Tuesday, 10 August 2010

Let's get the debt down, but let's target ALL the people who are stealing from us

Before I go any further I want to say that I deplore benefit cheats. By that I don’t mean the lad that takes a fiver for cutting his neighbour’s lawn, or gets a day wallpapering with his uncle and fails to declare it to the tax authorities or the dole.

I'm talking about constent cheats who claim for children they don’t have, or (and this is a particularly bad one at the moment) take a council house which they do not use, and on which they get a complete rebate while they live with their girlfriends.... all in order to maximize her benefits.

Or the guy who works all week and get’s paid under the counter, avoiding tax and national insurance and claims JSA, housing benefit and every single thing that he can and who is nothing more or less than a thief.

So I was delighted to hear that the government is going to clamp down on this crime, which, in an article for the Manchester Evening News, Mr Cameron tells us costs over £5 billion a year.

He makes it clear tha
t he thinks that this is outrageous and he will not stand for it. The money, he says could be used to employ 150,000 nurses or build 200 new schools.... neither of which, of course, is what will happen to it. It will actually be used to help plug the gaping hole in the finances caused by people at quite the opposite end of the financial and social scale.

However Mr Cameron says that it is a key part of restoring Britain’s battered finances. At £5 billion, it can hardly be “key”, given that the debt is measured in trillions, but hey... what’s in word.

I’m less pleased that Mr Cameron’s chosen method of recovering this money is to employ credit checking agencies, who will take on a large number of untrained workers at or close to minimum wage and set them to go through the financial affairs of everyone who collects any kind of benefit. As there are all kinds of cheats, I imagine that child benefit will also be checked. In short a large number of people’s details will be available to be lost or stolen by an army low wages staff. (OK, I can’t guarantee that they will be on low wages, but what do you think they’ll be paid?)

I’m wondering why, given the number of civil servants who will have to be made redundant, he can’t give them the resources; they already have the records.

One of the difficulties of paying private companies by result is that they MUST get results. And get results they do. By hook or by... and this is the “key” word....crook.

If David Cameron wants to make a bigger dent in the country’s mountain of debt, he might do well to start looking at closing the loopholes in the taxation laws that allow the rich to dodge tax and cost the country an estimated sum in excess of £25 billion a year. Together with the take from benefit cheats, the BBC and parliaments and councils the length and breadth of the UK that would be a “key” part of restoring Britain’s finances.

The picture at the bottom is of Mr and Mrs Jones who diddled £10,000 on a housing scam, rather like "Lord" Paul and "Lady" Udden, but without the benefit of being above the law, of course. The one at the top is a lovely puppy, with some strange old man!!!!


  1. Of course if David Cameron wants to find a cheat he only has to ask wee Wullie Hague to pop off the house of lords and ask Lord Ashcroft where all that tax money he promised to pay, instead of continuing to be a non-dom from Belize, for that peerage that Wullie wangled for him. Hypocrites?

  2. Actually, simplifying the tax laws and lowering the higher rate of tax will net the government more income (yes it's a proven fact, New Zealand did it), it might even encourage more of the rich to settle here and employ more people as well. The usual thing for governments to do though is simply close the loopholes then wonder where the rich people went.

  3. they came in search of paradise - and met experianAugust 10, 2010 2:38 pm

    There will be a good sideline in selling shock stories to the Daily Wail though. That should help compensate the bounty hunters on the minimum wage.

  4. Tris says...."At L5 Billion it can hardly be 'key', given that the debt is measured in trillions...."

    Spot on! A couple of things about politicians are as predictable as the sunrise. They will posture and pontificate about the solution to enormous fiscal problems. And that solution will be insufficient by one or two orders of magnitude. And it will always involve coming down hard on the people with the least political and economic power in the society.

    This is political hypocrisy. But all politicians are hypocrites. It's even worse when they are advocating fiscal policies which are utterly mad. And the politicians and central bankers across Europe and the UK are now advocating policies that are simply mad. They are blathering on about reducing their governments' budget deficits....NOW. And people are accepting that madness. Even the articles and comments on Munguin's Republic are all about applying the cuts fairly and equitably. They all begin with the tacit assumption that the cuts must be made at all. No, no, no! This is the very LAST thing that should be done in the depth of a recession. It will insure that the misery will go on almost forever.

    You don't CUT spending in a recession. You INCREASE spending. You don't have the cash? OK...You borrow the money. Yes...you go more deeply in debt in the short term, so that increasing tax revenues from a recovering economy decrease the deficit in the long term. Has the country that gave the world John Maynard Keynes forgotten the man?

    We are told that the Brits and Europeans were terrified by the debt crisis in Greece. Another thing about politicians. They are very easily terrified. This is something like the American president making fiscal policy in Washington, and worrying about the economic situation in Arkansas.

    There is an overarching American example of course. President Herbert Hoover (1929-1933) insisted on balancing the books in the face of collapsing tax revenues, and insured that the great depression would go on for more than a decade. The politicians and central bankers of the UK and Europe are on the same course. One that will absolutely insure the continuation of economic misery for the indefinite future.

  5. As much as I want to see the cheats caught, this is just another extension of Labour's snoopers' charter - it won't be long until they are sifting through all of our bank accounts, this is only the start.

    I wouldn't trust Cameron as far as I could throw Eric Pickles!

  6. @Danny, so you're advocating that when in a hole, you keep digging? That is utter madness! The British state is paying out nearly a third more than it is taking in, our AAA credit was nearly wrecked by the last government and only put in abeyance by the budget of the new government. We can't borrow anymore as we can't afford to pay it back, even now the debts racked up by the previous government will have to be paid back by our grandchildren and possibly the generation beyond. Fiscal irresponsibility as you advocate would get an ordinary guy thrown in prison for starting a Ponzi scheme whereby you take out a loan to pay back the loans you already have until your entire income goes on paying back loans.
    Cuts, deep cuts in public services are coming, they have too, either that or tax at the lowest levels goes up to 50%, that would bring down the state in a way the poll tax riots never came close to doing.
    You cannot and should not ever spend more than you earn!

  7. Easy Peasy - Just declare the country bankrupt, after all it is, and start again.

    After all it happens every day with companies and people all over the world.

    Still silence from the Tories on tax-evasion which makes benefit fraud look like peanuts.

  8. Yep... like that'll happen Munguin.

  9. No indeed dean... what was the question again?

  10. "You cannot and should not ever spend more than you earn!" Speaking of a nation? Are you serious Quiet Man? Sorry, but this is pure drivel which does not in any way reflect the reality of the economic life of nations....or of individuals, or individual families, for that matter.

    A reasonably well off middle class family is in debt all their life....taking into account the mortgage on their home. They never pay it off unless they want to. They just have to responsibly service the debt. That is, pay the interest and a bit of principle. But OK......even if you insist that private individuals cannot and should not take on permanent indebtedness, nations are not anything at all like individuals and families. The notion that a nation's public debt balance must be paid by future generations is pure rubbish. Future generations must service the debt. But they NEVER have to pay the principle. All that hand wringing about leaving a bill for our grandchildren and great grandchildren to pay is just a sure fire applause line for posturing politicians. It has nothing to do with economic reality.

    Through much of its history, the US has been an economic powerhouse. And it was all done on borrowed money. There was only a brief period in the 1830's, during the administration of Andrew Jackson, when the US had no public debt. During the other 234 years of its history since 1776, the American government was financed on borrowed money. Borrowed money financed the Revolution and World War II. It was borrowed money that built the transcontinental railroad and underpinned the economic boom of the 19th century. It was borrowed money that helped pull us out of the Great Depression, and financed all the social programs of FDR's New Deal. There has always been a public debt and there always will be. And it's not a bill that future generations of Americans will ever have to pay.

    America is not the same as Britain. But fundamental economic realities are the same for both. Public borrowing must, in the long run, be responsible and prudent. The debt must be serviced. But now is NOT the time to cut spending. This simply insures that your children and grandchildren will have a harder and harder time satisfying that debt service....while the nation remains mired in economic stagnation.

  11. It's certainly worked in NZ. A flat rate of tax for everyone so that there is nothing for the tax avoidance accountants to advise on. Still, they'd find a way of paying less somehow. They always do.

    I just don't think we can roll over and say... OK... you win, you're rich and we're poor and you can pee on us from a great height.

  12. Great post Danny: I talk about the cuts as being inevitable, because they are here. They are happening. We more or less elected a Tory government which now wants to squeeze us till there's no breath left in us. But mainly the poorer people of course. There's nothing we can do about it.

    Because the Scottish government, which does not want to make the cuts now, exists on pocket money from England, they have no choice but to make cuts too. The imperial master has decreed it.

    I guess that the £5 billion that David saves (less what it costs for the credit companies) will be welcome, but it irks me that we are letting the tax avoiders get away with it.

    I agree that when in a recession you must spend. You need someone to start the ball rolling so you build railways and roads...it's not like it would be a waste...you really should see our infrastructure... It's the laughing stock of Europe.

    You invest in the future and at the same time you provide jobs, making money flow into the economy. The gang of 100 men working on the construction of rail lines and each earning £300+ a week, will spend that money in shops, and create retail jobs; they’ll take their kids to football and cinemas and create jobs there...their partners will spend money too... and the people with jobs in retail, thanks to the railway workers, will spend their wages and create more jobs etc, etc.

    Who can do it? Not small businesses which may or may not get off the ground; not larger companies which fear expansion at a time when confidence is low. It has to be government.

    You come out at the other side with an infrastructure which is appealing to private enterprise.

    I don’t know why they are trying the other way. It may well lead to a double dip recession. No one wants to start up businesses when the banks are dodgy about lending and there’s a likelihood of redundancies across the country. Unemployment benefits don’t buy anything except essentials.

    But we’re told that the Tories know best because of their vast experience of these things. Wee Georgie Osborne has of course a vast experience... as does Dave... and Liam... and Tess.

    Money markets are just imaginary places. A word here and there can change the whole economic situation, because it is all in people’s minds. The money doesn’t exist. It’s all a game that rich people play. Greece’s economy is a mess, but it was made a basket case on the word of an American credit rating agency...coincidentally right after the main Middle Eastern oil producers decided that oil might be better priced in €.

    It was necessary to make the € unstable... and they did. If they wanted to make the £ unstable tomorrow they could. It only takes a word from them or George Soros. If he started a rumour that the $ was about to crash ... it probably would.

    We can’t borrow anymore? Well, what we need to do is have a recovery plan. Then we show it to the world, priced and with a projected result... which would be a country with a decent infrastructure fit for the 21st century with low unemployment all to be achieved over a fixed time span. That would sort the AAA.

    As it is we are following the Canadian example with a hinterland that is entirely different from Canada’s and an economic situation that couldn’t be farther away. Madness is right. But that’s what we got.

  13. LOL Billy... Fergie can do it... why can't we? or maybe the Queen will bail both of us out.... yea?

  14. Well Barking. We tend to think of benefit recipients as the long term unemployed, but many other people receive benefits. Child benefit; child tax credits go to anyone who is married and earning less than £50,000; many older people have council tax benefit or rent rebates....

    We are giving them a charter to snoop.

  15. Ah well "they came". Just think of how that money will go to stimulate the economy... at the same time as making some vinegar face happy ....

  16. Danny:

    Yes, I agree...well... of course I do. You have stated undeniable facts. The US debt is enormous. It nearly always has been, and yet it is the most powerful and the richest country in the world.

    Mrs Thatcher came to power with the maxim that she could run the economy because she was a housewife and housewives knew how to run their households prudently. Of couse this was rubbish because she had never interested herself in the house and its running, or the children (and it was handy that they had twins because that meant that never had to be done again!!). It might also have helped that Dannis was not a poor man. balncing their household books would not have been an issue.

    Companies run on borrowed money, households do too.... why wouldn't countries.

    In any case as i said ... it's all notional. none of it exists.

  17. Nice overview of the problem in Britain Tris. And notwithstanding Keynesian economics....and the fine articles on the subject by Nobel laureate Paul Krugman in the New York Times.....the pandering politicians here in the states are likely to force fiscal restraint which will stall our already fragile economic recovery. The bogus political slogan about leaving a bill that our grandchildren will have to pay, seems to resonate with voters. And Obama will cave in to that political pressure.....as FDR did in 1938. And the result will be the same as in 1938. The recovery will stall.

    In 2009, the ratio of public debt to GDP for the US was 52.90, compared with the UK's 68.10. Earlier this year, the US debt to GDP ratio was over 60%. Both the US and UK numbers are in the same ballpark with the rest of the G8 and comparable world governments. In short, we are not the economic basket cases that our posturing politicians would have us believe. Until our economies pick up, the debt ratios for both countries may increase as government borrowing increases. But not nearly as much as they will if the economies falter again and GDP takes a nosedive.

    In the mid 1940's, the US Debt/GDP ratio stood at well over 100%. By 1980, even in the face of increasing public borrowing, the US debt ratio stood at 26.1 percent. The affect of a robust economy.

    But politicians like Mrs. Thatcher will persist in telling us that running a government is like running a household. And you can never spend more money than you earn. Sounds so sensible. And it's such utter and complete rubbish. But it wins elections I guess.

  18. Sorry, 'no' to the question Munguin posed.


    As to your article, I agree with you [makes a change from recent times] that corruption is corruption, cheats are cheats regardless of station. Clamp down on those at the top and bottom, seems common sense, not too controversial!

  19. Yes Danny... and as you know very well at the moment, winning elections is all that counts. The Republicans don't want anything Obama does to succeed, otherwise that may bring him electoral advantage.

    It is the same in Scotland now. Nothing must be allowed to work, otherwise the incumbants will be made to look good at next years General Election... To hell with the country, these people are fighting for their jobs and of course the gravy train that goes with them.

  20. Ah right Dean.

    Well I'm pleased we agree about one thing anyway...although I think I did agree with you over at your place on the subject of council housing, didn't I?

  21. I see you were trying to have an intelligent conversation with Councillor Terry Kelly over at his blog.

    Wasting your time I'm afraid. The guy is a numpty - another one of these people with a season ticket to Parkhead, independence for Ireland but not Scotland, Irish culture brilliant Scottish rubbish etc type of person.

    He is not the laughing stock of the internet, English as well as Scottish now, for nothing you know.

  22. LOL... Billy. Thanks for the tip. I did try but I think he gave up on me and didn't publish my last message... which was long and took his points to pieces.

    Labour councillors huh?

  23. Oh but he will answer you Tris - just wait and see.

    The guy thinks he is intelligent and he will come back with what he thinks are smart answers - either that or he will just try and slag you off personally to try and avoid having to answer.

    He is the typical "Labour monkey with the red rosette" Labour politician.

  24. LOl... you right Billy he did answer... lordy

  25. See dean...we are not always at war old mate!

  26. taxation without representationAugust 11, 2010 8:57 am


    This direct taxation from Brussels will make all the benefit fraud savings insignificant..


  27. Kelly must be a bit like Tom Harris MP, in that he only answers points he can score a cheap point over. So terrified of STV because he knows that given a real choice the people of Glasgow would not choose a Labour apparatchik that revels in being the most right wing of Labour MPs. Mr Harris is really a Tory, but he knows that there is no room on the Westminster gravy train in Scotland for a Glasgow Tory. His 51.7% of the vote would soon shrivel if a real Labour candidate was to stand against him as STV requires. Oh and rather than have oodles of time to fill in expenses forms and write a moany blog about it, STV and the Lib Dems he might have to do something for the people of Glasgow South, or they would all switch to voting for a real Labour candidate.

  28. Taxation:

    Some good comments on that, particularly about the silly money pensions that these people in Bruxelles get.

    Cameron must simply veto any tax. It’s bad enough having to pay our hard-earned Scottish money to England, without the Union wanting a share.

    The simplest thing would be to do what the Liberal Democrats suggested last year and have a referendum on whether the UK citizenry wishes to come out of or stay in the Union.

    As you can count on the visceral hatred of anything foreign to motivate the usually supine British public into action, it is almost undoubted that the answer would be to come out of the EU. Problem solved.

    No more taxation to Bruxelles, no more worries about foreigners getting their hands on our money and wasting it on whatever it is that foreigners waste money on.

    As every Tory government since Heath (Blair and Brown included), has been violently anti-EU I can’t for the life of me understand why it has taken the Liberals to come up with this proposal. The strange thing is that all these Eurosceptic governments have taken us deeper and deeper into the EU with Dave ranting about how he, like Mr Obama, wants half of Asia in it now.

    I suspect that, as well as pleasing the senior partner, the EU, and membership thereof, is a handy thing for British governments to use to deflect criticism from themselves. Every time things get a bit hairy they arrange for a story about foreigners poking their nose into the traditional English way of life (including Scotlandshire and Walestown), and the public forgets the latest travesty and pours bile on the unelected EU. It’s like having a little brother or a dog to blame everything on. Very handy.

  29. Mr Kelly isn't half as bright as Tom, Munguin.

    There's nothing in the least clever in his arguments.

  30. tris..

    I wouldn't agree that previous governments have been anti EU. They've all taken us further into the EUSSR. Heath signing away Scotlands fishing grounds when he put us in. Maggie, Major, Bliar, Brown all signing whatever was put in front of them.( Maastricht - latest Treaty) Now cast iron has reneged on the referendum he'll probably renege on his promise of no more integration. Once this tax is applied ( article 113 of the Treaty) it will just increase each year as the EU expands. Wars of independence have been fought over this no taxation without representation so you never know it might wake people up to what's being done by unelected officials in Brussels.
    Oh and countries have said No in previous referendums but had to keep voting until they got a Yes vote ( Eire etc).
    Very democratic ( not)

  31. That was my point really, taxation. They have been pro EU on the inside and anti EU (because it's populist) on the outside.

    'We will protect Britain and the great British peoples against the onslaught from the European hoard', says the government, whist carrying on widening and deepening procedures.

    You’re right. Not one has ever suggested for a second that we come out. I suspect that now that the Liberals have found themselves unexpectedly, and temporarily, in government for one last time before they cease to exist for ever, they will not be so keen on that referendum.

    It seems that no serious party is. I mean UKIP and the BNP aren’t going to be forming any government anywhere. I think it will be interesting when Scotland gets independence to see if the Labour Party, which is likely to form the government, will take Scotland into the union.

  32. Taxation,

    I totally disagree with you, the EU owes precious little resemblance to the USSR.

    That, you will forgive me, is a suggestion I find deeply offensive as a Europeanist.

  33. Yes. I think that any comparison to the USSR is probably a little over the top.

  34. I'm with you on the post as cutting Trident and overseas wars would save more than tackling the worse off. Those who believe that economic growth is sustainable and achievable must be on stronger medication than MEPs.


  35. Dean said..

    " the EU owes precious little resemblance to the USSR."

    I'm not so sure. Dozens of countries forced into a common allegience with no democratic way to escape. A common currency and a common economic policy. I suppose the main difference is that the people of the USSR had the strengh to say no and brought the whole edifice down with weeks of riots and years of silent non compliance.
    We have a few years to go before the people see that they have been shafted by the Common Purpose goons and follow the same route to freedom.

  36. Interesting article:

    Of course, it being in the Sun, you have to read between the lines. It’s the Sun’s job to find an angle to bash the EU.

    In truth I imagine that, should an MEP find themselves in a situation where they have a sexual dysfunction, they will be able to get treatment for it on their health insurance. I think that the British Health Services do the same thing. Likewise, if they find themselves on a drug which they cannot get off (of course the Sun has quoted heroin, but it could be a pain killer, many of which are extremely addictive, being based on morphine) then, just like the NHS, treatment will be available.

    That said, I’m against any luxury being available to representatives. I believe that if they caught buses, stayed in 2 star dumps, sent their children to local schools, used local hospitals and ate in greasy spoons like the rest of us, they would much better see, and care about, the dreadful state of the country and the miserable conditions many people have to endure. But i suspect that will never happen.

    Have you seen the inside of the house of lords, for example?


    Which one of them, sitting in these surroundings, has the vaguest idea what real life is like?

  37. Taxation,

    There is a democratic way out of the EU, and the proof of it is the fact that a country has left it in its history.

    Besides, there is no force being used to create it, it is entirely voluntary. You've been taken in by the UKIP lot, the BNP in blazers.

  38. It's true that Greeland left the EU. It had joined with Denmark in 1973. However, it left the EU following a referendum in 1985, with 53% voting for withdrawal. The referendum followed a dispute over fishing rights. So far Greenland is the only country to have left the EU.

  39. tris..

    Interesting I didn't know that about Greenland.
    When I said there's no democratic way out of the EU I meant that all our parties support the EU so it doesn't matter who you vote for. UKIP get ignored by the media so aren't able to get their message across at elections. They managed to force a coalition government by stopping 20 Tory seats but the coalition support the EU.
    Have you met the new UK amabssador to Washington ? Mr Joao Vale de Almeida ?


  40. Greenland is a very interesting study. And its relationship with the EU is even more so, given that it retains some EU privileges (and responsibilities as a result of its association with Denmark, but not now as a member).

    Yes. That was the point I made somewhere up above. Even Mrs Thatcher, whose rhetoric was staunchly anti European, didn't seem to be open, not even once in 10 years, to a referendum on coming out. Even although she would probably have won it... and it would ahve been a royal kick in the teeth to Mr Heath.

    I don' meet ambassadors as a rule. We don't have them in Scotland, and I hate these odd little chocolates they give you.... :)

    Thanks for the link!