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The Soane Museum

Rumour has it that Labour will make a call for the dead at its party conference, if not before, during the summer.

If it happens, be sure to read all about it here.

Upmarket burgers for all? With the Falkirk fiasco blowing up now, in July, Labour seems to be so desperate to get members that it is turning to its ancient New Labour spectres for succour.

The Observer has revealed that a leaked, internal 'Secret memo shows key role for Blairites in Labour's election team.'

Now, in December, having dug deep into an old cabinet Labour finally has enough faces to front up at the next election and work behind the scenes.

Election strategy will shortly return to being made on a sofa (much like policy before it).

13 December 2013

Almost needless to say the 'response' has come five days later - the Unite union will not allow the diminution of its voting rights within the party and it looks unlikely a special conference next March will result in mass membership.

6 July 2014

Apparently One Nation socialism is to receive a spine-stiffening jolt (from Blue Labour?) at the National Policy Forum on 18-20th July to substitute for the damp squib of March.

Tony Blair will then give a major speech on 21st July to mark the 20th anniversary of becoming leader.

Expect an electric reaction.

15 July 2014

Charles Clarke is reported today as saying One Nation Labour 'has no narrative' and 'give people a reason to vote Labour - not an assembly of odd policies like the electricity freeze or whatever'.

25 October 2014

The electric reaction was attenuated by the summer break but is now coming through at full voltage with quotes like:

We want society to change and actively to lift up those who are down. It begins with an analysis of the world shaped by reality not ideology, not by delusionary thoughts of how we want the world to be.



20 February 2013

There is a case for making tax reforms revenue neutral. Then they can be seen as reforms.

In western societies governments currently tend to be spenders of money they have not quite got. On the other side of the equation large corporations tend to be stockpilers of the money, unable to fully invest the surpluses and particularly so in the countries of their domicile.

The real net provider of new capital for investment tends to be the personal sector, usually from saving out of income, but not exclusively so, and which often goes into small companies.

Inheritance tax and capital gains tax are a mess as presently structured. Both disproportionately hit a segment of the middle class and that is about it.

Why they are also undesirable and degrade the personal sector's ability to provide capital is best explained in detail by commentators like Allister Heath (Daily Telegraph 12 February 2013).

Here is a simple example of the mess.

A single sculptress who has never had much of an income because of her occupation but has scrimped and saved to own a house big enough to include her studio will be hit by a big inheritance tax bill on death. She cannot sell it without giving up her occupation and moving away from a location that gives her artistic sustenance.

A quango chief who retires on a good pension can give everything away, live on the pension and not pay a penny of inheritance tax.

Both the Liberal Democrats and Labour seem to have settled on £2 million as the level at which their putative mansion taxes could start. ( When applause from the converted dies down, at election time everyone remembers who invented a new tax. In May 2010 everyone knew who proposed the death tax. So why engage in gale force Michael Foot-style rhetoric about more taxes when a restored 10% tax band could be there for the asking?).

£2 million is a worthwhile abstract figure to concentrate on. Give or take a little it is the level at which, averaged over a few prosperous societies like Germany, America and England, the 1% starts and the 99% stops.

So let us take it as the threshold mark for capital taxation reform. Let us do away with the two dog's dinner taxes and let everyone be able to receive gifts and bequests or make capital profits, in whichever combination, until they reach the lifetime total of £2 million, after which they pay at the rate that keeps the tax take revenue neutral. 15% might more than do the trick. This level might surprise but it shows how unfairly selective the taxes have become.

If you are of the school that says tax everyone richer than you or if you wish to set the limit higher than affects you, by all means switch the level to £1 million or £5 million but to keep it revenue neutral the relevant percentage might change too to, say, 4% and 40% respectively.

£2 million is perhaps a level at which a family can be self sufficient and sustain one or more of life's unpleasant vagaries like having a disabled child and continue self sufficiency into the next generation. It is not unreasonable to facilitate more and more people doing so as time progresses.

By definition 99% will not initially be at that level but achievable goals within a generation are no bad thing for the state to encourage.

There are obvious benefits. As the receiver of gifts pays not the donor, the multi-millionnaire would do well to give to the many not to too few.

The most important consequence, though, would be that some families and individuals would have the money to invest in something that benefits their local society. The bigger society if you like.


26 March 2013

Some seven month old research has recently been dragged up showing the top 1% in Britain as having mean wealth of £22 million (whilst their median wealth is below £2 million) and the next 9% having mean wealth of around £300,000 at the bottom end and around £700,000 at the top end (there is not enough information given to calculate the median).

However, the way it has been spun one would have thought one in a hundred people you pass in the street has £22 million, or about 600,000 people, with them stuffing it all into homes. But how many homes qualify for the £2 million threshold for mansion tax? About 10,000. How many homes sell for over £22 million a year? Less than a hundred.

So who are calls for wealth taxes based on property, in addition to the mansion tax, really targeted at by the Left? The next 20%, say 12 million people.

The next problem is if Mr Average Top 1% is the CEO of New Mega Corp with £22 million wealth and you wealth tax him half a million a year, so what? It is New Mega Corp with its billlion a year profit that is monopolistic/overly exploitative - or not as the case may be - but the Left is playing the player not the ball because of its swaggering timorousness. It totally fails to tackle the system. It is like chopping the head off an aristocrat in the Terror rather than doing away with feudalism - which survived in much of Europe after the French Revolution though it had been overrun by French republican and imperial armies.

The next problem is that the wealth of the 1% is billed as being "housing + financial + physical + pensions" whilst everyone well-informed knows the vast majority of the wealth of the 1% is held through corporate vehicles and not as their homes, however palatial. Warren Buffett is the extreme example of this.

Even great landowners use corporate vehicles. However, it will probably be the following 20% who will pay 90% of the wealth taxes that will become 'justified' by the 'need to tax the rich' because homes are visible 'immovable wealth'.

So why not try taxing the movable wealth of the 1% which is so much more in quantity?

It is easier to spin.

No wonder the Left is now running out of runway.


5 January 2014

In the European Commission and the House of Commons there are remarkably few people who have run a genuinely small business and so policies in Britain, with a few exceptions like business rate relief, are now inimical to much of small business. The main culprit is the second tax in the mutt's dinner, capital gains tax. A few politicians, like Dr Liam Fox and John Redwood, have been saying the right things about it but no one has listened.

Discussions about companies within the two institutions mentioned above are woefully inadequate and nobody in the Treasury has been there much more than 20 years to give a perspective on how Britain was when it was awash with small business.

They talk about SMEs, for instance, as if small companies have much in common with medium sized companies and can be lumped together as a sector that can then be mildly patronised. They have some things in common but not much.

Enterprise divides itself better into six groupings: individuals, micro enterprises, small companies, medium sized companies and large international corporations or multinationals.

Some other categories, like full liability partnerships, cooperatives and mutuals were largely killed off during the last Labour government.

Individuals and micro enterprises have quite a lot in common.

Small companies have more things in common with these than with medium sized companies.

Medium sized companies and large international corporations have quite a lot common.

Amazon is an example of a large international corporation.

Cuadrilla is an example of a medium sized company.

A company selling fitted kitchens from a couple of showrooms is a small company.

A key cutting and shoe repair shop not part of a chain is a micro business.

The builder who you call out to replace a roof slate and who gives you a receipt in his own name is an individual.

A large international corporation, in Britain at least, can always find a way to write off a trading loss or capital loss against the tax bill, if necessary by using offshore vehicles. The exceptions to this are rare. A few large capital losses or trading losses in a row will not take it out. On the limit it can sell a loss-making subsidiary for the value the tax losses have to another company.

Medium sized businesses are usually internationalist in outlook, too, with the same tax planning flexibility but with usually less market pricing power.

Warren Buffett was partially right when he said nobody is put off investing by high tax rates. If 'nobody' means the type of company he invests in then it is so. If local tax rates are too high they have quite sufficient pricing power to put up prices to compensate.

At present there is some public debate as to whether inadequate rates of return are the cause of poor levels of business investment in places like Britain and Spain. They probably are but one must also distinguish between the rates of return likely to be obtained by the different enterprise size categories.

For large and medium sized companies, taken in aggregate, the rate of return may be positive but inadequate.

For the individuals, micro enterprises and small companies, taken in aggregate, the current rate of return is almost certainly negative.

Since for the latter there is unlikely to be a public quotation on a stockmarket, the owners must have fluid means to exit (and reinvest if they wish). Exit should not disadvantage them in relation to medium and large sized companies but of course it does because the two rates of capital gains tax are far too high.

This is because for those engaged in small scale enterprise there is little equivalence between capital and income. Capital you have to provide yourself (as European Union rules relating to banking effectively mean banks will never lend you risk capital) and if you lose it first or second time round (as is not unlikely as not all enterprises can succeed) it is entirely your loss. You will not be able to write it off against the third but profitable enterprise because you will likely be in a different field by then. If you happen to sell this business to recoup what you lost in the first two goes then you are going to pay capital gains taxes at rates that are higher than the old betting tax and as everyone knows betting with a betting tax on winnings is a mug's game. So taken in aggregate over the many small enterprises that have a go the rate of return is negative.

What is more, the owners of the smaller enterprises have to exit because they do not live for ever.

Naturally, people engaged in small enterprise with a bit of accumulated nous know the new rules: set up a new venture by all means but do not put in much capital of your own. In other words, do not set up capital intensive businesses.

Socialism has always been hostile to any kind of proprietorial class and so has not much helped small business.

Social democracy has, if anything, been much worse than socialism over the past decade: always anxious to cut a deal with big business at the expense of the citizenry. This is all very well for its ideology but multinationals are often in these markets only for the market share they feel they must have or must defend. They will, therefore, invest only so much in the territory as the market share merits and not so as to use it as a major base for exports elsewhere.

Governments can guarantee some rates of return but do it too much and the free market is interfered with.

Given its influence on coalition policy, social democracy is writing its own epitaph: we helped discourage many types of small business in Britain.


1 March 2015

Since New Labour tried so hard to dominate the centre ground it led to a political monoculture and an increasingly dull, conformist society. Socialism was not wanted, conservatism was not wanted, nationalist parties unregarded.

Until 2008 incipient problems in the economy and the safety agenda regarding the NHS simply did not surface so far as to gain sufficient public attention because bad news was suppressed. After all, boom and bust had been abolished and the NHS was the envy of the world. Later the world was saved.

Were Labour to move left from where it is now it would not be what the electorate wants, were it to move back to New Labour the electorate would not want it either. Yet when the possibility of it moving either left or right is removed and the electorate obliged to study what centre ground Labour occupies, its vote collapses.

This has been evidenced in Scotland where the SNP now occupies the ground to the left.

The core offering of Labour is slight. North of the border it augments it by offering to use mansion tax revenues from predominantly London properties in Scotland but this loses it votes in London.

Wherever you stand you have to understand the other political cultures and adapt for a growing political plurality.

The coalition has been successful in being a broad church. Though it would not get movement on the Union or Trident, the SNP might get more effective independence after the election by doing a deal with the Tories rather than with Labour.