customers galore.

The same applies to charging for standard bank accounts. If one bank does not charge, the others can’t either. They would lose too many account holders that way. And while losing customers who pay no charges seems like no great loss, it is worth noting that people prefer to buy mortgages, personal loans and insurance from “their” bank than a different one.

The Ruling.

None of that matters now though. Banks, consumers and the OFT alike will be surprised to find that overdraft charges are here to stay. The courts have overturned their previous rulings and decided that account holders and banks agree fairly to a contract in which banks can charge large sums for exceeding overdraft limits.

But that was not the end of the ruling. Though the OFT can’t now investigate the matter in regards to what is fair and unfair, the courts accepted it could still investigate in other ways. There are a great many consumer protection and business regulations that could be used. And the OFT clearly intends to keep trying. So while this is a blow for consumer power, it is not a fatal one in the battle over bank charges.

Floody Tories

Cumbria, in case anyone remains oblivious to the news, is very wet right now. A foot of rain fell in one day about a week ago and many more inches have fallen since. Yet the political storm has yet to hit.

The press has bombarded us with images of swollen rivers and broken bridges, of waterlogged homes and communities cut off. We have even been treated to inspirational story of a dutiful policeman washed away while helping to keep others safe.

So far so apolitical.

Of course weather is sometimes very political. But this is no Hurricane Katrina. This is not a weather pattern tracked over hundreds of miles. White folk were not evacuated from its path while black folk were left to die. The recovery effort has not been fudged with fatal consequence by incompetent federal agencies run by unsuitable pals of an unpopular president.

Instead this is an unpredictable and entirely unprecedented event. And it is literally unprecedented. At no time in history has anywhere in Britain recorded the level of rainfall that Cumbria suffered in one wet day last week. Meanwhile those sent to put up temporary flood barriers and provide supplies to affected communities have done a stellar job.

But none of this can stop the matter turning political.

Letters to editors have started to hint ever so slightly that the public is ready to see the floods exploited. Some have attacked the Government for building homes on flood plains. Others have criticised the blocking of flood prevention plans that would harm biodiversity. More routinely people have argued we could spend more on flood defences if we left Afghanistan alone.

What these letters are not, is a signal to the Tories to go on the attack. Whether the individual points are fair or not, some egotistical nut will always write to the papers with their often ill-conceived wisdom. And in the internet age editors are keen to publish them if they court controversy.

Instead the Tories have a tricky balance to strike here. They don’t want ‘events’ disrupting the normal flow of politics while they have a large lead in the polls. Events are unpredictable. Appearing to exploit them can damage public support and turn people in favour of Governments. However, Gordon Brown’s popularity peaked when the country was hit by terrorism, Foot and Mouth, and flooding all at once in 2007. So events can’t be ignored either, for fear of leaving Labour to pick up easy points.

Various Tory MEPs, councillors and other bods have thus started calling for flood related inquiries. Their list of issues includes flood defences, the speed of response, planning, house building, and more besides. It is possible that this is testing the water ahead of a more focused line of attack. But it feels premature and disorganised, as though the individuals involved might just have got a little carried away with themselves.

If so that should worry David Cameron. His party is not on solid ground if a policy debate arises. After all, it was only a month ago that they ruled out the promise of a flood bill in their first term.

And consider that for a moment. Would anyone really blame any party for prioritising Afghanistan, crime, education, the NHS, banking, climate change and unemployment over costly preparations for weather conditions never before seen in Britain?

When the flooding subsides I suspect the answer will be no. And so does the Tory leadership. Hence their headline announcement today is on recycling, not rainwater. But they are now asking questions. They may do so quietly. And they don’t want answers. But they are asking so as to hint at Government failure and to foster a small degree of public discontent. And that is a shame.

It is a shame because the Tories want the public to stop looking to Government for answers to every problem.  And surely the weather is a perfect illustration of the state’s limitations.