Post Election

Time to reflect on the UK’s Election or what might become known as Theresa May’s disaster.

Some of this is extracted from a Goodreads forum discussion.

First turnout.

  • Although pleasing the turnout went up 3% since 2015 we still ended up with only 69% bothering to vote or deciding to vote. i.e. nearly 1/3 of electorate did not care or could not decide.
  • 53 to 48% on UK Brexit out on turnout of 72% of which 62% in Scotland voted to remain in EU and 60% in London did the same. EU vote also included Gibraltar
    55 to 45% on Scotland to stay in UK on 84.5% of eligible Scottish voters – no one else got a say
  • 2015 General election 66.4% turnout with wide variation dependent on constituency. The Conservatives won 36% of that which gave them overall majority of 12 seats in House of Commons

May as P.M

IMHO May got exactly what she deserved. 3 unbelievably bad decisions in under 12 months:

  1. No general election after becoming p.m and failing to seek support across parties for Brexit process after referendum and Cameron’s resignation
  2. Triggering Brexit process but not having election whilst clearly knowing there was a 2 year timetable
  3. Changing mind and having election – again this could have been agreed with other parties based on the Brexit timetable – i.e. the alleged reason of a stable government to agree deal on the timeline

If anything proves that May is not fit to be P.M it should be the above – as if her record as an appalling Home Secretary was any justification for making her leader. I think that was the anyone but Boris Johnson/Michael Gove vote in action. Luckily I was away for a few weeks of the general election campaign but seldom have I seen such a disastrous rabble as the Conservative attempt – again totally controlled by May’s cohorts, at least some of them have had the dignity to resign. Contrast with Scottish campaign run by Scottish Conservatives 1 MP to 13 is staggering.

Now what – the country will have to carry on with May (or have 4 weeks of leadership election) for a period but expect an autumn election – no party can govern without a more formalised agreement as 2010-15 showed – at least Gov was stable – unlike Lib-Lab pact of 70’s. Despite Progressive Alliance discussion Labour would need DUP as well as all the other parties to pass any legislation unless they expect Conservatives to vote for their policies – nationalise railways for example?

Labour

Kudos to Corbyn although losing an election is a funny way of claiming victory. The big losers are SNP but are still the majority in Scotland. My only comment there is if your campaign is entirely based on someone who is not standing i.e. Nicola Sturgeon then don’t be surprised if it get personal. Ditto for heresa May but at least she was standing in her constituency. Labour MPs after this election have 10 less than Labour won under Neil Kinnock in 1987. He resigned as it was seen as a disastrous result. Some Labour commentators have managed to mention the fact that Labour lost.

Some realism at last. To win an outright majority Labour need’s at least another 70 seats. To have a decent majority they need more like another 100. Even with a complete reversal in Scotland (30 back from SNP) a dozen from Wales and no resurgence in Lib Dems, somehow they need another 50 current Conservative seats.

Forecast

If there is another election will Conservatives campaign as badly? Will young turnout (thought to be Labour) be as high will places like Kensington stay with current result. My view:

  • Lib Dems will gain again impact on both Labaour and Conservative but only small number maybe another 5-8
  • Labour will hold more easily in North but lose in South end up same
  • Conservatives will regain Southern losts
  • SNP will again slip back to Labour but might re-gain Conservative wins.
  • Net result – same again but might just give Conservatives 8 seats net gain for overall majority.

I cannot see an alternate candidate for P.M – yes I know people talk about Boris but he does not have enough backing. There is no obvious alternate leader in waiting. I think May will survive for a few months, then again I didn’t expect Cameron to resign and her to become P.M. Let alone to blow the election – I had a bet for 50+ majority. This time I won’t put money on it and a lot can happen between now and then

The BBC’s poll of polls tracker actually showed it. The trend for Labour was up just as it had been for the referendum out vote and the 2015 election Conservative win. What Theresa would give for Cameron’s result now.

Tax

One of the problems of most electorates and the promise of jam tomorrow is misunderstanding how the tax system works and what can really be obtained by raising taxes. The Lib-Dem manifesto was at least partly honest by stating that there needed to be a rise in basic taxation to generate the funds needed for higher spending without just adding to the debt. Remember our UK debt interest payments:

(paying the interest) the public debt amounted to around £43 billion (which is roughly 3% of GDP or 8% of UK government tax income)

This is roughly the same as the defence budget 2/3 of education spending and 1/3 of NHS. In other words this is a staggering amount of money, which is growing daily and current spending activity despite austerity is just adding to it. i.e. the governments since 2008 have made this worse.

If we want more money for these areas (or anything else) don’t treat public spending as a never ending credit card. The difficult austerity measures of 2010-15 were designed to stop increasing this borrowing and failed. The Labour party campaigned (somewhat successfully whilst still losing) for an end to austerity but unless tax intake goes up substantially the debt will rise as day to day borrowing increases i.e. we add to the debt.

It doesn’t mater what you borrow for (infrastructure, deficit, pay) it all adds up to debt – a failing of virtually every country in the world. It’s called living beyond our means – although in most of advanced world it is its not paying our bills. i.e. if we paid more tax privately or from business we could pay this off. Relying on GDP increase to increase taxation is not working.

The other issue on tax is the fallacy that higher earners are not paying their fair share. 25% of £100k a year is £25k. 25% of £20k is £4,000 – ignoring allowances and higher payments (First £11k free of tax for both and higher rate coming in at higher salary) the higher rate tax payer already pays £21k a year more for the same services. So the richer members of society (everyone that pays tax) already give subsidies to the lower paid. At the same time many richer members of society do not use those services e.g. private education and private health/social care.

The old tale of the taxpayers should always be born in mind – yes its glib. For 10 taxpayers substitute ten companies with corporation tax

10 drinkers in a bar who decide to settle their £100 weekly beer bill roughly the same way we pay our taxes. So, the first four men (the poorest) paid nothing; the fifth paid £1; the sixth £3; the seventh £7; the eighth £12; the ninth £18; and the 10th man, the richest, paid £59.

Then the barman decided to give them a £20 discount for being good customers. The group wanted to continue to pay the new £80 bill the same way as before. While the first four men still drank for free, the other six divided up the £20 windfall by following the progressive principle of the tax system. So the fifth man, like the first four, now paid nothing, making a 100 per cent saving; the sixth man paid £2 instead of £3 (a 33 per cent saving); the seventh man paid £5 instead of £7 (a 28 per cent saving); the eighth £9 instead of £12 (a 25 per cent saving); and the ninth £14 instead of £18 (a 22 per cent saving). The 10th man paid £49 instead of £59 (a 16 per cent saving).

The men then began to compare their savings. “I only got £1 out of the £20,” declared the sixth man. He pointed to the 10th man, “but he got £10 – the wealthy get all the breaks!” “Wait a minute,” said the first four men, “we didn’t get anything at all. This new system exploits the poor.” So the other nine men surrounded the 10th and beat him up. The next week he didn’t show for drinks, so the nine sat down and had their beers without him. But when they came to pay, they discovered they didn’t have enough money between them to pay even half the bill.

Inflation

Unless we as a society do some fundamental re-thinking of tax income we are in danger of the rich man/company walking away. The amount of money raised by just increasing higher rates of tax is small because there are so few. This is always going to result in less income as the ridiculous 90% tax applied in the 70s demonstrated. The same applies to rich companies – i.e. those that generate sufficient profits or dividends. If the are publicly owned then those dividends turn into investment income for our pensions – yes the senior executives pay themselves extortionate amounts. The richest companies in the world (Apple etc.) employ hundreds of people to move money around to avoid whichever country tries to get more of the income even under a current system. If you make it more expensive for them to trade the directors will be duty bound (and financially incentivised) to try a way to avoid it.  Taking their jobs (from Apple store assistants to financial traders) with them.

By the way increasing wages in any organisation increases costs unless there is a corresponding increase in productivity. Cost = goods / services price rise or cost of service for public sector. Thus either price inflation or more tax required issue. Pay seems to come first, productivity a long way behind, if ever.  Have we learned nothing from the high inflation and high interest rates of the 70s and 80s. Of course the young have an excuse. They were promised in Labour’s manifesto free University education, higher wages, and the old more spending on welfare and social care. They are the now generation and have grown up with exceptionally low inflation. This is not a Conservative manifesto it is baic economics. We as a population are childish and naive. We want something for nothing. We all want jam tomorrow. The current political situation is a reflection of lack of honesty from politicians of all parties who have failed to address the major issues of national income and national debt. If we want good health care and good social care then it has to be paid for. That means tax not borrowing. The trident row is another good example, Whatever the merits of a nuclear deterrent the cost argument is farcical. Trident cost is £100bn for whole life i.e. less than the cost of one year’s NHS spending.

I sometimes think the entire population is unable to understand basic mathematics in particular what a percentage is i.e. the tax take example above.  If we really want to sort out public finances.Institue of Financial Studies produced this in 2015. Suggested reading

And a quote from that document my emphasis – “Of the big three taxes:
  • a 1 percentage point rise in all rates of income tax would raise £5.5 billion;
  • a 1 percentage point rise in all employee and self-employed National Insurance
  • contribution (NIC) rates would raise £4.9 billion;
  • a 1 percentage point rise in the main rate of VAT would raise £5.2 billion.
 If we want £10bn more for the NHS per year we need 2% on basic rate and we will all have less to spend.

 

Drugs, Brexit Divorce Bill, Elections and Musings

I had not realised that it has been over a month since my last wittering. Many of you will be thankful for the silence especially my own son who’s has managed to embed himself into a political party and start campaigning in the UK’s latest election. I’ll get to that in a moment first lets talk NHS and drugs!

NHS

In the never ending debate about NHS spending in the UK – read across to other countries – let’s get a fact out from http://www.nhshistory.net/parlymoney.pdf

In 1950/51 spending amounted to £11.7 billion in 2010/11 prices, or 3.5% of
GDP. By 2010/11, spending had increased more than tenfold in real terms to reach £121bn, or 8.2% of GDP.
Although it has risen consistently over the period, spending has accelerated in recent years.
Between 1999/00 and 2009/10, real-terms expenditure rose by 92%

The Kings Fund has this for NHS in England in dismissing yet another politicians claim of how big an increase the NHS had received each year

Graph showing annual percentage change in real NHS spending

i.e. there has been a real terms increase in NHS spending in England since the 70s with 3 exceptions – so much for NHS cuts. The counter to that argument is that NHS costs have also increased ahead of regular inflation during this period and that is true in particular costs for new treatments i.e. drugs and they are treating more patients due to larger population size, but this is a pot % of a bigger pot as GDP has grown in the same period. There are within the numbers huge variations of what the money has been spent on – a new hospital, pay for cleaners, more doctors and nurses, radiographers, LGBT diagnosis, car parking executives, etc? But lets stick to Drugs.

Drugs

The drug market has recently been in the news with the perceived failure (in economic terms against improved life expectancy) of the UK’s National Cancer Fund. This was set up with the best intentions of funding nationally treatment that local health authorities could not afford. Thus transferring large amounts of money for very expensive drugs produced by pharmaceutical companies. Not surprisingly the results have not been as good collectively as everyone hoped. Some individuals have had very successful treatment, unfortunately most have not. This brings us to the bigger picture of drug companies, cures and such issues of the slow failure of antibiotics (due to over prescription and misuse).

Drug companies are not investing in research to replace antibiotics because there is no money in it for them. There is no money in any drug that produces a cure. What drug companies want is a population that is kept well enough to earn a living thus to pay for drugs that do not cure but keep the customer well. There is no cure for diabetes just a lifetime of insulin injections, blood tests and monitoring. Vaccines cure or prevent treatment is designed not to cure. The only answer to this problem is to either persuade leopards to change spots i.e. drug companies to work for the interests of the patient rather than shareholders or Government to be socially responsible. I have quoted before one terrorism incident provokes millions of tax money spent. Thousands of antibiotic deaths and risks of death provokes barely a whisper.

Brexit

Just a brief word on Brexit divorce bill for my European colleagues. Yes there will be a cost for commitments beyond Brexit date. the liabilities, but there is also a share of assets. Therefore, I presume the UK will be paid its percentage share of buildings, systems, IPR, stored wine, butter, grain, computer systems etc. Of course it appears that the rest of the EU want the UK to pay maintenance for the rest of the EU countries lives, like a distraught spouse who wants to stay in the family house and not work for a living.

UK Election

Both the elements above are key UK election issues. I know my pleads will land on deaf ears (or blind readers) but can we have proper facts. If a cut is claimed (See NHS) above please have the Oxford English Dictionary refine what the word cut actually means. I thought after Trump alternative facts might go on the back seat but no such luck. To add to NHS lets look at Education

http://data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS?locations=GB

The graph on that link shows a less than 1% reduction in Education spending as % of GDP between 2010 and 2015 since reversed and trending back upwards. This is in turn with a growing GDP i.e. higher % of higher total pot. Again internal inflation may reduce value of increase but it is not a cut. Spending per pupil – another measure may be down overall but that is because we have far more pupils than before due to net population increase, thanks to birth rates, lower death rates and better health care. Immigration may also have an impact but where more children come from is less important than the fact that there are more children living longer – I have covered this before. Normally we talk about age and long life pushing the population numbers up but higher birth rates and lower infant mortality do the same then 70+ years later add to the aging population. Just one example not in my local area and not a hotbed of immigration (unlike London), Somerset County Council had an increase in pupil numbers of 0.8% just between 2014 and 2015. This amounted to 521 pupils i.e. a decent sized primary school capacity needed. Have you noticed all the new schools being built, and the sewage systems, the roads the hospitals the…. You get my drift

I could also hope that people not actually standing in the election but in political parties might shut up for ten seconds so we can view the actual candidates – already a forlorn hope. Farage, Blair, Osbourne, Sturgeon I mean you. We then have the endless comments about voting for May, Crobyn, Farrow etc (other candidates are available) We do not have a presidency. For any one of these they first have to get elected by their area’s constituents. None of these people are standing where I live so I cannot vote for any of them. I can only vote for candidates standing in the area I am registered to vote. I continue to see commentators, media and the general public asked who they will vote for with the answer one of the leaders. All of these discussions are not in the the respective constituencies. Why is this question even asked?

Once elected as an MP, then ,if they manage to be the current leader of the largest political party (or other grouping), in the UK’s parliament, you may be asked by the monarch to form a government. If the numbers do not add up (326 MPS) you may still be asked if with other partners you can form a government as happened from 2010-2015. Sorry regional governments that’s why you still have national elections not regional ones Ms Sturgeon please take note, if you want a say on UK politics please stand as an MP and be accountable to your constituents to the UK Parliament otherwise please stick to running the bits of Scotland devolved to the Scottish Parliament. This specifically does not include foreign affairs, defence, security etc.

France

Of course by the time the UK goes to its national poll (we have local elections before that) France will have a new President. On current polls (can we believe any of them?) the likely winner on 7th May will be Emmanuel Macron and not Marine Le Pen. Here unlike UK they are voting for an individual. The whole EU leadership seems to be behind Macron as he is seen as pro-EU and business. Of course I am certain that no EU funds have been used to support any of the candidates apart from the funding all candidates in France receive from the EU – what you did not know that the EU funds political parties?

http://www.welcomeurope.com/european-funds/funding-of-political-parties-foundations-european-level-180+80.html#tab=onglet_details

It Almost Makes Sense

In the UK there are major restrictions on funding of political parties, hence potential prosecutions over expenses in the 2015 election, meanwhile the EU funds all sorts of groups and clearly the UK currently pays (via its net contributions) for this. Perhaps this is the real reason the EU wants funding to continue post Brexit. All those political parties and institutions are dependent on it just like a drug company wanting unwell patients that are never cured.