Friday, 23 March 2012

A "Granny Tax" or fairer tax system?

I was surprised yesterday to see that all of the headlines were about a "Granny Tax" rather than the reduction in the highest rate of tax.  

Ed Miliband didn't attack this immediately, I guess it hadn't been announced previously so all he did was allude to it in his rebuttal, however since then Labour have seized upon the indignation that seems to have been felt and gained some political points scoring.  But is this just another case of the negative sound bite being better than positive substance?

Are Pensioners going to be worse off thanks to the Government?


When most of us wake up in April to find that we have a £630 increase in our personal allowance (worth £126 per year) pensioners (over 65) will also see an increase, albeit slightly lower at £560 (worth £112) - a tax decrease.  In 2013, although there will be a freeze in the limit they will still have an allowance of £10,500 (which will make many over 65s £479 better off in 2012/13 and £259 in 2013/14 than those below the age of 65 due to the normal allowances being £8,105 then £9,205 respectively).

That is worse off I hear you say?  The fact their allowance wont increase when the rest of us will see an increase in our personal allowance and theirs wont even rise by inflation?  Well you have to also consider the income side of things.  For those who don't know, state pensions have been "triple locked" by this Government, meaning that they will rise annually by the higher of inflation, earnings or 2.5%.  As a result pensions will be rising by £5.30 per week in April (£275 per year) after a similar increase of £4.50 last April, meaning next month each pensioner who has a pension (or earns) more than £10,500 will be £63 better off.  Contrast this with 13 years of Labour indicating they would like to reintroduce this but never actually doing it - instead offering up increases in the region of 75p per week, resulting in a real devaluation of a pension's value.

Should pensioners be treated differently?

In my view, again no.  I really don't understand the argument of "that person's older so they should pay less tax".  Age should be irrelevant (just like gender, race and sexuality etc) when it comes to tax, if the Government says that they want to tax income above a certain level, why should someone have a higher level just because they are older?  

For instance two people, one earning £11,000 and another receiving a pension of £11,000 per year, how can anyone assume that the second person needs £479 more money in their pocket from that figure than the first person?  In my experience if anything pensioners tend to need less.  

Remember, the poorest pensioners who have lower than £10,500 coming in each year WONT BE AFFECTED.  

There should be no presumption that because they are older a pensioner is more deserving.  We should ensure that nobody is living in poverty, irrelevant of age, removing this BENEFIT they have been receiving will just bring them into line with everyone else.  

When considering this you also shouldn't overlook the fact that it will remove a huge complexity and administrative burden from lots of pensioners.  The way the allowance is phased out requires a lot of pensioners to complete a tax return when otherwise they wouldn't.  I'm not exactly sure any of my grandparents would be capable of it if they'd hit the thresholds.  

Political fallout?

Contentiously I think this could work out well for the Lib Dems.  I've seen it suggested that the rise in the state pension is all down to the Lib Dems and the freeze in the personal allowance is all down to the Tories.  However I think this is really bad politically for them, Mark Thompson reckons it may cost them the next election and I agree that it may have a major impact.  The over 65s and those approaching that age are a core voting group for the Conservatives, so it's very surprising to see them introducing any measure that could be spun against them for this group.

When confronted with this on doorsteps, as a Lib Dem it will be easy to rebut with the introduction of the Triple Lock, we can point to our manifesto in 2010 and say we introduced it straight away, giving much higher increases than people had been used to.  It's at this point it will be easy to show how Labour failed to do this.

Labour will undoubtedly gain, but only through hypocrisy - but that's their only ploy at the moment (when did you last see a properly thought through idea from them that wasn't just anti-whatever the other lot are up to? Even when they come up with something they have no idea where the money's coming from). 

I know we don't like to think so, but pensioners are a privileged group (which is fair enough) and this will only have result in a relatively small increase on the amount of tax they'll be paying in a few years time.  As far as I'm concerned it's a good change which may be unpopular but the Tories should take the flack - win win? 

Wednesday, 21 March 2012

A Budget for the millions, not millionaires‏?

To be honest I was a bit underwhelmed by the budget, people said it was risky but I finished watching it and didn't really have too many points that I wanted to talk about! 

Well you can see what Nick Clegg and the rest of the major Lib Dems want to big up - from Cleggy's email to the party: 

"As a result of this Budget, someone working a full week on minimum wage will see their income tax bill cut by over 50% compared to under Labour.

Increasing the personal allowance to £9,205 takes us within touching distance of our number one manifesto pledge – ensuring no one pays any tax on the first £10,000 they earn.

Thanks to our changes, a basic rate taxpayer will be paying £45 a month less in tax than they would have been under Labour."

You can understand why, it's seen as the major Lib Dem "win".  Announcing the largest increase in the personal allowance, taking it really close to our (arbitrary) target of £10,000, is a really good, positive move for most working people, taking even more people out of tax all together.  It's also really expensive to do for a Chancellor so it is impressive that we've managed to get Gideon to agree to it...

The problem is it doesn't really look like we've had too much else back, not long ago there were claims that we would definitely not reduce the higher rate of tax from 50p to 40p or 45p in the pound, hell our conference even confirmed that, yet just a few weeks later we have.  The problem here is tax avoidance wont definitely come back down as the tax rate does, it's sticky - people wont suddenly get morals.  However they obviously believe that their new measures will bring in more money overall from the wealthiest, which is the important thing.  This isn't thought the best political move, it allowed Ed (or Wallace - I'd rather they didn't get into childish name calling, they should be above that) to ignore the better things and focus on this as an ideological benefit to the rich. To be honest, even with the supposed overall increased take from the wealthy as lets face it not all of the wealthiest will be effected by the stamp duty or the anti-avoidance measures - lots will get a huge tax cut!

The child benefit change (will be tapered down once someone in the family hits £50k) is also not great as still a couple who both earn £49k will still get the benefit whilst a couple with one earner getting £60k will not.  Now I know that this is difficult to administer and yes when benefits are universal it means those who need it are guaranteed to get it but to be frank, I don't see why a couple with earnings of £50k would need child benefit!  That's a couple with above average take home and I wouldn't prioritise them as people to help.

One interesting change is the removal of the change in the personal allowance to those over 65.  I guess you can only look at this as a whole, yes their allowance wont be increasing as much as expected, however at the same time they will be getting a greater amount of income. 

The other good news in brief:
  • Growth for 2012 revised up slightly (despite Labour claiming we're heading into another recession).  It's bad to look at forecasts further than that - for evidence just check 2007's budget.
  • Borrowing £1bn lower than predicted.
  • Reduction in the corporation tax rate.  This really will help millions of companies and is consistent with the policy of reducing the taxes on income in favour of wealth - which most Lib Dems are in favour of.
  • As an accountant this isn't great news for my profession as it will lower some fees however it is good for very small businesses - they can now report their profits on a cash basis.  I wouldn't surprised if most people missed this but it will make things a lot easier for those companies - I'm amazed how few people understand the accruals concept.
  • Increased transparency with regards how the government spends "your" money - however I'd prefer they just asked the media to publish it as surely it'll cost HMRC to distribute it.
Apparently it was a revenue neutral budget and I agree with Nick:

"Of course, this is a Coalition Budget and we did not get our own way on everything. Conservative priorities are not ours."

However less so on the next sentence:

"But as on so many other issues, we have made sure that there is a real Liberal Democrat stamp on this Budget."

Overall, yes there were some good things, however I don't think the poorest will be best off, working people who don't get tax credits will be, the reasonably well off may be hurt a little, some well off will be hurt a lot, however some millionaires will be better off!

Tuesday, 13 March 2012

5 things I've learned from running a half marathon...

I'm feeling quite good at the moment - well in fact I'm feeling pretty damn awesome.  On Sunday I ran the Bath Half Marathon in a time of 1 hour, 44 minutes and 36 seconds - beating my previous time by over 8 minutes from way back in 2007 (i.e. the time before the booze and bad food really took hold, and definitely before I had a 9-5 office job to sit around not exercising all day).  How did I achieve this?  Simple - practice, I trained and changed a few things about my lifestyle... and I did one thing that was inconceivable to me just a year or so ago - I joined a gym!  This experience has also taught me/reminded me of a few things that I'd like to share for the benefit of those doubters - the people who probably scoffed when they read that it took practice or those who want to do something themselves but are too scared or not motivated enough to:

1. Not all people who go to a gym is a steroid taking, body-building Arnold Schwarzenegger wannabe's who want to embarrass you

Well there are some steroid/supplement users, there is the odd body builder and I'm sure some of them would dream of being Mr Universe but they are far from the norm (at least in the gym I attend so if you're at one and there are so many that you feel uncomfortable shop around!) and even those who are are pretty polite and friendly or just stick to themselves, they are their for their own goals, not to embarrass you. 

In actual fact I've found the gym a vast mix of people, from those training towards specific events (like myself), those who like to keep fit/want to stay in shape, those who want to lose weight, and those who want to build muscle (most of whom are far below Arnie standard).  Not one of these people have been anything less than pleasant, at worst they keep to themselves and at best they are friendly with the occasional conversation every week or two which is mutually encouraging.  

The staff as well are incredibly helpful and approachable - even the one who would be Arnie's closest match, they spend all day with people and are used to the nervous newcomer so are really good at putting you at ease, giving you that initial confidence you might need.

2. You don't have to be the best - you can just do your best

My favourite banner I saw whilst running along the 13.1miles was one that said "It's you against you, the paradox that drives us".  I loved that, however the paradox lies in the fact you can't win, whereas you can - I did.  I beat my last time, I beat my target time, I didn't get lapped (it is pretty much a two lap race, other than the first & last mile or so, the middle 5ish miles are done twice) and I didn't walk at all - therefore I beat myself, I won.

Thinking back to PE as a kid, it was the only subject that wasn't segregated by ability where it was possible to differentiate by ability.  I remember what it was like, every single person was made to do the same thing and then you were ridiculed if you couldn't do as well as other kids (either the PE teachers would be on your back or the other students would be afterwards).  

I was fairly lucky, not the best athlete but I always tried which often meant me being picked a little above my ability when it came to teams being chosen and I didn't get 'stick' from the teachers (plus the head PE teacher was afraid of my mother - always a bonus).  The whole system revolved around you having to be able to do everything, not just what you are capable of - a system designed for the kids who are already good at it to show off whilst reducing the self esteem of the others.  As a result lots of children are put off and try to avoid PE, this quite easily lasts into later life as well.

However, since training again you see all sorts of people taking part, including those who are quite clearly out of shape who just do a slow mile on a treadmill and week on week you see their improvement.  It happened with myself, I couldn't run 5 miles solidly not so long ago, so I did what I could, ran for as long as I felt able then walked, before running again.  In school this would have been allowed - otherwise you'd be punished, where as in reality this helped me build up to being capable of my goals.  

If you think about it it's ridiculous to think just cause you can't do 13.1 miles doesn't mean you shouldn't do 1 mile - that's like saying because you can't save 13 injured people (an amazing thing) doesn't mean you shouldn't save 1 injured person (amazing in it's own right).

3. Specialist equipment is not just an attempt to bleed every drop of cash out of you - it makes a difference

I'm not going to say that every last bit of equipment people buy is worth the price they pay for it, but if you really do want to improve then it's amazing what just a small change in attire or intake can do for you.  For instance, when I first started running years and years ago (before my 4 year break) I did so in some scruffy old trainers I had.  Then, for my birthday, my parents kindly bought me some running shoes (maybe to try and encourage me to keep it up), and oh my, what a difference.  Suddenly I could feel the extra support when my feet landed - previously I put too much pressure at one particular place and it had lead to a constant niggley pain in my left leg.  Running in these shoes in no time at all that pain had gone.  

Now step forward to this training, gone are my heavy shorts (the only ones I had) and normal t-shirts, in come nice lightweight actual sportswear and you know what, you feel a lot freer.  The running shoes themselves are much lighter than the normal trainers and that lighter feel really makes a difference to your time and your attitude, less weighing you down, more free as a bird.

4. You do actually improve

This sounds silly I know, but when you first start off your goals could seem impossible.  Granted I wasn't starting from scratch but like I said above I couldn't run 5 consecutive miles, that really wasn't too long ago.  If you go back 6 months before then I struggled past 2 miles.  However over the past month or so every single distance I've ran on a treadmill I've done so at a personal best.  I now run 6 miles in under the time I used to run 5.  My time for 8 miles has come down by over 10 minutes since the turn of the year - that's under 3 months!  

You don't have to be able to run a marathon straight away in order to be capable of doing it eventually. You just need the determination to keep at it.

What's better is the sense of achievement you feel when you do lift weights you didn't think possible, when you finally manage to do an unaided pull-up (here's hoping!) or when you beat an hour for 8 miles - you really do feel unbeatable, which leads me nicely on to...

5. It is actually enjoyable and makes you feel good

... and not only when you actually achieve your goals (as above).  How many times have you seen those annoyingly happy people on TV as they push others through a gruelling workout?  That's just because they are an annoying personality right? Possibly.  How about those people who swear by their morning run as a way to wake them up and make them feel like they can take on the world - well I only know one of those people but if truth be told they are right, as is every other sanctimonious exercise freak who has told you that it makes them feel good - because it does.  I enjoy it.  I didn't at first, at first it was tough - ridiculously hard work, but now I look forward to it.  The endorphins  kick in and you feel like you can take on the world.  

You do also have more energy as a result.  I know that on the few lunch times when I've had a "social" run with a colleague my afternoon productivity has been much higher.  I feel less lethargic, I need less sleep (as the sleep I do have is better) and I am more restless - as I want to be doing something more active than just a sedate activity.  

The other week I was actually feeling really rough, taking 2 paracetamol and 2 ibuprofen every four hours to try and shake a headache that just wouldn't leave.  The only thing that made me feel better for the entire week was the couple of occasions I made it to the gym and jumped on a treadmill - I was then considerably better for the rest of the evening.  Now I'm not proposing running as a cure to all of life's illnesses, but it helped me in this case!

One thing that has helped me be so pleased with myself and helped with the motivation was the fact that I was raising money for a charity - a small local charity that I now have quite a bit to do with.  I posted about this a little while ago, the fact that I don't give to big charities any more (unless I'm sponsoring someone for something and I know it means something to them) whereas, Charles and I raised over £800 for a cause where I will actually see the money help.   In that blog post I mentioned that this will make you a superhero, and I can tell you whilst running that half marathon that knowing how much I had helped to raise for such a small charity made me feel like a superhero - and I didn't need to be one of those people in fancy dress! 

Friday, 9 March 2012

Rahul Dravid - One of the games' greats...

There are times in sport when every now and then a truly great player comes along, with regards Indian cricket they were lucky, at the same time they had four.  Sourav Ganguly, VVS Laxman, Sachin Tendulkar and Rahul Dravid.  Together they formed a scary middle order that even the best bowling attack would struggle to break through. 

This line-up lasted around 12 years together - from 1996 when Ganguly and Dravid joined Tendulkar (already a main figure) in the team during their tour of England, with VVS Laxman joining later that year until 2008 when Ganguly became the first of this magnificent quartet to retire from the international game. 

I grew up watching the magnificent Australian team lead by Mark Taylor then Steve Waugh before Punter took over, but even in this period it was always India's batting line up that was the scariest as an opposition fan - particularly in the subcontinent. 

VVS and Ganguly were both fine players, but for most people the star that shone brightest was Sachin, particularly in India where he is treated like a God.  For me however, if I could have taken one of them and put them into the English team (form being equal) then it was no contest, I'd take Dravid every time.  

"The Wall"

He wasn't known as "The Wall" for no reason, it was because of his immense powers of concentration. it was first mentioned after an epic 12 hour innings (that's two full day's play) of 270 runs against Pakistan back in 2004.  It was a very fitting nickname, as far as the opposition were concerned if he got himself in then you might as well just bowl to the other end as he wouldn't give you a chance - you might as well be bowling at a wall.

I was very lucky (even though I paid for it etc) last summer to go to one day of the Edgbaston test between England and India and luckier still to see the three remaining legends have a bat.  I actually saw both Rahul and Sachin get dismissed in unlucky fashions, Rahul was "caught behind" when in fact he didn't touch it, he actually hit his shoelace with the bat which had made the correct sort of sound so he didn't review it and Sachin was run out at the non-striker's end.  Having seen both of them I had to agree that Sachin is the best batsman I've seen bat, just so elegant... but I'd still take Dravid. 

Dravid at Edgbaston '11
The main reason for this is that time and time again Dravid seemed to deliver when the others around him failed. This was really summed up in that series, he was top run scorer with 461 runs and 3 centuries... between them the rest of the team didn't manage a single treble figure score (against England's 7)  and his average of 76 was double that of the next best.  In particular I have been so impressed with his ability to adapt to English conditions when so often his countrymen failed to do so.

In many ways it is a shame that Dravid's career has overlapped Sachin's completely, as he has always been in the great man's shadow, going about his business quietly whilst the maestro gets all of the attention.  Yet for all his quietness he has amassed 13,288 test runs at an impressive average of 52.31, that total is second only to Sachin himself with only Kallis close enough to over take any time soon.  At the same time it has been great for Indian cricket, as a result Sachin and himself have 20 century partnerships (a record) out of 143 innings, with another 29 50+ stands.  The highest of which was 249 against Zimbabwe in 2000.  If they came together you might as well already add 50 runs to the score and hope they were having an off day!

It is therefore in my mind a very sad day today that Rahul Dravid has called time on his international career, every time he spoke he did so with intelligence and what seemed like genuine warmth.  The modern game, with the explosion of Twenty20 cricket has many incredible stroke makers (which Dravid could match on his day) but very few who can match the concentration this man was capable of.  India must have been fearing this day, especially with Sachin and VVS also in the twilight of their careers, but it was always going to happen, hopefully they still have some young players to come through and fill these incredible shoes.

Tuesday, 6 March 2012

More graduates are in low paid work because... there are more graduates!

The BBC's website has the following headline:

Pointing to the fact that around a third of graduates from 2011 were in low skilled jobs at the end of 2011, in comparison with around a quarter in 2001.  Quite an increase.  

This is ridiculously intuitive, yet at no point in their article/post do they mention that in 2001 there were 504,401 students who qualified from higher education of which 272,665 obtained "first degrees", whilst in 2011 there were 762,540 qualifiers with 369,010 obtained "first degrees"

In other words people qualifying from higher education has risen by 51% with the amount of students obtaining their first degrees has increased by 35% over the 10 year period - this also isn't a surprise given Labour's goal of getting as many youngsters as possible to University.  Unless there is also a greater demand for the skills (or unless the correct skills are being learnt) then the number (and proportion) of graduates in low skilled jobs is bound to rise - it's not rocket science!

I have always thought that getting people to university shouldn't be the end goal, as far too many students chose a degree which wont have a use for them once they complete their course and as such they have basically just earned an expensive piece of paper.  Rather than the policy of encouraging everyone to go, we should make sure that the right people go (those who will benefit from it), on the right courses and that enough other options are available to those who chose not to.  

Typically the BBC balance their article with statistics that "prove" that it is still worth while going to University:

  • The typical hourly wage for graduates between 21 and 64 is £15 in comparison with £9 for non-graduates.
  • Proportion employed 86% for graduates and 72.3% for non-graduates.
However these statistics are meaningless - because there is a huge bias in the sample!  Those who go to University are likely to be more intelligent and more driven than those who do not so would tend to be better off irrespective of a degree.

I'm not saying that students shouldn't go to or aspire to going to university, but they have to do what is going to be best for them in the long run and for many an apprenticeship, a trainee programme or even setting out on their own would be more beneficial.

Thursday, 1 March 2012

A turkey doesn't ask for Christmas...

Five hundred and thirty seven business leaders have written to the Daily Torygraph to request that the Chancellor reverses the 50p highest tax rate.  

For those who don't wish to visit the website here is the full letter:

"SIR – Given the state of the British economy, we urge George Osborne, the Chancellor, to consider scrapping the top rate of tax in his forthcoming Budget. The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.

We believe the richest should help the poorest in society. One per cent of taxpayers are already responsible for 24 per cent of income taxes. But penalising high earners through an unfair, politically motivated tax puts populist politics before sound economics.

The 50p tax is set to reduce government income, and damages the economy, the public services and charitable giving.

As business people, we want to see our industries, our economy and the Third Sector thrive. Repealing the 50p tax would demonstrate the Chancellor’s wish to celebrate British entrepreneurialism, stimulate industry and contribute to the Government’s growth agenda.

The sooner the top rate of tax is repealed, the better."

In case you glossed over all that then the rough translation is "we are worse off because of this so would rather you changed it back".  

There have been some reports that this is actually revenue neutral due to an increase in avoidance and people moving abroad, the simple solution to that is to crack down on avoidance.  The Government would be foolish to remove this as irrespective of the effects it would be a smack in the face of the "all in this together" line that they like to keep throwing out.  

Lets think about this logically anyway.  Whilst some people may move their affairs abroad this isn't easy to do in practice without physically moving and most people bury roots deep within their living place.  As for damaging the economy, surely if the rewards are lower that doesn't mean people wouldn't take the risks necessary, perhaps it would encourage them to work harder to boost the economy and get themselves into the position they would have been if this rate wasn't introduced.  

Basically though, I just think this letter shows how detached from reality some people at the top really are.  I say some people because both Sir Stuart Rose and Warren Buffett have over the last year said/implied that the rich don't contribute enough - it's a shame more 'wealth creators' don't think like them.