Spud misses the error that the Resolution Foundation commits:
The Resolution Foundation published a report this morning which suggests that at least 30% of UK households have savings of less than £1,000 and are, therefore, unable to manage many of the cash-flow risks that are a normal part of life as a consequence of unexpected events.
You do not need to have £1k in cash savings to be able to manage cash flow risks. You need to be able to have access to £1k in order to be able to manage cashflow risks.
These are not the same thing. In a country with a banking and credit system the requirement is that you be able to go get £1k if you need it – by, say, borrowing it.
The very existence of a credit system means all require lower amounts of cash savings.
Ah, yes, well then:
“… the requirement is that you be able to go get £1k if you need it – by, say, borrowing it.
The very existence of a credit system means all require lower amounts of cash savings.”
Thereby going into debt, thus compounding the problem.
A longer answer here, which neatly disposes of that point: https://timworstall.substack.com/p/astonishing-resolution-foundation
To quote David Coverdale : ‘Here i go again on my own’
I find this omission quite staggering. The problem inherent in the UK’s obviously inappropriate patterns of saving is not that 30% of the population are somehow delinquent as evidenced by their failure to save, which is the fundamental underlying assumption of this report from the Resolution Foundation.
Another Straw Man – I doubt anyone thinks that all of the lower three deciles can’t save because they are delinquent. I would guess that some are though, and I’d imagine if he displayed his ‘renowned empathy for the ordinary man’ then he might actually know this.
They are, instead, unable to save because they simply do not have sufficient income to let them do so at a level that provides them with either short or long-term financial security.
Perhaps might be a good idea to remove them from tax altogether rather than confiscate their income to redistribute it through an expensive bureaucracy?
In contrast, as is apparent from the data, at least some within the remainder of the UK’s population are able to save the considerable sums likely to be way in excess of their needs, which we know is certainly the case for a very relatively small percentage of people at the top of the wealth distribution
As Andrew C says – hardly a new observation from him. Some people have too much. Possibly ‘semi-retired’ accountants living on their own in the Fens?
My purpose in writing the Taxing Wealth Report 2024 has been to suggest:
a) The capacity to tackle inequality by imposing additional taxes on those with income and wealth does exist.
b) Imposing those taxes does not require the creation of new and decidedly complicated wealth taxes, for which the gestation period would be long and disputatious. Instead, it lies in the much more appropriate taxation of existing, identifiable, measurable, and inherently assessable forms of income and gains, all of which could be subject to additional taxation if desired with relative ease.
c) The sums that could be collected as a result are material. They easily exceed the amounts required for investment in infrastructure in the UK present, given the physical constraints on our capacity to actually use such funding. They do, therefore, provide a real opportunity for redistribution of both income and wealth, which is very obviously what we actually require.
Criticism of which on his blog has now been limited to those who can apparently prove they are ‘real human beings’ – suffice it to say it has been proven beyond peradventure.
a) – there’s almost no scope for additional taxes. The tax burden is at its highest since 1979 in a vastly different geopolitical climate. There needs to be huge cuts to the state, especially in academia and the public sector.
b) – As many have shown, the additional taxes Murphy proposes would not even yield his sums as a one-off let alone as a repeat income stream., None of them were new and the entire report is little more than a collection of his ‘Greatest hits’ all of which were rendered nugatory by his complete lack of basic economic understanding the first time he proposed them int he last fifteen years
c) — There is no capacity for raised UK spending – thanks to five policies he enthusiastically supported (Well you could argue 3 he is ambivalent on)
– QE in its various iterations
– Policies surrounding COVID mitigation including lockdown
– The Ukraine War
– Net Zero
– Unlimited immigration
The economy is on the verge of total collapse. There is no money to even perform basic functions like defense.
So, why didn’t the Revolution Foundation talk about redistribution as a mechanism for tackling the problem that is identified? Why did it, instead, suggest that those without savings solve this problem themselves when their capacity to do so is clearly very constrained by existing power structures on reward distribution within society? I wish I knew the answer to that because what they have come up with looks very like an extraordinarily neoliberal solution to a problem to which neoliberalism has no answers.
I do wish these ‘neoliberals’ would hurry up and reduce the tax burden and the red tape – so far I haven’t seen a dickie bird in 14 years.
As it is, the Resolution Foundation has identified a problem. They have also identified some useful potential reforms within the pension system, but they have failed to identify a systemic solution to a problem created by poverty that is impacting at least 30% of the population, which was always there, staring them in the face, if only they looked at data on wealth distribution and realised that skewed distribution is, in itself the problem that they need to address. That is what is hard to understand.
That money needs to go to ME,ME, ME !!!!
AndrewWS:«Thereby going into debt, thus compounding the problem»
This sounds like the kind of idiocy that excessive exposure to Elynomics can engender. The issue here is how to deal with a temporary mis-match between cash inflows and outflows, you see.
I would question how easy it is for the bottom 30% of households to obtain credit.
I would question how many of the bottom 30% really want £1,000 in savings. If all their needs* were met and they could start from now with £1,000 in savings, how many would have £1,000 next week? More likely a new phone and a big weekend on the razzle.
*needs as defined by income level by the all seeing, all knowing, fat fucker of Ely
“In contrast, as is apparent from the data, at least some within the remainder of the UK’s population are able to save the considerable sums likely to be way in excess of their needs, which we know is certainly the case for a very relatively small percentage of people at the top of the wealth distribution”
“Way in excess of their needs” – would this include a single man occupying a 4 bedroom house with 3 public rooms? Time for a new window tax weighted to heavily penalise properties with a low number of permanent occupants.
“way in excess of their needs”
But what about their wants? I *need* a roof over my head and food. I *WANT* to be able to travel around, program my computers, *have* some computers to program, watch TV, listen to the radio, buy maps and books, take part in online discussions, go to computer fairs……
Ah, but we know that proper socialists like Lord Spudcup are committed to eliminating wants.
“They are, instead, unable to save because they simply do not have sufficient income to let them do so at a level that provides them with either short or long-term financial security.”
I would offer the example of the acquaintance of mine who has been on ‘the sick’ for the last 25-30 years (now retired from the arduous ‘job’ of being sick) who has a house paid for by the State and enough money given to him to live on that he had managed to build up quite a decent bit of cash savings. This despite being a smoker, drinker and (largely former) pothead. Such that when his car died on him he left where it was in a car park, sold it to a scrap dealer who collected it, and went and bought another car for £3k cash. The first car was arguably fixable, he just couldn’t be bothered, and splashed the cash instead. Such is life on benefits.
Or I could offer the case of the daughter of one my later father’s carers, who is (of course) a single mother immigrant – where are these brain surgeons we were promised? When the cost of living payments for energy etc were offered by the DSS she couldn’t be bothered (or was too dim) to register for her vouchers, and was complaining she didn’t have enough money. Just doing the small amount of admin to access free cash was either beyond her, or beneath her, which I couldn’t say. She expected it to drop into her account without her lifting a finger.
My sole experience of taking a bank loan:-
Me to the assistant branch manager: I’d like a loan of £**** to buy a car.
Him: Car? Frown! What sort of car?
Me: a Land Rover.
Him: ah, short wheel base or long? Petrol or diesel? Will you put an overdrive on it? Do consider buying free-wheeling front hubs, they really work …
Nae bother at a’.
My first experience of trying to get a mortgage loan:-
Halifax Man: no!
Me: but my employer has a special arrangement with you for the likes of me.
Him: still no!
I would question how easy it is for the bottom 30% of households to obtain credit.
Especially since the likes of the Resolution Foundation successfully campaigned for the end of pay day loan companies.
That 30% is what I like to call a number by proxy. The number itself doesn’t tell you much, but you can project your own fears & concerns onto it. At first glance one might assume that this means 30% of the population are just one failed head gasket away from living off stale bread & water.
But if living off stale bread & water is the problem, then why not measure that directly? Because it doesn’t produce nearly so scary a number.
Spud misses the error…
Evergreen.
When a person with no savings suddenly needs 1k to cover an emergency, what normally happens is they use a credit card. Unfortunately having that line of credit available is too much of a temptation to some and they will already have maxed it out. This inability to manage money is not limited to the poorest. I knew a lawyer who was a partner at a top London firm and to all intents he seemed a very clever chap. His accountant told him that HMRC owed him £40k. Over the course of the next week he and his wife spent that promised money on expensive garden furniture and other pricey goods. Then the accountant said it was a typo and actually he owed HMRC £40k. For the next few months they had no money and lived on baked beans.
Utter cunt
@ BiND
Pawnbrokers still exist and have expanded their pledge book since “Pay Day Loans” were effectively eliminated