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Archive for June, 2007

Jun 30 2007

Miliband promoted despite flooding failure

<font face="Times New Roman" size="3">Mr Miliband failed to get a?? ??1 billion Agency to tackle flooding urgently enough.</font>

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<font face="Times New Roman" size="3">The Environment Agency in 2005/6 received ??450 million for flood protection, and?? enjoyed a total income of?? ??1038 million. Blazoned across its website Annual Report?? are warm words including Protecting?. All that seems very hollow to many people counting the cost of their ruined homes in the current floods.</font>

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<font face="Times New Roman" size="3">The Agency states the blindingly obvious as part of its attempt to divert responsibility from itself:</font>

The vast majority of floods come from two sources; one is surface water overwhelming the drains, the second is very heavy and intense rainfall causing river levels to rise so high they overwhelm and overtop defences. Less than 1% of all floods are as a result of the failure of flood defences.?
<span />People expect the flood defence and the water management system to cope with heavy rainfall. Heavy rainfall may be unusual in June but it is not unusual at other times of the year in the UK. The Environment Agency is charged with regulating the whole water system, and with pointing out the dangers of building on floodplain.
<span />The Agency’s report is typical of a top heavy very expensive monopoly regulator under this government. In July last year its report tells us?? that only 58.6% of EA maintained flood defences were in good or better condition. They admitted that 4.7% of EA defences were in poor or worse condition. There is still building on flood plain, often driven through against Council wishes by government Inspectors.
<span />The Agency budget is mainly about paying for a very large number of people in offices to monitor, advise, warn, lecture, ??and to raise charges, fees and fines on the rest of us.?? Out of the 13,774 employees only 1608 are manual - the type of people who might go out and clear a blocked drain, improve flood defences or pump water away from residential areas.
The total pay and pensions bill was a???? massive ??477 million last year. They spent ??30 million on travel, subsistence and entertainment in 2005/6. If they had spent some of this money on improving our ability to handle water on the ground we would not be suffering so much. They blame the lack of grant they should try managing a ??1 billion budget better in line with public priorities for them.
<span />Mr Miliband gets promoted for failing to get value from all this spending, and for leaving the country ill prepared for some heavy rainfall. He should have spent more time at DEFRA trying to sort out the mess of the Environment Agency, and less time contemplating his future career in government.
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4 responses so far

Jun 29 2007

Shock horror - Cabinet wants stronger Parliament

It is interesting that after 10 years of the Blair regime undermining and sidelining Parliament, we are told the new Cabinet wants a stronger Parliament capable of holding the Executive to better account. Three cheers for that.

This is a case where actions will speak far louder than words. Offering a vote on a new war amounts to very little, as we had a vote on the Iraq war, and Parliament was summonsed and gave approval for the Falklands War.

The problem for these Ministers is their record. As theyworkforyou.com shows, the senior Ministers have not been showing great support for more Parliamentary accountability so far.

Gordon Brown spoke only 12 times in the Commons over the last twelve months and voted in only 19% of the Divisions. As a Minister he was unable to ask questions but did answer some. As the monitoring site says, he has not voted on a more transparent Parliament and voted moderately against investigating the Iraq war.

Alistair Darling never voted on a transparent Parliament and voted strongly against investigating the Iraq war. He voted in 58% of the divisions and spoke in 16 debates.

David Miliband never voted on a transparent Parliament and voted strongly against investigating the Iraq war. He voted in 63% of the divisions and spoke in 19 debates.

All three voted less often and spoke less often than the average MP.

As Ministers they can bring more of their issues to Parliament and offer to speak more often on matters affecting their own department, but they chose not to. If the Brown government is to show it is very different from the Blair government, these Ministers must offer more Parliamentary time to discuss matters of importance, and must attend themselves more often to both vote and speak.

One response so far

Jun 28 2007

What should the US expect from UK foreign policy under PM Brown/ Foreign Secretary Miliband?

Gordon Brown is an admirer of the USA. he holidays there, understands the power of the US economy, and has gone along with Blair’s foreign policy based on a strong US alliance.

However, he is good at political calculation and will not be sentimental. He will reason that Bush is unpopular and is on the way out, and that the Bush/Blair wars were unpopular in the UK. He will not want to go so far as to incur wrathful brieifng against him by the Bush regime, but he will want to signal that lessons are being learned from the invasions, and that he will be well disposed should a Democrat win next time.

Miliband has risen without expressing strong views on foreign affairs. He let people believe he was unhappy about the last Israeli/Lebanon hostilities, and just hinted that Iraq was not the UK’s finest hour without going too far.

Gordon Brown has let people believe he is sceptical about the case for more European integration. He was important in stopping the last government seeking to abolish the pound and put the UK into the Euro. He is unlikely to want to find that many of the things he woudl like to do as Prime Minister are no longer possible without EU agreement, as that will block or slow up his plans for Britain.

He faces an immediate problem. Tony Blair signed up to a wide ranging surrender of powers to the EU at the last Council of Ministers, whilst refusing a referendum which he had promised on the Constitutional Treaty.

Gordon Brown appears to hold the view that he must ram this through?? an unwillling Pwrliament and people, claiming it is not important enough to warrant a referendum. However, as he often thinks politcally there is an outside chance he will see the advantage of seeking a better deal in the IGC that has to ratify this Treaty, and then failing to get it strengthened say he will put it to the British people. The government need not directly take a view, leaving it to umbrella non party organisations to fight for and against the Treaty. This would leave the Conservative party without their Eurosceptic ace of the offer of a referendum on this crucial issue, where more than 80% of the public want such a vote, and would free Gordon Brown either way in the EU.

One response so far

Jun 28 2007

That Cabinet in full

??

Prime Minister?????? Gordon Brown

Deputy Prime??Minister???? Gordon Brown

Chancellor of Exchequer???????? Gordon Brown (did next year’s budget this year in advance) assisted by Alastair let’s be boring Darling

Foreign Secretary???????? Gordon Brown?? (Treasury officials going over to sort out Europe policy) assisted by David Miliband

??

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One response so far

Jun 28 2007

Putting the same old Ministers in new jobs is not the way to create a “new” government

David Miliband is rewarded for not opposing Gordon Brown, proving?? once again that failing to cut carbon emissions and mishandling farm payments ??is the way to promotion from Environment!

Alistair Darling, who failed to make much needed decisions to increase the capacity of our roads, airports or railways, is rewarded with the Treasury where the consequences of poor infrastructure willl continue to haunt him.

Jacqui Smith, Tony Blair’s Chief Whip, who??was frequently unable ??to keep?? all Labour MPs in and voting for the government, is given charge of the Home Office.

Harriet Harman, Labour Chairman and Deputy Leader, can?? now draw a taxpayer financed salary as Leader of the House.

??Des Browne, who made a mess as Defence Secretary, has it converted into a part time job,adding Scotland to his portfolio.

Tessa Jowell confessed she did not have a grip on the Olympics budget, so she is downgraded from the Cabinet BUT remains in charge of the Olympics!

You cannot make a competent government, by taking Ministers who have done badly in departments and putting them into entirely new ones!

No responses yet

Jun 28 2007

The reshuffle - some good news.

Yesterday??I wrote that the Health and Foreign Secretaries should go for incompetence. Today I learn they are leaving. That is a good start for the new government.

Gordon Brown’s speech on the steps of Downing Street was well judged. He was right to call for opportunity for all, and to recognise that people want change. The question is, Can he supply the change when he has been such a central part of the old regime?

This morning the sad news came of the first deaths of soldiers in Basra on the new prime Minister’s watch. Many of us want an end to these deaths as soon as possible. That would be a welcome change.

This morning we still awake to the surrenders made by Tony Blair in Brussels. We want a pledge that our new Prime Minister will renegotiate it all at the forthcoming IGC, or will give us a referendum so we the people can express our view on the Blaid legacy in this field. Gordon Brown will find this is part of the damaged??inheritance he has received.

The morning we still do not know what will be the outcome of the enquiries into some of the top officials of the Blair regime over the cash for peerages allegations. It is in the new Prime Minister’s interest that this is resolved as quickly as possible so his party can move on from that unhappy episode.

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No responses yet

Jun 28 2007

The departure of Tony Blair - Parliament hits a new low

I had a premonition I would not approve of Tony Blair’s style of departure from the Commons, so I watched proceedings from the TV in my office rather than jostling into the chamber. I am so glad I made that decision.

There was no point in asking him anything more, after ten years of his evasions, refusals to answer??and unwillingness to listen to sound advice on so many things. His decision to treat the Commons to a Variety Show performance was symptomatic of the whole Blair approach to Parliament. At least he had the honesty to tell us he never liked the place, but did fear it. That shows it was not all in vain, and maybe the weekly requirement to come before us provided some much needed ??brake on his intentions and actions.

The stage management of the whole show was designed to send him off in the best possible light. There was no attempt at balance - with the finale provided by two tributes, one from Paisley and the other from the Father of the House.

I think David Cameron was right to be charming and to say pleasant things on a personal level, as the time for him to fight Blair is over. What I found too much to accept was that Blair should go out to applause. Applause has never been part of the Commons tradition for a variety of good reasons. It is particularly inappropriate for such a contentious figure.

Tony Blair reported to us three more deaths from his wars last week. His senior staff still have a police enquiry hanging over them concerning the award of peerages. He has left us the loathsome EU draft treaty, which would mean if implemented he surrendered 140 areas of public policy to EU majority voting. He leaves us?? bodged constitutional arrangements in Scotland, Wales and London, and a purged but not reformed House of Lords. He has plundered our civil liberties and our wallets and purses. Never has a government spent so much of the people’s money to so little effect.

He did not deserve a standing ovation. History will be rightly more sceptical of his claims to greatness than the Commons was yesterday.

2 responses so far

Jun 27 2007

Who should go in the Brown reshuffle?

Voters want a government which is more competent, above all else. The Blair Ministerial team concentrated on spin to the exclusion of much else. If you got a meeting with a Minister they had sheafs of press clippings and seemed most preoccupied by what had been written about a problem, rather than wishing to sort out the problem for its own sake.In department after department there are countless examples of waste, error and inneffective Ministerial activity. They believe that mouthing the words "We have massive increased investment in…" will see them through every problem, muddling investment for spending and usually unaware of how the money is being used or abused.

We know the Home Secretary goes, the Deputy Prime Minister goes and the Chancellorship is vacant.

It would be a good idea if the Health Secretary and?? the Culture Secretary also went, as the handling of the Health Service and the Olympics have been spectacularly bad even by this government’s standards.

It is widely rumoured David Milliband will be promoted. It is difficult to see why, as his department have bombed over payments to farmers, which he has been unable to sort out properly. He has shown no sureness of touch over global warming, and presided over an increase in UK carbon emmissions last year.??His predecessor, Maragret Beckett,was promoted to the Foreign Office despite this poor performance at Environment.

We should also look for the dismissal of the Defence Secretary, after the shambles of the naval hostages in the Middle East.

We have been marking time for months as Tony Blair said his long farewell and government drifted. Gordon Brown needs to demand higher standards of competence, and show by who he removes that he is serious about rooting out poor performance.

4 responses so far

Jun 26 2007

And he didn’t even protect the red lines!

When I was reading through the documents from the European Council for the PM’s statement and to appear on Newsnight yesterday, it became obvious that the defence of the red lines was just so much spin.

Our right to settle our own social security matters is "protected" by a so called "emergency brake" in place of the veto. The brake may prove as useless as the old Emergency brake or Luxembourg Compromise, which we used to be assured remained in place to proect any important national interests but has now fallen through disuse. The brake seems to be intended to slow rather than stop EU social security measures that particular states do not like.

Our right to an independent foreign policy is "defended" by a mere Declaration, the weakest form of noting?? a country’s concern in a new Treaty. The Declaration will prove as useful as an umbrella in a hurricane.

Our right to keep control of our own Criminal Justice system is "guaranteed" by the Opt-in device. This has already been overruled in an ECJ judgement which has said if the EU wishes to make criminal offences in areas where it has competence, it can??do so against the wishes of an individual state. This draft Treaty makes a huge increase in the areas of Union competence to which this judgement would apply, including criminal law!??

??Our ability to make our own laws unaffacted by the Charter of Human Rights is supported by a long and explicit Protocol. Lawyers are divided over whether this will work. Some believe the words of the Treaty will take precedence over the Protocol, and the Protocol will therefore be eroded by Court judgements. We can all agree that a Protocol is not as clear cut and as effective as keeping the veto Tony Blair wishes to surrender.

??It is a fitting but unhappy end to Tony Blair’s tenure as PM, to go out giving great chunks of our rights to self government away, whislt claiming he has protected our position. This is the Constitution by another name which the French and Dutch electors rejedted, and which the British people would reject if we were given the vote we were promised.

3 responses so far

Jun 25 2007

2 Old English Rain ceremonies

England has always had two fairly reliable ways of bringing the rain in summer.

In the first three sticks are placed near the centre of a field, three more sticks are placed facing them 22 yards away. Two men in white coats come out into the middle of the field, followed by 11 younger men in white trousers and sports shirts, carrying a hard red ball. This often makes it rain. This summer it worked perfectly at Durham, although it was not reliable in London.

In the second, people place a net between two posts across the middle of a beautiful English lawn. Two men in white shorts and sports shirts come out carrying huge bags full of towels, rackets and other equipment.This brings on the rain. It also works if two young ladies come out dressed in white with large bags full of equipment.

It worked perfectly today. It was so like it has always been that the BBC will need to bring a new expert on to interview, to reassure us that we should expect it to be cold and very wet in June as part of?? global warming!

No responses yet

Jun 25 2007

A levels and University places

I was pleased the Sunday Telegraph picked up the answers to one of my recent questions about school results.

When I asked what proportion of A grade A levels in modern languages and sciences were awarded to public school pupils I expected it to be high, but even I was surprised to learn that 40% of all A grade A levels in sciences and modern languages go to independent school pupils. (Only 7% of all pupils go to fee paying schools, although the sixth form percentage may be a bit higher)

No wonder the most prestigious Universities end up with a high proportion of independent school pupils. It is a disgrace that our state schools overall ??produce so few young people with good qualifications in modern languages and sciences, making it difficult for them to obtain places in maintstream academic subjects at the?? best universities.

Instead of the government lecturing Oxbridge and London for not letting in enough state school pupils, they should start working on hiring the qualified modern language and science teachers they need to teach those subjects successfully in state schools.

One response so far

Jun 25 2007

Social mobility killed by Labour

IT is good to hear even the BBC recognising that social mobility has declined badly in recent years. If education is the main ladder of opportunity, it has been moved away from the children of those on low incomes. The ladders are very firmly rooted in?? middle class areas, in an era when we have comprehensive schools throughout most of the country and when the standards of those schools vary widely. The old ladders, the grammar schools, assisted places and direct grant schools have been removed and nothing has been put in their place that works.

When the NTB Group of MPs first highlighted this issue in?? a pamphlet??in February ("The Caravan moves on…Putting social mobility back into Britain by Michael Fallon and the NTB Group of MPs)??the BBC and Labour were reluctant to take it up and had no wish to give us air time. I am glad they have reflected on it further and see the pressing need for new ideas to give people opportunity whatever their background. They should not ignore the power of enterprise, setting up your own business, as well as the power of education. A package of measures to make it easier to set up your own enterprise, by deregulating and cutting taxes for small businesses, would be a wonderful promoter of social mobility.

??In our pamphlet we identified three routes out of poverty. One was educational acheievment. The other two were climbing the property ladder and setting up your own business. You do not need a smart degree to either of those. Let’s make more progress on all three.

One response so far

Jun 24 2007

You are right to be angry about the way our powers of self government are being neutered

All the contributors to this site - and my email correspondents - are united in seeing how Tony Blair’s last act is in some ways his worst (Iraq aside). ??He has stitched Britain up with a shady deal, that brings most of the Constitution into effect whilst denying us the right to vote it down.

As someone who?? voted "No" in 1975 because I did not believe then then Labour government’s promises on Europe, who urged Margaret Thatcher not to give away any powers in the Single European Act, who??urged from within the government not to sign Maastricht?? and resigned from the government to help save the pound, and who has voted against Nice and Amsterdam in Parliament, you can rest assured I want a Eurosceptic solution to the problem of the UK in Europe. I am also very conscious that with the exception of winning the battle??to save??our currency, the Eurosceptic majority has lost all the way since 1972.

??To those who say we should not trust to a referendum, I say you are wrong. I have every confidence the British people would vote down any proposal put them to give more power to the EU. Why would we want the EU, which has done so much damage to fishing and farming where it has complete power, to run other things? The only way to start winning all the time we have a federalist government (Labour or Lib-Lab) is to secure a referendum. The only thing we have won in the last thirty years is the currency, where we did so by first securing??the promise of a ??referendum.

A Conservative government led by David Cameron would negotiate a very different relationship for the UK with the EU partners. The more power the federalist parties give away, the more we will need to change the agreements. It is time for all Euroscpetics to unite and fight. The first battle is the battle to secure a referendum on this new version of the Constitution. The Conservative leadership is clear on this issue, and right on this issue. All Eurosceptics should respond to the clarion call.

2 responses so far

Jun 23 2007

5 reasons why we need a referendum now

1. It’s the only way to hold these slippery Ministers to account - without a referendum they simply give our democracy away.

2. The people are???? more sensible than their government, and will vote No to more power to Brussels.

3. It will force those who claim to want more EU government to come out and make their case. We need to know who they are and why they think more Brussels power is a good idea.

4. Elected politicians are not elected to prevent future Parliaments doing their job - they need to ask the people if they wish to damage Parliament.

5. We were promised one for a good reason - these issues are crucial. If politicians wish to restore some trust they must keep their word.

6 responses so far

Jun 23 2007

We lose the veto in 52 areas and still no referendum

It’s a disgrace that Tony Blair has given so much away but will not hold the referendum he promised.

He has given away power in more areas than Maastricht (32) or Nice (40).

If Gordon Brown is serious about restoring confidence in UK politics he must hold a referendum as soon as possible.

One response so far

Jun 22 2007

What’s so difficult about saying “No”? Why we need a referendum.

I called my book on the Euro "Just say No".

We won that argument, because we forced the promise of a referendum from Tony Blair. Once he worked out he couldn’t ever win one, he accepted Gordon Brown’s advice and slid out of his commitment to introduce the currency. Once the EU got used to the idea that we weren’t going to surrender the popund any time soon, they turned to trying to take away our rights to self government in other areas instead.

When pressure from the Conservative Opposition in the House, and other pressure through the media, forced the promise of a referendum on the Constitution it looked as if we had an efective block on the transfer of more powers. This time a Europhile government ??decided to learn from??its defeat over the currency. We will now be told if the so-called "red lines" are not breached, the resulting Treaty is nothing like the Constitution, so there is no need of a referendum.

No wonder, in Gordon Brown’s words, people have no trust in??politics. Polling shows 80% of the public want a referendum on any new Treaty. Polling shows the Conservative’s policy of demanding a referendum is the most popular policy we have announced.

You need to be 53 years old to have voted in the one and only referendum on the EEC/EU so far held. Those of us who voted (when I was very young!) now learn that many deeply regret casting their vote in favour of the EEC, as they believed the assurances given at the time that it would not damage the UK’s right to self government and was merely a trading arrangement. As one who did not believe that baloney from the then Labour government and voted "No" it is not satisfactory to discover that many who did vote "Yes" feel they were misled by the politicians of the day.

As many over age 53 would like the chance to remedy their mistake in voting "Yes", and as many who are under 53 want a vote because they do?? not see why their lives should be dictated to by a vote held so long ago in a very different country in very different circumstances, the case for a vote is overwhelming.

Gordon Brown is in a hole over this. There are two simple ways out. The easiest way is to tell Tony Blair to say "No". Why is the EU wasting its time and our money discussing another power grab, when its plans are so unpopular in France, Poland ??and Holland as well as in the UK? Tony Blair should say at the summit that there are more pressing problems for the EU to deal with - like the failure of the world trade talks. The mess over trade and agriculture is eloquent testimony to why we do not want them running more things on our behalf.

The only other course is for Gordon Brown to honour the promise of a referendum on the new Treaty. Then the British people can have its say. If those of us who do not more powers??for the EU win,?? we force a renegotiation of our whole position, around an agenda of returning powers to the UK. If we lose, I for one?? will accept the verdict of the people, just as I had to in 1975.

3 responses so far

Jun 21 2007

Tony Blair - a job offer from President Bush

We learn that the US is seriously considering offering Tony Blair a job seeking to find peace in the?? Middle East by tackling the Palestinian problem. He would be working for the quartet, although so far Russia does not seem to have been brought into the loop??to agree such a move. After Mr Blair’s account to Parliament of his difficult exchanges with Mr Putin at the recent G8 summit Russia it would be wise to ask them nicely.

??It would be the least bad solution to the question of what??this ??former Prime Minister with plenty of energy left??should do. He knows many of the important players. He certainly knows the immediate history to the present chaos, as the Middle East has dominated his last six years in power. His talents are presentational, not managerial. He is best at tallking to people, not at running large organisations.

He will have the goodwill of the British people as well as of the US administration in any serious effort to solve the Palestinian problem. He leaves power mired in unpopularity for what he has done, but with more support for the style and personality he has brought to high office. If he could harness these strengths to a popular cause - peace through talking - rather than to an unpopular one - regime change through force -??he will get a better press.

It is one of the toughest diplomatic challlenges anyone can be given. We should not expect any easy or rapid improvements, but we do need to try to move things forward.

3 responses so far

Jun 21 2007

Gordon Brown 3 Menzies Campbell 0

The Prime Minister in waiting’s first public move was a masterstroke.

He invites the Lib Dem leader in for talks, offering junior jobs in his government. By doing this he poses as a thoroughly "new" politician, trying to build consensus with people beyond his party, showing he is not wishing to retreat into an old Labour bunker.

If the Lib Dem leader accepted, he would bind his party to supporting past and present policies of the Labour government, for very little influence. If he refused, he would show all that Liberal hot air about wanting a "new" style of politics that allows people of different parties to co-operate in the public interest is just spin that they do not mean.

Menzies Campbell decided to reject the offer.

The story leaks out, and the troubles in the Lib Dems begin. Having lit the yellow touch paper Gordon Brown does not retreat behind the nearest spin doctor, but decides to light some further political pyrotechnics.

He offers the former Liberal democrat leader, Paddy Ashdown, a place in the Cabinet - probably Northern Ireland Secretary - behind the back of the present Lib Dem leader.

It was a brilliant calculated risk. If Ashdown accepted, the Lib Dems would split between those who liked Ashdown and thought he was right to try to influence the Labour government, and those who thought the Leader was right to have nothing to do with Labour patronage. If Ashdown refused, it would underline the message that Lib Dems are not serious about building consensus and co-operating in power. Ashdown is working in Northern Ireland, and could offer something to the post settlement position there.

Ashdown decided to turn the offer down. Gordon Brown can sit back happy in the knowledge that there will be serious repercussions in the Lib Dems, who will have to argue over their model of politics, based on the assumption that they come third and then seek to enter alliances or coalitions with one of the major parties.

Alan Johnson, Educaiton Secretary,??this morning on the radio did not seem to understand the political finesse behind all this. When he was asked about job offers for Lib dems he rejoiced that they do not want to enter a coalition, because he said, nor do Labour. Clearly Gordon Brown is going to have to put senior Labour figures through some politcal education, so they do not??give the ball away from his brilliant long passes.??

2 responses so far

Jun 20 2007

Tax “breaks” and venture capital

As soon as something is successful in the UK people pop up to condemn it and demand that it be taxed more.

Most countries would?? be delighted to have the concentration of talent and business skill that the UK has assembled in the private equity area. If we do tax it too much then the industry will move somewhere else more welcoming, but still be able to bid for UK companies from an overseas base.

??The Trade Union and Labour MP enemies of private equity have highlighted two "tax breaks" which they think are "unfair". The first is??taper relief??on capital gains tax on investments in companies held for a sufficiently long time. The second is the deduction of interest from profits before charging corporation tax.

??The first thing to understand is that there are no special tax deals or arrangements for private equity. Private equity investors and managers have to pay tax in exactly the same way as everyone else. If you????increase taxes on them you increase them on??everyone else.??

The second thing to understand is that private equity has not found a way to pay 10% income tax instead of 41% Income tax and National Insurance on higher earnings. As they pay themselves salaries??they have to pay 41% on the money.

If they issue free shares to managers and staff, the people concerned have to pay income tax on the value of those shares granted to them, usually at the higher rate of 40%.

The Trade Unions seem to be most concerned about cases where venture capitalists only pay 10% capital gains when their investments are successful. This case arises where a) they have put up money to buy the shares in the first place out of taxed income, b) where they have held the investment for a long time and c) it is successful. Like everyone else they can use taper relief to pay 10% instead of the 40% standard rate of CGT.

This idea of taper relief was introduced to encourage people to put up money to create new or better businesses. Why stop it when it is successful? It would mean ending it for everyone,including individuals and familes who work hard over the years to build up a family business. The government does not pay the losses if the investments go wrong.

??The industry does borrow to enable it to invest in substantial companies. Every business is allowed to deduct the interest it pays on its borrowings before paying tax on profits. That is the only way to do it, as interest is a cost of doing business just like paying the wages or the suppliers. If you decided to make venture capitalists pay corporation tax on the interest they pay the banks you would kill the industry in the UK, and would bankrupt quite a lot of other companies that borrow money to do business and would not have spare cash to pay tax on their interest payments.

The other thing the critics forget is that many people are beneficiaries of private equity success in improving the performance of companies. Anyone who is part of??a pension scheme may find their pension plan is invested in private equity funds as well as directly in company shares. Some of private equity’s critics may well beneficiaries themselves, who clearly are not telling their pension fund trusteees to avoid such investments.

The media concentrate on telling us the industry has been no good at putting its case. That’s because they are getting on with investing and growing UK businesses. If the government buys the idea that business has to pay more tax in the UK they simply have lost the plot. We should not be discussing removing some tax "breaks" that allow people to be enterprising here, but discussing how we can lower tax rates on enterprise and saving more generally, so we can grow the economy more quickly, creating more jobs and higher incomes.

4 responses so far

Jun 20 2007

Go to work on the nanny state

I hear on the radio that the slogan "Go to work on an egg" has been banned from the airwaves, as such advice does not recommend a balanced diet!

It goes to show how stupid some bans can be, as it has given the old slogan far more attention than if the banners had allowed it to be broadcast again.

As someone who does not usually go to work on an egg, I do question this idea of a "Balanced diet". Is it??unbalanced to always have toast in the morning, to always drink tea, or to hit the cornflakes every day? If it is, then most people have unbalanced diets.

I say, go to work on an egg if you like them. And let’s all go to work on sorting out the nonsense of so many prescriptive rules about what people can and cannot say.

3 responses so far

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