Expect the unexpected

Before Christmas we discussed John Rawls’s idea of the ‘veil of ignorance’. He argued that social rules should be seen from the several points of view held by the different categories potentially affected. Apart from other advantages, it can be a valuable way of identifying what would otherwise be unintended consequences. As it happens, there is a flurry of recent examples – enough to make us wonder if the Government is particularly bad at thinking things through.

The first example is the ‘bedroom tax’. The intentions were excellent: why should some people get subsidised housing for properties too large for their needs, while other, larger, families cannot get adequate housing? The unintended consequence was that, since enough smaller accommodation was often not available, many had no realistic opportunity to size down. In effect their income was reduced without the opportunity to evade the loss. Another consequence was that society as a whole, including natural Tory voters, saw this as an injustice.

A further example was the proposal to remove tax credits before higher minimum rates of pay had been achieved. We all remember the unintended consequences of that. Did Tory headquarters ever think of the effect of that before announcing a policy which had, in the end – and after a lots of worry for the potentially affected – to be withdrawn?

A strong hike in stamp duty for more expensive properties would bring greatly increased revenue – and, by definition, the buyers had more than enough money to meet the bill. But did the Government realise that this tax would reduce the value of high end properties, and thus reduce the revenue? Did they understand that stamp duty revenue is a result of value multiplied by the number of transactions? Of course the market has slowed, and the rate of transactions at that level have dampened down. I don’t know the figures, but I suspect they may collect less revenue than before the hike – and certainly less than they expected.

Bright idea? Several entrepreneurial people decided to build up capital for the future – particularly for retirement – through investing in buy to let properties. So let’s reduce tax relief on their mortgages interest – it’s a goldmine! Unfortunately that catches all the people who made their calculations on the normal basis of full tax relief on business expenses. But since mortgages are long term they are stuck. Their original equations no longer work. Two problems here: first, at the next opportunity rents will be increased so it will be the tenants who pay the difference; second, potential entrepreneurs will know that we have a government which is not above making what are in effect retrospective changes when they spot an opportunity to grab revenue.

The latest little adventure is to increase stamp duty levels for second properties. Of course, if you can afford a second property, you can afford to pay extra for it. But the fact that two people who cohabit can own two properties in their two different names without this extra charge, while a married couple cannot, will discourage marriage – and will bring all the extra costs which ultimately arise because of the instability of cohabitation. It’s not long since I wrote an open letter to David Cameron on the social benefits of encouraging marriage. Although it was forwarded to him by my MP, I have received no reply. Had he read it, and thought about it, he might have paused before allowing yet another unintended consequence of a decision which gains revenue today at the expense of unaccountable social costs tomorrow.

I am often asked my opinion about Jeremy Corbyn. And I always reply that there are few things more damaging than a government, whether leaning left or right, which does not have a strong and credible opposition. So whatever Corbyn’s merits or demerits may be, his presence and his position, is a disaster.

About Quentin

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21 Responses to Expect the unexpected

  1. Barrie Machin says:

    A well produced chapter on how not to raise taxes but I fear that incompetence both in finances and PR is always on show 24/7 365 days a year.
    I was so incensed by the totally inept approach taken over the award of the multi billion pound nuclear power station contract to the Chinese on the same day that the closure of the steel works in the north that I wrote to my conservative MP to complain . You don’t have to be a technician to realise that the steel the Chinese will need will be their their own which will cost a fortune to ship from China. Imagine the feelings of the redundant steelworkers on the day if this joint announcement. I had a 2 page reply from some minion the the relevant department which was a prime example of ducking the issue using a smoke screen for an answer which has happened before.
    Perhaps we should look for competent parliamentary candidates not from the ranks of the party faithful but from tried and tested business men who can see the wood for the trees and apply business logic and that item so lacking in the government these days common sense.

    • John Candido says:

      Although I am writing from Australia, our two countries do have a similarity in our institutions and in our democratic system of government; enough of a similarity to apply what is happening in Australia regarding that most important matter of how our societies generate policy prescriptions. In fairness, I am sure that examples that happen in the UK or in other nation-states can fruitfully apply in Australia as well.

      The high road to proper policy generation in a democratic nation-state is through the cabinet process, the use of ‘white & ‘green’ papers for commentary together with the assistance of parliamentary committees and the strategic use of an independent and robust public service. Policies are more wisely generated when they are subjected to a multiplicity of voices discussing and debating propositions.

      These political ‘sieves’ should be used before any policy is made into bills. Even the use of ‘white’ & ‘green papers’ in contemporary democratic parliaments, seems to have little influence towards sensible policy generation.

      These processes are crucial to well-functioning democracies and can lower the risk of deliberately or inadvertently implementing poor policy prescriptions. I am assuming that most policies are generated on the basis of whatever constitutes unimpeachable scientific evidence of the day. The history of deft policies to help manage climate change is a topical point relevant to this discussion, especially in Australia.

      In this age of angst due to terrorism and economic uncertainty, the most crucial mechanism i.e. cabinet, has been compromised in Australia. This has partly been the fault of both major political parties through the politicisation of the public service, the making of political appointments (‘yes’ men & women), the 24 hour mass-media cycle, the power of the Prime Minister’s office and the use of focus polling by mainstream political parties. The long-term national interest suffers as a result of these factors.

      The public service was once an independent source of ‘fearless and frank advice’ to a minister or government of any political hue, based on years of experience in policy implementation and political/administrative skills cogent to their specialisation. We are all the poorer for the damage that has been done to the independence of the public service, the culling of public servants as a cost-cutting exercise, and the independence of the Public Service Board of Australia, which was an independent statutory authority governing the public service, at arm’s length from the government of the day.

      There are praiseworthy exceptions to the use of cabinet government. There is no doubt that the institution of ‘Letters to the Editor’ can sometimes generate an effective policy to a particular problem by one person or a group of people. Academic journals can also be an excellent source of ideas for future policies, whether they cover economic, defence, security, health, cultural, humanitarian or social issues, especially when their conclusions are an outcome of replicable research both locally and internationally.

      Political parties used to be a place of generating political ideas but have been gazumped by the sway of the Prime Minister’s office, alongside political parties never leaving election mode with their ‘professionalisation’ for winning elections at all costs.

      The dimming effect on our collective intelligence with the use of focus groups by political parties is tragic, and this practice should be banned. Just don’t ask me how this can be accomplished. Despite this, the traditional manner of scientifically-based policy generation that is in the long-term national interest, is all the poorer for not following cabinet based parliamentary methods in favour of sectional, political or pecuniary interests.


  2. Geordie says:

    Have our politicians always been muddle-headed incompetents or is this something new? I seem to remember that, although we may have had self-absorbed idiots in politics, there were some very astute men and women in all parties who rose to the surface when they were needed. The few good politicians seem to have been squeezed out by the self-seeking, egoistic incompetents. I can accept the self-seeking egotists provided they can do the job but even they don’t seem to exist in our present set-up.
    I’m not a Jeremy Corbyn supporter but I know what he stands for. I wish I could say the same for Cameron and his cronies.

  3. Vincent says:

    My son in law bought a property as an investment, He put it into the joint ownership of his three children. Now he finds that when they buy their own houses they will attract second property stamp duty. Around here that will be about £30,000 a head — so £90,000 in all. So much for trying to help one’s children!

    • Alan says:

      So your grandchildren will be buying first time properties for close to £1,000,000 each and they will not be selling their one third share in a second property that was bought for them before they do so?

      • Vincent says:

        You are of course quite right. Got my decimal point wrong. Sorry. However selling a one third share in a property owned by siblings would be rather complex — and of course involve stamp duty payments. I think Quentin’s point is that the extra charges are caused by changes which act in retrospect — not that they are necessarily unjust in themselves.

  4. St.Joseph says:

    Wishing a very Happy and healthy New Year Quentin and all on SS blog.

  5. Brendan says:

    I fear that bolstering ‘ traditional marriage ‘ does not come into the government thinking . Too many pledges have been broken before the last election. Quentin sets out a catalogue of poor judgments on finances with little respect for social consequences. There is a sense of panic in the governments trying a ‘ smash and grab ‘ policy from the relatively ‘ rich ‘ with little safety net for less fortunate ( surprise , surprise ! ) in a still weak economy conditions. That won’t stop the less well off being persuaded to ramp up huge debts in the new year.
    Of course to a friend who supposedly helped win the last election for the Conservatives ……. a New Years Honour !

  6. Hock says:

    Why does any of this political financial manouvering surprise anyone? You only have to ask yourself why certain MP’s ( a significant number,) are employed for a couple of days a year as advisors to companies and financial institutions and are paid in the tens of thousands of pounds for this couple of days work a year. Those same companies dishing out these massive retainers regard it as money well spent because their interests are being safeguarded by the very people elected to protect the electorate from the greed of these same companies.
    It comes down to: ‘noses in a trough,’ and passing water in the same bucket!

  7. Brendan says:

    Successive governments have peddled the view ( including New Labour ) that if one keeps London- South-east fed from the City, to the style too which it has become accustomed ( no doubt well-founded in financial terms ) ; then somehow or other this wealth would convert into an equitable share for the rest of us … in the stick. What a pipe-dream !
    We understand that foreign money is pouring into London – Russian etc. into property. One wonders exactly what this money is the proceeds of – in other words who should lawfully be paying taxes in Britain and how much ?
    With lack of muscular opposition to Government , this is all reminiscent of a one party State. Sadly and paradoxically we are stuck in the nightmare of an EU which ham-strungs its doubting members in the name of democracy.
    An American friend of mine would sum it up for me …… ‘ it all sucks ! ‘

  8. G.D. says:

    Sorry, but isn’t it plainly obvious for all to see that the ruling politic of the world is for them that have money to get more money – be it (so called) democracy or any other regime.
    But only because they are supported by people, from all walks of life, that seek their own self serving ends and greed.

    The corrupt ‘laws’ passed, that have been supported thus far by anybody with money seeking more, is the problem. ……… Plain greed and self aggrandisement.

    Getting bogged down in the means used to support this egotistical agenda does nothing but play into the hands of them that welcome ‘debate’ to avoid uncovering the causes of such corruption.

    When we have a politician that asks questions that get to the real issues, and brings justice & morality to the fore, he gets slated. …… I wonder why?

    I’m amazed at the acceptable self asserting assumptions that so many put forward to hide the truth of the ‘subversive dictatorships’ the peoples of the world are suffering at the present time?

    And it’s all acceptable as ‘legal’ because the corrupt regimes pass ‘laws’ that say it is.

    When someone challenges those assumptions ……….. he’s not acceptable for whatever reasons that can be drummed up ……..

    …….. Once upon a time … there was an unjust leader called ‘Many Names’ … supported by self serving sycophants and thugs … along came a just man, ‘Many Times’ … who was outlawed in many different ways ……
    …………………………………… and the story continues in exactly the same way today.

    And always will until we face the ROOT causes that are placed before us ‘Many Times’; and not diverted by the unjust means used to continue on that very same path.

  9. Brendan says:

    ” The ROOT causes ”….It’s at times like these that I turn to 2 Corinthians Chapter 5 for comfort ,calm inspiration … and an answer to my lack of understanding in a world similar to that of St. Paul’s Corinth ; where The Christ can overcome the permanency of sinful nature by grace ( the indwelling Spirit )
    When Quentin like many of us receives ‘ authentic ‘ answers to our requests ; then we might have confidence that our way of governance has the feel of something wholesome , again….when a sense of belief in ourselves rooted in a deep faith is apparent to all.
    Maybe that’s what David Cameron meant when he talked about ‘ British values ‘ – if only with his many advisers he could have fleshed it out – that would be worth a New Years Honour !
    It feels now like a Country looking back to a nostalgic age when we and the world were younger.

    • G.D. says:

      No honours would have come from that fleshing out i fear. Those ‘ British values ‘ would have been of the Victorian & Medieval types. With plenty of servants and serfs to suffer & obey the whims of the gentry and lords of the manor.
      Come to think of it, that is the way it’s heading.

      • G.D. says:

        Did you mean ” Corinthians Chapter 6″ rather than chapter 5?
        That would seem to make more sense to me in this context.
        Not that i use scripture in that way.
        It can always be contradicted with other scriptures – even the following chapters – when read literally.

  10. G.D. says:

    ‘ 2 Corinthians ‘ … that is.

  11. John Nolan says:

    The so-called bedroom tax is not a tax at all. In fact there is a bedroom tax which is paid by everyone not on benefits; moreover it is paid out of already taxed income. I refer of course to Council Tax, the banding of which correlates to the number of rooms you have.

    Tax credits were a result of Gordon Brown’s sleight of hand in giving what amounts to a benefit via the Inland Revenue rather than appearing to increase the welfare budget.

    Lack of forward planning has characterized every government since the war. To be fair to the Conservatives, they usually leave the economy in a better state than it was when they inherited it.

    I am no great admirer of David Cameron and modern politicians in general are a mediocre bunch. Maria Miller wants us to be able to choose our ‘gender’ by filling in a form. Cameron wants women soldiers in the front line for purely ideological reasons, despite the fact that anyone with military knowledge or experience could tell him that it is a thoroughly bad idea.

    Jeremy Corbyn appears to believe you can run a country with the politics of student protest.

    I suppose democracy means you get the politicians you deserve.

  12. Brendan says:

    As a Catholic Christian I use The Bible ( as with prayers ) when I feel the need to ground myself with God at my centre in daily living , to make judgments Listening to the ‘ Daily Politics ‘ , Mark 3: 24 comes immediately to mind….. ” if a kingdom is decided against itself , that kingdom cannot last..” That’s why on preferring Corinthians 2: Ch.5 before Ch.6 ; it is a precondition to realising the Christian apostolate that Christ offers to the World . It’s about .. ‘ the cognitive aspect of faith ‘- NJB.
    Currently watching our political system at work on the media; something that is tragically lacking among’st its exponents.

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