Its my View

my view on life and politics, nothing more than that!

Archive for October, 2008

Taxes might have to rise!

Posted by michael on October 31, 2008

 

The front page of the Independent newspaper carries a report of a speech by the Chancellor, in which he indicated that ‘taxes might have to rise if the economic downturn is prolonged’.

Alistair Darling warned that Government revenue has collapsed because of the recession. He said that ministers would attempt to stimulate the economy by accelerating spending projects even if it meant a sharp increase in Government borrowing.

The Independent Thursday, 30 October 2008. Report by Nigel Morris, Deputy Political Editor

http://www.independent.co.uk/news/uk/politics/darling-tax-may-rise-in-downturn-978540.html

Mr Darling said that people should be in no doubt that the Government will take the necessary decisions.

It will be interesting to see the public reaction to any attempt to raise taxes at this time. Especially if the tax increases are seen to be necessary because of the greed of the Financial sector and the lack of controls by the government in power to curb these excesses.

Putting it bluntly: the Financial sector caused these problems and the goverment has allowed it to happen – so why do I have to pay higher taxes to bail them both out?

We are already one of the most taxed nations in the world. People are struggling to pay the bills. The ‘credit crunch’ is affecting many people.  

No doubt there will be other tax increases required at the same time to allow for inflation and for other government projects. Unless of course the government shelve these other projects that they are planning to  implement!

I think that it will be political suicide for any government to raise taxes when they have been so closely linked to the problems that the UK is going through.

Posted in Blogroll, credit crunch, debt, financial, tax | Tagged: , , , , , , | Leave a Comment »

What is the UK debt at this time of crisis?

Posted by michael on October 29, 2008

The government is talking about borrowing to get us out of this recession. 

However I have seen various newspaper reports and heard people saying that we are borrowing too much. So what is the situation about the UK debt levels?

A report from the Centre for Policy Studies (described as a right leaning think tank) says that the Governments  bank bail out plan could mean that the UK owes £100,000 for each household. The total debt would be £2,350 billion, some 60% more than the UK’s annual Gross Domestic Product (GDP).

What the Centre for Policy Studies have done is to take the Government debt as consisting of:

  • Private Finance Initiative (PFI)
  • unfunded public sector pension liabilities
  • Network rail debt
  • the Bradford & Bingley nationalisation
  • £500 billion from the bank bail out

This brings the National debt to the totals mentioned above.

The PFI debt has concerned me for a while now. It is not clear to me exactly how much this debt actually is?This Government has used it to built new schools, new hospitals etc but it does not seem that we (the nation) has actually paid for them yet! These projects have been purchased by borrowing money from the private sector. We will be paying for these for many years to come!

Was the PFI method of improving the schools and hospitals a good move? It has certainly been good for the government, they can claim to have done so much to improve the UK.

A report from the Welsh Assembly (quoted below) shows a potential problem with the PFI debt (the spending on the schools and hospitals).  A building project with a £66 million cost will actually cost the tax payers £326 million, the interest charges over the years will make total project cost  FIVE times the amount spent to build the hospital.

On this basis the £200 billion PFI debt will cost the UK £1000 billion to clear these debts!

I know that some of these debts are due to be paid back, for example the B&B nationalisation and the bank bail out. So it is hard to get an actual UK debt value. But at this moment of  time this would seem to be a realistic figure of the UK debt, although the timespan over which it is to be repaid obviously stretches into the future.

I welcome comments (and corrections) but please don’t make political points. This is about debt levels.

A quote from a  report from the Welsh Assembly 

‘The Western Mail has used information that exists within the Assembly to demonstrate that the cost of the project will be far from the £66 million that we were advised of two weeks ago; the project will actually cost the taxpayer £326 million, which is nearly five times the amount spent on the capital scheme.’

Posted in Blogroll, debt, financial, tax | Tagged: , , , | Leave a Comment »

New benefits system – who does it target?

Posted by michael on October 27, 2008

A new benefits system making it tougher for sick and disabled people to claim benefits comes into force today.

There are about 2.6 million people who claim incapacity benefits. Of course this will include some who are abusing the system for their own benefit!

The government claims that most want to work and the Employment and Support Allowance should help them. It is pretty obvious that most sick and disabled people want to work but may are unable to work because of their condition. There are obviously some people who are abusing the system, that is what people do if they think that they can get something for themselves!

People who have mental or physical problems but who are not terminally ill nor severely disabled, could have their benefits cut if they refuse to attend interviews with jobs advisors.

I do hope that there is a process put in place which will help people to get to these interviews. Perhaps the advisors could visit some people in their homes. After all it does not seem to be acceptable to be too sick or disabled to actually attend an interview! It can be quite difficult and expensive for some people to attend these interviews, especially those who do not drive. People do need to get their travelling expenses paid!

Any new claimants will have to pass a tough new test intended to identify the sort of jobs that they may be able to do. In principle this is fine, but it does seem to me that this is totally the wrong time to establish what a sick or disabled person is able to do! The whole process of diagnosis and any initial treatment should be completed before a person attends an interview with job advisors. 

What I find sad is that there is no allowance for part time work in the system, it is full-time or nothing. There is far more scope in getting disabled people in part time work with flexible hours. 

The government must take into account that commuting to a work place is one of the barriers that most sick and disabled people have to overcome! The effort of commuting may well be too much for many ill people and the costs of commuting may be excessive. A disabled person may need to go to work in a car, but cannot afford a car and may not be able to drive themselves.

My view at this moment of time is that this is a political game being played by the government! They want to look tough to the electorate and are targeting the sick and disabled and talking about ‘scroungers’ and ‘work shy’ people. This is not about saving money, it will cost more to get disabled and sick people into work and to keep them working. But it will change the budgets that the money comes from!

A measure of any society is how they care for their sick and injured members. This whole process will only work if significant amounts of money are available to help people to work and to keep them at work.

Posted in Blogroll, Uncategorized | Tagged: , , , | 1 Comment »

The ‘Credit Crunch’ and irresponsible bankers

Posted by michael on October 20, 2008

The credit crunch is now beginning to effect many people in form or another. It is the banks that seem to have been the cause of the current problems with their desperate greed to make as much profit as possible even if that meant abandoning prudent banking practices. 

Many people see the banks and this apparant greed to make bigger and bigger profits as the primary cause of the difficulties many people in the UK are going to have to deal with over the next few years! 

These difficulties must not be understated. They affect people’s lives and are capable of doing a lot of harm to many people and families.

Banks are withdrawing credit and refusing loan applications. Businesses that need to use ovedraft facilities are having them cancelled and this is causing jobs to be lost and businesses to fail.  

Banks that used to be happy to offer 125% mortgages only a few weeks ago are now demanding much larger deposits and big application fees before they will offer loans and mortgages.

People who are coming to the end of their fixed mortgage or loan rate are now being faced with huge increases in their monthly payments or are unable to sort out a new mortgage deal. People are subsequently having their houses repossessed although they have done nothing wrong! 

Surely the banks would be better off by continuing these fixed rates for another 12 months, rather than ending up with properties that cannot be sold and that have mortgage debts well over the value of the property in the current market.  

And in many cases it would cost social services (that is us the tax payers again!) much more to rehouse the families.

There seems to be something wrong with a banking system that fails to operate in a responsible manner and is then allowed to get their profits (and bonuses) back by increasing the charges to the ordinary people in the UK, many of whom were harmed by the irresponsible actions of the banks in the first place! 

I strongly believe that the banks should be heavily penalised in some way over the next ten years. This would possibly be done by limiting the profits to some agreed percentage and any excesses should be used to help those who have lost so much from the actions of greedy bankers over the last few years.

Posted in Blogroll, debt, financial, Uncategorized | Tagged: , , , | 1 Comment »

financial crisis

Posted by michael on October 17, 2008

Although this is not a political blog, it is blatently obvious that the government of the UK (and that would be any government of the UK) directly affects our daily lives. Our income, savings, investments, VAT, taxation, benefits, price of food, prices of everything really are directly linked to the policies of the government in power. 

It is obviously a political statement to say anything about the government in power. But criticising or praising the government in power should not always be seen as ‘party politics’, although that tends to be used to devalue any comments that the government do not like!

The ‘credit crunch’ is now well known to most people. And the government is now taking steps to try to minimise the effect on us. All the political parties support these moves.

But it is now becoming obvious that at least some of the current problems with the ‘credit crunch’  are the result of a failing of regulation of the financial sector by the government in power over the ten years that they have been in power.  

Many other countries in the world are having similar problems and their governments will also have to account to their people for what has happened.

The Prime Minister is presenting himself as someone who can save the UK from the difficulties that we are in. I hope that he can. But we shouldn’t be in this mess in the first place!

The consequences on many people’s lives will be difficult to manage.  Of course some people will do well out of this crisis. Many others will manage without any real difficulties. But most people will find life getting much tougher.

Financial pressures often puts pressure on family relationships. Unemployment and money difficulties harms relationships (men in particular feel that they have failed if they cannot provide for their families).

Paying the mortgage/rent becomes a priority.

The energy bills have to be paid (and these will cost most people significantly more this year). Life could become very difficult for many people if we have a severe winter.

Food bills also have to be paid. There is much more scope for  people to shop around to make the most of their budget. We are already seeing changes in shopping habits with people switching to the budget stores to save money. 

And then there are those whose homes have been repossessed and are thrown out on the streets. Whatever the cause of the repossesion (other than criminal fraud) I do not see the point in throwing a family out of a home if that house is to stand vacant for months or even years whilst the family have nowhere to live or are rehoused at the expense of the public!

Posted in Blogroll, financial | Tagged: , , , , | Leave a Comment »

 
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