Monday, April 08, 2013

Bring Me My Pot Of Gold

We've got stacks of these

The fundamental reason we have to cut the welfare bill is because we can't afford it. At 16% of GDP and growing, we simply have to get a grip. And of course, the decisions are difficult, and the consequences for some individuals can seem harsh. But we just can't go on as we are.

Or can we?

Over the last week we've heard a lot about pots of gold that could pay our welfare bill without having to inflict cuts on the poor. Here are three of them, all heavily promoted by our friends at the BBC:
  1. If the government would just swallow its Plan A pride and get people back to Plan B work, the welfare bill would fall and there'd be loads more tax revenue coming in. The problem would solve itself.
  2. We could reverse the tax cut for millionaires, using the extra revenue to safeguard benefits.
  3. We could clamp down on corporate tax avoidance and get tens of billions more revenue. 
Pot One - traditional Keynesian pump-priming - is a seductive idea, but as Andrew Lilico points out today, with the government stuck on a £120bn pa deficit it doesn't offer a credible way forward. In effect, we've already been trying Plan B ever since the Crash and it hasn't worked. 

As for the idea that increases in public spending can be self-funding through their impact on GDP and tax revenues, that's akin to plans for a perpetual motion machine. Estimates of the actual impact vary, but the Office for Budget Responsibility reckons that an extra Pound of public spending boosts GDP by between 60 and 100 pence, depending on the type of spending (capital spending works much better than welfare spending). But since the amount that comes back as tax revenue will be less - perhaps 20 to 40 pence - the government's deficit is left 60 to 80 pence higher.  There are no magic pots of gold here.

Pot Two sounds even more attractive to most of us - reverse the millionaire's tax cut and pay the welfare bill without whacking the rest of us on incomes below £150k. 

Again though, the numbers don't stack up. According to the official HMRC analysis, increasing the top rate of tax from 40% to 50% raised much less than the £2.5bn pa originally promised by Labour. HMRC says:
"The conclusion that can be drawn... is that the underlying yield from the additional rate is much lower than originally forecast (yielding around £1 billion or less), and that it is quite possible that it could be negative. This conclusion is supported by wider academic literature which generally suggests a greater behavioural response than was included in the Budget 2009 and March Budget 2010 estimates. Evidence from the U.S. suggests the behavioural responses could be even higher, with an even lower yield."
The problem is that golden geese no longer hang around waiting to be plucked: faced with a punitive hike in tax rates they find ways of reducing their taxable income, possibly flying away entirely. Between 2009-10 and 2010-11, faced with a tax hike from 40% to 50%, they reduced their incomes by 25%:

Moreover, the longer-term damage to the economy is likely to be even greater, as entrepreneurial types leave for sunnier, lower tax climes. And as the economy suffers, revenue from other taxes also sags. HMRC says:
"High tax rates in the UK make its tax system less competitive and make it a less attractive place to start, finance and grow a business. The longer the additional rate remains in place the more people are likely to consider it a permanent feature of the UK tax system and the more damaging it would be for competitiveness. This suggests the negative impact on GDP may increase over time, and therefore the direct yield (and revenues from other tax bases) might fall over time toward or beyond zero."
In today's globalised high mobility economy, higher tax rates for millionaires are very far from being our pot of gold: in fact, they can easily turn out to be the exact opposite.

Pot Three - clamping down on tax avoidance by the likes of Starbucks - is widely trailed, and also sounds painlessly attractive to the rest of us. Because according to some estimates, the tax gap between what big companies ought to pay according to the spirit of the law, and what they actually pay, runs into tens of billions annually.

But once again, the reality is somewhat different. According again to HMRC, the tax gap for companies is only around £4bn pa, which while worth having, is nowhere even close to the £200bn plus we spend on welfare. Moreover, tax avoidance is an exceptionally grey area, and one man's tax avoidance is another's perfectly legitimate protection of shareholder interests.

And that pesky globalised economy makes it virtually impossible for one country acting alone to do much about it. Indeed, over the long-term governments may well have to phase out their taxation of multinational companies altogether. They may have to rely on taxing company earnings only when they distributed back to their own resident shareholders (which is how it was done originally back in Victorian times).

So three pots of gold that turn out to contain little but wishful thinking.

The only way of making welfare affordable is to cut it. Or more specifically, to tighten up on eligibility and to focus what cash we can afford on those who need it most. The painful choices are unavoidable.

PS Going back to that global savings glut and the role of those high saving Chinese, I was fascinated to read this account in the English version of the People's Daily. Not so much for the story itself, but for the accompanying list of the PD's most popular articles. Nothing to do with savings, or lack of welfare provision, or say, the shenanigans next-door in North Korea. No, the most popular article right now - complete with pic - is "Bogus sexy cop charged":
"A model who impersonated a police officer, posting sexy photos of herself online, has been given a suspended jail sentence at Fengtai district court for cheating and bluffing, which damaged the image of government officials, the Beijing Times reported Tuesday. The woman, 23, surnamed Wang, posted sexy photos on her microblog in July, including one in which she was pulling on black stockings while wearing a police shirt. She also wrote that as a policewoman, she has so much pressure because she has to dine with government officials every day."
Do they have April Fools Day in China? What would the Great Helmsman have said? What isn't clear is whether the article is meant as a warning to other microblogging bogus sexy cops, or whether the PD thinks those government officials need to chill. Of course, our own cops are perfectly capable of cheating and bluffing all alone without any help from bogus ones - as we've seen in the Mitchell case.


  1. Budgie8:35 pm

    BoM, it is I think extremely difficult to pare back government spending. The only way for sure is to chop out departments completely. In my book DfID should be so chopped. The BBC should be sold off. A large proportion of Quangoes should go too. Then of course we should leave the EU.

    1. Bạn muốn sử dụng dịch vụ ship hàng toàn quốc. Hãy đến với Proship chúng tôi. Vì sao lại phải chọn chúng tôi?
      Vì chúng tôi có nhiều kinh nghiệm và đang cung cấp dịch vụ vận chuyển như dịch vụ giao hàng tận nơi, dịch vụ ký gửi hàng hóa, dịch vụ chuyển hàng thu tiền hộ, gửi hàng bằng xe tải, gửi hàng đi Đà Nẵng, cho thuê kho quận 10, cho thuê kho bãi trong tphcm với kho đạt chất lượng gsp, gửi hàng đi Hà Nội... Hãy đến với chúng tôi khi bạn cần gửi hàng nhé.

  2. If you draw a graph of welfare budget v GDP from the Attlee government to the present day you get a line that stays level during the good times, rises for each recession and falls in each recovery but never quite make to where it was before. The early 1980s recession saw the welfare budget hit 10% so how come after 30 years of the Thatcherite consensus has it failed just as badly as the Butskellism that came before it.

    Has the welfare state become more generous? No, when Thatcher became Prime Minister unemployment benefit was £18.50 per week or £965 per year. GDP then was £199.2b so one million unemployed cost 0.48% of GDP. Now it's £71.70, £3,740 per year. GDP is £1,560b so one million unemployed costs 0.24%. That's exactly half as generous.

    There's not more unemployed than there were in the days of 3 million unemployed, so there's a conundrum, if we're paying half as much out, how is it costing 60% more. Where is the money going?

    Mr Denham does point out three pots of gold where the welfare budget can't be funded from, so proposes painful choices on the poor. But governments have redistributed wealth from the poorest to the richest for the past thirty years and the cost of welfare has still gone up. His solution has already been tried and failed.

    1. Có nhiều loại collagen hiện nay trên thị trường , nhưng chất lượng rất khó kiểm chứng chính vì vậy có nhiều câu hỏi đặt ra như : super collagen c có tốt không, fine pure collagen gia bao nhieu, collagen shiseido có tốt, collagen maihada có tốt không, collagen de happy giá bao nhiêu, collagen youtheory có tốt không, collagen neocell có tốt không mục đích để tìm được loại collagen ưng ý nhất , vừa an toàn mà hiệu quả cao. Đông trùng hạ thảo là dược thảo quý từ thiên nhiên , giúp chữa được nhiều bệnh. Có nhiều câu hỏi đặt ra như : hướng dẫn cách sử dụng đông trùng hạ thảo, thuốc đông trùng hạ thảo chữa bệnh gì, mua thuốc đông trùng hạ thảo ở đâu, đông trùng hạ thảo có tốt không, Và những câu hỏi về đông trùng hạ thảo sẽ được trà lời trong bài viết.

  3. I've always been amazed at those left wing (and some not so left wing) thinkers who claim the way to reduce the welfare bill is for the government to create public sector jobs (by employing people to dig holes and fill them in again?)
    Do they not realise that instead of giving people dole out of public funds to sit on their arses watching television we would be paying them a wage out of public funds for leaning on shovels , them or sitting in the pub plus we would have the additional expense of buying them shovels.

    1. Giảm cân có nhiều cách , nhưng cách giảm cân bằng ăn các loại thức ăn được nhiều người dùng đến , món ăn giúp giảm cân, thực đơn giảm cân cấp tốc sẽ giúp bạn có được thân hình đẹp và thon gọn. Khó ngủ hiện nay đang gặp phải ở rất nhiều người , cả già và trẻ .bi kho ngu phai lam sao ? Có nhiều cách trị khó ngủ .Gan là bộ phận lọc các chất độc trong cơ thể người , chính vì vậy việc giải độc gan rất quan trọng . thuốc giải độc gan tốt sẽ giúp bạn có được gan khỏe mạnh . Collagen giúp trẻ hóa làn da và ngăn ngừa các nếp nhăn , kéo dài tuổi thanh xuân, thực phẩm có nhiều collagen sẽ giúp bạn có được làn da đẹp và trẻ mỗi ngày . Ăn các loại thực phẩm tốt cho mắt sẽ giúp mắt sáng và khỏe mạnh hơn.

  4. It is the best post related to how to Make money online easily and recommended way which fully secure and safe.
    I really thankful to author for this post.

  5. It is the best information share in this post and you can also come to know how to 'Make money $710,000 in 28 Days easily and recommended way which fully secure and safe.
    I really inspired from this post and really like it.

  6. Your pot of gold looks good and attractive..your post about money was fantastic and very much informative..Thank you so much for sharing..


  7. The solution:

    Procedure By Which conservatives Could Control Parliament

    If UKIP  is  Lucky,  UKIP could  get,   perhaps,  get   ten to thirty   seats
    in  Parliament.  Do  not   forget,   the  public  still regards  UKIP  as   a
    one  issue  party.  To gain  control of  Parliament  UKIP  and  (and frie-
    nds) should  form a  new  conservative  party  with  a  platform that is 
    close to that of the existing Conservative party, omitting, of course, 
    policies that are objectionable to conservatives. The purpose would
    be to make a bed that would be easy for conservatives to slide into,
    including  the eighty  percent  of  the Conservatives who left Conser-
    vative  associations. UKIP and the  conservatives  should   then  form
     a  political  association  in  each  parliamentary  district.   UKIP   could
    merge with the new party, thus getting rid of the one issue problem. 
    Every one who would have worked  to  form  the new,  conservative,
     party   should   be   prevented   from    joining    the    new   party    for
    a  period   of time  to  prevent  the  impression  that  UKIP  controls  it.
    The two or three conservative parties should hold a primary election
    to determine who runs as the Parliamentary candidate, with the losers
    to help the winner. The cost of forming new associations can be raised
    by local contributors. It is suggested that the  new   conservative   asso-
    ciations and the political party be controlled by the lowest level of con-
    servatives, such as teachers, small businessmen, solicitors, professionals
    etc. If the  above   procedure   can  not  be  completed  in  time  to   get 
    candidates   elected   to    Parliament,  the  new  party  must  wait  until
    after the  election  and  hold  a  petition  demanding  that  the  elected
    MP  resign. Note: an MP  represents   every  person  in  his  district,  not
    just members and   supporters of his party. When the petition reaches
    fifty percent of those who voted in the prior election, the conservatives
    will be morally justified in demanding their MP"s resignation. Then the
    new party could run their  candidates  in  the  following by elections. 
    To select a candidate, a local  association should  advertise  for applicants
    or the position of candidate for  Parliament, then  select   the   best  app-
    licant  by using rigorous tests, including, most importantly,  psychological 
    evaluation. psychological evaluation is an absolute necessity as the psych-
    ological evaluation is the only way to tell who is honest and who is a con-
    artist; members of the public  cannot.  Testing  could  be  required  of the 
    association  officers,  committee  members and delegates, etc.

    The platform, selected by new party associations,  should be some what
     vague in order to facilitate integration  the platforms of the  new  assoc-
    iations into one platform. It is suggested that self forming cliques of those
    who are   honest  and   trust  worthy  be formed;  then form   self  forming
    cliques of those who have   political skills  and  capabilities,  within  the
    first described clique.

    The corruption in Ukip is a cause for concern. Information about the corr-
    uption may bee seen on the following websites:

    John Newell

  8. Có làn da trắng là mong ước của mọi cô gái , sản phẩm thuốc ivory caps giúp làm trắng da toàn thân ngoài ra bạn cũng có thể sử dụng các loại loai kem chong nang tot nhat. Ngoài ra nếu bạn muốn làn da luôn tươi trẻ thì nên dùng my pham sakura nhat ban như kem duong da chong lao hoa sakura giúp làn da luôn trẻ đẹp xóa các nếp nhăn. Cách thuoc herba vixmen an toàn và hiệu quả bằng herba vixmen , vậy thuoc herba vixmen mua o dau , có an toàn không và mua ở đâu sẽ được cho biết sau đây. Sản phẩm giúp bà bầu và thai nhi như prenatal multi dha sẽ bổ sung chất dinh dưỡng cho cả bà bầu và thai nhi.

  9. I understand you’re saying. I agree writing is not an easy task that everyone thinks. My friends keep telling me that I’m lucky because the only thing I need to do is to write to earn money. But for me, although writing is my passion, sometimes this gives me stress. How to create interesting article for my followers when the time I want to be alone and I’m in deep hurts. But I also agree that writing makes me happy because it bring back my pot of gold. -Dorothy of wise essay writing

  10. I also enjoy reading the comments, but notice that a lot of people should stay on topic to try and add value to the original blog post. look at my profile I would also encourage everyone to bookmark this page to your favorite service to help spread the word. I'll use this information for my essay topics.

  11. Awesome . can i share this your post on my fanpage ?
    comment from day mo quan with OPen ID & facebook Fanpage hoc nau an o dau

  12. I lost my husband to another woman 2 weeks ago after 27 years of marriage . We had a lovely marriage but he started a relationship with a co worker who chased after him . He is living away near his work and her and refuses to talk to me or to come home . I am devastated and am finding it hard to cope . I wish I did not love him and that I could move on but I can't . I don't know how to stop feeling like this I wish I didn't as its eating me away and I m starting to feel ill. I have degraded myself begging him to come home all to no avail. I became very worried and needed help. As I was browsing through the internet one day, I came across a website that suggested that Dr Frank Ojo can help solve marital problems, restore broken relationships and so on. So, I felt I should give him a try. I contacted him and he did a spell for me. tow days later, my husband came to me and apologized for the wrongs he did and promise never to do it again. Ever since then, everything has returned back to normal. I and my family are living together happily again.. All thanks to Dr Frank Ojo . If you need a spell caster that can cast a spell that truly works, I suggest you contact him. He will not disappoint you. if you have any problem contact him, I give you 100% guarantee that he will help you, This is his details, E-mail: , Web site: . Mobile number +2348072370762. Thank you all for reading.

  13. I would like to thank you for the efforts you have made in writing this article. I am hoping the same best work from you in the future as well. . Buy spects frames online

  14. Truly, this article is really one of the very best in the history of articles. I am a antique ’Article’ collector and I sometimes read some new articles if I find them interesting.
    Assignment Help

  15. I would like to thank you for the efforts you have made in writing this article. I am hoping the same best work from you in the future as well. .

  16. This comment has been removed by the author.

  17. This comment has been removed by the author.

  18. Thanks for Sharing Great information in burning our money

    Homework help, best homework help, help with homework, online homework experts, do my homework
    homwork help


  19. I am very happy to read this. This is the kind of manual that needs to be given and not the random misinformation that’s at the other blogs. Appreciate your sharing this best posting. Assignment help | Need Assignment help | Marketing Assignment Help | Law Assignment help |


  20. I am an antique article collector and this article is one of the best I have ever read. I hope to see the same amazing work from you in future. Thanks Assignment help | Need Assignment help | Marketing Assignment Help | Law Assignment help |

  21. Such a nice blog and i appreciate your all efforts about your thoughts. it's really good work. well done. I would like to share something really helpful for education. Online Assignment Maker

  22. Congrats on having such well managed site! It has good looks and contains informative content as well. We are also a web portal where students get the help with the academic writing by opting for our assignment help online and can get a well written assignment.
    Assignment Expert

  23. Such a nice blog and i appreciate your all efforts about your thoughts. it's really good work. well done.I would like to share something really helpful for education. Mathematics Assignment Help Malaysia


    Get professional trading signals delivered to your cell phone every day.

    Follow our signals NOW and make up to 270% per day.

  25. If you need your ex-girlfriend or ex-boyfriend to come crawling back to you on their knees (even if they're dating somebody else now) you must watch this video
    right away...

    (VIDEO) Text Your Ex Back?

  26. Nice and informative post. Thanks for such a wonderful post.
    Myassignmenthelp provides custom Nursing assignment help to students who find it difficult to complete their essays and assignments in the available time.

  27. scam? is the largest academic news and reviews website and rapidly growing in the US, Aus, UK and Singapore. We'll work hard to provide you original reviews & news.

  28. This comment has been removed by the author.

  29. Happy to read this.
    Need custom essay writing help UK visit at My Assignment Help UK at reasonable service charges. Acquire professional help from specialized writers who can deliver high quality wiring assistance for every subject. Receive work on time that contains an all-inclusive research on your topic along with various references and complete bibliography.

  30. I would like to thank you for the efforts you have made in writing this article. I am hoping the same best work from you in the future as well Assignment help| Need Assignment help

  31. Make My Assignments|Assignment help make customized assignments. Our team of experts is ready to make your assignments 24x7. We provide 100% Plagiarism free work
    Best Marketing assignment help service at affordable prices that too plagiarism free
    I really liked the article and i am really fond of such kind of people who writes such good content. Keep it up
    [url=""]Marketing assignment Help[/url]
    [url=""]assignment making service[/url]
    [url=""]UOP Assignment help[/url]

  32. I am an antique article collector and this article is one of the best I have ever read. I hope to see the same amazing work from you in future. Thanks freelance digital marketer | web designer | freelance wedding photographer

  33. I would like to thank you for the efforts you have made in writing this article. I am hoping the same best work from you in the future as well Assignment help| Need Assignment help

  34. Nice Article.

    Punjab Assignment help offering quality assignment help services in UK, US, Australia, Dubai, NZ, Canada and many countries. Connect at or email or +447464884564, +917027018503

    Assignment Help

  35. On the off chance that more individuals that compose articles truly fretted about composing extraordinary substance like you, more perusers would be keen on their compositions. Much obliged to you for thinking about your substance.Assignment help Australia | Need Assignment help | Marketing Assignment help | Law Assignment help

  36. This is the nice blog post i have every seen on the internet, i like the way you described, thanks for sharing such a valuable post.
    assignment help uk,assignment help,assignment helper

  37. Thanks for this article. It contains the information i was searching for and you have also explained it well. We are also a service provider that deal in the assignment writing help sector. So, the students struggling to write their college assignments can opt for our online assignment help and can get a quality assignment written from us. 
    Assignment help Australia |
    Literature Review Assignment help |
    DBMS Assignment help

  38. I am very happy to read this. This is the kind of manual that needs to be given and not the random misinformation that’s at the other blogs. Appreciate your sharing this best posting. Make My Assignment

  39. Great site and a great topic as well I really get amazed to read this. It’s really good. I like viewing web sites which comprehend the price of delivering the excellent useful resource free of charge. brass ganesh

  40. Anonymous7:21 pm

    Great site and a great topic as well I really get amazed to read this. It’s really good. I like viewing web sites which comprehend the price of delivering the excellent useful resource free of charge

  41. It is good to read such a valuable information and thanks for sharing it. Livewebtutors is striving towards creating a great learning platform and hence, provide authentic Assignment Help Sydney to make it more informative.

  42. I am happy to find this blog very useful for me. As it contains lot of information. I always prefer to read the quality content and this thing I found in you post. Thanks for sharing. We also provide CDR Report .

  43. Anonymous12:17 pm

    Now that you have come to just the perfect place for answers to “revise and edit my paper for me”, we will share with you some of the secrets of our editing and proofreading success. From uncovering grammatical mistakes to polishing the tone of the paper, we do it all for you whenever you enquire, “Who can edit my paper online?”

  44. This post is not just informative but impressive also. The post is so convincing that it created an urge to choose Assignment Help services. You can email us at Info@Myassignmenthelpau.Com or Phone Number: +61-2-8005-8227

  45. Thanks for sharing such a nice blog of information to us. This is very knowledgeable for me. I am offering Assignment Help all over the world.

  46. Your resource is so interesting and informative for me and this article explained everything in detail. You have done superb job thanks for sharing this kind of stuff with us. Read more about the Best JavaScript Framework and know which is the best app development platform

  47. Good news. Appreciate this post. Thank you for compiling and sharing it.
    Check out our latest research report of best mobile app marketing companies 2018 worldwide.