BURNING OUR MONEY

Labour's election fraud

Following Labour's refusal to put up anyone to discuss their jaw-dropping behaviour in Birmingham, I looked forward to our msm political reporters having a real go at their first news conference. Just like they did with Michael Howard after he sacked Flight.

I'm still waiting.

Tony wasn't asked about it either on the sofa this morning, or during his love-in with Gordo this pm.

Compare that to today's World At One. They continued to fan the embers of the Flight affair, pointing out that one of the possible replacement candidates is Nick Herbert, the head of Reform. Apparently- shock horror- he believes taxes should be cut. WATO spent a third of their programme sucking their teeth over it.

Almost as good a use of taxpayers' money as Newsnight hiring a helicopter to ferry around the self-satisfied Michael Crick during the election campaign. Allowing him to make post-modernist jokes about the size of his chopper.

Back from sick leave

Back from unscheduled sick leave straight into the election.

Depressingly, the Howard Flight affair underlines just how far away we are from being given an open and proper choice on tax and spend.

I must say I'd thought when the Tories said 'are you thinking what we're thinking?' they meant what Flight implied- ie don't worry, once we're elected, we'll have a proper go at the whole shooting match.

But it seems I was wrong, and the Tories have now gone and painted themselves in.

You'd think- well, I'd think- enough people would want lower taxes to make small government a saleable proposition.

True, history is not encouraging.

For example, I've been leafing through British Political Opinion, a collection of Gallup Polls between 1937 and 2000. And it turns out tax has rarely featured particularly highly among the hot issues.

Even when Thatcher was elected in 1979, people who thought public services should be extended even at the cost of higher taxes, outnumbered those that wanted lower taxes by two to one. By 1997 the ratio was ten to one.

Of course, many people really mean someone else's taxes should be increased. Not theirs. And that highly visible taxes like the Council Tax are disproportionately unpopular. But by and large, tax has not been a knockout issue.

Yet surely things are changing. Those 66 stealth taxes and the almost universal agreement that Labour will hike taxes again after the election does seem to be having some effect of opinion.

YouGov's Budget poll showed that those who want more tax and spend still outnumber tax cutters, but the margin is now quite narrow (49 per cent against 41 per cent).

Such a shame no party has the balls to pick that up.

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'?