At the end of my last blog I stated that I didn’t believe that people in the UK should go hungry.  Some folks might dismiss this as idealistic or unrealistic, although I don’t think basic food provision is a stretch goal for a developed nation. I pre-empt this criticism and try to show in this blog how deliberate policy has caused this hardship unnecessarily.

For sources I will use the office for national statistics and the office for budget responsibility.  Feel free to check my sources and respond if you disagree.

https://www.ons.gov.uk/

https://obr.uk/

For the record, I pay both corporation tax and higher rate tax, so have personally benefitted from the UK government policies of the last 8 years or so.  However I would prefer to pay more in tax to support the social infrastructure rather than donate money to foodbanks to help prop up a poisonous government ideology.

Tax and tax rates are pretty complicated and it is easy to get bogged down in the numbers so how much to we pay in tax and spend?  These two charts from the OBR show the 2018/19 numbers:

From a personal tax point of view, overall we are paying less personal tax as a proportion of GDP than we have for a long time, as this graph from the OBR shows.

When you consider that each 1% GDP is equivalent to around £22 Billion (as measured in 2018 GDP terms), it is plain that the variations in the policies that affect us as individual tax payers make a huge contribution to the total government budget.

For info a table of historic personal allowances is shown below.

Personal tax allowances	0%	20%	40%	45%	50%
2019	11850	34500	150000	+
2018	11500	33500	150000	+
2017	11000	32000	150000	+
2016	10600	31785	150000	+
2015	10600	31865	150000	+
2014	10000	32010	150000	+
2013	9440	34370	150000		+
2012	8105	35000	150000		+
2011	7485	37400	150000		+
2010	6475	37400	150000	na	na
2009	6035	34800	150000	na	na

 

Add in to the mix corporation tax which, in 2010 was taxed at 28% for large companies.  Now in 2018 it is 19%, slowly being reduced to 17%.

Corporation tax receipts are increasing as a % of GDP despite the tax cuts, which begs the question where would tax receipts be without the cuts?

When you study the overall spend vs receipt graph it appears difficult to justify continued tax cuts to corporations and the 2013 cut to the very wealthy as there is still a significant deficit and receipts are broadly flat as a % of GDP.

The key to the pain that is being caused to the poor and vulnerable in society is in the speed of deficit reduction that is being demanded by the government.  This can be seen in the sharp downslope of the blue line in the last graph, since 2010 spending, as a % of GDP has been sharply falling.  This is the government choosing to balance its budget by attempting to create growth through hostile social infrastructure policies and tax cuts.

A more generous solution would be to maintain the 50% personal tax rate for the wealthiest and at least the 20% corporation tax rate.  For example, in 2018 the corporation tax alone at 20% rather than 19% would have added £3.3 billion to the government coffers.

In summary, natural growth of the economy at 2% adds about £16 billion a year to the tax receipts, only part of which should be used to fund the debt pay off, as social and physical infrastructure investment tends to pay back more than you save on debt interest.

Of course we would then have accept a lower rate of deficit reduction,  however whilst it is not desirable that there is a deficit, less people would be starving.

My last graph shows the deficit vs surplus since 1948.  You would think that if having a surplus was so important successive governments would have done better at making it happen as not many years are yellow!

Poverty in the UK

Professor Philip Alston United Nations Special Rapporteur on extreme poverty and human rights visited the UK to assess the state of poverty and deprivation in the country.  The report makes difficult and uncomfortable reading.

See link below, it is long, but worth a read to get a full understanding of the issues we face.

https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=23881&LangID=E&fbclid=IwAR1p5W4GO0gTGrGvxLHEJWB3Pr1vWB5QDtbHSCNGCMVGOIo3oDUOwN5LvDY

I have extracted some key passages from the report, firstly the numbers:

14 million people, a fifth of the population, live in poverty. Four million of these are more than 50% below the poverty line, and 1.5 million are destitute, unable to afford basic essentials. The widely respected Institute for Fiscal Studies predicts a 7% rise in child poverty between 2015 and 2022, and various sources predict child poverty rates of as high as 40%.  For almost one in every two children to be poor in twenty-first century Britain is not just a disgrace, but a social calamity and an economic disaster, all rolled into one.

Second from the conclusion:

The experience of the United Kingdom, especially since 2010, underscores the conclusion that poverty is a political choice. Austerity could easily have spared the poor, if the political will had existed to do so. Resources were available to the Treasury at the last budget that could have transformed the situation of millions of people living in poverty, but the political choice was made to fund tax cuts for the wealthy instead.

The graph below is from the Trussell trust which is one of the major foodbank charities the continuous increase in demand tells a grim story of the true state of the country.

 

For more information see:

https://www.trusselltrust.org/news-and-blog/latest-stats/end-year-stats/

I am one of the fortunate ones, I have my health, a good job and a stable family life. It is extremely galling to sit here in my comfortable life and realise that through my governments choices, so many of my countrymen are suffering chronic hardship and grinding poverty that there is little chance of escaping from.  The worst thing about it is that it could be all corrected by tweaking the national balance of payments or me paying slightly more tax (or both).

No one likes paying tax, but at some point you have to take responsibility as an adult in a democracy. You have to accept that you have to contribute to the social and physical infrastructure of the country or there won’t be any country.

The government have been desperate to return to budget surplus to recover from the financial crisis, while no one can argue that that is not a good idea, the mechanisms used, the timescales that this has been enacted over and the unnecessarily high levels of debt repayment have hurt the most vulnerable in society whilst shielding the better off.

If I think of it in terms of my household, what has been done is the equivalent of me spending all my pay to reduce my mortgage whilst not leaving enough to feed the family.  At the end of the month I will owe a bit less, but we will all be starving and that will reduce my ability to earn more to pay the debts off.  Whereas if I balanced my books and paid a reasonable proportion of debt off, accepted that we would be paying the debt off for a while longer.  We could have a much more productive and happier lives.

I don’t believe for an instant that anyone needs to go hungry in the UK, especially not through benefit sanctions or political ideology.  It is high time we made better policies for the now and a better vision for the future.

Alex

 

 

All simple actions we take have complex consequences which are far outside our control.

There is a difference between complicated and complex as I use the terms.   A system like the engine of a car is complicated with many interlinked parts, but if you turn it at a constant speed it has a predictable outcome.  A complex system has effects that ripple outside your control and feed back or forward in unpredictable ways.

A fault in many folks perceptions is they underestimate how our actions affect the world around us.  They miss out the complexity and don’t appreciate how the loops and ripples can feed back on ourselves or feed forward and affect a multitude of people either positively or negatively.

Consider using cash to buy groceries.  You hand over your money, in return you get groceries and your change.  A simple loop maybe, but the ripples of that action will touch the lives of people all around the globe from the central banks who guarantee your money to the farmers who produced your goods.

On an individual level the ripples may be imperceptible but it doesn’t mean that they are not there.

On a bigger scale, when government decides to build infrastructure such as roads, airports, water treatment plants etc.  It is not a “spend” with a simple straight line effect from your tax money to some billionaires pocket. It is an investment which affects the builders who return part of their wages/profits as taxes and the eventual users who by utilising the infrastructure contribute to the economy.  This benefit is not a one off, the ripples from investment in infrastructure last for decades.

It may be simple benefits like investing in sewage treatment facilities reducing hospital admissions, or more complex like investment in port facilities meaning the cost of importing and exporting goods drops allowing regional development in ways that was just not possible before.

A good example is found here:

http://ec.europa.eu/budget/explained/myths/myths_en.cfm

Under the heading “Does the EU only help poorer countries”, they state that for the investment period 2007-2013 by 2023 a 274% return on investment is expected as the structural improvements like fire and flood prevention, new roads etc, this helps boost the whole economy of the continent.  Now of course those returns don’t stop in 2023, they keep on paying back for the life of the projects.

The next tranche of European investment (2014-2020) is 480 Billion euros, which, if it follows the same pattern as previously, will have generated over 1 trillion worth of wealth by 2030 which will have a huge positive impact on the life of citizens in the block.

There are many reports from the financial companies showing how structural investment generates both good investor returns and overall societal improvements.  A quick google search will find most of the big names weighing in on the issue.

Personally I am a small fish in a big pond, I am more concerned with how we as individual consumers understand the world we live in and how I can make a positive difference.

I believe that our actions should be as generous as we can to maximise our positive impact on the world and reduce negative feedback on ourselves.  This doesn’t mean giving our assets away, it means that we invest our time and money sensibly, both in ourselves and our local/global environment to encourage the positive development of society.

Alex

Welcome to my blog,

here you will find an erratic collection of opinions on topics such as engineering, politics, investments and world issues like pollution and climate change.

I will link various things or groups I think of as interesting, make of them what you will.

I decided to call it “generous by design” a phrase I have borrowed from Kate Raworths book Doughnut economics.

https://www.kateraworth.com/

I will try to explain what I mean by that below.

In my work I design complex chemical/oil/gas plants and systems for humans to be able to interact safely with those plants. Often, I travel to older plants and offshore rigs where I see both examples of good and bad design.

What is striking about the two cases of the good and bad design is that there is often no difference in build cost, however one is easy to operate and maintain, the other is expensive and difficult.  Expensive and difficult leads to early shutdown and poor return on investment.

When I am building or modifying plant for my clients I always try to build in the following benefits.  Simple to control, cheap to maintain, overall reduction in environmental impact for the plant and overall reduction in operating cost.  Of course, it is not always possible to achieve all these goals on every job, but it is a target to aim for.

I can often build layers of operational benefits into my work that the client is not even always fully aware of until it is installed.  It costs nothing or sometimes even less than a more basic solution.  What is even more fundamental is, the more of my target goals I can incorporate into a design, the better the solution is (normally).

So, if I am generous with my design and take a holistic view of the systems I am working on I can normally come up with better solutions than if I just focus on small problems.

Moving from the technical engineering side to modern social issues.  It has been a couple of years of political drama in the UK, lots of opinions have been spouted (mostly uninformed) which have shown a large amount of ignorance, this has made me take a step back and re-evaluate some of my thought processes and how I evaluate the information I am being given.

I decided I would only present arguments that can be logically consistent and I would be wary of my own biases.  To help me be consistent I went to these guys:

https://yourlogicalfallacyis.com/

I normally have these posters on the wall where I work. It is a useful exercise to watch a politicians speech for example and see how many logical errors they make.

I also decided I would be polite and calm when debating.  I am less good at this but I am working on it.

There appear to be a number of bad actors in the world today who are distorting or damaging the public discourse for their own ends.  I have no idea what those ends may be, but I don’t believe that it will be beneficial long term to base our society on falsehoods and I am prepared to put effort into working for a better future and vision of the future for us all.

Alex

Thanks for joining me!

Good company in a journey makes the way seem shorter. — Izaak Walton