May 102009
 

British MPs have managed to make themselves look corrupt in a spectacular way with the leaking of the details of purchases made on the second home allowance. It is particularly amusing that the biggest fuss is about somewhat trivial items such as loo brushes (that’s not a real example) and the like.

It is worth pointing out that the whole second homes allowance was introduced by the Tories in the 1980s to supplement MPs salaries during a time when Thatcher was grinding away at public sector salary increases. So this is not strictly speaking a Labour issue.

There have been a number of excuses floating around as to why MPs need a second homes allowance, and because MPs are so good at spinning rubbish it is easy to start to think that they may have a point. But lets compare things with not just the private sector but everyone else …

Normally when you take a job, you are expected to live within a reasonable distance of work. It’s not usually explicitly stated but you are expected to turn up to work every morning at a reasonable time, and stay for a reasonable length of time. Whilst you may get a more or less generous “bonus” to making moving easier, you don’t get money to pay for a home near work.

So MPs might have a point about a second home allowance but until such an allowance becomes common place outside of Westminster, they are going to look like pigs in the trough if they do have one. Under the existing system it does make sense to make some sort of arrangement for providing accommodation to MPs whose constituency is some distance from London.

But that can simply be provided by a block of flats close to Westminster – perhaps something on the river.

If MPs had sorted this all out before all this fuss, it would have been quite reasonable to abolish the second home allowance, spread the money used for it previously amongst the MPs as a salary increase. But because this was not sorted out previously the MPs should lose the money completely.

It would seem that many of the items coming to light are strictly speaking “within the rules”, but that is not good enough. We have to trust MPs to be honest and honourable as they make the rules that govern us. If they are apparently eager to exploit a system that is not quite as rigorous as it should be, what is to blame ? The MPs of course.

In any position of power, there are ways of abusing that power. It is the responsibility of those with power to not abuse that position. Can we trust MPs not to abuse their position ? Apparently not; at least not those MPs who have abused the system. Parliament needs to identify the 10 worst offenders and expel them for a minimum of 5 years.

Or if they do not have the courage to do this, perhaps we should identify the top 50 most serious offenders and refuse to re-elect them at the next election.

One of the dangers of so much concentration on the second homes allowance is that we are in danger of overlooking worse things. For instance, why are MPs allowed to take on jobs in addition to their job in Parliament?

In many situations (at least in the public sector), if you are in any sense in a senior position, you are effectively prohibited from taking additional jobs. At least without getting permission to do so. In the case of MPs, I see no reason why they should be allowed to have additional jobs – they already have an important and well paid job and any other job will take them away from what they are supposed to be doing.

There’s a tired out old excuse that MPs like to trot out whenever the second jobs question gets asked – that they need second jobs to keep in touch with the outside world. It is really an excuse to rake in fat cat salaries – after all how many MPs with second jobs work as nurses in hospitals ? Or anything that does not pay ridiculous amounts of money for trivial amounts of work.

Time to refuse to elect part-time MPs.

Jan 292009
 

When the economy is well, we constantly hear from businesses about how government should not interfere with business; that anything the private sector does is sacred, and the public sector is at best pathetic. They complain the most about regulation but government support for problematic businesses frequently comes up to. And of course whinge constantly about taxation on business.

Of course any business that needs support from the government to survive is pathetic and probably should fail.

But wait! Come this recession, we are seeing speaking heads from businesses in droves demanding that the government bail their business out. Somehow because there is a recession on, all the traditional rules can be ignored and businesses need support from government.

Sure perhaps we do need to use public money to help out businesses that would otherwise fail. After all reverting to 19th century economics like the Conservatives seems to have done is likely to be far worse. But that does not mean they should get a free ride – we should remind them that businesses usually ask to be left alone, and that goes two ways.

And of course put up taxes on businesses a tad, to pay back the money over the long term. And every time a business complains about high taxes, remind them of these times when government was spending money to help businesses out.

Nov 182008
 

Today the leader of the Conservative party David Cameron spoke on economic policy and went on again about the level of government debt in the Uk. He is quoted in a BBC article as saying Britain was different from other nations because public debt levels were already very high; in fact you can play the video and find that he believes that Britain already has “the biggest budget deficit in the modernised world”. Well perhaps, although it is clearly an attempt by the Conservatives to reclaim the “party of low taxation” banner and frighten the public with talk of a “borrowing binge”.

So shall we take a look at Britain’s public debt ? It is currently at the level of around £660 billion which sounds like a huge amount (and is). It is also around £11,000 per head of Britain’s population. Now lets look at Germany which has a debt level of around €1.5 trillion, or around €19,000 per head of Germany’s population. This comes out to £16,010 per head thanks to Google’s currency converter, or £1.27 trillion in total. I guess Germany is not part of the modernised world which might come as a surprise to the Germans!

Now the US; On 30 September 2008, the total U.S. federal debt passed the $10 trillion mark for the first time, with about $32,895 per capita (cut&paste from the Wikipedia article). This converts to about £6.66 trillion pounds in total and £21,900 per capita. It seems the Conservative party has trouble doing basic arithmetic with such large numbers.

Or perhaps they are being sensible and looking at public debt as a percentage of the size of the economy. Expecting an unsuccessful politician to be sensible is little unrealistic, but hey! I’ve been wrong before so I could be now. Looking at public debt as a percentage of GDP (a kind of measurement of the size of the economy) is a far better way of doing it, as we do not get distracted by all those zeros and is basically what the banks do when deciding how big a mortgage we can get (the old rule being up to three times the yearly income).

The CIA has an interesting table giving the level of public debt in terms of percentage of GDP for the year 2007. The UK is listed at position 50 with a level of 43% of GDP. Lets have a quick look at the big names above the UK in the list :-

  • Japan is listed at position 3 with 170%.
  • Italy is at number 7 with 104%
  • Germany is at number 20 with 64.9%
  • France is at number 22 with 63.9%
  • and the US is at number 27 with 60.8%

Does not seem quite so bad really does it ? Wait! The UK debt has risen considerably since 2007, so we should recalculate the level of debt for a later time. Fortunately the UK National Statistics department have an update for September 2008 showing public debt was at a level of 43.4% of GDP which would still leave us at position 50 in the CIA’s table. Even if we recalculate using the latest debt figure (given above as £660 billion) we get to around 44.4% of GDP which is a pretty big increase, but would still leave us at position 49 in the CIA’s table.

Interestingly the National Statistics page I referred to (here is the link) also gives us the highest percentage of GDP that the UK public debt level reached – 44.2% in 1997 when the last Conservative government was in control.

It seems to me that at best the Conservatives are scare-mongering with talk about huge tax rises to combat spiraling public debt at record levels. That is not to say that public debt is not a concern, but I think we have a fair way to go before we reach the levels of some other modern economies which are still reasonably successful. Of course public debt has to be repaid eventually, but some of that public debt will be repaid by the banks that have been bailed out and by eventually selling off Northern Rock (at a considerable profit I hope).

Of course I could be totally wrong about the level of UK government debt, and perhaps we do have the largest public debt in the Western world, but I cannot see the evidence for it myself. Perhaps someone could point me in the right direction?