How The Poor Got Richer

They've never had it so good

You'd never guess it from the constant wailing of the poverty lobby, but over the last half century the poor have got a whole lot richer.

A standard measure of poverty is net income of the poorest 25% of households (specifically, the bottom quartile point). And as it happens, the Institute for Fiscal Studies have recently published a compilation of the official figures going back to 1961 (obviously it's far too much to expect HMG to publish its own compilation). They have helpfully adjusted the figures for inflation so we can see the underlying trends in real income.

The figures show that the real income of this poorest group has approximately doubled since 1961, an average annual growth rate of 1.4% pa (ie the growth in income at the bottom quartile point).

In fact, it turns out that in real terms the bottom 25% are now considerable richer than were the top 25% in 1961*.

Just think about that.

Tyler remembers 1961 very well. His family were most definitely not in the top 25%. They had no car, no TV, no phone, no fridge, no central heating, and certainly no foreign holidays. Yet in truth they did not consider themselves poor. His father was earning the average national wage in manufacturing (£16 pw), and the Tylers were all housed, fed, and clothed. Not what anyone could call dollar-a-day out and out poverty.

But the top 25%, wow, they were living the life of larry:




So what we're saying is that the bottom 25% today have a higher real income than those people in the 1961 Saab 95.

How on earth can that be called poor?

As we've blogged many times, poverty as defined by the poverty lobby and the government today is miles away from what most of us actually think of as poverty. Today's poor have material resources way beyond those of the affluent middle classes back in the days of SuperMac and never had it so good. And even further beyond what Tyler and millions of others knew as children.

Ah yes, I know - the world has changed since 1961. Everyone's so much richer today. Virtually every household has a telly, a fridge, a telephone, and central heating. 75% have a car. Having those things may have made you rich in 1961, but these days it's a given. You can have all of that and still be poor.

Except of course, you can't. If you're housed, clothed, fed, and in possession of a fortune in consumer durables, then sorry, you are not poor. By both historic and international standards, you are in fact pretty rich.

And as Iain Duncan Smith sets about his much heralded welfare reform programme, he needs to remember that. Poverty in Britain was conquered long ago.

Yes, there are plenty of people who live sad dysfunctional workless lives. But that's nothing to do with lack of material resources. That's to do with poor education, destructive personal behaviour, and our grotesque level of welfare dependency. None of which will be solved by yet more welfare cash.

Which is why we have long argued for reformulating our definition of what constitutes poverty. Ideally, we'd like to switch to an absolute standard of poverty such as they have in the US. But if we have to stick with a definition measured relative to median income, we'd settle for dropping the current poverty line at 60% of median income, and switching to a 50% line.

Why?

First, because we estimate it would save £20-30bn pa from the current welfare bill. And second, because it would increase the attractiveness of work relative to welfare (ie it would make the poverty trap problem a whole lot easier to solve).

And as it happens, Tyler has recently been working on a TPA paper on precisely this issue - watch this space.

*Footnote update - Tyler has quite rightly taken to task for slack use of statistical terms in this post. Matthew T has spotted that our figures for the bottom 25% and the top 25% relate not to the average income of those two segments of the population, but to the quartile points - ie the income of the 25/100th  household in the distribution. So all we're showing is that the 25/100th household in 2008-09 is now richer than the 75/100th household in 1961. It's a fair cop, but we'd argue the 25th percentile point is still a widely used "breakpoint" between the poor and the not poor. We'll do some more digging within that bottom 25% when we have a moment.

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www.gudanggrosiran.com Categories: poverty, welfare

Hot Date in the Forest.

                       Sometimes we don't meet for a year, but when we do, it's one date after another.

We staked outside Heeren for Man Hunt 2010. 

No more a boy, not yet a man.

They were in itsy bitsy shorts that drew a lot of male onlookers. Don't ask me why, but if only that photo i took of the crowd was clear, i'd upload it. 80% of them were males, with 20% of them armed with huge ass cameras. I don't think it meant anything though *cough*, i think they were just passer-bys. Except this one short bespectacled man in his thirties who was grinning away to himself when the contestants paraded topless.

The next night she again introduces me to something naughty.

The very potent appletini at Mortons.

Then we did something that was a first for us. A double date in the forest. Singapore is growing with expats, i love reading blogs written by them because i get a perspective that i don't otherwise see! They even have some ingenius ideas for things to do in Singapore that i never thought of! This date idea, was inspired from Singapore Tourism Board's website. So we trooped down to Bedok Reservoir.

What was unnerving yet exhilarating at the same time was that there will be no instructor on board with you throughout the entire course. Imagine if you strap on wrongly, miss your footing or strap on loosely...

its THE.END

So we paid extra attention during the group briefing before setting off. That lasted for 5 minutes, before we started monkeying around like naughty students. Each "group" holds abot 20 "climbers", but quite frankly, you complete the course at your own pace, that so long as there's more than one in your personal group, you really feel exclusive on the course.

Initially, i thought it was one massive course across the entire reservoir, literally on tree tops. So we were alittle disappointed when we arrived only to see ladders sparsely located around the vacinity. Boy, do you not underestimate this layout!

There are in total 4 sites of challenge. Each site has a series of high ropes. They're not joined to form one big thing per say. You enter each site by climbing onto the highest point, get across and then exit via a flying fox. You land, then its onto site 2 and so on.

Go WITHOUT a trace of make-up, because you'll be perspiring ALOT. I'd say it's for resonably fit people, then again there're children, mums and a 60 year old grandpa doing it. It's fun, challenging and such a good workout that i strongly encourage anyone sporting to spend an afternoon there. It's $36 for the entire course (take as long to complete it but it usually takes about 2 hours).

Here's what you conquer. First, you climb up a ladder that takes you as high as a medium sized tree.

The flimsy ladder can overturn, and you'll hang in an awkard position. Just stick your body close to the ladder, shift your weight and flip yourself back with a little effort.

I know this looks scary, but trust me, this IS the simplest!

See, she can even pose even balancing on precarious tight ropes! I too, can even be camera woman while strapped on.

This was the most challenging yet most fun! Do note that there is no turning back once you've embarked on the obstacle. No one can help you turn around or get down. Unless you want to climb down the tree literally, or wait for the fire department to come rescue you like how they save pussies stranded in trees.

You don't want to be a pussy.

So you complete obstacles like these...

The most exhilarating activity, other than the zipline was jumping ACROSS FREE FALL onto this

spider web.

It takes alot of nerves, i assure you. Even to go down the zipline, you'll check your hook, your straps a gazillionth time. I don't want to fall to death.

I'm proud to say we all completed the obstacle course, no one was a wuss. It's such a great activity to do for young and old. Even better was, even those who are not participating will not be excluded. Parents who signed up their children, can still stay close, cheering down from below, taking photos as they come zipping down.

She couldn't stop thanking me for inviting her into the bush this afternoon, but really it was she who made it all worthwhile.

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www.gudanggrosiran.com Categories: bedok reservoir, treetop adventure

Laugh Monday Blues Away

I know i've missed a couple of Mondays, but it really ain't that easy narrowing down really funny ones as I usually chance upon them. I only want to put quality laugh-out-loud material, thus pardon me for the lack of it. Today's post i'd say it's quite a feeble attempt at laughing out loud, but still...let's laugh at someone else's expense :P

Petticoats have been invented as an undergarment for ladies. They're usually in not-so-flattering colours like 肉色 (beige) that is often associated with granny panties. Thus Singaporean girls don't use them as much, and would rather wear g-strings under white skirts, flashing their butt cheeks.

Vanessa Williams, the famous tennis player, however re-defines the use of petticoats.

I guess her's is really 肉色 (skin colour).

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www.gudanggrosiran.com Categories: funny

How To Rebalance The Economy

Set my people free

Yesterday Cam gave his first major speech on the economy as PM. It contained much that was good: cut the deficit, cut red tape, stabilise the banking system, improve our schools, reform welfare to make work pay, fight protectionism.

Yes, a big tick for all of that.

But his speech included another bit. One that we're not nearly as comfortable about.

It starts off fine:

"Today our economy is heavily reliant on just a few industries and a few regions – particularly London and the South East. This really matters. An economy with such a narrow foundation for growth is fundamentally unstable and wasteful – because we are not making use of the talent out there in all parts of our United Kingdom.

We are determined that should change."

Yes, good - we all agree that must change. Our depressed regions have remained depressed for far too long, and we have always believed they have huge potential (eg see our posts on the city by the bay).

But it's Cam's next bit that makes us wince:

"That doesn’t mean picking winners but it does mean supporting growing industries – aerospace, pharmaceuticals, high-value manufacturing, hi-tech engineering, low carbon technology. And all the knowledge-based businesses including the creative industries...

An early task will be to reform and refocus regional support and the RDAs. And Yorkshire is a priority...

Support from government, civic leadership, business investment and expertise – this is how we’ll help to rebalance our economy across the country. And there really shouldn’t be any limit to our ambitions.

Let’s make Humberside lead the world in carbon capture and storage. Let’s make Bristol a centre for marine energy parks. Let’s make the Mersey a global trading centre once again..."

Oh, Dave. You're sounding soooo horribly familiar.

It's H Wislon with his catastrophic Selective Employment Tax to boost manufacturing, Heath with his expensive lame ducks waddling themselves onto the public payroll in the name of industrial policy, Uncle Jim with his zillions poured into hi-tech industries of the future scrapheap (see this blog), and even St Maggs with all that cash poured down the gullet of BL. And as for Brown with his money burning Regional Development Agencies, R&D tax credits, etc etc, we don't even want to remember it (and er, Dave... weren't you going to axe the RDAs at one point???).

But look, Mrs T has given Tyler strict instructions not to carp until at least we've seen the budget. So we won't.

Instead, let us praise Cam's good intentions, and his sincere wish to help the regions. And simply make a helpful suggestion.

The best way to help our struggling old industrial cities would be to set them free. Slash taxes and regulation and watch private sector entrepreneurs do the rest. Instead of some hugely expensive and ultimately doomed attempt to force Hull into being the world leader in carbon capture and storage, set the city free. Give it charter status and watch it go. As we blogged in February:

"Given its prime location facing Europe, we've long believed Hull has huge potential, and yet it has failed dismally to exploit it. Suppose it became our own version of a Charter City - minimum wage and working hours regulations abolished, social benefits for working age citizens abolished (maybe a 5 year phased withdrawal), central government economic and planning and regulations abolished, no more central government development assistance but a 10% flat rate income tax, 10% Corporation Tax rate, and no capital gains tax.

Public spending as a percentage of GDP would obviously fall sharply, and those that depend on public spending would certainly feel the squeeze (although social welfare recipients could be given the option of staying on benefit if they relocated outside the City). But against that, Hull would attract entrepreneurs and private investment on an unprecedented scale - and with its easy European access, much of the inflow would come from overseas. There would soon be jobs for all.

Yes, yes, of course. We can't do it because of the 53rd EU Directive on not doing stuff. And there's also the question of human rights. And anyway, we might end up with all kinds of Coketown beastliness, and children being sent down the mines. And... well... anything might happen... it's impossible to predict.

Yes, yes, we know all that.

But have you ever been to Hull?

Do you honestly think faster trains and better broadband are the answer?"

Please Dave - think radically. The people trapped in all those bombed out places far from Notting Hill deserve it.

PS As for Laws, just how depressing is that? Here's a guy who seemed a perfect example of cometh the hour cometh the man. We've been hugely impressed. And now we find he's just like all the rest. I'm frankly amazed he says his cover-ups and lies were because he didn't want the world to know he's gay. I thought the world already knew - we certainly all did. And nobody cares about it one way or the other. But what we do care about is him wangling his expenses. Depressing.

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www.gudanggrosiran.com Categories: lame ducks, regions

New TPA Vid

To coincide with this Year's Tax Freedom Day - the day when Britain stops working for the government and starts working for itself - the TPA has launched a new vid showing how the tax burden grinds down one young worker.

Starting work at 9am, it isn't until 1.21pm that he's earned enough to pay off the government. Only then is he free to work for himself.

PS Don't believe the TPA's numbers? Tyler is 100% confident they are spot on - largely because he was the one who calculated them. And in truth, he'd have gone further. Because if you add in the government's borrowing - which after all, is nothing more than deferred taxation - you find that our typical worker is still working for the government right up to 3.10pm (assumes 30 mins lunch break). Is it any wonder everyone's so stressed at work?

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www.gudanggrosiran.com Categories: tax, TPA

Perspectives.

I was staring at this, deciding if it looks obscene or not.

Got my answer when i flipped it over. Be imaginative :P

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www.gudanggrosiran.com Categories:

WTF Do They Think They Are?

By far the best QT ever

We try to stay off the BBC - no, really, we do - because it pushes our blood pressure into the stroke zone. Which is why we also steer well clear of Question Time.

But last night Newsnight led with the same lengthy tabloid report on the murdered prostitutes (sorry, "sex workers") we'd already seen about 20 times elsewhere. So we flicked across to QT. Just in time to see one of the Lord High Dimblebys passing judgement in a serious case of contempt of the BBC.

It seems the new government had had the temerity to refuse to provide a cabinet minister for throwing into the pit. Not unless the BBC replaced the odious and never elected Ali Campbell as the Labour fighter with a proper Labour front bencher.

Puffing himself up to his full height, Bimbleby intoned that that Question Time "expected" to have a government minister dancing attendance, and that it is up to "us on Question Time to decide who should be on the programme not Downing Street".

WTF?

These arrogant cosseted people are employed by a £3.5bn quango that increasing numbers of us simply do not want. Their agenda is unremittingly that of the Guardian and points left. They are a major statist roadblock to the kind of progressive reforms we would like to see.

QT itself - which incidentally normally attracts well under 3m viewers - is a bearpit with a packed audience of young lefties. Campbell is a notorious spinner of untruths who has done more to undermine confidence in our political system than any number of duck islands. WTF would any sane Tory cabinet minister volunteer to enter such an arena?

The Major has long argued that the next Tory government should deal with the £3.5bn pa BBC. Ideally, the whole shooting match should be broken up and privatised. Failing that, it should be hacked back to one TV channel and one or two radio channels, funded out of general taxation rather than a ring-fenced tax of their own.

Meanwhile, our new government should be much more selective in taking up requests for ministerial interviews. They should say yes to Sky and ITV - who are both far more balanced in their approach - and no to the ritualised abuse handed out by the likes of Dame Paxo. Let's see how the BBC likes that.

PS Apologies for no blog yesterday. I actually intended to blog Iain Duncan Smith's much trailed welfare speech. Unfortunately, the accompanying paper contained little that is a new - it's more a restatement of the problem. Instead, we'll take a look at the National Audit Office Report on Labour's Pathways to Work programme introduced in 2003/04 to cut numbers on incapacity benefits. The NAO reckons it's given “poor value for money”. It said that private companies and charities hired to deliver support to get people off incapacity benefits had “universally under-performed”, delivering results no better than those achieved by job centres. It said Pathways “had had a limited impact and, while a serious attempt to tackle an intractable issue, has turned out to provide poor value for money”. Getting ripped of by private sector welfare-to-work providers is a real issue with these schemes, so the full NAO report will be worth a read. We'll report back.

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www.gudanggrosiran.com Categories: BBC

OECD Tells George To Brace Up

That's where 13 years of Labour leaves you

The OECD published its six-monthly World Economic Outlook today. And you know what? It's not all bad news.

They say that world growth is picking up faster than they expected last time, and it's been driven by China and the other emerging economies, rather than by yet more fiscal blow-outs here in the West.

So world trade is picking up again, and basket economies like the UK have a real chance of earning their way back to solvency.

Right, that's the good news over with.

The bad news is that when it comes to government borrowing we are still the worst economy in the whole of the OECD, bar Ireland (see chart above). The OECD forecasts that HM Government will borrow 11.5% of GDP this calendar year, and a further 10.3% next. Which compares with the laughably optimistic figure of 8.5% forecast by Darling for 2011-12.

The OECD's assessment?

"A weak fiscal position and the risk of significant increases in bond yields make further fiscal consolidation essential. The fragile state of the economy should be weighed against the need to maintain credibility when deciding the initial pace of consolidation, but a concrete and far–reaching consolidation plan needs to be announced upfront. While monetary policy should remain expansionary over the forecast period to support activity against the background of low levels of resource utilisation, the process of normalisation of interest rates needs to start soon in response to the expected gradual rise in underlying inflation."

Translation: public sector borrowing needs to be gripped soonest; George needs to announce a quantified plan for getting the public finances back in the black and keeping them there (aka a new set of explicit fiscal rules); the Bank of England needs to increase interest rates now before inflation balloons completely out of control.

Oh, and George will also need one of these:

PS The more we hear and see of young Mr Laws, the more impressed we are. We thought he was pretty good under fire in the Commons today, and in matters fiscal, he seems a whole lot drier than many a Tory front bencher. Hopefully he'll provide some much needed resolve when the shooting starts for real. We like him.

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www.gudanggrosiran.com Categories: cuts, growth

Tackling The Welfare Problem

"My Government’s legislative programme will be based upon the principles of freedom, fairness and responsibility...

The tax and benefits system will be made fairer and simpler... People will be supported into work with sanctions for those who refuse available jobs and the timetable for increasing the State Pension Age will be reviewed."

Thus spake Her Majesty today.

As we mentioned a couple of days ago, the welfare bill is now running at £200bn pa, around 15% of GDP, and increasing rapidly. The chart above shows how it has soared over the last century since the Liberals began the huge expansion of welfare just before WW1.

And under successive governments since then, it's grown into a serious problem. The blunt truth is that we can no longer afford it, and Dave is quite rightly set on cuts.

But what cuts? And how can we cut without having people starve in the gutter?

Here's how that £200bn breaks down between the three key "client" groups (2008-09):

• Old people - £90bn, mainly in the shape of the state pension.
• Sickness and disability - £40bn, including the 2.5m people of working age who are on those notorious incapacity benefits.
• Families and children - £30bn, plus another £20bn in the form of tax credits which also largely goes to them.

The remaining £20bn goes mainly on housing, spread between all three groups. Unemployment support comes in at just £5bn - the rest having been redefined as something else.

So what to cut? In truth, there are no easy answers, and there will inevitably be losers. But the current level of welfare benefits is targeted on 60% of median income, which is now around £23,000 pa*. By no stretch of the imagination is that starving in a gutter, and given our dire fiscal straights, a 60% target is no longer sustainable.

And all those old people are going to have to be even older before they can retire. Given their increasing tendency to have 100th birthdays, the state pension age is going to have to rise to 70 soonest. Because if Her Majesty can still work at 84 - and wear that huge crown - working to 70 without the crown ought to be a breeze for everyone else.

The poverty line redrawn at 50% of median income; state pension age raised to 70; and forced sterilisation for anyone who has children they can't afford to support. Well, no, OK, the last one was the Major's and might not make it through to the final programme.

Nobody would start from here, but Dave does sound like he might be ready to take some real decisions. Let's hope he gets on with it.

*Footnote - The government's poverty benchmark is median household net income on an equivalised basis. Que? That's median household income, adjusted for household size and composition (equivalised), net of income tax and National Insurance, and gross of social security receipts (for more detail see here). Gross of social security receipts? But surely that means the target is chasing its own tail, and the higher the government makes social security, the higher will be the poverty benchmark, and the higher will be social security payments to close the gap, and the greater will be the cost. Well, yes, that's right - it's one of the very many bonkers features built into our current system of poverty relief.

PS So what does the Imperial State Crown actually weigh? An incredible 32 ounces. All set with 2,868 diamonds, 273 pearls, 17 sapphires, 11 emeralds, and 5 rubies.

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www.gudanggrosiran.com Categories: welfare

Absolutely Free

Free fountains for all

On BBC R4 Today this morning they discussed the imminent move by the Times to charge £1 per day for access to its online edition. You and I know there's no way we'll now start paying for Finkelstein and the rest of the Times output, and the BBC clearly agrees. Which will be great news for the BBC themselves, whose audience/readership should get a big boost. As Evan Davis chirped in his link to the subsequent item: "here's a review of the papers, and it's absolutely free".

Yes, ladies and gentlemen, absolutely free.

A single phrase that precisely captures the BBC's approach to public spending. Public spending is free, so cuts must be a bad thing. More is good, and less is bad.

Yesterday's Newsnight was a classic. It kicked off with their Trotskyite economics editor frowning his way round Westminster, and telling us how the cuts will bring massive job losses (he's clearly cranking up to announce the final crisis of capitalism). That was followed by a lengthy report from a sun-drenched Sheffield, where billions have been spent on public sector jobs and those arty fountains that spurt up unexpectedly from pavements for drunken unemployed teenagers to run through (vid). The message was the same - the cuts will extinguish the sun, destroy this city, and destroy these vulnerable lives.

Not once did anyone mention that fact that all those jobs and pavement fountains are not actually free, but have to be funded by taxpayers. That the cuts are not being made for fun - some evil Thatcherite whim to punish the poor - but simply in order to get the books back into some vague approximation to balance.

No mention of the fact that spending money on things that cannot pay their own way means taxing things that can. And that when you tax those things, you weigh them down and make it more difficult for them to succeed. Or that returning to prosperity depends on stimulating the things that can pay their own way - ie the private sector chasing private profit.

Of course, the tax-funded BBC doesn't have to worry about such tiresome details as paying its own way. They get £3.5bn from us whether or not we like what they produce.

Which means they don't have to charge for use.

But free it ain't.

PS As we've said many times, for those of us who believe in smaller government, the BBC is a major roadblock to progress. Like all the big public sector institutions it is impossible to reform, so breaking it up is the only option. Some had hoped that a Tory victory might have secured early action, but there's not a prayer now. We'll just have to keep plugging away for a brighter tomorrow.

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www.gudanggrosiran.com Categories: BBC, cuts

Nokia N900

Humans are said to be known for not having enough for material things—yeah, I’m one of them so I should agree. For about 2 months, I’ve been eagerly eyeing this one of the latest from Nokia’s Nseries, and I’ve spent quite sometime looking for obviously a cheaper deal (I have heard it still is around 30 thou in the Nokia Philippines store). I was almost scammed on eBay during that process, and I rightfully won the claim and got a full refund (thank you, PayPal). The seller still told me he or she shipped the item and I could either pay for it (duh, after that long process and worrisome nights?) or return it to him or her. If that’s true, then I might be getting another N900 next month. Thinking of customs charges and other fees, I don’t think I’m getting that 450 USD worth mobile. I got the refund, period.

Anyway, I got what I wanted through a local store online. I just had some problems dealing with them through the phone, but everything went smoothly as they’ve stated. Got it in a so-so price, and my budget was just enough. The package I chose included an 8 GB micro SD and shipping insurance. I was really excited to open the box since Sunday night and I kept dreaming of using it. The reviews were astounding, and as compared to Apple Iphone 3GS, it is said that this one’s better (I was also aiming for that 3GS thing, but I decided not to since I’m not a Mac person). Air21 delivered it at around 9 am something, and here are some of the initial unboxing photos (taken by my former favorite smartphone, Samsung Touchwhiz F480):

              Here’s the opened box and all its contents (not in particular order): N900 phone, charger (with micro USB converter), CA-101 USB data cable, headset (with extra earplugs), manual (in color and one of the thinnest Nokia manuals I’ve ever had), BL-5J battery, video-out cable, cleaning cloth and the 8 GB micro SD (meaning they’ve already opened the box before I received it! haha).    

 

So I got the phone opened and inserted the Smart SIM I’ve had for ages, removed this black plastic cover and saw its shiny shiny touch surface":

 

 

 

 

 

 

 

 

Then I turned it on for the first time in my hand and yeah, it was like this:

This is the back part. I liked it since it’s Blue in color (my favorite).

And so, for the next few hours, I can’t stop exploring it. :)

Took this photo hours and hours after. This is the cover of the box, and it’s somewhat embossed. Pretty cool.

 

 

 

 

I cannot add a detailed review here because you can see more specific and technical reviews in the net. What I achieved so far is using the stylus and avoiding my fingers to touch and touch (I was trained with my Samsung smartphone to only use my fingers since it has no stylus), connecting it with WLAN through ad hoc connection with my Acer laptop, using it with PC Suite 7, downloading apps and widgets for it through WLAN again, connecting my social networks to it, adding VoIP and IM accounts, setting up my 3 mails, watch a Youtube video through its Maemo browser, playing a full touch screen tetris game (haha), taking photos and videos, abusing the micro SD by loading it up with music and videos, using Firefox as browser there, listening to radio, synchronizing contacts with my other Nokia phone, receiving and sending files through Bluetooth, getting used with the QWERTY keypad, personalizing the phone and counting.

After long hours of spending time with it and draining its battery, I think now I’m already satisfied. Now I’m not really into the phone. Maybe one of these days I won’t be using it for a day or two. The phone hype is over. Till next year, I guess.

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www.gudanggrosiran.com Categories: Web/Tech

A Decent Downpayment

No wonder they always wanted him to join the Tories

You'd hardly know it from the BBC and C4 News, but the Osborne/Laws £6bn cuts represent a really decent start in rescuing us from Labour's fiscal catastrophe.

Even more encouraging, many of the cuts have been lifted straight from the TPA's list of recommendations. In fact, adding up list, we reckon almost £5bn of the £6bn came from the TPA/IOD £50bn cuts proposals published last September. Which means they've still got another £45bn's worth already identified and ready to roll.

Naturally the BBC and C4 line is that the cuts will cost countless thousands of jobs, and risk plunging us into the Great Depression Mk II. C4 even ropes in notorious left-wing economics campaigner Danny Blanchflower as support.

But as we've blogged many times, the real risk we face is that the markets lose confidence in our resolve to tackle the deficit and ramp up our borrowing costs. And on that score, the Osborne and Laws show is proving a real hit. In fact, since that post-election sweat when it looked as if Brown might somehow cling on, the market has reduced the rate at which it will lend to HMG (25 year gilt yields are down by almost 0.3% to 4.2%).

Yes, of course, £6bn is a drop in the ocean. But we do need to give credit where it's due. And this does suggest a serious resolve.

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www.gudanggrosiran.com Categories: Coaltion, cuts

Taking Arms Against A Sea Of Waste

£150 to you

George's Treasury has apparently put together a waste dossier.

We say apparently because, although it has been sent to all the important journos, it has not been officially published so we humble taxpayers can take a look for ourselves - so much for the promised public spending transparency.

Anyway, the S Times reports its copy thus:

"A Treasury audit of Whitehall spending, which was carried out over the past week, has revealed how officials spend £125m a year on taxis, £320m on hotels and £70m on flights.

The audit also reveals that the government spends £580m a year on office furniture, £1 billion on advertising and £700m on other marketing and media.

[The] audit has revealed widespread waste where different British government agencies operate out of separate sites in the same city. For example, £20m could be saved by merging four offices in Abuja, the Nigerian capital, occupied by the high commission, the Border Agency, the Department for International Development and the British Council.

Even ministries whose overall budgets will be ringfenced are having to find cost savings, which will be reinvested in frontline services. The Department of Health, for example, is expected to end its £275,000 funding of dance classes and competitions."

Which all sounds like stuff that really must be chopped. So good.

And in truth, BOM readers don't really need to see George's report on waste - we've been tracking this stuff for years. We've also had access to regular input from actual real live public servants, some of whom - it may surprise you to hear - are just as appalled as we are about how taxpayers' money gets squandered.

As it happens, one emailed last night. We're witholding his ID, but he says:

"I work in a government department and cannot believe the amounts of money being spent. For example we recently had to convert a small office and a small store room in to a single conference room. It required the removal of a partition wall, a bit of paint and a bit of wiring. It costs £250,000.

This week we found out that the little metal "desk tidies" that we use to file forms, etc on our desks cost £200 apiece, and every desk has two of them! How can they cost so much?

A bolt was fitted to our finance office door - a basic bolt, nothing more than what you would put on a shed. The cost? £150!

Then we had to refit a floor of another office for new claims (because of the recession). The total floor space was probably (and I'm estimating) around 1100 sq ft. A bit of paint, about a dozen desk and dozen computers. Cost, £1 million. How? [For a clue see this blog]

My problem with any new government is they'll appoint people at the very top who know nothing about the workings of their departments. The frontline do know how money can be saved, but I am in a minority of those people who realise and accept that massive savings can be made."

Our correspondent has just put his finger on something very VERY important. The truth is that most of our government bosses don't have a clue what's going on below decks.

Consider.

George certainly wants to cut waste - of that there can be no doubt.

But so did Darling.

And so did Brown before him.

And Clarke before him.

And Lamont before him.

Etc etc.

The trouble is, they don't really have the knowledge to do it.

Even worse than that, big government is by its very nature wasteful (see this blog for how the Clerk of the Acts to the Navy Board found things in 1662).

Which is why we believe the only long long-term solution to government waste is to break up government itself. Choice and competition are key to managing waste.

Bosses need to be driven to investigate what's happening below decks by the sure and certain knowledge that if they don't, they will be swept aside by competitors whose bosses have.

Yup, I agree. We can't do that for defence, or law and order, or a few other things.

But we can do it for education.

We can do it for healthcare.

And we can do it for a bunch of other public services.

And we should.

PS When George announces his £6bn immediate waste savings tomorrow, we'll be checking them off against the TPA/IOD list of spending cuts published last September. You might want to do the same (see this blog).

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www.gudanggrosiran.com Categories: waste

He Is Heavy. And He Ain't My Brother.

1. The beer case for welfare

2. The power of real brotherhood

Listening to the appalled German taxpayers wailing over Merkel's Greek Euro bailout, you can only thank your lucky stars we had the quite marvellous Mr Gordon Brown to keep us out. If it had been left to Bliar, Clarke, St Vince, and the BBC, we'd now be in the Euro and as stuffed as those North Rhine Westphalians.

German taxpayers have also worked out something their politicos won't yet admit - any bailout will simply be good money chucked after bad. There isn't a prayer the Greeks will suddenly become good Lutheran hausfraus, tightening the family belt to live within budget.

And remember this - German taxpayers have recent experience of just how expensive this kind of support can be. The cost of German reunificiation is now put at 1.3 trillion Euros, which was getting on for one year's GDP when the Wall came down. That was much more than originally suggested by the politicos, and in one way or another, most of it came from West German taxpayers.

There was considerable anger about that as well. The industrious Wessies were not at all happy to find themselves milked for years to support the idle Ossies.

But of course there was one gigantic elephant size difference from the present situation - the Ossies were fellow Germans (or as the Major would put it, fellow members of the Master Race). There was a powerful bond of history and culture. They were brothers.

We're not in that situation here. Northern European taxpayers are not going to stand funding a permanent welfare regime for the South. Yes, of course, the political euroclass are wedded to ever closer union, and may even welcome the idea of binding in the PIGS via permanent welfare dependency. But sooner or later, their taxpaying voters are going to rebel. And as things look today, that might be sooner rather than later.

Which brings us to the fascinating session Tyler had with a group of Tory activists last evening. It was a political discussion group, and on the table was the small matter of how we're going to solve our own fiscal crisis.

We spent an hour and a half running through all the main options, and you know the one that generated most interest?

No, it wasn't abolishing quangos. Or cutting public sector pensions (although that did feature). Or scrapping the NHS supercomputer. Or even leaving the EU (although that too did feature).

The single most popular idea was fundamental reform of the £200bn pa welfare system (that's reform as in cutting expenditure). Discussants raised all the various issues we've blogged so often here on BOM - benefits that are so high they are a disincentive to work - even in a high employment town in Surrey - the unfairness of benefit families being able to furnish themselves with 50 inch plasmas that their working neighbours cannot afford, the housing priority given to people who won't help themselves, the ludicrous overpaying for private rental property via housing benefit (the local premium is reckoned to be c20%), etc etc.

Most of all there was a feeling that those who work hard and pay their taxes are being taken for a ride. Nobody minds helping those who genuinely cannot help themselves, but we've drifted far beyond that. As one member of the group explained, benefits are far too high because we've been duped by a bunch of self-serving left-wing politicos who, once real poverty had been conquered in the 50s, invented the concept of relative poverty to save their own political skins. And he should know- he was once a member of the Communist Party.

Who then is my brother?

Well, my brother is my brother, obviously. And most of us feel a natural and strong obligation to help a real brother in trouble.

But the Greeks?

Well, no not really. Sure, they're perfectly nice people, and if they got whacked by a natural disaster, we'd all put our hands in our pockets - there but for the grace of God, etc. But a fiscal crisis caused by years of living too high on the hog, maxxing the credit cards and fiddling the bank statements? That's not something Tyler feels terribly inclined to help with. Lessons have to be learned.

The Germans? Well, we laughed as we listened to some stern looking German politico last night warning that if we don't help them with the bailout costs, it will be the worse for us if we ever need help. We were remembering the last time we wanted their help during the 1992 currency crisis and how they told us to get stuffed (even though as things turned out they actually did us a gigantic unintended favour - see this blog).

Once again, the Germans are perfectly reasonable people, they make excellent cars, and they are people with whom we can very confortably do business. But when it comes to subsidising them, they ain't any brother of Tyler.

Which just leaves those we subsidise and support here at home. Are they our brothers? And even if they are, are we really helping them by incentivising them to spend all day having kids, drinking loss-leading lager, and watching Trisha on the 50 inch?

Tricky.

But probably not that tricky.

What we desperately need is that much promised root and branch reform of welfare, now being steered along by Iain Duncan Smith. Not only should it reduce the weight of all our brother support, but crucially, it must provide some real incentive for the brothers to rise from their butts.

PS Yes, I am quite aware that this kind of thinking is what got the nasty party its name, and I'm not imputing any of these views to party members past or present. Other than Tyler and the Major, that is.

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www.gudanggrosiran.com Categories: euro, welfare

Coalition Checklist

For various reasons, Tyler hasn't got time right now for a full blog on yesterday's coalition manifesto launch. So we've summarised our reading in the handy cut-out-and-keep checklist above.

Overall, there are definitely reasons to be cheerful. They are going to cut borrowing, mainly though cuts in public spending. They are going to cut some taxes - although only at the price of increasing others. They are going to cut red tape, and they are going to publish detailed public spending data online.

On welfare there will be more conditionality and more use of private contractors to get people back to work. But no mention of reverting to a 50% poverty line from the current 60% - the key change to discourage idleness and vice.

In education, we're promised the full Gove, so hurrah for that.

No hurrahs for the health plans - more top-down  direction under a new wrapper.

Fiscal decentralisation? Yes, it's there, and Clegg has assured us they understand the criticality of money - ie unless you dencentralise control over the money, you've decentralised nothing. But we can see nothing on the real issue - decentralisation of tax raising power.

Law and order gets one big tick for elected sheriffs, but nothing for locking up more bad guys (ie the 100,000 villains who are responsible for half of all crime).

There will be an immigration cap on non-EU migrants, but no detail on the tricky stuff like overstaying students.

With the Reich in flames, you might think now is the time to get on with renegotiating ourselves back to a free trade arrangement. Nothing on that.

And the eco-lunacy carries on unabated.

Still, there are some words we can definitely tick.

We'll be filling in the Deeds column as and when.

PS This evening at 7.30pm Tyler will be talking to a select group of Conservative activists about the fiscal choices we now face. It's been organised by that Man in A Shed and will take place at Churchill House, Chobham Road, Woking. Not quite sure what the entry arrangements are, but if anyone wanted to come, I'm sure we could squeeze you in.

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www.gudanggrosiran.com Categories: Coaltion

Larf?

The chippy grammar school boys are on the right... and they still are

Well you've got to laugh, haven't you.

Today Tyler had a rather long, and shamefully liquid, lunch with an old friend from the Treasury bunker. Two old Treasury hands, and two grammar school boys from the old days.

Ah yes, the old days.

The days when public school toffs were not the only game in town. The days when the richest fifth of students were not seven times more likely to be admitted to the top unis than those from deprived backgrounds. The days when kids who were eligible for free school meals (such as Tyler) had a serious chance of making it to Oxbridge and beyond. And the days when comfortable middle class parents (such as Tyler and his friend) did not feel the need to send their own kids to public schools.

Yes, indeed, ladies and gentlemen. Our new coalition cabinet comprises 23 members, of which no fewer than 14 went to fee-paying schools. Eton, Westminster, St Pauls, Charterhouse, Rugby, Wellington - they're all there (although interestingly, not Winchester).

Does it matter?

On one level no. As long as they can do the job, that's all we need. In fact, grammar school girl Mrs T reckons that when it comes to leading a charge into the machine guns, your average toff is a far better bet than your average prole. It's not just brains you see. It's character. Breeding. Bred to lead. And Cam is right out of the top drawer.

But jeeps, what does it say about the state of our state education system?

93% of our kids get educated in state schools, yet state school pupils comprise just 39% of the cabinet.

We know the Battle of Waterloo was won on the playing fields of Eton, but this is 2010, not 1810. As things stand, Tyler and his friend feel like some historic aberration. We benefited from a short burst of sunshine when those at the bottom of the pond had a real chance to crawl out and become butterflies. But now the dark clouds of privilege have rolled back in.

We've said it before, but we'll say it again: the single most important thing our new government must do is to push through Gove's free schools reform. We need the sunshine back again.

Let's hope it wasn't all just blather.

PS Declaration of personal involvement - Tyler knows our new Home Secretary personally. We thought Theresa did a good job at the Police Federation Conference today. The police don't like the idea of elected sheriffs, but Theresa got them to listen by putting it into the context of returning authority to the police themselves, and away from Whitehall. Most people on the right wrote Theresa off long ago. She may yet surprise them. Apart from anything else, she's one of the 9 cabinet members who were state educated, so she immediately gets six bonus points in our book.

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www.gudanggrosiran.com Categories: Education, Schools

Enron Labour

Allow me to introduce the finalists for Labour's Got A New Leader*

Today's revelations of Labour ministers flouting the rules governing the proper use of taxpayers' money ought to shock us.

"Labour ministers rammed through hundreds of millions of pounds of spending on pet projects before the election against the explicit advice of senior civil servants. Senior mandarins throughout Whitehall resorted to the ‘nuclear option’ – writing to demand written orders from ministers because they disapproved of the decisions."

According to Jonathan Baum, General Secretary of the First Division Association, which represents senior civil servants (and of which Tyler was once a member):

‘This is very much a nuclear option in government departments. ...it is very clear that the permanent secretary was very concerned about the spending decision but was overruled by the minister. When a permanent secretary asks for the letter of direction from a minister it is because they feel a serious decision is being taken which they feel is not right.’

We don't yet have all the details of precisely which decisions were rammed through like this, but the bottom line is clear enough - Labour ministers abused their power in a desperate last-ditch attempt to buy votes... with our money. Shocking. Absolutely jaw-droppingly breath-takingly shocking.

And yet... are we really shocked? Can we any longer be shocked by what that appalling bunch did during those 13 abysmal years?

From the very start they lied and cheated their way through office. They systematically abused our trust with their Enronised debt figures, their bubble economy, their illegal war, their fiddled dumbed-down exam results, their fudged crime statistics, their gross distortions over immigration, and their unbridled pillaging of the public purse.

As the indispensable Jeff put it last week (and please do read it if you haven't already):

"Unemployment is higher today than in 1997, as are taxes. The pound is worth less than 13 years ago, as are many private pension schemes. Personal insolvencies are at record levels. Worst of all, the state is borrowing one pound in every four that it spends, and our collective debt is set to double by 2014-15 to about £1.4 trillion, equal to one year's GDP.

The "success" of New Labour's economic expansion was a sham, based on a simple formula: spend more than we earn; pass off consumption as investment; wallow in self congratulation. Through the "boom" times of 2003-2007, all of Mr Brown's budgets involved massive borrowing. He told us we were getting richer, while in effect making us poorer.

In those five years alone, he clocked up £160 billion of debt. These are harsh, unavoidable facts. The legacy of that profligacy will bear down on British taxpayers for generations. As Niall Ferguson, professor of history at Harvard, has concluded, Mr Brown's stewardship of the economy was a "disaster".

But look, we are where we are. It's too late to wish away 1997. The main thing now is this: when the Brothers Millipede next appear arm in arm on the stage, glottal stopping in the limelight, and singing their saccharin ditties of progressive consensus and fairness for all, just remember.

Remember that Labour always always wreck our economy. Remember they always wreck our public finances, and they always leave a gigantic mess that someone else has to clear up and we have to pay for.

There are no exceptions. From Ronald McDonald, to Jerusalem Clement, to Wislon, to Uncle Jim, to Bliar, to Brown, it is always a disaster.

So please - one last time - never ever give them another chance.

PS Today's inflation numbers are once again very unsettling:

All measures of inflation are up, and RPI inflation is now running at 5.3%, the highest for nearly two decades. The Bank of England may still be relaxed about this, but we most certainly are not. Anyone on a fixed income - which these days includes pretty well everyone working in the private sector outside the banks - is being squeezed dry. And as for savers on their 0.5% interest rates, they've been so squeezed they're now little more than a dessicated husk.

And sterling? Well it paused for breath today, but it still looks very groggy. As we blogged yesterday, getting a grip on our public spending problem will be good for sterling in the longer term. But in the short-term it may actually make sterling a bit soggy since lower spending allows the Bank to keep interest rates lower for longer. Of course, if the Bank were suddenly to realise the jolly old inflation genie was out of its bottle again, then rates would go up and sterling would firm.

So what happened to the point that sterling would collapse if we didn't cut spending? Well, it's still there. If George doesn't cut spending, HMG will have to borrow more, a chunk of it from abroad. Which is fine as long as investors remain confident that they'll get repaid, and as long as we give them a good rate of interest. But if for some reason, confidence cracked - like for example, the markets suddenly got the crazy idea the coalition couldn't actually agree on spending cuts - then there'd be a rush for the exit. The point is that currencies are driven by a whole raft of different pressures, and they are just about the least predictable of all the key asset prices: someone once described them to Tyler as "the balancing residual in the global financial system". But what we do know from our own experience is that confidence is key. Which is why these cuts are vital to the value of sterling.

*Footnote Talking of Enron, did you see that the award winning (here) British play of that name (pic above) has just bombed on Broadway. It closed after two weeks losing an estimated $4m. The British theatre establishment are aghast, blaming those low-brow insular Yanks for not appreciating good art. Another explanation goes along the lines of US audiences not being prepared to stump up $120 a seat to watch a bunch of anti-capitalist anti-American propaganda cooked up by a state-funded theatre company from an irrelevant socialist country thousands of miles away. And come to that, who said it was OK for my taxes to be used to put on the play in the first place? If people want to watch anti-capitalist anti-American propaganda, fine. But they should pay for it themselves.

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www.gudanggrosiran.com Categories: deceit, inflation, new labour