BURNING OUR MONEY

Featherbedding farmers: £10 billion every year

Quite understandably there's huge indignation at the Freedom of Information disclosure that unreconstructed farming toffs, like Prince Charles and the Duke of Westminster, are being featherbedded by CAP subsidies.

But as the Telegraph reports:

'...the major recipients of the £3.9 billion that the British taxpayer pays into the CAP are big companies with little or no link with the land.

Principally, they are sugar and dairy processors, the top dozen of which received more than £10 million each, nearly five times more than any farming business.

One such firm, Meadow Foods, received £25 million, and Nestlé £11.6 million, but the others in the top 10 are dwarfed by Tate & Lyle, which received £127 million.

The reason so many food companies receive so much money is that subsidies and import controls make sugar three times the price it is on the world market and dairy products twice as expensive.

To compensate for the higher prices that result from European Union protectionism, companies that export outside the EU are entitled to apply for export refunds that cover the difference between the prices at which they buy and sell.

Producers of processed foods are allowed production refunds for the same reason.'

So to compensate for the inequity of our artificially high food prices, taxpayers have to subsidise foreign consumption of our processed junk foods.

Lunacy on lunacy.

But of course, although our farmers don't get the whole of that £3.9 billion tax transfer, they do benefit hugely from those higher food prices.

The OECD, which every year publishes its aggregate Producer Support Estimate (PSE), says:

'Clearly, in asking how much is spent on agricultural policies, it is crucial to consider overall support, rather than just government payments. Out of the Euro107 billion producer support going to EU farmers in 2002, Euro61 billion came from consumers’ pockets to pay the high prices caused by tariff protection and export subsidies, and €46 billion from tax transfers.'

Euro107 billion is the equivalent of about Euro280 per head. So with a UK population of 60 million, and an average 2002 exchange rate of 1.6, this implies a total CAP cost to UK taxpayers and consumers- ie you and me- of over £10 billion.

And as for paying farmers to 'look after the countryside', why can't they just sell out to investment banker vanity farmers? Unlike real farmers, they won't want to grub out the hedgerows, and they'll be more than happy to pay for ornamental sheep, haywains etc.

And why can't I have a subsidy for looking after my garden?

Flat tax entering mainstream

The flat tax debate won't make it into this election because none of the parties want it to. But it is certainly getting closer to the mainstream.

Last week's Spectator carried an article by Nick Herbert of Reform ( here) in which he weaves a flat tax proposal into Reforms' existing scheme to restrain public spending growth, and suggests the combination could be used to deliver substantially lower taxes for the poor.

Currently the poorest 20 per cent pay an average 40 per cent of their incomes in tax, actually higher than the overall average tax rate of 36 per cent. Under Reform's outline proposal this would be more than halved in the lifetime of the next parliament.

He concludes:

'The principled luxury of progressive taxation which doesn't actually work is no longer one we can afford.'

We're not there yet, but we are thinking about how flat tax could be made to fit with with a broader policy agenda.

Industrial subsidies- another £30 million blown on manufacturing

According to the DTI, 'the Manufacturing Advisory Service (MAS) has injected over £112 million of added value into UK manufacturing since its launch in April 2002.'

It passed me by at the time, but it seems MAS 'was set up to provide practical advice through 10 centres throughout England and Wales to help manufacturing companies improve their productivity and competitiveness.'

So far, it's cost us £30 million. Real folding money.

And what of that £112 million value added? Was that the real folding stuff?

Hmm....let's see...Apparently it was achieved through zillions of 'responses', 'initial diagnostic health checks', 'events', and 'in depth consultations'.

Ah.

So how do they know it's £112 million?

'The benefits...are assessed using 7 productivity measures relating to quality, cost and delivery. The impact of these improvements...is then calculated. The figures for all those firms where projects have been completed...are then added together.'

Yes...that's exactly what I feared.

Coincidentally, there's a John De Lorean memorial posting today on the ASI blog. It reckons these days politicians have learned not to back particular businesses.

Maybe. But not so deep down they still think they know how to run business better than the private sector.

And they're quite happy to put our money where their arrogance is.

Unskilled meddling

The government has published its 'vision for the future' of skills training. It reckons we need to 'invest' a load more because:

'The UK faces a major challenge in ensuring our workforce is equipped with the skills needed to compete in a global marketplace on the basis of high value-added goods and services. Currently countries such as India and China can compete on the basis of lower labour costs. But with around 20 million graduates in China and 2 million new graduates each year in India, those countries are increasingly competing not just on cost, but on expertise.'

As usual, it's impossible to fathom out exactly- or even roughly- how much they actually intend to spend because they spray around all kinds of apples and pears numbers. £1.5 billion, £20 million annually for two years, £1 billion, £1.5 million, £3 million...it could be any or all of those- who knows?

But we do know it's more than we taxpayers ought to be 'investing.'

Because Labour is forever justifying its useless skills programmes on the basis of competitive threats from abroad.

Until recently it was the US, France and Germany. They were reckoned to have much higher skills levels than us, and we needed more public spending and government tinkering.

The problem with this was that once somebody did some proper analysis (see for example this NIESR paper) we found out that the so-called 'skills gap' didn't add up to much- maybe 2-3 per cent of output, well within the margin of error. What's more, the apparent productivity lead once enjoyed by France and Germany seems to be fast evaporating in the post-Euro malaise.

So our rulers have reverted to more generalised arm-waving about the yellow/brown peril out east. I guess it's that vision thing.

Tax funded propaganda: capital punishment

Following posts by S&M and Blimpish, I’ve been trying to think through my own position on capital punishment. I’m still thinking, but meanwhile, surfing has thrown up a number of jaw-dropping items.

For example, the irreplaceable Paul Foot argued in Socialist Review (1995):

‘…there was no correlation at all between the incidence of capital punishment and the incidence of murder.'

No correlation at all.

'Murders were mainly personal or domestic crimes, immune from deterrence. Moreover, there were plenty of American 'mistakes' similar to the tragedy of James Hanratty...a young worker from north London, [who] was hanged for a murder near Bedford on the A6 when (as later evidence proved) he was 200 miles away in Rhyl at the time.'

Later evidence proved? Er...would that be the same cold blooded killer James Hanratty who in 2001 was definitively proved by DNA evidence to have been quite correctly convicted and hanged? Bearing out the brave testimony of the woman he raped and left for dead at the scene forty years earlier. The same woman who was thereafter confined to a wheelchair, having to withstand a constant stream of smear and innuendo from Paul Foot and other woolly-brained abolitionist liberals such as Ludicrous Kennedy?

Sorry, I'll just take another swig of my medication.

Another even more gobsmacking item. We know that our rulers are against reintroduction of the death penalty on standard liberal elite grounds. After all, paying any attention to the 60-70 per cent of us who regularly poll in favour would be…my God…no better than lowest common denominator populism. But what I hadn’t appreciated was how blatantly they use the state propaganda apparatus to shape our views. As a taster, try the National Archives’ Learning Curve site to help school kids with their studies. They have a game:

‘It is 1965. Many people want to abolish capital punishment, although there is still a significant number who want it to remain.

You have to put together a set of statements…which will form a Bill to be passed in Parliament. If MPs are convinced, they will pass the Bill- if not, they will throw it out.’

You then have to select 8 from 16 multiple-choice statements.

Now with forty years of post-abolition hindsight I know that it resulted in a trebling of the homicide rate, rocketing amounts of violent crime, and more dead policemen. So naturally, I picked statements like ‘the numbers of violent crimes will rise,’ and ‘police believe that more criminals will carry dangerous weapons, as the punishments will not be serious enough to stop their actions,’ and ‘life sentences are often shortened and criminals released only to kill again.’

It sounded pretty coherent, so I pressed the ‘Vote’ button and was pleased to see the Bill was lost.

But instead of getting a coconut, I read: ‘No. Your arguments are weak and muddled- you have not convinced people. Capital punishment will be kept. REJECTED.’

And to emphasise my rejection there was a gale of derisory surround sound laughter from the MPs.

I felt humiliated, so re-read the opening instructions. Yes, you guessed it- you can only win this tax-funded ‘game’ if you pick the 8 statements that support abolition.

My complaint is already whizzing its way through cyberspace, although somehow I don’t think I’ll hold my breath.

EU Constitution cost £100 million

England Expects has ferreted out the cost of producing Giscard's grand euro-constitution:

'According to the Budget published in the Official Journal ofthe European Union dated March 8th 2005it cost:

Budget Line 372
Contribution to the Fund for the financing of the Convention on the future of the European Union
Chapter 37 Total

Euro 38 239 968 in 2003
Euro 43 574 000 in 2004
Euro 55 078 500 in 2005

Even with my bad maths that adds up to a grand total of...

136,892,468 Euros

Worth every groat I am sure.'

Future tax rises

I've been trawling through the small print of Gordo's final budget to see how he got the fiscal arithmetic to add up, without needing to include those inevitable post-election tax rises.

The answer's quite simple: he's just assumed that somehow he'll get sharply higher tax revenues without the need to raise tax rates. Simple as that.

So income tax is projected to generate £4 billion more next year than would be implied by his GDP growth forecast, and corporation tax a staggering £8 billion more.

4+8= 12...why, that's pretty well the figure the IFS and others are pencilling in for those tax increases.

But...splutter...he can't just do that can he? How's he got the brass neck?

Well, of course, the small print burbles on about fiscal drag, and on the big £8 billion corporation tax figure it adds:

'...above trend growth is expected in 2005, as the remaining slack in the economy is absorbed. Receipts growth in 2005-06 should also benefit from financial company taxable profits returning towards trend, the impact of higher equity prices on receipts from life assurance companies and the impact from of anti-avoidance measures.'

These effects are expected not only to stick, but actually to increase further out in the forecast. So by 2009-10, tax, national insurance, and other receipts are forecast to have increased by no less than 2.3 per cent of GDP, despite there being no explicit increases in tax rates beyond what was announced last week, plus the usual price indexation.

However, as others have pointed out, 2.3 per cent of GDP in 2009-10 will be £35 billion. So instead of the £35 billion spending cuts Labour say the Tories will make, under Labour we'll have £35 billion of extra tax.

A neat equivalence.

And of course it's bitterly ironic that Gordo's got to depend on the City to pull the fiscal fat out of the fire. New Labour have subjected the financial sector to such a torrent of taxation, regulation, and general vilification that it's a wonder we still have a stock market or any financial firms left to tax at all.

Bureaucracy overwhelms cops

The Sunday Telegraph carries another front page report on Chief Constables complaining about the tons of extra paperwork Tony's given them. Last week it was Steve Green of Nottingham, this week it's Bob Quick of Surrey. He says:

"It costs a third of a million pounds to train a constable in the first four years of his career, so it does seem bizarre that for nearly 90 per cent of their time they are either doing form-filling and bureaucracy or they are doing lower order tasks that are well below their training and skills threshold.

"Only about 10 or 12 per cent of their time are they doing things that I feel constables should do. We are not tackling the really vociferous, persistent criminals that need to be tackled."

Naturally I'm receptive to complaints of burdensome bureaucracy, particularly when they come from our local Chief Constable. But there are one or two quibbles.

First, what he's told the Telegraph about not tackling crime doesn't square at all with the Panglossian view that accompanied our recent Council Tax demand. There he produced a string of stats showing how responsive the force was and how much they'd reduced crime. Since nobody round these crime ridden parts could recognise that version, I'm pleased to see he's now come out with the truth.

Second, he complains about lack of funds. But he already gets £165 million, for which he provides just 1,944 officers. That's a walloping £85,000 apiece! Where does it all go?

Third, the cops have been complaining about paperwork ever since Dixon of Dock Green. I'm quite prepared to believe it's worse now, but it's something managers in state industries just have to...well, manage.

Roll on elected sheriffs.

And finally, umm, what exactly are 'vociferous criminals'?

NHS: doubled spending still hasn't delivered

New Labour has doubled NHS spending in England from £34 billion in 1997-98 to £69 billion now, and the Sunday Times has a long piece on where all this extra money has gone. They report an audit carried out by the King's Fund that concludes:

The bulk of new funding for the NHS is being eaten up by pay increases for staff and other “cost pressures”.

The funding increase left for new hospital services in 2004- 05 was only 2.4% despite an overall increase of 12%.

Figures for new doctors and nurses are overstated because more NHS staff are working part-time.

Waiting lists are coming down but some waits for diagnostic tests for cancer and other diseases are increasing.

MRSA infections are still a “significant problem” for the NHS.

This is no surprise to those of us who believe we need a completely different approach based on privatisation, competition and choice. And with health spending now heading for 9 per cent of GDP, we simply must switch over.

But how do we get there? How do we convince the electorate that breaking up the NHS is the only long-term solution?

Of course, in an ideal world, the Tories would adopt the policy and then use all their powers of persuasion to win the argument.

Hmm.

Unfortunately, my experiences on the doorstep show that, despite everything, the public still believe the NHS can and should be saved.

The Tories may be wimps, but hell, they want to get elected. So they have to confine themselves to generalised attacks on bureaucrats and their promise to revive Hattie Jacques. Well, there is that thing about meeting half the cost of private operations, but even that is interpreted by some as an attack on motherhood.

Public choice theory explains why it's so difficult to shrink the state. Out there on the doorsteps I'm discovering people may want lower taxes, but they sure don't want us to dismantle the NHS.

Wastewatch: Ken pisses away another £100,000

Mrs T and I were perambulating through Trafalgar Square earlier this week when we noticed that the water in the fountains had turned a rather distressing shade of urine. Initially we put this down to severely incontinent tourists, but then we picked up one of Ken's many propaganda leaflets at the Tube station.

'St Patrick's Day parade and festival, opened by Ken Livingstone. A free day out for all the family.'

We'd missed the festivities, but the green dye dropped into the fountains had lingered on.

One, this was not 'a free day out'- it was funded by London's taxpayers, at a cost of at least £100,000 (assuming it was no less than previous years).

Two, even setting aside the bombing of Harrods, Bishopsgate, Canary Wharf etc, why exactly do London taxpayers need to 'celebrate the Irish Community's unique contribution to life in the city'? We don't do the same for the English, say. (Mrs T agrees- even though she's half Irish).

Three, why does Ken get to throw all these parties at our expense anyway? It was only a couple of weeks ago that he threw that party where he laid into an Evening Standard reporter.

Grrr.