Good article by Philip Johnston in the Telegraph
"Our younger son is on a rite-of-passage trek across the globe and on Friday came the news from somewhere in South America that he had been mugged and all his bank cards stolen. Still, he was OK and it was not the end of the world; it just required me to cancel the cards and order him some new ones. The former is easy; the latter almost impossible.
After getting through an interminable succession of disembodied orders I finally spoke to a human being. "I am afraid that we need to talk to your son," he said. "Well you can't because he is in Peru, his mobile is not working and he is contacting us via the internet – and he can't get through your phalanx of automated instructions. Could you just send a replacement card to his home address and we will forward it?" "No, he has to call us." "I just explained that he cannot do so easily." "I know, I'm sorry but it's security."
We even went to his bank where we are known; and while staff were solicitous and helpful, we were told that they needed to speak to him. In the end, this will be sorted out, though it will take longer than it needs to. But the point here is that no one in the chain was allowed to make a decision for themselves. They were governed by orders, set centrally, that brooked no discretion or independent thought. Of course, security must be observed; but it was easy to establish that we were his parents. We possessed his birth certificate, proof of our identity and a joint address. But rules are rules. We would love to help, but we can't.
The same attitude has been evident in the public sector since Labour took office. Today, the Government will publish a policy document that will say – wait for it – that the target culture that has suffocated initiative for 12 years is to be abandoned because it is unlikely to deliver the reforms that the Labour Party wants to see. Instead, the various parts of the public sector that deliver services directly to us as taxpayers, such as the police, doctors and teachers, will be allowed to make more of their own judgments based on what is needed locally. Gordon Brown will announce the new approach in a document laughably entitled Building Britain's Future, together with a draft legislative programme for the next session of Parliament.
Can you believe this? Ministers who for years have been defending a system that has shown itself to be wasteful, inefficient and even perverse in its outcomes, now have the brass neck to stand up and say that, whoops, that didn't work after all, so here is Plan B.
Why were targets introduced? The Government would have you believe it was to drive up standards; but in reality they were a means of showing that Labour "cared". They were a political device. Whenever ministers were challenged about high levels of offending or poor levels of literacy they could say: "But we have a target to reduce it/increase it/scrap it, so we must be good." Targets were ostensibly introduced to hold the Government to account, but were used as a means of deflecting criticism.
The benchmarks were set not by you or me but by the very people who sought to obtain political capital from their attainment; and those who had to operate within this straitjacket found themselves unable to use their experience and discretion to do things a different way. Now, in a back-flip that would grace an Olympics gymnastic arena, Liam Byrne, the Chief Secretary to the Treasury, says: "We need a power shift from Whitehall ministers and civil servants that currently have the power and move it to citizens."
He wants to give people an entitlement to services like good education, safe streets and effective health care. Remind me: what did we spend all the money on that has pushed public spending up to levels not seen since wartime? Labour's education policy, a top-down fiasco, has left hundreds of thousands of children lacking in basic numeracy and literacy skills. Don't worry, says Ed Balls, the Children's Minister: we are going to scrap the prescriptive teaching methods that we introduced and leave it to teachers to teach.
The target approach did not cut crime; it made it worse. While offences such as burglary and car theft fell because of better security, the streets became less safe. Police chiefs were under pressure to ensure their officers were at a crime scene within a fixed time period because this was measurable, unlike the deterrent nature of a local bobby doing his community rounds. Soon, fewer police officers were seen in public, either waiting around for something to happen or filling out the voluminous paperwork that was considered necessary to push up standards.
Mr Brown will no doubt say that Labour was always planning to move from a target-based approach designed to drive up standards to a greater emphasis on local decision making. But no one will believe him. The problem is that the first stage failed because the system was wrong. What we are witnessing is less an attempt to put things right than a death-bed recantation. The perpetrators will look in vain for absolution. "
The Penguin
1. Taxing dividend payments
Before 1997, dividends issued by UK companies and paid to pension funds were tax-free - that is, the tax could be claimed back via a system of tax credits. Not any more, decided Brown. Tax relief was scrapped, reducing the amount collected by pension funds by around £5 billion a year. Pension funds holding the cash that you, me and almost everyone else in the country plan to use for our retirement have lost around £100 billion over the last 12 years. That's one hell of a stealth tax.
2. Selling our gold
In May 1999 Gordon Brown had a plan to sell some gold. There were two problems with this, which concerned his economic advisers deeply. The price of gold had slumped after a decade of stagnation, but was likely to increase in the proceeding years. Added to this, the announcement of a major sell-off would drive the price down further. Little of this worried Gordon. Experts believe that the poorly timed decision to flog our national treasure has cost us all around £3 billion. Granted, that doesn't seem much nowadays, but more of that later.
3. Tripartite financial regulation
The system of financial regulation dividing powers between the Treasury, the Bank of England and the Financial Services Authority, established by Brown as Chancellor in 2000, missed what amounted to the biggest financial crisis of our lifetime. Whoops. This has led some glass-half-empty commentators to conclude that the system set up by Brown failed and should be replaced. The Commons Treasury Select Committee’s report on the collapse of Northern Rock said that the Financial Services Authority had “systematically failed in its duty” to oversee the troubled bank’s activities. Little did it realise at the time that Northern Rock was the over-leveraged tip of the securitised iceberg.
4. Tax credits
“Gordon Brown claims the tax credits system lifts children out of poverty,” says Simon Blackmore, 38, who was pursued for £6,057 in over-paid tax credits. “Maybe it does, but only to plunge them and their families into debt two years later.” Millions of low-income families have had to pay back the Treasury after receiving too much money in tax credits, putting them under huge financial and emotional strain. Meanwhile, 40 per cent of workers and families who deserved tax credits left billions of pounds unclaimed in the 2008-09 tax year for fear of being chased for the cash later on. Introduced in 1999, reformed in 2000, tax credits have been "a complete disaster zone", according to tax experts.
5. The £10,000 corporation tax threshold
In 2002, Gordon Brown introduced a new tax regime to help small businesses. He announced a new zero per cent rate of corporation tax on profits below £10,000. It was designed to boost the ability of small businesses to grow and prosper. It didn't quite work out this way. It became advantageous for sole traders such as taxi drivers or plumbers to turn themselves into limited companies to take advantage of the new rules. A Treasury Minister later commented that "the Government did not realise how many people would engage in abusive tax avoidance", despite the fact that it was "blindingly obvious" to tax experts "within 5 seconds" of the budget announcement that this would happen. Gordon scrapped the rules a few years later, raising the rate from 0 per cent to 19 per cent when he released how much money was being lost.
6. Abolition of the 10p tax rate
Mr Brown rarely apologises. In fact, he never apologises. But occasionally he acknowledges "mistakes", albeit begrudgingly. Over the abolition of the 10p tax rate in 2007, Mr Brown told Radio 4's Today programme that "we made two mistakes. We didn't cover as well as we should that group of low-paid workers who don't get the working tax credits and we weren't able to help the 60 to 64-year-olds who didn't get the pensioner's tax allowance." Experts use stronger language to describe the Budget of 2007, which was designed to produce positive headlines for the 2p cut in income tax. Accountants calculated that the scrapping of the 10 per cent tax rate, coupled with the increase in the proportion of tax credits withdrawn from higher earners, would leave 1.8 million workers earning between £6,500 and £15,000 paying an effective tax rate of up to 70 per cent.
7. Failing to spot the housing bubble
Gordon Brown said he ended boom and bust, and in those innocent days before the collapse of the global finance system we believed him. In 1997, he outlined his plans. "Stability is necessary for our future economic success", he wisely informed an audience at the CBI. "The British economy of the future must be built not on the shifting sands of boom and bust, but on the bedrock of prudent and wise economic management." The other components of that bedrock including a trillion-pound debt mountain and a decade of unchecked and unparalleled house price inflation presumably slipped his mind. In 2003 a mild-mannered Liberal Democrat MP by the name of Vince Cable dared to question the mantra of "the end of boom and bust". He asked Gordon Brown: "Is it not true that...the growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level?" Gordon replied: "The Honourable Gentleman has been writing articles in the newspapers, as reflected in his contribution, that spread alarm, without substance, about the state of the economy..." We all know what happened next.
8. 50 per cent tax rate
Robert Chote, director of the Institute for Fiscal Studies, has said the tax hike which heralded the end the new Labour may actually end up losing the Government money. "If you look at what happened when higher rates were last changed in the 1980s, that might lead you to suggest that such a move might actually lose you revenue, rather than gain it, as people actually declare less income for tax," he said.
9. Cutting VAT
"It would be funny if it wasn’t so serious," said a tax accountant when asked about the Brown-Darling brainwave to cut VAT by 2.5 percentage points. As a nation of shoppers, rather than shopkeepers, a chopped down sales tax sounds like a good idea, providing a vital boost to hard-pressed families at a time of financial hardship. There were two problems. It costs £12.5 billion a year and it has made little discernable difference to those hard-pressed families because it is shopkeepers, rather than shoppers, who have pocketed much of the benefit.
10. Public-sector borrowing
If Gordon had only saved a little more in the good times, we might have had a little more to fall back on in the bad, economists sigh. Last month saw public-sector net borrowing hit £19.9 billion, the highest on record, according to the Office for National Statistics. The chancellor of the exchequer, Alistair Darling, has forecast that Government borrowing will reach £175 billion this year. It is forecast that total government debt will double to 79 per cent of GDP by 2013, the highest level since World War 2. Mr Chote recently warned that "the scale of the underlying problem that the Treasury’s detailed forecasts identify will require two full parliaments of mounting austerity to repair.”
The Penguin
