Month: May 2009

The Revenue have made clear that if any MP has paid for personal tax advice, they need to pay tax on any claim they made for public reimbursement. The Ministers concerned have to demonstrate that the advice they bought was advice on the tax position of their employees, not for their own affairs.

If there is any uncertainty about the tax position of employees it would be best for that to be sorted out for all Commons staff by the executives in the Department of Resources. Any cost involved could then be controllled, with all MPs and their staff benefitting from the single piece of advice.

The wider issue is the attitudes towards tax and public spending it reveals. Many Labour MPs have made speeches telling us all that it is good to pay more tax for public purposes. They have said that those on higher incomes , like MPs, should pay more. They have told us the tax system is not over complicated, whilst passing Finance Bills with ever more pages of complex drafting. They have never said we should pay more tax so more MPs can have free tax advice for their offices.

I have regularly complained about both the overall level of tax rates, and the growing complexity of tax law. The adverts telling us “Tax need not be taxing” have not gone down well with some of my constituents struggling to keep up with the legislative outpourings and the demands for more tax.

Any suggestion that the architects of all this, the Ministers themselves, have decided it is all so complicated that they need special advice at public expense is not an easy sell for them. They should have found an easier way of designing their tax system, and they should have avoided the need for individual MP tax advice at taxpayers expense.

If any Minister takes tax advice at taxpayers expense to minimise his or her own tax he or she would be in an untenable position.

It is good news that at last, after years of criticism by many of us, even the EU has decided its Common Fishery Policy is wrong. Fishermen have got angry, despaired, lost their livelihoods over the years of mind boggling incompetence and aggressive obstinacy. We have been told for too long that throwing back dead fish into the sea is the way to “conserve” fish stocks!

As one of the proponents of getting fishing back under UK domestic control, I would like the British government to pursue that option,. If the masters in Brussels now know they cannot carry on with their damaging policy, isn’t it time to allow member states to have a go? They tell us they believe in subsidiarity, they believe in devolving power. What better test of their good intents than to tell them to give us back our fish?

Our once great fishing industry has been badly damaged by the CFP. In the case of some ports and some species and fishing grounds it has been all but destroyed. Elsewhere in the world more enlightened policies followed by national governments have enabled fishing grounds to recover or to be maintained. It is high time we did this in Britain.

What is the government’s line on this? Doubtless they will once again fail to speak up for Britain, preferring to await some new compromise which will fail to restore our fishery to its former glory.

As I reached London before 7 am to avoid the £8 tax for coming to work called the Congestion Charge, I looked forward to another day with a broken Parliament not even bothering to meet to try to mend itself.

It beggars belief that the government will use its majority to send Parliament away as often as possible. It is particularly damning at a time when everyone else in the economy is having to work harder to keep their jobs and to preserve their businesses. It’s not as if there is a shortage of things to discuss or to put right.

It’s yet another day as an MP when my only option to say what I think needs saying is the web. No wonder so many people are fed up with Parliament, and think it offers such bad value for money. If Parliament was able to do a better job tackling the government, and was able to do so more of the time, maybe more people would think MPs needed office costs and back-up to do the job.

If all they see is an empty Parliament, closed owing to lack of government interest, they are not impressed. If at the same time they read some MPs think office costs include personal tax advice on the taxpayer, no wonder there’s such a gap between electors and elected.

There are signs that this big story about the expenses of the public sector is not going to stop at MPs. The Telegraph doubtless has more to say about what MPs have claimed for office costs and staffing as well as for second homes. Meanwhile the Sunday Times is working away revealing more about the claims that peers make in the Lords. I am told various local newspapers are now sending in Freedom of Information requests over Councillor and senior executive expenses and remuneration in local government. Doubtless some other media outlets, not to be left out, will be trying to find out more about the expenses, salaries, entertainment and travel for the quangocracy.

Never again will a politician be able to say with a straight face that there is no waste in the public sector. Never again will they be able to say all spending is essential, and targetted on front line services the public value. The answer to that is a luxury rocking chair or a fee for media training for an MP. These individual items may be small against the totals of public spending, but when multiplied out across the upper eschelons of the whole public sector they amount to large sums. Throughout many parts of the public sector there is a willingness to go on seminars and conferences, to hire consultants for work that could be done in house, to have extra senior staff and to spend more on IT in the hope of a solution. None of these things are wrong in themselves, and when done in moderation some may be useful. When done to excess they create serious problems in public budgets.

I assume the jolt to MPs as a whole from this story and the new rules being put in will lead to lower MP claims overall this year. Sensible people throughout the public sector would be wise to see that the same pressures could apply to them, and start to look at how they can also do more for less.

Meanwhile one or two of you have expressed worry about the idea of fewer MPs. I think we do need fewer, but with Parliament meeting more often so we each have more chance to make our points in Parliament in a timely and effective way. For much of the year I have to make my points on the website, because there is no Parliament to attend, let alone one with a debate where I could be called and make them in order. The idea of fewer MPs must not be a weaker Parliament. There should be fewer Ministers as well, and more opportunity to cross examine them. Above all Parliament needs more control over the timetable, so we can discuss what we want when we want to. The government should be able to pass its business, but only after scrutiny and when it has made its case to justify it to its majority.

Recently I wrote on this site

“In the age of the internet (government is) now discovering that the cameras which point at the public can also capture them. When people ask the old question Quis custodiet ipsos custodes – who will watch the watchers themselves – we now have a new answer. The watched can watch the watchers”

MPs should be used in the Commons to the automatic submission of every fine sentiment they express to the humbug tests. MPs listening – or researchers watching – immediately ask has he or she lived up to that requirement in what they have said and done personally? If a Labour MP waxes lyrical about the duty of the better off to pay more tax for social purposes – as they often do – people are bound to ask if they have been paying CGT when they sell their second homes. If a Conservative says you can cut public spending without damaging services, he or she might now expect a question on whether they have managed to do that with their own small part of the public budgets.

It is this characteristic which has made the expenses files such compelling reading for the public.At a time when people feel especially oppressed by heavy taxation, heavy regulation, prying government and the damage being done to their own job prospects and finances by the recession, they suddenly have access to material showing some MPs spending their money on expensive rocking chairs and duck houses. They learn that cabinet members have used public money to seek tax advice on their allowances, and at the same time some have sold homes without having to pay CGT. The anger reflects the excessive and excessively costly government imposed on the public, and the feeling that some MPs see themslves as above the rules.

In the age of the internet those who govern have to learn that they too are on camera. If they wish to impose ever more rules and requirements on the rest of us, they need to be especially careful about obeying them themselves. If they favour higher taxes from the better off, they have to understand they are amongst the better off and need to show us they are paying them willingly.

Let me spare my Labour and Lib Dem critics the trouble of applying the humbug test to me on these matters. I did pay CGT on the home I sold. I have cut my total expenses every year since 2005-6. I give the figures beneath.

Total costs 2005-6 £116,162
2006-7 £105,928 minus 8.8%
2007-8 £105,917 minus 0.02%
2008-9 £91,000 minus 14.1% (provisional Fees office figure)

2005-2009 minus 21.67% (provisional figure) In 2007-8 this was around £40,000 below the average

I intend to cut further this year, as the public deficit is so large.

Before the expenses row blew up I led a discussion on this website of how much MPs should be paid. Some of you thought MPs should be paid more. Some MPs themselves think the answer to the current mess is to pay them more by way of salary, cutting back on the expenses allowed. I would like to say why I think a pay rise would be quite wrong.

There is no shortage of people wanting to be MPs, so there is no overall recuitment case for lifting the pay.

Given the state of the public debt it is clear the overall public payroll has to be contained. MPs acting as Ministers would have no moral authority to demand pay sacrifices elsewhere, if they are putting their own pay up.

The current basic pay for an MP is only part of the pay of many MPs. All Ministers, government Whips,The Leader of the Opposition and Committee Chairmen enjoy second salaries for their second official jobs. Other MPs earn money from journalism, advisory positions, non executive directorships, legal and dental practise, public speaking and other activities. An MP has to be on call seven days a week, work at week-ends and in the evenings, but has flexibility over when to do the job and has much more spare time in the many weeks of the year when Parliament does not meet.

There are three types of people financially who take on an MP role. Some come from jobs that pay less. Clearly the MP pay level is no barrier to them. Some are independently wealthy, from inheritance or past financial success. They often want the privilege of representing people and the interest of the job. The third group are people who are following a more lucrative professional career who will make some kind of financial sacrifice. That is their choice. It would be very costly and wrong to set the salary of an MP at a level which meant lawyers, bankers, media figures and business executives no longer were paid less.

Some favour banning all second jobs for MPs, though I think they mean banning all private sector second jobs. That would have an impact on the type of people coming in, limiting it more to the first two groups. It would also mean fewer people in the Commons with a current knowledge of many walks of life based on contemporary experience. It would mean more career politicians, even keener to follow their party lines and to engage in the media/political spin game.

We need to get a grip on total public spending. That is why MPs are right to be cutting back the generous scope of the current expenses regime, and why Mr Cameron is right to call for fewer MPs. It is only when people think MPs are offering good value for money that Parliament will have the authority it needs to get value from the rest of public spending.

If an MP wants the taxpayer to fund a website there should be no party politics or strong opinion on it. If an MP wants to send out a free newsletter paid for by taxpayers, it has to avoid political comment and is best submitted to neutral assessors in Parliament first before being sent out.

An MP, paid for by taxpayers, can be political, but his or her staff must not be political during time in the office paid for by taxpayers. These distinctions are important to the expenses system, but not always understood elsewhere.

When I am undertaking a school visit, for example, I need to ask the basis of the invitation. If they want me to visit as MP and representative of all my constituents, then my Parliamentary office can organise it for me. I have to remember not to make political remarks. If they want me to talk to students as a Conservative politician, I need to ask that they have invited in people from other parties on other occasions to balance , and to remind the pupils that I am speaking politically. In that case the visit should be arranged by the MP or by a political assistant paid for from party money and is probably only appropriate for six forms.

The Parliamentary office can help organise the diary, but again this should be the Parliamentary side of it. MPs have poltiical and private lives, but they should not ask taxpayer funded staff to help with these other aspects.

Many MPs have contracts with political offices to provide Parliamentary services as well. These need to be clearly recorded, and the office providing the service needs to understand the different roles and to provide value for taxpayer money when acting in the Parliamentary capacity.

There could be more issues over the use of taxpayers money to appear when all of this territory gets examined in more detail. Reform of the system will not just be about second homes.

How many more wake up calls does the government need, before they recognise the seriousness of the UK’s debt situation?

In government circles it is fashionable to dismiss arguments that we need to control the deficit. They believe that spending whatever it takes will prevent or limit the recession. They think they can go on printing money to get them closer to the next election. They say that of course the UK will never default on its debt. All it has to do in their world is print some money so it can meet the debt bills.

There are two ways a country can try to default on its debts. It could stop paying the interest, or literally cancel the bonds. The UK does not do such things, and it is unlikely to start any time soon. The other way is to undermine the currency and the value of the pound, so the money can be repaid in depreciated notes. Some in world markets are now worried that this is exactly what the government will do. There has been a steady stream of overseas sellers of UK government debt, selling it back to the Bank of England as they do the buying.

At a certain point buyers of Uk government debt want a higher rate of interest to justify making a further investment. The government gets itself into a nasty spiral. It is spending too much, so it borrows too much. The amount spent on interest payments goes up, requiring yet more borrowing to pay the interest. The rate at which it has to borrow goes up, again increasing the interest charges and requiring yet more borrowing to pay the interest.

In Opposition Labour used to know this. They rightly pointed out that the then government spent too much on debt interest, and too much on the “costs of economic failure” – welfare benefits for those without jobs. Many people are now very nostalgic for the relatively low levels of debt and the lower costs of welfare of those days. By its own former rhetoric this government has got itself into the wrong situation. Its own budget deficit is now ballooning through too much debt interest and too many people out of work.

They are about to discover that it is easy to get into a vicious circle on debt, but much more difficult to get out. If you borrow £417,000,000,000 gross debt in just two years as they are doing, you have to pay £12,500,000,000 a year in interest at 3%. If you had to borrow that again at 5% the interest bills soars to £20,850,000,000 a year. And that’s just the interest on two year’s borrowings!

The President lost the vote to close down Guantanamo Bay. It is a reminder of just how difficult it is proving, for him to be different from President Bush.

I always felt he was going to be very similar to his predecessor in policy in major areas. It was clear he would continue with the high spend high borrowing policies of Mr Bush. It was stated he would intensify Bush’s war in Afghanistan, as they both wound down the more intense operations in Iraq. His bank rescues and monetary policies have built on the wobbly legacy of his predecessor in similar ways.

It was clear he would be different over issues like abortion, and I hoped he was going to be different over detention without trial. Today, five months in to his first Presidential year, he is no further forward in closing down Guantanamo. To some Guantanamo is a symbol of the West’s willingness to be tough. To others it is a bad departure from our principles of liberty, where people are innocent until proven guilty, where they have a right to a fair trial. The President needs to sort this out urgently, to show he is the change he promised.

In recent days quantitative easing in the USA has got to the US dollar. It has started to fall against other currencies. I guess the US authorities are relaxed about that. It will correct the balance of payments more quickly, and put more pressure on the exporting countries.

Over the last year the US economy has fallen much less than the European economies, less than the UK and much less than Japan. The US still has strengths from its huge continental market, and from the energy and productivity of its workforce and from the entreprenuerial nature of many of its people. The successful exporters, led by Japan and Germany have hit worse turbulence, as they were very dependent on western demand for their range of products.

Even China has struggled. The impact of the collapse in demand must have been quite severe in the first quarter of 2009. The world can only make economic progress when the big exporters spend more of their savings, and borrow more to finance more consumption. That is happening very slowly, if at all.

In the meantime, it is quantitative easing which is providing the only drink at the wake. Today Sterling, the other QE currency, fell back from its recent rises. A ratings agency has said “We have revised the outlook on the UK to negative due to our view that, even assuming fiscal tightening the net general governemnt debt burden could approach 100% of GDP and remain near that level in the medium term”.

If only that were the limit of it. As readers of this website know, the true indebtedness and liabilities of the UK state are well above £1,500,000,000,000 already. It now costs £80,000 a year to insure £10 million of UK government bonds against default!