Saturday, September 27, 2008

Government spending over time

There is a great site called, that tells you exactly what the government spends it's money on. You can go back in time, looking at historic data, and also look at the data in billions or as percentages of GDP.

% of GDP is the best way to look at things as you get an accurate look at how spending changes relative to income. All figures quoted are the total of central government and local government spending. Here's a look at what has happened since 1997:

1997 2001 2005 2008

Pensions 6.060% 6.807% 6.998% 7.308%
Health Care 4.976% 5.408% 6.721% 7.515%
Education 4.553% 4.522% 5.126% 5.615%
Defence 3.091% 2.878% 2.721% 2.819%
Welfare 7.895% 6.173% 6.366% 6.610%
Law&Order 1.891% 1.880% 2.294% 2.372%
Transport 1.225% 0.908% 1.294% 1.448%
Gen govt 0.796% 0.952% 1.587% 1.869%
other spending 4.611% 3.999% 5.065% 5.492%
Interest 3.444% 2.624% 1.971% 2.248%
Balance 0.476% 0.426% -0.268% -0.388%
Total 39.019% 36.578% 39.874% 42.908%

Other spending consists of agriculture, forestry and fishing, waste management, government sponsored R&D, broadcasting, pollution abatement etc.

You can see certain trends over time. Health spending is jacked up (though our spend remains lower than that of any G7 country with the exception of Japan). Spending on state pensions goes up due to increased number of older people, plus Labour increasing the state pension through minimum income guarantee, plus other payments and free services for the elderly (free eye tests, free local bus pases etc). Spending on education and law and order is also up.

Spending on welfare goes down due to unemployment dropping. In future, as the reforms to incapacity benefit kick in, it should continue to drop. Spending on debt interest drops too - Labour spent the first six years paying off debt, and renegotiated a bunch of it at lower interest rates and most debt issued by this govt has been at low coupons (the lowest being 4% in 2005).

Many Tories believe that a potential conservative government would cut tax - but Cameron has boxed them in somewhat by his statements. He has said that the NHS is sacred and they wouldn't make any cuts there (and given our low spend relative to other countries, pretty hard to shave spending in this area without trying to destroy the service and returning it to the shambles of the Major years). They would probably not touch state pensions as most of their supporters come from the over 60's. The over 60's are the stroppiest part of the electorate - despite Labour spending a lot more on their state pensions, they still believe that they arn't getting enough. Tories have signed up to Labour's education policy. They want to increase defence spending, and it's doubtful they could do better on welfare spending than Labour (Labour's record on reducing welfare spending is much better than the Conservative one).

Which leaves them with cutting back on such vital things as waste management and pollution abatement etc. The Thatcher and Major governments paid for their tax cuts by simply privatising assets. Essentially previous Labour governments used to go to the pain of raising tax in order to buy out shareholders and nationalise assets. Then Tories would take this store of money helpfully put away by Labour, and sell the assets and spend the loot. New Labour hasn't played the nationalisation game though. We've nationalised just two entities - Railtrack (which no one wants to buy) and Northern Rock, which people might want to buy once it's back on it's feet. Northern Rock's market capitalisation was about £4bn prior to it crashing - raising that in a privatisation is peanuts in the context of government expenditure.

So I'm very interested to hear what the Conservatives have to say at their party conference. The only way they can supply tax cuts is for Cameron to abandon his commitments to the NHS, state pensions and education. But of course those are the very commitments that his populatity is based on.

Wednesday, September 24, 2008

Hugely relieved about Gordon's speech

Against the odds, Gordon Brown gave one of the best speeches of his career, while at the same time his potential rivals crashed and burned.

I'm not the only Labour party member massively relieved at this. It means the Old Man of Fife gets to fight on and lead us into the next election. After that he will step down, win or lose (if he wins the election, he will go within a few years). Either way it will be an exit with honour (there is no shame in being rejected by the electorate, that's democracy for you, the shame lies only in being stabbed by your own side).

It's no exaggeration to say that the rank and file had dread in their hearts at the plotting going on before the conference. At one point it seemed as though the damage being done to him was irretrievable, and our Gord would be forced to go in the most awful circumstances.

And that was not what we wanted. Labour is the party of love and compassion and second chances. It's not our style to knife leaders at the first sign of trouble. I watched Polly Toynbee on the Politics Show on Sunday, extolling how the Tories knifed Thatcher and then kept knifing each new leader, over and over. She seemed to admire this (why, I've no idea). I felt like screaming at the TV, we're not Tories, don't you get it?

Because if we did emulate the Tories, we'd lose our USP. It would be like Coke abandoning it's tried and tested formula for a new version simply because sales were temporarily dipping and people were telling testers they prefered Pepsi. It turned out that people didn't want a version of Pepsi from Coke, they wanted Coke from Coke, after all.

Thus Labour. This is who we are - a party that choses a leader and then gives them a fair go. Make no bones about it, Gordon Brown was chosen in 2007 because there was no other choice for leader, and there still isn't. It still seems to me that he is the right choice for these dark times, in the same way Blair was right for the sunnier clime of 1997.

We've just witnessed a financial earthquake where it appears the City can't cope without the help of big government after all. So much for deregulation. This is one of those turning points much like the one in the early 1930's when Hoover and the free-markets went out of fashion, and Roosevelt and his regulation was in. We don't know how things might ultimately play out, but some elements of Thatcher's deregulation of banking in 1987, which allowed retail banks to enter investment banking, insurance and other financial lines, might need to be modified and in some instances reversed and the firewalls reinstated. The deregulation that took place here in 1987 was similar in effect to the repeal of the Glass-Steagall Act in the USA in 1999, the repeal of which allowed banks there to securitise credit-risk and sell it on and while our deregulation allowed banks here to buy those risks. The current climate is a serious moment for serious people - a moment for Gordon perhaps. It's not over till it is over.

Monday, September 22, 2008

Will the People's Republic of the United States lose it's AAA rating?

I'm from the centre-left, but I'm gobsmacked at the latest events in the United Staes. It was OK to nationalise Fannie Mae and Freddie Mac (initial cost $100bn) and rescue AIG for $85bn, and rescue Bear Stearns for $30bn. Despite the $5.4 trillion of liabilities Fannie and Freddie have, and the $185bn liabilities in AIG, most of those will come good, only a small part are bad. In the long-run the taxpayer will make a profit (and this is the case for Northern Rock too), and the present cost to rescue them is reasonable in the circumstances.

But this $700bn rescue fund being proposed by the Bush administration to buy toxic assets is something else. These "toxic assets" are worthless, that's why there is a problem in the first place. Unlike Fannie and Freddie where the nationalisation meant that the taxpayer gets the good with the bad, this new plan means that the taxpayer is essentially giving away a load of money for junk with no value and the only ones to benefit are the companies receiving the gift. Talk about getting rewarded for screwing up the system.

The markets are nervous too - stocks, bonds and the dollar all collapsed today and NYMEX oil for October delivery jumped $25 in a day, as people sought a safe haven. Because the end result of this can only be a sharp downgrading of the superpower's own credit rating, which implies that being loaded with junk like this might cause Uncle Sam to default in the future.

I can't believe they are even considering doing something with those sorts of implications. Frankly they'd be better off nationalising the whole banking system, even if it made them more Commie than the People's Republic of China (which has been privatising stuff in recent years). Nationalisation at least means the state gets the good bits with the bad, plus control over the banks - it means the state has a chance to break even or make a profit (with the potential for future privatisations) and thus the state/taxpayer gets to survive all this relatively intact. But gifting money to robbers in return for worthless paper, just puts too much strain on the state.

Even worse was Hank Paulson's exhortation for the rest of the world to follow his example. Eeeu! If our government wants to make emergency nationalisations, fine. Gifting taxpayers money to the city, no.

Saturday, September 20, 2008

A few thoughts about Frank Luntz on yesterday's Newsnight

I'm guessing that most people interested in politics will have viewed the focus group run by Frank Luntz on Newsnight on Thursday and Friday and will be scratching their heads to make sense of it.

To recap - the group of Labour leaners thought Gordon Brown's presentation was awful, didn't like Cameron, didn't know who Clegg was but liked his presentation (though one woman pointed out that it was because as an unknown, they were taking him at face value). Then they dismissed all the contenders to replace Brown (with David Miliband scoring no better than Ed Balls), looked at the greybeards (Straw and Johnson), and then decided that they wanted to keep Gord after all. Oh, and they expressed nostaligia for Blair.

What to make of it? My feeling is that Blair and Brown have been such a solid part of political landscape for so long, that in turbulent times people still wish that partnership was in place. And that if they can't have Blair, they will at least hold onto Brown.

What interested me most was when they were discussing who was to blame for individuals taking on so much debt. One man said that it was Brown's fault, only for a Labour leaner to say, I paraphrase, "how is it Brown's fault if someone chooses to run up large credit card bills?"

This is really important, as I think it divides those who will vote Labour and those who won't. I can illustrate this best with anecdotes.

My mother is a classic floating voter - she voted Tory, but switched to Alliance in 1983 as she thought Maggie was cruel and racist, and Labour only interested in attacking people like her. She voted Labour for the first time in 1997, but LibDem in 2005 because of Iraq. In September 2007, she was virulently angry at Labour over inheritance tax, but was pleased and pacified by the transferable allowance introduced by Darling. She doesn't think the IHT threshold needs to be increased to £1 million, let alone £2 million. "We're middle class people, not millionaires" and "there arn't that many millionaires in this country, there are more important priorities than them".

At the moment, she's in Gordon's camp, and doesn't want him replaced. As far as she's concerned, he's done OK for the country, listened when people like her were upset, and has "a good heart". In her opinion no one else in the political system can match him for experience and she thinks Britain needs an experienced person at the helm. The other thing to note is that she is completely unaffected by the credit crunch or global turmoil. She has never had any debt, bar her mortgage, which she determindly paid off early. She doesn't understand people who have debt and has no sympathy for them trying to blame the government for what she sees as their own failings. Most of her savings are in building societies, and most of her income comes from these savings. She's pleased that interest rates on savings have risen. She's not extravagant but hasn't noticed food prices, because she doesn't eke out the pennies while shopping and she likes the free local bus travel Labour has inroduced for the over 60's (she doesn't drive). She will vote Labour if Gordon is at the helm.

My sister and her husband, in their mid-thirties, are both firmly Labour (no floating for them). They are professionals who are just above the higher rate tax threshold, but don't resent paying the tax. They are not extravagant - they paid off their mortgage a couple of years ago, emulating my parents in ploughing every spare pound into getting rid of debt, security was a priority and living high was not. They feel that the Labour government provided the opportunity of a good job market, and it was up to the individual to seize the opportunity to make good. They are completely unaffected by the current economic crisis. No mortgage outgoings mean lots of savings accruing in building societies. They are green, they don't drive much and my sister grows most of her vegetables. They think of Labour as a positive force that enabled them to get jobs in the first place, which made everything else possible for them. My brother-in-law is from a working class background and is convinced that people like him would never have prospered at all under the Tories. They will vote Labour regardless of who leads Labour.

My other half works in IT as a Java developer. He too is a floating voter, voting Tory till 2005 when he switched to LibDem, and he is now in Gordon's camp because he thinks Cameron is a tosser. As you can imagine we have had interesting political discussions in our household over the last decade - while I was enthralled with Blair in 97, he was suspicious. It wasn't till Blair was leaving that he came round (he liked the Blair skit with Catherine Tate for Comic relief). He supported the Iraq war, while I was furiously against. Switching to LibDem in 2005 was a halfway stage to moving left (people find it hard to move either way in one go), it was nothing to do with Iraq, but about weaning himself off the Tories (he didn't like Michael Howard).

The main thing colouring his "Gordon is good" feeling is that he thinks Britain needs a solid person at the helm, and the economic turmoil hasn't affected him either. He struggled to get work under the Tories after graduating, but refused at the time to believe that Labour would be any better. But his career has taken off in recent years. His firm is struggling to recruit people, and this year he got a 14% payrise because his boss is trying to retain Java developers. He used to have debts before he met me, but doesn't any longer bar the mortgage (any household where my mother's daughters live is debt-averse). He doesn't drive (I ferry us about), so is oblivious to fuel prices, and doesn't notice food bills because they are too small a part of the budget. As far as he is concerned life is great, and he doesn't see the need to change government or PM. He thinks I spend an unhealthy amount of time reading the press and that my fears about the Labour leadership are all down to that.

A pattern emerges here. Those who have benefitted from the long economic boom, where jobs were readily available, and who've seized the opportunities available to make their lives better, will vote Labour.

Those who haven't seized the opportunities available, and frittered their money away instead, will blame anyone but themselves and will try to punish the government for perceived sins, including the sin of not controlling the world oil price and not sending a personal letter to their household saying please don't overload with debt.

The question is, how big is each camp. I fear the former is smaller than the latter.

Wednesday, September 17, 2008

Stock Market Falls

I've been taken aback at how many people are worried about stock market falls. It's legitimate to be worried about the banking system and whether the American crisis will ruin the world banking system, but to worry about the stock market?

Stocks go up and down. During the crash the FTSE went from 6900 in Jan 2000 to 3287 in March 2003. By contrast the current bear market (peak 6706 in Oct 2007 and 4912 today) is mild, and clearly has much further to go. 2003 wasn't that long ago, have people such short memories?

Markets have also been known to be flattish for extensive periods of time. The Dow Jones for instance was flat from 1937 to 1950, and then flat again from 1966 to 1982, and the 1950 to 1966 rise was very shallow indeed (you'd have been better off sticking your money in a deposit account). Yet America was booming from 1938 onwards as they supplied all the armaments for WW2 and didn't suffer any domestic destruction, plus came out of WW2 as a stonking superpower (in the 50's and 60's the USA ran massive budget and trade surpluses and had nearly 50% of the world's GDP). By contrast the Dow rose very sharply in the 1920's, but the underlying American economy then was nowhere near as strong as in the 40's, 50's and 60's.

Go-go markets have more to do with fear and greed than anything else. Essentially the stock market is a giant casino. Witness the go-go market in oil for instance. Did fundamentals really justify the $147 per barrel in July, or is the $90 now more reflective of the world economy? And that drop in oil price will have also taken out those speculators who thought the price would go to $200 per barrel - but the oil bear market is actually beneficial to the real economy.

I think the trouble is that too many people think that stock markets can go only one way and lots of people who invest in them simply don't understand the nature of the gamble they are taking. If you really want financial security, you'd be better off overpaying your mortgage - people pay way more in interest over the term of their mortgage than they did on purchasing the property in the first place. But it's funny how no financial advisor ever recommends that simple solution.

Tuesday, September 16, 2008

If I was Obama I'd promise to reinstate the Glass-Steagall Act

The two laws collectively known as the "Glass-Steagall" Act were banking regulations that were passed in June 1933 - practically the first things that Franklin Roosevelt signed into law after he was inaugurated as President in March 1933 (it formed part of his "100 days" of furious and frenetic action).

The legislation introduced for the first time separation of bank types (i.e. retail banks could not be investment banks and brokers) and forbade retail banks to sell insurance or securities (bonds) or to underwrite them. What prompted it was the failure of 5000 banks during the depression. FDR and the Democrats of that era believed that it was conflicts of interest and contagion rather than the Wall Street Crash of 1929 that brought down the banking system.

And the act stood for 66 years, safeguarding the USA as it turned into a superpower. Then it was repealed in November 1999 by the Gramm-Leach-Bliley Act, which Clinton, under the cosh from impeachment hearings, signed into law instead of vetoing it. And here we are a mere nine years later, with three of the top five American investment banks gone, Fannie Mac and Freddie Mac with $5.4 trillion in liabilities, nationalised by the US govt, and the huge American insurer AIG teetering on the brink of disaster, plus loads of small American banks going under, and the contagion threatening to spread across the world. It all makes Northern Rock look like a triviality.

Glass-Steagall was repealed in response to ferocious lobbying of the Republican Congress by Wall Street, who felt they were over-regulated - the same people who now want the American taxpayer to bail them out.

If Glass-Steagall had been in place the sub-prime lending crisis would not have happened as lenders would not have been able to sell on the credit-risk through securitising it, and hence would have been more careful about the loans they were making.

And Senator Gramm, one of the architects of the repeal, was John McCain's economic advisor (McCain has previously admitted that he himself knows nothing of economics).

McCain hasn't really been able to respond to the crisis other than calling for a commission to look into it and report in three years time (by which time it's too late). Americans can't really afford to let the current situation continue, where bankers assume that Uncle Sam will pick up all the bills, as it will create an even more extreme moral hazard if it's always "heads you win, tails the taxpayers lose". In any case, Uncle Sam is starting to get scared at the liabilities being taken on, hence the decision to let Lehman brothers go to the wall.

This is an opportunity for Obama. For the first time, not having a Clinton on the ticket may be a plus. He can claim to be running against the orthodoxy of de-regulation of the last 30 years, and re-instate the depression era legislation. Americans after all have a lot of time for FDR and all he did - recall hostile way the public reacted when a newly re-elected Dubya pledged to abolish FDR's Social Security (state pensions); the hostility killed Dubya's plans. In the end, if Obama plays this right, his role in history is not to be the new Martin Luther King nor the new JFK, but instead the new FDR.

Thursday, September 11, 2008

John McCain and Gordon Brown

Apparently John McCain was furious that Gordon Brown endorsed an Obama proposal supporting struggling homeowners. The press has been making much of how McCain sarcastically dubbed it the "Coveted Gordon Brown Endorsement".

Some people are comparing it to John Major angering the Clinton administration. But circumstances are different. Clinton was president of the world's sole hyperpower. McCain if he becomes president, will take over a USA reduced to being one of many poles in a multi-polar world, with the Chinese closing their grip on the American throat through their ownership of American assets. Only last week the US taxpayer took on the liabilties of Fannie and Freddie Mac to pay Chinese bondholders.

I for one am pleased with what Gordon Brown has inadvertently achieved. Consider - McCain believes in a 100 years war in Iraq, plus starting a war with Iran, plus attacking Russia on behalf of Georgia. But given how he now disdains our Gord, and disdains his "endorsements", we can take it as read that a McCain presidency wouldn't even consider asking Gordon to "endorse" any of his dubious foreign policies, let alone ask Britain to send troops for his foreign adventures.

After all, now that he's dissed the UK PM, he can't then turn around and go begging for our support. This means that for the first time in an age, Britain can sit watching sardonically from the sidelines, and allow the French or whoever to commit troops for McCain's hundred year wars. Or McCain can reintroduce the draft on American men.

Yay for Gord! He has done exactly what those of us who despaired of Blair's "follow the US at any costs" policy, have wanted out of his premiership. It also means that it no longer matters who becomes president of the USA. If it's Obama, we get someone we can relate to and do business with. If it's McCain, he'll ignore us and leave us out of his mad policies, so that they don't affect us in any case.

Monday, September 08, 2008

The US Treasury Nationalises Freddie Mac and Fannie Mae

The US government has effectively nationalised Freddie Mac and Fannie Mae, the two mortgage groups with a combined $5.4 trillion in liabilities (about equal to the entire federal debt).

What's more they "seized control" - no pfaffing about trying to appease shareholders and having to deal with malicious hedge-funds-on-the-make as we did with Northern Rock. They're proper socialists in America.

For those gob-smacked by the American action because they thought that the USA was the acme of free-market liberalism, don't be. The superpower era of America has always been underpinned by the taxpayer and the willingness of government to intervene - whether it is the Fed slashing interest rates to rock-bottom or the military-industrial complex where tax money keeps vast defence industries going, or the pork-barrel system where tax money is used for all sorts of dubious things or the way the US taxpayer takes on the job that should be done by insurers and compensates people who deliberately build in hurricane zones, so that some folk have their house rebuilt over and over courtesy of that indulgent Uncle Sam. Americans have never actually practised pure free-market liberalism, they've merely preached it to countries like Russia in the 90's and hence destabalised and killed the fragile democracy there. In proper democracies (and the USA is a proper democracy), the free-market is always modified, controlled and underpinned by the representatives of the people.

The nationalisation of Freddie Mac and Fannie Mae is actually a good move, it reduces the uncertainty that kills economies. But it's also interesting in that, as I said previously, we are in an era of where government intervention is deemed to be good and markets are deemed to be foolish and wicked (in direct contrast to the early 90's when government was deemed bad and the markets were the heroes who rescued us from govt, especially as regards the ERM).

The recent Populus poll showed massive support for government intervention, including for one-off fuel-payments, windfall taxes to pay for it, and public spending on housing. Voters seem to be leaning left, which is at odds with the voting intention polls. But then the Conservatives have no policies other than increasing the inheritance tax threshold to £2 million, and the public are projecting on them a view that they would be more left than Labour. What will happen when the Conservatives have to unveil a manifesto at last?

Thursday, September 04, 2008

Aspiration v Reality

The New York Times columnist, Maureen Dowd, has written a brilliant piece about Sarah Palin:

"reality, in all its messy, crazy, funky glory, has flooded the party, in the comely, crackling form of Sarah Palin.

Unable to stop the onslaught of wild soap opera storylines erupting from the Palin family and the Alaska wilderness, McCain campaign adviser Steve Schmidt offered caterwauling reporters a new mantra: “Life happens.”

Indeed, it does. Only four days into her reign as John McCain’s “soul mate,” or “Trophy Vice,” as some bloggers are calling her, on the ticket known as “Maverick Squared,” Palin, the governor of Alaska, has already accrued two gates (Troopergate and Broken-watergate), a lawyer (for Troopergate), a future son-in-law named Levi (a high school ice hockey player, described by New York magazine as “sex on skates”), and a National Enquirer headline about the “Teen Prego Crisis” with 17-year-old daughter Bristol."

Surely this is why the whole world is rivetted with Sarah Palin. Because she represents America as it really is as opposed to America as it aspires to be. Millions of Americans in the hinterland really do hunt for food (which is OK), as opposed to hunting for sport, and if they didn't they wouldn't have enough to eat. Some Americans experience poverty that would shock Polly Toynbee and make her appreciate the Labour party a bit more. Of course Ms Palin is a crack shot and knows how to cube, skin and cure a whole moose. That's how her family fed her when she was young. Millions of them have children who are quite out of their control, indulging in underage drinking and teen pregnancy. They feud scrapily with their inlaws, they get drink-driving tickets, they don't get much education (due to getting knocked up at 17).

The Obamas by contrast are pure aspiration. Black America in it's ghettos and Latino America with their 100-hour weeks look at them and think, I'd like my kids to end up like that. Cool, intelligent, sophisticated, educated and so mainstream normal. They've made it. Hillary, who toured America with her mother Dorothy Rodham and daughter Chelsea, also represented an aspiration, albeit a different one. They represented solidarity amongst women across generations where you aspired for your daughter to be educated and successful (Dorothy), and aspired to combine a career with being a good attentive mother (Hillary) and aspired to be a credit to your mother and grandmother (Chelsea, but also Hillary). What makes the Clinton story piquant is the messy reality of Bill thrown into the mix.

Which will win? Aspiration or Reality? Americans like to relate to their presidents, which is why Dubya, of the bluest American blood (way bluer than the Kennedys) adopted a Texan accent and style and played to certain stereotypes (how much was real and how much was calculation by a shrewd politician is up for debate). Bill Clinton was of course aspiration and reality all rolled into the one complex person (someone from real Arkansas hillbilly stock, as a child he witnessed his stepfather fire a gun at his mother, but he got himself to Oxford).

Nobody is looking at McCain anymore than they are looking at Biden. McCain is simply an old guy of 72 who has had cancer four times and is expected to pop his clogs soon. This election will turn on Obama versus Palin for president. Both young, both inexperienced, and representing two separate threads in the American story - the American dream versus the American reality.

Those of us in the aspiration wing of politics find Palin a little too ruthless and red-meat for our tastes. Women struggling to be a good mother and good daughter and good careerist at the same time will blanch at the way Palin tossed her daughter Bristol to the wolves by making an announcement about her pregnancy. Then again Bristol knew her mother was in the public eye and still got herself in trouble - no solidarity across generations from either of them.

Aspiration rules in the UK. We don't know if Brits would elect a chav simply out of identification with them, because no party here would select such a person as a candidate so they wouldn't even make it to Parliament. Reality looks like Nightmare to us, so we steer well clear. In the USA it's different, and it's difficult to tell from this far away how this will play out. But it's bloody good entertainment all the same. No fiction could compare to the US 2008 presidential race.

Wednesday, September 03, 2008

Thoughts on moving house

People spend so much time and effort moaning about stamp duty, even though the money goes to government to pay for valuable public goods (such as health, defence, roads, infrastructure etc).

Meanwhile moving house involves other hefty costs, the worst one of which is paying the estate agent's fee when selling, which is usually 1% of the selling price (though some agents will negotiate a flat fee). In London this is as much as 2.5% of selling price. I have very little sympathy for estate agents saying that the government package "isn't enough". If they want sales, they should slash their fees.

It's weird we've got into a situation where people think paying 1% in stamp duty which goes to govt to purchase valuable public goods = bad, but paying 1% of selling price to rip off estate agent = good. It should be the other way round, as you don't get similar value for money from the estate agent fee - all they do is take some people round your home (and nine times out of ten you have to do this yourself).

My advice to home movers - if you want to cut your costs, bargain mercilessly with the estate agent over their fees. You can also use the online DIY sites such as, where you list your home for £99, and arrange your sale privately.

Tuesday, September 02, 2008

Tories plan to extend inheritance tax threshold to £2 million

Hat-tip Labour Matters

Further to my post on 30th August about Tory millionaires, where I wrote "Look out for policies that will specifically help millionaires and ignore everyone else", the Telegraph reports that the Conservatives are planning to raise the inheritance tax threshold to £2 million.

Surely they've proposed this just so the likes of David Willets (worth £1.9 million), Caroline Spelman (worth £1.5 million) and Michael Gove (worth £1 million) are taken out of the tax altogether, and people like George Osborne (worth £4.3 million), David Cameron (worth £3.2 million) and William Hague (worth £2.2 million) have their liability cut sharply.

Indeed it's likely that the initial £1 million tax threshold they proposed last year was just a trial balloon to see if anyone objected. If no one objects to this, watch for them to try to raise it to £5 million. Nests, feathering, anyone?