Permission to fire Sir - another banker in range

The banking bonus system originated at a time when the investment bankers were partners in smaller investment banks in a similar structure to Lloyds, the insurers. The bonus was then a fair reward for the profits made over the year.

However, like Lloyds, there was unlimited liability. So if the banks can justify the generous bonus payments in the good times then the assets, the houses, the shares of the bonus receivers, should have been seized before there was any thought of asking for help from the tax payer.

A secondary factor is that a large part of the government’s deficit was made up support for the banks in taking over toxic debt, very cheap money supplies of benefit both to the nationalised banks and to those, such as Barclays, which took massive loans from the Middle East, to protect its independence, (which I suspect is a way to protect the power of the management to award themselves bonuses).

If we are looking at a pure capitalist model how are they going to repay the taxpayer for this vast amount of subsidised capital. Logically it should be through increased tax on the bonuses.

My third point is what the hell are the shareholders, the pension fund managers and insurance finds, doing allowing the bankers to get away with the current bonus system – effectively the process is ripping off their income. (Oh yes the real reason of course is that their managers are also on the inflated bonus circuit). In my opinion this money is being stolen from pensioners and small investors.

A fourth point is that the banks are using the cheap tax payers money to invest in speculative ventures in Asia. They are not supporting British small and medium sized businesses. It should be made clear to them that if they don’t play ball – they will suffer.

A fifth point the threat of investment talent moving away from London is entirely false. Where to? The Swiss financial press is full of shock horror stories of their bankers moving to London when their new regulations come in. Most other places will be bring regulations or they’ll be dealing in countries where the laws are more flexible: in favour of the locals, particularly if you don’t know the right people to bribe.

It’s about time these nasty games were stopped, but I expect that the long term career plan of Cameron and Osborne is to retire from politics with a whole raft of directorships – so let’s keep the bonus culture going.

Response to Steve Richards article “Don’t expect protests to achieve much” in the Independent.

In your article you state that protests do not bring about change of policy. You give as an example the Poll Tax protests. I believe you are right and wrong.

Scottish Poll Tax Revolt

What really changed the policy was the Scottish Poll Tax revolt, where tens of thousands of people refused to pay the tax. There were also numerous local demonstrations in Scotland.

Although being pressured by the government the local councils were reluctant to take people to court as effectively they creating martyrs, which had the effect of encouraging more people to revolt.

They also realised that the size of the revolt meant that if they took legal action against substantial numbers of the protesters the whole justice system would come to a halt.

In addition the number of protesters willing to go to jail for the cause would have quickly filled up the jails and the costs involved in incarcerating so many protesters would have bankrupted the prison system.

Success of the protest

As it slowly dawned on the Thatcher government that there was a problem that they could not resolve the demonstration in London, which did turn violent, and hit the headlines was the coup de grace. The policy couldn’t work and Margaret Thatcher’s Prime Minstership was doomed.

The longer term result is that Conservative politicians are an endangered species in Scotland. The current government’s extreme cuts policy may complete the process.

Student Tuition Fee Protests

Going onto the student protests on tuition fees. I accept that they will not be effective enough to prevent the policy getting approved. But this is not the end of the matter.

One effect will be that a great many of the students that have protested, and a great many who sympathised, but did not go out of the streets will, as you suggest, become politicised.

Stirring People into Action

It has stirred to action many other people, like myself, into becoming more active. I’ve started joining various issue groups and I’m looking for ways to be more active. At the moment this consists of boycotting various organisations, such as cancelling my Vodofone subscription, (to protest over their tax avoidance), and Marks and Spencers and Asda, unless they sack the senior executives, who signed the letter supporting Osborne’s cuts. Short term not effective, but as more and more people become influenced the effect could be serious for these companies, which in turn could have an effect on politics and policy.

I think you will find over the next few years that gradually the politics game will change. The complacent Westminster, ‘Business as Usual’, process will start being undermined and that politicians will need to be more aware of protests and issue groups.

The Dangers if Protesters are Ignored

If not then the danger is that protests will turn violent and that some misguided individuals will turn to terrorist tactics. Another probability is that some of the street gangs will become politicised as the cuts hit their communities which will result in serious riots, as in urban Paris, which will really shake up the political system.

Links

Image:  Flickr: SonniesEdge (upper)  and DaisyBush (lower)

Both have interesting sets of photographs to see.

I have questions rather than a comment and perhaps someone can answer them for me. How will they know when a graduate is earning enough to pay the tax? What will they do if they leave the country, is there a mechanism in place to recover the money even if they do.

They’ll know when some is earning enough through their income tax return. So the proposal is really a complicated graduate tax, except the tuition fee is borrowed and interest is added to the outstanding loan.

At the moment the interest rate is subsidised by the government, but this will be scrapped soon as graduates will have to pay a commercial interest rate in the near future, probably when this scheme is implemented. So the extra costs are the lending company’s fees and profit.

Someone working in a low paid job will therefore be accumulating interest on their outstanding loan for many years. At present interest rates the loan will double in around 12 to 15 years. As rates will almost certainly go up this period of doubling will reduce to maybe six or eight years.

So apart from the few who pay off their loan quickly I reckon the majority will never pay off their loan. It will not take much effort in parliament to change the rules to where the debt repayment stops, at I believe, forty to move the goal to fifty or until
the person retires.
The self employed may be able to hide their income and I’m sure that the investment bankers will able to hide their bonuses off shore.

I know of at least one person who has emigrated to America and has just stopped paying their existing loan. There is very little the loan company can do about this situation. This makes the very spurious argument that the same thing can happen to someone on a graduate tax scheme.

Well in my humble experience as a further education lecturer I can tell you that the fees affect the decisions made by many of my poorer students.

This has ranged from some not going to university and many not going to university away from home, even though this might be the best decision for them.

The debt has an affect on poorer students’ student life in that they are more likely to take part time and even full time jobs, which can either harm their grade and in quite a few cases result in students dropping out.

Graduating students from poorer backgrounds will often take the first job offered, (this was a few years ago when there were jobs), which may harm their long term career progression.  They see paying off the debt as a priority.

Students from a more middle class background worry less about the debt.

Also alarming is the number of under graduates who have decided not to proceed with starting a business as the mountain of debt hangs over them.

As the tuition loan is effectively a very expensive and complicated way of administering a graduate tax – then why not just have a graduate tax?

The loan is given out by a company that collects it’s money back through the taxes.  The rate of the loan is at the moment subsidised by the government.

As the loan organisation has to make a profit and I would expect bonuses for the bosses it will be expensive. there is also the need and cost of contacting graduated students  to tell them how much they owe and how much interest they have accumulated in the year.

I also note that there are currently a high number of students having problems with their loans at present.  All a student would have to do under a graduate tax system is turn up and prove their English residency.  (I note the same rules do not apply to Scotland, Wales and Northern Ireland.)

I also note that it is the government’s intention to charge realistic, commercial rates of interest, which in a few years time and interest rates rising will mean that debt will double every few years.

I also have doubts of the cut off point at the age of 40.  I reckon if the Conservatives for a second term then they can easily change the rule – so that the loan has to be paid off.

I went to university at a time when not only was tuition free, but I was also given a grant.  Why doesn’t the government extend the graduate tax to those of us that have benefited or cannot that be done as the policy makers may have to pay.

POOR STUDENTS ARE BADLY AFFECTED BY THE TUITION FEES

I used to work in a college for foreign students in the early 1980s.  Reputable colleges urged the then Thatcher government to strengthen the regulation of the sector.

This was refused as the government felt that a private industry should be self regulating.  There was therefore no restriction on anyone setting up a college with the result that many dodgy colleges were set up – some with dubious qualifications and some as a cover for those seeking an entry into the UK to work.

The current plans will hit many of the legitimate centres and will lose the economy around a one billion a year, plus closing down businesses and putting lecturers and administrators out of work.

The motivate for the majority of students I taught were to follow a course in an English environment to improve their career prospects.  This is why courses in computing and business are popular.

Another reason for attending these courses is as a foundation for a year before taking a degree.  This is sensible as it will improve their performance when they study.  The sector makes the attraction of studying a degree in the UK substantially higher.

The loss of this foundation, the increased costs of visas combined with the now unpleasant process of applying will be putting off thousands of genuine potential undergraduate and postgraduate students. This will make a huge hole in the proposed budgets of universities, which are already being badly affected by the government cuts.

So what the government is going to do is to destroy a substantial section of this useful income earner and at the same time boosting the educational sectors of countries, such as Australia, Canada and the USA.

I used to work in a college for foreign students in the early 1980s.  Reputable colleges urged the then Thatcher government to strengthen the regulation of the sector.

This was refused as the government felt that a private industry should be self regulating.  There was therefore no restriction on anyone setting up a college with the result that many dodgy colleges were set up – some with dubious qualifications and some as a cover for those seeking an entry into the UK to work.

The current plans will hit many of the legitimate centres and will lose the economy around a one billion a year, plus closing down businesses and putting lecturers and administrators out of work.

The motivate for the majority of students I taught were to follow a course in an English environment to improve their career prospects.  This is why courses in computing and business are popular.

Another reason for attending these courses is as a foundation for a year before taking a degree.  This is sensible as it will improve their performance when they study.  The sector makes the attraction of studying a degree in the UK substantially higher.

The loss of this foundation, the increased costs of visas combined with the now unpleasant process of applying will be putting off thousands of genuine potential undergraduate and postgraduate students. This will make a huge hole in the proposed budgets of universities, which are already being badly affected by the government cuts.

So what the government is going to do is to destroy a substantial section of this useful income earner and at the same time boosting the educational sectors of countries, such as Australia, Canada and the USA.

Death of the Liberal Party leadership

If Clegg and Cable vote for the increase in tuition fees then they will lose a lot of support among their own supporters. As a voter in Vice Cable’s constituency this will be a make or break decision on how I vote in the next election and I’ll do my best to persuade others not to vote for him.

I support the idea of a graduate tax. It is by far the most sensible alternative. As an ex-FE lecturer I know that the fear of university debt comes more from bright kids from a poor background, than from middle class kids.

Graduate tax is a good thing

The only reason a graduate tax is being rejected is that in the short term it will save the government’s cash flow. Longer term it would be cheaper, as there’s no administration fees, beyond a little tinkering with tax codes and it would bring in a surplus, that could then be used to help poorer students gain places at say Oxbridge, or could be used to extend research grants.

The present fee system is in effect an expensively run graduate tax. Money is taken from a graduate’s income tax when they reach a certain level of income. However, there are the costs of administering how the money being loaned, how much is being repaid, the addition of interest etc. All of this commercial companies making their little cut.

The big objection is, of course, that in the short term it would be expensive as the first few years would require government funding until graduates started earning. This, of course, would affect Osborne’s long term strategy of cutting taxes for the well off and corporations in time for the next election. However, government should think a little like a business and see middle term investment to reduce long term costs as a sensible strategy.

The arguments about foreign students and students moving abroad can easily be countered. First at present it requires an EU student to be resident in the UK before they are entitled to a loan. If not they have to pay home student fees. There is no need to change that situation. Only UK residents will be eligible for the graduate tax scheme.

Graduates that move abroad.

I would give graduates the right to travel abroad for two years for free. This gives people the right to do the grand tour or try out living in other countries. It will also reflect the fact that the majority of graduates will not be earning enough to trigger the graduate tax in their first few years of employment.

After that they build up a debt calculated on the average income, from graduate tax, the government receives from graduates. Those living abroad will then have the opportunity of either paying off their debt immediately or allowing it to build up. Those that chose the latter and return will be able to pay the debt back through a higher rate graduate tax. The system would be more beneficial to those paying back on a regular basis.

Those that do not pay will forfeit any UK benefits. They will also be subject to various forms of debt collection. I for one would see the government having the right to block say an inheritance being paid, unless the the graduate debt has been paid off.

There will be a few who will escape repayment. But, and this is a big BUT – there is nothing in the present system that prevents a graduate moving to America and not paying back their current debt.

Concerns

My only concerns with the graduate tax are that all money raised should be allocated to the universities. There has to be rules to stop the Treasury interfering with the system.

The other is the allocation of funds. They should be allocated by an independent commission that is not influenced by politicians. This will be difficult to organise.

LibDem leaders need to be aware

If Nick Clegg and Vince Cable decide to vote for the increase in university fees they will destroy the LibDem party. They will have gone back on pledges made by the party.  They do not have to vote for the policy.  If they do then they have sold out to Osborne.

The LibDem policy of a graduate tax is a far better medium term solution to sorting out university funding, rather than the Conservative’s far more expensive strategy of building up graduate debt.

The LibDem supporters understand this. The present government are too short term focused to even consider it.  Clegg and Cable do not let your party down.

In northern Europe counties sensibly run countries, such as Holland, Sweden, Denmark, France and Germany have supported the euro as part of their strategy to develop their countries for the future.

When I hitch-hiked around Europe in the early 1960s Britain was on about a par with all these countries, with the exception of Sweden.  In all these cases the country is developing better than the UK as their politicians seem to comprise and have longer term strategies than a maximum of a two year attention span.

They all have a more stable housing market, better public transport, health services are better and as important their working hours are shorter and generally they have more holidays.  In short the average person in one of these countries has a far better work/life balance than the UK.

This is demonstrated by the fact that many social indicators, such as rates of teenage pregnancies,  anti-social behaviour, drug taking and depression are lower in all these countries.

Co-operation on the euro and the EU are essential to their strategies.  It gives them a framework and an awareness which sadly British politicians lack.

And now. The euro is going through troubled times mainly caused by the scams, sorry ‘investment mistakes’ of the American financial markets.

Britain, Ireland, Spain and Portugal were particularly badly hit, as they used dodgy credit to fund a housing boom, which was then used as equity to fund consumer spending and speculation.  This is the result of bad regulation.

So the next few years are going to get heavy within the eurozone as they work through the crisis.

The economies, such as Spain and Portugal, will have to tighten up their borrowing.  Ireland, as part of its deal, will have to tighten up its taxation policy, particularly as regard to business taxes.

Greece and Italy will also be forced to develop systems to encourage the payment of taxes by the well off, who believe at present that taxations should be voluntary.

The result will be that in around five to eight years the countries in the eurozone will be run more like Germany or Sweden, with a sensible mix of public/ private spending and a more cautious approach to speculation by the big banks.

I'm angry

Of course in this country we will continuing ranting against Europe and the euro, as services to ordinary people decline, but this will still be the place that a few thousand speculators can amass a fortune and can safely avoid, and evade, paying their fair share of taxes.

My daughter now lives in Bristol.  On a short term visit to the city I was amazed.  In the centre there are dozens of quality graffiti images.  Although a few are influenced by the Britain’s most  influential graffiti artist, Bansky, there are numerous different styles. 

The atmosphere in the centre of the city is very edgy, there are obviously a lot of social problems, such as many with a severe alcohol addiction, obviously a drug problems and much poverty. 

However, there is a lot of positive energy.  There’s a mass of different ethnic shops, a wide collection of different churches, mosques and temples.  A wide range of interesting communtiy groups, with their cafes. 

The area organises Europe’s largest collection of street parties, is Britian’s centre for juggling and circus skills and it has a reputation for many unusual art projects. 

Bristol images

I'm angry

I’m starting a fund. Give them both a ticket on a National Express coach to Gretna. Let them stay in a B&B. Say ‘ah – isn’t that romantic’. Then forget about it.  Forget about them.

We’ll end up saving a forest the size of Wales being cut down, for unnecessary newsprint, and the TV can cut all the specials so that we can go back to the natural order of watching American serial killers, jovial chefs joking, endless house search and renovation programmes.

One thousand pound coins. One thousand people. And we’re spared the next 8 months, 10 months of speculation. Yes she’ll wear a dress. Yes they’ll be in a big coach. Yes they’re get married in some where posh. Yes his amusing, patronising friends will be there. These are the ones too thick to be in the present government.

There you are my predications.  Anyone need a royal correspondent?

Is my job safe?

It is estimated by the GMB trade union that around 37,000 council jobs will be lost in the next year because of the government cuts. A close friend’s job is definitely at risk as her council is going to lose a substantial grant from central government.

These 37,000 are the people employed by the council in full time work. This figure does not include the many who will, or have already, lost their temporary jobs. These will be people not sacked, but will be given a week or month termination of contract.

In addition there will be thousands, possibly tens of thousands of small businesses finding that their work is being reduced or badly affected. Many will close, many will have to fire staff. As everyone knows consumers are being careful. All well run businesses are being careful. To there are no new markets to take up the lost work.

As a case in point my daughter’s business, who provides information technology services, to her local council had all six small contracts terminated with ten days notice. This income was her bread and butter. Now I pay part of her mortgage to keep her going.

Having been in the public sector I know what is now happening. Managers are protecting there own jobs. They have the time, the resources and the contacts within councils to work out schemes to justify the redundancy of lower level hard working staff. One manager usually needs to remove about four staff to protect their own job.

Quite often it is the hardest working workers that lose their jobs as they have little time to protect themselves are usually less likely to kick up a fuss about going. So front line council services will not only lose staff, but probably the best staff.

So 37,000 direct job losses. Probably a true loss of nearer a 75,000 plus the closure of several thousand small businesses. Most will end up job seekers or other benefits. Many, will never get another job, except for the periodic, IDS, litter picking, punishment gangs for the criminally unemployed.

So when does the government realise that the magic businesses will not appear unless there is an emerging market? So when do they realise that cutting people’s jobs and cutting government spending actually throws tens of thousands, correction at least a million, onto to job seekers and other benefits? When will they realise that their strategy is exactly the same that brought down Ireland?