Wednesday, 26 May 2010

Magic mirror on the wall

Further to this morning's post (below), I've just heard on Radio 4 that John Redwood doesn't approve of these capital gains tax hikes either.  I agree with John Redwood? What's happening to me....?

Responsibility Tax

Going into work today, to see if I can remember what it's like to be a solicitor.  There's a file there so big, so hefty and so permanent that I might try and patent it as a new building material.  Especially with faith in good old bricks and mortar so low - and about to get lower.

I've lost count of the mammoth days and Saturdays spent working in the two housing booms of the last decade.  Way before Northern Rock became Northern Pebble, lowly conveyancing-belt solicitors like me were raising their hands in class, enquiring "Sir! Sir! What's a 125% mortgage?  Are these self-certified mortgages safe, Sir?", but as the Treasury and lenders and insurers were behaving like the Vicar of Dibley with that chocolate fountain, I don't think Headmaster Brown ever really heard us.

After Brown's pension raid and periods of uncertainty with the stock market, the rush for property was inevitable.  An explosion of wildly overpriced buy-to-lets and free money led to speculator overload.  When it all fell in on itself, I almost expected the Doctor to appear and confirm that the bad guys had all been sucked into an interstitial time prison, configured in secret and only to be understood  in three series time when Steven Moffat has written the script.

But what about the extras?  Those with no Equity card, and now with less equity.  Those who were encouraged by government to go and stand on set, and perhaps have a go at investing in property in a small, personal way?  All those people who believed that buying a bigger house, or maybe even a second one, was the best way to save for their old age.  An old age which could easily require long term care.

The collapse in the housing market has meant that retired people, looking to downsize and realise some of their savings, haven't been able to do that.  HIPs cost for the seller and high stamp duty for the buyer, plus a drying up of credit have had careful pensioners trapped in their big houses on little incomes.  That's why I didn't like the thinking behind the Lib Dems' mansion tax, and why I approved of the Conservatives raising the inheritance tax threshold (although, maybe £1m was a bit generous once house prices started to fall).

Now we have a similar threat to those who placed their savings in a second property, especially on the verge of retiring.  No mortgages available at that age, so maybe using matured policies (contributions taxed) and savings (interest taxed) to buy a property.  Earning a little income (taxed) and maybe having some equity to help pay for old age.  Come to sell it now - even at the deflated price - and you'll have even less money than you expected.

The Lib Dems - and now the ConDems - call capital gains tax (CGT) a voluntary tax.  In a business setting it can be rolled over or legitimately avoided, even set off against losses.   If it's a professional investment setting, you can hang onto it or take the CGT hit as part of usual investment business.

But if it's your second property is your personal savings vehicle, you're going to need to liquidate it.  To live on, to help your children get on the housing ladder, to help with grandkids' tuition college fees and, ultimately, to pay for care.  The things you planned to do, carefully, responsibly.  You were promised a tax-efficient way to save.  Now - when you've retired and not in a position to alter your plans - the new government wants some of your savings as additional tax.  CGT is not a voluntary tax for you.

You meet many pensioners when you're knocking doors during a general election.  Those who'd looked after themselves and put a bit by - just enough to keep them in the lower income tax bracket.  They inevitably thought the Lib Dem policy of raising the income tax threshold was "fair".  They didn't think the same way about the corresponding desire to clobber some of them with higher CGT.

Gordon Brown, the Golden Chancellor, effectively told them that saving in property was the only safe way to save (remember SIPS?).  Should a new government punish those who believed him?

Tuesday, 25 May 2010

Slim Fast

So, the Welsh Assembly government has to find some savings.  Hardly a bolt out of the blue is it? 

Yet, just two and a half weeks after the election, we're apparently seeing the catastrophic effects of  "yet another direct Tory Liberal hit on Wales", sighs Peter Hain.  If you can sigh and explode simultaneously.

When the Labour government in Westminster imposed cuts of quarter of a billion last year, I don't remember Peter Hain saying "This is yet another direct Labour hit on Wales", despite us already having the highest unemployment, highest child poverty, oh you know the rest.  If he has to have his say, could he please change the record.  We don't want worn, scratched old vinyl in this i-Pod age.

As it's time for some new voices, it's pleasing to hear from the new Plaid MP for Carmarthen East & Dinefwr, Jonathan Edwards. His calculator tells him that the cuts in Wales are a third higher than the rest of the UK apparently. 

Maybe one of the primary areas for these extra savings in Wales is the cost of governing it. Just like Whitehall, Cardiff Bay needs to cost less. If WAG doesn't want to be treated like a government department, then it needs to start behaving more like a government. That means going on a diet instead of moaning about the cost of burgers.

Rhodri Glyn Thomas AM is right to resist deferring savings that can be made now, and right to resist equal cuts across all areas of expenditure.  Russell Lawson of FSB Wales agrees and says that public services should “look towards the private sector” to introduce efficiencies:
There have been studies that show that if the public sector had adopted the practices of introducing efficiencies of the private sector, public services would be in the region of £58bn cheaper today, which is obviously a significant amount."

Mr Thomas also mentions the pending loss of 500 lower paid jobs in Carmarthenshire County Council, and asks why the higher salaried posts aren't going.  Good question, and one that could be applied the to Assembly itself.

Only this week, the Assembly's response to an important report into the serious problem of people trafficking is to recommend a new post of trafficking director to deal with the problem in Wales.  The typical Assembly response - create a new job/civil servant/quango.  However, there is already a single point of contact and senior police officer in place in each of the four Welsh forces who is the dedicated work lead in the area of human trafficking.

As any dieter knows, it's about changing your eating habits. Time for the Welsh Assembly government to be thinking of that Austerity Bikini, and going for locally sourced, low-fat alternatives.

Sunday, 23 May 2010

Remember the Defer-endum

I was just musing whether the name "Peter Hain" was an anagram of "Procrastination", when it dawned on me that you can get "Pan-era Hypocrite" out of "O! Crappy Peter Hain". An extra "d" would give you "deferred" out of "referendum" too.

It's almost three years since we were offered a referendum on greater law making powers by the Labour/Plaid coalition in Cardiff, and we're still at the bickering stage.

Yet it takes Cameron and Clegg a fortnight to be a position to create an Office for Budget Responsibility, and for Eric Pickles to turn the Potato Marketing Board into lunch.

Pinning a late referendum on the Tories won't cut the mustard or butter parsnips. Shame, as Pickles needed something to go with those potatoes... A moment on the lips. A lifetime on the HIPs (if he hadn't abolished those as well.)

Natural or acrylic

"I was lying. Your cuticles are terrible", barked Tracey Barlow, bristling at Gail Potter-Tilsley-Platt-Hillman-McIntyre's insistence that she is an innocent woman. This despite the fact that Corrie's answer to Zsa Zsa Gabor was sporting a very professional French manicure. Clear evidence of the Lib Dems' soft sentencing policy having made it into the coalition agreement maybe?

Some coalitions, however, are destined to create havoc on the fingernails. Angela Merkel's are putting Gordon Brown's to shame at the moment. Hardly surprising, with the Germans coming over all fretful about Mutti bailing out reckless adoptive Mediterranean children. All she did was warn her euro-brother and sisters that they were all in this together (I know those words from somewhere...?). Isn't that what families are for?

New York, London and Japan had a fun morning sticking pins in the euro. France wagged its immaculately groomed finger and the markets wobbled for a bit.

Both France and Germany are asking for a further - but not the same - transfer of national powers to the EU. Merkel wants new rules to deal with members' insolvency: Sarkozy is after a centralised "economic government" and a eurozone council which would sideline the UK. Yet neither seems to believe the other is willing to yield the element of sovreignty required by either plan. So what will happen?

In the meantime, the UK's non-euro status will have many Brits mopping their brows with relief. UKIP enthusiasts are basking in the glow of high-grade schadenfreude - or would be if it weren't so damned European. The ConDems are going with "Yah! Phew!", and hoping that that Frau Pandora won't really open the box marked Lisbon Treaty.

The near-parity of the euro and the pound has been a godsend for Welsh farmers, but if the euro is as wobbly as it is, what does the similarity say about the stability of sterling?

With Sarkozy's financial best friend offering a stereotype's shrug at our triple-A rating, and stage-whispering "IMF" at every turn, we must hope that tomorrow's ConDem austerity measures are real not fake.

It matters, because we can't hang on by our fingernails much longer.

Wednesday, 19 May 2010

Fantastic Mr Field

There can be nothing more irritating for the nascent blogger than the arrival of a worm bot (or maybe bot worm) on the laptop. A combined treatment of Ivomec and ignorance has failed to defeat the intruder, and I'm off to see Uncle Darren at Blues Digital in Newtown tomorrow morning. A techno-enema from a professional computer doctor is required.

In the meantime, I have negotiated the release of the home PC from long-term captivity by my in-house teenager (who is wandering around the house singing "Life on Mars", and waving a pack of Oreos round like a light sabre, and, therefore hasn't noticed).

That's because I wanted to give a verbal round of applause to PM Cameron for choosing Frank Field to be the country's new poverty czar.

"Czar" and "poverty" usually end up in the same sentence in less than wholesome ways, but this has to be one of the most positive and inspired ideas politics has seen in a long time. Anyone who still thinks Cameron is the heir to Blair can see the mistake exposed here in this single appointment.

Field was famously charged with "thinking the unthinkable" as Blair's Minister for Welfare Reform, but - rather like Mo Mowlam - came up with something that dimmed the Bambi glow (pinning his demise entirely on Brown and Harman is just a bit too convenient.) The result was an unacceptable reshuffle role; a kind of green bench constructive dismissal. He has been rattling New Labour cages ever since.

Looks like Cameron is made of braver stuff. Field is already sympathetic to the aims and findings of the Centre for Social Justice, and so should find an easy ally in Duncan Smith at the DWP. We're going to see some pretty stern frowns from that quarter in coming months, so it'll be interesting to see how the Lib Dem elements of the new government cope with forthcoming proposals.

After all, Clegg seems to be saying that the Big Society (or "patronising nonsense" as he called it before the election) was basically what he was talking about all along, just speaking from a different lexicon. Removing entrenched over-reliance on the state is part of the Big Society philosophy; a differently balanced Social Contract, if you like. If IDS (and Field) are serious about making it difficult for people to view a life on benefits as a career choice, replacing a sense of entitlement with sense of responsibility is bound to mean stick as well as carrot. Already the Lib Dems are muttering elsewhere about human rights. Perhaps we had better check now to see if Clegg's lexicon includes the words "Yes, but..."

Another cage rattler seems to be surfing the zeitgeist, this time in Powys. Not content with being the County Council's newest Board member, Cllr Price is also Llandrindod's new town mayor. Congratulations Gary. Man is born free but everywhere he is chains....

Friday, 14 May 2010

Wigs and Whigs

Was going to wax lyrical about Ken Clarke and his fancy garb tonight. Never did a wes'cut and gaiters befit a man so well. But, instead, let's have a look at the controversy over the new "55% and you're out" rule, which seems to have resulted in periwigs being wrenched from scratchy scalps and fits of the vapours all round.

The question of Parliament being able to bind itself in perpetuity is the stuff of first year law degree essays. Laws change all the time by will of Parliament. So relax.

You can see this as some amazing devolution of power away from the prime minister, or you can see it as restriction of the ancient freedom to kill off a government with a simple majority of one.

Even if it's just a pragmatic attempt to staple these parties together for an effective period, it can all be changed by Parliament in the future. And if you're worried about a future government's ability to claw back powers, just remember how many powers this last Labour government assumed over you in the last 13 years.

Interesting times in Wales and Scotland today. Head Girl for the Lib Dems discovered a whole new repertoire of facial expressions for Cheryl's visit to the Assembly. Think we all remember George Osborne's openness on the issue of the Barnett Formula, and Cameron's willingness to see the referendum on additional Assembly powers go ahead. And we'll be waiting, chaps. Though Scotland may not be quite as up for that Barnett formula review as Wales is, when it comes down to it.

Quick word on Stephen Timms MP, who was stabbed by a constituent today. Met Mr Timms at a Centre for Social Justice event a couple of years ago. Ok, he's Labour, but he struck me as a genuine parliamentary good guy. Committed to his constituency, committed to helping people, and seeking no acclaim for something he was honoured to see as his job. Good to know there are some like that, isn't it? Get well soon, Stephen.

Lembit - groan

Judging by this week's edition, the County Times is going to miss its role as Lembit's chief hagiographer. "Parliament's loss is undoubtedly television's gain", says Nelson. Some of us may quibble with the first assertion anyway, but after LO's performance on "The Sharp End" last night, maybe even the County Times may have to re-assess its judgement call on the second.

Hats off to Andrea Benfield for keeping a straight face as Mr Opik, who "never lies on shows like this", piled into the appointment of Cheryl Gillan as Secretary of State for Wales. Always after the telly reference, he referred to her as the "Weakest Link" and had a pop at her for not naming the date for the referendum on additional powers for Assembly.

Strange that Opik didn't have a go at Peter Hain for letting the referendum papers languish in his intray for months. But then, having a go at the Labour government was never his strong point. No, he thought Cheryl wasn't up to it because, just 24 hrs in, she hadn't named the day that we would be invited back to the polling booths to decide on one of Wales's most significant constitutional reforms.

In a painful performance by any standards, he continued to take gratuitous, unsubstantiated swipes at the new Secretary of State for Wales; hardly in keeping with the new Cam-Clegg special relationship. At one point, he even suggested that Roger Willams be appointed. Roger must have been shaking in his shoes - we all remember the Curse of Lembit.

Lembit seems to believe that, unless you're in a headline, you don't really exist. His essential criticism of Cheryl Gillan is that she isn't a headline chaser.

Well, thank goodness for that. We're all hoping she'll be a bit too busy and a bit too serious to be yesterday's chip paper

Thursday, 13 May 2010

Unsettled fronts

Good lord. Derek's just mentioned "Radnorshire" on the weather. Didn't pick up on the atmospheric pressure affecting the Lib Dem councillors on Powys County Council though. Seems like it's not just Swansea valley voters who are upset with Mr Clegg.

Now we know that Head Girl, Kirsty Williams, has a problem with the idea of Lib Dems and Tories working together. But we're somewhere over the Rainbow - for the moment. Maybe not in love yet, as Jeremy Hunt's observed, but it seems to going well in this marriage of convenience. Ironically, it seems there will be no immediate restoration of the married couple's allowance to acknowledge the stability of this publicly announced union.

So how about a bit of wedding reception bonhomie to wish the couple well. Surely the prospect of Eric Pickles in government is something to be celebrated. Somewhat grumpily, the Telegraph has focused on helpful tips on which policy points are likely to be grounds for divorce. Maybe they could put them together in a handy free wall chart to help sell the Saturday edition. I note, however, that David Laws' choice of ties seems to has been omitted as a possible source of disharmony.

My favourite appointments? Cheryl Gillan for Wales. Caroline Spelman at DEFRA - someone who understands farmers feed us. And IDS at the DWP - a committed social justice warrior just where we need him.

Wednesday, 12 May 2010

Getting On With It

Sales of Red Bull are returning to normal. Candidates and their campaign teams have caught up with the hoovering and "Ashes to Ashes" on Sky Plus. Cameron and Clegg have shared smiles in the rose garden and Gordon's gone.

The relentless TV coverage may have owed more to football punditry than political commentary, but that'll be over soon as well - maybe.

Labour's Peter "Boo Hiss, the Tories are behind you" Hain is still getting air time, I see. Kim Howells (also Lab) has been characteristically up front with his widely-shared views about Lib Dem campaigning. Now it's Neil Kinnock (er, Lab again) on the box. And David Cornock's got a quick smack on the head with a rolled up newspaper for Cheryl Gillan for the crime of not representing a Welsh seat and - confound her! - still getting 8 Welsh Conservative MPs.

Please tell me we're moving on from all this. Time to say goodbye to this soap opera and let the real story unfold. This baby government needs to given a fighting chance to mature, without the media poring over every milestone like over-anxious, over-dramatic first-time parents.

But, if you still like your "doof doof" moment, wait for this time next year. When all those outraged Labour tactical voters take out their ire out on the Welsh Lib Dems in the Assembly election.