The Mancunian Way

The power of dreams

Sheltering from the rain in a Manchester shop doorway, Tyler was accosted by a woman sporting a Citizen Smith style beret.

"You're one of them Tories, aren't you - I can tell from your Daily Telegraph. How's it going?"

Tyler glanced round nervously for her gang of Militant Tendency vigilantes, but she seemed to be alone. "Well... it's going fine..."

"Good. Because we need to get rid of this lot as soon as possible - they're a complete disaster."

Really? A Tory voter in a Manchester?

"Mind you, I could never vote Tory. I'm a retired teacher, you see - Labour's our party. You'll have to win without me... let's hope you can."

She surely spoke for many disillusioned Labour voters. They want this shocking government out almost as much as we do. But they simply cannot bring themselves to vote for the Evil Tories, especially under the leadership of an old Etonian toff.

Cam and Oz spent much of the week trying to make it easier for such voters to make the switch.

The 50p tax rate will stay not because it makes any economic or fiscal sense (it doesn't), but because it proves we're all in this together. Sure Start will stay not because it's transformed the lives of our most disadvantaged kids (it hasn't), but because it proves Tories care about the poor. The NHS and international aid are ringfenced not because their budgets contain no fat (they most certainly do), but because they prove Tory compassion*.

But look, let's not carp. Tyler liked the Big Message from this Conference: it was Big Government wot done it, and Cam intends to put it back in its box. At last we seem to be focusing on the Big Issue.

So on the economy, George sounded like he really does intend to take a Big Axe to spending.

To be sure, he gave us precious little detail (only identifying £7bn of cuts out of the £50-100bn needed), and to be sure, he rashly rejected some of the cuts set out in the recent TPA/IOD paper (eg he will retain Child Benefit, the winter fuel allowance, and free TV licences for the over-75s). But he's now a million miles away from all that "sharing the proceeds" wibble.

On "Broken Britain", the emphasis will be on personal responsibility rather than state direction.

There will be tax breaks for families, and a big push on welfare-to-work programmes, making much more extensive use of private sector job brokers.

True, there wasn't enough detail on the crunch issues - brokers ripping off the Simple Shopper (eg see here), welfare rates too high to make work worthwhile, and a minimum wage too high for high unemployment areas. But the direction is absolutely right. A society with 10% of its entire population comprising working age welfare dependents is a society that has to take tough action.

And then there's our political structure. As we've blogged many times, the key to more cost effective public services, not to mention a much-needed revival of democratic accountability, is to decentralise power back to local level. Again, Cam made all the right noises.

True, he had little to say on the crunch issue - ie the decentralisation of tax raising powers - but he has at least positioned this as a key issue.

Overall, we were encouraged. The direction is now much closer to what we need the next Tory government to do above all else - downsize the state.

"All" that remains is to fill in a couple of details - like how are we going to get the tax cuts essential to the growth of private enterprise? Once they've done that, we might even get a glimpse of those sunlit uplands Cam promised us yesterday.

Of course, it still won't be enough to tempt retired Mancunian teachers away from Che.

But then, nothing ever will be.

*Footnote The real reason for ringfencing the international aid budget was underlined by the warm-up video screened just before Cam's final speech. It featured a personal endorsement from none other that St Bonio himself. No matter than Bone is a notorious humbug who spends his life avoiding taxes and emitting humongous amounts of greenhouse gases. £7bn pa down various DfID plugholes is apparently a small price to pay for his support. We hope it will impress all those retired Mancunian teachers, because it left Tyler in urgent need of the sick bag.

PS One of the great things about these conferences is that you bump into all kinds of unexpected people - especially when the party is so close to power. As Mrs T and I slumped at a table in the coffee bar we were joined by that Grand Designs bloke off the telly. Very interesting. He even offered Mrs T a nibble on his chocolate nut cluster. No. Really.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: the future

For Richer For Poorer

A previous Tyler family Big Hat Fest

The bride dazzled, the sun shone, the champagne flowed, and our son's wedding was just about as perfect as it could be. The Tylers have gained a wonderful daughter, and have at least doubled the size of their extended family.

Weddings are one of life's great set-piece events, and old-fashioned people like the Tylers think it's important to do them properly.

It isn't just the formal business of the day - the families gathering to bear witness to their children repeating those age-old but always moving marriage vows. And it isn't just the celebration itself, or even the wedding album (the Brag Book as the photographer insisted on calling it) - brilliant though they may be.

No, over and above all of that, there's something even bigger: weddings are a reaffirmation of family ties, stability, and continuity. And at a good wedding, that reaffirmation touches everyone there, as we hope it did on Saturday.

*****

Of course, being an economist, Tyler's mind is never far from money matters. And a wedding in the midst of recession naturally highlights the thorny issue of for richer and for poorer.

We're not talking here about the cost of the wedding itself - these things cost what they cost, and it was worth every single penny.

No, the issue that troubled Tyler was one particular relation whose previously thriving small business has recently folded. He and his family did not come, even though they have attended almost all previous such events. We fear he simply could not face the questions/sympathy/gloating he imagined he'd find. Or maybe it was the cost.

Either way, it was a great shame. But it does underline just how risky it is to be an entrepreneur.

Everybody knows about the entrepreneurs who end up making a fortune, but the vast majority never do. In fact, according to survey evidence, well under half survive even four years. And when we remember that most are dependent for initial funding on their personal or family resources - including second mortgages - we can see that their personal risks are much higher than those of an employee.

As it happens, today sees the publication of a new paper from the TaxPayers' Alliance on just this issue. Snappily entitled Tax and entrepreneurship - How the tax system impedes the creation of new firms and decreases employment, it was written by Matt Sinclair, the TPA's Research Director, and Dr Jonathan Scott, a Fellow at Queen’s University Belfast and a specialist in entrepreneurship and small firms. There's also a forward by a real live Dragon from the scary Den - Julie Meyer.

The paper runs through some of the evidence on what drives entrepreneurs, how they fund themselves, the risks they run, and their vital role in Britain's future prosperity.

It then focuses on our tax system, and how that increasingly penalises entrepreneurs:

"The tax system affects the decision over whether to become an entrepreneur in two key ways:

• It may reduce the amount of capital they can access from their own wealth or their family. In particular, existing research suggests that receiving an inheritance leads to higher levels of self-employment. Inheritance Tax, in particular, may reduce the extent that entrepreneurs can obtain finance without the risks that come with a bank loan.


• The tax system undermines the large rewards that justify the risks attached to starting a new
  business."

The paper points out that entrepreneurial earnings can be taxed several times over.

For example, money that is earned is taxed as personal income. Then, if that net income is invested in a start-up company, any earnings will be taxed at the corporate tax rate. Then, if the company is finally sold, its value will be taxed as capital gain. And finally, any residual value passed on to the next generation will be taxed at the IHT rate.

For most entrepreneurs that currently means 40% personal tax times 28% corporation tax times 18% capital gains tax times 40% inheritance tax. and compounded up over a lifetime, the TPA calculates that comes to an eye-watering total tax rate of over 90%.

We're right back to Denis Healey pip-squeaking territory. It's more than enough to make any rational entrepreneur take the first plane out.

Worse, rather than tackle the problem, this government has actually made it worse. The top personal tax rate is soon to increase to 50%, which means that the overall compound tax rate on entrepreneurs will shift up to 92%.

It's a great pity our struggling relation didn't come on Saturday. Nobody would have been chortling. We'd have been advising him to get out and try again - maybe here. And we'd still invite him and his family back to all the weddings.

For richer or poorer.

PS Many thanks to BOM readers for all the good wishes you sent. The day could not have gone better, and those of a certain age are already counting the grandchildren.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: economy, tax, the future

Bucking The Trend

We Tylers are off for a weekend of bearing witness, toasts, and big hats. Our elder son is getting married, and we are delighted.

These days of course, getting married is pretty well a minority pursuit. We now have the lowest marriage rates since they were first calculated in 1862. The number of first marriages has halved since the early 70s, when Mr and Mrs T got shackled.

Does it matter? Will the relationship between our son and his fiancee be strengthened by their marriage?

Actually we think it will be, but in truth that's more about them than the institution of marriage per se. They've already been together for 8 years, and they're now making a very public statement that they intend to stay together. And - famous last words - from what we know of them, it will then take an atomic bomb to split them asunder.

As for marriage more generally, it's not at all clear that more marriages would necessarily mean more stable homes for Britain's kids.

But let's not think about that today. The sun has just broken through, and tomorrow's forecast is good.

Time for Mrs T to climb into her big hat.

Gudang grosir baju anak murah - harga pabrik !!
www.gudanggrosiran.com Categories: the future