Friday, March 23, 2007

Where There's Trash There's Tax

OK – no more jokes on Brown going green. I am just trying to make up for the fact that, personally, I am useless at recycling. I use the council recycling bin for a coal bucket and I chuck bottles of every colour into the general trash. My excuse is that newspaper will rot in the ground, helping to aerate the soil, and being a binge drinker, I rarely drink at home. But – one more comment on the Green Budget. The tax on landfill has been all but doubled, to £8 a tonne. According to the waste industry Cassandras quoted in the Telegraph, it will be the end of this form of waste disposal – one that a lot of people feel uncomfortable with.

I am not convinced it is a good idea to impose a punitive tax on a practice for which, presumably, there is no immediate, cost-equivalent alternative, and which in the meantime must be a necessary dimension of a consumer economy. I can’t help think, too, that there will be an inevitable backdraft into local authority finances, with council taxes pushed up to pay the landfill tax, or other services cut.

Telegraph - Environment Links

Thursday, March 22, 2007

Pulling the Rug From Under Cameron

The budget was ‘boring’ – until the end of the speech, when suddenly it was a ‘trick’ or a ‘flourish’, depending largely on your political point of view. I am going to go for a flourish, myself. The 2p off income tax was an iconic moment in the sweep of modern British political history. Just when David Cameron thought he was about to transform Old Conservatism into New Labour with promises of improved public services, New Labour swivelled around to become the Old Conservatism.

What is a zero carbon house? Not many of us know just yet, but I suspect a lot of people will be wanting to find out, and there will be plenty of legal work in developing and explaining the rules. I had my first invitation to a conference on the issue this morning.

Tying relief on stamp duty to carbon reduction is a clever idea, though a zero carbon requirement may be somewhat daunting. A simple raising of the thresholds for inheritance tax and capital gains tax is more reasonable, if less headline-grabbing.

The reduction of corporation tax to 28p from 30p, to be financed from reform of capital relief allowances - in particular an end to relief on empty industrial buildings - looks good. It is generally better to pay a lower rate on a basic tax than to claw money back through allowances, which is more costly and tends to favour the bureaucratically competent above others.

Politically, the cut in the basic rate of income tax is somewhere near glorious. Socially it is more doubtful. It gives a bit of money to people who vote, to middle class families. But with the scrapping of the 10p band, it does so at the expense of low-income workers. Those with children will get it back through tax credits, those without will pay.

Budget Links

Tuesday, March 20, 2007

Local Heroes

The difference in being involved in local politics in Highbury is that the people you argue with over parking and dog-fouling turn up the next morning on the Today programme discussing Iraq or, worse, modern political culture.

This morning, Mark Easton, home affairs editor at the BBC, came on to discuss a survey showing the surprising popularity of the Iraq intervention among the English middle classes. Some two-thirds of the electorate supported the intervention when it looked like it was going to be an easy victory. A third continue to do so now. I am not sure why anyone is surprised at this. In a list of the electorate's top political priorities, gathered in the same survey, Iraq does not feature.

It would feature in my list - I would like to think that it is the end of the culture of sanctions. This cruel instrument starves and crushes the innocent and the vulnerable, making them easier prey for tyrannical regimes, but which have the undoubted advantage that they are poor television.

The last time I came across Mark was to photograph him on the school run in a campaign to stop rich parents trucking their children 100 yards to school under the ludicrous excuse that they are too 'busy' to walk. The other argument is that the roads are not safe - not least due to over-frenetic parents trucking their children 100 yards to school. I won't mention the o-word. All right then - obesity.

Next up was Peter Oborne, discussing the mendacity that is apparently become endemic in modern political culture with Steve Richards, the Independent columnist. They are a lively pair of self-publicists, capable of a decent and heated discussion about nothing at all.

Peter is not above local politics. Like Mark, he prefers to drive his children about in his car, even if only as a political statement - he once made a documentary for Channel 4 on this important human right. On another occasion, when I told him his local newsagent, Harendra Bhatt, was threatened by planning approval for a Tesco to open 20 yards from his kiosk, the story was soon in the Evening Standard. Peter's wife, Martine, was a Conservative candidate in the local elections last May. One of her fellow candidates, Dave Barnes, a rather notorious character in Highbury politics, cheerfully told me that her contribution to the campaign had been to hold a dinner party. Their house is palatial - though I have never personally been invited in. I could imagine however that a dinner party chez Oborne could easily involve up to 15 voters.

Monday, March 19, 2007

What Is the Point of Small Shops?

One reason the Liberal Democrats have managed to look so successful in Islington is that previous Labour administration left them a spectacular windfall - a vast portfolio of real estate.

The Labour regime in Islington refused as a matter of policy to ever sell any of their sprawling estate, with the result that 1. they established for themselves a reputation as poor managers and 2. they left their political opponents a rich source of income. Margaret Thatcher's chancellors had to produce ex-privatisation revenue receipts, but a local authority is way below that kind of scrutiny. The money has gone into the council's coffers and distributed at the whim of the ruling party.

The lastest sell-off is a job-lot of shop leases on Essex Road. Labour councillors are up in arms. Huff this, puff that, sell-off, rip-off, public heaven, private hell, developers, chain-stores, capitalism, globalisation... .

Really? Essex Road? There is already a Sainsbury and a Tesco on Essex Road, and most of the chain stores are represented at the Angel and on Holloway Road. No one is any longer capable of counting the number of Starbucks on Upper Street, but plenty of people seem to want to go into them.

But there are some fundamental questions here. The first is obvious - why should the London Borough of Islington be a commercial landlord? In my view it should not be. I want my council tax to go into education, social services, cleaning and maintaining the borough. I do not expect them to be spending my money randomly subsidising businesses. That said, I would not mind if the current leaseholders and/or tenants were offered a discount to buy out the council's interest.

The second question is why does the Labour party - anyway in Islington - automatically oppose the 'Tescopoly' of modern retail? Supermarkets are generally good for the poor. They provide better quality products at lower prices than small shops. They represent the industrialisation of food and grocery distribution that you might expect socialist theory to welcome. They provide better employment conditions, better benefits, training and more opportunity than any small shop could hope to provide.

Instead of standing up for small shopkeepers, who will express their gratitude by voting Lib Dem and Tory, should Labour not campaign to ensure supermarkets are more accessible to those who cannot affort cars?

Friday, March 16, 2007

Hypocrisy and Other Western Crimes in Africa

When was the last time you ate an apple from Zimbabwe? Unless you are of a certain age or you have been to southern Africa, almost certainly never.

Why not? You don't like apples? Zimbabwe orchards are among the best in the world. What about bread made from the wheat grown in those fabulous highland farms? No?

Ian Smith's snub to the Empire, the unilateral declaration of independence in 1963, when the European elite took control of what was then Rhodesia in order to block a democratic constitution, was in part racism. But don't be too self-righteous. Smith and his backers did after all live in Africa. They were not master-race fantasists.

What white Rhodesians meant to protect was their own close control over their remarkably successful agricultural economy. When Britain abandoned its African relationships and joined its super-rich neighbours in the European Economic Community, it had to switch its agricultural suppliers from Africa (and Asia and Australia and Latin America) to France and Italy and eventually to Spain, Portugal and Greece.

Now, dear friends, if you really think you can save your political modesty with a hijab of nice-sounding words like 'independence' or 'freedom' - or anything else that gives you a warm-fuzzy feeling - I am going to have to insist on a strict dress code. It does not take economic analysis of any depth to understand that a business is likely to decline in value when it loses its customers, and that when it can no longer sell its goods it will be unable to maintain its workforce any more than its shareholders.

Robert Mugabe was in many ways justified in expelling white owners from farms that no longer had an economic use, and giving the wreck of what was left to his political supporters.

Zimbabwe's orchards and wheat-fields are worthless because you don't eat their produce. You don't eat their produce because you are not given the choice. It is the European Union's refusal to open its markets to African business that is destroying Zimbabwe - and Congo, and Ghana and Nigeria and Mozambique and Kenya and Uganda.

Imposing sanctions and talking sanctimoniously about human rights, freedom and democracy while imposing what is effectively a vicious economic blockade is tasteless beyond words. If we want to bring Africa into the modern world, we should do there as we have done in Eastern Europe and invite them, on the same conditions as were required of Bulgaria and Roumania, to join them our Economic Union.

Guardian - BBC - Times

Tuesday, March 13, 2007

Great Carbon Emitting Competiton

Who won?

In the centre-left corner, heavyweight Gordon Brown flicks aside his trainer, David Miliband (for it is he) to stake his place in the middle of the middle...

In the centre-right corner, middle-to-middling-weight David Cameron comes on wearing out-size gloves ...

Boof! Whack! Thwack! Kapow!

Labour to insulate homes - Tories to tax airlines ... that was actually the headline on the Daily Mail online edition, for about five minutes, until a panic-struck call from Tory Central Office got it changed to - 'I'm greener than you! Brown and Cameron go head-to-head over climate change'.

But they couldn't bump the Telegraph, which stuck with - 'Tory 'tax on homes abroad' will hit 400,000' ...

A clear victory to the New Labour spin machine. But which will be champion. It is not as easy as it looks.

Brown can be seen as taking a soft option. The idea of setting legally binding carbon emission limits sounds good, but it is really pretty vague. Insulating homes and pushing long-life light-bulbs sounds worthy but dull and they are ideas that have already been recycled several times.

Cameron, by contrast, is hitting hard - super-discount flights, second homes, tax-free aviation fuels ... .

The trouble is that a huge proportion of carbon emissions come from energy wasted in homes and only a tiny amount comes from aviation. Brown sounds dull and repetitive, but he is confronting the real problem. Cameron sounds tough and ready, but chances are he is shooting at his own voters for very little effect.

Personally, I think aviation fuel should be taxed if for no other reason than to reflect the true cost of flying. Towns and cities bidding for air traffic through offering subsidies does not much bother me - it is a reasonable economic decision as the air routes bring in business well beyond the cost of the subsidy. The airlines deserve a commission on that business.

But what we really need to remember is that all this is largely by the bye. As Michael O'Leary at Ryanair likes to remind us, the real cost of air travel to the passenger is negative. The airline should properly pay you to fly with them, recouping the cost of the flight and making a profit through in-flight advertising and on-board casinos.


Yes, I Don't Grow Bananas

An open market in EU farm subsidies is the latest thing in speculative booms.

Do you live in a bedsit in Islington, or a bijou studio apartment, if you prefer? And you don't grow bananas, or rape seed, or wheat or husband milchcows? Well, fool on you - you should be claiming EU agricultural set-aside subsidies, the brilliant twist on the Common Agricultural Policy that pays cash to people who do NOT farm!

Do you need a farm not to farm? What is this, some kind of crazy Eurospeak? Of course you don't need a farm not to farm! All you need is to own an entitlement to a set-aside subsidy, which can be sold separately to the land to which they originally attached.

'Entitlements' as they are coyly called, are one of the best - that is, the cheapest, highest yielding - financial assets currently on the market. The present yield - the annual payback relative to the initial cost - is hovering at 70%. This compares to a yield on UK government bonds of around 4.5%.

There's your pension problem solved! Snap up entitlements! Eurogenius!