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. 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?


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 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.

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.


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 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.

Lizzie visits her friends


Once upon a time there lived a wonderful old woman named Lizzie. Lizzie was a very special woman. She was so special that she owned a whole country. In fact she owned several. She owned Canada, Australia, New Zealand, Jamaica, Papua New Guinea, the Solomon Islands and Belize. She was even Paramount Chief of Fiji, though she puzzled over what that meant.


One splendid country was lucky enough to be Lizzie’s absolute favourite. And that was the United Kingdom which she loved with all her heart. She cried for days when a band of hardened cartographers armed with compasses and rulers had thwarted her wish to rename it United Queensland. But she got over it quickly as she loved the place so much.


Lizzie was lucky that United Queensland, which she secretly still called it when no one was around, loved her too. She was so popular in her favourite country that she never had to pay for anything. Her happy subjects bought her all sorts of wonderful prezzies to show how much they cared. They decorated her palaces and castles. They bought her a special choo-choo that only she could ride on. They bought her a big boat and a fleet of cars and even a golden horse-drawn carriage. They paid for all her lovely food and drink and nice dresses and jewellery and works of art and trips abroad and all just because they loved her so much. 


To repay their generous spirit, Lizzie worked hard for her subjects. She made them well when they were ill. She locked away fiendish criminals so they couldn’t hurt anyone anymore. And she taught children their ABC’s. But sadly Lizzie was getting older, and doing all of that was very difficult for one old lady, even one as special as Lizzie. So she asked some friends to help.


These friends formed a Parliament who met for four days a week, twenty-six weeks a year, to help tell lots of teachers and doctors and nurses and policemen to do all the things that Lizzie couldn’t do on her own anymore.


And so every year Lizzie would become Queenie for one day on which she would put on a crown and visit the special palace used by her friends. There she would sit on her decorative throne that absolutely was not “just” a bench covered in velvet no matter what that French upstart Napoleon once said. And from her throne she would explain what everyone should be doing to make the bestest country in the whole wide world even betterer.


Unfortunately Lizzie’s friends were not as wonderful as her. They started to steal people’s money so that they too would not have to pay for food and drink and cars and homes. Just like their friend Lizzie.


When people realised they got angry. Many of Lizzie’s friends quit running the country. Others demanded changes in the law to stop it all happening again. One, a yellow man named Cleggy, even suggested Lizzie should stay away until the whole mess was sorted out.


Fortunately Cleggy was not very popular, so Wavey and Grdn Broooon, who could not stand to miss their visit from lovely Queenie, told him to shush his mouth and stay shushed.


And so, tomorrow, Lizzie will tell her friends to merge something called a DfID with another thing called the Foreign Office. She will ask them to spend more on health care. Again. She will tell them to be nastier to criminals. Again. And she will tell them not to be naughty any more or she would be very disappointed in them all.