Since I’ve been blogging light in recent weeks, I’ve not commented on the ongoing mess that Labour have got themselves into over the scrapping of the 10p rate of income tax. There isn’t much I can add that hasn’t been said a thousand times before. It is of course ludicrous that the Labour backbenchers have suddenly woken from their slumber on this issue, a year after we warned them what the implications of this reform would be. That the BBC have given the rebels such an easy ride for their johnny-come-lately rebellion is just par for the course.

But they do appear to have been bought off remarkably easily. The main measures for helping those hurt by scrapping the 10p rate seem like a total crock.

Let’s start with the retrospective raising of the winter fuel allowance. This is going to apply to all pensioners between 60 and 64, including my partner’s mother who is already roughly £50 a week month* better off due to her enjoying the full impact of cutting the basic rate from 22p to 20p. This is just throwing money around at random in the hope that some of it will stick.

And then there is the pledge to raise the national minimum wage for younger workers. First of all, this will only help those earning the absolute minimum wage for 18-21s. Someone working full time on the London “living wage” (£7.20 an hour) will still be whacked by the tax rise and yet only earns £13,000 a year. Secondly, it should be pointed out that any such an increase will mean that at least some of the cost of raising the winter fuel allowance is going to be paid out of increased tax revenue generated from young earners. The very lowest earners are going to be subsidising a benefits rise that will help many of the wealthiest (and yes, I do accept that the winter fuel allowance helps poor people as well, but still).

I’m all for raising the NMW for young people so it is comparable to the NMW for older workers, but this rise is happening for all the wrong reasons: getting the government out of a fix rather than doing what is right in the first place.

Surely it is unacceptable to have people on minimum wage paying income tax anyway? It is just a deadweight cost to the economy. The government should be working to narrow the gap between personal allowance and the NMW, not widen it. What possible economic reason is there to make employment even more expensive and wages even more inflationary?

But my greatest fear is that if the Labour rebels really are so easily bought off, they will capitulate over 42 days quite easily as well. They really are a useless shower. Give them a totemic act of class warfare like fox hunting to get self-righteous about and they will push the government to the limit. But helping poor people? Defending civil liberties and the rule of law? What is the bloody point of them?

* Oops! Good job I corrected that before anyone else spotted it.

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A blogger who shall remain nameless wrote on my Facebook wall on the day that my partner and I bought our new apartment: “Congratulations on joining the grasping classes! Pah.”

Ouch. Over the last few months, the significance of this comment has started to sink in. On Friday for instance I was at a friend’s birthday dinner party. As my friends dribbled in, I was asked four separate times how selling the apartment was going. Each time this resulted in me reflexively talking about the housing market, negative equity, tax, estate agents, the whole kaboodle. And each time I realised that it was stuff I was genuinely concerned about. On the fourth occasion it suddenly hit me like a bolt from the blue: I am now officially that bore at dinner parties I used to avoid who wanted to talk about house prices. My friends are now officially those boring people who actually initiate conversations about house prices.

And the worst thing is, we don’t even live in the fucking apartment! There’s nothing wrong with it, only that it is a one bedroom affair and there are two of us. We own it because my partner put a deposit down on a new flat that hadn’t yet been built during our first month of going out together, way back in 2005 when the housing market was still buoyant and it didn’t seem like much of a risk. Then one month before exchanging contracts in the summer of 2006, the fucking thing burned down (coincidentally, Lord Levy - whose own offices burned down a few months before in mysterious circumstances - was helping police with their inquiries in Colindale Police Station next door to the apartment building). We didn’t actually get to buy the thing - and we stood to lose a big deposit if we didn’t - until January this year. As you will no doubt be aware, since then the housing market has been, well, not great.

So I now pay more attention to news reports about house prices and the Bank of England than I ever have done before. A quarter of a percentage point can now raise or lower my spirits of a morning. I get palpitations each time I look at my bank account online and see a big red six figure sum glaring at me.

The simple fact is, we aren’t really doing that badly. The advantage of buying property at 2005 prices is that even with house prices wobbling at the moment we are unlikely to actually lose money (although making money is looking like it would take a minor miracle at the moment). And let’s face it, we have privileged enough backgrounds to be able to put up with the inconvenience and the anxiety for a few months. I’m acutely aware that there are people for whom the state of the housing market has a tangible effect on their quality of life. Far from becoming inured to the way our whole economy is underpinned by property prices, becoming a property owner has just made me realised what a crock it really is. At least I’m getting to see its full awfulness before in a few years time I become at one with my class and start working the system to my full advantage.

(the saddest thing is I just went back through this article and changed the word “flat” into “apartment” - I’ve become the most pathetic wanker ever)

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Well, I seem to be all right. As a public transport-using, non-smoker on a decent wage who is a moderate drinker, I suspect I’ll be the beneficiary of the 2p income tax cut overall (although the devil is always in the detail). But it doesn’t look as if too many people will be particularly happy with this year’s budget.

More here.

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Jock Coats points me to this video which is worth linking to:

Take the trouble to watch it.

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Following on from a conversation I had with a friend the other day, I thought I’d mention this idea here.

I’m sure it has been proposed before, but why aren’t London parking meters made a part of the Oyster network? The advantages would appear to be legion:

1. Per minute billing would encourage people to vacate the space as quickly a possible.

2. It could be easily integrated with residential parking passes (just as Oyster is already used for complementary travel).

3. Traffic wardens would have less of an incentive to hover around parking meters waiting to pounce on anyone who outstayed their welcome.

4. Instead of issuing fines, you could just have an automatic billing system whereby the first hour cost X per minute while after that it went up to 10X per minute - people couldn’t use the network until they’d cleared any backlog on their card.

5. It would encourage motorists to acquire Oyster cards - and thus make greater use of public transport.

There are obviously civil liberty concerns about the being able to use the system to track people’s movements, but those concerns apply to the Oyster system anyway. They are solvable, by scrapping the RIPA for example. Either way, London is the most CCTV riddled city in the country.

It seems to me it would offer tangible benefits to the motorist, while encouraging efficient use of parking space at the same time. What are the disadvantages?

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So, let’s get this straight. Nicholas and Ann “ten a penny” Winterton have used the Commons’ Additional Costs Allowance to buy an expensive Westminster flat and, having bought it, have passed it onto a trust to which they now pay rent - via the Additional Costs Allowance.

Shocked? Horrified? Well, you should be, but not at the Wintertons. They are just taking advantage of a fundamentally flawed system. This trick is played by middle class families across the country on a daily basis - the Mail on Sunday commenter claiming that “One rule for all of us, another for MPs” could not be more wrong. And would it really be any less of a waste of taxpayers money if they had never used it to buy a property and instead enriched a private landlord, as a number of MPs self-consciously and piously do? In that respect I have to take issue with Dr Pack over at Lib Dem Voice: the system is most certainly not “reasonable enough.”

If MPs were serious about reform, they’d scrap the ACA and replace it with a trust which MPs could use to buy or subsidise accomodation. If that asset were ever realised, the equity purchased by the trust would simply revert to the trust. This is hardly revolutionary - it’s how the government’s own shared equity scheme for key workers operates. Instead of blowing £20,000 per MP every year, that money would be recycled every time an MP vacated their seat. Given the nature of the housing market, the taxpayer would probably end up making a tidy profit.

But of course, that would mean admitting that the wealth accrued from such investments is fundamentally unearned and a drain on the economy. MPs dare not admit that as it could be the thin end of the wedge. Next thing you know, people would start demanding we tax this unearned wealth in exchange for tax breaks elsewhere. Revolution!

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Last week, you may remember David Cameron defending his plans to fine hospitals for superbug infections on their turf:

“We have got to make sure every hospital, every service, is prioritising this and the best way to do that is to make it part of the payment by results system.

“That will mean that every doctor, every nurse, every ward sister, the management of the hospital will be absolutely thinking of infection control first and foremost.”

As I’ve already suggested, replacing targets with incentives is to fundamentally miss the point about what is wrong with targets which is that they can game the system and are subject to the law of unintended consequences. Both problems also apply to incentives. Now it emerges that Cameron has another critic on his front bench.

Speaking in an Opposition Day debate on the New Year Network Rail debacle, Theresa Villainous said:

As my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) noted earlier, merely imposing fines on Network Rail would not be an adequate response, as the taxpayer would pick up the bill for them anyway.

Good point, well made. But, um, doesn’t that apply to hospitals as well?

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A few days late on this one, but I have been meaning to follow up on this article about Grant Shapp’s cunning stunt over the Christmas holidays:

“Our plan would build more houses than the Government. But the way to do it is not to do it in a centrally planned way. That has always failed.

“The way to do it is to incentivise communities to want to build houses. It works by saying, ‘build these houses and you get a new town centre or other services like a hospital or school.’ The existing community gets the gain, not just those people who move there.

“If people knew that council tax receipts were kept for five or 10 years if they took houses and therefore council tax was lower, they would often be in favour. This way you are building up an array of benefits from being a Yimby, not a Nimby.”

No-one is disputing that if communities had incentives to develop, all things being equal they probably would. But perhaps Mr Shapps ought to buy himself a calculator if he intends to make this incentive reliant on council tax receipts. Because while only a fraction (a quarter to be precise) of local authority revenue is raised from council tax, new developments will continue to have net costs associated with them, not net benefits.

If the Tory policy is for council tax to shoulder a bigger burden of local tax revenue, it’s news to me, and I’m sure it will be news to the millions of people who are unlikely to welcome a massive tax hike to the tune of thousands of pounds. And it must be news to Caroline Spelman and Eric Pickles who have spent the past two-plus years denouncing any attempt of government to even contemplate revaluation by coming up with scare stories about taxing “nice views“.

If Shapps truly wants his dream of creating incentives for new build to become a reality, he’s going to have to be a bit more radical than that. It won’t happen without a significant tax shift onto land values. That isn’t something that David Cameron, Gideon Osborne and the other members of the Tufty Club behind the New Model Tories are likely to contemplate, no matter how many times Grant sleeps in a cardboard box.

Shapps of course must know this; he’s seen how Osborne has been inflated to the point of being hailed the new messiah by the Right for suggesting (modest) cuts in wealth taxes after all, which makes his stunt seem all the more hollow. Almost as hollow, in fact, as this claim:

Mr Shapps points out that the real losers were the Lib Dems whose second place was a foretaste of the disarray that eventually claimed their leader.

W-O-W - this is amazing stuff coming from the man who claimed he had proof that the Lib Dems were running a “poster lottery” (which has subsequently earned Iain Dale the immortal nickname Pravdale) and whose hands appeared to be caught stuck in the YouTube cookie jar. Cunning stunts indeed. Without wanting to revisit old battles, let’s just make one thing clear: just as the Lib Dem’s victory in Dunfermline and West Fife in 2006 had nothing to do with our lack of a leader at the time, winning Ealing Southall would have done nothing to save Menzies Campbell’s job. He would still have quit this autumn. For Shapps to claim that one of the greatest Tory fuckups of 2007 was in fact a bold act of regicide on his part is immodest even by his standards.

It’s nice to see him begin his political rehabilitation however. It is clear he has learned nothing, which suggests that we will have a second chance to have some more fun at the expense of this legend in his own lunchtime before too long.

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Thanks to all concerned for all the positive comments I’ve had regarding my post last week on intellectual property. I’ve been pleasantly surprised with the response despite the article’s glaring flaws.

One of the things I meant to write about, which Jock reminds us of (via Mises Blog) was the whole Radiohead/In Rainbows phenomenon. Amazon currently rates this album, released this week, at 2 in its music sales chart, and 1 in rock and indie. Not bad for something being given away for free a few weeks ago (speaking personally, I really didn’t think much of the album being a pre-Kid A kind of guy, but each to their own).

It does make me wonder however if the future of physical music purchasing lies in the 70s. Back in the days of vinyl, bands would often turn their LPs into wonderful must-haves, with large, glorious artwork, books and sleevenotes. The scrappy booklet that can be found inside most CDs doesn’t compare. Already all major releases (including Radiohead’s) have a limited edition; at what point will these become standard issue?

Doctor Vee also highlights another omission: the argument in 2007 about whether or not to extend the copyright of recordings, lead by the rather deep pocketed Paul McCartney and Cliff Richard. He points to a paper by Rufus Pollock arguing that the optimal length of copyright from an economic viewpoint should be around 15 years. I haven’t read the full paper yet but it looks interesting.

Anyway, it made a nice change from the endless strings of memes and goodwill messages that dominate the blogosphere at this time of year.

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It’s still 2007 (just) so just enough time to do Iain Dale’s Eight for 2008 meme. Over the next 12 months I would (realistically) like to see:

1. Clegg to learn to trust his instincts, distrust his yes men and subsequently the Lib Dems to get back up to the low twenties in the opinion polls and to make steady progress over the year.
2. After another period of stagnation, and Brown’s Black October a distant memory, the Tories to resume the civil war which was giving them so much fun up until September.
3. A House of Lords Reform Bill to receive its third reading in the Commons (could easily happen and with the next general election now likely to be 2010, there is time to stand down the Lords obstructionists).
4. Following much faffing about with this upcoming citizen’s summit, the government to formally begin a constitutional convention in which electoral reform is very much on the agenda.
5. ID cards to be scrapped.
6. Clegg to hold a third tax commission, rowing back from the disappointing second one which (despite Vince Cable’s assertions) saw us embrace the conservative consensus to cut IHT and a withdrawal in Lib Dem support for wealth taxes.
7. The government to finally wake up and introduce a German-style feed-in tariff to promote micro-generation.
8. The public to embrace the Sustainable Communities Act.

I’m supposed to tag five people so I tag (with apologies to those who have already taken part - I’ve not been paying attention much recently): Alix Mortimer, Anthony Barnett @ OurKingdom, Antony Hook, Jennie Rigg, Jo Angelzarke.

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