Tax Dodging in Britain is a government regulated sport

A chancellor is reputed to have said: 

"Laws, like sausages, cease to inspire respect in proportion as we know how they are made" 

Not said by our chancellor of the exchequer but by Bismark, the Iron Chancellor of 19th Century Germany. He may not have been the first to say it, but like most witticism the originator rarely gets the credit.

Successive British governments, from left to right, have bent over backwards to keep a sausage machine of laws creating loopholes for tax avoidance. The industry knows it; the tax dodgers know it; the government and government in waiting (the opposition) know it.

In Britain tax dodging is a government regulated sport. In a session of the Public Accounts Committee (PAC) of the UK Parliament looking into tax avoidance schemes they questioned Aidan James, a director of a tax consultancy advising those who want to avoid tax:

Q103 Ian Swales: How many of the schemes you have marketed are now illegal?

Aiden James: Most of them.

Ian Swales: Most of them?

Aiden James: All of them, I suspect.

Q104 Ian Swales: All the schemes you have marketed are now illegal, so you are now looking for the next loophole-is that a fair description of your business?

Aiden James: That is how it works, yes.
.....

Q110 Stephen Barclay: The model, if I am understanding correctly, Mr James, is that most of the schemes that you introduce get closed down within a relatively short period of time.

Aiden James: Yes.

Q111 Stephen Barclay: So then you aggressively target a client base and get as many as you can through in a short period of time on the basis that HMRC cannot pass retrospective legislation. Therefore, your clients will get a tax window where they can reduce their tax until HMRC wake up and close that scheme down, by which time you have moved the game on to the next scheme. Is that a fair summation?

Aiden James: I would agree with all that you said apart from "aggressively market". 

The UK government plays its part in the tax-dodging sport by pledging not to take away the tax-dodging industry’s meal ticket, which is that tax window of opportunity between a loophole being found by the dodgers and closed by the legislators. In an official Government notice the solemn pledge was made by the legislators:

The Government agrees that changes to tax legislation where the change is to have effect from a date earlier than the date of announcement should be restricted to wholly exceptional circumstances. The Government has made a commitment to this effect in the Protocol on unscheduled announcements, published in Tackling Tax Avoidance at Budget 2011.

So, the game goes thus:

• Government produces loophole ridden tax legislation
• Tax advisors find loophole to create a tax dodge.
• Tax advisers rush clients who can afford their fees through the loophole like Noah populating the Ark - leaving most of us Ripped-Off Britons outside to drown.
• Government looks into legislating to close the loophole
• Law is changed, but those who got their tax money through before the change get to keep it.
• Tax advisors collect their fees and move on to the next loophole.

The ‘window of opportunity’ can last a considerable time. In the National Audit Office’s report in November 2012, the section on HMRC’s response to mass marketed avoidance schemes states

“the majority of avoidance cases that were open in August 2012 had been open between one and five years.”

The same NAO report provides details of the “five largest types of mass marketed tax avoidance schemes”

1) Partnership loss schemes: 

A partnership is set up, which makes a loss. The participants in the partnership use the loss to shelter their other income from tax.

Tax at risk: £3.5 billion

Number of users: 14,000

2) Employee benefit trust schemes: 

Employee benefit trusts are trusts set up by employers to reward or incentivise employees. They can be used to disguise employment income to avoid tax and National Insurance contributions. For example, a trust is set up offshore and makes loans to employees, which are not taxable. In practice, the loans are never repaid and are used as a way of rewarding employees. HMRC has identified 75 variants of this scheme.

Tax at risk: £1.7 billion

Number of users: 3,400

3) Interest relief schemes:

Schemes which seek to engineer a situation where a taxpayer can claim interest relief as a deduction against their general income. They evolved when legislation was brought in in March 2007 to counteract partnership loss schemes.

Tax at risk: £1.1 billion

Number of users: 900

4) Employment intermediary schemes:

An intermediary (which could be a company, partnership or sole trader) is set up to pay contractors or employees working for a company in the UK. Instead of paying the worker directly, the company using the worker’s services pays the intermediary. The intermediary then pays the worker a small salary on which PAYE and National Insurance contributions are paid. It pays the remainder to the worker via interest-free loans, but the loans are never recalled.

Tax at risk: £0.6 billion

Number of users: 16,000

5) Stamp Duty Land Tax schemes: 

These schemes take advantage of sub-sale relief. A property sale is structured so that tax relief can be claimed because it is contractually going to be passed on via a connected party. The transaction is structured such that another relief can be claimed, or a low-value transfer can be arranged, when the property is passed on.

Tax at risk: £0.5 billion

Number of users: 6,600

Why do they do it, all these politicians, tax advisers and tax dodgers? The dodgers clearly do it to dodge tax. And at least the partners in the tax dodging advisory firms take their money over the table, and may even pay tax on much of it.  In a PAC committee meeting on 31st January 2013 tax chiefs of the Big Four (the world's four largest accountancy firms Ernst & Young, Deloitte, KPMG and PwC) were asked what they were paid:

Q146 Chair: Are you all on seven-figure sums? Taking salary and bonuses-are they seven-figure sums? Yes.

Bill Dodwell [Head of Tax Policy, Deloitte LLP] : I’m not, no.

Kevin Nicholson [Head of Tax, PwC]: Yes.

Chair: Jane?

Jane McCormick [UK Head of Tax, KPMG]: Six.

Chair: Are you seven or six?

John Dixon [Head of Tax Policy, Ernst and Young]: Seven.

Bill Dodwell: Six.

Bragging rights go to Kevin “seven figures” Nicholson of PwC. Mr.Dixon and Miss McCormick take as consolation prize the ammunition to get a pay-rise at their next appraisals. All for helping people dodge tax.

When the government looks like making a change in the law that seems to close the gaps too tight the government is easily persuaded by those who need a bit more space to “manoeuvre” their taxes. An example from the UK budget of 2012 was putting a limit on tax relief available from donations to charity.

HMRC provides a helpful example of a Higher Rate taxpayer making a donation via the ‘gift aid’ route:

“For example, if you donate £100, the total value of your donation to the charity is £125 - so you can claim back:

£25.00     - if you pay tax at 40 per cent (£125 × 20%)

£37.50     - if you pay tax at 50 per cent (£125 × 20%) plus (£125 × 10%)”

So, a top rate taxpayer can claim back £37.50 in tax for every £100 of taxed income he donates.

The scrapped proposal in the 2012 Budget was to put a cap of £50,000 or 25% of income, whichever was higher, on the donated amount on which you can obtain tax relief. For example, a person with a £1 million income could claim tax relief on donations up to a maximum of £250,000. He could donate more, but no tax relief would be available on sums above £250,000. Surely, you would have thought, the higher of £50,000 or 25% of income is enough?

Lobbyist came pouring out of the oak panelling shedding bitter tears for the charities that would lose out. After all, it would cost a dodger £100 to dodge £37.50 of tax at the 50% higher rate, wouldn't it? A net loss of £62.50 to the dodger. So why would he do it other than for sweet charity? Think of the seals, snow leopards and butterflies, the crumbling stately homes, the orphans and the privately educated youth who benefit from charities! 

Chapel of Registered Charity Number 1139086

George Osborne, the chancellor, may be a hard hearted man. But he relented. Perhaps he thought of the beneficiaries of Registered Charity Number 1139086, "The Kynge's College Of Our Ladye Of Eton Besyde Windesore" that helped out his dear friend David Cameron as a child. Whatever the reason, Osborne scrapped the cap. 

Surely not even the most hard bitten cynic could doubt someone who would give away £100 to get just £37.50 back? So what's the need to put a cap on that philanthropy?

Well, if you thought that then silly you! The tax dodging industry managed to invent a legal avoidance ruse that allows dodgers to claim £millions of tax relief from charitable giving by donating nothing except the fees paid to the accountants running the avoidance vehicle. An example is "the Cup Trust", which was the subject of enquiry by the Public Accounts Committee in March 2013. The activities of The Cup Trust were described in the course of questioning:

Q41 Chris Heaton-Harris: I just want to see if you recognise this statement: "The trust bought £176 million-worth of Government gilts, which were sold to donors for only £17,000. The donors sold the gilts and donated the equivalent of the proceeds to the trust. Gift Aid of £46.4 million has been claimed on these donations by the trust." Do you recognise that?

William Shawcross [Chairman of the Charity Commission]: Is that from the Spotlight report from HMRC?

Chair: No, Spotlight is nothing to do with this trust. Again, I know Lin Homer will not tell us.

William Shawcross: Yes, I recognise the figures.

In short, the Trust gave £176 million to the dodgers, who then 'donate' it back to the trust. The Trust claims £46.4 million in tax rebates. The dodgers claim approximately £77 million in tax rebates. HMRC loses £millions in tax which the government recoups by increasing other taxes and cutting services (schools, hospitals, armed forces, police), and Charities get enough peanuts to keep the Charity Commission impotent. 

The number of peanuts is also exposed in that Public Accounts Committee session, when the question of how much the Cup Trust had donated to charities:

Q16 Chair: How much?

William Shawcross: £55,000.

Q17 Chair: Out of how much?

William Shawcross: Out of many millions.

...

William Shawcross: Madam, £55,000 has already been paid to charitable causes. In the course of our investigation, which we started as soon as the tax avoidance thing came to our attention in the spring of 2010, we looked to see whether this was a proper charity registered under English law. We did not like the tax avoidance scheme, but we operate according to the law. Tax avoidance is not actually our issue; it is much more HMRC’s issue.

Q20 Fiona Mactaggart: Public benefit is your issue.

William Shawcross: And they were giving money for public benefit. [Interruption.] I know it was not very much money, but the proportion of money that a charity gives away in every year is not for the Charity Commission to determine.

Q21 Austin Mitchell: It was giving away thruppence for every £100 it received in donations. That is ridiculous.

William Shawcross: If you think it is ridiculous, Sir, the law may have to be changed. We are looking with HMRC, with whom we have a very close relationship-

Austin Mitchell: But you didn’t mind that it was such a pathetic donation?

Amyas Morse: I understand that the law does need to be changed.

Tax advisers, dodgers and legislators who know they are doing wrong will no doubt take comfort from a much higher source than Bismark and his disparaging comments about sausages.  The Bible, Romans 5:13, states:

"for sin indeed was in the world before the law was given, but sin is not counted where there is no law."

So long as there is a loophole in the law, that's alright, your sins don't count.

So long as you are one of the 'in-crowd', tax dodging is a sport of choice.

Picture from Wikipedia

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Tax on beer and cigarettes

KJ, Chris and Fee get all confused...

SOURCE TELEGRAPH: Bitter taste for drinkers as beer is watered down to save money
John Smith’s Extra Smooth will be reduced from 3.8% alcohol to 3.6% - and the price per pint is set to rise. The change is not just because of the rising costs of production, and reduced beer sales in Austerity Britain, but in response to high tax rates. The government’s attempt to tackle problem drinking includes a lower rate of duty on beers with lower alcohol content. The change should save Dutch brewers Heineken, who own the brand, £6.6m in duty per year. A third of every pint now goes to the tax man.

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Rip-off News round-up. Our pick of the last week's media (Thu 13th March)

Government’s Treasury expert says Cameron is wrong over austerity “success” 
The PM insisted that the Office for Budget Responsibility (OBR) had concluded that the austerity cuts had not reduced growth. But Robert Chote, head of the OBR, responded by writing an open letter to the PM saying his report had concluded exactly the opposite: cutting public spending reduces economic growth in the short term. He added that most other economists agree with him. TELEGRAPH

(Cameron’s phone rings off the hook following his latest speech: “The Pope is not Catholic. That’s what he told me, anyway…”)

Saga criticised over excessive home insurance cost

Saga promotes itself as a champion of the aged. But they have been caught charging existing customers far more than their new customers, and far more than competitors. The BBC's Money Box programme featured a woman who had been with Saga for 10 years, who said: "My last quote was for £1,214 but it wasn't until this year that my family said you're paying much too much...” She finally got comparable, alternative home insurance from her bank for £236. She felt the discrepancy between the two quotes was unjustifiable: "You think of Saga looking after the over-60s. I couldn't believe they would treat elderly pensioners like that." BBC NEWS

(Saga shares its name with the ancient Norse word for stories of heroic deeds of fantastical make believe. It now shares its meaning as well.)

Archbishop of Canterbury backs campaign attacking Government welfare reforms
The Archbishop of Canterbury, Justin Welby, has backed a letter to The Sunday Telegraph written by 43 bishops who say the benefits cuts will have a “deeply disproportionate” effect on children. They say the cuts could push 200,000 children into poverty. The Government’s reforms will limit the annual rises in benefits to just 1% for the next three years, well below predicted inflation. The archbishop said "As a civilised society, we have a duty to support those among us who are vulnerable and in need. When times are hard, that duty should be felt more than ever, not disappear or diminish.” TELEGRAPH

(“People joke that the Church of England is the Conservative Party at prayer. So we thought we’d bring the UK economy to its knees while we’re at it,” said our family-loving government insider...)

Bitter taste for drinkers as beer is watered down to save money

John Smith’s Extra Smooth will be reduced from 3.8% alcohol to 3.6% - and the price per pint is set to rise. The change is not just because of the rising costs of production, and reduced beer sales in Austerity Britain, but in response to high tax rates. The government’s attempt to tackle problem drinking includes a lower rate of duty on beers with lower alcohol content. The change should save Dutch brewers Heineken, who own the brand, £6.6m in duty per year. A third of every pint now goes to the tax man. TELEGRAPH

(“Errr... couldn’t they just dodge tax like everyone else?” slurred our finance correspondent, weeping through his sixth pint of beer...)

Bupa condemns rising fees at private hospitals

The private medical insurance giant warned that lack of competition among private hospitals was driving up the cost of insurance. Bupa believes its private customers will be forced to turn to the NHS unless the sector is reformed. This will add £5bn to the NHS bill. Bupa CEO Stuart Fletcher blamed the ‘excessive’ price inflation for denting Bupa’s annual profits in the UK and criticised the Government for a ‘chronic underfunding of social care’. DAILY MAIL

(A sober reminder that lack of competition doesn’t just hurt consumers and public services, but also private businesses!)

Google chairman Eric Schmidt nets $6m cash bonus, despite company’s tax dodging

The company reported record revenues of $50bn but came under fire for UK tax arrangements. Google lawfully used the tax haven of Bermuda for £6bn of transactions, while paying just £6m in corporation tax in the UK, in 2012. In January, Schmidt said Google would abide by any tax changes imposed by the UK: "Our tax strategy is that whatever the tax regime, we would pay that." GUARDIAN

(Ah, the Bermuda Triangle: a region of sea infamous for the tragic disappearance of aircraft and ships under mysterious circumstances... and countless billions of unpaid taxes without any mystery whatsoever.)

428 Barclays employees and 93 at RBS earned more than £1m last year

Among the top earners, 50 people were paid between £2.5m and £5m last year, while a further 373 were paid between £1m and £2.5m. BBC NEWS

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Archbishop of Canterbury attacks Government welfare reforms

Cameron tells Justin Welby to stop meddling in things he only half understands...

SOURCE TELEGRAPH: Archbishop of Canterbury attacks Government welfare reforms
The Archbishop of Canterbury, Justin Welby, and the Archbishop of York, Dr John Sentamu, have backed a letter to The Sunday Telegraph written by 43 bishops who say the benefits cuts will have a “deeply disproportionate” effect on children. They say the legislation will remove the protection given to families against the rising cost of living and could push 200,000 children into poverty.

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A tale of three bonus seasons, two banks and a shop: Lloyds, RBS, and the John Lewis Partnership

Over 500 bankers earned more than £1million at RBS and Barclays in 2012, with 50 paid between £2.5 million and £5 million. HSBC paid 204 bankers more than £1 million, with its five highest paid staff receiving between £3.9 million and £7.5 million. 

Bankers have been permitted by successive governments, Labour and Conservative and Coalition, to loot in a way unseen in any other industry. Excessive bonuses are paid to the bosses of many industries: for example in 2013 the CEO of Centrica arranged to leave that company accompanied by a hearth warming £10m combined share, salary and pension package. The difference is banks hose cash over staff well below top-boss level. None of this is news, but every now and then the bare-faced cheek of one bank is exposed by the relatively less spewing bonuses paid by another bank.

In March 2013 two banks, both rescued by £billions taken from the British taxpayer, announced their results and their bonus pools:

From basic measures, taken in March 2013, Lloyds appears in better shape than RBS. Lloyds total value was double, its revenues 27% higher, and its losses seven times lower than RBS.

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=LLOY:LSE

http://markets.ft.com/research/Markets/Tearsheets/Summary?s=RBS:LSE

And yet Lloyds' is paying relatively less ludicrous bonuses compared to RBS. Lloyds is led by Antonio Horta-Osorio who was the first bank CEO to stop fighting against paying compensation to customers ripped-off in the Payment Protection Insurance scandal, resulting in the other banks also throwing in the towel. The same Horta-Osorio who, having started as CEO in March 2011 got so stressed by what he saw that he suffered insomnia through the summer, and took a few weeks off sick later the same year. Could he be a man with enough humanity to be revolted by British banking culture? It’s too early to tell. 

Horta-Osorio seems confident he won't lose the competitive edge by holding back on the bonuses. After all, the question should not be whether staff will leave if they don't get a fat enough bonus. The question should be whether staff who leave can be replaced. As we have pointed out, the maths shows banker performance matches random chance. They are eminently replaceable.

In contrast, the prime question occupying the directors at RBS seems to be how much bonus they and their favoured staff can get away with before the owners do anything about it. The owners being, of course, us British taxpayers represented (disappointingly) by our government. 

The arrant nonsense about needing bonuses to make people work hard is exposed by the likes of the John Lewis Partnership, that runs the department stores of that name and also the Waitrose supermarket chain. In the same week RBS reported it had lost over £5 billion and was giving top staff £600 million in bonuses as a reward, the John Lewis Partnership announced its results:

• Gross sales of £9.54bn, up £811.8m, 9.3%
• Revenue of £8.47bn, up £706.9m, 9.1%
• Group operating profit of £452.4m up £59.1m, 15.0%
• Profit before Partnership bonus and tax of £409.6m, up £55.8m, 15.8%
• Partnership Bonus of £210.8m; 17% of salary (equal to nearly 9 weeks' pay)

John Lewis employed 78,700 staff. Revenue per head at John Lewis (£108k) is comparable to RBS (£130k). And yet according to their 2012 Annual Report John Lewis' top paid director's bonus was just £115,000: 

"The emoluments of the Chairman [of the John Lewis Partnership], who was also the highest paid director, were £954,000 (2011: £950,000), including Partnership bonus of £115,000 (2011: £142,000)."

John Lewis Partnership, which quaintly refers to its employees as ‘partners’, has a written constitution, which dictates that: 

"The pay of the highest paid Partner will be no more than 75 times the average basic pay of non-management Partners, calculated on an hourly basis"

And yet John Lewis manages to recruit staff from chair salesmen to chairman that managed a strong 2012 without resorting to showering them with cash.

How much longer will the British Government pretend it is powerless to do anything about excessive pay in the financial sector because the other countries won't cooperate? The EU is legislating a cap on banker bonuses of up to 200% of salary (compared with John Lewis’ 17% of salary bonus per person regardless of rank for 2012), and all our government will do is fight to stop the EU and protect bankers' pay. Even the Swiss, famed for services to tax dodgers, voted in March 2013 for a change to their constitution to control excessive pay, banning ‘golden hellos and goodbyes’ completely and giving shareholders a binding vote on company remuneration.

So what do you actually get in return for paying stonking bonuses? Compare John Lewis and the banks:

John Lewis makes its money selling kettles and frocks at a high price in a posh environment. Their kettles don’t boil water any hotter than those available for a song at Wilkinsons. The frocks are no more frightful than those available at far less frightful prices in Marks & Spencer. But the people who walk into John Lewis, or pick up a bottle of Jamesons at Waitrose, walk with full knowledge that they pay extra for the fragrant environment and the company of more fragrant fellow shoppers who appreciate that fragrance.

Banks make their money promising prosperity and security but delivering the opposite: Payment Protection Insurance scams; Libor rigging frauds; Interest Rate Swap rip-offs. They boost their profits by paying risible returns on savings and investments, and taking excessive charges and extracting well hidden penalties.

What you get in return for paying stonking bonuses is a banking system run by people chasing stonking bonuses. You get bankers with no compunction about pulling off the frauds and deceits, regardless of the harm it does people and companies, that are the only way they can pay themselves their stonking bonuses. 

For a more fragrant banking sector, stop excessive pay to stop pulling in those who want to enrich themselves. Recruit leaders who want to be good bankers more than they want to be millionaires. 

Read More

Isolated Britain fails to avert EU bank bonus cap

Fee, Chris and KJ wonder how long the UK can hold out...

SOURCE REUTERS: Isolated Britain fails to avert EU bank bonus cap
Britain was left isolated in Europe on Tuesday after it failed to secure backing to water down new EU rules limiting bankers' bonuses, a measure that could threaten London's dominance as a financial centre.

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Rip-off News round-up. Our pick of the last week's media (Thu 6th March)

RBS pays £600m in bonuses despite £5.2bn losses

Despite also losing £1.2bn last year, RBS CEO Stephen Hester confirmed that he plans to join his investment bankers in taking his bonus for the first time in four years. It will award him £780,000 in shares next month. Last year he returned his bonus after a massive computer glitch cost RBS well over £100m in compensation. INDEPENDENT
(Well, in that case, fingers crossed for another computer meltdown…)

Computer meltdown hits RBS as customers are unable to withdraw cash
The most seriously affected are customers of RBS-owned NatWest Bank. Today's problems come after technical issues hit RBS and its subsidiaries last June and left millions of customers unable to pay bills or move money for days. RBS apologised. INDEPENDENT
(Errr... whoops!...)

Cadbury accused of opening imaginary factory in India to dodge tax

Cadbury, owned by US food giant Mondelēz (formerly Kraft), is reported to have reprogrammed its accounting system so employees could submit false invoices, purchase orders and other documents that made it seem as if a new plant were operating. DAILY MAIL
(“We’re very sorry and heads will roll… for not sticking with a fake company in the Cayman Islands, like everyone else,” said a genuinely contrite Mondelez spokesperson…)

Banks cut back on loans to business, in spite of getting £14bn “Funding for Lending” from the Bank of England

Funding for Lending was meant to be passed on to small and medium-sized businesses. Instead, bank lending fell by £2.4bn in the final quarter of last year. The Bank of England’s deputy governor, Paul Tucker, admitted that the majority of the £14bn had gone to homebuyers. Businesses confident of expanding and repaying the loans have been turned down by the banks. BBC NEWS
(“...Because only we know how big a mess the economy’s in, stupid. Hey, we created it!” said our sympathetic bank insider.)

“Global centre of banking” Switzerland backs curbs on executive pay

Voters in Switzerland have backed controls on executive pay, forcing public companies to give shareholders a binding vote on remuneration. Swiss companies will also no longer be able to pay so-called “golden hellos” and “golden parachutes”, whereby senior managers receive a one-time cash lump sum when joining or leaving a company. But companies could also seek ways around the new rules and experts have questioned whether shareholders will make full use of their new rights. The new Swiss rules are now the world’s toughest on fat cat pay. TELEGRAPH
(…and the punch line is? “The new Swiss rules are now the world’s toughest on fat cat pay,” said the entire world weeping tears of frustration…)

Massive profits and bonuses at HSBC, despite paying $4.2bn in fines in 2012

The billions in fines has not stopped CEO Stuart Gulliver getting paid $14.1m in 2012, up from $10.6m in 2011. Globally, 204 employees were paid more than £1m last year, of which 78 were in the UK group headquarters. Overall profit was $20.6bn. HSBC paid out $1.9bn in fines for money laundering, and set aside another $2.3bn for mis-selling financial products in the UK. Last year HSBC was caught breaking laws by doing business in Syria and Iran, and trucking lorry-loads of cash for Mexican drug cartels. BBC NEWS
(“To avoid the bad publicity we thought of delivering these bonuses in truck-loads of cash. But we keep getting caught,” said our HSBC insider…)

Npower profits soar by a THIRD after its inflation-busting winter fuel price hikes

The German owned firm reveals 34% rise in profits to £413m. It increased gas prices 8.8% and electricity 9.1% last November. The industry-wide price hikes pushed a further 300,000 households into fuel poverty, taking the total to 7.5m. DAILY MAIL

Clampdown on payday lenders

Payday lenders will be forced to share data to stop multiple loans, the number of TV ads could be limited, and there will be unlimited fines for those who break the rules. Payday lenders have 12 weeks to comply. The OFT found widespread breaches of the law and regulations. Payday lenders are earning up to half their revenue from rolled over loans causing costs to mount up rapidly. Although lenders told the OFT the average loan was £270, charities report typical debts of more than £1,000. GUARDIAN

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Michael Gove forced into another U-turn on GCSE replacement plan

Cameron can only look on...

SOURCE GUARDIAN: Michael Gove forced into U-turn on GCSE replacement plan
Education secretary abandons English Baccalaureate certificate after pressure from Lib Dems and exam watchdog. The Liberal Democrat input is the second time they have helped thwart Gove's policies. Last year, Nick Clegg lobbied hard for the Department for Education to drop plans leaked to newspapers about a two-tier replacement for the GCSE, billed by some as a return to O-levels and CSEs.

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Who should pay for the defence of the nation? The wealthiest, in the form of higher tax, or the poorest having their benefits cut?

The UK Minister of Defence said, in an interview with the Telegraph, the "kind of Conservatism I was brought up on says that the first priority of the government is defending the country and maintaining law and order. Those are the two top priorities for me” . Which seems reasonable. There is no doubt that paying for the banking crisis required us to cut defence spending, probably beyond what is prudent. However, he then goes on to say the people from whom money should be taken to pay for Defence are not those with the most money (including bankers), but those with the least. 

The minister went on to say: “There is a body of opinion within Cabinet that we have to look at the welfare budget again. The welfare budget is the bit of public spending that has risen the furthest and the fastest and if we are going to get control of public spending on a sustainable basis, we are going to have to do more to tackle the growth in the welfare budget.”

At least he is being consistently true to the "kind of Conservatism [he] was brought up on". Defence and Law&Order are the "two top priorities" apart from keeping tax down.

They pick us off one at a time. Public servants, then teachers, then 'skivers and strivers'. So who is next? Nick Clegg, Iain Duncan Smith, and various 'think tanks' are softening us up to the idea of cutting benefits to the elderly. Are pensioners so feather-bedded they can afford to lose their benefits?

Fortunately the Office of National Statistics (ONS) is still manned by ordinary Britons driven by maths, and still manages to publish their statistics regardless of the bums on the ministerial seats. They know they need to be careful: The National Audit Office's (NAO) criticisms of various government departments including, among so many others, HMRC and the Department of Works and Pensions resulted in the government's decision to abolish it. Following the NAO's abolition it will be for the various government bodies to appoint their own auditors. We need look no further than the banks to see what happens when organisations are the paymasters of their own auditors. 

So let's appreciate some of the truths brought to us by the ONS while it is still alive and counting:

a) The UK has similar percentages in poverty to the EU average for those up to 64 years of age (children and what used to be 'working age' before retirement ages were pushed up). However, the percentage of over 65's in poverty is much greater than the EU average.

b) The reason poverty has fallen in the UK since 2008 is that the definition of 'poverty' sets it at 60% of the median income. So when the median (average) income falls there are fewer people in 'poverty'. 

"Poverty" falls even though the poor are actually worse off than before as inflation pushes prices up. A report by Lloyds Private Banking shows the value of money has fallen by two thirds since 1982. Regardless of the definition of poverty, it is a case of having less money when money is worth less.

c) The UK has a significantly higher percentage of its population in poverty than Germany and France. The UK is kept off the bottom of the pile by such economic paladins as Spain, Italy and Latvia.

According to a study by the London School of Hygiene and Tropical Medicine, part of the University of London, the British Army already focusses recruiting in schools with children from the poorer families.
Having already targeted their children to defend the nation is it reasonable to also target their benefits?

If the Tories regard defence and law&order as their "top two priorities", then they should put their hands into their own pockets in the form of taxes.

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Tesco fined £6.5m for fixing milk and cheese prices

Fee, Chris and KJ hope that's the end of the matter...

SOURCE TELEGRAPH: Tesco to pay £6.5m fine for fixing milk and cheese prices
Tesco, Asda and Sainsburys were operating a cartel to keep dairy prices high. The Office of Fair Trading estimated that the collusion led to shoppers paying 2p more for a litre of milk and 2p more for 100g of cheese. Although Tesco has always denied collusion, it finally lost a decade-long court battle. Supermarkets and dairy processors have paid £39m collectively in fines for this price fix.

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