The politics of poverty

    Both the Brown and the Obama administrations seem united in one thing – the pursuit of lower living standards for all.

    The Brown regime will seek to improve on the falling economy by imposing higher taxes which will deter enterprise and send people packing. He will follow that up with extra regulations, as with the proposed new licencing scheme for landlords. I don’t doubt there are some bad landlords out there. After regulation there will be fewer good ones as well.

    Obama is seeking to close tax loopholes for companies, another good way of driving them offshore, whilst looking at catching up with European green taxes as another way of taking money off people. Both are very enthusiaistic about bailing out and maintaining zombie banks, and now want a flutter with overextended car factories.

    Neither seem to see the irony of wanting to tax people off the road or out of their cars with one set of policies, then offering subsidy to the car makers with another.

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33 Comments

  1. Kevin Lohse
    Posted May 5, 2009 at 8:42 am | Permalink

    Obama will have a far tougher ride from both his own party and the individual state legislators than Brown (theoretically) will have. As I understand it, the US constitution gives States considerable control over taxation, which will not willingly be given up. Resistance from Republican states is a given. resistance from Democrat states who depend on relaxed tax regimes for economic stimulus will be more subtle but neverthe less strong. The difference is that whereas Obama has a massive mandate and 4 years, Brown has no mandate and a political life possibly measured in days, but definitely in months.

  2. james barr
    Posted May 5, 2009 at 9:12 am | Permalink

    Obama has charisma. He’s photogenic. He performs well on the media. Our PM has none of these attributes. However, what they both share in common is a belief in the existence of a taxpayer funded orchard full of money trees. One day soon British and US citizens are going to realize the cost of the tax payer funded bail out. They won’t like it. The media are in love with Obama. I think it would be wise to exercise a little more caution.

    • figurewizard
      Posted May 5, 2009 at 6:22 pm | Permalink

      What you say is true but we have already had our own Obama in Tony Blair and look where that got us. The only difference is that Obama does not have a brooding and malevolent wannabee lurking in the background now he’s in office, so there is still an opportunity for someone to show him the error of his ways by pointing to our situation here in the UK for example.

      • james barr
        Posted May 5, 2009 at 9:03 pm | Permalink

        I always felt Blair was insincere. Events proved me right. Obama strikes me as being more genuine. You are right to say that he doesn’t suffer from the brooding presence of Gordon Brown. Lucky fellow. I’ll leave you with this thought. Has there ever been a less talented Cabinet? Jacqui Smith at the Home Office says it all. John has always been portrayed by Labour and their pathetic spin doctors as a radical, as someone dangerous for the economy. If only we had people of his calibre and independence of thought running the country. Balls, Cooper, Milliband, Harman,Jowell, McNulty, Milliband (again), Smith, Prescott, Straw….can someone please tell me of any one policy these people have enacted which has been for the common good?

  3. Stuart Fairney
    Posted May 5, 2009 at 9:19 am | Permalink

    The licence scheme for landlords is another pointless layer of nonsense. The so called “Deposit protection scheme” is so good that a friend recently had a letter from the bank explaining that the particular company charged with guaranteeing the tenants deposits “may not be able to meet its liabilities” Unreal.

    I am sure the landlord registration will be an equal success.

    We now have annual gas safety checks, electrical safety checks (a particular bete noir as code changes every year and 2008 standards aren’t good enough today so bye bye an additional pointless £150), fire detection systems, a safe furniture code, deposit ‘protection’ mandatory energy performance certificates* (which I have yet to see a single tenant even look at) and now registration!

    Pointless.

    * PS If EPC’s aren’t a stalking horse for additional taxation based on a house’s carbon emissions, I’m a Dutchman

    • Denis Cooper
      Posted May 5, 2009 at 5:04 pm | Permalink

      Article 7 of EU Directive 2002/91/EC, here:

      http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002L0091:EN:HTML

      “Member States shall ensure that, when buildings are constructed, sold or rented out, an energy performance certificate is made available to the owner or by the owner to the prospective buyer or tenant, as the case might be.”

      As David Cameron says:

      a) We should allow the EU to take control of anything which might have some conceivable connection with alleged climate change, which is of course includes anything where there is any energy usage; and

      b) We must always do what we’re told by the EU, however stupid it may be;

      I’m afraid we’re stuck with EPC’s for the foreseeable future.

      • Stuart Fairney
        Posted May 6, 2009 at 9:12 am | Permalink

        Congrats on the research, If I may, do you go to this website directly or is there another you use?

        • Denis Cooper
          Posted May 6, 2009 at 4:01 pm | Permalink

          I often poke around on the EU’s europa website:

          http://europa.eu/index_en.htm

          the sheer scope of which might be something of an eye-opener for some people.

          I mean, those who are just dimly aware that we’re in this thing called “Europe”.

          As taxpayers we have paid for this and the other EU websites, and they’re quite safe; the only problem is that it can be time-consuming to track down all the items which are relevant to a particular topic.

    • Chris H
      Posted May 5, 2009 at 6:24 pm | Permalink

      I dread this being implemented. I’ve owned a small house for two decades, which is let rent-free to a very elderly family member. There’s no debt owing on the place in any way. However, this proposal would force me to spend my savings on annual registration and certification for equipment and “safety codes”. The tenant has purchased a lot of their own stuff over many years, which is theirs by right, not mine. I might well have to sell the place with the relative in it, if I face bills of several thousands of pounds merely for the privilege of providing someone with a free home. It might be a proposed £50 fee but how long would it be before it doubled….or trebled? I see a mass exodus of landlords and it’ll be back to the 1960’s….

      • Stuart Fairney
        Posted May 6, 2009 at 9:11 am | Permalink

        I would never advocate ignoring the law, no do I, but it is clear that vast numbers of people will and thus more “criminals” will be prosecuted and the figures will look better.

        I fear that deep down all the piddling, pettyfogging legislation IS an attempt to drive out the private sector. I was at a reception with a number of labour supporting types recently and the news that I was a Landlord was met with utter horror and disgust ~ seriously. Only the government should do it apparently, and if you can’t ban freedom to invest directly, just make it impossible practically.

    • alan jutson
      Posted May 5, 2009 at 6:27 pm | Permalink

      Stuart agree with most of your points.
      Have yet to see a legal regulation introduced which covers the landlord when a tennant trashes the house and absconds, or does not pay rent.
      My understanding is that only 3 months rent can be held against such a possible action, (new deposit scheme)
      But legally I understand that you have to give the tennant 2 months notice to quit.
      Hence in actual fact you only have one months rent to cover damage, cleaning, non payment etc.
      Like all things we should have a sensible balance for both sides, unfortunately we now seem to be getting out of balance.
      The new deposit scheme seems to me to be no more than a modified escrow account (usually held by a solicitor) a system which has been used for years.
      Funny how the papers never seem to pick up those rogue tennants who abuse a landlords property, or who are proffessional non payers.
      If landlords are now to have a licence those who for whatever reason had to move property without selling, perhaps due to movement of work etc, will now probably decide not to rent out at all because of the hassle.
      I would suggest that this new regulation has been bought in simply to find those who rent out property, and who do not declare it on their tax return.
      The fee will increase over the years. I guarantee it, and so rents will rise to cover it.
      At the moment the tennant usually pays the deposit fee to the holding company.
      Soon they will be paying more in water rates, community charge, deposit fees, and landlord licences than they do in rent !!!!!
      Landlords will be paying for all of the services that you mention, as well as maintainance, and will make little, so why bother. !!!!!

  4. Acorn
    Posted May 5, 2009 at 10:00 am | Permalink

    Got to get me a job in that public sector JR, just like yours :-).

    “The Office for National Statistics said average weekly earnings fell 5.8pc compared with the same month last year, to £459.10. The private sector took the full force of the fall in weekly earnings, down sharply by 7.7pc at £463.50, while average weekly earnings in the public sector actually rose by 3.2pc to £442.90.” (Telegraph): http://www.telegraph.co.uk/finance/economics/5245729/UK-wages-collapse-at-fastest-rate-in-60-years.html

  5. Simon D
    Posted May 5, 2009 at 10:07 am | Permalink

    Ken Livingstone shed some light on the subject by explaining on the Andrew Marr show that one of the reasons things are so much better than in 1929 is that we have a much larger public sector which mitigates the effect of unemployment. Nothing beats telling it as it is. Perhaps the solution is for the entire country to be employed by the public sector – Brown’s second term would then be assured.

    Surely the reason for pouring money into legacy car manufacturers is New Labour’s client vote in the Midlands and the threat at the next election to so many marginal seats.

    • mikestallard
      Posted May 5, 2009 at 4:25 pm | Permalink

      I wonder if the ex Mayor of London has ever heard of Argentina?

      • jim
        Posted May 6, 2009 at 4:06 am | Permalink

        Yes, things will get brutal when the state collapses, unemployment and poverty are about to rocket.
        The real problem is going to be food, we will probably see a lot of starvation, given we won’t be able to afford to import as much as before.
        I can’t see how this won’t end in revolution.

  6. Neil Craig
    Posted May 5, 2009 at 10:12 am | Permalink

    For the last 40 years it has been politically fashionable & not just among LudDim & Labour parties & the BBC, to say that we are, or will within 10 years, be suffering environmental melt down & the common people must be persuaded not want a higher standard of living.

    Well they have got their wish.

    In reality, with scientific knowledge expanding faster than ever & Moore’s Law, if anything, speeding up we could all be having the growth rates of China & India if our political class would get out of the way.

    • Stuart Fairney
      Posted May 5, 2009 at 5:53 pm | Permalink

      “Moore’s Law, if anything, speeding up we could all be having the growth rates of China & India if our political class would get out of the way”

      That maybe the smartest comment I’ve ever read on this blog.

      But how can we expect politicians to vote to reduce their power and influence. Turkeys voting for christmas etc This theme was discussed in the best political novel of 2008

      http://www.amazon.co.uk/Single-Acts-Tyranny-Stuart-Fairney/dp/0956001602/ref=sr_1_1?ie=UTF8&s=books&qid=1241545958&sr=8-1

      • Neil Craig
        Posted May 6, 2009 at 11:11 am | Permalink

        Thank you Stuart. Considering the very high opinion I hold of Mr Redwood & of discussion here generally I am immensely flattered by that.

        I will check out your book & hope you click on my name & check my blog. I think you will approve of most of it.

  7. alan jutson
    Posted May 5, 2009 at 10:13 am | Permalink

    Yes John.
    It’s all part of the Grand Redistribution Programme.
    Most of your income (taxes) now goes to the Government in one form or another, so that they can distribute it to others.
    The others are either Government or Public Service Employees, or those on some other sort of Benefit or finace scheme.
    The thought behind all of this:
    The more complicated any system is, the more people you can employ.
    The more people you employ the more chance there is that they cannot do without you (the provider of money) so the more they are likely to vote for you.
    They call it a more equal Society, but all its doing is leveling down, and not giving inspiration to improve, because if you do then you loose Benefit, so whats the point.
    In the meantime it is made ever more difficult for Companies to remain in business, with ever more Regulation, increased taxes, increased Business Rates, and increased National Insurance contributions.
    This reduces profit and the ablity for the Company to grow.
    The above is a rather simplistic view I know, but nevertheless true.
    I am not against Benefits, a sensible Welfare State or Public Service jobs, but we have now gone beyond the tipping point of being able to afford it, in its present form.
    A drastic rethink is neccessary if we are to move forward in future years with an increased standard of living and a competitive business model.
    In the meantime the incentive to get on and improve your life yourself, is steadily being eroded.

    • Stuart Fairney
      Posted May 5, 2009 at 5:56 pm | Permalink

      Right on the money. The Chinese/Indians/Asian tigers will kill us unless we can sacrifice our sacred social cows and seriously reduce public spending.

      I think JR knows this. I do not know what Mr Cameron thinks. I guess we will find out in 2010. One thing is for sure, if he has the heart for uber-Thatcherite reform, he has the excuse, and this is the only thing that will help.

  8. oldrightie
    Posted May 5, 2009 at 10:35 am | Permalink

    “Neither seem to see the irony ”

    They most certainly do not. Both wish to be all things to all men whilst being nothing to anyone with a brain cell.

  9. Steve Cox
    Posted May 5, 2009 at 10:56 am | Permalink

    It’s also ironic that they claim to care so much about our safety on the roads (hence the justifications for speed cameras, new 50 mph and 20 mph speed limits, and so on), and yet insist that we should drive the smallest, most under-powered, and least safe cars, unless we are prepared to pay an extortionate amount of tax. So which is it they REALLY care about: our safety, or generating yet more revenue to squander on their pet projects and client state? No prizes for the correct answer, I’m afraid. 😉

    • mikestallard
      Posted May 5, 2009 at 4:27 pm | Permalink

      And their limos? Or their chauffeurs?

  10. no one
    Posted May 5, 2009 at 11:18 am | Permalink

    agree on the car subsidy being stupid

    however private landlords and their agents badly need sorting out, free market is definte not enough, and UK is badly out of sync with rest of western world

    dont think youre right on that one

    • Stuart Fairney
      Posted May 5, 2009 at 5:57 pm | Permalink

      Dead wrong. In a free market, good supply drives out bad supply.

    • alan jutson
      Posted May 5, 2009 at 6:31 pm | Permalink

      agree SOME private landlords.
      Also SOME private tennants.
      I have seen first hand how some tennants treat a rented property.

  11. sm
    Posted May 5, 2009 at 1:24 pm | Permalink

    Surely tax should be levied where the economic substance of the business takes place? Not where the tax happens to be lower and where intellectual assets may have been relocated by controlled group companies.

    This may result in some business relocating but they cant relocate away from where the profitable business actually takes place.

    The lack of financial competence by HMG is a problem these companies are trying to avoid, but at the expense of other less able smaller companies.

    A lot of the loopholes have been exploited by large companies and banks with sophisticated expertise which arguably should be better utilised elsewhere.

    The SME probably does not take advantage of these schemes, nor can most individuals legally.

    The tax withholding proposed is only where non disclosure is made. It doesn’t appear to onerous?

    Surely a more equitable tax system would simplify things eg similar tax rate for self-employed small business and small incorporated business and the longer suffering PAYE employee.

    I don’t favour offshore activities or hidden onshore activities which tend to be non-transparent and not subject to public scrutiny which does have a remarkable effect. e.g MP expenses.

  12. Brian Tomkinson
    Posted May 5, 2009 at 3:06 pm | Permalink

    They are both basically dishonest because they suggest that government is a benevolent organisation which can sort out these problems. They never refer to the fact that governments ultimately can get money only from the taxpayers and that the taxpayers will pay the costs of all these failures. This will mean a drop in disposable income which will be made even worse by their continual meddling.

  13. UK Voter
    Posted May 5, 2009 at 3:07 pm | Permalink

    This is a further example, if any were needed, that Governments are consistently out of touch with the public, moreover, the effects of their policy initiatives on the lives of real people and businesses.

    I earnestly hope, that whoever gets in at the next election, will determine, come what may, that they will seek to serve and listen to the public rather than rule and lecture.

  14. mikestallard
    Posted May 5, 2009 at 4:32 pm | Permalink

    Bad day today.
    The statement on the savings we have with Legal and General came in by post. Guess what? We had lost about 20% of our tiny investment.
    My wife could not see why we had lost so very much of its worth. It means a lot to her because it was given to her as part of her father’s will.
    Believe me, if she cannot see it, then there an awful lot of other people out there (as I checked in the gym later) who are also very perplexed, although one sage did say that it had nothing to do with the government……..

  15. no one
    Posted May 5, 2009 at 6:19 pm | Permalink

    on the landlord thing

    rented places most of my adult life 20 + years, mainly cos i move around a lot, later half of that period have been generally upmarket places, im not in the poorest demographics BUT

    i have had no end of problems from landlords and their agents, withholding depost, lying about non existant damage, promising an extension and then demandng property back with no notice when the 12 months tenancy is hours from expiry, demanding access for “checks” at crazy times, lying to utlity companies about opening and closing meter readings, etc etc

    im all for decent landlords in a free market making a few bob, however i think there really needs to be a whole lot more protection for the tenants, and encouragement for longer term security of tenure tenancies

    • alan jutson
      Posted May 6, 2009 at 5:48 am | Permalink

      Agree fully that tennants need protection, but so do landlords as well, otherwise there will be no private houses to let.
      Real life Example:
      A neighbour let out his property, a 4 beroom modern house in good condition whilst he worked abroad for 3 years.
      let on a full maintainance contract with local agent (in Wokingham as it happens)
      Came back to his home after 12 months to find tennant had absconded without paying the last 3 months rent, to find all of the internal doors were missing, turns out these had been burnt on the open fire to save the cost of heating with gas.
      2 Skips had to be hired to clear out all of the rubbish which had been left behind.
      Kitchen and bathroom had been trashed and needed replacement and the whole house had to be re-carpeted and decorated.
      Agree most tennants and landlords are OK but:
      A contract should cut both ways, both should have protection and safeguards from each other.

  16. JG
    Posted May 5, 2009 at 8:42 pm | Permalink

    Both Brown and Obama have to pay the piper for the massive bailouts. This can only be done by taxing and closing loopholes. It’s going to take years, if not generations, to pay off the national debt.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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