Politics From The Sidelines

Blogging 211 Miles From Westminster

Tax Rates And What We Get Back

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A tweet the other day got me thinking about tax rates and how they effect us. The tweet was simple and read like this:

It’s abhorrent that people earning £35,000 + a year are subject to 40% income tax. It’s scandalous and punishing effort

Just to give credit, the tweet was by Sam Baxter.

Yes it is pretty scandalous that the higher rate of tax is that high at that low an income. I don’t really have a problem paying that much tax though if I know it is going to do some good. When you take into account allowances etc the rate is truly over £40k but then again with VAT, NI and all the other taxes we pay you are giving away over 50% of your salary at the higher band.

So why are we handing this cash over, and what good is it doing us. Well for the most part, if you are paying this rate of tax you see little of it. Your NI pays your NHS fees (supposedly) so you are getting that back if you go to hospital. Your bins get collected out of your council tax, police are paid for in a large part by that as well. So where does it all go.

I think this is what annoys me the most. A large proportion of the tax you pay goes out again in benefits. Yes I witter on about benefits a lot I know but there are reasons for that and this is one of them. Someone I know recently told me about their dad who is suffering from cancer. He can hardly support himself and his wife was tiring from the effort of helping him 24/7. They have never claimed a penny from the state and their attitude was “someone else needs it more than us”. While that may be true, the sad fact is that many people who are far less needy are taking advantage every day. In the end they were convinced to take the benefits they are entitled to and lead a happier life because of it.

If only more people had this attitude I feel we would live in a more equal society. Take it when you really need it. If you can do anything in your power not to take it, do it. Unfortunately there are far too many people out there that are happy to take whatever is offered without giving a second to it. Happily living their lives in the knowledge that they will never have to work because these higher rate tax payers will sort everything out for them in the long run. This is where the benefit system falls down and where we need to look at how we are dishing the money out. The welfare reform bill is a big step int he right direction. Lets hope it keeps on track.

Benefit Plans From The Policy Exchange

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The policy exchange have announced a proposal to get tougher on the benefit system. A good summation of what has been proposed can be found here.

The most disturbing part of it in my view is the following quote.

Over a third of benefit claimants felt that there was nothing wrong with choosing to stay on benefits rather than looking for work and that claiming benefits should be an option over having to work.

It should never be the case that benefits are simply an option over working. Too many people where I used to live have this mind set and the result is generation after generation of unemployed making a living from other peoples hard work.

Now obviously a good benefit system is needed for those truly in need and the proposals put forward by the policy exchange address some pretty good points. A key idea is that the more national insurance contributions you have made, the kinder the welfare system is to you. This is a great idea. You are basically on the bottom rung of the welfare ladder unless you have actively made contributions into the system from which you are extracting your income. I hope this can get put in place as it is a good incentive to get out and work.

Another point which has been raised a number of times over the past few years is benefit claimants having their benefits curbed or even totally stopped for refusing work. Damn right.

Unfair Budget?

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There has been a lot of talk today about how unfair the budget was. This talk has stemmed from the report produced by the IFS that said that families on the lowest incomes would be hit hardest by the measures announced in the budget as seen in the graph on the right.

Whilst at first glance this may seem like it is unfair I would question that analysis. The people on the lowest incomes are generally on low income because their income is derived from benefits. These are the people in my opinion should be hit the hardest. This is not because I want to see these people suffering in any way but it is because we need to make living on benefits less attractive and getting back into work more attractive. Yes it would be great if we could support everyone who is out of work and give them large incomes. But at what cost? Firstly this is a great burden on the tax system as it costs an extortionate amount to fund this. Secondly the more people get whilst out of work, the more appealing it is not to try and work at all.

George Osbourne has already made great strides towards getting people off benefits and back into work and Nick Clegg today has stated that these measures have been ignored by the IFS report.

Let’s get people back into work and away from the dole culture that is wreaking havoc in some areas.

My Thoughts On The Democracy Village Press Release

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I noticed here that the people down at Democracy Village have put out a press release. Obviously as they are on the brink of being evicted this comes as no surprise. Reading through the release shows just how out of touch with the real world these people are. I have put some of my thoughts in response to the press release below.

Democracy Village has been an experiment in peaceful protest.  We’ve achieved a huge amount.  We’ve also made mistakes. The media has portrayed us as drunks, drug addicts, fighters and layabouts.

Here’s the truth.

We all are.

Whether you like a drink on a Friday night, smoke cigarettes, drink coffee, get angry, or can’t be bothered to tidy up, none of us are perfect. Let him who is without sin cast the first stone.

Whilst this is true there is a major difference between the people down at DV and the civilised population. The rest of us do it in the privacy of our own homes or go to places where such actions are deemed appropriate (a cafe for coffee or a pub for a drink). What we don’t do is go out and sit in the middle of one of the most historical and beautiful places in London and make a mess of it.

What we’ve done is put a microcosm of our society under the microscope, and many of you (and some of us) don’t like what we see.

What we don’t like to see is a bunch of people with nothing better to do making a home out of a piece of grass land in our countries capital.

Too many of us look the other way when we see something we don’t like; complacency is not an option anymore, we need to unite and face our problems together.

Here’s the situation that lead us to set up the camp in the first place:

Our taxes are currently financing war in Afghanistan, a country which has never attacked us, to the tune of £11bn. In so doing we’re reinforcing extremism and perpetuating the cycle of violence in an already unstable the world.

I find the term “Our Taxes” used in this paragraph to be quite laughable. I would be extremely interested to find out the total amount of tax paid by the inhabitants of DV in the last couple of months. Also incorrect grammar in a press release such as “unstable the world” shows the level of thought that these people put into their efforts.

On top of that, our troops, young men and women who are working to protect us, are coming home in ruins – those that survive their injuries are hidden from view, can’t find work and are generally forgotten; chewed up and spat out by the very country they are fighting for.

An anecdote: At the end of one of our recent Talking Circles, where all our camp members have their chance to speak up about what’s on their mind, a young man from Rotherham took the floor and told us about his brother who was in the Army.  He’d been serving in Afghanistan and had returned to the UK last December at the end of his tour of duty, only to be told he had to return to the front line due to lack of reserve troops.  A week later, this guys brother got a phone call saying his brother’s jeep had been blown up by an IED  – the guy almost cried as he explained how he’d had to identify his brother from a tattoo on his back as that was all that was left of him.  He came up to me at the end of the meeting and said, ‘This is the only place where I feel anyone cares about how my brother died.’

Whilst we sit in our living rooms watching this distant conflict rage on, we’re also facing massive cuts in public services whilst big business and government rewards themselves with our money.

Firstly it is good to know that the people down in DV consider Parliament Square to be their “living room”. This is the major problem with DV. It is nothing to do with the fact that people are protesting the war. That is their right. It is the fact that they have chosen to turn Parliament Square into their home. This cannot be tolerated.

Secondly cuts to the amount spent on public services do not by definition have to mean cuts to the public services themselves. Better eficiencies and a reduction in bureaucracy can mean less money spent to provide the same services.

We’re losing our civil rights day by day, and have sleep-walked ourselves into the world’s most surveilled society,  where anyone can be locked up with no charge for 30 days in the name of national security and peaceful demonstrators are arrested for sitting outside Downing Street.

Our parliamentarians, whether they start out with good intentions or not, are standing by or actively supporting terrible injustices at home and abroad, which have been pre-planned by undemocratic think tanks and unelected  Whitehall mandarins.

Tony Benn recently said, ‘the politics of the present is in Parliament, the politics of the future is in Democracy Village and on the streets.’

Instead of sitting around complaining when things go wrong, let’s actually make a change. We believe it’s our duty to resist injustice, and permanently protesting outside parliament is the way we choose to do that.

OK, this is just ridiculous. “Instead of sitting around complaining when things go wrong” So you believe something has gone wrong and what are you doing about it? You are sitting around and complaining about it. That is most definitely not how you change it.

We want to learn how to become more passionate and compassionate, heal the rifts that seem to be widening between our communities, and ultimately be proud of our country again.

I for one am very proud of the country I live in. The thing that has made me least proud in the last few months is DV turning Parliament Square into a squat. The sooner people are evicted from this spot the better. Come back and protest if you want but don’t do it permanently. You do not live there, go back to your homes if you have them and get back to paying those taxes you seem so worried about.

We can do it.  We must do it.  We will do it.

Cumbrian Tragedy – Don’t Blame The Guns, Blame The Person

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After the terrible tragedy in Cumbria yesterday I feel it won’t be long at all before either the police or MP’s come out and blame the firearm laws for this. There is even a good precedent with the Dunblane massacre. Whilst both of these tragedies are just that, tragic, I don’t feel in either case it was the firearm laws that were to blame. It was the crazy men behind those firearms.

I still disagree with the motives behind banning all handguns after Dunblane. Yes Thomas Hamilton had a firearms licence and did use some licenced hand guns in his attack. But originally he was refused a licence on the grounds that he was known to the police as a possible paedophile. George Robertson wrote him a glowing character reference however that meant he got the licence anyway. This to me stinks of the police using hand guns as a scape goat for their own stupidity in listening to Robertson to overturn Hamiltons refusal for a licence.

In the case of the Cumbria shootings, this seems like a man who simply flipped. I doubt anyone will be able to explain exactly why it happened but it was probably the culmination of a long series of events. When someone flips like this and decides they are going to go out and murder a load of people they will do it. If it is with knives, guns, or whatever they decide to use. We have some of the strictest firearms laws in the world and even some of our Olympic shooting team have to go abroad to practice.

Let’s not look for another scape goat in this case. Unfortunately a small proportion of the population have the capacity to do something like this if pushed to the limit. We should be looking into spotting the early warning signs if that is at all possible rather than blaming the guns (again).

The Welfare Shambles And Tax Credit Scam

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Iain Duncan Smith has been talking today about his plans for reforming the welfare system. This is a system that in my opinion has needed to be overhauled for quite a while now. After spending 4 years recently living in an area with a very high unemployment rate it really makes you see how some people love and feed off the system and have no intention of working. This is totally wrong. Whilst I agree that people out of work need a helping hand to keep themselves going it should not get to a point where they are too comfortable living off the state that there is no incentive for them to work in the future. It is also shocking how the long term unemployed know every little loop hole to get the maximum value out of the Government in benefits.

Housing benefit is a nice little earner for some of the unemployed. Find out what the maximum amount is you can claim in your area and say you are paying that in rent even if you aren’t. Of course the remainder of the money goes towards buying a few more beers that week, lovely.

Disability benefits are being taken advantage off as well by many people, and with good reason. If you can manage to say you are just ill enough to get on them then you are set. As is anyone who can put their name down as being your carer. Your benefits shoot up and you’ll get a brand new car given to you so your carer can pick up your shopping. Of course a lot of these brand new cars go to people who could walk the 5 minutes to the local shop or supermarket to pick up your shopping anyway but that doesn’t matter, they may as well have a shiny new car to do it. I saw a lot of this and some mornings you wake up and drive to work down a narrow street littered with brand new cars and a sky dish on every house and think to yourself  “why am I bothering?”.

For those that manage to get a job and start working the tax credit system often discourages people from working more than a certain number of hours (16 usually if my memory serves me right). Once they go over this number of hours then they lose a massive chunk of their tax credits and end up quite a bit worse off. At least they are out working but let’s encourage them to do as much as possible.

Of course let’s not forget the real reason the tax credit system was introduced in the first place. It has been a great way for the government to fiddle the figures so the general public think they have somehow been collecting less tax and managing to reduce the amount of benefits being paid out. Tax credits were named as such for a very good reason. Every pound paid out in the form of a tax credit gets subtracted from the figure the government releases for the amount of tax collected. Benefits paid out are shown as an expense. By off loading some benefits as tax credits the amount paid out in benefits reduces as does the amount collected in taxes (or at least that’s what the official figures show). Amazingly, over night the governments figures look a lot better and they are managing to do a lot more with less money.

There are many flaws with the way the welfare system works at the moment. It is highly exploitable by those in the know and this is one of the first things the new Government should look into. As well as trying to encourage people back into work we should be looking at exactly why it is they don’t want to work. The answer is simple, most of them have it great on benefits. They can afford to do all they want to do in life without the tedium of having to go out and earn it.

Putting Things Into Perspective

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It’s been a day all about what the Government is going to cut. Details have been put forward about how the new Government is going to make cuts worth £6.2 billion. This is all well and good but with the scale of the numbers involved it is often difficult to know how much this represents.

I came across a rather interesting comment on Nick Robinson’s Blog that puts this into perspective quite well with regards to how much we will still need to be borrowing.

This chap I know, he currently earns £54,100 pa but his outgoings are £69,700 pa yet he goes to the bank and asks to borrow another £15,600 this year to cover the difference between his income and expenditure.

The bank manager coughs and says this will be difficult because you currently have a mammoth overdraft of £890,000 which needs servicing at around 4% pa.

That is, you are already paying interest of £35,600 pa on your overdraft and you want to borrow even more?

Mr. Optimistic says Ok, look, to demonstrate my good intentions, I will cut my spending by oooh … £620 this year.

If you were the bank manager, would you lend any money to this chap?

No – I would’nt either.

Unfortunately his name is Mr. UK plc and his real debt is the above numbers with several noughts tacked on i.e. hundreds of billions of pounds.

I quite like this simple analogy and it shows that despite the efforts being made to cut spending I think we need to be doing a lot more as well.

Inflation Is Rising – Who Would Have Thought?

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The latest inflation figures have been published and the Consumer Price Index (CPI) has risen to 3.7% while the Retail Price Index (RPI) has risen to 5.3%. The CPI is now 1.7% above the governments target of 2% and Mervyn King will have to write his second letter of explanation to the chancellor. Obviously this time however, it will be Mr Osbourne receiving the letter instead of Darling.

So why is inflation rising? Well there are obvious recent factors such as the ash cloud hindering our ability to import via air freight although I don’t believe this will have had a massive effect. Fuel prices have risen slightly but again, nothing huge here. In a BBC article Howard Archer, chief economist at IHS Global Insight said he expected inflation to begin falling again immediately:

April’s consumer price inflation rate of 3.7% should mark the peak, Inflation is expected to start heading down in the near term as temporary upward pressures start to unwind”

Whilst I have none of the experience of Mr Archer I have to question one big thing that people seem to have been glossing over in the past few months whilst inflation has been rising.

Has everyone forgotten about Quantitive Easing?

£200 billion of ‘new money’ was pumped into the economy. I know this is only supposed to be a short term arrangement, with the bonds that were purchased with the money being sold on when the economy recovers and the ‘new money’ returned, but even in the short term printing money will surely have an effect on inflation. I am no mean economist but I hope that people in the know haven’t underestimated the effect Quantitive Easing could have on inflation. Lets get the economy going in the emergency budget and get the bonds the Band of England bought, sold back so we don’t have this burden hanging over us.

Have The Lib Dems Thought PR Through?

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The Lib Dems have been making it abundantly clear throughout the election campaign that they want the voting system changed from FPTP to PR. I am not a great fan of PR and would prefer the AV system if it had to change but have the Lib Dems really thought about the consequences of what might happen if we switched to PR?

Throughout the election campaign one thing we heard quite a lot about was tactical voting. Labour MP’s were urging people in Tory/Lib Dem marginal seats to vote Lib Dem to keep the Tories out. Obviously figures on how much of this went on is not available but it’s quite possible that there was a fair amount of it in certain areas. If we switch to a PR system there would be no reason for any of this tactical voting which could potentially lead to quite a reduction in votes for the Lib Dems.

On the flip side of course, there will have been seats where Lib Dem voters might have tactically voted for Labour but as a total estimate I would guess this happened a lot less than the other way round.

Overall in this election the Lib Dems would have done a hell of a lot better with PR however. They won 23% of the vote which would equate to 149 seats as opposed to the 57 they have ended up with. I think they are treading sticky waters with the PR proposal though. A lot of people I have spoken to that voted Lib Dems did so because they didn’t like either of the big 2 parties but knew no other party stood a chance of winning in their are. A lot of people could be persuaded to vote differently under PR though and I think the party that would suffer the most in the end would be the Lib Dems.

What about parties like the BNP? The Guardian published an article today entitled “General election 2010: the defeat of the BNP” and a tweet from Tim Montgomerie asked is this the end of the BNP based on this article. I would be guessing the answer to this is no. If we ever get to the point where PR becomes a possibility the BNP will be loving it. They won 1.9% of the votes at the election. Under a true PR system that would give them 12 seats. This is not an insignificant number at all. Another interesting party is UKIP who won 3.1% of the vote, equating to
20 seats.

It will be interesting to see what happens in the coming months with regards to the way we vote. The Lib Dems are going to really push for a change I think, for better or worse. Something will end up in front of the house and if they manage to get a referendum out of it what will the people make of it?

Cabinet Settling In, Labour Leadership Battle Is On

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Well today was the first real day of politics I think. Although there was still lots of appointing being conducted it did look like people were slowly starting to settle in and get down to business. The first cabinet meeting was held this morning with members of the Conservative and Lib Dem parties present. New rules had been put in place by Mr Cameron to prevent anyone in the meetings from bringing in their phones or blackberries but I doubt that would have put them off too much from their duties..

Some interesting points have arisen in the last few days. Mostly from the publication of the Conservative/Lib Dem coalition agreement which can be read in full in the viewer below or downloaded from the conservative web site here.

Straight off the bat was the scrapping of ID cards. This will be welcome news to the freedom brigades that have been going on about how they would be an invasion of our privacy but some of the people who are campaigning against illegal immigration could see this as a set back. Of course the up side of all of this is it will save the public purses a substantial amount of money.

HIP’s to be scrapped, what great news this is. After going through the process of buying a house in the last year these things are a bloody nightmare. They only last 6 months so most of the time (especially during a housing slump when property isn’t moving) they are out of date and you end up having to pay for everything again anyway. I for one will be glad to see the back of these. EPC’s are to be kept however.

Plans for another runway at heathrow shelved in favour of a high speed rail network. Presumably then there will be investment into Manchester and Liverpool airports at some point in the future then. Or at least planning for them to expand. I guess on this matter we will have to wait and see but it should make life for people in my neck of the woods a lot easier when they want to head South.

Nuclear power is back on the agenda. Obviously the Tories want to see the current power stations replaced as a lot of them are nearing the end of their shelf life. The Libs on the other hand aren’t too keen on this favouring renewable sources of energy. I am all for renewable energy but do the Lib Dems really expect us to believe that shutting down our nuclear facilities and trying to replace them (and presumably gas, coal and oil plants too as they pollute a hell of a lot more than nuclear) with renewable sources is feasable in the near future. Of course it’s not. We need nuclear energy. If we are hasty about this we will end up buying more power from the French, and guess how they create a hell of a lot of their electricity. If you said Nuclear you’d be correct. The coalition agreement states that a new planning statement will be drafted and put before parliament with a Lib Dem spokesman speaking against it. The Lib Dems will however abstain at the vote. It should be interesting to see how that will turn out and when it happens.

There were many more interesting snippets in the coalition agreement but these were the first that caught my eye, the provisional keeping of trident for example is another good point in my opinion. Of course there were other goings very recently as well.

David Milliband has announced his formal candidacy for the position of Labour leader. The question everyone is asking now is if his brother Ed will be standing and indeed who else will put themselves forward. Rumour has it that Ed Balls has been sounding out his colleagues to see what their feelings are for him standing. Peter Hain has ruled himself out, not that I believe many people thought he would be standing. Jack Straw would have been a slightly more likely candidate but he has also spoken out saying he is not running. As is to be expected most of the Labour MP’s are being quite candid about the subject so far. It could be an interesting battle to see who makes it. And it will also be interesting to see if brotherly love will survive, as David Milliband puts it, if the two brothers go head to head on this one.