If it ain't working, fix it

In the real world, if something doesn't work it is abandoned. It might have seemed a good idea at the time and its intended outcome might have been a great boon to mankind and to fluffy bunnies, but if it doesn't work it doesn't work so we say "nice try, bad luck" and we move on. Abandoning an unsuccessful experiment can be very expensive for those engaged in the project. History is littered with many thousands if not millions of "greatest inventions since sliced bread" that never got anywhere near the toaster let alone were buttered and consumed. Countless inventors and investors have lost every penny pursuing an idea which either failed to meet its potential or failed to find a market. Because that's what real life is like - someone has an idea, it seems like a good idea so it is tried. If it seems like a really good idea initial failure might justify further attempts. Always, sustained failure results in abandonment. The money required to continue the experiment can no longer be justified so the tap is turned off.

This illustrates one of the many fine qualities of money. Money allows us to measure success or failure of every commercial project. We can tell from a profit-and-loss account whether it has been a financial success to date, if it hasn't yet made a profit we can tell by the level of loss incurred whether it has a decent prospect of becoming profitable within a reasonable time. Money not only allows us to measure how successful a commercial enterprise is, it also provides a means by which we can assess whether a commercially unsuccessful venture should be continued (through private or public subsidy) because it provides a benefit that is perceived to be affordable. For example, a local council might operate a swimming pool and choose to spend up to £100,000 of taxpayers' money subsidising it each year; once running costs exceed entry fees by more than £100,000 questions will be asked about whether it should stay open. The mere fact that the swimming pool has been built and provides a benefit can never justify limitless spending on it. Some would say no such subsidies should ever be given, others might argue that £200,000 is the correct maximum figure, but whether a subsidy is given and if so how much it should be are decisions taken with an eye to money - the universal means of measurement.

Some areas of government expenditure cannot easily be assessed in monetary terms. The armed forces, the police, prisons and the fire service can only be effective if they have a certain number of front-line personnel and the equipment necessary for them to do their work. The level of necessary service determines how much must be spent, it is not possible to say "we can afford half a billion for the police and that's that". Of course countless arguments can be had over what level of service is appropriate, how it should be organised to get best value for money and whether there is a sensible role for the private sector, but at heart these services must be funded according to need (however you wish to define that) and cannot or should not be limited by purely financial considerations. The central point about these services is that they are protective services, they exist to prevent trouble and to protect us when trouble brews.

Other so-called public services are not protective in nature, they are intended to provide a positive benefit rather than to protect us from a threat. Health, education, refuse collection, laying and maintaining roads, providing street lighting and many other things are essentially commercial activities being carried out by one arm of the State or another. Some of them are usually provided by private sector businesses but paid for from taxation, road maintenance and refuse collection being perhaps the most widespread examples of this.

Not so long ago refuse collection was manged by local authorities and performed by people employed directly by them. In many areas the task has now been contracted-out to private businesses who are paid less than it cost the local council to run it's own service and are subject to a contract requiring them to provide a service at least as good as the one they replaced. As far as I am aware, no council has chosen to revert to the old system once a contract with a private provider has expired. No doubt one reason for this is that a council would incur a substantial cost in buying or hiring the necessary lorries and installing managers on its payroll but the more compelling reason is that the work is a service which is best left to the private sector because only that sector is subject to market pressures to keep its costs as low as possible, not least because they do not have to battle against the monopoly public-sector unions. The provision of refuse services is a normal commercial exercise. Local authorities specify the service they require, price is a matter for negotiation and the result is a binding contract. There is an important public health element to the work but so there is in the supply of all sorts of goods and services, appropriate contractual terms and general legal obligations on suppliers ensure (insofar as you ever can) that health is not adversely affected by the identity of the supplier.

The effectiveness of private-sector delivery of services such as refuse collection can be measured by money. Once the standard of required service is defined it is a matter for competitive tender who can give the purchaser (the council) the best price. That these tenders will be pitched at a level that allows the supplier a profit does not mean that the state sector could provide the same service at a lower cost in particular because working practices in the state sector are not subject to the same constant pressure to be efficient as the private sector because the provider is also in charge of paying the bills.

When it comes to health and education is there any reason to believe the private sector will provide an inferior service? After all, non-state schools and hospitals have to provide what their customers want or they lose business. MRSA infections don't happen in private hospitals because a single occurrence could cost the business millions in lost custom. Indiscipline and a failure to teach to a high standard can have the same effect in private schools, so it just doesn't happen. It doesn't happen because the system is designed to deliver a service not to deliver a political agenda.

The NHS doesn't work. It doesn't do what it was set up to do. Part of the problem is that it is not operated as it was intended by its founders to be operated. The original idea was for it to be a universal health service funded by insurance but operated as the best private hospitals and general practices were operated. Instead it has become a perpetual opinion poll, fiddled with by government after government with at least as much of an eye to political advantage as providing a service. There is now about twice as much money in real terms being pumped into the top of the NHS as twelve years ago. It hasn't resulted in twice as good a service at the bottom, despite the efforts of the vast majority of doctors and nurses to do their very best by every patient. The NHS is the largest single employer in the western world and it has the highest rates of hospital acquired infections of any developed country. It simply isn't working.

State schools don't work. They don't do what they were set up to do. Levels of general numeracy and literacy at age sixteen are pitiful. Far too many bright children are not stretched as they should be to develop their analytical powers. Universities have to hold remedial classes for those who have splendid examination results on paper but struggle in real life to construct a sentence. It simply isn't working.

Why have these failed institutions not been farmed-out to the private sector which has a long record of providing a better service for a lower cost? No doubt part of the reason is the desire of politicians to use health and education as measures of the success of their time in government. If they had any sense they would realise they are onto a hiding for nothing in the long term. A system that cannot deliver, cannot deliver. You can fiddle with it to your heart's content but it still won't deliver. You can boast of so many more billions being spent on the NHS or school and, as we have seen, you can win elections, but a system that cannot deliver, cannot deliver.

The central problem is that additional money is pumped in at the top rather than the bottom. Pumping in extra money at the top means, in the mind of government, that there must be additional oversight of how the bit that gets down to the coal face is spent. Ah, but there's more, you can't just pump money in and distribute it to everyone, you have to choose where it goes. That requires committees. Extra committees to deal with the extra money. And if more is getting down to a region the region will need an extra manager or ten to supervise it, and every hospital will need an extra manager or five to report back on how it is being spent. The whole system doesn't work. It's almost as far as it could be from Beveridge's idea of a private system funded by public insurance.

In the real world a system that doesn't work must be replaced, root and branch if necessary. We are seeing at the moment how the public have a taste for radical change where systemic inefficiency, waste and corruption are to be avoided. Today it is MPs' expenses and allowances, this is the perfect time to widen the debate and expose systemic inefficiency in the state delivery of services. Strike while the iron is hot and tomorrow we can spend less and receive more.

A full tummy and a smile

For those of us currently living off our savings treats have to be rationed these days as the returns from main-stream investments tend to be negative, it makes treats even more of a treat than they used to be and causes us to be more discerning in our choice. Being a plump boy, my treats tend to involve food, and at the moment they alternate between Indian and Thai. Saturday was a Thai evening.

Within walking distance of FatBigot Towers there are three Thai restaurants, all of which have experienced my custom at some time but these days I only go to one of them. One of the others is an extraordinary place. I only went there once although I go past it frequently and it never seems to have any customers. My single visit provided me with the worst meal I have ever had the misfortune to pay for, an overcooked starter and bland but decidedly unpleasant main course. It was reasonably cheap by the general way of these things but grossly overpriced for what it was. Never will I darken their door again.

The second is relatively new and quite nicely appointed, I have been there three times. Their food is good but they have a skeleton staff and delays are not unusual. They are noticeably more expensive than the one on my blacklist and a little cheaper than the third. The third is in a different league. It is the most expensive of the three, although not by much, large and extremely well presented with a magnificently stocked bar and waiters and waitresses constantly buzzing about in the background. To my taste the food at the second is marginally better than at the third, yet the third is my establishment of choice in these straightened times.

If a business wants my money it has to pry it from my grasping hand by providing something I really like. The food doesn't have to be spectacular, the wine doesn't have to be fine but the overall experience has to be enjoyable and for me that means clean premises, unobtrusive yet attentive service, no more than one "how is your food?" per course and an overall air of friendliness. It was interesting walking to the restaurant at around 7.30 on Saturday evening. On the way I passed at least a dozen eateries and only two of them were busy, an independent pizza place and the excellent curry house at which I was assailed some weeks ago by the world's most ignorant person (see here). All the others had fewer than a quarter of their tables occupied, including my second-choice Thai establishment.

Walking in a different direction from FatBigot Towers takes me to my favourite local curry house, on that route I pass five or six restaurants including quite a new one also serving Indian food. I ate there a couple of weeks ago and the food was exceptionally good, however I was treated as an inconvenience by the snotty staff. That is perhaps only to be expected by a scruffy, aged, fat alcoholic who decides to impose his shambling self on high-quality premises; yet others welcome me to their business and smile sweetly as I hand-over cash at the end of the evening.

I know who is going to get my cash, it's the place that makes me feel welcome and gives the impression they have enjoyed having me there at least as much as I have enjoyed being their guest. They might be lying. They might want to get rid of me in case other potential customers are put-off by the rancid old man in the corner who looks as though he smells of stale urine, yet they smile through gritted teeth and realise that one scrofulous customer spending real money is worth more to them than any number who might visit but have not done so.

Next Saturday it will be curry again at my usual haunt and I am sure I will leave with a broad grin and a feeling of deep satisfaction with the product I have paid for.

Is it time to flatten the black economy?

We now have confirmation that the Chancellor of the Exchequer is just guessing what he should do, he has admitted that his decision to increase the top rate of income tax from 40% to 50% was not based on any evidence or analysis but was a personal judgment.

As the Director of the Adam Smith Institute, Eamonn Butler, points out in an article in The Times today, increasing rates of income tax, particularly at the higher bands, does not increase the overall tax take. It's all pretty obvious really. The more you have to pay in tax the more cost-effective it is to pay an accountant to keep your bill to the absolute minimum and the more fastidious your accountant must be to keep you happy. Equally, if earning above a certain level will result in you having to pay a rate of income tax you consider to be excessive you might well choose to keep your earnings below that level. Or you could just move to Papua New Guinea and be done with it. On the other hand, being liable to income tax at a rate you consider fair reduces your incentive to find ways of reducing your tax bill. Not only does the cost of hiring an accountant form a greater proportion of your tax liability, such that he has to find substantial savings to justify his fee, but there is simply less inclination to do so if you feel you are being asked to pay a fair amount.

I rather like the idea of income tax being set at a level which provides very little incentive for avoidance. It's not that I want to put accountants out of business, although I am happy to allow them more time to formulate their proposals for Land Value Tax. Reducing tax avoidance is something of an empty concept. By definition, tax avoidance involves careful examination of the tax laws so as to ensure you take advantage of ways in which those laws allow you to reduce your liability to tax below what it might otherwise be. Everyone who lawfully claims an expense against tax is engaged in tax avoidance. Say you have a gross income of £20,000 and you spent £15 on travel from one place of employment to another, a taxi from one of your employer's offices to another because you were needed at the other office. You can put that expense against tax and reduce your taxable income by £15. You don't have to make the claim, you can pay the extra tax if you want to, but the law allows you to set that expense against your income so that you are taxed on a smaller total sum. There is absolutely no difference between the shy paper-pusher who reduces his tax bill in this way and the brash multi-millionaire who sets up complex trusts or has money paid to an overseas management firm rather than to his bank account in the UK. Each is doing exactly as the law allow him to do - he is arranging his affairs within the law so as to reduce his liability to UK income tax. It should not be forgotten, however, that those who engage in tax avoidance are complying with the law, not breaking it.

Changing the law so that various forms of avoidance are no longer available is aimed only at those who comply with the law. Very often such changes merely make available new means of avoidance because closing one "loophole" opens another, the risk they run is to be too effective and encourage those who previously complied with the law to operate outside it.

The "black" economy is, in my view, the real black hole in the UK government's income stream. It is anyone's guess how big it is. Some parts of it, like organised crime, are so far outside the law that there is no reasonable prospect of them being brought into the tax net, but I believe an awful lot is a direct consequence of tax and national insurance being at the rates they are at the moment. The headline standard rate of income tax of 20% doesn't sound too bad, but employees pay national insurance on top at 11% and employers have to chip-in a further 12.8% on all but the first £110 a week. A base weekly wage of £400 will cost an employer more than £430 yet the employee will receive in the region of £300. Pay half the wage in cash, half through the books and both employee and employer benefit, the employer's weekly outgoing is reduced by around £19 and the employee's take-home pays rises by around £65.

There are two further incentives for employers operating small businesses to keep a proportion of their turnover off the books. The first is to ensure that they personally only pay income tax at 20% rather than 40%. Declare a taxable income above £37,400 in the current financial year and you retain only 60 pence for every pound above that figure whereas you keep 80 pence in the pound below £37,400. Having said that, I suspect many of those who under-declare their income are more interested in finding a figure that will not leave them open to enquiry rather than just avoiding the top rate of tax and so will declare around £25,000 or £30,000 rather than being too cute and running right up to the limit. Nonetheless, they will steer well clear of the 40% tax band.

The other factor is VAT. A turnover of £67,000 triggers the need to register for VAT and, therefore, to charge VAT (currently 15%) to all your customers. The £67,000 threshold is on turnover not profit. I was speaking just the other day to a neighbour who is having a new kitchen installed. She engaged the services of a specialist kitchen fitter who is certified to do electrical and gas work, so that he can undertake all the work himself, but who is not registered for VAT. He advised her that he does not provide any materials, units or appliances because he needs to keep his turnover below the VAT threshold in order to be able to charge a competitive rate for his services. My neighbour chose and bought units and appliances herself and the fitter told her what additional materials he needed (including cables, copper pipes, solder, a gas canister for his blowtorch, tiles, grout, filler, paint and even tubes of silicone sealant) which he asked her to pay for (she paid him cash, he bought them, provided her with the receipts and, of course, gave her the change).

Not every tradesman has a customer willing to engage in this circuitous process. The others have to buy materials themselves and it doesn't take long before their turnover exceeds the magic figure and they have to put their prices up, thereby doing themselves out of business. Building materials, in particular, are quite staggeringly expensive. Their only practical option is to seek payment in cash so that they can buy materials in cash and pay their staff in cash, thereby keeping enough off the books to avoid having to charge VAT.

I believe the scale of this type of tax evasion to be enormous. It happens all over the country with tradesmen who fear that strict compliance with the law will make their services too expensive. As a consequence they not only jiggle figures to keep their overheads and prices down, they also see an opportunity to declare a lower personal income then they would be happy to declare if only they didn't feel the need to fiddle the system in the first place. Once they are fiddling to reduce staff costs and fiddling to keep prices down they have nothing to lose by also fiddling to keep a proportion of their own income away from the taxman. It is a cumulative process, each fiddle that is considered necessary to stay in business encourages a further fiddle to make additional profit.

I wonder what would happen if the first £15,000 of income were free of income tax and then a flat rate of 20% applied to everyone with no additional national insurance contributions. My guess is that a great part of the black economy would be brought onto the books because the incentive to work outside the system, with the risk of detection and penalties necessarily involved in doing so, would be cut drastically. I would also guess that the vast majority of those currently taxed at 40% and those who will be taxed at 50% when the new rate comes in (if it ever does) will readily pay 20% rather than spending money seeking to reduce their liability. Of course this is just a guess, but it accords with my idea of common sense.

There is no way of knowing what a radical change like this might do to the tax take, perhaps it will provide enough for the government to do the things it really needs to do, perhaps it won't; it's anyone's guess. What it will most certainly do, in my view, is trim the costs of collection enormously. Plenty will bleat about it being wrong that someone on £100,000 a year of taxable income should pay "the same" as someone on £10,000. This raises an aspect of so-called "progressive" taxation I have never really understood. The person taxed on £100,000 does not pay the same as the person on £10,000; under a flat-rate system at 20% the former pays £20,000 and the latter pays £2,000. My maths might not be particularly good, but I see a factor of ten differentiating these amounts.

To my mind there are only two arguments for "progressive" taxation. One is that the person on a lower income necessarily pays a higher proportion of his money on subsistence, so it is fair that the tax paid on the amount available for discretionary spending should rise. That is all very well when subsistence costs have to come out of income that is taxed. For the current financial year income tax is payable on earnings above £6,475. Assuming £15,000 to be subsistence level (as I have for the purposes of this piece), Mr Modest is required to earn over £17,000 just to reach subsistence level because he pays tax at the current rate of 20% on everything above £6,475, so to end up with £15,000 he must earn an additional £2,000-odd. Even if true subsistence level is £10,000 or £8,000 he is still paying tax on part of his income within the subsistence bracket. In that situation I can see that a modest up-lift for those earning comfortably more than subsistence can be justified. The other argument is essentially similar, it is that above subsistence level everything is an optional extra but some optional extras are a normal part of life in this country and others are real treats. In essence the argument is that true subsistence level is higher than the base costs of housing, heating, food and clothes. Actually there is a third argument, that people earning more are some sort of wicked parasite and should be punished; attractive though that might be to some I consider it to be mindless nonsense.

That is all very well, but the sensible answer is surely to lift the personal allowance to subsistence level and then concentrate on bringing everyone into the fold rather than providing incentives for some to escape. This is what lies behind the flat rates applied in some Eastern European countries after they shed the yoke of Soviet rule. The black economy was rife as was corruption by both municipal and tax authorities. A system had to be adopted which reduced incentives to operate outside it otherwise the well-established evasion techniques would just be adopted by even more people. Introducing flat rates at modest levels was a huge gamble because the new governments could only guess whether those operating outside the system would play ball. The result was that they did in sufficient numbers to make the new system work, both in terms of tax raised and in being easy and cheap to administer.

Britain's black economy is rarely addressed by our main political parties other than through bland assertions that they will clamp down on evasion. A few builders and car mechanics are caught each year and a few shops are monitored and discovered to be taking far more in cash than they declare. So what? Has it done anything to bring substantial sums onto the books and into the tax system? Of course not. There are some jobbing gardeners, builders and plumbers who issue formal tax receipts for everything they do, for every one of them there are dozens who ask for payment in cash and when pressed to issue a receipt give a document signed in the name Michael Mouse.

Enforcement against those operating outside the system is a fantastically expensive exercise which might or might not provide a return in excess of the costs. That, however, is the wrong way to look at it. It is not a trading enterprise in which the Revenue can be seen to be successful if it costs £100million to collect £101mlillion because it is not about the net £1million they collect, it is about the countless hundreds of millions that escape their attention completely. All that money is outside the tax system because the risk of being caught is small compared to the benefit of saving income tax and national insurance by doing things on the sly.

I have heard it argued that those operating in the black economy are such thoroughgoing rogues that they will evade tax no matter what. I find that impossible to accept. Of course some are, but the jobbing handyman or gardener who earns £400 in a week and declares £220 is just trying to earn a living wage and the builder who keeps his declared turnover below the VAT threshold is just trying to stay in business. These people are not major criminals, they work for every penny they receive. The effective cause of them fiddling their books is the current tax system under which they fear (rightly or wrongly) they could not make a living if they kept by the rules. Any system containing such an incentive is necessarily flawed.

It would take a bold government to make such a radical change. My guess is that it would pay off in spades.

Football can be very unappealing

I watched a ball kicking contest on the television yesterday between Manchester United and Arsenal. Having grown up in Sussex and being a long-standing resident of Highbury my support (such as it is) has always been directed at Manchester United. The game wasn't particularly entertaining because United were wholly dominant from first to last and Arsenal seemed to have neither the will nor the skill to fight back after conceding two early goals. Apparently another bunch of cheating thugs based in London was eliminated from the same tournament this evening and the final will pit United against Barcelona in three weeks' time. I'm not particularly interested in football, in fact I find it rather tiresome as a spectator sport and the behaviour of almost all the players is nothing less than organised cheating. To an extent it shouldn't really matter if the game is administered unfairly given that the players spend so much of their time trying to mislead the referee into awarding them free kicks and throw-ins, but something arising from yesterday's game really shocked me.

Towards the end of the match a Manchester United player was adjudged to have committed a foul and was sent off. He will not now be allowed to play in the final against Barcelona. Apparently there is no right of appeal no matter how incorrect the referee's decision might have been save in two very limited circumstances. The first is where there is a case of mistaken identity such that the referee has mistaken one coiffurred and tattooed millionaire ponce for another. The other is where the referee himself admits that he was in error. I find this a quite bizarre state of affairs.

For all its thuggishness, professional ball kicking is big business and the players have only a limited time playing at the very top level. The player who was sent off yesterday is Scottish so he will never play in any important international games, his chances to fulfill his potential are restricted to club football. Perhaps he will never again have the opportunity to play in the final of the European Cup. And so far as his team is concerned their chances of winning could be compromised by his absence, something not only of personal importance to the players and supporters but of huge financial significance to the business of the football club itself.

How can it possibly be right that there can be no appeal against a decision with far-reaching consequences? On looking into matters a little further I have discovered that in the English league system clubs can appeal against a player being sent-off but not against him being given a formal caution during a match (something I will always think of as a booking but which we must now call a yellow card). Yet an accumulation of yellow cards leads to suspension from future matches even if each referee issuing the caution was wrong to do so.

Not having a right of appeal against an incorrect decision strikes me as fundamentally wrong. Having said that, restricting rights of appeal has been a feature of the development of English civil litigation over the last twenty or so years. When I started in the law a disgruntled litigant had an automatic right to appeal against almost any decision. None but the most foolhardy would just appeal willy-nilly because an unsuccessful appeal could be very expensive, nevertheless the system acknowledged that decisions at the lowest rung of the judicial ladder are made by just one person who can get it wrong so there was an opportunity to, in effect, seek a second opinion. Rules set various tests that had to be met to overturn rulings in different types of case and from different ranks of judge resulting in some decisions being easier to change than others. The technical details don't matter, what was important was that the system recognised the fallibility of human judgment and that it can have a profound effect on real people.

There was then a major change about twenty years ago. A general requirement was introduced for obtaining permission from the court before you could appeal (there were some exceptional instances in which permission was not required but they were rare). And, somewhat strangely, you had to seek permission to appeal from the very judge who had ruled against you. This might sound like a recipe for embarrassment and in front of some judges it was because they took it as a personal insult. Fortunately they were few in number, but it was still a slightly uncomfortable thing to seek to persuade a judge he was wrong when the ink of his signature at the bottom of the judgment was not yet dry. Even if he or she refused permission to appeal you always had the right to ask the appellate court for permission. You might or might not have been correct in thinking that the first judge got something wrong but at least you had the chance to put your objection and if there appeared to be something substantial in your point you would be given the chance to make a formal appeal. This filtering system actually worked very well and I presume it still does.

The idea that you should have no way of challenging a plainly erroneous decision strikes me as absurd unless there are special reasons justifying that position. I can see, for example, that a right to appeal every decision for a free kick or throw-in by reference to television pictures might cause any sport to be delayed and stultified. Decisions about whether to award a penalty and whether the ball has crossed the line for a goal are in a different category because they can have a significant impact on the outcome of the game. Decisions leading to players being suspended from participation in future matches are even more serious. Maybe yesterday's referee was correct, maybe he was not. I don't know. But I can understand the argument voiced by the commentators at the time, and by many observers since, that he was completely wrong. For there be no way of raising that argument would be said by some to be a breach of the player's (and possibly the club's) human rights. I prefer to look at it as being unfair and, therefore, unacceptable without the political dimension of "human rights" being dragged into the matter.

This seems to be yet another example of a self-important transnational body (in this case UEFA) setting itself above the standards of decency and fair play by which we little people try to live. The UN does it and the EU does it so it is perhaps no surprise that other unaccountable bodies with access to virtually unlimited amounts of other people's money should do it as well.

A useful Act of Parliament

Here's a thought, all ideas for improvement welcome:

An Act to Confirm the Honesty of the Members of the House of Commons

Section 1:
(1) All property real and personal paid for by the Second Homes Allowance is and always has been owned by the Crown save to the extent, if any, to which any Member of the House of Commons has contributed to the purchase price.
(2) Any payment of interest on any loan taken out for the purpose of the acquisition of real property and secured on that real property shall be treated as contributions towards the purchase price of that property for the purposes of sub-section 1 of this Section.

Section 2:
(1) Upon a Member of the House of Commons ceasing to hold that position (whether by death, failure to secure re-election or in any other way):
(a) all personal property paid for, in whole or in part, by the Second Homes Allowance shall within 7 days of the Member ceasing to be a Member be surrendered physically to the Crown, and
(b) all real property paid for, in whole or in part, by the Second Homes Allowance shall within 21 days of the Member ceasing to be a Member be sold at public auction.
(2) The Member shall, on ceasing to be a Member, have the right within the periods specified under sub-section (1) of this Section to purchase all or any of the real or personal property purchased in whole or in part through his Second Home Allowance.
(3) For the avoidance of doubt the power contained in subsection (2) of this Section may be exercised by the personal representative of any Member whose demise causes sub-section (1) of this Section to operate or the personal representative of any Member who dies within the periods set out in sub-section (1) of this Section.
(4) In the event of a Member or the personal representative of a Member exercising the power contained the sub-section (2) of this Section, the price to be paid by him shall be determined by agreement between the Member or the personal representative of the Member, as the case may be, and such person as shall be nominated for that purpose by the Comptroller and Auditor General. In default of such agreement the real or personal property in issue shall be dealt with in accordance with sub-section (1) of this Section. Upon the Comptroller and Auditor certifying that additional time for negotiation is required the Speaker for the time being of the House of Commons may, at his absolute discretion, allow up to a further 28 days for agreement to be reached and sale to be completed.
(5) The price payable by any Member or personal representative of a Member in exercise of the power contained in sub-section (2) of this Section shall take into account such contribution, if any, made by the Member towards the purchase price.

Section 3:
(1) This Act shall apply to all Members of the House of Commons on the commencement date and shall apply to all real and personal property, whenever acquired, paid for through the Second Homes Allowance of all such Members whether such payment or any part thereof occurred before or after the commencement date.
(2) This Act is intended to ensure that the Second Homes Allowance does not allow Members to make a profit but to be reimbursed for out of pocket expenses and it must be construed to meet that intention.

Schedule
Commencement : as soon as possible.

How do you cut without cutting votes?

Hillaire Belloc identified an important influence on modern politics when writing about a boy being eaten alive by a lion (here). He ended the poem with the words "always keep a-hold of Nurse for fear of finding something worse". This sums up a widespread attitude to the State machine in Britain and presents one of the greatest difficulties to those who wish to take a sharp axe to both the scope and cost of big government.

Some aspects of the government operation, such as the use of expensive consultants, cause little difficulty because they don't involve the public directly and can be eliminated without any risk of losing votes. Perhaps more pertinently with an election due in the next year, such cuts can be announced without fear of alienating potential voters. The same can be said of numerous relatively small areas of spending which are essentially either purely bureaucratic or little more than ministerial navel gazing. The amounts spent are, I would expect, measured in the millions but are a tiny drop in the putrid pool of government debt. To make real inroads requires changes to the whole method by which the State operates. Current favourite topics in this field are education and health. The Conservatives are dipping their toes in the water with suggestions about changing the way these services are provided and are careful always to say that the amount spent at the point of delivery will not be reduced. I believe they face an uphill battle to persuade the voters.

Their greatest difficulty is the culture of reliance on the State to provide these services and much more besides. Say it was proposed to abolish all the national and local government jobs relating to "healthy" lifestyle so that we were not any longer paying for people to tell us what to eat and what not to eat, what to drink and what not to drink, how much and what type of exercise to take. I doubt that it would have any effect on health at all. Can there really be anyone who does not know that a balanced diet and reasonable exercise are generally good for their health and an unbalanced diet and sloth are generally not? That is quite an important question because whatever the answer it proves the case for getting rid of the naggers. If everyone knows, the jobs are not needed because everyone knows. If some people don't know, the jobs are not needed because they are not achieving what they aim to achieve despite every effort having been made to get the message across to everyone.

What would happen if the Conservatives proposed getting rid of all such jobs? It is a fair guess that there would be uproar on the BBC and the other more left-leaning media with allegations that the party doesn't care about peoples health. From there it will be suggested that this would be the first step to dismantling the NHS, no doubt the reasoning would be that a party that is happy to get rid of supposed preventative measures would be just as keen to dispense with treatment for those whose lifestyles lead to ill health. It's all a nonsense, of course, but the overarching nannying by all aspects of the state health regime has, I believe, led to a culture that the more the government does the better our health will be. Any attempt to remove part of the apparatus is portrayed as an attack on it all and, more worryingly, the argument seems to be accepted by a large number of those the Conservatives need to woo into the voting booth.

If the same issue is addressed in a different way the result should be different, but I wonder whether it would be. Instead of saying these jobs will be abolished, what if they ask people whether they benefit from the work done. Ask Mr & Mrs Ordinary whether they need someone to tell them what a "healthy" diet is and that exercise is good for them and the chances are they will think you are stark raving bonkers. Ask them whether other people need such advice and they might say they do. Ask them whether those other people are likely to follow the advice and I suspect the answer will be in the negative. If my assumptions about their answers are correct, they should support attempts to cull these worthless non-jobs, yet that does not necessarily follow.

Curious though it might be in an age when trust in politicians has never been lower, I believe there is still a general feeling of trust in the government's judgment about the range of so-called health services that are necessary. Once something has been added to the list it is presumed to be beneficial and so it is also presumed that its removal will be detrimental. Of course there is a logical flaw in that approach because a government that says something is not necessary is exercising the same judgment as its predecessor that said it was necessary, if government judgment were the crucial factor a change of judgment should lead to a change of public perception. So there must be a secondary factor at work causing expansion of government-led services to be considered wise judgment and contraction to be error. My view is that that secondary factor is the great myth that sustains the majority of State expenditure, namely that it must be beneficial because it is being done and if it is beneficial today it must also be beneficial tomorrow.

In essence we are seeing the precautionary principle in operation, in other words that we should do something just in case not doing it will make things worse. It is not just in relation to five-a-day counsellors and all the other modern naggers (without whom human life existed quite happily for millions of years) that this point arises. More generally in relation to the big expense areas of health, education and welfare, any attempt to change the method of delivery faces the same objection - "it might not work perfectly now but if they change it things might get worse". Ironically this attitude could be enhanced by the continual failure of increased State expenditure to deliver proportionate improvements in services - "they spend all this money and it only gets a bit better, it can only get worse by cutting the money".

I believe the general population has little if any idea of the convoluted spaghetti-heap of bureaucracy lying between Westminster and their local school or hospital. Layer-upon-layer of committees, quangoes and paper-pushers suck-up cash. Any attempt to save money by dispensing with these intermediaries can only satisfy the precautionary electorate if it is spelled out clearly and forthrightly where the savings will come from and why eliminating bureaucracy will not adversely affect the service delivered to the public. It is not an easy task. All exercises in persuasion have to battle against contrary arguments and the Labour Party paymasters in the public sector trade unions have very loud mouths and very deep pockets. That makes it all the more important for plans to change the structure of the NHS and State education to be detailed and fully thought-through, as well as fully costed.

At the moment Mr Cameron and his merry men are putting out feelers with a view to judging the mood. They might or might not want to take a hachet to the public sector as I do. Whatever their desired position, it cannot be achieved unless they win a general election with a working majority. Fighting against the force of the precautionary principle there is only so much they can propose and remain electable.

What do we vote for?

I received my voting card today, informing when and where I must go to vote for the forces of good in the forthcoming European Parliament elections. It got me thinking about something I find both interesting and amusing.

The very nature of our electoral system is that we cast our vote but there are no rules about what we should or should not take into consideration when deciding where to put our mark. There is a very obvious reason for this because we can decide on whatever grounds seem important to us, or on flippant grounds or on no grounds at all, we can vote tactically to prevent the election of someone we don't like even if the result is that someone we dislike a little less gets in, we can vote for a candidate knowing they have no chance whatsoever of being returned; it is a complete free-for-all. There can't be rules about it because there is no one to make such rules and no way of enforcing them.

One effect of free votes is that a particular candidate can succeed despite a clear majority not supporting any of his policies. If you need 15,000 votes to win and can attract 1,000 votes each from single issue fanatics on fifteen different issues, despite them not supporting anything you say on any of the other fourteen fanatical issues or any other issue, then you will be elected. Fair enough, although it's probably unlikely to happen. At least it's unlikely to happen in a general election where core issues tend to come to the fore, particularly if there is a realistic chance of a change of governing party. Nonetheless, it is inevitable that inconsistent reasons will lie behind the majority achieved by each successful candidate.

During every election campaign I can remember there have been debates on television and radio about what people think their vote is for. Some will argue that we should all vote for the candidate who will be the best representative for the constituents, others will argue that choice of party is more important and others still that a general election is really a vote for your preference as Prime Minister. People get quite unnecessarily heated about this when the reality is that each argument is valid to those who find it valid. If Mr Ordinary uses his vote for his party of choice and Mrs Ordinary for her preferred Prime Minister, each is equally in the right because it is a free choice to do what you want with your vote according to your personal judgment. In all but the most extraordinary of circumstances nutty and emotive issues are swamped by more general considerations, hence the changes of governing party in 1979 and 1997 and the fluctuating majorities held by those parties during their recent periods in office.

I still read suggestions that the current government is somehow illegitimate because it only polled 35.3% of votes cast at the last general election and each time I do I sigh and think of apples and oranges. They received 35.3% of votes cast under the current system of first-past-the-post constituency elections rather than proportional representation. Having won a majority of seats they are the legitimate government, no matter how much I dislike that fact. No one can say how many votes they would have received under any of the many versions of proportional representation nor what effect it would have had on seats won in the House of Commons.

I also read assertions that Gordon Brown is not the legitimate Prime Minister because he was not leader of his party when the last general election was won and Tony Blair said at the time that he intended to serve a full term in office. That assertion, too, is without substance. Under the system we have the leader for the time being of the majority party is invited to form a government, if he or she stands down and a new party leader emerges that new leader will be invited to form a government. You can't sensibly ignore one aspect of the whole process and claim that it removes legitimacy from someone appointed under the process that was in place at the time of the election. Poor Gordon is the legitimate Prime Minister, albeit a hopelessly incompetent holder of that office, just as he would have been had Tony Blair been run over by a bus a week after the election.

A highly visible aspect of voting decisions being affected by differing considerations is the way things happen in by-elections compared to general elections. The issues are different and having the spotlight on a single constituency allows attention to be brought to particular local and topical matters on which the incumbent government has a less than unblemished record. Innumerable examples exist of protest votes at by-elections resulting in the governing party losing the seat, only for it to be regained at the next general election - of course that doesn't always happen but historically safe seats for one party tend to revert to their usual holder.

European elections raise yet further issues. Support for the UK Independence Party soars far above its level at general elections because all three major parties seem keen on Belgian gravy being a fatty product whereas the people would prefer it to be weak and watery. In a way it is curious that elections to the European Parliament tend to revolve around our views of the EU and its institutions rather issues of policy because something like 80% of our laws now come from Europe. But then it is not really curious because any views on policy expressed by the electorate of one country out of twenty-seven are of no importance to the Brussels machine.

It will be interesting to see how far the vote swings against Labour at the upcoming Euro elections. There is little difference between the position of all three major parties on the EU so there is no reason to read a loss of votes for Labour as reflecting anything about their position on matters continental. Of course we can never know why people will vote as they will, but that won't stop the speculation, and jolly good fun it will be too.