Graphs at a glance: How the government goes after benefits fraudsters but lets off tax fraudsters

There are a number of differences between those who indulge in tax fraud and those who indulge in benefits fraud. The most basic is money: to dodge tax you probably have money, to steal benefits you probably don't. 



Is it this basic financial distinction that accounts for the differences we describe below? Do well paid legislators and prosecutors feel more empathy with tax dodgers then benefits cheats? 

The following graphs suggest perhaps so:

7.4 times more money is lost through Tax Fraud than through Benefits Fraud:

• Benefits Fraud: £1.9 billion
• Tax Fraud: £14 billion (We use the National Fraud Authority (NFA) report figures, though knowledgeable commentators on tax matters assert the loss is very much greater)

10 times more in percentage terms is pinched by tax dodgers than by benefits cheats according to the NFA report:

• Benefits: 0.7% of all benefits are taken fraudulently
• Taxes: 6.7% of all taxes are not paid fraudulently (i.e. doesn't include 'avoidance' which uses legal loopholes).

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Graphs at a glance: how local authority spending cuts have hit areas by level of deprivation

The Joseph Rowntree Foundation's report "Coping with the cuts? Local government and poorer communities" shows that spending cuts in more deprived local authority areas are systematically greater than in affluent local authority areas. The difference between most affluent and most deprived being about £100 per head.

"Figure 3 illustrates this, but also highlights a key finding relevant to this study: that the scale of the cutback has been greater in more deprived local authorities than in more affluent ones. Figure 3 expresses this in terms of per capita spending power, where there is a difference of over £100 per head between the most and least deprived. Deprived authorities were previously more grant-dependent and have suffered disproportionately. However, even in percentage terms, deprived areas have seen a greater reduction in spending power (-21.4 per cent) than affluent areas (-15.8 per cent)."

Here is a brief definition of "Specific" and "Formula" grants in the graph above. They are the two main sources of money from central government and represent around 70% of all local authority funding.

Specific grants pay for individual services, such as key government priorities. This money is ring-fenced and must be used in the way specified by those priorities.

Formula grants are calculated using mathematical formulae based on, among other things, the local council tax base and how many people rely on local services.

For a fuller definition of how local authorities are funded, see http://www.bbc.co.uk/news/uk-11567693 and http://www.local.communities.gov.uk/finance/1213/basicguid.pdf

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The Ripped-off Britons TV Sketch Show: Cutting the national debt

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The Ripped-off Britons TV Sketch Show: Tax dodging

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Graphs at a glance: Impact of occupation, unemployment, and geography on death rates in Britain

Public policy is a classic instance of the tail wagging the dog. For a tail to wag a dog it is not necessary for the dog to be in cahoots with its tail. It is enough that the dog doesn't resist its nether extremity. 

Most people pay little attention to things that don't affect them directly and immediately. Even when those things inevitably will in the future, or inescapably did in the past, they are likely to swallow any lazy assertion. The unemployed are portrayed as living high on the hog with their overly generous benefits. A lack of interest in whether this is true or not allows public policy to be driven by the prejudices and interests of whichever cabal is wagging the government.

The Marmot Report of 2010 showed statistics from the Office of National Statistics (ONS) comparing the death rates per 100,000 of two cohorts in the period between 1981 and 1992. The first cohort was made up of people who had a job in 1981. The second cohort was made up of people who were unemployed in 1981.

The impact on mortality of being unemployed is clear, and provides no evidence of the unemployed having it easy. The "lower orders" have a higher death rate within both cohorts. However it is also evident that being unemployed has the greatest impact on the highest Class I, where the unemployed in that group had a 65% higher death rate than their employed peers. A matter that should be of interest to the highest as well as the lowest in the land. 

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Graphs at a glance: Bank of England report shows in 2013 our mortgages are bigger than before the mortgage crash of 2008

A graph on page 63 of the Bank of England's end of year report might raise an eyebrow, if not your blood pressure.

Loan to Value (LTV) tells what percentage of the value of your home you owe on your mortgage. For instance, if you have a £150,000 mortgage and your home is worth £200,000 your Loan To Value ratio is 75%.

LTV in 2013 is actually higher than just before the Credit Crash, blamed by many on people borrowing too much on mortgages. In 2007, just before the crash, around 10% of borrowers owed more than 75% of the value of their homes. In 2013 this had risen by a half to 15% of mortgage borrowers. The percentage of borrowers in negative equity in 2013 (they owe more than the value of their homes) quadrupled to 4% of mortgage borrowers. 

Bank of England Quarterly Bulletin, 2013 Q4

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Graphs at a glance: Low pay by age and industry

These graphs are from the Joseph Rowntree Trust:
In 2015 almost 6 million people were paid less than a living wage, at the time £9.15 per hour in London and £7.85 per hour in the rest of the UK. This is about one in five of the UK workforce (made up of approximately 30 million people in 2015 according to the Office of National Statistics). 

Nearly 80% of jobs done by the 18-21 year age group in 2013 were 'low paid'. 

Most low paid jobs in the Public Sector were held by those over 40 years of age.

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The Ripped-off Britons TV Sketch Show: Indispensable overpaid bosses

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Rip-off News round-up. Our pick of the last week's media (Thu 19th December)

Government lost £13bn to fraud and error

MPs are demanding action after £13.2bn was written off the government balance sheet in 2011-12 due to fraud, financial error and legal claims. The numbers are found in a new annual report called “Whole of Government Accounts”, first published in 2011. But the figures do not include local government or public corporations, and the National Fraud Authority estimates the true cost of fraud to the public sector was £20.6bn. Other omissions include HMRC’s "tax gap" - the difference between what the authorities were owed and what they were collecting – which now totalled £35bn. Overall, the accounts showed net public liabilities - the difference between the government's assets and liabilities - rose from £1.19 trillion to £1.34 trillion over the period. BBC NEWS

Osborne: £12bn more in welfare savings needed

"You are going to have to find billions of pounds more in welfare savings if you want to reduce the deficit, eliminate the deficit and get our debt falling," he said. The comments indicate that if the Conservative Party wins the next election, welfare may be cut to protect spending on public services. Conservative MP Brooks Newmark cited figures produced by the Institute for Fiscal Studies think tank, which said that welfare cuts of £12bn would be required after the next election to keep departmental budget cuts at their current rates. BBC NEWS

NAO contradicts Osborne on Lloyds share sale: Taxpayer lost £230m on rushed sale of bank

The National Audit Office findings shatter Chancellor George Osborne’s claim that the sell-off delivered “a profit for taxpayers.” A rushed sale of Lloyds shares left the taxpayer another £230million out of pocket, a report reveals today. The Government raised £3.2billion by selling off a 6% stake in the bank to major institutional investors in September. But that’s before taking account of borrowing costs to bail out Lloyds at the height of the financial crisis. The taxpayer pumped a colossal £20bn into saving the bank following its disastrous takeover of Halifax Bank of Scotland. A report from the National Audit Office found that once you’ve included the cost of financing the mega-deal, the taxpayer ended up £230m worse off from this summer’s share sale. MIRROR

Probe into gold price scam extended to Deutsche Bank

Germany’s financial regulator has demanded documents from Deutsche Bank as part of an investigation into potential manipulation of gold and silver prices. The probe from the German watchdog comes as regulators around the world step up their scrutiny of benchmarks after the recent Libor interbank lending scandal led to hefty fines for banks. The UK’s Financial Conduct Authority has also been looking at precious metals as part of a broader review of financial benchmarks. With an estimated 175m ounces of gold, worth $215bn at today’s prices, changing hands daily on the over-the-counter market, London is the global centre of gold trading. However, the FCA has not launched a formal investigation. FINANCIAL TIMES

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Graphs at a glance: Number of people who had to resort to foodbanks tripled in one year

Updated on 22/3/2015: We first posted this in December 2013, reporting that between 2011-12 and 2012-13 the number of people resorting to foodbanks close to tripled. Since then the Trussell Trust issued new figures showing this leap happened again between 2012-13 and 2013-14, with yet another close to tripling of users (up 2.6 times). We have updated the graph to show this.

According to a report by the Trussell Trust, a charity running foodbanks the number of people resorting to foodbanks nearly tripled in 2012-13:

"Trussell Trust foodbanks have seen the biggest rise in numbers given emergency food since the charity began in 2000. Almost 350,000 people have received at least three days emergency food from Trussell Trust foodbanks during the last 12 months, nearly 100,000 more than anticipated and close to triple the number helped in 2011-12."

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The Ripped-off Britons TV Sketch Show: Trickle Down Theory. True or False?!

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Graphs at a glance - Do we deserve MPs who are paid more?

One almost has sympathy for our MPs. They are being tantalised mercilessly by IPSA waving wads of cash at them. IPSA's proposed pay-hike is as cruel as leaving a diabetic Billy Bunter locked in a dorm with a plate of lemon meringue pies and lashings of ginger beer. Shame on you IPSA! Is this revenge for when all but one of your predecessors were de-facto sacked in January 2013 for refusing to be MPs' doormats? Though we do appreciate the black comedy of MPs protesting through clenched teeth "I couldn't possibly".

MPs have convinced themselves they are underpaid. Even though the supply of politicians has in all our recorded history wildly exceeded the demand. Even though:

• They, and we, know that in Parliament MPs just do as the whips instruct them. They serve up their votes to order with the same level of contemplation as a hotdog seller handing out hotdogs. 
• They are chosen not by the electorate, but by schmoozing up to tiny bands of 'swivelled eyed loons' on constituency selection panels.
• There is a heavy over-representation among MPs of Oxbridge graduates (thought by many to be really really clever and high calibre, so the money is already good enough for them)
• They are already paid more than 95% of Britons, not including their expenses.
• Their expenses have grown wildly faster than inflation in recent decades.
• they get paid more for holding Parliamentary offices (from £26k extra for being a whip to £79k extra for being a cabinet minister)
• They are allowed to do other paid work which in many cases dwarfs their MPs salaries
• A quarter of MPs employ family members on salaries upto £45k.
• Much of the UK is covered by 'safe seats' that haven't changed hands in decades, according to the Electoral Reform Society.

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Graphs at a glance: Whether Free Schools are any good or not, they cost half as much to build as traditional schools. Is this the real reason the government is so keen on them?

A National Audit Office (NAO) report published in December 2013 reported that 'free schools' were costing twice as much (on average £6.6 million per school) as expected to build. On the day of publication the media herd wallowed in this cost-doubling story. 

What was less talked about is the report's observation that even though the schools' costs were double the original estimate, they still cost 45% less than building a traditional school. The NAO report stated:

Costs have been lower partly because the Department has taken an innovative approach to providing premises for Free Schools. It has used significant numbers of existing buildings to reduce costs, including properties not traditionally used for schools (Figure 13).

 

the Department also used less extensive building specifications than on its previous building programmes, such as Building Schools for the Future. It also adopted new space standards, which were approximately 15 per cent smaller for secondary and 5 per cent smaller for primary Schools than existing standards.

Free Schools are 45% cheaper on average to build than traditional schools, helped by having less space per student (15% less in secondary schools!) and by moving into unused former hospital, police, office and retail buildings.

With all the evangelical talk of a 'free school revolution' could grubby cost-cutting be the real motivation? Or was the cheapness just collateral to improving educational standards? The same NAO report sheds some light on this. 

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The Ripped-off Britons TV Show: 3 sketches - Inequality and Cameron's Happiness Index; Housing Benefit Cuts; The Pension (errr... Bank Fees) Crisis

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Rip-off News round-up. Our pick of the last week's media (Thu 12th December)

Rise of 'closet borrowers' who hide debts from their partners

An estimated 11 million people are not telling their partners or family the truth about their borrowing. This secrecy poses a risk to both their relationships and finances, warns the Debt Advisory Centre (DAC). One in ten of these "closet borrowers" owes more than £10,000. The DAC warns that keeping debt secret makes it impossible for households to manage their budgets, and borrowing through credit cards and payday lenders increases the risk. Londoners are the "most duplicitous", with nearly one in three hiding the true scale of their borrowing. But their neighbours in the wider south east were either more open with their families - or less honest to survey takers - with only 16 per cent admitting that they had secret debts. Younger borrowers keep more secrets than older, with around third of those between 25 and 44 holding hidden debt. TELEGRAPH

Lloyds fined record £28m for mis-selling: 100,000 may get compensation

The Financial Conduct Authority said that incentive schemes created a failure in its sales process between 2010 and 2012 where staff across the group's high street brands - Lloyds TSB, Bank of Scotland and Halifax - were put under pressure to hit targets to avoid being demoted. It said such incentive plans "can create a culture of mis-selling". The products included critical illness, income protection, life cover and "expenses on death" cover. Investments included personal investment plans, Individual Savings Accounts (Isas) and Open Ended Investment Companies (Oeics). The regulator said the banks persuaded customers to take out more protection cover than they needed. It could also be that customers were urged to invest in funds when this wasn't suitable for them. Salespeople got commissions as high as £1,600. TELEGRAPH

RBS fined $100m by US for deliberate Iran sanctions violations

The Royal Bank of Scotland has been fined $100m (£61m, 73m euros) by US regulators for deliberately violating US sanctions against Iran, Sudan, Burma, and Cuba. The settlement follows from a 2010 internal investigation by RBS into its historical US dollar payment processes and controls. The violations took place between 2005-09. Bank procedures removed location information on payments made to US financial institutions from countries like Iran and Cuba. RBS employees in the UK "received written instructions containing a step-by-step guide on how to create and route U.S. dollar payment messages involving sanctioned entities through the United States to avoid detection". In total, more than 3,500 transactions, totalling approximately $523m, were routed through New York banks in violation of US sanctions. BBC NEWS

Ofcom says TV payday loan adverts have risen sharply to 400,000 a year

Television viewers were exposed to nearly 400,000 payday loan adverts last year, according to the regulator, Ofcom. In 2011 there were 243,000 such adverts, increasing to 397,000 in 2012, a rise of 64%. On average, each adult viewer saw 152 such adverts in 2012, while children watched 70. Labour has already called for all such adverts to be banned during children's TV programmes. BBC NEWS

ONS figures show families spending more on heating and maintaining homes, with those on lower incomes cutting spending on food

The Office for National Statistics said a decline in disposable income since the banking crash had tightened the financial screw on the average household, which had £489 to spend in 2012, compared with £526.40 in 2006 after accounting for inflation. The ONS said the harsh winters of 2011 and 2012 were also likely to have played a part in driving up energy bills. For the lowest-income families the jump in costs meant they spent 25% of their income on housing, compared with 9% among the richest households. Overall, the richest 10% of homes spent an average of £1,065.60 a week and the poorest 10% spent £189.30 a week. Some of Britain's biggest retailers said the continuing squeeze on family budgets meant they were braced for a difficult Christmas. GUARDIAN

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MP pay to rise while everyone else's is falling? There's more than one reason why their timing is damn stupid

Fee explains it all to KJ...

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Justice is supposed to be blind, but not when signing outsourcing contracts. House of Commons committees expose Ministry of Justice outsourcing contract calamities.

In a previous post we complained about the coalition government's plan to reduce spending on public services to the lowest level since before 1948. 

The Ministry of Justice (MoJ) provides a good (i.e. dreadful) example of this blind rush to cut costs. 

Rather like someone looking for a miracle diet, the MoJ showed it was prepared to swallow anything to lose costs. Sadly this is the same with all the ministries chasing the government's strategy of cutting costs. They measure success by the number of pills they take, and not by the effectiveness of the resulting 'body shaping'. They rush because they know the pill-box may be taken away from them at the next election (though Labour say they will pop the same pills, so it is doubtful us ripped-off Britons will be any less ripped-off).

Outsourcers tempted by this careless slopping out of public sector contracts claim they improve services and lower costs by deploying their ninja-like private sector skills. In practice, their bright ideas are focussed on extracting profits.


Probably the key innovation the private sector brings is cutting staff pay and benefits. Cutting the pay of public sector staff is a very blunt instrument that could be done without outsourcing to the private sector. However governments dare not do this directly because the public sector workforce is better organised by unions to resist. Privatised employees are broken off from this mutual support and become easier prey. A report by IDS, who do independent research on employment issues, shows that the private sector pays worse in general, and exceptionally worse when it comes to female employees:

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Graphs at a glance: Government spending on education, health and other services are being cut to pre-1948 levels

A train is dangerous if you run into its path or you refuse to get out of its way. Otherwise trains are perfectly useful and amiable. Rather like our amiable chancellor, George Osborne, into whose path the country placed itself when fleeing from the previous Labour government. George Osborne whose boyish smile eloquently smirks “How come they haven’t found me out yet?”

A graph from the Office of Budget Responsibility (OBR), a body created by the government in 2010 to provide independent economic forecasts, shines a light into a dark corner of Osborne’s mind. This graph shows Osborne’s current economic strategy will bring government consumption to the smallest share of GDP since before 1948. 

Office of Budget Responsibility "Economic and Fiscal Outlook December 2013"

“Government Consumption” includes money spent buying goods and services. It does not include transfers of money from one group of people (taken in taxes) to another (e.g. paid in benefits and pensions). Government Consumption includes paying for public services such as health, education, transport, justice, defence and the like.

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Osborne says his policies have put Britain back on the road to recovery as growth returns. But for whom?

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Rip-off News round-up. Our pick of the last week's media (Thu 5th December)

Serious Fraud Office called in over Royal Bank of Scotland’s role in High Street collapses, including Peacocks, Clinton Cards and HMV

The taxpayer-controlled RBS was accused in a Government-backed report last week of ‘systematically’ profiting from vulnerable, mainly small, business customers placed in a division called its Global Restructuring Group (GRG). The SFO is already considering a criminal investigation into the treatment of these small businesses. A whistle-blower has provided the SFO with a dossier of what he claims is evidence that RBS conducted alleged ‘systematic institutionalised criminal fraud’. In a letter sent to SFO director David Green, the whistle-blower says: ‘Officers of RBS deliberately acted contrary to interests of other parties . . . to maximise their own interests at RBS to [the bank’s] unjust enrichment.’ DAILY MAIL

Paying below the minimum wage: HMRC has prosecuted ONLY TWO companies in four years

Paying less than the National Minimum Wage (NMW) is illegal, yet over 300,000 people in the UK earn less than the NMW. HMRC has investigated 10,777 firms since 2009 for allegedly breaking the law on low pay, collecting £15.8m in arrears payments and imposing £2.1m in fines. However, only two firms have been prosecuted, and despite ministers' repeated pledges, only one has ever been named and shamed: Treena Professional Hair and Beauty in Leicester, which in 2010 paid a member of staff £342 for 20 weeks' work when she was entitled to £3,703. GUARDIAN

EU fines banks £1.4bn over rate-rigging

The European Commission has fined eight banks - including RBS - a total of 1.7bn euros (£1.4bn) for forming illegal cartels to rig interest rates. The rates are used to set the price of trillions of dollars of products, including mortgages. The record-breaking fines cover yen Libor and Euribor, the European equivalent of the rate set in London, and follow similar fines by financial regulators in the UK and US. UBS and Barclays stood to pay the largest fines of 2.5bn euros and 690m euros, but avoided paying anything because they assisted the investigation. Aside from RBS, Barclays and UBS, the other organisations involved were Deutsche Bank, Societe Generale, JP Morgan, Citibank and the brokers RP Martin. Banks that have not yet settled fines but are being investigated are HSBC and Credit Agricole. A handful of individuals are facing criminal charges. BBC NEWS

British Gas under fire for insulation plan lobbying

After it failed to meet existing mandatory targets for solid-wall insulation, British Gas persuaded ministers to lower industry targets by two-thirds . Rival energy firms say British Gas's lobbying has put up to 10,000 jobs at risk and may jeopardise the fledgling solid-wall insulation industry. Some firms created large teams of home insulators and were on schedule to complete the work on time. But British Gas insulated only one in six of the solid-walled homes it was supposed to. British Gas said there were cheaper ways to save on bills and cut carbon emissions, and denied that they supported lowering the target because cold homes would mean more sales of gas. An industry source pointed out the Old Etonian link between Mr Cameron and Sam Laidlaw of Centrica, which owns British Gas. BBC NEWS

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The £50 saving from cutting the ECO green levy may be gobbled up by a small rise in the wholesale gas price

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Liebrary: PFI saves us virtually nothing, if you believe the NAO’s figures. If you believe the Commons Treasury Committee, it costs us a vast amount that nobody has yet quantified

Private Finance Initiatives (PFI) were first used by the Conservatives in 1992, were enthusiastically embraced by Labour when they came into power in 1997, and continue to be cuddled and kissed by the coalition government of 2010. PFI involves the government entering into contracts with the private sector, where public infrastructure (hospitals, schools etc) are handed to the private sector for development and management and effectively rented back. A report by the National Audit Office (NAO) helpfully explains this:

"The private finance initiative (PFI) is a way to finance and provide public sector infrastructure and capital equipment projects. Under a PFI contract, a public sector authority pays a private contractor an annual fee, the ‘unitary charge’ for the provision and maintenance of a building or other asset. The unitary charge may also cover services such as cleaning, catering and security in relation to the asset."

Government ministers of all odour promised better services and greater savings from PFI. The reality, stated in a House of Commons Treasury Committee report in 2011 is very different:

"Private finance has always been more expensive than government borrowing, but since the financial crisis the difference between the costs has widened significantly. The cost of capital for a typical PFI project is currently over 8%—double the long term government gilt rate of approximately 4%. The difference in finance costs means that PFI projects are significantly more expensive to fund over the life of a project. This represents a significant cost to taxpayers."

The same Treasury Committee report complained that analyses justifying PFI contracts made unjustifiable assumptions without which the contracts would never have been signed. These included:

• Understating the internal rate of return (IRR), i.e. the profit the private sector partner would extract.
• Overstating the cost of the government simply borrowing money to pay for capital investment, instead of paying rent to a private sector partner
• Underestimating the whole life cost of the contract.
• Overestimating the cost of keeping the work in the public sector
• etc. etc.

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U-turn: Osborne will, after all, cap the cost of payday loans. What’s made him change his mind?

Fee and Chris explain it all to KJ...

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Rip-off News round-up. Our pick of the last week's media (Thu 28th November)

Energy row erupts as winter deaths spiral 29% to a four year high of 31,000

Campaigners say Government should be "ashamed" as official figures reveal thousands of over 75 year-olds perished in Britain during the coldest winter for nearly 50 years. Dot Gibson, national secretary of the National Pensioners Convention, said "How can colder Scandinavian countries avoid this annual toll while we simply wring our hands?” Ed Matthew of the Energy Bill Revolution campaign group said it was mystifying that Germany could "retro fit" a quarter of a million homes a year while in the UK only 219 homes had been insulated under the Government's 'Green Deal'. The figures came a day after Ofgem, the energy industry regulator, said profits at residential supply arms of the Big Six energy suppliers leapt 75% last year after a near 20% increase in gas and electricity prices. TELEGRAPH

Hospital A&Es swamped by 500,000 elderly diverted from failing community care services

Half a million elderly people a year are being unnecessarily admitted to hospital as emergency patients because of stark failings in community care, an official Government report has warned. Almost one in 10 over 75s had been taken to hospital with avoidable conditions – a rise of over 20 per cent in just five years. The conditions include malnutrition, pressure sores and urinary tract infections. The findings suggested that some GPs, care homes and community health services were failing to treat vulnerable people “in the way they deserve”. Inspectors found safety concerns in one in five nursing homes. Problems included failing to give out medicines safely, not carrying out risk assessments and understaffing. The report also identified a link between high staff turnover and number of reported deaths of residents. INDEPENDENT

U-turn: cap on Payday loans unveiled by George Osborne

Announcing a major and politically significant U-turn, George Osborne said the cap on the overall cost of credit was the next logical step as the coalition sought to regulate what had been a wholly unregulated market. The timing of the U-turn led observers to conclude that politics as much as policy had driven the decision. Both the government and the regulator the Financial Conduct Authority (FCA) had been resisting the move despite strong pressure from Labour and individual Tory MPs eager for their party to be doing more to be seen on the side of hardworking people. Only last month, the FCA said there was no need for a cap and the issue had been referred to the Competition Commission for further discussion. GUARDIAN

Half-blind woman crippled with back pain killed herself after benefits bosses stopped her disability payments - following a TWO MINUTE assessment

Despite being in almost constant agony, Jacqueline Harris, 53, was told she was told fit for work in November 2012 following a Government health assessment. Widow Ms Harris was only able to walk with the aid of sticks after she suffered slipped discs in her back and neck. Her sister Christine Norman says arthritic Ms Harris was asked just one question in the 'lightning-speed assessment', carried out by private firm Atos Healthcare. Mrs Norman said they asked her one question: "Did you get here by bus?" Jacqueline replied with one fateful word - "yes". Her assessment lasted just two minutes. In January her benefits were stopped. But Ms Harris had contested the ruling and her first appeal against the decision failed.  A second Department for Work and Pensions tribunal hearing in Cardiff was due to take place on November 15. However, Ms Harris was found dead at her home on November 2, having taken a suspected overdose. DAILY MAIL

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Graphs at a glance: the regional impact of excessive debt

In November 2013 The Money Advice Service, set up by the UK government, released a report on the debt burden. The report states:

Across the UK approximately 8.8 million people are over-indebted. These are individuals who have been at least three months behind with their bills in the last six months or have said that they feel their debts are a heavy burden. This large and diverse group represents 18% of the UK adult population

Most startling is the concentration of debt stress in certain cities and certain regions. In areas more than 4 in 10 people (more than 40% of the local population) are over-indebted.

Money Advice Service

It may also be surprising that only 1 in 5 (20%) of over-indebted people are those dependent on benefits. The great majority are working people earning salaries.

Money Advice Service

It is said that a drowning man will grab at any straw. "Austerity" is the straw our government enthusiastically waves like a cheer-leader's baton because it is not their own voters who are drowning.

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RBS accused of making money by forcing small and medium-sized businesses into bankruptcy

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Graphs at a glance - Who do MPs represent? What did they do before becoming MPs?

In an earlier post we published graphs showing the unrepresentative number of private school and Oxbridge types among our MPs. One could argue that going to private school and Oxbridge is largely an accident of birth. Your parents need to be able to afford the fees to get into private school, and that gives you a great advantage getting into Oxbridge (UK students from private schools (6% of all students) make up 42.5% of undergraduates at Oxford and 36.7% at Cambridge). 

On the other hand, what you choose to do for a living is down to you.

According to a Parliamentary report, there has been a great leap forward in the number of "political organisers" (local politicians and other political creatures) becoming MPs. At the same time there has been precisely equivalent collapse in the number of people the report classes as 'manual workers'. 

Former "political organisers" now outnumber those coming from other professions as follows:

• 10 times more political organisers than doctors
• 3.7 times more political organisers than school teachers
• 2.8 times more political organisers than manual workers

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Liebrary: Does Government "Help To Buy" help house buyers on modest incomes get 95% mortgages? Shelter, the housing charity, reveals that people on average incomes can't actually afford repayments on 95% mortgages

UPDATE JAN 2017: One of the government's flagship home ownership programmes, the Help-to-Buy Mortgage Guarantee scheme, ended on 31st December 2016. It has helped more than 100,000 individuals or couples onto the property ladder. The Council of Mortgage Lenders said it had worked "exceptionally well", making mortgages more available when it started in October 2013.

However Shelter argued that the scheme helped to push up house prices, and only helped those who needed little or no help. They said: “Drawing on official statistics and analysis, this research finds that Help to Buy has added around £8,250 to the average house price. In other words, it has helped a small number of people to buy, at the expense of worsening the overall affordability crisis for everyone else.”

Meanwhile, the Tory’s more recent 'affordable' starter homes programme kicks off in 2017. But Shelter points out that these “affordable homes” will cost up to £450,000! No doubt the perverse results will be the same. READ ON...


The Conservative led government's "Help To Buy" provides £12 billion of guarantees allowing people to buy houses with just a 5% deposit. This government guarantee enables them to take out a 95% mortgage. 

We pointed out in an earlier post that this subsidy is available to people buying homes for up to £600,000 - i.e. not aimed at those on modest incomes, nor at first-time-buyers.

We were scolded by some, who said that while £600,000 was the upper limit the subsidy was also available for those on modest and low incomes aspiring to less than a 4 bedroom detached house in Surrey. 

Shelter's "Homes for Forgotten Families" report

A report by the housing charity "Shelter", released in August 2013 shows this is actually not the case.

Their report shows that in almost three quarters of England families on an average (median) income could not afford the repayments on a 90% mortgage (let alone a 95% "Help To Buy" mortgage) for an average 3 bedroom home in their area.

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Tory leak says the prime minister is going round Number 10 saying: 'We have got to get rid of all this green crap!'

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Rip-off News round-up. Our pick of the last week's media (Thu 21st November)

Government admits fiddling figures to hide failings of fit for work test

Work and Pensions Select Committee member Sheila Gilmore MP has today revealed that the number of sick and disabled people wrongly declared ‘Fit for Work’ by a Government benefits test could be far higher than previously thought. This followed a letter from Tory Work and Pensions Minister Esther McVey in which she admitted figures are ‘not clear’ and promised to ‘ensure greater clarity in future’. Gilmore said: “Up to now we thought that the assessment was getting about one in ten fit for work decisions wrong – far too many in most people’s eyes – but now we know the Government have been fiddling the figures, the reality could be much much worse.” SHEILA GILMORE MP

Top Executive pay rises by 14% as awards linked to shares soar

FTSE 100 executive pay increased by 14% last year to £2.1m.  Companies are accused deflecting public scrutiny of directors' spiralling pay by moderating rises in the well known and more widely quoted salary and bonus figures, but quietly increasing share-based awards. While basic salaries rose 4.1% and annual bonuses fell by 8.8%, the total pay package for an average FTSE 100 director rose sharply by 14% through a 58% surge in the value of long-term incentive plan (LTIP) awards being cashed in. Latest labour market statistics show average UK annual wage increases of 0.7%. Frances O'Grady, TUC general secretary, responded: "The time has come for legislation to put ordinary workers on the pay committees of companies. This is the only way to bring some sanity to the way in which directors are paid." GUARDIAN

Boris Johnson says super-rich are ‘put-upon minority’ like homeless people and Irish travellers

Mr Johnson accused “everyone from the Archbishop of Canterbury to Nick Clegg” of bullying the group he defined as “zillionaires” – and said the most rich of all should receive “automatic knighthoods”. INDEPENDENT TELEGRAPH

JP Morgan Chase agrees record $13bn settlement in the US over toxic mortgages, and opens door to criminal prosecutions

The fine in the US, the biggest civil settlement with any single company, ends several investigations and lawsuits brought by the US authorities related to the sale of home loan bonds between 2005 and 2008. Crucially, and unlike settlements and fines in the UK, the bank’s admission of wrongdoing is a major victory for the US Justice Department. Banks have fought shy of such statements fearing yet more legal actions from investors. The settlement leaves open the possibility of potential criminal charges. While this agreement ends a troubled chapter for the bank, other issues remain. A criminal investigation of the bank over mortgages will continue. The bank is also under scrutiny for its hiring practices in China, its massive “London Whale” trading losses and its relationship with Bernie Madoff, the Ponzi scheme fraudster. GUARDIAN

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At the lavish annual Lord Mayor's Banquet, Cameron says Britain needs cuts. Permanently

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Graphs at a glance - Who does Parliament actually represent?

As we watch the government make our lives harder with cuts in pay, pensions, benefits, the creation of 'two tier' services and generally soaring inequality we tend to forget that it is we who put them there. They are not our rulers, they are our representatives.

Rulers rule in their own interests. They hold their power and wealth by force of law and arms. The spoon belongs to them, and they ladle out goodies to whom they wish.

Representatives in a democracy rule in the interests of those they represent. They hold their power because we give it to them in elections. The spoon belongs to us, and we trust them to ladle out goodies in all our interests.

Inevitably, whether it is Ruler or Representative holding the ladle, it is the closest people who get served most generously and those furthest away who get the dregs.

We provide some graphs using data from a House of Commons report to show who is closest to our representatives in Parliament. Perhaps they provide a clue why successive Tory and Labour governments have steered Britain back to Victorian levels of inequality:

a) According to Department of Education data, just 1% of England's school leavers in 2009/10 went to Oxbridge, compared to a quarter of MPs. 48% of England's school leavers did not go to university at all.

b) 6% of children are privately educated. In contrast, over half the Tory MPs and over a third of all MPs from the three main parties went to private schools.

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