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The ravings of an individual, UK voter frustrated with our politicians

Posts Tagged ‘tax credits

Gordon Brown, economic competence and his Legacy

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Most politicians worry about their legacy, Tony Blair for example seemed to be permanently preoccupied with how his tenureship as prime minister would be viewed by future generations. No doubt, it sometimes pal, Gordon Brown will have similar thoughts. So I have taken a moment or two to list some of his ‘achievements’ which will hopefully act as an aide-memoire when he comes to having his autobiography written. No doubt I will have missed one or two, so please feel free to fill in the blanks, he may need all the help he can get.

  1. Raided private pension schemes to the tune of £100bn over 10 years, whilst allowing public servants to retain their gold-plated, index linked, early retirement pensions.
  2. Introduced more stealth taxes than any other chancellor in history, equivalent to an extra 10p in the Pound on the basic rate of tax (source: Grant Thornton).
  3. Sold the UK’s gold reserves at the bottom of the market despite expert advice not to.
  4. Introduced ‘green taxes’ knowing full well that the revenues gained would not be spent on green initiatives, another successful stealth tax to add to the collection.
  5. Successfully achieved goal of becoming prime minister without going through the inconvenience of being elected by the people.
  6. Sold out the UK’s sovereignty to unaccountable, foreign elections, in spite of a promise to allow the public to decide through a referendum.
  7. Destroyed the union and in the process, ensured that his countrymen received more money per head than those in England and Wales.
  8. Missed virtually every financial growth target announced in each successive budget without so much as a murmur from the press.
  9. Successfully managed to dupe and the press into believing that he was an iron chancellor driven by prudence, when in fact he was a spendthrift.
  10. As the architect and driver of the revised PFT initiative proposed by the conservatives, saddled the country with a bill of £170bn which must be paid by 2032, without having to include the figure as part of the public sector balance sheet.
  11. Managed to keep the £780bn public pensions deficit off the books, even though this is equivalent to over £30,000 per household and must be paid out of future tax receipts.
  12. Managed, without any consideration of the irony, to lecture people on their level of borrowings, whilst building up nearly £500bn of dept of the governments own ‘credit card’.
  13. Introduced a complicated tax credit programme that managed to lose £2bn every year through fraud and errors.
  14. Left the taxpayer saddled with £1.7bn of Metronet’s debt having been the person that pushed through the Private Public Partnership initiative for the London Underground.
  15. Managed to convince the public that local authorities are responsible for the doubling of council tax, whilst actually placing responsibility for all additional services firmly with the local councils.
  16. Managed a real blinder, by camouflaging the inflation rate by changing the measurement from RPI to CPI.
  17. Underwritten £17bn of debt for Network Rail, without having to include it on the public balance sheet.
  18. Survived the embarrassment of claiming in March 2006 that 31,000 government employees had been trimmed off the payroll, whilst the Office for National Statistics claimed one month later, that the headcount had actually increased by 62,000 a difference of 93,000!
  19. Managed to introduce such a complex set of rules and regulations, designed to extract maximum tax take, that the annual Finance Act  (summary of tax changes in the budget) has increased from 300 pages or so in the 1980’s to over 10,000.
  20. At a time when businesses are struggling and people are having to tighten their belts, presided over a government that has some 78 acres of empty space if office buildings and grace and favour homes.
  21. Managed to push another 3.5m people into the higher income tax bracket, using a favoured trick of ‘fiscal drag’, where the tax threshold is raised more slowly than earnings are rising, so that workers end up paying a higher proportion of their income in tax
  22. Twice shifted the timing of the ‘economic cycle’ in order that the so called “golden rule” would not be missed, resulting in a brazen massaging of the figures.
  23. Ensured that there are now twice as many tax collectors as there are nurses, demonstrating firmly where the government’s priorities lie.
  24. Managed to convince people that they are “better off under Labour” even though each family pays more than £5,000 in extra tax, compared to 1997.

I could continue, but there is a real risk that this page would just take too long to load. Perhaps I should keep a copy for Gordon Brown’s ghostwriter!

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Fuel Poverty – The case for creative thinking and solutions

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Within the UK, there is no denying that there are a high number of people in fuel poverty. These include ordinary families on low incomes, pensioners, lone parents, the unemployed and those with long term disabilities and registered as unable to work. In fact, the problem is so large, estimated to be some 4.5m, that the government cannot wave their wand and make the problem go away. That is the long and short of it.

Union leaders and Labour MP’s can huff and puff as much as they like, but the harsh reality is, this government has squandered much of the income it has gained as a consequence of the economic boom, higher taxes and borrowing. This means that the cupboard is bare. The union leaders crying foul, are the same people that fought and succeeded in getter higher wages for their members and in the process, supporting this government. The MP’s bleating, are the same ones that thought the gravy train of higher taxes, followed by waste, was okay. They have themselves, New Labour values and specifically, this government to blame. So there is no point trying to convince us that you are fighting for the ‘people’ when you are as guilty as the rest for the position we all find ourselves in.

It is time to stop the whining and start thinking creatively. It is time to forget trying to fleece the ordinary taxpayer that has spent the last 11 years supporting those that cannot or will not work and propping this government allowing them to claim that they have successfully invested in our services, whilst failing to demonstrate any real tangible benefit to the majority.

The Labour government typically throw money and/or resource at problems in the hope that it will fix the problem, or at least provide a brief respite, perhaps with some good headlines. Their spendthrift ways have lumbered this country with an enormous mountain of debt, which includes official borrowings of £450bn and another £170bn that needs to be paid between now and 2032 on PFI schemes. This ignores the £800bn or so shortfall in government pension schemes. In fact, it is an utter mess, and demonstrates what a tardy bunch this government is. Many of the foolish press barons have hailed Gordon Brown as a prudent or successful chancellor, history will judge him differently.

With nothing in the kitty, ‘working’ taxpayers are so highly taxed through direct, indirect and stealth taxes introduced by this government and with realborrowings at an all time high, there is little room to manoeuvre, even for a government adept at screwing every last penny from the rest of us. Now is the time for new ideas, a bold approach, creativity and above all honesty.

Windfall taxes are a ‘one off’ short term measure with long term consequences, given the energy companies will get the money back somewhere, either by reducing necessary investment, increasing energy cost for the majority, or, most likely a combination of the two. Similarly, throwing money at the problem, assuming we had any, in the guise of fuel credits is knee-jerk and would then be expected every year. The answer is investment in ways to reduce energy consumption through insulation, energy saving appliances and bulbs and other such measures. Estimates suggest that these measures could reduce our energy bills by up to 35%.

The government should encourage the energy companies to invest their carbon credits in the UK rather than elsewhere. They should be incentivised, rather than bullied into offering more support for the Warm Front programme and the government should put back the money they withdrew from the scheme. The energy companies should, however, be forced, by legislation if necessary, to offer the so called ‘social tariffs’ to all those in need and should be prevented from charging higher tariffs for meters on non-direct debit customers. The energy companies have dragged their feet on social tariffs and the penal rates they charge people who use pre-payment meters, this in unacceptable. The regulator should be given more powers to mandate and control issues such as access to social tariffs as well as price rises.

The government then needs to be more creative. Lets face it, at a time like this, everyone needs to pull together. Those in fuel poverty should be encouraged to help themselves, not simply come along to the government expecting more money, which the rest of us will have to pay. Ordinary working families, whether they fall inside or outside the fuel poverty trap are feeling the pinch. Many have had to reduce their expenditure on non-essentials in order that they can meet the higher fuel prices, higher costs in getting to and from work, higher food prices, higher mortgage costs and higher local taxes. They too are suffering, even though they are working, some, many have had to also take on a part-time job in order that they can meet their obligations and keep their head above water. What of these people, the taxpayers that make it possible to support so many that are not working or are retired, don’t they matter?

No solution is going to be perfect, but you can be damned certain, that chucking borrowed money that this country doesn’t have at the problem is going to be much worse. Here are some ideas the government could consider.

  1. Determine which of those in ‘fuel poverty’ are capable of helping themselves with government assistance or encouragement and which are not.
  2. Allow those on fixed incomes, such as lone parents, disability allowances and the unemployed to take on a part-time job (stacking shelves, land work, cleaning houses etc) and retain the income, free of tax, national insurance and, most importantly benefit deductions. The limit for this extra income should be set at a level equivalent to what the government believes is the additional cost of living as a consequence of food and energy increases.
  3. Allow those in ‘fuel poverty’ and in receipt of some form of ‘tax credit’ to earn an additional income through a part-time job, free of tax and national insurance, albeit up to a pre-determined limit, set by the government or better still, experts!
  4. Remove VAT and any other forms of duties on items that are routinely used to save energy, such as, energy saving bulbs, insulation, gas boilers and so on.
  5. Reduce the amount of paperwork pensioners have to complete in order that they can take on a part-time job. Provide them with an additional ‘work credit’ whereby they can earn up to a pre-determined amount, free of tax and national insurance contribution, without affecting their pensions. Increase the work credit by an amount equal to each allowance they do not claim, such as the ‘winter fuel payment’, the savings could be reinvested.
  6. Stop paying the winter fuel allowance to pensioners that no longer reside in the UK and reinvest this money into support for the most needy or energy saving measures.
  7. Provide, if necessary, secured short-term, interest free loans to private landlords, housing associations and local authorities to allow them to bring properties under their control up to acceptable standards in terms of energy efficiency. – A large proportion of homes that need upgrading are in the private sector.

The policy of assuming that there will always be enough taxpayers that can be fleeced to support those that are actually capable of helping themselves in times of need has to stop, it is not sustainable. Yes, if they cannot work, through a genuine disability, age, or lack of mobility then we should offer support, but if they can help themselves, why should they get away scotfree whilst the rest of us pick up the tab through higher taxes and having to take on extra jobs? It is time to view the so called priviledged not as a gravy train, but as the conduit through which those less fortunate can have a better existence.

The truth is, many of those that are capable of helping themselves, probably would if they are in dire straits. However, New Labour has exercised and grown this culture of state intervention, the government will always come to the aid of those less well off. Little or no effort is put into finding out whether they can or are willing to help themselves. If someone on benefit tries to get a part-time job to cover the additional energy costs, they can expect to lose the equivalent amount in state benefits. Why, where is the incentive? I am not suggesting that we should let people abuse the system, just that they are encouraged to help themselves, within limits that relate to their assessed additional needs.

Similarly pensioners are penalised if they work part-time. Clobbered with paperwork and additional taxes, encourage them, don’t penalise them. Government should look to incentivise, cajole and if necessary bully people into helping themselves, rather than transferring the burden onto overburdened taxpayers who are suffering just as badly.

Okay, I accept there are flaws and risks in some of my suggestions, but then I am not an economist or a civil servant. What I do possess is commonsense and a desire to be constructive in my criticism, the former is something the government lacks and the latter something the opposition parties lack. At least my suggestions are a start, perhaps those better qualified than myself can come up with working proposals that encourage those that need help to do more for themselves, thereby reducing the burden on existing taxpayers already facing pressure on their own finances.

 

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