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First past the post or something else?

The Institute of Public Policy Research says that unless the current arrangement is scrapped there is greater risk of the “wrong” winner being declared when the country goes to the polls.

It points to the fact that Labour needs only a three-point lead to secure a Commons majority at a general election while the Tories need an 11 point gap to seize power.

Now, yes, of course, this can be used to argue that we need a change in the voting system.

However, it can also be used to argue that the voting system is just fine, it\’s the drawing of the constituency boundaries which needs reforming.

But of course, when his is argued then we get the various Labour Party harpies screaming about how unfair this would be.

In general (and it is only in general, not specifically true in all cases), Labour seats are in declining city centres and declining industrial areas. Tory seats are in growing suburbs and rural areas. \”Declining\” and \”growing\” here are defined as losing or gaining population.

We only have a census once every decade and we seem to change the constituency boundaries (please correct me if I\’m wrong) a decade or so after we get the results of that census. So there\’s a near 20 year delay, at the extreme, in constituency boundaries and size reflecting these geographical changes in the dispostion of the population.

As a result, Labour seats tend (again, tend, this is not absolute) to have smaller electorates than Tory ones. For English seats the differences are from 56,000 voters to 80,000 odd (the Isle of Wight is a special case at the very top end).  Someone else can go through those seats to see how this bias works but certainly the majority of the smaller seats are Labour, the larger Tory.

Well, so what?

Well, if we\’re going to keep any form of voting that relies upon a constituency, if we\’re going to change the system but not go to regional or national party lists and so on, then whatever the voting system we need to get this constituency thing right.

And, the thing is, if we do get this constituency thing right, then we may well not need to change the voting system……

On those tax debts everyone keeps talking about

We\’re all aware that there\’s a lot of muttering about tax debts. Money that should go to HMRC but doesn\’t.

And this is seen as part of the salvation of the Kingdom: if only those debts were paid then no cuts would be needed.

Unfortunately, no one ever really wakes up and thinks about why there might be tax debts in the first place:

It is thought that the £6.6m in unpaid fines relates to smaller companies and individuals fined by the FSA. Some companies fined will have been wound up before they had a chance to pay. Individuals may have declared themselves bankrupt.

Agreed, that\’s the FSA, not HMRC, but the same will be true of tax debts. Some portion of it will simply be people who have gone bust. There just isn\’t the money there to pay the tax.

And, of course, our man waving the bloody shirt of tax debt to get the crowd roaring doesn\’t bother to tell us what portion that might be: meaning that his estimates are useless. We simply don\’t know whether any of it is recoverable, a bit, most, all.

If only Mr. Hari knew some economics

In the US, volunteerism is highest in high-tax Massachusetts, and lowest in low-tax Mississippi. In Europe, volunteerism is highest in high-tax Sweden, and lowest in low-tax Eastern European nations.

Well yes of course. It\’s called the tax wedge.

There\’s lower labour market participation, higher household production, when the government takes more of what you can make from market production. So where taxes are higher people will give more time: where taxes are lower we will see them giving more money than time (everything else being equal of course).

Servitude Year Cost

Yes, I approve of this measure, the Servitude Year Cost.

The Servitude Year Cost measures the cost in years of labour necessary for an income taxpayer on median wage to pay for any given state expenditure. In other words, how many years people will be forced to work to pay for state waste spending. It\’s simple:
1 Servitude Year Cost = £5,800 per taxpayer
It’s easy to apply and allows a clear narrative to translate the ethereal figures into the tangible, physical work that it takes each of use to achieve it.  So for example:
2,241 working servitude years were saved by the £13m cut to Bookstart (i.e. £13m/5800) or;

I think more of us should start to use this unit of measurement.

Serious, real, insanity over high speed rail

So, California is going to build it\’s first high speed rail line.

\"\"

It\’s going to go from Borden (so small it\’s not even incorporated, doesn\’t seem to actually have a population in Wikipedia), through Corcoran (pop 25,000, of whom half are prisoners and thus not likely to be frequent travellers) to Bakersfield (population 340,000 or so).

And they\’re going to spend $5.5 billion on this.

These people are absolutely fucking insane.

Oooh, my!

France expects 1.6% economic growth this year and less than 2% in 2011 and 2012, according to the European Commission; Germany is forecast to post 3.7% this year followed by 2%-plus the following two years. France\’s budget deficit is forecast to be about 7% of gross domestic product in 2012; Germany\’s is expected to fall below 3%, according to the Organization for Economic Cooperation and Development.

Eventually, economists say, France might have to grapple with the size of its government. France\’s total tax burden—from income tax to payroll taxes—is 42%, compared to 37% in Germany

But, but, say it ain\’t so!

You mean there is a connection between overall tax levels and growth?

How fascinating!

Of course people are allowed to organise their affairs how they will within the constraints of tax compliance – but that still means the economic substance is consistent with the form in which transactions are reported for tax…

So Ritchie does agree that, Vodafone, having paid tax in Germany, where it sells phones and air time, having paid tax in Luxembourg, where that part of the corporation is actually based, should not therefore be paying yet more tax in the UK because absolutely no part of the economic substance of selling phones and air time in Germany, nor managing such from Luxembourg,  takes place in the UK.

You know, he\’d save a whole lot of time and grief if he actually said this.

Not very good defence of the day

The salient fact about DC is not that it has education problems. Every big city in America has those.

Every big city in America has problems in its education system. Therefore it cannot be that the teachers\’ unions, which are in every big city in the USA, are part of the problem.

Doesn\’t really work, does it?

The IPPR really is most glorious

So they\’ve got this piece up at \’T\’ G about how these cuts are just going to be so horrendous for young couples expecting a child.

Take one scenario, a couple in their mid-20s expecting their first child in May 2011. Based on data from the Office for National Statistics, we estimate that there are about 525,000 families who are expecting to have a baby post April 2011. Let\’s assume that this couple live in Stoke-on-Trent, bought a flat several years ago (for the average price, which was £90,000 in 2006) and are paying a mortgage on it. They have never been in receipt of benefits.

Since leaving school, they have both always worked, mostly full-time. They currently earn the median income, which in April 2010 was £538 a week for full-time male employees and £439 for women. Both could be worried about their future job security with a volatile local labour market.

So, thinking ahead, what might 2011 hold for this couple with a baby on the way?

According to the latest figures, the average weekly household expenditure for couples with no children is £529.50. This rises to £615.30 for a couple with children. With the increases in VAT (calculated at 1.5% as VAT is not added to every household purchase), this could conservatively add an extra £413 (calculation based on expenditure with no children) to the family budget in 2011. On top of this, the health and pregnancy grant (worth £190) for expectant mothers is being scrapped and so is the child trust fund (worth £250) for every child. Taking all this together, compared to if they had a baby in 2010, our imagined couple will be more than £800 worse off in 2011.

Now there\’s a few choice bits in there. They\’ve got the local cost of a flat about right (although, for Stoke on Trent it looks a little high maybe) but they\’re using the national median wage, not the local.

Judging from the cost of my own UK mortgage I\’d estimate their repayments at around £500 a month….not all that accurate but close enough for a blog post. £6,000 a year.

But now look at their incomes: that\’s £50,800 a year! Umm, they\’re between the fourth and fifth quintiles for household incomes! And they\’re in friggin\’ Stoke on Trent! With only £6,000 a year to pay in mortgage!

And, get this, look how much worse off they\’ll be as a result of the cuts. £800 a year. 1.6% as a share of gross income, 1.8% as a share of pretax but post housing income.

Umm, isn\’t this what we actually want? That the rich carry their share of the pain?

I have to admit I do wonder what the IPPR were smoking when they put this example out there…..

Avastin and Lucentis: what a glorious tale!

This is really rather funny, at least for those who have my own rather lugubrious sense of humour about matters economic.

So there\’s two drugs, Avastin and Lucentis. They\’re really rather similar: almost exactly the same you might say.

However, Avastin is the one licensed for use on bowel cancer and Lucentis the one licenced for use on blindness (wet eye advanced macular degeneration, AMD).

Doctors have noted that you can in fact use the Avastin to treat wet eye AMD. And that doing so is about one tenth of the cost of using Lucentis.

However, the drug company that makes both refuses to take part in the clinical trials (either Phase III or Phase IV) to prove that Avastin works just as well as Lucentis.

Now, at this point, opinions can differ. On the one side we\’ll have the pretty usual screams of bloodthirsty profiteers trying to make a fortune out of those going blind, the rapine of the NHS drugs budget and so on.

On the other might be those who stop and think for a moment.

For you are allowed to use drugs \”off licence\”. If you note that sticking a bowel cancer drug into eyeballs stops people going blind then as far as the licence for the drug is concerned, go right ahead. But, and here\’s the point, no Phase III or Phase IV trials will have been done on how well this works and what the long term effects on lots of people are.

And this is the very expensive part of drug testing. This costs the lion\’s share of the $800 million it takes to get a drug approved and to market.

But here we\’re in a very interesting situation: for the drug manufacturers have actually gone and spent this $800 million (or the lion\’s share of it) in doing Phase III and IV trials on Lucentis. They must have done for they now have formal approval for using it to treat wet eye AMD.

So the current situation is that NICE is asking them to take part in Avastin trials for wet eye AMD: when they\’ve already done that, spending all that money to get Lucentis approved.

Note that this is nothing at all to do with drugs coming from universities, from various forms of the public sector. This is all about the regulatory costs, costs imposed by government, on bringing a drug to market for an approved use.

So, what they\’re really being asked to do is to help NICE make that $800 million (or lion\’s share of it) an entire waste of money because NICE now wants Avastin approved for eye care, despite the fact they\’ve already done this by getting Lucentis approved.

This might be best described as NICE both wanting their cake and eating it. If NICE actually wanted Avastin to be so used they could have turned around years ago and said so, before all that cash was used to get Lucentis approved.

And the real bottom line is that this is all an artefact of how the drugs licencing regime works. And yes, this does mean the blame is on the regulatory regime. Currently one must show that a new drug is both safe (to a certain level of safety: no one worries about heart attacks in 30 years if it cures terminal cancer today) and effective in order to get a licence.

And effectiveness of course depends upon which disease or problem the drug is being aimed at. If we changed the system to showing only safety then we wouldn\’t have this problem at all. Avastin could be used on eyeballs and the drug company would never have spent the money on trying to get Lucentis approved for eyeballs.

But I\’ll bet you that the way this plays out in the media is the \”usual screams of bloodthirsty profiteers trying to make a fortune out of those going blind, the rapine of the NHS drugs budget and so on.\”

Numbers, lovely numbers!

Rising unemployment will cost the government £1.5bn more than expected in welfare benefits, according to official forecasts that reveal the hidden cost of the coalition\’s austerity drive.

As big increases in VAT are due to bite from Tuesday, analysis from the Office for Budget Responsibility shows slowing economic growth will make it harder to reduce the deficit by forcing more people to seek state support.

The Treasury watchdog calculates the government will have to pay out £700m more in unemployment benefit than previously forecast. Similarly, a higher number claiming jobseeker\’s allowance as well as falling into lower wage brackets will see the government needing to pay out another £700m more in housing assistance over the next four years.

You see what\’s been done there?

Yes, you\’re wandering along thinking, hmmm, £1.5 billion, that\’s, even by government numbers, real money.

Then you get that \”four years\” bit.

They\’re actually saying that there\’s going to be £180 million (ish) more in unemployment pay and £180 million (ish) more in housing benefit each year.

Yes, still real money, but these are projections of course: that predicting the future thing is very difficult. And in the context of predicting the housing benefit bill (circa £20 billion a year) four years out, a 1% rise is really a rounding error. In fact, I would rather hope that the margin for error in the estimate is larger than that: if it isn\’t then someone is guilty of spurious accuracy.

Absolutely no four year forecast of government finances survives contact with the real economy and a 1% variance from previous plans is simply too entirely trivial to get excited about.

Won\’t stop Danny (see comments. How the hell am I supposed to keep track of the various flavours of odious Scots?) Douglas Alexander and the like leaping about shouting \”£1.5 billion!\” but that\’s just spurious politics, nothing real or serious.

Interesting way to do it

On one occasion he saved his men from an angry mob by showing a presence of mind well in advance of his 21 years. Encountering a roadblock consisting of eight young virgins, dressed in white and lying in the path of his armoured vehicles, he ordered a good-looking young Gurkha to walk forward and drop his trousers.

The virgins ran off screaming and the column moved on without a shot being fired.

And when the Revolution comes Somerset will be free and independent again!

We have our marching song

Who would not gird their loins against the devious Devonians, devlish Dorsetians, whassock Wiltshirians, and let us not forget, those those avaricious Avonians who have designs on parts of our fair county, upon hearing such stirring music?

And when we win, as we shall, we do of course already have our national anthem.

Time for Europe to tremble again in fear of the power of Scrumpy!

Quite gorgeous wondrousness from Ritchie!

OK, so a column in the Observer says the following about UK Uncut:

Keep up the good work. Your non-violent protests outside high-street chains have shoved tax avoidance on to the political agenda. Sir Philip Green is under pressure to explain why Topshop is registered in the name of his wife, Cristina, who is a tax resident in Monte Carlo. Boots is struggling to justify its domicile in an obscure canton of Switzerland. UK Uncut’s adoption of David Cameron-style language is a masterstroke – the group’s members call themselves “Big Society Revenue & Customs”. The business world is facing a long overdue question – aren’t elaborate tax-avoidance gymnastics just as morally repugnant as tax evasion?

To which we get Ritchie\’s comment:

They won’t be alone in thinking that in the coming year.

And business is not going to like it.

The answer is, of course, that business will have to embrace country by country reporting. Then they will be accountable for their tax. And what is the problem with that?

The problem with this is that country by country reporting is absolutely and entirely irrelevant to any of the three cases being discussed. Indeed, proper country by country reporting would, by highlighting where the economic substance of the transaction is, mean that all this talk about Vodafone would be switching entirely: wht the fuck are they being aksed to pay tax in the UK on their German activities at all?

So, let us go through the three cases.

1) Arcadia and Christina Green. Arcadia is a UK resident and UK domiciled company. It pays UK corporation tax in full on all of the profits it makes in the UK. In fact, as far as I\’m aware, Arcadia only trades in the UK and thus its acounts are prepared on a country by country basis anyway.

That Christina Green is not a UK resident nor UK domiciled and that thus dividend payments to her are untaxed by the UK tax system, as is true of all dividends paid to foreigners, has absolutely nothing at all to do with country by country reporting.

2) Boots in Zug. The low tax bill being paid by Boots is very little indeed to do with where the company is now domiciled. It\’s to do with thin capitalisation. The company has borrowed huge amounts of money: it therefore pays a lot of interest. Thus taxable profits are low because interest is a deductible expense for tax purposes.

This has the square root of fuck all to do with country by country reporting.

3) Vodafone. Now, the purpose of country by country reporting is so that, as Ritchie keeps telling us, we can see that companies are paying the requisite taxes in hte place where the substance of the economic activity has taken place. In Vodafone\’s case the economic activity was in Germany. They were and are selling phones and air time to Germans. Through a company in Luxembourg.

Some of the profits of doing this are taxed in Germany and some of the profits of doing this are then taxed in Luxembourg (but each portion only once, of course). And since the economic substance of the transactions is very definitely in Germany and Luxembourg, not the UK, country by country reporting would enable us to see that the requisite taxes had indeed been paid: whatever was demanded by the tax systems of Germany and Luxembourg.

Under Ritchie\’s preferred system there should be no tax liability at all in the UK: so calling for country by country reporting is in essence stating that UKUncut are deluded fools.

Which they may well be even if it\’s odd to hear Ritchie implying such.

So, err, quite why Ritchie\’s preferred scheme would help in these matters must remain unknown: unless it\’s the simple observation that when all you\’ve got is a hammer then everything looks like a nail.

Oh and this is lovely too:

One of the objects of 2011 is to reclaim politics from the extremists.We all know who they are: the Taxpayer’s Alliance, Policy Exchange, the right wing blogosphere, those who think that the world is a neoliberal experiment from which they can gain……They’re opposed to the state, they build a fantasy world of economics based on wholly false assumptions that they then promote as being an epitome of liberty that actually oppresses the vast majority, and they’re utterly and callously indifferent to the needs of those without wealth…….We need to reclaim politics and especially politics on the web from these dangerous (I use the word wisely) people who wish to cause harm for a majority…….We need to beat the trolls. They’re a threat to our society and the people of Britain.

Not until you\’re able to pull my blog from my cold dead hands matey….

Woolly Willy forsees the future

This is really quite wonderful from our Mr. Hutton:

The popular revolt against bankers, their current business model in which neglect of the real economy is embedded and the scale of their bonuses – all to be underwritten by bailouts from taxpayers – will become irresistible. The consequent rebalancing of the British economy, already underway, will intensify. Britain, in thrall to finance since 1945, will break free – spearheading a second Industrial Revolution.In 2035, there is thus a good prospect that Britain will be the most populous (our birth rate will be one the highest in Europe), dynamic and richest European country, the key state in a reconfigured EU. Our leading universities will become powerhouses of innovation, world centres in exploiting the approaching avalanche of scientific and technological breakthroughs. A reformed financial system will allow British entrepreneurs to get the committed financial backing they need, becoming the capitalist leaders in Europe.

He seems not to realise that the UK is the best and easiest place to raise entrepreneurial finance in Europe already.

He\’s still stuck on this \”banks must finance business\” thing when we have an entirely different system, public markets, which provides exactly that sort of finance in a manner that almost all other European countries don\’t.

I had a few meetings 6 weeks back (and that you to the kind gentleman at CityUnslicker who set them up for me) and basically I was asking \”Here\’s this half thought through proposal in an area where I am expert even if I\’ve not tracked down all of the numbers in detail yet. D\’ye think I could get £5 million off AIM for it if I did track down all of the numbers in detail? Oh, and it\’s a 90% probability of not working and wasting everybody\’s money and a 10% chance of really working rather well.\”

\”Yes\”.

And so the difficulty entrepreneurs have in finding finance in the UK is what?

Fun point from Geoff Mulgan

Health systems are generally quite conservative.

Indeed, they are. For they\’re almost always either largely (ie, US) or wholly (NHS) government run.

And government run bureaucracies are notably conservative.

Which is, of course, why we don\’t want governments running health care systems (financing them is just fine): because we\’d rather not, in this time of rapidly changing technology, find such a vital system being run conservatively.