Snouts in the Trough

A couple of readers have challenged me to give an answer to the question of how we escape the debt death spiral I wrote about yesterday.

Firstly, as the Irish say, I wouldn’t start from where we are now – I would have started from the moment the Coalition got into power in 2010. But we are where we are. So, here are a few ideas (I’m afraid some of my proposals will upset Guardianistas. But Britain is as bankrupt as the loss-making Guardian newspaper, so we can’t go on spending more than we earn):

1. Declare a state of “national economic emergency” and put all public-sector and council managers and administrators on a 4-day week and all quangos on a 3-day week. After all, who would notice if the Department of Health only worked Monday to Thursday and the Equality and Human Rights Commission only did Monday to Wednesday? Saving £150m a week – £7.5bn a year

2. Set a maximum public-sector pension of twice the average wage and abolish the 3 years taxfree payments made to bureaucrats and top civil servants. Saving maybe £2bn a year

3. Stop all foreign aid till Britain eliminates its budget deficit and reduces its debt to 30% of GDP. Saving £10.5bn a year

4. Leave the EU – we can’t afford the cost of membership. Saving £19bn a year

5. Stop all subsidies to “green energy” and stop closing coal-fired power stations. Saving maybe £1bn a year. Resurrect Britain’s coal mines – extra tax revenues maybe £500m a year

6. Replace Corporation Tax with a retention of part of the VAT charged by companies so that all companies operating in Britain pay tax whether they claim to be based in Jersey, Cayman Islands or on The Moon. (Financial institutions would pay a tax based on their assets). Increase in tax revenues maybe £13bn a year. This would also result in many foreign firms moving their HQs to Britain creating say 10,000 well-paid jobs and generating say £3bn in extra income tax and NI

7. Declare activity sectors like energy, water, airports and ports as “strategic national assets” that can only be owned by British companies fully based in Britain for tax purposes. Increase in tax revenues, perhaps £3bn a year

8. Bring in a False Claims Act whereby whistleblowers who reveal that government departments are being overcharged receive a % of all money saved. Saving of say 1% on the government’s procurement bill of £170bn = £1.7bn

9. Bring in a scheme whereby public-sector, frontline workers (not managers) get paid a % of any money saved through a suggestion scheme up to a maximum of £50,000 per worker. Saving perhaps 1% of government spending of £500bn = £5bn

10. Set a mandatory improvement target for all public-sector managers of a very modest 2% a year. Saving in 1st year = £10bn: in 2nd year £20bn and so on

11. Cut the BBC’s budget by 5% a year for 5 years and restrict the BBC to making public-service programmes, not junk entertainment that belongs on the increasing number of commercial channels. Saving in 1st year = £150m: 2nd year = £300m: 3rd year = £450m and so on

12. Lower housing benefit by 1% a year and the cap by 5% a year for 2 years to force down rents across the private rented sector. Saving maybe £260m in 1st year: £520m in 2nd year and so on

13. Cut the number of MPs, MSPs, members of the Welsh and Northern Ireland Assemblies and their staff by 50%. Reduce the Lords to 100 members from over 850. Saving maybe £500m a year. Sell off Portcullis House earning maybe £300m

14.  End the culture of breeding at taxpayers’ expense – only give child benefits to the first 2 children: restrict social housing and housing benefit to people over 25: house anyone, who cannot live with their parents, in army-like barracks where they have to work (cleaning and so on) to earn privileges like TV. Saving maybe £3bn

15. Stop us being bankrupted by immigration – withdraw from the European Convention on Human Rights: extend restrictions on Romanians and Bulgarians for 10 more years: tighten habitual residency rules: deport all foreign criminals: no benefits to be paid to anyone who is not a British citizen or who has not worked full-time in Britain for 10 years. Saving maybe £5bn a year

16. Restrict citizenship – make the right remain and granting of British citizenship signed legal agreements between the government and the person, whereby it is agreed that any breach of the law by that person or any dependent results in automatic withdrawal of the right to remain in Britain and immediate deportation. Saving maybe £2bn a year

17. Give student grants to anyone aged 16 to 24 who goes on a vocational course to become a plumber, electrician, car mechanic, carpenter, bricklayer etc. Cost maybe £1bn

18. Impose a land tax on any development land that has been held for more than 3 years by a developer who has not built anything. Launch a programme to build 100,000 housing association homes a year on brownfield sites. Cost perhaps £4bn, but increases in revenue from income tax and NI and reduction in unemployment payments saving perhaps £1bn

We’re getting close to £90bn saved. Then hopefully economic growth would increase tax revenues by say 5% (£30bn) and that gives us the £120bn we need to eliminate the £120bn deficit.

But then we need to start paying down the debt of £1.2trn – that’ll have to wait for another day.

(Just a reminder – I’ve reduced the price of my latest book GREED UNLIMITED – paperback and Kindle versions – hopefully someone somewhere will now buy a copy or two)

I made a comment on a newspaper website the other day suggesting that people grabbing buy-to-let properties were making a negative contribution to the economy. Sure enough, I was subjected to a torrent of abuse including one reader who called me “a stupid little moron”. So let’s look at a few facts:

On TV and in the press we’re constantly being told that buy-to-let properties are the place to put our savings. With interest rates below the level of inflation, most pension funds charging huge fees but not giving any growth and the Government reducing access to the state pension, it’s understandable that people with a bit of spare cash are turning to property for an income and for their retirement.

And now, the Government’s Funding for Lending and other schemes to keep mortgage rates low and house prices high until the next election are making buy-to-let even more attractive.

But are these people providing a service by renovating and renting out houses and flats? Or are they just profiteers and parasites, pushing up house prices and then living off those who can’t afford to buy their own homes?

I think there are about 14.5 million homes in England (I don’t have the figures for the UK). Of these 14.5 million, around 3.6 million (a quarter) are buy-to-lets. If we assume that the average buy-to-let is costing £500 to £700 a month, this means that renters are paying somewhere between £1.8bn and £2.5bn a month (£22bn to £30bn a year) to live in someone else’s property. That’s £22bn to £30bn a year being taken mostly from the less well-off and put directly into the pockets of the better-off. Or £22bn to £30bn being taken mostly from younger people starting out in their careers and given mainly to older people who have managed to accumulate a bit of capital. Buy-to-lets add nothing to our national wealth. They produce nothing that can be sold abroad. They just move money from one section of society to another, from one generation to another. Moreover, as they account for about a quarter of home purchases, they push prices up beyond the means of many (younger?) people.

At the moment, buy-to-lets seem to be profitable investments for the lucky few – at least that’s what gushing BBC presenters and newspaper property writers claim. But there are at least two threats to the buy-to-let paradise.

Firstly, the government, particularly a Labour government, might start to impose rent controls in a bid to reduce the ever-increasing cost of housing benefits:

Housing benefit has shot up from around £10bn in 2003 to £21bn last year and is expected to hit £25bn by 2015. This is unsustainable. And this projection doesn’t even take account of the one million Romanians and Bulgarians heading to Britain from January 2014.

And secondly, when Labour get back into power in 685 days and the deluded Ed Balls goes on a Brownian spending spree, he’s going to need money – lots of it. And there, ripe for the picking is £22bn to £30bn being taken by buy-to-let owners.

Buy-to-let owners beware – it’s not unlikely that, under the banner of “fairness”, the repulsive (IMHO) Balls may be coming after your money. After all, there’s not much else left for our incompetent, wasteful, financially-incontinent governments to tax. Mr Balls may make you rue the day you ever entered the buy-to-let market

As the much revered Nelson Mandela goes back into hospital, many South Africans must fear for their future. There is no danger of the country descending into the kind of civil war so beloved of most African countries. The danger to South Africa is widespread corruption practised by the political and bureaucratic classes. This corruption ensures that the rich get richer while the vast majority of South Africans live in grinding poverty in shacks without running water or electricity.

A new report called The Real State of the Nation published this year concluded that South Africa is fighting a losing battle against corruption. “Corruption is rampant,” the author of the report said, “It’s out of control … And the dedicated units that have been created to fight financial misconduct are in essence fighting a losing battle.”

A former managing director of the World Bank Mamphela Ramphele recently said, “A culture of corruption and impunity is seeping through every level of government, corroding our entire society. It is estimated that corruption robs us of more than R30 billion ($3.34 billion) from our government’s budget every year.” Substantiating her point, Ramphele queried where the country could be if R30 billion a year was spent on schools, bridges and roads, rather than being lost to corrupt practices.

One of the most newsworthy possible scandals was 206 million rand ($22.98 million) of state funds used on President Jacob Suma’s private compound in his home village of Nkandla, in KwaZulu-Natal province. Inevitably, a government inquiry found that this money had only been used for security upgrades and related costs at the president’s private compound (not for any home improvements) and that this decision was based on an assessment of threats to Zuma. Well, I guess that the president should feel pretty safe with $22.98 million spent on security for his home – that’s an awful lot of bullet-proof windows, security cameras and burglar alarms.

Fortunately (for the corrupt), thanks to a new media bill passed a month or so ago by an overwhelming majority in the South African parliament, in the future politicians and bureaucrats shouldn’t be embarrassed by so many news stories revealing their venality. The “secrecy bill” will increase the government’s power to restrict access to information and impose hefty fines and jail terms on reporters who publish information the government classifies as secret. Like President Zuma’s home improvements, perhaps? Sorry, I meant security for his home.

Here’s a picture of South Africa’s former president Nelson Mandela:

And here’s one of South Africa’s current president Jacob Zuma:

One of these men is respected around the world for his integrity. The other is said to be very rich. Can you guess which is which?

Here are the cuts being planned for our armed forces:

The army is planning to get rid of 20,000 going from 102,000 to 82,000. As up to 5,000 leave voluntarily each year, this 20,000 reduction in strength by 2020 should have meant no forced redundancies.

But our military top brass have a cunning plan. They have just launched a big, expensive, TV recruitment drive to hire about 10,000 new troops. So, to reach the targeted 20,000 troops reduction, there will have to be lots of redundancies as about 10,000 new soldiers are being recruited. These new troops will, of course, have no experience and have to be trained at great cost to British taxpayers. The 5,000 who have recently been made redundant and the thousands more still to be made redundant will mostly have lots of experience.

Make sense?

Here’s the last head of the British armed forces:

And here’s the new one who is just taking over:

And here’s a clown:

Though, given the ability of our military leaders to make a total cock-up of everything they do, you might have difficulty distinguishing between the head of the armed forces and the clown.

(I’ve just reduced the price of the Kindle version of my latest book GREED UNLIMITED by about 2 quid – hopefully some more people will now be able to afford to buy it to help support this website?)

As you may know, there is a Bilderberg meeting at The Grove in Watford, England from 6 to 9 June 2013. You can see what I believe to be the guest list below. The Bilderberg Group never publish the results of their meetings and insist they just come together to exchange views. Some people (readers of Dan Brown books?) believe that the Biderberg Groups are Illuminati or Freemasons or something like that plotting to take over the world and establish a NWO (New World Order) with themselves in charge. If so, there not doing a very good job so far. Others think they are shape-shifting reptilian humanoids from planet Draco.

As for me, I’m not sure what they’re up to. But it seems unlikely that so many important, wealthy and influential people spend four days of their extremely expensive time meeting if they were just discussing the weather and the latest football results. So why are they getting together? Search me: