POLITICS CORNER

[Stanley]

You are right David... The only thing we can be certain of is that we are in a very strange economic cycle and the econo0mists in charge of our money don't really understand what's happening. Anything they say is 'best guess'.
I see Lord Fink has backed down and admitted tax avoidance.... But he says that 'everybody does it' so that's all right.

[Tizer]

One of my sons has a mortgage at 0.15% above base rate. If rates go negative say to - 0.5%, - they just did so in Norway - will the bank will have to pay him?

You know the banks would find a way of avoiding that, Tripps, they're very clever at `avoidance' (but don't tell HMRC). Mind you, they'll probably demand that I pay them for letting them have my savings kept in their electronic vault (otherwise known as a hard disk).

[Bruff]

There’s various ‘schools’ of economics, but it seems to me the predictive power of any of them is questionable. Each of these schools of economics seems to me more an agenda or an framework for how you want things to be done, or would like things to be. The new Greek Finance Minister is setting the cat among the pigeons due to his ‘school’ of economics being very different to the orthodoxy of the last 30 years.

There is research that looked at the predictive ability of various economists and this showed it was little better than a guess. As with your joke Tripps, the other joke defines an economist as someone who will explain tomorrow why what they predicted yesterday, did not happen today.

So when the next chief economist from Deutsche Bank or wherever comes on the tele and opines at length on the outlook, you can be mildly interested in the argument though know that if you argued exactly the opposite, or some other outlook, you’d have just as good a chance of this being the outcome. The economist or the financier of course thinks he or she’s brilliant and deservedly ‘earns’ their riches, and we are constantly reminded of this. A nonsense of course.

To whit, Lord Fink. Both a hedge fund guru and by his recent interventions spectacularly gormless. I think we all know standards have dropped in this country, but that someone of so limited abilities is allowed anywhere near our legislature is shaming. What he means is ‘everyone like me does it’. Which we know. And it’s good that he confirms this.

More generally, whatever one might think of the practicalities of his interventions, Mr Milliband has now stood up to the Daily Mail, to the Murdoch empire, to the energy companies and now the tax avoiders and evaders. In each he has been measured and analytical. The Tories have a problem. They seem to think that because he looks funny, seems a bit weird, struggles with eating a bacon sandwich, that’s enough. But on each of the above, the Tories have been caught on the hop with their focus on personalities.

To whit (again), a recent questionnaire through the door from our charming MP Ms McVey, Minister for the Disabled and Tea-Lady to the Cabinet. Q4 was as follows (I kid you not):

‘Ignoring the different policies and thinking of them purely as people, who would you prefer to be Prime Minister: David Cameron or Ed Milliband?’

Of course, I ticked Mr Milliband and helpfully provided a written explanation for Esther to the extent that Mr Milliband struck me as an intelligent, thoughtful and careful individual ideally suited to the strictly adults-only world of serious policy-making and diplomacy. Whereas Mr Cameron seemed an easy and accomplished liar as one would expect from a low-rent PR spiv for a third-rate TV company. I then thanked her for giving me the opportunity to attack the player and not the ball so to speak.

Good speech and good interviews from Ms Sturgeon the other day.

Richard Broughton

[Stanley]

"low-rent PR spiv for a third-rate TV company." Brilliant Richard! Love it. I agree with you on Economists (and incidentally Keynes had the same opinion) and also on Milliband. I admit that I am not happy with the way he presents himself but there is principle behind his statements. I suspect he is held back by his team from what I glean from news reports of dissension in the ranks. Like you I was astounded by Fink's rapid retreat and his inept statement. Last night's revelations about BLOOMFIELD leave a tax layman like me completely baffled. The excuse seems to be that tax regulations and law are too complicated. My suggestion is forget the complexities and bring in a new rule to ensure punitive punishment if a case like this is proved. In other words, raise the risk level of evasion to a much higher pitch. There will be many more cases surfacing like this.
On the wider point of the election strategies being pursued by the Tories at the moment, again I agree with you. The Tory evidence base for proof of good governance since 2010 is so slim they are forced to attack personalities, repeat the old canard about it being Labour's fault and if necessary completely ignore any delicate questions. Even this strategy leaves the Tories wide open, who was it said he was going to eliminate ya boo politics at QPMs?
Locally, I am getting confused by Stephenson's election literature and pictures of him at recent events. The former show a young slim clean shaven man, the latter a podgy moon-face with a heavy beard. Very confusing..... (We are still getting a flood of full colour glossy flyers through the door)

[PanBiker]

I cant for the life in me see why HMRC don't apply the same rules for the super rich as they do for the common man. That is to generally overtax them throughout their working lives and then give them occasional rebates. That's how it's been for this pleb and I suspect thousands of others through various employments. Why isn't Lord Fink, (apt name it would seem) in front of a judge? He has openly admitted fiddling the tax man. If that was you or I we would be bounced through court as a matter of course.

[Tizer]

My experience with HMRC has been the same as yours, Ian, and it was even worse when I became self-employed - they kept over-taxing me and then handing it back at a much later date, sometimes in instalments. They were in debt to me most of the time, and of course they didn't give me any interest or apologies. Way back in the early 80s I got an intimidating threatening letter from them because they discovered I had an `undisclosed' bank account. About 6 or more years previously I'd been working 100 miles away from home during the week for about a year and had opened an account at the local bank so I could withdraw cash (this was before ATMs). At the end of that period we moved to another part of the country and I withdrew all my money from the local account and assumed it was closed (there weren't all the concerns about security of bank accounts in those days). As far as I was concerned I had only one bank account. If they'd looked they'd have seen there hadn't been any money in the `closed' one for all those years. But it's easier to chase people like me than the real tax dodgers.

[Tripps]

"He has openly admitted fiddling the tax man"
Are you sure that this is the case? I don't think so.

I've looked him up - he 's an old boy of Manchester Grammar School, and his dad was a shopkeeper in Crumpsall. Quite irrelevant, but interesting, nonetheless.

[Thomo]

Another interesting snippet is the Moribund versus Bacon Butty episode. Given that he was born of Jewish Parents one would imagine that it would be a big no no. And then I discovered that he is a declared atheist. As this is not common in Judaism maybe either his conscience was troubling him or being Jewish is something that is not easy to walk away from!
I have been down the same path as many others when it comes to HMRC. When I lost my boatbuilding business to thieves and the resultant ill health, several years later I was threatened with court action if I did not pay the exorbitant demand immediately. A visit the their office at Nelson armed with all the paperwork from the disputed period, and I came away with a clean sheet. I must have been paying over the odds in the first place, as over the following three years I received a substantial number of rebates.

[plaques]

And then I discovered that he is a declared atheist

At least we now know that he 'doesn't do God' unlike Tony Blair who went from Anglican to Catholic. Fortunately, we live in a country where we tolerate all faiths. "nearly". But are a long way off accepting ethnicity.

[Stanley]

David puts his finger on the real problem. The distinction between avoidance and evasion is not clear. This is why I say that when a case is proved the punishment should be punitive and always include loss of freedom and the threat of prison. A large fine is a flea-bite to the super rich. We see this with the big institutions as well. Drag those responsible out in cuffs and make life difficult for them, they might think twice if they knew this was the case.

[Tripps]

"The distinction between avoidance and evasion is not clear"

I wouldn't say that's true. Evasion is clearly illegal, and involves concealing assets. Avoidance is more complicated - an ISA is tax avoidance - and I think this is what Lord Fink meant when he said everyone did it. Remember MIRAS - that was handy when basic tax was 33%. Buying a house avoided a lot of tax.

There is now it appears, another category - that of 'aggressive avoidance' . The immensely wealthy it seems will go to any lengths to increase their wealth. I heard it defined this morning as 'taking action which though legal is not what the Government had in mind when the relief was granted'.
There is a constant battle between imaginative accountants and HMRC. Sometimes the Revenue win, and claim back the tax 'avoided'. Recent examples I believe, are David Beckham and Gary Lineker.

My MP in the 1980's was Sir Peter Rees - who was such an accountant. His car Reg No was TAX 1. We brushed shoulders one Sunday morning in the paper shop. I read an account of his methods, in which he took (I think) 27 different steps in a process to avoid tax. This was all supposed to be very clever at the tme, and he ended up as Chief Secretary to the Treasury.

[Stanley]

Which all goes to demonstrate that the system is too complicated.... perhaps impossible. I once knew a bloke who was reputed to keep his money in biscuit tins under his bed. No chance of the revenue getting at that!
Ken Clark could be on the right lines with party donations, cap them. I'd go further, ban all of them apart from party subscriptions and fund the parties from public funds. Recoup the money with an annual windfall tax on capital from the sources that give the donations now. It wouldn't work of course but might be a place to start from. The present system is rotten and loaded in favour of the capital holders. Classic case of 'money talks'.

[Tizer]

Perhaps we need a new approach to make `aggressive' tax avoidance much less easy. For example, let's state that any form of tax avoidance must be easily understood, already established and widely used if it is to be allowed to occur in a routine manner (e.g. Tripps' example of ISAs etc). If someone wishes to embark on a new, more complicated version of avoidance then they must submit the details of what they propose to HMRC in advance of its use and wait for approval to go ahead. This might be sufficient to deter most of the problem people.

[Tizer]

Robert Peston's latest analysis of the Greek exit danger:
http://www.bbc.co.uk/news/business-31499814

[Stanley]

He's got it about right I reckon which is the reason why I said last week that an 'accommodation' would be made with Greece because the consequences for the Euro project and the EU itself are worse than anything that can befall Greece. Think of the number of times the rules on spending as a proportion of GDP have been broken and ignored. It all goes back to the original flaws when the common currency was instituted without the necessary controls over budgets. A circumstance like the Greek problem was foreseen and ignored, kicked into the long grass.
The biggest tragedy is that even if the cracks are papered over for Greece, the fundamental flaw in the Euro Project still exists and will crop up again.
See THIS for the Guardian's coverage of the resignation of Peter Oborne from the Telegraph. Widely respected for his political coverage Oborne has evidently had enough of falling standards and resigned on principle. He won't be unemployed for long. He has done us all a service by drawing attention to the ignoring of uncomfortable news, a trait that can be seen right through politics as well as in the media.

[Bruff]

Another day and another fib from the easy and practised fibber that is our PM. At his ‘Meet the People’ Q & A today, the PM in response to a question about HS2 noted (again!) that this Government is investing more in the railways than any other since Victorian times. This fib was comprehensively demolished in a statement from the Civil Service, which was reported in the Guardian in 2013. Rather cheekily, the claim was dismissed as being as inventive as the Victorian era itself! In what was described as a long historical exegesis, the Civil Service admitted that the Government has little way of knowing anything at all about investment levels prior to 1951.

It is tempting to log all the PM’s fibs but given that at one PMQs he managed three in a half hour, I’d have very little time left for anything else.

Richard Broughton

[Tripps]

Must confess I had to google 'exegesis'. It appears to be interchangeable with the word 'hermeneutics'. Ah - now I get it.

[Stanley]

Richard, far easier to log all his statements which are undoubtedly true. At the moment I can't think of any.....
Latest riveting offering from our MP, Pendle Matters. Two pics of him on the front page that are entirely different.... Front page news is that"Boris Johnson the mayor of London made a 250 mile trip north in January" So what?
Not a word about Infant Mortality or Child Poverty, pure Mom and apple pie throughout. Where's the politics?

[Stanley]

The latest developments in the Greek financial crisis are worrying. It looks as though Syriza has blinked first and they are partially backing down. If this is the case it saddens me because make no mistake, what we are looking at is a power struggle between principle and the rule of the bankers and it looks as though money is winning....
Ukraine... Like it or not, Putin has played a blinder. He accurately assessed the reluctance of NATO and the Western Powers to commit to a conflict in Europe and has secured an enclave close to the Russian border. He will reinforce this and then start nibbling at the intervening space. The worry is now that he will turn his attention to former USSR possessions in the Baltic. See THIS for what looks like an accurate assessment of the situation from the House of Lords....

[Stanley]

Good luck to anybody trying to read the runes in the 'settlement' of the Greek crisis. Both sides are claiming success but I think there is more spin than substance here. One thing is certain, the original discontent that drove Syriza to power hasn't gone away and any perceived betrayal will not go down well with the voters. Watch this space....
See THIS Guardian report on the downgrading of Russian bonds to 'junk' status. This will do nothing for what is increasingly being seen as a new 'mini' Cold War....

[Tizer]

Liam Fox was on the radio this morning saying that three of the NATO members contribute by far the bulk of the funding for its military strength and the others get away with doing little. What he didn't mention is that a major reason for NATO members not being able to afford to keep up is the economic crash caused by irresponsible lending by the banks, and that in turn being a result of the failure of governments to monitor and control the dodgy activity of the banks. In the UK the Thatcher and Blair governments have a lot to answer for.

[Stanley]

"In the UK the Thatcher and Blair governments have a lot to answer for." You can extend that Tiz back to the era when Thatcher and Regan were having their love in. That's when the really serious deregulation was brought in which opened the door to Chicago School economics. Greed was good and the market was the perfect regulator. Funny thing is that this is still the philosophical base for most economic policy to this day despite all the problems it has caused. The Greek crisis is a classic example, no mention is made at all of the condition of the majority of Greeks, all the arguments are based on the needs of the flawed monetary system. Should the world be run for the benefit of the bankers or of the ordinary people?
Another general has been gagged for proposing to make a speech highlighting the the weakness of our defence policy and funding. (SEE THIS)

[Stanley]

Cameron massages the Grey vote.... (LINK) I'm afraid he's flogging a dead horse with me...
More revelations on similar matters to cash for questions. See THIS for details. Mud being slung all over the place... could it be connected in any way with the fact we are in an election campaign?

[Stanley]

Cash for access rumbles on. Who was it said that this was the next big Parliamentary scandal....?
Greece presents its revised package of austerity measures to the Troika and the EU holds its collective breath as it waits to see if they are sufficient to allow the latest injection of cash into the banks. If it isn't there will be trouble. This isn't over yet....

[Stanley]

I watched the last episode of the BBC2 programme on the Houses of Parliament last night. I can't help thinking that it is a building and institution that needs a complete revision. Every time someone mentions 'tradition' my crap detector starts whining.....