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22 May 2010

Disgusted of Tunbridge Wells

Tag(s): Politics & Economics

This week I joined the “Disgusted of Tunbridge Wells” Club when the Sunday Times Business section printed a letter I had written as follows:

Go figure 

Jenny Davey writes (Retail boss backs VAT rise to boost economy, last week 9.05.10) that a possible increase in the rate of VAT from 17.5% to 19.5% would add an estimated £31 a week to the average household bill. From where does she get this average? Such an increase is 2 percentage points or 1/50. If this increases average household expenditure by £31 per week then the expenditure would have been £1,550 per week or £80,600 per year.

This excludes zero rated items so the average household must be spending over £100,000 per year out of after- tax income, which we can now estimate at around £160,000 assuming no savings. So our economy has no worries, because our GDP is enormous and the Treasury's income tax take can easily afford all Gordon Brown's excesses.”

A similar error had been made by a Scottish nationalist on the Any Questions radio programme during the election campaign. This time my email was not read out but it read as follows:

“All politicians tell porkies but the SNP lady takes the biscuit. She quotes research that says that an increase in the rate of VAT to 20% would cost a poor family £30 per week. An increase to 20% is an increase of 2.5 points, i.e. 1/40. If that costs £30 the family is spending £1200 per week or £62,400 per year. That implies an annual income of at least £110,000 even assuming they spend nothing on zero rated items like food, public transport and children's clothes.”

Such errors are not mere details but fundamentally important because they show how poor the evidence may be for reaching conclusions about major issues of public policy. After all our late lamented Prime Minister, Gordon Brown, was quoted* as saying

“I did maths for a year at university. I don’t think I was very good at it.”

He has spent the last thirteen years demonstrating just that, first as Chancellor of the Exchequer and then as Prime Minister. It is not for me in this blog to write his political epitaph, many more distinguished commentators and historians are all jostling to do that. But if you want just one example of the legacy of a government that stated thirteen years ago that its three priorities were education, education, education then just consider recent research by the University of Sheffield that finds that 22% of English 16 to 19-year-olds are functionally innumerate and 17% are illiterate.

By an amazing coincidence an old friend of mine also had a letter published in the main section of this week’s Sunday Times. James Shillady and I were fellow exchange students in the Twin Cities of Minneapolis and St Paul over 40 years ago and he wrote:

“Alternative remedy

Thank you for explaining the alternative vote system and how voters’ second to fifth preferences are allocated, in successive steps, to surviving candidates. This apparently is one of the simpler options for replacing first-past-the–post.
Our present system is barely able to work out quickly which candidate has the biggest heap of completed ballot papers, each bearing a single cross. We are going to have to fork out for quite a large computer.”

James makes a good point and recent government computer initiatives have not been very successful. I have a postal vote and my local authority managed to mislay a PC with the database of 14,000 postal voters. This includes name & address, date of birth and signature! Noone has resigned yet.

But I quite like the Alternative Vote system. First-past-the-post was designed for a two party system and does not fit today’s pick and mix politics. Proportional Representation would break the constituency link with MPs and presumably, if it was now in practice, there would be 10 BNP Members of Parliament.

I would also advocate compulsory voting as they have in Chile. This ensures that the final candidate has an absolute majority, not just a plurality. I put this to Martin Bell, the famous white-suited former MP, whom I met when he was launching his book on the expenses disgrace, A Very British Revolution, The Expenses Scandal and How to Save our Democracy. He said the libertarian in him was against that. I said, what if there is a box for “None of the Above”, and if that wins you have to have a new election with new candidates? He said, "I like that!”

*in PFP Wealth Management

Copyright David C Pearson 2010 All rights reserved

 

 

 

 




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