Graphs at a glance: The effect of political fibbing exposed by Office of National Statistics report showing fewer than one in three of us 'tend to trust' the government

There is nothing like a government to prove the old adage of "lies, damn lies, and statistics". 

In March 2014 a BBC Newsnight programme reported that the Tories were holding back a government report that would expose as untrue a key statistic being used to rouse a rabble of votes with tough talk on immigration. The report is said to show Tory claims that "for every additional 100 immigrants… 23 British workers would not be employed" were a gross exaggeration.

The Tories were criticised in July 2013 by the Office of National Statistics for misusing statistics to back a claim that the benefits cap was pushing people back into work. In February 2013 Andrew Dilnot, chairman of the UK Statistics Authority, criticised the government for being economical with the truth about the UK economy's debt and deficit figures.

The Advertising Standards Authority has long since washed its hands in relation to political fibbing. They regard Political Advertising as beyond their control:

"For reasons of freedom of speech, we do not have remit over non-broadcast ads where the purpose of the ad is to persuade voters in a local, national or international electoral referendum. Complaints about political advertising should be made directly to the party responsible for that advertising."

The key to statistics is not so much what they say, but who is saying it. The Office for National Statistics - still not privatised at the time of writing this post - provided an interesting statistic in its report on "Measuring National Well-Being - Governance 2014". The report shows that over the last 10 years fewer than 1 in 3 of us actually believe what the government tells us.

Read More

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.

Read More

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.

Read More

Graphs at a glance: Government wants you to think we made a profit on sale of Lloyds Bank shares. Actually we made a thumping loss!

http://markets.ft.com/research/Markets/Interactive-chart

The UK government’s sale of the first tranche of Lloyds Banking Group shares, bought in 2008 to bail out that crashing bank, exposed how we ordinary taxpayers are being soundly ripped-off once again. 

The chancellor, George Osborne, wrote on 17^th September 2013:

“The Government has today sold 6% of the bank’s [Lloyds Banking Group] shares to institutional investors for 75p per share, raising £3.2 billion. The sale price is 1.4p per share more than the 73.6p the previous government bought them at”

This has been trumpeted this as a £61 million profit. Sadly, and predictably, this is not true:

1) The impact of inflation:

Inflation has been running well above target for most of the five years since 2008. This has been driven not least by the government's Quantitive Easing policy. 

Office of National Statistics RPI inflation data shows inflation between 2008 and 2013 has totalled to 15%. This means the value of 73.6p in 2008 with 15% inflation = 85.2p in 2013.

2) The cost of borrowing the money:

The cost to the government of borrowing the bailout money can be calculated from the government bond yields. In September 2013 the 10 year UK government bond cost 2.92%.

To borrow the 73.6p cost of a share for the 5 years between 2008 and 2013 cost 11.3p

Therefore, just to break even the Lloyds Bank shares should have sold at 96.4 pence (85.2p + 11.3p). 

On this basis far from any profit, by selling at 75p instead of 96.4p, we the taxpayers have made a 22% loss!

Read More

Graphs at a glance: Are cuts to incomes and services really necessary? Are Britons really too expensive for Britain?

In August 2013 the Office for National Statistics (ONS) revised the second quarter growth figure from a spongy 0.6% to a strident 0.7%. This allowed George Osborne and the Tories to trumpet that the economy was "moving from rescue to recovery". Recovery will happen eventually, maybe sooner, maybe later. 

But just as it is hard to say whether the man running in front of a raging bull is leading it or being chased by it, it will be hard to say what role the Chancellor's policies have in our economic recovery.

The banker induced economic crisis, like all busts and all booms, is transitory. Governments are using a transitory crisis to inflict permanent pain including cuts to pensions, pay and benefits, the proliferation of 'zero hour contracts', and changes to employment law eroding workers' rights. What we sacrifice in the bad times will not be returned to us in the good.

It is not because our economy can't afford the costs of health, education, pensions, workers rights etc. While the banker induced crisis knocked us back for awhile, the medium term GDP forecast shows a very healthy growth trend (see graph of government forecasts below). 

The economy is strong enough to support us. The Credit Crisis is being used as cover to increase inequality.

The underlying reason we ordinary Ripped-off Britons are becoming too expensive is that our share of our nation's wealth is being reduced. The national pie is getting bigger but our share is being cut down faster:

Read More

Liebrary: Do we have to maintain exorbitant pay for bankers because everybody else does? See the data that shows we've been suckered.

Excessive pay in the banking industry has long been justified by the need to 'stay competitive' in the global market. The UK has to pay bankers exorbitantly, we are told by UK bankers, because everybody else does. We can't stop until they do, the bankers tell us. To add insult to injury, banker pay provides cover for executives in other industries (energy; transport; MPs; etc.) to pump up their own salaries and perks. Which they pay for by keeping ordinary workers' salaries down, and pulling off more and more consumer rip-offs. New data on banker pay has exposed the whole "everybody else pays pots" as a fib.

Figures published by the European Banking Authority expose the lie. They reveal that the UK has more than three times the number of bankers paid more than 1 million Euros than the rest of Europe put together. 

"The EBA published today a report featuring data on the remuneration of EU bank staff who received one million Euro or more in total in 2010 and 2011. The report focuses on the gathering of numerical data and provides a first analysis of remuneration structures across the EU. "

EBA report, 15th July 2013

Second in the list, after the UK's 2,436 bankers, is Germany with just 170: fourteen times fewer.

Bankers taking more than one million Euros in remuneration

Read More

Liebrary: Do tax deals with tax havens deal with tax dodging? Here's how the UK's hoped for £3.2billion tax haul from the UK- Switzerland deal disappeared

Legend has it that the Forty Thieves, who were ultimately extinguished by Ali Baba, once had a lucky escape. The cops had them surrounded in their cave. They had them bang to rights, holed up with their loot. However the cops knew the Forty personally, since when the cops got bored of finding hidden loot they joined other firms whose business was to hide the loot in the first place.

So the cops proposed a deal to their once and future friends:

• Hand over the loot
• Stop hiding more loot
• We will let you go, and we won’t even ask who you are

Most importantly, the cops said they would go away and come back in a year and a bit to collect. The Forty naturally agreed. They said they wanted to be de-criminalised, and they wouldn’t do it again. The cops went away, and when they returned…..the cave was empty! 

Is this the nonsense of fairytales? Actually, no. It is the nonsense of Her Majesty’s Revenue and Customs (HMRC). This was pretty much how the British tax authorities contrived to turn the pursuit of criminal tax evasion into a game of children’s hide-and-seek. They didn’t count to 10, nor even to 100. They closed their eyes and counted to just over 39 million (the number of seconds between the deal in October 2011 and the return date in January 2013).

In 2011 HMRC proudly announced they had finally got the better of rich individuals hiding their wealth in Switzerland. The Swiss-UK deal was signed on 6 October 2011 by the UK Treasury Secretary David Gauke and the Swiss Finance Minister Eveline Widmer-Schlump. It was scheduled to come into force on 1st January 2013. HMRC's cops had given the dodgers over 1 year's notice that they were a-coming with their bells a-ringing.

Our boys in blue pinstripe were ecstatic. The government made a press release titled "Agreement with Switzerland to secure billions in unpaid tax":

"George Osborne, Chancellor of the Exchequer, said:

Tax evasion is wrong at the best of times, but in economic circumstances like this it means that hard-pressed law-abiding taxpayers are forced to pay even more. That is why this coalition government made it a priority to go after those who don’t pay their fair share. We will be as tough on the richest who evade tax as on those who cheat on benefits. The days when it was easy to stash the profits of tax evasion in Switzerland are over.

David Gauke, Exchequer Secretary to the Treasury, said:

I am delighted that, through our constructive discussions with the Swiss Government, we have secured the best possible deal for UK taxpayers. This historic agreement will enable us to collect billions of pounds from those who have for too long evaded their responsibility to pay UK tax by abusing Swiss banking secrecy. The message is clear: there is no hiding place for tax cheats.

Read More

Liebrary: Is affordable housing in London intended for people on modest incomes? Actually the eligibility limit for this subsidy is a household income of £80,000!

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...

"What's in a name? That which we call a rose by any other name would smell as sweet" (Romeo & Juliet, Act2 Scene2).

Juliet's assertion applies both ways. A rip-off by any other name still stinks. You might think the 'affordable housing' policy is aimed at those who find it hard to afford their housing. There you would be right. You might think that the policy is aimed at people on low and modest incomes (e.g. nurses on £25k, firemen on £23k). There you would be wrong. After all, however much money you have there is always something that costs just a bit more than you can afford (think yacht, football club, income tax).

The sell-off of social housing in London starting in 1979 with the Tories' "Right to buy" scheme, rolled on virtually uninterrupted through the Labour government of 1997-2010, and continued into the Con-Dem coalition from 2010.

The original 'right' to buy at a considerable discount to market value (the discount was increased to up to £100,000 discount in London and £75,000 in the rest of the country in March 2013) was given specifically to public sector tenants. However this has been an open invitation to speculators entering into 'deferred purchase' agreements, where the council tenant has been the middleman - exercising his right to buy, and then selling on to private landlords both individuals and companies. A report by the Daily Mirror newspaper exposed the extent to which council housing has been taken over by private landlords:

"A Daily Mirror investigation found a third of ex-council homes sold in the 1980s under Margaret Thatcher were now owned by private landlords. In one London borough almost half of ex-council properties are now sub-let to tenants."

This opportunity to turn a profit is particularly succulent in London, where rents are literally streets ahead of anywhere else in the UK.

http://www.ons.gov.uk/ons/dcp171766_285163.pdf

Read More

Graphs at a glance: Are swingeing cuts to legal aid needed because the cost is ballooning out of control? Actually the Legal Aid bill has been falling for years.

The wealthy live more opulently than the poor. But generally speaking the expensively dressed wealthy don't themselves benefit from the tatty outfits of their less well heeled fellow citizens. Indeed, when they are able the wealthy take the trouble to dress their servants very well. 

http://en.wikipedia.org/wiki/File:Amesservants.jpg

Old bangers breaking down on the road don't really make the man in his £50k motor car feel better. Broken down crocks just cause traffic jams to infuriate rich and poor alike. 

Few people take active pleasure in the poverty of others. They enjoy the inequality in the form of their own comfort, and just ignore the discomfort of the rest.

This is true with clothes and jewelry and houses and cars. It is true with private education and health. The wealthy buy their privileges. The principal benefit to the wealthy few of the poor services meted out to the majority is low taxes.

But this is not true of justice. Justice denied to one is justice escaped by another. The withdrawal of legal aid will mean those who can't afford to pay for their justice will not be able to afford to pursue those who can. According to a BBC report:

"The government is removing funding from entire areas of civil law. They include:

• Private family law, such as divorce and custody battles
• Personal injury and some clinical negligence cases
• Some employment and education law
• Immigration where the person is not detained
• Some debt, housing and benefit issues"

The BBC's list does not include the cuts for criminal cases, which are in addition to the above.

To justify pulling legal aid, we are told a host of fibs about how it is 'ballooning' out of control. So we looked around, and found some data in a report by the parliamentary select committee responsible for Justice:

1) Has the Legal Aid cost been ballooning? No: it has been falling since 2004:

2) Is this because the number of cases has been falling? No, they have been rising. In spite of rising number of cases since 2004, the costs have NOT been rising:

Read More

Liebrary: "If it isn't hurting, it isn't working". How Austerity worked for the few by hurting the many

An earlier Tory chancellor during an earlier crisis claimed "If it isn't hurting it isn't working". This, together with the fib from a later Tory prime minister "We are all in it together", is used to convince the majority of us ripped-off Britons to keep taking the painful poverty pill while the elite take the opportunity to reinforce their positions. 


As Lord Young, former Tory minister and advisor to David Cameron, said "a recession can be an excellent time to start a business. Factors of production such as premises and labour can be cheaper". Young just said it as it is: bust businesses leave empty buildings and sacked employees who can be got on the cheap.

It was ever thus: when a ship sinks although all the passengers start off 'in it together' it is the passengers in the lower decks that drown first. The water eventually reaches the middle class, creeping up so they don't notice until it is too late. Giving the upper class time to float away in the lifeboats, taking their luggage and hampers, rowed by their more essential servants.

The sinking of the UK economy was made apparent by a release in May 2013 from the OECD and the Office of National Statistics. This shows that austerity did not improve our position relative to our competitor countries. In the period from 2005 to 2011 the disposable income per head in the UK fell from fifth to twelfth place in the OECD. France, much criticised for eschewing austerity, in the same period moved from four places below the UK to four places above.

Equally telling from these figures is the fact that in this period the UK disposable income grew by just 7%, compared with 22% in France and 19% in Germany.

Read More

Liebrary: The truth according to the Office of National Statistics (ONS) behind the Public and Private Sector pay differential

The government gets regularly rapped by its own statistics body, the UK Statistics Authority, for making up stuff to support government policies. In May 2013 the Secretary of State for Works and Pensions, Iain Duncan-Smith, was put on the naughty step for fibbing about the number of people enthused into getting a job as a justification for his draconian policy of cutting benefits. 

Duncan-Smith's claim that the statistics "clearly demonstrates that the cap is having the desired impact" was quickly shot down by the UK Statistics Authority. The Authority declared the statistic "explicitly states that the figures are 'not intended to show the additional numbers entering work'". The decrease in claimants was actually due to policy changes that reduced the number being counted. Andrew Dilnot, Chairman of the UK Statistics Authority, wrote:

"We have concluded that the statement attributed to the Secretary of State for Work and Pensions that ‘Already we’ve seen 8,000 people who would have been affected by the cap move into jobs. This clearly demonstrates that the cap is having the desired impact’, is unsupported by the official statistics published by the Department on 15 April.

The release Ad-hoc statistics on JobCentre Plus activity, from which the 8,000 figure appears to be drawn, explicitly states that the figures are ‘not intended to show the additional numbers entering work as a direct result of the contact’. The release Ad-hoc statistics on households identified points out a number of policy changes that occurred between the publication of the 56,000 and 40,000 numbers, as well as caseload changes ‘due to normal caseload churn, reducing those potentially in scope for the cap’."

Politicians rarely allow truth to get in the way of policy. 

Read More

Liebrary: Is Corporation Tax being cut to make us more competitive? Or is there another reason?

Adam Smith, the patron saint of capitalism, theorised that by everyone behaving selfishly the 'invisible hand' of all the selfishness will distribute the wealth of the nation as if "the earth had been divided into equal portions among all its inhabitants". Smith wrote: 

"The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society"

So why hasn't this beneficial outcome happened in Britain? Perhaps the flaw is it requires everyone to behave selfishly. Not just the wealthy, but also the rest of us. Just as the rich demand the gratification of their insatiable desires, for the 'invisible hand' to succeed ordinary Brits must demand as big a share as they can grab. Is it the fine balance of grasping that is the key? Is it all our fault, that although the wealthy are grabbing we aren't doing our bit?

During this time of 'austerity' appeals are made to the unselfishness of us Britons by political and business leaders claiming "we are all in this together". 

Are we ripped-off Britons too gullible, accepting wage freezes, benefits cuts, withdrawal of decent pensions, curtailment of employment rights? Governments have cleverly targeted minorities for their austere medicines. But as the scythe progressively cuts at one minority after another, we slowly realise that we are all minorities one way or the other: the disabled; the unemployed; the teachers; the public servants; the pensioners; the soldiers; the students; the nurses... 

The reality is those who make the appeals rely on the unselfishness of others as they selfishly feather their own nests. Cuts for all - with the biggest being tax cuts for companies, their top executives, and their owners.

For this post we focus on corporation tax cuts, and refer to some interesting graphs from the 2013 Budget Document:

Read More

Liebrary: Are wages and employment rights being cut to make Britain more competitive? Or is there another reason?

Our leaders tell us we must be more competitive. So we can work ourselves out of the banker induced crisis. They tell us that to earn money to pay off the debts that came from the crisis we must compete with other countries to attract companies to Britain. 

To do this they tell us we must have a more flexible labour market (i.e. easier for companies to fire us), more competitive wage structure (i.e. pay us lower wages), and we must cut corporation tax for the companies (i.e. reduce companies' contribution to the public purse, paying for the NHS, schools, defence, roads and stuff like that).

So we thought we would look to see how uncompetitive we actually are in terms of wages, sackings, and tax at the moment:

a) Compare wages, and we see the UK average wage measured by the EU is well below other major European countries, and below the average of all the EU27 countries.

Statistics from the European Union, Europa.eu (As figures are in Euros, UK average wage rise is impacted by exchange rate of strengthening pound in this period)

Read More

Liebrary: Do high pay and bonuses encourage high performance and excellence? A US Federal Reserve study says high reward actually results in worse performance!

Now here is something all the fat cats and their apologists really don't want us to see: scientific evidence that paying them fat salaries, perks and bonuses actually makes them worse at what they do not better. The evidence is provided not by some left wing think-tank, but from research done by top US universities funded by the US government.

Fat cats from executives to politicians claim that paying them loads is done for the good for all of us. Paying them more, they claim, would attract higher calibre people. Presumably because they find themselves and their colleagues inadequate (can't argue with that). To say anything to the contrary, they assert, is just envy. So we should just shut ourselves up and put their pay up.


You would have thought the evidence of the Credit Crisis, in which highly paid bankers crashed the World economy, together with the ongoing litany of banks ripping off their clients (PPI; Interest Rate Swaps; LIBOR rigging...) has proved beyond reasonable doubt that by paying vast amounts of money you simply get people who are blinded by money and will recklessly and without compunction pursue money for the sake of getting money.

Read More

Liebrary: Are the unemployed (a) Skivers and (b) A cause of the ballooning benefits bill? ONS and DWP figures show they are neither.

We are told not to be harsh on bankers because most bankers are not reckless rogues (just the ones in the board rooms and on trading desks). Having crashed the World economy in 2008, the bankers promised to behave better, lend more to businesses, and accept new rules to reduce the risk of them going bust. They didn't behave better (e.g. LIBOR rigging); they screwed businesses (e.g. IRSA scams); and now they have wriggled out of the tighter rules (generous bank lobbying has resulted in liquidity requirements being greatly relaxed). Banking robbers dodging weak kneed regulators: not much of a surprise here.

We are told not to despise MPs because some of them didn't fiddle their expenses. They have continued to fiddle (e.g. they can't claim the cost of mortgages on their flats anymore so they swap them and claim rent that they pay to one another); in December 2011 they argued for an extra £20k in allowances; and in January 2013 they dumped their expenses regulators. In a survey of MPs done by IPSA and published in January 2013 "69% of MPs questioned think they are underpaid and, on average, they suggest a MPs’ salary should be £86,250.", a 32% payrise. Pompous MPs patiently manoeuvring for a big payday: not much of a surprise here.

With all this forgiveness for greedy bankers and grasping MPs, we are told it is necessary to punish the unemployed because while the rest of us trek to work of a morning the sofa-surfing-skivers are eating hot buttered toast dunked in cheap gin.

The debate about benefits cuts has been focussed on the "Strivers and Skivers". With the "Skivers" allegedly pocketing vast amounts of taxpayers' money to fund their skiving. The government has decided that by getting the money out of the skivers, they can afford to cut the top rate of tax (already done) and not impose a wealth tax (determinedly not imposed). 

The lie is exposed by figures from the Office of National Statistics and the Department of Works and Pensions that show less than 1% of all benefits spending is paid to possible "Skivers". And yet it is the whipped up contempt for the skivers that is used as a smokescreen to attack all benefits and deflect the public's attention from handouts to the very wealthiest.

So, lets look at the figures:

Read More

Liebrary: Is the UK national debt at a historic high? Actually it's lower than it has been for most of the last 300 years.

In the Autumn Statement of 2012 the chancellor’s idea of ‘more Austerity’ was not much of a surprise. To prove "we are all in it together" Osborne cut benefits for the poor and disabled and also cut pension savings allowances for the rich. 

Osborne hoped that nobody would notice that this takes money away from the poor immediately, but only reduces the incomes of the rich some time in the future when they retire to find their pensions aren't as large as they otherwise may have been. Though by that time the economy would have recovered and other wheezes will doubtless have been dreamed up to once again fatten up those elite pensions. 

Osborne decided that at the time of crisis the poor would have to make immediate sacrifices so that no significant contribution would be required from the rich in the form of higher income tax or a new wealth tax. Far from a making an extra contribution the wealthy have instead been given cuts in income tax and corporation tax. 

But is all this austerity for the 99% really the only option we have? This graph from a McKinsey report in 2010 illustrates the lies we are being fed to justify the austerity.

Government debt is at a historical high.

The Treasury stated that in October 2012 government net debt was 67.9% of GDP. The McKinsey graph shows that far from being a high, for most of the last three centuries government debt has been much higher. Debt generally balloons during wars, when elites pour blood and treasure into protecting their own and snatching one another’s assets. Andy Haldane, executive director of the Bank of England, speaking to BBC Radio4 in December 2012 compared the economic impact of the current crisis with that of a world war:

Read More

Liebrary: Cutting benefits will push the work-shy into employment? Actually benefits subsidise the low wages of millions of working Britons.

More evidence that benefits subsidise business comes from the report by Queen Mary University of London.

The London Living Wage is calculated by the Greater London Authority's "Living Wage Unit", set up by Boris Johnson as Mayor of London in 2005. Boris Johnson stated in the 2011 report:

"The functioning of our great city relies on the work of many who carry out its essential functions on a daily basis – from office cleaners to care-workers in social services. It is right that their skills and commitment to London’s success are recognised, and one of the most fundamental ways of doing this is to ensure that all Londoners are paid properly.  That means receiving at least the ‘London Living Wage’, which is designed to provide a minimum acceptable quality of life."

http://www.geog.qmul.ac.uk/livingwage/

Read More

Liebrary: Are energy companies really forced to raise prices due to high wholesale prices?

We notice that energy company spokesmen defend price hikes on television, radio and in print by claiming to buy all their energy on the wholesale market. (You can also read our more detailed post on this from 2011).

The fact is the retail energy companies, who bill domestic consumers, buy their wholesale gas and electricity from...you guessed it...themselves. The generating companies, who take the coal and gas from the Earth and generate the wholesale electricity, are the retailers’ own conjoined twins. Each of the ‘big six’ are now able to supply virtually all their own needs. The graph below from OFGEM shows above the zero line how much energy the retail companies' generation twin can generate, and below the zero line how much energy the companies sell to the likes of you and me and the businesses that employ us. All six are more or less in balance – they can supply their own demands. [In the graph, RWE is the owner of nPower, SP is Scottish Power]

Since 2004 the energy industry has simply moved its profits from the retail side of the business to the wholesale generation business. This can be seen from the soaring OFGEM graph below showing the Value Chain Profitability. Profits from generation were small until 2004, after which they boomed as did overall profits:

Read More

Rail fare increases - gouging profits or a stealth tax?

Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Dickens' wisdom, from the mouth of his literary creation Mr.Micawber, would suggest that British train companies have had a surfeit of happiness in the last decade. 


Companies seldom admit they put up prices to fatten their executives' pay or to boost dividends to their shareholders. They'd far rather claim they are forced to take more money from us for our own good. Energy companies justify price hikes asserting, dubiously, that they pay for 'greening' their output. Train companies justify rocketing fares with the claim they are investing in track and trains. A cleaner country and better commuting. Who wouldn't pay for that, they assert.

The reality, exposed in their own rail industry reports, is that in the last decade the train operating companies have been growing their income while reducing their expenditure on improvements. Yet rail bosses still plead the need to increase fares, apparently demonstrating their Micawberish tendencies in their puffing pursuit of personal happiness. 

If that is not the case, where is the money going?

According to the Office of Rail Regulation (ORR) everything about the railways has been steaming upwards for a decade except for one thing that has been falling like a lump of coal: investment by the private sector train companies back into the industry. 

We are told repeatedly, by rail company directors and government transport ministers, that fares need to go up to pay for renewing our railways. However, statistics from the ORR show private investment, excluding the track owning Network Rail, halved between 2006 and 2010. And the rise in 2011 has only brought it back to 70% of 2006 spending. 

In contrast to this precipitous fall in investment, ORR figures show that Ticket Prices have soared by upto 50% since 2004

(If you thought that the big fall in 'Advance' tickets in 2009 was generous, be aware that according to a Department of Transport report in 2012 these constitute just 4% of all tickets).

Again, in stark contrast to the fall in investment, total ticket revenues have increased 97% since 2002, and gone up over 40% since 2006:

Read More