Government signals biggest disaster ever for Britain’s roads – privatisation

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'A' road, 'B' road, Coalition, Conservative, council tax, Highways Agency, lobby, Michael Meacher, Mike Sivier, mikesivier, motorway, network, NHS, Patrick McLoughlin, private, privatisation, privatise, profit, road, road tax, secretary, strategic, Tories, Tory, transport, vehicle excise duty, Vox Political

Gridlock: Under Coalition plans for transport, motorways and major ‘A’ roads will be clear – but the roads YOU use will look like this.

The Highways Agency is to be privatised, according to new government plans for the biggest disaster in the history of motoring in the UK.

The agency was formed under the last full Tory government in 1994 and operates, maintains and improves (ha ha) the strategic road network – the motorways and major ‘A’ roads that take one-third of the nation’s traffic, in terms of mileage. These are your roads – you pay for them with your taxes. They do not belong to the Conservatives and selling them off is nothing less than the theft of national assets.

The change should signal an end to Vehicle Excise Duty, otherwise known as road tax – but there is no mention of this in the Coalition government’s press release, so it seems likely that the Tories in charge of this project are hoping to siphon your tax money into private hands as profit again, as was the aim with their NHS privatisation.

It may also signal the arrival of tolls on the major roads, creating a two-tier road system: The motorways and ‘A’ roads for rich people and wealthy corporations; the other roads for less wealthy private citizens and smaller firms. Of course the other roads, maintained by local councils, will go to wrack and ruin as they become more clogged with traffic and the surfaces are worn down.

The press release states that the “reforms” (ha ha) will be “tackling decades of underinvestment in roads” and will be “backed by legislation” to ensure “future governments cannot walk away from these commitments”. That’s a mistake – no government may be tied by the decisions of its predecessor and the Coalition knows this. If Labour gets in, it could reverse everything.

The Coalition wants to make the Highways Agency an attractive prize for private investors, which is why it is providing – out of your tax money – “additional funding of £500 million for electric vehicles and £12 billion for road maintenance and resurfacing”.

(Chris Davies: Think how many hospitals you could build for £12.5 billion… Oh, but no – this is money for rich people so you couldn’t possibly contemplate putting it to good use!)

In order to sweeten the deal for future shareholders, the press release says “motorways and trunk roads will get extra lanes, smoother, quieter surfaces, improved junctions and new sections in key areas under the plan published today (16 July 2013) by Transport Secretary Patrick McLoughlin”.

The £28 billion of total investment – £28 billion in a time of austerity that THEY have forced on US! Michael Meacher was right when he wrote “amazing how austerity is irrelevant when the government wants it to be” – includes “a trebling of funding for motorways and major A-roads… the biggest ever upgrade of the existing network.

“The focus will be on cutting congestion and minimising the environmental impact of roads, including an extra £500 million to make Britain a world leader in electric vehicle technology,” the press release says. The congestion will go onto the network of lesser ‘A’ roads, ‘B’ roads and the rest. Result: You will be late for work.

The release foolishly adds: “These measures complement record investment in rail” – an own-goal, considering the railways were sold off in the 1990s and cost the taxpayer more money now, in real terms, than we were paying for them then.

The government’s new command paper, ‘Action for roads’ details plans to turn the Highways Agency into a publicly-owned company with six-year funding certainty for capital projects and maintenance – underpinned by legislation “so future governments cannot walk away from these commitments”. This is impossible to guarantee. Why should a future government not simply repeal any such legislation?

“It is estimated that the reforms could save £600 million for the taxpayer.” Which taxpayer? The taxpayer having to pay road tax for improvements to routes s/he can no longer afford to use? The taxpayer having to use increasingly run-down minor roads to get about and having to pay more in Council Tax for repairs? The taxpayer in danger of losing their job because of lateness caused by increased congestion on those minor roads? Or the taxpayer who just had a £100,000 tax cut on their more-than-£1 million-a-year earnings?

You’d have to be really stupid to say this was a good idea.

“Today’s changes will bring an end to the short-term thinking that has blighted investment in England’s roads so that we can deliver the infrastructure our economy needs. Backed by the government’s £28 billion commitment, they will give us a road network fit for the 21st century and beyond,” said Mr McLoughlin.

“Our major roads are vital to the prosperity of our nation, connecting people to jobs and businesses to markets. They carry a third of all traffic and two thirds of all freight traffic but in recent decades we have failed to invest properly in them.

“That underinvestment has seen us fall behind many of our economic competitors. Since 1990, France has built more motorway miles than exist on our entire network, while Canada, Japan and Australia all spend four times more on their roads than we do.”

All of this reminds me very much of Ben Elton’s novel, Gridlock. Do you remember it? Here’s the reason, quoted from The Politics of Mobility: Transport, the Environment, and Public Policy by Geoff Vigar, page 175:

“The Minister of Transport, Digby Parkhurst, is portrayed as being in the pocket of the roads lobby, and a mythical ‘Global Motors Corporation’ in particular. This fictional association reflects a general view amongst many outside the transport policy world that the roads lobby has a relationship with central government transport officials that borders on the classic corporatist ‘iron triangles’ to be found in policy-making in the United States. This view is supported by various accounts of UK transport planning in the 1970s and 1980s where the activities of a roads lobby are held to be a critical factor in explaining transport policy (Hamer, 1987; Tyme, 1978; Wardroper, 1981).”

It seems, with the Tories back in power, those bad old days are back.

The Department for Transport intends to consult on these proposals in autumn 2013. For your own good, oppose them.

Osborne’s cuckooland claims could leave a terrifying legacy

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austerity, Balls, borrowing, contraction, cuts, debt, deficit, economy, Ed, education, fuel, George, Gideon, infrastructure, investment, Mike Sivier, mikesivier, Miliband, Osborne, payment, pensioner, rail, recovery, road, science, UK, Vox Political, winter

‘Jeffrey’ Osborne sings for his supper at some CBI dinner.

Try not to choke on your coffee: George Osborne reckons the British economy is “out of intensive care”.

Now, he says, the task is to “secure the recovery”.

He’s starting on Wednesday with cuts totalling £11.5 billion which, once fiscal multipliers are taken into account, means a contraction of around £20 billion in the national economy.

Securing the recovery. Good luck with that, Gideon.

The good news is that he is expected to announce investment in infrastructure projects, including roads, railways, education and science. He has realised – probably too late – that cutting all those infrastructure projects at the start of this Parliament was economic suicide and is trying to do something about it before everyone realises he’s an idiot. He is, of course, much too late for that but the investment – if it goes to well-advised places – might just do some good.

Don’t bank on it, though.

Osborne’s claims about the economy are based on statements that government borrowing has come down and employment is up – but we know that the first isn’t true and the second is not helping. In other words, he’s built his castle in the sand.

Government borrowing rose by £300 million in 2012-13, from £118.5 billion to £118.8 billion, according to the Office for National Statistics. That’s not a huge amount, you may think, but remember this government reckons it has cut borrowing by a third since taking power. That would put borrowing at around £100 billion right now, which is clearly inaccurate.

The debt is now £1.9 trillion, up from 1.1 trillion a year ago – 75.2 per cent of GDP, up from 71.1 per cent.

We all know what the problem is: Austerity – the self-perpetuating (and self-defeating) policy that will eventually bankrupt us all (but not the country. Because we have our own currency, the UK is unlikely ever to go bankrupt. You see, when the Tories told you that, they were lying).

The worst of it is that the other main political parties have signed up to the delusion that all these cuts might actually do some good.

Ed Miliband has ruled out more borrowing. That in itself is not a bad idea. But Ed Balls has admitted that he would follow Tory spending plans, at least for the first year of a Labour government, and there’s a consensus that pensioners will probably be the next defenceless social group to be hit with cuts – this time to benefits such as winter fuel payments.

They are talking among themselves. It seems unlikely that any of them has bothered to look out of the window to find out the real effect of their idiot schemes.

And so the agony continues. Based on an economic fallacy, perpetuated on the masses, while the very rich continue raking it in.

The longer this goes on, the greater the danger to us all.

A few simple ideas to save the UK economy (Part One)

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avoidance, business, Coalition, council, Customs, economy, empty property, evasion, haven, hm, hmrc, income, limited liability partnership, Mike Sivier, mikesivier, national insurance, Revenue, road, small, tax, Treasury, unemployment, Vox Political, Workfare

Tax: Nobody likes paying it but progressive tax reform could be one of the fastest ways to rebalance the UK budget.

It seems I have been challenged. Commenting on my post ‘Iain Duncan Smith – what went wrong?’, a correspondent calling himself ‘Brian’ suggested I should use “a little grey matter and suggest where to cut instead”.

This is a question that has exercised my intelligence for much of the last two years, ever since it dawned on me that the current Conservative/Liberal Democrat coalition was not going to do anything at all to help the UK economy in real terms.

In fact we have seen them try to make it worse – look at Gideon George Osborne’s changes to tax laws, that make it easier for multinationals to put their profits into tax havens rather than pay the UK Treasury what it deserves; look at the way Workfare keeps unemployment artificially high; look at the proposals for a two-tier road tax system that will disproportionately affect small businesses.

In fairness, I haven’t updated my ideas over the 12 months since I have been writing the blog. What follows must stand as a document of what could have been done. I put together more than 20 ideas at the time. Some of them may be impractical now, due to the many and various incompetences of the current government. I will try to include the best.

This is looking like the first part of a series, as there is an amazing number of possibilities available. I’ll try to concentrate on just one issue at a time.

Here goes:

1. TAX

“What we need now is a deficit cutting policy aimed at increasing government income.

“There are three ways to achieve this. The first is for the government to stimulate a moribund economy by encouraging investment. This is the Keynesian solution that is proven to work. The second is to raise selective new taxes on those best able to pay them. This is possible. The third option is to tackle the tax gap.

“The tax gap has three parts. The first is tax avoidance. I estimate this to be about £25 billion a year. This arises from the exploitation of loopholes in UK tax law and between UK tax law and that of other states – especially tax havens. The second part is tax evasion – that is breaking the law. I estimate this to be £70 billion a year. H M Revenue & Customs claim it is much less, but their methodology for estimating anything but VAT evasion is very weak. Lastly, there is unpaid and late paid tax – currently according to H M Revenue & Customs at least £26 billion.

“Put these figures together and they come to more than £120 billion, or enough, at least in principle, to close the whole current government deficit.” – Richard Murphy, Director of Tax Research UK.

If we compare the estimate of the tax gap with the DWP estimate of benefit fraud, we can see that benefit fraud is less than 1 per cent of the total lost in the tax gap; tax is therefore far more important than welfare in the struggle to balance the UK budget book.

So the first measure must be to minimise personal and corporate tax avoidance by requiring tax havens to disclose information fully and changing the definition of ‘tax residence’; these two reforms are estimated minimally to yield £10 billion.

Introduce a 50 per cent Income Tax band for gross incomes above £100,000. This reform introduces a new 50 per cent band of Income Tax for taxable incomes above £94,000 per year (approximately £100,000 a year gross income). This would raise £4.7 billion compared with the 2009/10 tax system, or an extra £2.3 billion compared with introducing this band at £150,000 as proposed by the previous chancellor. (The Coalition has lowered the previously-existing 50 per cent band to 45 per cent, giving a £40,000 tax break to the richest in society when the UK economy needs the money far more than they do).

Introduce minimum tax rates. This reform introduces a lower limit to effective rates of Income Tax above certain levels of gross income. As gross income approaches each threshold, the personal allowance and other reliefs (for example, tax relief on pension contributions) are ‘clawed back’ at a high marginal rate until the average tax rate – as well as the marginal tax rate – on income above each threshold is equal to tax rates of 40 per cent and 50 per cent on incomes of above £100,000 and £150,000 respectively. Such a reform raises an additional £14.9 billion.

Introduce a special lower tax band of 10 per cent below the poverty line (below £13,500 per annum), while restoring the ‘basic rate’ to 22 per cent – in order not to hit the poorest hardest. This costs £11.5 billion, far less than the extra tax take outlined above.

Uncap National Insurance Contributions (NICs) so they are paid at 11 per cent all the way up the income scale (continuing to exempt pensioners). In 2009/10, employee NICs were payable at 11 per cent from £100 a week up to £884 per week – and at just 1 per cent above this level. Self-employed NICs have an equivalent structure based on annual profits, paid at 8 per cent up to profits of £43,875 and then at 1 per cent above this. Also, unearned income (for example, income from investments and savings) is not subject to NICs. This reform removes the upper threshold so that employee NICs are payable at 11 per cent on all earnings above £884 per week for employees and at 8 per cent on all profits above £5,715 per year for the self-employed. Additionally, all investment income above £110 per week (or the annualised equivalent) is made liable to NICs at 11 per cent. This results in further revenue of £9.1 billion; thus uncapping NICs would rake in a great deal of money. It would also turn NICs into a flat tax, making it ‘merely regressive’ rather than ‘über regressive’.

Increase the tax payable (higher multipliers) for houses in Council Tax bands E to H. This would raise a further £4.2 billion.

£5bn could be raised every year with an Empty Property Tax on vacant dwellings which exacerbate housing shortages and harm neighbourhoods.

Urge that all current small limited companies be re-registered as limited liability partnerships to simplify their administration and reduce opportunities for tax avoidance.

These measures alone are likely to bring at least £34 billion into the UK Treasury every year.

Tax and tax avoidance: Osborne’s attack on small businesses

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The Madness of George: Mr Osborne’s latest attack is on the smaller businesses and sole traders who prop up the UK’s economy. Does he understand nothing at all about his job?

It seems George Osborne wants to focus his next attack on the small businesses of the UK – the firms that form the vast majority of the nation’s business base.

Lunacy, you might say. Craziness. You may ask why he would want to do such a thing, and what evidence I have to suggest it.

Well, let’s start with the letters going out to 1,500 people suspected of taking part in a tax avoidance scheme – which is currently legal, although the BBC report suggests its legality will be challenged. These people are suspected of depriving the Treasury of £10 billion per year.

The National Audit Office said HM Revenue and Customs was dealing with a backlog of 41,000 cases of aggressive tax avoidance involving individuals and small companies.

That’s all very interesting. Why not write to the shareholders of the Thames, Anglian and Yorkshire Water companies, whose tax avoidance history received an airing in the press and on this blog very recently? The evidence suggested they were removing a combined total of £1 billion per year to tax havens offshore and, to me, it seems far simpler to write letters to three companies, and investigate them, than to 150 individuals.

Could it be because the water companies were exploiting tax loopholes that had been created especially for them, and other large businesses, by Mr Osborne himself in 2011?

Could it be that shareholders in those large concerns might also be donating money to the Conservative Party? Attacking them would be the political equivalent of self-harming, if that were the case.

So the focus of attack goes down to the smaller business or sole trader.

Were you aware that Mr Osborne is considering changing road tax rules, to introduce a new two-tier system?

It seems he wants to create a class system for the roads, in which second-class citizens will be licensed to use the smaller roads, while first-class citizens will be able to pay for the extra tax disc, entitling them to use the motorways.

I see that as an attack – on the private driver, yes, but also on the small businessperson. Think about it. Small businesses can spend a lot of time on the roads, zipping around between jobs. An extra expense on the balance sheet could be the difference between being a profitable concern and going under.

At a time when the UK is relying on small and start-up businesses to re-ignite the economy, this is nothing short of madness.

But then, when’s the last time anyone ever suggested George Osborne had sense?