Death, Taxes & Deceits

There is nothing more exciting than an exhumation in a crime investigation. The dawning realisation that there is not just a real crisis in prospect in relation to the care of the aged but it is here already and has been up and running for several years now.

In some places it has been going on for rather longer. The manner in which some Labour councils handled their care for the old was both a disgrace and a crime in several respects. The way Government has gone about it since 1997 follows their example.

Strangely, it is Andy Burnham whose localities are amongst those who have behaved badly who is responsible for summoning the ghost of Lord William Beveridge, latter day Civil Servant, Master of University College, Oxford, and between 1919 and 1937 the Director of the London School of Economics where he tried to create in the Fabian Society mould an institution of study that now sends 30% of its graduates into financial and management services.

Originally, a lawyer and writer for the Morning Post, he was involved in social policy before 1914. He became a Civil Servant during WW1 dealing with manpower matters. The family heritage was that of the British Indian Civil Service at the height of The Raj and his father is said to be one of the Orientalist school, although this is the later version rather than the one of the late 18th and early 19th Centuries.

The 1942 Beveridge Report “Social Insurance and Allied Services” produced after some convoluted politics amongst the Labour leaders involved in the WW2 Coalition Government has long been regarded as almost a sacred text of social policy and Beveridge regarded as one of the saints of the socialist pantheon.

It had a key impact on the 1945 election and if anything could be regarded as a major piece of wartime propaganda. The creation of hope and a better life to stir people into making huge sacrifices and accepting the demands of the war was important at a time when it was going badly and it was clear it would be years before it ended. There was a hunger for certainty and security and for putting the problems of the past behind.

Moreover Beveridge was a firm believer in The State, in centralised direction and control and that power, decision, delivery and management should all be in the hands of those in Whitehall and their subordinates in local authorities. Given that the population were being told that vast State powers were a necessity in winning the war, the built in message was that it would be The State that would win the peace and only The State could deliver what people wanted. It was assumed that The State would educate and tell people what they wanted.

Is all this beginning to seem familiar? So here we are in the 21st Century in a world that has changed a great deal, yet what Labour and Burnham offer us is the vision of an early 20th Century Statist politician cum academic with a liking for eugenics and brought up in the traditions of the British Raj of the late 19th Century.

Meanwhile, here in the UK the old and vulnerable are faced with an expensive, unreliable, predatory system that delivers little care less certainty and a lot of insecurity. Sell a boy a gold fish and you have the forces of hell unleashed on you. But anyone who smashes their way into your house, reduces you to a physical wreck and a takes you for everything you have will get community service at worst or if it is done within Labour’s laws and Cronygarchy either honours or bail outs or both.

There are too many ways in which the implementation of Beveridge’s ideas were either compromised or botched or taken beyond reasonable conclusions to go into here. The recent story of how a single parent family can cost the taxpayer over £5 million over a lifetime is instructive enough.

What matters in relation to the old is that these days old age is a reality for many and almost taken for granted. In 1942 old age was an aspiration few would achieve and of those who did few would enjoy for long. The Grim Reaper used to get up a lot earlier those days.

Going back a hundred years or more, even amongst those who survived very few would be “pensioners”. The Census Returns commonly have a job listed for the old men and for the women they are usually in a situation where they would be doing a great deal either round the house or in other contexts.

The idea that people of greater age might do little or nothing or only things that amused them was alien. That there might be large numbers of such people who contributed little or nothing to their families and community and depended on a State service for their functioning would have seemed utterly crazy, if only because it would have been obvious that the costs would be beyond bearing.

Which brings us to the basic problem. The numbers involved in relation to the working population and its taxable capacity given other obligations are simply too great for the State to cope with financially and they are rising as the fiscal gap widens year by year.

I may scream about paying National Insurance all those many years, but this always worked on the running bathtub principle, that the tap of National Insurance payments would keep the water level high enough despite the loss through the pensions plughole. Only instead of the five inches or less decreed by the State for baths for the few that had them, as in the 1940’s, the water level needs to be much higher, because the plughole of liabilities has become much bigger.

The difficulty is that the tax element called “National Insurance” is not “insurance” at all. It is a tax, which amongst others, is a form of revenue for government spending, a great deal of it on health, social services and pensions. The political problem is that since the age of Beveridge the great majority of politicians have been untruthful and evasive about this and its implications.

The basic situation has worsened appreciably since the 1940’s. The increasing rates of divorce and this has become more common amongst older people allied to smaller families together with the rate of break up amongst families generally means there are far fewer people to give family support.

Moreover, the modern culture of individuality as opposed to a basis of either family or community means reduced willingness to give lives or even time to supporting and caring for their aged. Add to that at the extremes of age many of the family are pensioners themselves, especially with the numbers either taking early retirement or dumped out of jobs at or after 50 and increasingly 40.

Since 1997 the options for the old have been more and more restricted. Many of the former types of care home, residential quasi hotels specialising in pensioners, the convalescent homes are such have radically reduced in numbers. There is severe pressure on nursing home places. Care in the Community is for decreasing proportions of the elderly and largely means younger women buzzing quickly spending an hour or two here or there on basic duties.

Nutrition, hydration, medication, physical assistance, personal monitoring are all out of the question not only in their own homes but often in hospitals as well. What was the malnutrition figure for the NHS, 53,000? So where is the rest of it going to come from and how will it be paid for when there are so many other pressing needs?

One thing that is very different now from 1942 is that large numbers of the elderly own their own homes as opposed to renting or living in lodgings. Given the inflation in property prices many are asset rich and income poor. Much of this rise in theoretical wealth can be attributed directly to the boosting of the property market by the government and other forms of inflationary easing.

The Lord gave, and The Lord Hath taken away. What was it I said on Thursday 24th September 2009 “Property Tax – The Price Of Folly”? The past is coming back to haunt us and the bill is in the post.

An Italian Job

The news that Berlusconi has managed to succeed with an improved position after the elections in Italy will be heartening for Brown and Blair. The former because he is desperate to hang on to power; the latter because like his Italian friend he might face awkward legal situations.


There are also the familiar incentives of money and taking care of one’s fellow Cronygarchs. That Berlusconi managed it on reduced turnout would fit the bill for the pair of them.


Nevertheless the ever cheerful Armageddon dot org web site featured a story going the rounds of the pessimists and tremblers about a threat to Italy, a vulnerable geophysical zone. This is one of the less known volcanoes because it is under the sea and has been quiet during our brief period of recorded history.


Volcano & Tsunami Threaten Italy.


Europe's largest undersea volcano could disintegrate and unleash a tsunami that would engulf southern Italy "at any time", a prominent vulcanologist warned in an interview published Monday. The Marsili volcano, which is bursting with magma, has "fragile walls" that could collapse, Enzo Boschi told the leading daily Corriere della Sera.


"It could even happen tomorrow," said Boschi, president of the National Institute of Geophysics and Volcanology (INGV). "Our latest research shows that the volcano is not structurally solid, its walls are fragile, the magma chamber is of sizeable dimensions," he said. "All that tells us that the volcano is active and could begin erupting at any time."


The event would result in "a strong tsunami that could strike the coasts of Campania, Calabria and Sicily," Boschi said. The undersea Marsili, 3,000 meters (9,800 feet) tall and located some 150 kilometres (90 miles) southwest of Naples, has not erupted since the start of recorded history. It is 70 kilometres long and 30 kilometres wide, and its crater is some 450 metres below the surface of the Tyrrhenian Sea.


"A rupture of the walls would let loose millions of cubic metres of material capable of generating a very powerful wave," Boschi said. "While the indications that have been collected are precise, it is impossible to make predictions. The risk is real but hard to evaluate."


It’s good to have something to look forward to for a change. And there is Iceland on the go as well.

Peerages Going Cheap

There is a report in the Sunday Mail, the journal of record for the celebrity classes to the effect that Mrs. Pauline Prescott wishes her husband, John Prescott of this Parish to assert his right to a Peerage. This comment is serious and not to make jokes on the line of "That's no lady, that's my wife" or such.

It is my recommendation that when he rightly gets his come uppance he should be dignified with the title of Lord of Prestatyn in the County of Clywd and of Little Weighton in the County of Yorkshire.

No explanation is necessary.

Debt & Equity, Winners & Losers

In Humbugs and Tarts a couple of days ago, I nominated Geoff Hoon as my choice of the day in the meeting for money scandal unveiled by C4 and The Sunday Times. My reason was his cheerful willingness to use his NATO and EU contacts to help American Private Equity firms to buy up European defence companies.

The item below culled from the site of Tax Justice Network explains why. It means that when Brown and Labour are proclaiming their vision for all, necessarily to be paid for out of taxation, in reality they are happy to help the big boys, at a price and a cheap one, to set up schemes that will help them avoid UK tax.

As ever, they win, we lose, and we will pay more and more.

TAX JUSTICE NETWORK
Thursday, March 25, 2010

On the tax treatment of debt.

In October 2009 we blogged on a major faultline in global capitalism: the relatively different tax treatments given to equity and debt. This issue, largely as a result of a ferocious lobbying offensive by private equity companies and others, has not been in politicians' sights - but it should.John Plender has an excellent article on this in the Financial Times, entitled It Is Time to Stop Punishing Prudence, which says many of the same things we said (and our last article quoted him, too.).

As Plender says:"The heated debate on the taxation of bank bonuses has distracted attention from a glaring omission in current policy proposals to put the financial system to rights. This is the tax bias that exists in favour of debt at the expense of equity in the US and UK, which are the countries that matter most for global financial stability. It is a bias that potentially undermines the thrust of regulatory efforts to strengthen bank balance sheets."Indeed.

So a private equity company, for instance, has its financing supplied from a zero-tax haven, and pays no tax on the interest income there, while getting tax deductions on the cost of this interest income from the higher-tax onshore jurisdiction. It is a simple, and routine, abuse.

There seem to be two main approaches to evening out the difference in the tax treatment of these very different forms of finance. The first would be to make the notional cost of equity finance deductible against tax.

The second, far better approach, would be to stop making interest payments on debt tax-deductible. This would allow governments to reduce headline rates while broadening the tax base.

Plender points out some of the pitfalls of the first approach: "The snag is that this reduces tax revenue and narrows the tax base – the assets and income available to be taxed. The switch to giving relief for equity finance is reckoned to have cost Croatia up to a third of corporate tax income.

Raising headline rates of corporation tax to compensate is politically difficult."Politicians need to wake up to this essential question. Stop this, and (among other things) a world of offshore abuse disappears.

Going Potty Over Potholes

Those who drive, some who walk, but especially those who ride bikes, manual or motor will have noticed that across the land potholes have been sprinkled over our roads like fairy dust upon a moonbeam. A representative of the Local Government Association, motto “Your money or your life” has been roundly blaming the utilities for their indiscriminate digging and delving activities that, I quote, “have wrecked the structure of the roads.”

Before you mob rush off with your pitchforks and cattle prods to put up stakes and pile on the brushwood, I have to tell you it is not as simple as that.

Why do the utilities dig up roads? Because in the last 150 years we have required a lot of services we regard as essential to be installed below the surface. It began with drains and water, then we had gas, then electricity, then telephones later complex telecommunications and lately cable TV and other things.

Now there is not only a lot more down there, but the pace of development and change entails more activity. In other countries some of these facilities are carried above ground at much less cost.

Add to this the older services were often installed at a time when less robust systems were the rule and are now past their effective life. During the mid to late 20th Century the maintenance budgets of the local authorities and other bodies were often insufficient to keep them all up to standard and were the first parts of the spending to suffer any cuts being made.

There are other factors. The insistence of the government on extensive high intensity building adds to the pressures on existing services and systems. Also, we forget the earth moves. Water tables can go up and down, subsidence is common in many areas, and tree growth can impact on sub surface structures. There are other things as well to add to the movement.

The trouble is that our local authorities have forgotten what they were created for in the first place. Governments have piled on so many new jobs, initiatives and notions about what they might do that councillors have been giving themselves all sorts of airs and graces uttered in modern management speak, garbage in garbage out.

One of the basic duties was to enable people to move around on roads easily. Recently, it seems that many authorities are trying to make it as difficult as they can and as for keeping a reliable surface on the roads ours has certainly abandoned direct responsibility for that.

There are two other important matters. One is the practice of minimising reserve capability to deal with less common or rare events, such as a bad winter, or a wet summer. The other is the actual vehicles using the roads.

We do a fair amount of driving on the local minor roads and back roads often in the rural parts of our county. These are where the activities of the utilities is far less and there can be long stretches untouched by these organisations. But the numbers of potholes are not fewer, they are often more, and the increasing rate of breakup of the road surface as well as the degradation of the sides and verges is remarkable.

Why should this be? Because so many trucks and other vehicles are bigger, heavier, go much faster and give the road surface a real pounding. Also, there are a great many more of such larger vehicles using the roads for various reasons. So they are taking a great deal more heavy punishment. Not only are many of the lesser trunk roads deteriorating fast, but many of the minor roads and country lanes are in a very bad state.

The reason why the structure of these roads is being damaged is because that structure was never strong enough to take this sort of use.

The ugly truth is that if we wish to consume more and have more and need many more bigger and heavier vehicles to carry all this as well as ourselves on all the journeys we make then not only do we have to fill in the potholes, we are going to have to rebuild the basic structure of almost all our road system.

This will cost money and the local authorities are pretending that someone else should pay, notably the utilities so they can concentrate on their more airy fairy functions and prestige projects.

But may I ask, whose money is it that pays for the utilities?

Humbugs And Tarts

Watching politicians make fools of themselves on C4 Dispatches in Monday’s item on lobbying was instructive and predictable. Those of us who believe that the nation has been sold out to outfits with little or no interest in our actual welfare or futures will have had all our prejudices confirmed. Of a choice set of offerings I vote for Hoon The Hopeless cosying up to American Private Equity Companies to assist in their impending takeovers of European national defence champion firms.

Coming in the same week that the government announce that light tank production is to go to General Dynamics of the USA rather than BAE is intriguing. Does that mean that BAE is heading for the financial knacker’s yard and a sell off to Americans? Or is it to ensure that Gordon Brown gets to do a big TV interview with President Obama during the election campaign?

Hoon was rabbiting on about strategy. Has he any clue what it might actually mean or imply? If you want something serious on this I picked up on the Economic Road Map dot com web site called “When Giants Fall” (allied to Financial Armageddon) of Mark Panzner on March 20 an article “Peering Out To The Future” referring to a UK Ministry of Defence Document “Global Strategic Trends Out To 2040” available for download. It is 169 pages long and full of interesting comment.

So when we read all about it concerning politicians putting a price on their services, all I can do is give a weary sigh and ask what does one expect of politicians? When Parliament began under the feudal system the number of Lords was tiny and most either related or closely connected to the Crown.

They were the ruling House and the House of Commons was there to be consulted and informed. This was composed of the Knights of The Shires and even the Boroughs were represented by landed interests. The leading Knights were either related to or part of the network headed by the Lords. They were all in each others pockets.

By the time of the Tudors and Stewarts some of the Boroughs were sending leading merchants and burgesses into the House of Commons, but they in turn were linked through their trading and money dealings with the landed class. During the time of the Tudors and Stuarts anyone with enough money and clout could buy themselves a monopoly or get a Charter of Incorporation for control over some economic activity.

King James I of England and VI of Scotland was more careless than most. Selling off a key part of the wool trade to one City man wrecked one of the basic parts of the economy with the unintended consequence of triggering fiscal problems worsened by his high level of public spending. He might argue that Masques and Pensions acted as a stimulus but it did not work. The fall in the tax revenues and blunders in trying to correct it set off the long fuse that led to the Civil War.

By the 18th Century the political system had evolved further and then depended on a highly complex landed and monied City based Cronygarchy operating more openly but no more efficiently in the name of freedom. This was restricted to males in the richest five or so per cent of the population. The Reform Act of 1832 began to let in many more from finance and commerce to the House of Commons and some of the richest strayed up to the Lords.

This did not change the pattern of a lot of people still very much in each others pockets and this continued until 1914 by which time members of the House of Commons had gained a relatively small income essentially to cover basic London expenses. In the 1880’s running Egypt was handed over to a Baring to restore our lost investments. The Boer War was triggered by the gold and diamond mining interests and by this time the network was becoming looser, fractured and more complicated, the Marconi Scandal was a case in point.

In the 1920’s we had Maundy Gregory in action with peerages for sale and in the House of Commons constituencies could be often bought. By the 1930’s it was major industrial companies and the press barons that ruled with people like Rex Mottram of Evelyn Waugh’s “Brideshead Revisited” around. Money still talked and even Ramsay Macdonald was taken on the ride. By this time the growing Labour Party had developed its own networks in the Trade Unions and local parties.

In the 1950’s Big Tobacco ran the Tory party, between the Treasury revenues and marginal constituencies in Bristol and elsewhere the health people could go and whistle. Along with the bosses of the major industrial firms and the leading City firms the Tories went one way and the Labour Party went another. Unluckily under New Labour and its pressure to change everything the Tories lost the money men to Labour who let them off the leash and industry to the state Quangos.

So now we have an unholy mess and in many ways we are going back to 1603 with a Commons full of placemen, a Lords full of cronies, power given over to an elite of money and land and a Parliament under the thumb of a big spending dictatorial state that will allow no opposition or criticism.

Wandering through the concourse of Waterloo Station on Monday I saw something that at one time would have fulfilled one of the highest ambitions of life. It was a sales point devoted to selling humbugs and there were jars of them of all shapes and sizes. I had to pass it by, the remains of my teeth, never mind the digestive system, are no longer up to it.

The area around Waterloo Station had been one of the more downmarket areas for those looking for ladies described as “tarts” until the Butler reforms of the late 1950’s. The ladies in the vicinity were popularly known as “Tuppeny Uprights” available for servicemen in a hurry to catch a train. Economically this was a classic example of profiting on the basis of low price and high turnover.

There is a story of some American Airmen, rather better paid than our own, during The War making their way to Westminster Bridge, usually kept clear of such ladies and asking a constable where all the real “tarts” were. He put his thumb over his shoulder in the direction of the Palace of Westminster saying “There are all in there but they cost too much for you lot”.

This could be a very old chestnut, one can imagine a clutch of Scots profiting from the accession of King James to the throne in 1603 wandering along London Bridge looking for company, not finding it then asking the Watchman where the “tarts” are and he points to the Globe and Rose theatres making much the same comment. It might explain why The Bard did so well from his enterprises.

One way or another the majority of our modern politicians are in essence “tarts”. They are very inefficient, rarely deliver what they promise and very expensive. If we want more open and better governance then we are going to have to change the system quite radically. This means a new constitution and new representative bodies. If you care to call it that, I mean a revolution.

All we are getting at the moment is humbug and more humbug by the jar. The latest row about naughty men and women making promises for money are almost beside the point. In the MoD publication referred to above on Page 91 in a chapter dealing with Strategic Shocks it refers to issues arising from the collapse of “Pivotal States”. It gives several possibilities.

The one it should mention and does not is the United Kingdom.

Spare A Copper, Guv?

Is it possible that there is now a real problem relating to the use of breathalyser devices to measure motorists to test for alcohol in their system, assumed to be from drinking one beverage or another?

In one old film the sneaky villain boasted that the coppers would never catch him because he could smell them coming. In that age he could have been right if his senses were sharp enough. When policemen were on the beat they carried with them the distinctive aroma of well worn feet in well worn socks in well worn boots. In the days of shortages and high cost clothing men might only change their linen once a week, at the time of the bath or more likely wash down at the kitchen sink.

The trouble today is that many police officers smell a great deal stronger than they ever used to due to the extensive use of spray male deodorants and related cosmetic products. They might also work in premises with “air freshener” devices, some of which are very strong and are made to cover wide areas. Moreover their vehicles might also have such devices and also will be contaminated from use.

It goes further than that in that nearly all the products of this kind today are chemically engineered to have high impact on the sense of smell; that is an immediate effect on the brain function. Additionally, they are made to carry long distances and to adhere indefinitely, with many of them once contamination occurs it is virtually impossible to wash out.

Recently, simply walking around town by polic officers or passing police cars parked I have caught a strong waft of one product or another. So as in the days of old you can smell them coming, only today it is not necessarily quite so distinctive.

But there is a problem. Many of these spray and freshener products contain ethanol. This is used as a bulking item, a carrier substance, an antibacterial, and an enhancer to the aromatics and adherence elements. Ethanol is a form of alcohol and a favoured biofuel. Also, despite the manufacturing processes involved as so much comes from corn crops it can be called “natural”.

In short many of our friendly neighbourhood police officers are personally heavily contaminated permanently with alcohol related substances. This will be on all their clothing, on their skins, possibly on their breath and necessarily on any of their items of equipment, notably the breathalysers.

To make it worse if a suspect is hauled off to the choky for blood samples he may well have to wait hours in a heavily polluted environment before the blood sample is taken, possibly by a medical officer who is just as contaminated.

When people claim not to have been drinking or drank many hours ago when their tests show a high level in the blood this is often put down to variations in the metabolic rates, the consumption of foods with alcohol content that the person was not aware of, or if it is some hours that they may have taken in more alcohol than they thought etc. etc.

It does not seem to have dawned on any defending solicitors or other legal authorities that if there are now high levels of ethanol pollution in the air and moreover not only police officers but their premises, gear and cars might now be impregnated with ethanol strong products there are issues arising.

Honest guv, the ten pints I had were all lemonade its me personal fragrance what done it.