The art of bookmaking

Legend had it that he was once been consulted by a Ladbrokes manager who had been asked to make a book on the name of the next Archbishop of Canterbury, but did not know where to start. “You want a start, I’ll give you a start,” Stein replied. “The Chief Rabbi’s 1,000 to one.”

Extremely harsh

\"\"

But true for a certain value of \”true\”.

Bill de Blasio, the city\’s public advocate, described the advertisement as \”grossly offensive to women and minorities\”. \”This billboard simply doesn\’t belong in New York City,\” said Mr de Blasio.

\”Common decency demands it be taken down.\” Christine Quinn, the Speaker of New York city council, said: \”To refer to a woman\’s legal right to an abortion as a \’genocidal plot\’ is not only absurd, but offensive to women and to communities of colour\”.

Legal rights are funny things: yes, abortion is a right protected under that shadowy penumbra of the constitution. As the right to say anything you damn like about it proteted under the First Amendment.

The Guardian on The Guardian\’s tax affairs

Alan Rusbridger tells us it is all very complicated.

Which, of course, it is.

I do have to say that I am amused that there is no possibility of commenting upon the piece as yet.

However, here\’s the question that we (or I) would really love to have an answer to.

Scroll forward nearly 80 years, and the Scott Trust is still going strong. It was reconstituted in 1948 and 2008, in order to carry on doing exactly the same as it\’s always done. It is now a limited company, with five trustees owning the shares.

Yes….

GMG has, over the years, made some shrewd decisions and investments, not least the purchase of Auto Trader – a magazine (and now highly successful website) for selling cars. Auto Trader has at various times been solely owned by GMG. At other times it has shared ownership with John Madejski, Hurst Publishing, BC Partners and Apax Partners. These changes in ownership have been done for assorted reasons: to maximize the income at a particular time, to build up the value of the company or to protect the group from having too many eggs in one basket. GMG\’s portfolio today largely consists of its share of Trader Media Group (TMG) and Emap, which it purchased with the cash realised from the sale of 50% of TMG.

Yup.

The low charge is on the exceptional part sale of the Auto Trader group. No complicated planning was needed to produce a low tax-charge: the government allows for tax to be deferred in this case if funds are reinvested.

The Guardian did reinvest the funds. That\’s not artificial, offshore, or complex. Indeed, it is tax compliant: the company is doing what the government wants, and for which it provides a relief. So let\’s stop the nonsense about low tax rates now: it\’s just wrong.\”

Quite.

Now, the question is about the combination of these things. I\’m not a tax expert (as everyone knows) so I really do not know the answer to this. But I would love to get one.

There\’s a reorganisation from the Scott Trust to the Scott Trust Limited in 2008.

2008 is also when that 50% sale of Autotrader went through, leading to the £300 million profit which was not taxed: quite righteously not taxed because it was a subsidiary of Scott Trust Limited and the sale of a subsidiary of a limited company is not, under the SSE rules, subject to corporation tax (technically, a chargeable gain).

The question is: if the Scott Trust had not reorganised into the Scott Trust Limited, would some form of tax have been due on that £300 million?

That is, did the reorganisation alleviate some of the tax bill on that capital/chargeable gain?

Anyone actually know?

There\’s a *possible* explanation for this

A speculative and harsh one, true, but a possible one:

But general practitioners must do more to identify those suffering from the rapid increase in immune disorders, which now affect one in 20 young people in Britain, the National Institute for Clinical Excellence (Nice) warns.

The vogue for complementary cures may be a consequence of the NHS\’s inadequate response to the problem, Nice believes. Hospital admissions for food allergies have risen by 500% since 1990 and the UK appears to be one of the most severely affected countries.

The most common foods to which children are allergic include: cow\’s milk, fish and shellfish, eggs, peanuts, tree nuts, sesame, soy, wheat and kiwi. Severe allergic reactions, such as the anaphylactic shock experienced by those unable to tolerate peanuts, can lead to difficulty in breathing, swellings and, in extreme cases, fatal heart attacks.

The cause of growing sensitivity among children remains a mystery, said Dr Adam Fox, a consultant in paediatric allergy at Guy\’s and St Thomas\’ hospital in London.

There are various hypotheses put forward. More caesarians (eh?), less breastfeeding, homes that are too clean (both leading to less pump priming of the immune system) the \”chemicals\” in modern life etc.

How about this though. Such allergies are inheritable.

We\’re currently getting perhaps the first (or over the past couple of decades have been getting the first wave of) generation of children born to those who have survived such allergies themselves. We are thus seeing a rise in the allergies as a percentage of the population.

The simple reason being that in previous generations, up until 30-40 years ago, those with the allergies died. Now they survive to have children themselves, leading to an increase in the frequency of said allergies.

Pleas enote, I\’m not saying this is true: only that it\’s possible.

Anna Chapman

United Russia, the Russian prime minister\’s all-powerful party, has already pencilled in Miss Chapman as the next MP for the Volgograd region in southern Russia according to the daily Nezavisimaya Gazeta newspaper which said it had seen the list.

The former spy is all but guaranteed electoral success as Russia is a de facto one-party state and the United Russia party is expected to keep its dominant position for years to come.

Well, yes, I guess that does confirm that she actually was a spy then…..

Concluding that Chuka Umunna is a big fat idiot

My word.

The Treasury select committee will consider asking the banks to extract payroll taxes from the wider tax bill, the Telegraph has reported. This followed reports over the weekend about Barclays paying £113m in corporation tax out of a total tax bill of £2bn in 2009. The bank made £11.bn profits that year.

Mr. Umunna (for it is he, our hero): Thank you for coming back to speak to us again Mr. Diamond.

Mr. Diamond (for it is he, the devil): Nice to be here again.

U: Could you please tell us exactly how much tax Barclays actually paid?

D: As I\’ve said, the total tax contribution was of the order of £2 billion.

U: Yes, but that\’s not really what the bank paid, is it?

D: I\’m sorry, what do you mean?

U: Come along now, you\’ve lumped in all of the income tax paid by your employees.

D: Well, yes…

U: And that\’s really not being paid by the bank, is it?

D: Well, no, perhaps not….

U: And those payroll taxes, they really come out of the workers\’ wages as well.

D: Do they? My, I had no idea. You mean employers\’ national insurance as well, this is really paid by the workers, not the company?

U: Yes, come along now, everyone knows this, even Richard Murphy agrees.

D: So you agree then that the marginal tax rate faced by those on minimum wage is 45.8% then?

U: I don\’t think….

D: Clearly…

U: What?

D: Do I really have to lay this out for a most distinguished member of the Treasury Select Committee? Basic rate income tax is 20%. Then there\’s 12% employee national insurance and 13.8 % employers, NI. And you\’ve just said that all of that NI is paid by the workers, not the company. So, for those making the pittance of minimum wage, the government is currently charging them a 45.8% marginal tax rate.

U: But we\’re not here to talk about personal taxes but about corporate ones.

D: But this is about corporate taxes. We can go further. When people hit the upper band they stop paying employees\’ NI but keep paying employer. So actually the upper rate tax rate is 53.8%. And the tippy top one becomes 63.8%.

U: But this is still nothing to do with corporate….

D: Dear Lord Almighty, how did anyone as thick as you get into this building? Even on a guided tour. Look, what you\’re complaining about is the amount of money that the government gets. And you\’re also complaining about the bonuses that we bankers get.

U: Of course and there\’s no need to be rude…

D: But what am I supposed to be to a thicko like yourself? Can\’t you see it? If the bank makes a profit then the government gets 28% of it. If instead we pay the money out as bonuses then the government gets 63.8% of it. If you were coherent enough to actually argue for what you want, higher tax revenues, then you would be begging all of the banks to pay every single penny they earn out in bonuses.

U: Oh, well, since you\’ve put it that way, yes, you\’ve convinced me.*

* Excised on the grounds of being entirely unbelievable.

It\’s in Wikipedia so it must be true

In October 2008 it was announced that the trust was being wound up and its assets transferred to a new limited company named The Scott Trust Limited.[2] The purpose of this change was to facilitate the avoidance of a capital gains tax liability arising on the disposal of the trusts interest in AutoTrader. Not being a company, the trust did not qualify for the Substantial Shareholdings Exemption on the disposal of a wholly owned trading subsidiary, but by forming the Scott Trust Ltd and dissolving the Trust and distributing the assets of the trust to the new company from which the disposal was made the company was able to avoid over £100 million in tax.

Naughty, naughty.

At least Barclays didn\’t fiddle around with corporate structures when it took the same SSE.

Strangeness from Anne Pettifor and Victoria Chick

Alerted by Duncan there\’s a new paper by them.

They want to show, as good little Keynesians, that you must spend your way out of debt.

Now perhaps there\’s some detail, some cuteness, to their numbers that I\’ve not got. But just as an example, they say that in 1918, government expenditure was 35% of GDP (page 6) which really doesn\’t sound right for the last year of the first total war.

Indeed it\’s not. The military budget alone was £2.4 billion from a £5.1 billion GDP.

Correct, the military budget was 47% of GDP on its own.

So, have I missed some subtle point about their numbers or are they just making them up as they go along?

I do like this point

I\’m not normally a fan of Ha Joon Chang, but this is good:

The microfinance industry has always boasted that its operations remain profitable without government subsidies or contributions from individual donors, except perhaps in the initial teething phase. […] However, it turns out that, without subsidies from governments or international donors, microfinance institutions have to charge, and have been charging, near usurious rates. It has been revealed that the Grameen Bank could initially charge reasonable interest rates only because of the (hushed-up) subsiides it was getting from the Bangladeshi government and international donors. If they are not subsidized, microfinance institutions have to charge interest rates of typically 40-50 per cent for their loans […] the vast bulk of microcredit is not used to fuel entrepeneurship by the poor, the alleged goal of the exercise, but to finance consumption.

The point being that providing small short term loans to people is a very expensive undertaking.

Remember this when people start to splutter about payday loans and doorstep lenders here in the UK.

Oh, and the reason that the UK interest rates are so much higher? Because the amounts being loaned are so much smaller in relation to those fixed costs of labour needed to make the loan. Lending $100 to someone where monthly wages are $50 (or whatever) is much cheaper in terms of the costs of that labour than lending £100 to someone where monthly wages are £2,000 (or whatever).

What is true of small short term loans in one part of the world is true of them in other parts: they\’re expensive to make.

Might I ask a question about this outsourcing of public services?

We\’ve got Polly going nuclear here:

This is it, the last veil ripped away. In the Daily Telegraph today, David Cameron penned his preview of the long-delayed white paper on public services. The paper\’s editorial saw the light: \”For the first time he explains the full scope of his ambition to roll back the boundaries of an overweening state.\” This is indeed the eureka moment for the country. Nothing like this was ever breathed before the election.

Every single public service will be put out to tender. Everything. Well, not MI5 or the judiciary – but everything else, including schools and the NHS. Forget the camouflage of localism and choice: however much local people like local services that work well, they will have no choice in the matter. A private company – or in theory a very large charity – can challenge any service they would like to run and bid to take it over. If Serco or Capita think they can turn a reasonable profit from cherry-picking anything the council or the government runs, they will have the right to demand it is put out to tender. If they bid below the current cost and claim that quality will not fall, it\’s theirs for the asking. Not the people, not their elected representatives, nor the users of those services will be able to refuse. It will be taken out of their hands because competition law will decide. If local people want their council to hold on to a much-loved service, a company can take the council to court – at huge and wasteful expense – and almost certainly win the right to tender and win the contract.

The end of the world, eh?

So, here\’s the question. Why is outsourcing such things so bad? For example, it\’s a private company in Denmark that provides the majority of fire and ambulance services:

In Denmark, Falck is currently in charge of 65 percent of munipacility fire brigades and 85 percent of ambulance services.

We can see that it can at least potentially work. Yes, Falck is a profit making company, 402 million DKK.

And no, service isn\’t bad and no, prices aren\’t higher:

The idea: private rescue services

In Denmark, while still publicly funded, most rescue services have always been provided by one private company: the Group 4 Falck, formerly the Falck Corporation. And, with the growth of outsourcing, international surveys consistently point to Falck as the model for reorganizing rescue services the world over.

Example: fire and ambulance

Established in 1906, Falck has provided firefighting and (from 1908) ambulance services for nearly a century. Originally a family business founded in Copenhagen by Sophus Falck, the group is now a limited company, with the main Danish insurance companies among its shareholders. Since its establishment, Falck has expanded into other fields, such as home care, maintenance, meter-reading for utilities, cleaning, safety, and security; and it now works internationally in Sweden (where it has worked since 1934), as well as Norway, Finland, Germany, Poland, France, Hungary, Austria, the United Kingdom, the Czech Republic, Estonia, Belgium, and even South Africa.

Even the guard services at the Danish royal palaces and government buildings are now provided by Falck. But domestic rescue services remain the group\’s dominant sector, employing 65% of its 20,000 employees, and delivered from 132 Falck stations, co-ordinated by 16 operation control centres, administering all emergency calls.

Fire-fighting in Denmark was effectively contracted out by the country\’s first Social Democratic government in 1926, when the Fire Act was passed, allowing municipalities to hire private fire-fighting companies.

More than half of the 275 municipalities today, fire-fighting is provided by Falck, the rest being provided by municipal or voluntary fire brigades. Falck\’s provision of the service is based on an agreement between Falck and Denmark\’s association of local authorities, within which Falck and individual municipalities can draw up contracts comprising fire-fighting and related services.

For decades Denmark has enjoyed one of the lowest-cost fire-fighting services in the world (three times cheaper than in the United Kingdom, measured as a proportion of GDP). At the same time, however, Denmark has the most rigorous fire legislation in Europe, covering the size of fire brigades, training, equipment, response time, and other standards, backed up by rigorous control by public authorities.

Falck provides 85 % of the ambulance services in Denmark through a similar contractual scheme. A standard agreement between Falck and the Association of County Councils lays down Falck\’s emergency service obligations, among which is the obligation to dispatch the closest available ambulance, irrespective of where it is stationed.

The payment for ambulance services is dependent on response time and activity, so that individual counties must pay more if they demand an increase in either, and if Falck fails to honour its part of the agreement they must pay a refund. The guidelines for medical training etc are developed by Falck, but approved by the national health board.

Ooooh! Lookie!

Cheaper, better, services being provided by a profit making company.

Could someone explain to me why this is a bad thing?

Quite right too

Yunus, the managing director of the Grameen Bank, which has lent small sums to millions of deprived people to help them start or run their own businesses as a first step out of poverty since being created in 1983, has been caught in a bitter political battle in his homeland of Bangladesh.

The campaign to remove Yunus, mounted mainly by politicians, is to intensify this week ahead of a key board meeting next Monday, which his supporters believe will involve an attempt to force the 70-year-old to quit as managing director.

Last week, Bangladesh\’s finance minister said Yunus should stand down following alleged irregularities in operations.

Abul Maal Abdul Muhith called Yunus a \”man of high standing and respect\” but \”now old\”. The minister, who is 77, said: \”We need to redefine the bank\’s role and bring it under closer regulation.\”

Supporters of Yunus fear politicians want to bring Grameen under government control. Yunus did not respond directly to the minister\’s comments but told reporters: \”Any transition [would] essentially require a friendly environment and support from the inside and outside stakeholders of the bank to ensure that we continue to be totally committed to our mission for and with the poor.\”

Other government comments have been less polite. In December, the prime minister, Sheikh Hasina, accused Yunus of treating Grameen as his personal property and claimed the group was \”sucking blood from the poor\”.

Who does he think he is? This just getting on with things and solving a problem like poverty without the use of politics and politicians?

Quite rightly, we\’ll see all the usual suspects here applauding this move, just as they do with The City. You know, banking must be under the control of politics, of democracy: finance must be the servant, not the ruler?

We will see those usual suspects doing this, won\’t we? You know, being consistent n\’all that?

Quite marvellous

Your comment is absurd

If you genuinely think that there is no room for misunderstanding in the interpretation of the written word you’re either a) naive or b) deceiving yourself

In which case perfect legsilation is not possible – but the spirit of the law remains intact none the less

So how are we to divine the spirit of the law without recourse to that inevitably potentially misunderstood written word?

Hmm, the only way I can see this being done is that we have some group of, oooh, I dunno, senior and well respected people to do this for us.

Mebbe something along the lines of lawyers who have been lawyering for a few decades? Get \’em together, anyone who has a problem with what the law actually is, you know what\’s the real meaning of this not quite clear piece of prose, can go and ask them.

Mebbe even if people are having an argument about what the law is, they could pay some fees and end up in front of these experienced lawyers?

And these greybeards, they could, when deciding what that law really means, have a look around the world at other, similar, systems and see how other, similar, systems have decided in other, similar, such arguments about that true meaning?

Heck, we\’ll even let them look at Hansard so that they can try and divine what the politicians thought they were doing rather than what they\’ve actually written down.

Sounds like an entirely reasonable and effective system of deciding what is in fact the law, sorting through these arguments about what is the spirit and the letter of said law, no?

The only remaining question I suppose is why we don\’t go off an build such a system. To which the answer is:

This is exactly what our current legal system does.

We have \”judges\” who sit in \”courts\” and use \”cases\” in which they sort through \”legislation\” and where the \”letter\” and \”spirit\” of the law seem to diverge they look at the \”proceedings of Parliament\” and \”other jurisdictions\” and \”precedent\” to see both what was \”intended\” and what was \”written\”.

And then they tell us what the law is, having reconciled both spirit and letter of it.

What really bugs Ritchie is that what the judges think the spirit of the law is (ie, every Englishman has an absolute right to order his affairs so as to reduce his tax bill) isn\’t what Ritchie thinks the spirit of the law ought to be.

But then who do you think knows what it is better? 20 odd old farts in wigs or a retired accountant from Wandsworth?

Your call.

More on the Guardian and UKUncut

Oh my, this is just too precious:

Guardian readers seem to be under the illusion that it is owned by a not-for-profit charity. The Scott Trust was wound up in October 2008 and the Guardian is a for-profit-privately-owned business, the well paid directors of which confirm in their annual accounts that they operate tax strategies in line with their fiduciary duty to the shareholders – just like any other business.
\"\"The old Scott Trust was set up in 1936 to avoid inheritance taxes and wound up in 2008 so that GMG could cynically exploit the SSE capital gains tax shelter to pay 0% in corporation taxes on their £302 million in profits that year. GMG claim that it was about modernising the holding structure, in fact it was a disingenuous cover for corporate venality.

I think I\’m reading Guido correctly here.

OK, so, The Guardian was owned by the Scott Trust. As was Autotrader etc.

So, when Autotrader was sold, they would have to pay corporation tax (or would it be capital gains?) on the money they made from selling Autotrader. I think I\’m right in saying that charities are only free from such taxes when they relate to charitable activities, not to commercial subsidiaries.

But, Gordon Brown and Ed Balls had changed corporation tax law. If you were a limited company (not a charity) selling off a subsidiary and reinvesting the money, then you would not pay corporation tax on that capital gain.

The implication here (and I would love someone to detail this, correct me on it) is that such a tax free disposal of a subsidiary/investment would not be available to the Scott Trust under the rules that applied to them.

So, the solution is obvious: wind up the Scott Trust, restart it as a limited company and hey presto, there no tax is due on the sale of a subsidiary.

In October 2008 it was announced that the trust was being wound up and its assets transferred to a new limited company named The Scott Trust Limited.[2] The purpose of this change was to strengthen the protection it offers to The Guardian.

And that\’s what they did. They wound up a charity and converted it into a limited company because the tax laws were better as a limited company than as a charity.

And remember people: these are the high and mighty who are tutting at everyone else about tax avoidance!

A household on £150,000 a year of taxpayers\’ money

Rent free remember:

A Stakhanovite prime minister might have thought the nation would pay for his bacon rolls when he was toiling on its behalf to steady the world\’s economy.

Sarah Brown\’s diary of life in No 10, serialised in the Daily Mail, shows that when her husband was at work, officials asked her to provide breakfast. She refused, saying the prime minister was not technically \”at home\”, and was later bemused to get a bill for 200 breakfasts they had provided.

Also expects you to pay for their bacon butties.

For all the stuff about how travelling salesmen charge their breakfast at the Happy Eater to the company, does grate a bit, doesn\’t it?