Superfast Broadband essential for the UK

Great article at the Guardian talking about broadband requirement projections for the UK. I’m barely over a mile from an exchange and I can only get 2MBit. We should have fibre to the premises – we’ll need the bandwidth by the time BT gets its act together with its already old, new network.


Eliminating child poverty

If the UK Government reduced tax evasion by 50%, changed the income tax personal allowance (+NIC PT threshold) to £13,416, and ended personal tax credits we could eliminate actual child poverty. See below for how this would work.

The problem.

Child poverty has always worried me. When I was at school I remember friends of mine who kept forgetting to bring the £1 for non uniform day. We typically did this twice a year before the holidays, or for Red Nose Day. The first year my friend forgot, naturally he was made fun of, as kids do. Then it happened twice in the same year. Forgetful guy. Then it happened for every year – 5 years in total. After the third year everyone realised the true reason for him not paying the £1 – his family simply did not have it spare to spend.

Since leaving school you still see the signs of poverty. Many people are too embarrassed to admit issues. As a youth leader I’ve seen families struggle with the £1 per week subscriptions for clubs too, or struggle to pay for monthly hair cuts, or new clothing. Its a very real problem.

I decided to have a look at the definitions of Child Poverty. I read the headlines from Barnardos and a UK Parliamentary Committee Report. These date from 2004 and have a headline figure that 3.6 million children in the UK live in poverty. That’s 28% of all UK children. But where does this figure come from? I had assumed that it would be based on the minimum amount of money required for food, housing, clothing etc. for a household. This would give you a measure of actual poverty. Unfortunately the stats are all based on relative poverty. This means that a household is classed as being in poverty if their income is below 60% of the Median average income of the whole of the UK. The problem with this measure is that you could change the benefits system so that if you pay every household an extra £5000 a year, the exact same amount of people will be in relative poverty! You’d still have, under this measure, 3.6 million children in poverty. Not a particularly useful definition or method to track improvements over time.

How about actual poverty?

I like to look at real examples. Lets pick a lone parent family with two kids. Two reasons for this, firstly it makes the ‘household income’ easier to think about because there is one earner in the house, and secondly because lone parent families are more likely to live in poverty. Here’s what Barnardos have found:-

“In lone parent households, 41 per cent of children are living in poverty, compared to 23 per cent in two parent families[1]. Much of this is due to high levels of worklessness and low out of work benefits: A lone parent with two children, one aged 14 and the other aged five, needs £258 to take them above the after housing costs poverty line. The amount of benefit that this family would get if the parent was out of work is £219, which is well below the poverty line[2].”
[1] Department for Work and Pensions, 2012, Households Below Average Income 2010/2011. Figures are after housing costs.
[2] Barnardo’s calculation based on Jobseeker’s Allowance, Child Benefit and Child Tax Credit rates from April 2012.

This includes basic expenditure. It does not include what I would term social exclusion. That’s the cost of school trips or youth group camps which are key in personal and social development in young people. It also doesn’t include a one week UK family holiday like those I had as a child. So lets take the £258 and up this to £275. This means they need a yearly income of £13 416. This might be skewed a bit because of ridiculous London housing costs, but is at least a realistic measure. This is though quite a lot of money!

According to Her Majesty’s Revenue and Customs, the personal allowance (the amount you earn before you start to pay tax) for 2012-2013 is £8105. You pay 20% on all earnings above this (until you hit the 40% rate at £34370). You will also pay National Insurance Contributions (NICs) if you reach the ‘Primary Threshold’. You’ll pay these at 12% of income above this level. The PT level in 2012-2013 is £146 per week. So our family above will pay NICs of £15.48 per week. This is £805 per year. They also pay income tax of £1062. They will also pay council tax. This is a bit hard to figure out because it’s based on house prices in the 1990s! Lets assume a band C property though at a yearly tax rate of £838. A family on the poverty line is required to still pay £2705 per year in taxes. This is 20% of their income. This seems ridiculous to me.

Now we could use Tax Credits to claw this back. I used HMRCs childcare calculator. I also estimated that our under 5 child’s care would cost £41 per week (£7592 annually). I also assumed our employer offered £5 per week in childcare vouchers. (No idea how this works – don’t have children myself!) So our annual tax credits are…….. £185. Big woop. This system just has to cost more to administer than the amount it hands out. I suppose it is aimed at lower income families, but we’re trying to eliminate child poverty here!!! We don’t need tax credits if our tax level is lowered, so lets look at lowering that.

What does the child tax credit system cost?

If we eliminate the tax credit system and instead increase the personal allowance to compensate we might have some money to spend on this. Obviously I’m cheating a bit here, because the personal allowance would affect everyone in the country, whereas I’m concentrating only on my type of family – single parent, two children. So my ‘costs’ are likely to be much lower. I’m assuming Government can find a cunning way to target these people, although past experience would prove the opposite.

Also I’m not advocating we pay every lone parent £13K a year! I do think, though, that if we know this is the poverty line for a family then we are morally required to do what we can for this group of people. Taxing people below this line would seem to me to be dubious. It should be pointed out we can save this family the 20% they are paying in tax in other ways. We could lower or eliminate Sales tax (VAT). That would benefit everyone though, not to mention bankrupt the UK. I think using the income tax system to do this is common sense. We’re talking about ensuring income, so targeting income tax and NICs makes sense.

It should also be noted that the biggest contribution to poverty is worklessness in families. Just look at graph 8 from

So what’s the cost? Lets look at the number of households earning below £13k per year.  Apparently our taxpayer fits in here according to the IFS:-

Looking at the above graph from the IFS you find approx 5.3 million taxpayers below or at our family’s level. They’ll all be paying some level of tax up to the level of our family, even if it’s just council tax. Lets assume an even distribution (always dangerous, I know) and multiply this number by half of our family’s tax burden (as the lower earners would pay less, down to zero). This means you’d have to find savings of £7.168 billion.

(Note that this number includes the 0.5 million non earners – I assume they will find work or get rebates for child costs for the equivalent. Positive mental attitude and all that.)

In the grand scheme of things this isn’t actually that much. The problem with the tax system though is that it’s percentage based, so by giving a percentage tax break the the lower earners you’d have to give it to everyone else too, because it’s a sliding scale. So to do this across the board would mean adding an extra £2705 multiplied by the remaining taxpayers (total uk working population – our 5.3 million). Apparently there are 29.2 million people in employment. So an extra 23.9 million people would need to be funded. The actual cost would be therefore £71.8175 billion. Ouch. (We’ll say £72 billion to ensure we cover it). You’d have to change the basic rate of income tax to compensate, after moving it to start at £13416 (along with NICs changes). This means the average earner above this level would pay an extra £3013 in tax per year. Again that’s on a sliding scale, so lower earners pay below this and higher earners more than this.

Taking the average UK wage of £26K and subtracting our tax start rate of £13.416K gives £12584 taxable income. So as a percentage we’d have to add 24% to the basic rate of tax, making it above the higher rate, at 44%! I doubt you’d get any votes for this as a policy!!!

(Note that the above does not include Employer’s NIC contributions. If we provided tax relief for that there would be an additional cost again. Although this would likely increase job creation in the private sector, so could be beneficial.)

Other ways to pay for this

There is hope, however, in that our tax system is ridiculously complex and costly. If we can find enough savings and crack down on tax evasion we should be able to pay for it. You could pay for nearly all of it by cracking down on the £69.9 billion we lose in tax evasion. Eliminating this is difficult, but clawing back half should be achievable, which is £35 billion. Increasing the personal allowance would also mean there is little point having a personal tax credits system. Also given that only half of eligible families apply for tax credits, its not very effective on its own anyway. According to the latest HMRC report (page 26), total cost for this system for 2012 is estimated to be £29.9 billion, so say £30 billion as it’s predicted to pass that level next year. That’s £65 billion saved already. The remaining cost would be £7 billion. The remaining percentage increase required on the basic rate would therefore only be 2.18%. Nice!

So in summary we can eliminate *actual* child poverty by doing this:-

  • Increase income tax personal allowance to £13,416 from £8105
  • Eliminate employee National Insurance contributions below this income level (Change the PT threshold to 13416)
  • Eliminate the personal tax credits system
  • Increase the basic rate of income tax from 20% to 22.18%

Some other useful policies might be (uncosted):-

  • Reduce Employer NIC contributions to encourage taking on more employees
  • Eliminate employee NICs altogether and instead merge with income tax
  • Require all payment to be made via PAYE, setting up a central government website where the self employed or contractors can register their tax payer reference and bank account number so that payees can pay online, and HMRC pays people themselves via PAYE (should be very cheap and simple to do – HMRC already maintain a unique taxpayer reference and have a secure taxpayer portal)

Why we need a strong, independent House of Lords

If you ask most people what they think the House of Lords is for they will likely say something like a retirement fund for ex-politicians, or a place for the upper classes to lord themselves over the rest of us. They may say that it is undemocratic, has too much power, and prevents the House of Commons from successfully carrying out its duties.

This is very far from the truth.

In this excellent piece of constitutional research the author, Le Patron, points out how very few Acts of Parliament the House of Lords has tried to block. Indeed all of them are constitutional in nature, where the Lords clearly felt there was not a political mandate from the people of the UK. Typically these acts had substantial portions that were not part of parties’ election manifestos, and thus the people had not had a vote on. This is particularly ironic given the current Liberal Democrat Leader is trying to force an elected chamber through without a constitutional referendum. Just because each party’s manifesto said they wanted to reform the House of Lords does not give them carte blanche to alter it when the details were not in their manifestos before the election.

But these are arguments for another day.

Why do we need a House of Lords? The Lords has few powers to prevent the House of Commons from enacting legislation. They can amend legislation, but each amendment can either be accepted or rejected by the House of Commons before a bill is sent back after amendment to the House of Lords. There are no long lived ping pongs of legislation between the two houses. The House of Lords merely reviews and suggests alterations to legislation. They are uniquely suited to this job because they have a strong make up of people with expertise in particular fields. These people can see potential pit falls, gaps, loopholes and problems in legislation before it becomes law. Without experts reviewing legislation in the House of Lords we would have weaker laws and ineffective policy.

Why are we talking about Lords reform? The House of Commons has a habit of shouting loudly at the House of Lords that they cannot block or drastically alter legislation because they do not agree with it. This bluster covers up real misgivings amongst those in the know about the detail in legislation. The devil, after all, is in the detail. If the House of Commons forces legislation through with a three line whip, and the House of Lords just rubber stamps legislation, then who will point out the faults? No one. We would be left with a system whereby patronage, party majorities, and lobbyists decide not just the political direction of legislation, but also the quality – or lack thereof – of that legislation. The bigger the majority, the less rigorous the laws. Minority opinions would be silenced, pushed out. Only professional politicians would be left. The ‘Westminster bubble’ would decide the direction of the whole country with even less input from the regions as currently happens. With an elected Lords along party lines, from Penzance to Penrith, Birmingham to Belfast, Glasgow to Grantham, our voices would be simply ignored.

What are our British checks and balances? In the UK we do not have a formal constitution written in stone. Or indeed anything else. We are a flexible nation that modernises over time to meet emerging challenges. Our future is not dictated by our past. We all act according to a common code, or set of values. We do not need these listed, or boiled down, because they are inherent to our being. Indeed listing only a subset may constrain what our descendants could do to meet emerging challenges. Even in Parliament these conventions exist. The Queen does not, by convention, send legislation back to the Commons for them to reconsider. The House of Lords, by convention, does not reject legislation that is detailed within a governments’ manifesto.

If we allow political parties to dictate 80% of those selected for election to the House of Lords, who will stop the Commons from introducing legislation that is way beyond what they were elected to enact? The Queen does not by convention for quite understandable reasons. The Supreme Court cannot either because if legislation is enacted then they are powerless to strike it down due to the primacy of Parliament. So who will stop it? Without the House of Lords, no-one. We need a strong, independent House of Lords with a strong voice, and clear mission, to protect the UK from legislation with no public support.

How have the Lords really helped improve legislation? The House of Lords has significantly amended or rejected the following bills from the Commons:-

  • Rejected the Mode of Trial (No 2) Bill 2000 because it attempted to restrict the use of Trial by Jury
  • Rejected the War Crimes Act 1991 which allowed those suspected of war crimes in Germany in WWII to be tried in Britain for those war crimes even if they were not sought for prosecution in Germany itself, and if those people had subsequently become British Citizens. This was forced through by the Conservative government via the use of the Parliament Act 1911. Thus also dispelling the myth that the Lords will only block Labour or Liberal legislation.
  • … others anyone? [Could do with more stats here]

The Lords have also improved legislation recently. Here are some highlights:-

  • Amendments to the Protection of Freedom Act to: 1: Prevent non public bodies from using covert third party human sources to collect intelligence for minor offences [Have private investigators rifle through your trash and talk to your neighbours], 2,6,7,8,9: Created a new criminal offence of stalking [didn’t exist!], 4,5: removes loophole allowing people with child protection offences to have a CRB done but it NOT show up their convictions if their new job does not permit unsupervised access to children
  • Amendments to the Social Care Act 2012: 1: Allow charities to reclaim VAT for the same items as the NHS when providing healthcare services, 7: increase duties on NHS regulators to ensure equality of provision, 14: Add a board to oversee the civil servant in charge of Health England which would have 4500 staff but would otherwise had been accountable to no one unless Parliament investigated, 17: Add training and registration requirements to health care workers
  • Amendments to the Welfare Reform Act 2012: 1: Make the difference between the normal and higher support rate for disabled children less (would have been £1400 per year)

The House of Lords has the following powers:-

  • The House of Lords maintains a veto that cannot be overridden to any legislation that attempts to extend the life of the House of Commons to over 5 years
  • The House of Lords maintains a veto over subordinate legislation (that is legislation introduced by a minister because a previously passed Act may say ‘The Home Secretary may introduce an order to active section 4(1) of this Act’ for example.
  • Amongst others…

The House of Lords should be able to restrict any increases in executive power of the House of Commons, or indeed just the Government in Majority in that house. The House of Lords can be bypassed in the following way:-

  • Using the Parliament Act 1911 to ‘skip’ House of Lords approval for a Money Bill (E.g. ‘Her Majesty’s Government hereby gives £1bn to the Fascist Party of Great Britain’) – if it has a Speaker’s note attached, then it is a Money Bill, and cannot be vetoed by the Lords
  • Using the Parliament Act 1911 to force through after one session (not less than 13 months) any legislation that the House of Lords first rejects, and which does not change between its submissions to the House of Lords (E.g. ‘The only valid political party is the Communist Party of Great Britain’ or perhaps more worryingly ‘The Most Disagreeable Party is hereby banned from standing for elections in the UK’)

We need a House of Lords that:-

  • Is guaranteed a right to amend legislation for reconsideration by the Commons
  • Where the Commons cannot force through legislation that the Lords does not believe has a majority of public support
  • Can refer matters to a referendum of the people of the UK where the Commons is trying to force through particular legislation
  • Forces the commons to think more about the implications of whipping and rushing through legislation that they do not have a political mandate for
  • Guarantees an elected party in majority in the House of Commons cannot infringe upon the rights of the people of the United Kingdom or alter its constitution without their explicit consent