Monday, 28 April 2008

10p tax rate - fixed??

Tonight we will vote on the Government's plans to scrap the 10p starting rate of income tax. But the parliamentary excitement seems to have drained away now that the 'Labour rebels' have been persuaded to behave themselves after being promised concessions by the Government.

The truth is however that the proposed 'compensation' package is full of holes, as will become apparent when we get to see the details in the Autumn.

The first problem is that the Government really doesn't want to spend a lot of money compensating losers. As a result, there has been talk of giving 'average' compensation, which means if you are one of the ones worst hit then you will still be out of pocket.

Second is the question of where the money comes from to pay for the compensation? Suppose, for example, that the Winter Fuel Payment goes up to help the 60-64 year-olds who lose out and who don't get the 'pensioner' (Ie over 65) tax allowance. The Government probably can't just pay this to the losers in this group, so it will have to pay it to everyone. This is hundreds of millions of pounds over and above the cost of simply compensating the losers. Assuming the Government didn't just have the cash 'lying around' presumably ultimately some other tax will eventually have to go up to find this money - thereby creating more losers!

Third is the issue of 'take-up'. Whilst take-up of the Winter Fuel Payment is pretty good (though less so among men aged 60-64) take-up of some of the tax credits is pretty poor. So putting extra cash via a complex system of tax credits may not get to many of the poorest losers.

Four is the idea of using the minimum wage. To provide full compensation for all losers would involve employers having to increase wage rates for significant numbers of workers - and to make up their loss will they put up prices (creating losers among their customers) or perhaps hold down other wage increases (creating losers among other workers).

In short, this is a bad policy creating a wide diversity of losers. Trying to compensate over 5 million people in a wide diversity of circumstances is likely to be very expensive, very complex, and involve spending money on people who didn't lose in the first place. Far better simply to scrap the ill-judged policy.

But for now the rebels are happy - they don't have to vote against their Government three days before key local elections. Whether they will be happy when they see how this problem is going to be 'solved' is another matter....

Thursday, 24 April 2008

Testing, testing

With my environment hat on I've been given a Honda Civic Hybrid to test drive, which has been an interesting experience so far. It's the first time I've ever driven a brand new car, and it's also the first time I've ever driven an automatic, so it's a bit hard not to be distracted by all of that.

But as regards the 'hybrid' bit, the idea is that it has both a petrol engine and a battery, so that when it is more economical (eg in stop-start urban settings) to do so it automatically switches over to the battery. I had (perhaps rather naively) imagined that you had to plug it in at night, but it turn out that the battery charges up as you go along, so you don't really notice it. It also does clever things like automatically cutting out the engine if you are idling, again without you really noticing.

I've heard some people say that if you look at the whole lifecycle of the product, including manufacture, likely limited operating life, and disposal, then it may not be quite as green as it seems, but it certainly scores well on the 'gee whizz' front!

Wednesday, 23 April 2008

Queuing up to hear me???

Last night I took part in a Friends of the Earth / Stop Climate Chaos rally at the Friends' Meeting House at Euston, along with Secretary of State Hilary Benn, Tory spokesman Peter Ainsworth and FoE boss Tony Juniper. I was slightly startled on arriving at the venue last night to find the queue snaking down the Euston Road! I can't recall ever speaking at an event where people were queuing up to hear me before - though I suspect that the presence of the Secretary of State may have had something to do with it!

The event itself was very worthwhile. Tony Juniper set out the key concerns of FoE about the Climate Change Bill. Hilary Benn said the Bill was itself a triumph for 'people power' and was the first of its kind anywhere in the world. Peter Ainsworth ran through the changes that the Tories and Lib Dems had managed to achieve together on the Bill in the House of Lords. I then set out the Lib Dem position, where we want to beef up the Bill considerably, including trying again to get the CO2 cut target up to 80%.

I've spoken at a few of these events now, and unless you listen very carefully you could be forgiven for thinking that we all basically agree. But the reality is that whilst the environment spokespeople of the parties can say 'green things' to 'green groups', none of it has any credibility unless their party takes these things to its heart. I pointed out that whilst the Tory environment spokesman is, I am sure, sincere, the rest of his party is much more flaky on things like nuclear power and anything to do with economic development (eg airport expansion). Likewise, DEFRA may do its best, but it is a tiny department whose green agenda gets trampled on by the Ministry of Transport (cf Heathrow expansion), BERR (cf new coal-fired power stations), DCLG (eg housing insulation standards) and most of all the Treasury (cf the lack of a truly 'green' tax agenda). Only if environmentalism runs through the heart of a party - as it does with the Lib Dems - can you be confident that what the environment spokesman tells environmentalists is actually what the party would do in Government.

Thursday, 17 April 2008

Being ripped off

A very worthwhile report by the Office of Fair Trading has found that the public sector has been repeatedly ripped off by construction companies competing for (or rather 'failing to compete' for) big contracts for new schools and hospitals. It turns out - surprise surprise - that the companies have been getting together and agreeing that some would put in 'cover bids' - ie implausibly large bids - to make others look more attractive and also to allow others to inflate their bids and still get the contract. After the event the people who put in the cover bids got cash payouts. Sounds like good old fashioned corruption to me.

One of the companies named by the OFT is Carillion who are one of the two shortlisted bidders for the new North Bristol 'super-hospital' at Southmead. So can we now be confident that they got on the shortlist through a fair competitive process? I'll be asking the OFT to have a look at this one. I don't agree with PFI financing of hospitals in any case, but if we are going to get ripped off then it compounds the problem.

It also occurs to me that this is actually not a huge surprise. Adam Smith famously wrote over 200 years ago:

""People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices".

Not often Steve Webb quotes Adam Smith, but on this occasion he was spot on - shame no-one appears to have learned the lesson.

UPDATE: Carillion HQ have been in touch (!) to say that the company that the OFT criticised was Carillion JM (formerly known as Mowlem) who they bought in 2006; they say that there has been no suggestion of misdemeanours since the company was under Carillion control; I'm happy to acknowledge this; however, I remain of the view that the whole process is so secretive and there are so few people who can bid for a contract like this, it is asking for collusion, so I will still ask the OFT if there are any grounds for concern.

Friday, 4 April 2008


Some of my time is spent dealing with the great issues of the day - human rights, climate change, global terrorism - but occasionally you get a 'result' on something a bit closer to home!

In my local area there are three main league football teams who are followed by local residents - Bristol City, Bristol Rovers and Yeovil Town. In the past the custom of BBC Radio Bristol has been to cover the away matches of each of these teams for fans who could not travel to the matches. Where two of the teams were away together the station was able to split between its Bristol and Somerset frequencies and cover both matches.

However, in early February Radio Bristol created a storm by covering only a Yeovil away game and not the Bristol Rovers away game which happened at the same time, presumably as a cost-saving measure. I subsequently received several angry e-mails and letters from fans and took the issue up with the Director-General of the BBC.

I am pleased to say that he has now responded by saying that "...BBC Radio Bristol has now confirmed that it will provide live coverage of the away games of all three teams in the region, until the end of the current football season". I am sure that this result will be well received by fans of all three clubs in the area!