Chancellor admits economic incompetence

[Neil_F]

I disagree with most you say no disrespect, but it is just jargon....the facts as Kerry (Lord football) posted earlier are more relevant than some bollocks about how the government are trying to get us out of this mess

I didn't comment on current government policy at all. I was rebutting the notion that the structural deficit of 2008 wasn't due to excessive spending.

whilst they sit in their million pound houses and try to think of the next ploy to get the deficit down attacking the poorest in this country whilst letting multi nationals walk away without paying sod all in tax

And what action can you take? Multi-national companies are applying OECD transfer pricing rules and double tax treaties as they are written. They are obeying the law of the land and paying the correct amount. If they are not then put them in front of a tribunal or, if you are accusing them of outright evasion, a court of law. If politicians don't like the outcomes, derived from the laws that they vote for every year, then they need to change them.

Personally I would abolish corporation tax entirely. It doesn't raise much money and it has been demonstrated extensively that corporation tax is borne by employees through lower wages. Get rid of it, replace it with a modest land value tax and move all the HMRC officers to tackling personal income tax and indirect tax evasion. It would be both a supply side incentive and a fiscal stimulus that would dramatically increase business investment and increase employment.

I've been saying on here for a long time that no one knows what to do to generate growth; it may well be there is nothing that anyone can do. The UK government, like most others with their own currency, has stuck with modest fiscal contraction with monetary stimulus in an attempt to reduce deficits. All governments are terrified of being locked out of credit markets that would result from loose fiscal policy but austerity will always reduce medium term growth. The common consensus is that opening the spending taps would be worse, but no one has tried it so no one really knows.

Fiscal policy has therefore become a delicate balancing act of avoiding a loss of confidence and growth inhibiting austerity. It is the everything will be alright in the end policy, which it probably will but it isn't exactly inspiring.

Personally I would do some fairly radical things but there would be no mandate for it and no one would vote for it.

 

[Cricko]

That is a very fair balanced response.I would however like to know these radical things you would impose/take up?

As far as tax goes, it seems the politicians and not only in this country look after there rich mates.

 

[Neil_F]

That is a very fair balanced response.I would however like to know these radical things you would impose/take up?

As far as tax goes, it seems the politicians and not only in this country look after there rich mates.

I do think that the political class look after themselves, but not through the tax system. They do it through the revolving door of patronage and appointments to regulators, quangos and other bodies. The same people constantly turn up in high paid jobs for which they have no qualifications or experience. This is one of (the many) reasons I am againstthe Leveson recommendations.

I've been reading quite a lot recently about regional difference in economic output. In 2012 there was no double dip recession in London or the south east generally. Economic output went up throughout and unemployment didn't move. In 2008 there wasn't a recession at all in central London. The divergence between London plus the commuter belt and everywhere else is now huge; they may as well be different countries.

This is never talked about though and no one has any proposals to do anything about it. I think this is something that should be addressed, but not through redistribution or any other reallocation of cash. I don't want to go on too muvh here but broadly I would do the following in the north only: eliminate business rates, free up the planning system in favour of development especially for residential usage, introduce regional pay, eliminate stamp duty and eliminate employer NIC.

Nationally I would abolish corporation tax, introduce a modest land value tax, split the banks completely and defer the new Basel III regulations, legislate for no bank bailouts in the future, redirect the entire foreign aid and CMS budgets to infastructure spending in the North. That will do for now...

 

[Lord Football]

I'll re-emphasise my point about legislation. It is easy to change, and can be done quickly. But there are no plans to do so despute the public outcry and wringing of political hands.

You do the research, but check out where Tory (and some other) MPs have vested interests. Most of them have interests in multi nationals, internationals, banks and finance houses.

Then ask yourselves who really benefits in this mess.

 

[Lord Football]

I do think that the political class look after themselves, but not through the tax system. They do it through the revolving door of patronage and appointments to regulators, quangos and other bodies. The same people constantly turn up in high paid jobs for which they have no qualifications or experience. This is one of (the many) reasons I am againstthe Leveson recommendations.

I've been reading quite a lot recently about regional difference in economic output. In 2012 there was no double dip recession in London or the south east generally. Economic output went up throughout and unemployment didn't move. In 2008 there wasn't a recession at all in central London. The divergence between London plus the commuter belt and everywhere else is now huge; they may as well be different countries.

This is never talked about though and no one has any proposals to do anything about it. I think this is something that should be addressed, but not through redistribution or any other reallocation of cash. I don't want to go on too muvh here but broadly I would do the following in the north only: eliminate business rates, free up the planning system in favour of development especially for residential usage, introduce regional pay, eliminate stamp duty and eliminate employer NIC.

Nationally I would abolish corporation tax, introduce a modest land value tax, split the banks completely and defer the new Basel III regulations, legislate for no bank bailouts in the future, redirect the entire foreign aid and CMS budgets to infastructure spending in the North. That will do for now...

Now there is something going on here, and frankly its a bit scarey. Its called Regional Pay.


The current Government believe that it is cheaper in the north, that public sector pay should be spent accordingly. So, a nurse in London would earn £20k, in Leeds £18k (illustrative figures those); the same would apply to a teacher, a firefighter, a policemen, a council worker etc etc.....

The result of that would be that you find more hospitals up north because they are cheaper, but closures in the more expensive south. People in the north would have more jobs but less money; people in the south more money but less jobs.

So, you solve one problem but create two more!

 

[Neil_F]

I'll re-emphasise my point about legislation. It is easy to change, and can be done quickly. But there are no plans to do so despute the public outcry and wringing of political hands.

You do the research, but check out where Tory (and some other) MPs have vested interests. Most of them have interests in multi nationals, internationals, banks and finance houses.

So why don't you go through the Cabinet for us now? What interests do they have and how do they benefit from current policy?

I'm very spectical of conspiracy theories so let's see some evidence.

 

[Neil_F]

Now there is something going on here, and frankly its a bit scarey. Its called Regional Pay.


The current Government believe that it is cheaper in the north, that public sector pay should be spent accordingly.

Labour is cheaper in the North; that is beyond dispute. It is simple supply and demand.

The principle is a simple one: national pay distorts labour markets where labour costs deviate from the median at either the high or low end. That is the case in London, where it can be difficult to recruit public sector workers but the market price of labour is higher than public sector wage rates. In other words, someone that could earn significantly more in the private sector than they could in the public sector. Hence incentive payments to try to recruit teachers in London.

At the other end of the scale, where the national public sector rate is significantly higher than the regional/local market rate then a lot of people end up in the public sector and the private sector cannot find suitable labour. This is especially acute in areas of low migration as there is no turnover of labour. I have witnessed this first hand in the last few years in the North East, where the public sector dominates graduate recruitment because it pays the most. Private businesses cannot grow because they can't find suitable employees and no one wants to move there.

Regional pay wouldn't be popular but it would benefit private sector growth in the North and public sector recruitment in the South. The deployment of public services would be determined by Whitehall based on need. No one is seriously proposing closing all hospitals in London and moving them to Hull because it is cheaper.

 

[Tangled up in Blue]

As far as Starbucks,Amazon et al are concerned, how about an additional, windfall sales tax on the countries where they actually make their sales, rather than the tax havens etc where they choose to pay their taxes?

 

[Neil_F]

I'm not an expert on this, Barna, but I'm fairly sure it would be illegal under EU law.

There would also be some serious behavioural consequences as well.

 

[OldBlueLady]

Now there is something going on here, and frankly its a bit scarey. Its called Regional Pay.


The current Government believe that it is cheaper in the north, that public sector pay should be spent accordingly. So, a nurse in London would earn £20k, in Leeds £18k (illustrative figures those); the same would apply to a teacher, a firefighter, a policemen, a council worker etc etc.....

The result of that would be that you find more hospitals up north because they are cheaper, but closures in the more expensive south. People in the north would have more jobs but less money; people in the south more money but less jobs.

So, you solve one problem but create two more!

Even back when I was in banking 20+ years ago, it always grated that someone living in the north was on exactly the same pay as we in the south without all the added expenditure we had. A fairly low level bank employee living in, say, Darlington, was on what was relatively a very high income compared to one living in, say, Southend, even when London weighting was thrown in. So, I'm afraid I do understand the reasoning behind this.

 

[Perth Bambi]

It's not true as far as I know anyway. Nurses are paid at agenda for change which is banded So a nurse will start at 21,176 per year everywhere apart from London. The same as a Physio of the same band, each year you will get a payrise of roughly 900 depending on whether you hit your objectives or not.

 

[Tangled up in Blue]

As far as Starbucks,Amazon et al are concerned, how about an additional, windfall sales tax on the countries where they actually make their sales, rather than the tax havens etc where they choose to pay their taxes?

I'm not an expert on this, Barna, but I'm fairly sure it would be illegal under EU law.

There would also be some serious behavioural consequences as well.

I seem to remember it coming up as a possible solution to the problem of lost tax revenues on The Daily Politics last week(raised by Margaret Hodge, IIRC).Don't think she mentioned any specific arguments as to why it couldn't be implemented.
What's certain is this issue won't be coming away any time soon and it'll be interesting to see what GO proposes to do about it tomorrow.
The argument for a windfall tax on sales rather than(or as well as) profits makes sense to me.

http://www.guardian.co.uk/commentisfree/2012/dec/03/taxing-corporations-one-law-editorial

http://www.guardian.co.uk/business/2012/dec/03/vat-loophole-digital-sales-olympics

 

[hockleyeast1964]

Of course if the public sector workers want to share our pain and give up their final salary pension schemes ,that should save the country a few billion.Fat chance of that happening.Southend in the champions league before that happens.Enjoy your long christmas break.

 

[Neil_F]

I'm pretty sure it would be illegal. We already have a sales tax which is based on EU legislation: it is called VAT. Imposing a further sales tax on certain companies, or companies not tax resident in the UK, would be discriminatory and therefore illegal under EU law.

The UK long ceded sovereignty in much of these areas. Issues such as transfer pricing and double tax treaties, which override domestic legislation, cannot be changed unilaterally either.

The simplest solution would be to abolish corporation tax. Most of the entire discussion is arbitrary anyway. No one ever talks about who corporation tax is incident upon, what the economiccost would be of higher taxes etc. It is not as simple as the likes of the publicity seeking Margaret Hodge make out. It is a further illustration that politicians and government are totally ill-equipped to even draft legislation let alone enforce and regulate it.

 

[Pubey]

redirect the entire foreign aid and CMS budgets to infastructure spending in the North. That will do for now...

Are you suggesting that the north is the new sub-saharan Africa? It's not warm up here for a start!

Good points about regional differences. It is discussed a lot up here, and I can understand why it wouldn't be talked about much in London.

 

[Pubey]

Even back when I was in banking 20+ years ago, it always grated that someone living in the north was on exactly the same pay as we in the south without all the added expenditure we had. A fairly low level bank employee living in, say, Darlington, was on what was relatively a very high income compared to one living in, say, Southend, even when London weighting was thrown in. So, I'm afraid I do understand the reasoning behind this.

Why didn't you move to Darlington then? I guess because your well being/quality of life would be greater in the south (SUFC and family) and therefore the reduced earnings were compensated in other ways

 

[Perth Bambi]

Of course if the public sector workers want to share our pain and give up their final salary pension schemes ,that should save the country a few billion.Fat chance of that happening.Southend in the champions league before that happens.Enjoy your long christmas break.

The NHS will no longer be using a final salary scheme

 

[hockleyeast1964]

The NHS will no longer be using a final salary scheme

I take it that's just nurses i assume all these nhs managers get a tidy lump sum tax free etc etc ...oh to be a public sector manager!

 

[Perth Bambi]

That's anyone who is employed under agenda for change which will be a large majority. Certainly the senior finance directors will fall under that.

 

[Pubey]

That's anyone who is employed under agenda for change which will be a large majority. Certainly the senior finance directors will fall under that.

yep you're right.