Author Archive

Final mayoralty

April 30, 2008 Leave a comment

Diamond Geezer’s coverage of the mayoral race has been entirely on fire. The latest, possibly last, and definitely funniest summary of the campaign I’ve so far seen, is the London Mayoral Hustings 2012:

Paxman: Ahhhhh yes, transport. What are your priorities for the next four years?
Boris: Crossrail, yes, er, that’s something I’d really like to get a chance to finish. I know I still haven’t got the funding yet but, you know, the forms were jolly complicated and I didn’t quite fill them in properly. In the meantime, my cut-price petrol loan scheme has proved terribly successful, helping ordinary Londoners to fill their Landrovers more cheaply. So, cripes, it’s not all bad news.

and indeed:

Paxman: Some people were extremely surprised in 2009 when you started writing a twice-weekly column for the Evening Standard. How do you live with your conscience?
Ken: Look Jeremy, it’s very simple. When Andrew Gilligan left the paper to become the BBC’s ethics correspondent, the Standard suddenly had a vacancy for someone to write vicious spiteful copy attacking the Mayor. I was only too glad to step in

Categories: Bit of politics

More clarifications of the obvious

April 29, 2008 9 comments

If you think that Gordon Brown carried out a tax raid on pensions in 1997, which was the main cause of the end of final-salary pension schemes in the UK private sector, then you are wrong.

In 1997, the government did indeed abolish the tax relief on dividends paid by firms into pension funds. But on the same day it cut corporation tax by 2%, such that the final outcome of the legislation was revenue-neutral. Profits were taxed less in the first place, in exchange for which people lost the ability to get some of the tax money back if their shares were held as part of a pension fund rather than just as shares. The net effect on the income that flowed from the companies to the people was zero.

There were three real factors which led to the move away from final salary pension schemes in the UK – all of them are based on the fact that before 1997, the cost to a company of offering final salary schemes was understated:

1) Changes in life expectancy: average male life expectancy in the 1950s, when most final-salary schemes were created was 65; it’s now 80. This makes schemes that provide a defined benefit from age 65 onwards an order of magnitude more expensive than they were. Perhaps actuaries should have allowed for increasing life expectancy over time when calculating the costs of these schemes 20, 30 and 40 years ago – but they didn’t, and now it’s payback time.

2) Unwinding of contribution holidays: if you’re a plc, there’s an incentive during the good times, when your pension fund temporarily rises in value because stock markets are booming in general, to cut contributions as the pension fund is nominally overfunded. This is silly. Yes, if you’re a short-to-medium term investor, it’s rational to keep trading within the bubble – but if you’re investing for 30 years ahead, then you are grossly fiscally irresponsible if you base your required contributions on market fluctuations rather than, say, applying historical P/E ratios to your stock portfolio.

3) Introduction of FRS17: the accounting standard FRS17 forces companies to recognise pension fund deficits on their corporate balance sheets. Which is fair enough, as in the long run they’re ultimately accountable for them. However – especially as FRS17 forces mark-to-market on pension fund assets – companies are reluctant to show their financial statements swinging wildly each year based on an institution over which they have absolutely no control.

Overall, it does not make sense for an engineering company or an oil company or a retail company to take financial responsibility for an enormous pot of money (in the case of many companies, a pot of money larger than the market value of the company itself) on which its shareholders have no claim; nor is it especially sensible for an individual to base their retirement plans on the continued existence of an engineering company, oil company or retail company.

People who had private sector final salary schemes before 1997 have done very, very well because of the changes in life expectancy now compared with expectations when the schemes were set up. But this makes them the lucky beneficiaries of actuarial miscalculations. It does not mean the schemes as they existed in 1997 were sustainable, and it certainly doesn’t mean that Labour are evil pension thieves because the unsustainability of the final salary model became apparent on their watch…

Categories: Financial arcana

Reality check

April 29, 2008 Leave a comment

David Aaronovitch is one of the few Decent-ists that I like and respect. So it’s good to see him stating the obvious truths that more or less everyone (whether left or right) has forgotten as we descend in to a Cassandrine orgy of unwarranted gloom:

Taking modern Britain, for all that any country is beset by problems (lost discs, bingers, drug takers or Scottish Nationalists), the underlying facts were – are – that mortgages had become cheapo, unemployment was low, crime was, in general, falling, the economy was performing better than in most other similar countries and there were huge infrastructural improvements, as evidenced in new school buildings and hospitals.

Still true. Will remain true. And the rest is trivial…

Categories: Bit of politics

Just as well they didn’t have t’Internet back then

April 28, 2008 1 comment

As one ought, I’ve been looking up my ancestors (well, people with my not-especially-common surname) on the Proceedings of the Old Bailey 1674-1913 website.

There’s a disappointing lack of criminality among my lot. Only three Bands were prosecuted at the Old Bailey over the whole period, and one of them was acquitted, whereas we seem to have witnessed a whole load of stuff.

The baddest Band was Thomas Band, who nicked five kilos of brass from his boss in 1785, and got transported to Australia for seven years for his pains (which seems a bit harsh if you ask me, but then I’m a bleeding heart liberal…). But that clearly didn’t teach him much of a lesson – he was back in London by 1796 and nicked 13 wooden boards. This time he seems to have dragged his brother John into it as well, since the boards were nicked from John Band’s boss’s shop. But Tom maintained he was acting alone:

My brother has got a wife and five helpless children, he does not know any thing at all about it; for God’s sake, Gentlemen, if there is any guilt in the business let it fall upon me, and not destroy an innocent family.

The courts were unconvinced: Tom got six months; John got 12 months. Adding to the indignity, whoever wrote the sentencing report managed to get John’s last name wrong. This is annoying enough at the best of times (“did I pronounce it with an R? Did I spell it out with an R? No, I spelled it out Bee-Ay-Enn-Dee. Garrrrr”), but I imagine it’s even worse when someone’s just sent you to jail after your dodgy brother nicked your boss’s planks.

I suppose Tom was lucky that the courts’ record-keeping was poor back then: I can’t imagine the court would have been as comparatively lenient (the planks were worth three shillings, while the brass he’d been transported for first time round was only worth five) if they’d known he was a Magwitch-esque returned convict…

Categories: Fiends and flamily

Ready to face any challenge

April 28, 2008 Leave a comment

Diamond Geezer has an excellent piece on the sterling work that Boris Johnson has done in eradicating crime, misery, poverty, racial disharmony, etc from the town of Henley, and how useful this experience will be if he’s elected Mayor of London…

Would throbbing multicultural London (population seven and a half million) be a better place if it were more like genteel riverside Henley-on-Thames (population ten thousand)? So I headed upriver to Henley at the weekend to find out. And what do you know, I think Boris has it sorted.

A note to excitable lefties

April 25, 2008 1 comment
Categories: Bit of politics

Gun crime is getting worse

April 24, 2008 5 comments

No, not “more severe”, just “less effective”:

Firearms offences also increased, up 4% in the whole of 2007 to 9,967… however, gun deaths fell to 49, seven fewer than in the previous 12 months.

What’s wrong with kids today? I’m fairly sure that even when I was 15, I could have achieved a better-than-0.5% hit-rate…

Seriously though, it’s nice to see that crime is falling, both according to police records and to the generally-more-reliable British Crime Survey. Shame the mongers won’t pay a blind bit of attention…

Categories: Bit of politics

A lie has a good ending

April 19, 2008 1 comment

Today’s “this is what the Internet was invented for” site is the automatic random proverb generator.

Favourites it’s given me include:

Blood is thicker than the eye of the beholder.
He who lives by the sword shall die by a vacuum.
A little learning is money.

Quality stuff. From B3ta, obviously. As is this link: a gangsta rap album called Mail on Sunday. There’s got to be some scope for Middle England confusion there…

Quote of the day

April 18, 2008 8 comments

Can someone please explain on what basis I am supposed to care more about the plight of the white working classes than that of, say, Congolese people driven out of their homes by war?

(an oasis of sanity in a thread dominated by horrible bigots)

Sky in ‘not falling’ shock

April 15, 2008 13 comments

Here is a table showing projected growth in real GDP per capita [*] for 2007-08, according to IMF data released this month:

2007-08 2008-09 2009-10
Canada 0.0% 0.6% 2.0%
France 0.8% 0.7% 2.0%
Germany 1.5% 1.1% 1.9%
Italy -0.1% -0.1% 0.4%
Japan 1.4% 1.6% 1.8%
United Kingdom 1.3% 1.4% 2.1%
United States -0.5% -0.4% 1.9%

In other words, credible independent people who understand economic forecasting (note: not people who couldn’t tell GDP from a CDR but who think the PM is dour and boring and that therefore everything is going to the dogs) believe that the UK economy is unlikely to see recession, and is highly likely to outperform all of the G7 economies except for Japan over the next three years. Most other economic forecasters hold similar views, with a strong consensus that 2008 real UK economic growth will be 1-1.5%.

So why the hell is there such an insanely overhyped climate of doom going on, with people who shouldn’t really know better everywhere pontificating about how the government has ruined everything and left us all in a terrible position? Is it just that everyone who bothers going on about this kind of thing is a miserable get, whereas the people who think everything will probably be fine would sooner talk about Eurovision and football?

It’s partly due to misleading reporting, of course. Hands up who read this morning’s paper and came away with the take-out that UK retail sales fell when comparing March 2008 to March 2007? Wrong: they rose by 1.1%. The fall was in ‘like-for-like’ sales – i.e. new shops are opening faster than people are increasing their spending. That’s not great news if you’re a retailer, for sure – but it also for sure doesn’t mean that sales are falling…

[*] i.e. stripping out the effects of inflation, so you can’t whine about price rises, and done consistently on an international basis, so you can’t whine about CPI vs RPI. Oh, and please don’t slate the methodology the IMF uses to calculate GDP deflators, at least unless you have at least a master’s degree in a numerate discipline with some connection to economics.