Month: September 2010

As we learn that many tax calculations under the Pay as you earn scheme have been wrong for years, the Treasury is busy consulting on taking over the task of running the payroll for every employer in the country.

I jest not. That is the bottom line of their consultation. Apparently, because so many PAYE accounts have been charged the wrong amounts for years, the answer is for the Revenue to play a much bigger role in sorting out your pay.

The Consultation paper suggest a three stage approach. In the first stage employers will have to supply the Revenue with weekly or monthly details of all pay and tax charged, so the Revenue can see if a new code number or basis for the calculation is needed. Smaller companies that do not have the necessary computer programmes will be able to seek assistance of an unspecified amount to change their systems so they can talk directly to the Revenue to comply.

In the second phase, the Revenue will take on the task of working out the tax for every employee, harnessing the now assured mutual working between the Revenue’s computer and each employer’s computer.

The final denouement comes with the Revenue effectively running the payroll for each firm, charity and state institution.

I am sure the Treasury would like to hear from you if you think this is a good idea, and you might like to tell them if you think it a bad idea. I have already sent in my comments. I am not sure I should reproduce them here.

You might like to ask amongst other things how this would ensure accurate tax, as the employer does not know the details of an individual’s savings or casual income, and how much risk there would be in having such a huge national computer system to handle so much money each week and month.

This week Westminster has been preoccupied by possible changes in the voting system.

The bill to give the people a referendum vote on whether to move to the Alternative Vote system or not was granted a second reading on Monday.

The history of this measure is complex. It failed to get a Parliamentary majority in the 1920s when a previous Coalition looked at it. In the 2010 General Election the Conservatives opposed AV strenuously, Labour proposed it, and the Lib Dems said they would prefer a more proportional voting system.

After the election the Lib Dems said they wanted it as part of their price to join a Coalition, Labour said they now opposed it because it is linked to other changes to constituencies in the Bill, and Conservative Ministers said they now support a referendum on it, but will urge people to vote “No”.

It is in a way surprising that Lib Dems are now enthusiastic about this measure. They should study two different and interesting General Election results. In Brighton a Green emerged as the outright winner, leaving the Lib Dem struggling in fourth place. In a future election under AV more Lib Dem members and voters might decide the Greens were a purer version of what they believe in, and give them their first preference votes. Telling themselves they will vote Lib dem second preference, they could just get a Brighton effect. We know Greens can draw enough votes from across the party spectrum to win in an individual seat with a leading Green candidate.

Buckingham shows us something different. Labour and Lib Dem withdrew from this contest, giving UKIP the best possible conditions for their best known candidate to win. He struggled in well behind not just the former Conservative Speaker, but also behind a pro EU integration independent. This implies AV is less of threat to Conservatives, than it is to Lib Dems.

Under an AV system we should expect to see more splinter group or single issue type parties, as people can vote for them on first preference and still express a view on between the better supported candidates, where their preferred candidate is a minority cause candidate. This may not work well for the Lib Dems.

A leading newspaper on Sunday had a most interesting Appointments Section. Out have gone all the additional public sector roles we became used to under Gordon Brown’s Labour government. Out have gone most of the eye catching public sector salaries higher than the Prime Minister’s.

Practically all the jobs in the Section were either public sector replacement jobs or “third sector”. Presumably the private sector has other ways of finding the talent it needs. It was a slim supplement.

The BBC is seeking non-executive directors (no pay level advertised) , the FSA Consumer Panel members (no pay level advertised).

Ipswich’s new Chief Executive will be offered a salary below £100,000 a year. The Chief Executive of Ofqual will be paid circa £100,000 unless “exceptional” (worth another £20,000). The Principal of Preston College will receive £130,000 if “outstanding” whilst the Managing director of the Newcastle College Group will paid a rather coy “attractive six figure package”. The Chief Executive of the Welsh Ambulance Service will be paid around £120,000.

Liverpool City Council comes in with a Prime Minister busting £197,500 for a replacement Chief Executive.

The times are gradually changing.

The original script for the new government was radical reform of education and steady as you go for the NHS. Mr Gove spoke with racy and fervent language of the new schools he wished to allow. Mr Lansley spoke more quietly about the need to have real increases in spending for the good old NHS, year in, year out.

This started to change before the General Election. Suddenly we heard of radical plans afoot to change the NHS after all. Out would go a lot of the national and regional bureaucracy. In would come much more local and GP control. Out would go the Primary care trusts, in would come GPs buying the hospital services their patients needed.

Since the Election the balance has shifted again. Mr Gove knows that the powers of his office are limited to change behaviour. The pace of change of types of school does rightly depend on the pace at which individuals, charities and others wish to set up new schools, and the pace at which existing schools wish to change to Academy status. A long journey begins with one step. Mr Gove never intended to have for profit companies owning or running schools,and never wished to introduce academic selection to more schools. There were always strict limits to the radicalism.

Meanwhile over at Health it looks as if the plans for change are far more wide ranging. All the English NHS will be converted to the GP purchaser model. All over the country PCTs and other Health Boards will be swept away.

Radical is one of those words that is often used as praise. I think myself radical is neutral. Radicalism may be excellent, because it produces a better tomorrow. It may be bad, because it messes up something that was not too bad. My point today is not that one of these Ministers is right and one is wrong, or that radicalism is either good or bad in itself.

The important point is the spin is not the same as reality. It looks, so far, as if the Health policy will be more radical. There is likely to be more fundamental change to the roots of the system, than with the Education policy. When we come to assess how it all works, we need in each case to see if the varying degrees of change were the correct ones for the task in hand, to produce better public service. What does it take to raise standards in all state schools? What will ensure good quality prompt care for all who need NHS treatment? I invite your views.

Apparently those wicked speculators have been at it again. Not content with bringing the banking system down by sellling shares in banks that were just going through a slightly dificult time, they are now driving the price of wheat up so the poor starve. Cue Frau Merkel – time for the EU to regulate the grain dealers.

Most speculators are not immoral. They are amoral. They are making a living, providing a service. Farmers need wheat futures so they can speculate on when to sell their crop. They like rising prices as it helps them invest and develop their businesses and grow more grain in the future, as well as giving them a better income. Many of you will have shares in your pension funds and unit trusts that include shares in commodity companies that use wheat futures and other commodity derivatives to help them manage their businesses. You may even have investments that include commodity funds, savings schemes that are seeking to make money out of rising prices of food, energy, and metals. These are not immoral.

The grain price has been going up recently because Russia is having a poor harvest. It has gone up because Mr Putin has banned Russian exports. It has gone up because there are many more mouths to feed and the system allows little for harvest failure in the main grain baskets of the world.

These same amoral speculators who are currently being attacked for buying wheat have not yet had the praise surely they deserve for driving the price of oil down in recent months. As a result so the world’s poor can afford more energy. If they are to blame for things critics don’t like, shouldn’t they get credit for things that help?

A market is a mass of buyers and sellers. Each tries to make the right judgement for themselves or their organisation. Individual speculators do not seek to make the poor starve or go without heating. They seek to make money, and they may be working for you. Grain prices can only be carried upwards by speculators if the underlying market position between users and producers warrants it. If it doesn’t the market will soon adjust and the speculators will lose money. If there is a shortage of wheat then prices will rise. If they rise enough that will induce more supply, the ultimate answer to a food shortage anywhere in the world.

The reasons why some are facing dire conditons over food supply are many. That requires better government in their country, and more assistance in the meantime from outside sources. We should nto stand by and watch people starve, but we should not think we can solve their problem by regulating the speculators.

Yesterday I was talking to a former Labour Minister. He reminded me of the strength of the Blairite view that politics was changed fundamentally by the advent of “the 7 x 24 news cycle”. It was change in the media, they argued, that meant Ministers had to spend so much more time on media matters. It was the new news cycle which led to the demand for Ministers to spend so much more of our money and their time on spin, media handling, research and interviews.

I have always thought they overdid all this. The main purpose of a Minister is not to generate amusement and stories for the media, but the run departments, settle policies and spend public money wisely. Yeserday also led me to think that the premise that we now live in such different media times was not quite true either.

Prior to 1997, in the dark ages of Labiur mythology, we had Saturday and Sunday newspapers and TV and radio news bulletins. For decades prior to New Labour one set of newspapers went to print overnight and went through several edtions with changes to stories and even whole pages. We also had a series of afternoon and evening papers around the country going through several editions. Post 1945 TV news extended their hours of operation, giving us early morning and late evening news and comment. Radio had long since given regular bulletins spread over much more than the working day.

In recent years there have been two changes that affected the media substantailly. The one is the arrival in the UK of much more choice of programme, so there is more competition, and smaller audiences for each programme. The second is the advent of the internet, producing more news and comment from outside the professional world of the media. Neither of these developments need, however, fundamentally change the way a Minister does his or her job.

The truth is the last government thought they could manage the media better by spending much more time and money on that process. They discovered that whilst it worked for bit, whilst the public mood towards them was good anyway, when bad news or poor decisions came along their media handling skills bought them no refuge from barbed comment or revelations they wanted to avoid.

One of the popular views in news handling is that giving information out in a privileged way to selected outlets will bring better coverage. For every more favourable story it may produce, it builds up more resentments amongst the many news outlets who did not get the favour. There is a lot to be said for the news conference or the statement to Parliament as the main way for Ministers to set out their case or present their decisions. That way all media have equal opportunities, the costs of handling special information are reduced, and the Minister only has to perform once rather than saying more or less the same thing in interview after interview. The day job is running the country, not filling the papers.

There are plenty of footballers, cricketers, actors and actresses and C list celebrities to follow round to provide the endless diet of stories about follies and lifestyles to fill the papers on days when the government has nothing new to say.

Both the USA and the EU need to create more private sector jobs. In both the American and European continents unemployment is too high. Tax revenues are depressed and social expenditures large as a result.

Both the EU and the US authorities are taking actions which make private sector job creation more difficult and dearer. In the USA there are many corporate worries about President Obama’s Health care plans. Most agree on at least one thing – companies on average will have to pay more for the health insurance for their staff. Many company pension funds are languishing with deficits. The poor performance of US shares over the last decade has hit them, as many of these plans are substantially invested in domestic equity. Companies have to put more money into them. This background makes employers cautious about hiring more people.

In the EU the lawmakers are moving towards a big new raft of financial services regulation with new supervisory authorities. Taxes generally are rising in Europe, including taxes on employment and earnings. The USA too is busily putting in more Wall Street and banking regulation.

The creators of jobs and success in Shanghai, Singapore, Hong Kong, Mumbai and other dynamic centres must be rubbing their hands with glee as they see all these moves. Of course the west needs to learn from the big regulatory and management mistakes made during the Credit Crunch. That does not mean we need new regulators and more box ticking. It means we need Central bankers and lead banking regulators with better judgement. The old regulators and central bankers did not lack numbers of staff or powers. They simply got the judgement wrong, allowing too easy credit up to 2007 and then tightening too much too quickly to correct it.

The problem today is very different from the problems in 2006-7. Then the issue was excessive lending and credit. Today it is slow recovery held back by banks that cannot lend enough under the new rules and by companies that are happy to hoard the cash they generate for fear of more problems like 2008-9. The more western governemnts make it dearer and more complex to do business, the more the brake will drag on the recovery.

In the USA employees naturally value their healthcare plans, given the US health system. They also value their jobs, as the US incentives to work are more sharply defined than in some European countries. The President was doubtless well intentioned in his bid to raise healthcare insurance standards, but it raises the costs of US labour relative to other competitors. It will be good for productivty, and bad for the rate of job growth. The general fashion to much tighter bank regulation in the west will mean a slow recovery.

It’s not a topic I wanted to write about. I have studiously ignored the rumours and stories circulating on other websites and at a fairly empty Westminster. Today I cannot ignore it, as Mr Hague himself has issued an unusual statement and has invited all to comment on it.

His statement confirms that he has shared hotel rooms with a young male assistant, and argues that this assistant was well qualified to become a Special Adviser to the Foreign Office. Mr Hague has now accepted the resignation of this Special Adviser, Mr Myers. Mr Hague tells us he did not have an inappropriate relationship with this young man.

Let us hope this is now an end to the matter. Mr Hague himself now seems to believe that it was poor judgement to share a hotel room with an assistant.

A bigger issue of judgement is far more important. What does Mr Hague intend to do to improve the UK’s relationship with the EU? How does he intend to win over Euroceptics to his tenure at the Foreign Office? When will he implement the Coalition’s promise to end transfers of power to the EU or to give us a vote on such transfers? How does he fit in EU criminal justice changes to this policy? The mutterings I hear from fellow Conservative MPs relate to this, not to the state of his marriage.

I have refrained from commenting much on the Labour leadership. I have always thought it a two person race between the brothers. David is clearly the front runner, but I just feel Ed might steal it, given his sharper movement to the left.

Last night’s “debate” on Channel 4 did not do Labour any favours. The candidates were all frustrated by the questions on Blair’s legacy and let their frustration show. They have to get used to the legacy issues, as they are an important part of the new Leader’s job. Any party has to decide what to fight and defend and what to criticise or ignore from a past Leader’s inheritance. Mr Blair’s impact on Labour was large, so there will be plenty of questions for many years. Only Diane Abbott looked comfortable on the topic of Blair, as she proudly reminded viewers of her major disagreements with the more contentious things Mr Blair did.

None of them managed to use a fairly free form discussion to get over a new vision of a Labour Britain. Brother David performed best, seeking to show that he could start to bring together the squablling bunch by fondly praising the better statements of his noisy charges. On a day when Mr Blair sensationally backed much of the Coalition’s economic programme the rest struggled to say something that was both distinctive and convincing. So most of them retreated to the Labour comfort zones of higher taxes, soak the rich and delay public sector adjustments, remembering who their audience is for this election. The whole point of the Blair legacy and the Blair questions was to find out if and when any of these Leaders might want to reassure or even attract strivers and successful people to their broken and reduced coalition.

Let us suppose Mr Hawking does now have a full explanation from the laws of physics of how the Big Bang created the planets and stars as we now see them. Some scientists will assert that the job is done, and they now know how the universe was made without divine intervention.

Religious people will respond and ask where did the matter and force come from that led to the Big Bang? They will see in that the hand of God.

This one will run and run.