Archive for October, 2012

Tax and benefits

So its the rich that get the pleasure and its the poor that foot the bill. That seems to be the way of things. Not only under this government but it was true in the Blair/Brown era too.

The wealth of the twentieth richest people in the UK has increased over the last year by about a billion quid.

The Guardian recently reckoned that the richest 1000 people had seen the wealth increase by a staggering £155b during the time that austerity was the one word for the rest of us.

Austerity ain’t going to hit the rich anytime soon. It looks as if the good times will continue for the rich. All earning over £1m an year will get a bung of £42,000 in tax cuts courtesy of George Osborne’s next Spring

Now there has been a great deal of anger against the bonus culture and the complex ways companies and the super-rich avoid paying tax.

Anger there may be. But there’s little sign that its having any effect on policy. The Starbucks, Vodophone and Amazons of this world continue to cream it. They continue to avoid paying  a proper tax on profits. Profits made at our expense.

It was a fine mess that the City slickers got us into. But are they paying for it. Not a bit. It’s the other end of the social scale that the burden falls.

A catologue of cuts have ensued.

Health in Pregnancy payment of £190, abolished. Child Trust Fund, gone. No new applicants for Educational Maintenance Allowance. Child benefit rates frozen for three years. Major changes to housing benefit that amount to significant cuts. And this is only the start.

Treasury wants to continue to swing its axe to the welfare budget until it knocks off £18b of the budget. £18b out of the pockets of the poor. £18b of spending power from the economy.

Strange that there isn’t the same determination to clobber the rich tax dodgers.

Charlie Elphike a Tory MP and a tax lawyer reckons that nearly 20 American multinations operating in the UK are only paying an effective rate of tax of 3% on profits made here. The rate should be 26%.

Its reckoned that Treasury is shortchanged by about £120b each year. This is done by the various tax wheezes and yes, by downright tax fraud. Where’s the urgency in tackling this. You can take £18b from the poor, but God forbid that you should collect tax from the rich.

It’s been said you can’t take money off the rich because they’ll lose any incentive to invest. Strange isn’t it that the poor have their money cut in order to give them an incentive to work. One rule for one, me thinks.


Party Time

Don’t Welsh institutions love to celebrate their being. This week it’s the turn of S4C to celebrate 30 years since its establishment. So just to get in on the act the Welsh media have devoted a fair amount of time looking at the campaign that led to the channel’s establishment.

Inevitably, the attention is devoted to the role of one man. The man, elevated to a saintly status in the eyes of many, Gwynfor Evans.

Many  remember him more for his role in the creation of S4C than for being the first Plaid Cymru Member of the United Kingdom Parliament.

The reason that he’s achieved iconic status amongst nationalists at least, is because the ex-Carmarthenshire MP said he would starve himself to death if the Thatcher government did not provide the country with a Welsh language television channel.

His declaration skewed the argument immediately. At the time there were two schools of thought about Welsh language television. The Gwynfor Evans camp wanted the shortly to be established fourth channel to be  a welsh language one.

The other camp wanted BBC1 and ITV to continue to broadcast programmes in the Welsh language. Their worry was that an all-welsh channel would become a ghetto channel for Welsh speakers and non-welsh speakers would have little contact with the language in future.

This latter argument tended to be undermined by many a viewer simply turning their backs on Welsh output by turning their aerials to face the English transmitters.

However, It seemed that the one channel solution had won the day. Both Labour and the Conservatives fought the 1979 general election with a manifesto promise to establish a Welsh language channel.

But such is the way of politicians, no sooner had Mrs Thatcher’s Conservatives gained power that they reneged on their manifesto commitment. Willie Whitelaw the new Home Secretary decided against a Welsh forth channel. His solution spit Welsh-language programmes between HTV and BBC Wales.

Understandably, those that wanted an exclusive Welsh language were up in arms and that’s when Gwynfor Evans intervened with his death threat. There’s some evidence to suggest that as leader of Plaid Cymru, Gwynfor Evans saw this more as an opportunity of raising the profile of his party after the real disappointment of losing the referendum, than on the narrow issue of broadcasting.

To some Gwynfor Evans’s intervention was pivotal. Whitelaw recommended to cabinet that they ditch the plans and go to their manifesto plans. So S4C was to be given the go-ahead without Evans missing a single meal.

Was it the threat of a fast until death that did it? Indirectly, yes.

At the time another of the Welsh political greats, Cledwyn Hughes saw what Evans’s game was and was determined not to give him the political advantage.

He persuaded the Principal of Aberystwyth University, Sir Goronwy Daniel, and the Archbishop of Wales, Gwilym Williams to lead a delegation to see Whitelaw. It did the trick, Whitelaw went into reverse.

It happened so quickly that Gwynfor Evans himself was disappointed that his cunning little plan of winning the hearts and minds of the Welsh had to wait for another day and another issue.

And as they say the rest is history.

So for better or for worse, 30 years on, S4C celebrate.

Mr Evans is a national hero, and the shrewd and affable Cledwyn Hughes simply a footnote in S4C’s history.




Olympic legacy?


“The Good news is going to keep coming.” So shouted the Prime Minister at Miliband in that cockpit that is Prime Minister’s question time in the House of Commons. And if hyperbole was an Olympic sport the two would be competing for that elusive gold.

As it is the Olympics delivered not an extra medal for Cameron but something much more valuable, growth.

This has just been confirmed by the Office of National Statisitics(ONS). Their first look at the figures show that the economy grew by 1% in the three months of the third quarter of the year. This follows a 0.45% contraction in the GDP in the previous three months.

So the ticket sales for the Olympics and the Para Olympics helped the country move out of the longest double dip recession since the Second World War. The quarter gave the country the strongest growth figures for five years.

Although economy expanded larger than expected, all the signs are that it is unlikely to be repeated.

Looking closely at the figures construction, which is a recognised barometer of how well an economy is doing, suffered a 2.5% decline in the quarter. But the Olympics would surely have contributed to the increase of 1.8% in distribution, hotels and restaurants and also to the 0.8% increase in the transport sector.

But just as quick as a ferret down a hole, the chancellor was hailing it as evidence that his policies had put Britain “on the right track.”

He went on to say “There is still a long way to go, but these figures show we are on the right track. This is another sign that the economy is healing and we have the right approach.”

But that’s politician speak. The reality is that further lapses are likely. There are plenty of potential iceberg’s that could puncture his optimism. The first being his continuing austerity programme. Add to that tight credit conditions against the backdrop of a world economy that is sluggish and the still unresolved serious problems in the eurozone. All in all a very toxic mix.  And all factors that are likely to burst the growth bubble.

The danger is that the Chancellor believes his own spin and thinks that we’re out of the woods.

The cost of the Olympics was £9 billion. Now that produced growth. Classic Keynes.

Now there’s a lesson there for our dear Chancellor. If he wants growth to continue, his austerity policy needs ditching. He needs to upgrade more than his travel arrangements.