Dec 2007 18
How a pensions black hole works

Yesterday our battered beleaguered rulers bunged £3.9bn more taxpayers’ money into yet another pensions black hole.

Now, all of us sympathise with the 130,000 people who lost all or part of their pensions when their companies went bust up to 2003. And all of us can see that they were grossly misled by that stream of official assurances that their final salary pensions were safe (see here for Mail’s campaign).

But as taxpayers, we need to be quite clear about one thing: once again we’re being forced to pay for clearing up a pensions mess largely created by our rulers.

If the government had not issued all those incorrect and misleading assurances that final salary pensions were safe, these pension members and their trade unions would have had no basis for their legal case.

More fundamentally, if successive governments had squared up to the truth about final salary schemes, they’d have established an insurance scheme long before 2004.

The whole pensions universe abounds with hugely expensive black holes. And as we’ve blogged many times, successive governments are in denial about the looming crisis (eg see this blog). Despite a string of weighty reports (eg the Turner Commission- see this blog), they are still not gripping the real issues. Which are:

  • Pension age- increasing life expectancy means the State Pension Age (SPA) needs to be increased sharply; the current plan is to raise it to 68 by 2044: pension experts reckon we need quicker action and that SPA needs to go to 70, which would save us about £15bn pa- c 1% of GDP (eg see this blog);
  • Public Sector pensions- the scandal of largely unfunded public sector pensions continues (eg see this blog); in the face of pressure from their union paymasters, Labour backed off increasing the retirement age from 60 (or even below in some cases), and the total cost to taxpayers is currently put at about £1 trillion- twice the officially declared National Debt.

As we’ve said many times, the combination of spineless politicos and our chequebook is not a happy one. And unless you want to spend your old age living on Value Buy pizza, some people suggest you move your savings offshore and don’t plan on retirement until 75. At which point you should emigrate.

PS The splendidly opulent pension arrangements enjoyed by the boys and girls in blue are once again highlighted by the case of Ian Johnston , who leads the British Transport Police (BTP) and is a national police spokesman on organised crime. It turns out he is the highest-paid officer in the country with an estimated pay-and-pension package of £260,000 a year. The reason? He retired from the Met at age 55 on his full £70 grand pension, and then promptly got himself a new job with the BTP on £195 grand pa. Plus of course, the usual generous police expenses (£6,964.40 last year). If only everyone had such a cushy pension deal.

Dec 2007 18

Christmastax_2Christmas is a time of giving, but few families appreciate how much they are being forced to give to the taxman.  Virtually all Christmas purchases, from iPhones to crackers, are subject to VAT, and granny’s sherry attracts excise duty on top, not forgetting the fuel tax levied on journeys to see family and friends.  New calculations by the TaxPayers’ Alliance reveal the startling size of the family Christmas tax bill:

This Christmas, British families will pay an average £225 tax on their festive spending, equal to 600 Tesco Finest mince pies as well as 15 bottles of Harvey’s Bristol Cream sherry.

The total Christmas tax bill will come to £5.65 billion, more than enough for the Treasury to buy every single turkey in the EU.

Download The Tax on Christmas (PDF)

Dec 2007 18

The bureaucratic procedure attached to the simple act of clearing up a broken lightbulb is more important than it might seem.  It is important because it demonstrates just how unwieldy the procedures are becoming in too much of the public sector for even the most basic of task.  All this, as the Times is quite right to note, means far less time to do the vitally important real work they are supposed to be doing:

"So how many government ministers does it take to unmask the identity of a lavish donor, or to rescue Northern Rock, or sign an EU treaty at the same time as other EU leaders, or to ensure discs containing confidential details of millions of Britons don’t get lost? Answer: Are you crazy? Do you imagine that MPs have time for all that when so many lightbulbs need changing?"

Dec 2007 17

Not content with spending thousands of pounds a month on publicity and hiring a new PR exec on a bumper salary, Stoke-On-Trent City Council have outdone themselves again by blowing almost three quarters of a million on refurbishing their offices.

The Sentinel reports that many have questioned whether £729,000 of taxpayers’ money should have been spent on revamping the civic centre with new carpets, furniture, lighting, pictures, cabling and partitions, particularly in view of recent redundancies and other cut-backs, including a £500,000 cut in the funding the council gives to museums and libraries.

A substantial £475,000 of the money will come from local quango, Staffordshire Regeneration Partnership. According to the newspaper this is an umbrella organisation that encompasses the city council, Renew North Staffordshire and the North Staffordshire Regeneration Zone, who presumably couldn’t communicate with one another without it…

Worst of all, many have said that the civic centre does not need refurbishing at all, and mountains of perfectly good furniture have been disposed of and replaced at the expense of the taxpayer.

The redundancies of over 250 staff in 2006/7 resulted in a £4.5million pay out from the council who hope that this will produce net savings of over £41million over the next five years, so why can’t this belt-tightening extend to all areas of council spending?

Aside from being counter-productive, this indulgent move gives out the wrong messages to both council staff and residents of Stoke who would surely rather see this money go towards services or a tax cut? Cutting back in order to fritter any money saved on things like this, that are of no tangible benefit to the taxpayer, only serves to make the public wary of cutbacks.  From the outside it looks like they are ridding themselves of bureaucrats, only to make the ones that stay more comfortable.

Stoke Council really should be commended for attempting to make big savings by letting  unnecessary workers go, but they should be looking to pass on these saving to the taxpayer rather than channelling thousands into spin and refurbishments.

Cutbacks and savings could be the positive publicity that the council needs, but when accompanied by frivolous spending like this when services aren’t improving, local residents will continue to believe that they are losing out, and stumping up their tax money for less and less in return.

Dec 2007 17
Why have three out front when none will do?

Worrying news from Cricklade:

"NORTH Wiltshire’s top cop has warned residents in Cricklade they could be responsible for the closure of their own police station.

Cricklade Police Station, in High Street, no longer has a manned front desk due to cutbacks, but Chief Inspector Boland urged residents to use the station as much as possible.

When members of the public complained it was closed, Ch Insp Boland assured them it was manned and officers at the station would respond if they were not tied up.

"It is not closed but when the accountants come to review our expenses the first thing they will say is that it is perceived to be closed anyway’ and they will close it," he warned."

Did you follow that? Cricklade residents (aka the customers) are angry because their local police station is closed- ie if you go there you find nobody manning the front desk, and even if you shout, nobody comes. But rather than putting it right, North Wiltshire’s top cop advises them to pretend the station’s functioning properly as it is. Otherwise, he says, it will be perceived the residents perceive it’s closed, and it will be closed. Even though in real world terms, it’s closed already.

Only in Stalin’s Russia is such madness possible.

And there’s no doubt Stalin would have approved of the commissars’ programme to streamline policing by closing stations. As he would have appreciated, manned stations open to the public are a huge distraction for the police. Far more efficient if they concentrate 100% on their core function, which is to carry out orders from above.

So all over the country, stations are closing. According to the Sunday Telegraph, more than 600 have already closed since Big Government Labour came to power:

"Only one police station in eight is now open 24 hours a day and 18 out of 43 forces do not have a single station open around the clock."

It is true that new stations have opened, but these tend to be of a very different type, often closed to the general public altogether. For example, in the Met area, the plan is to close local nicks and organise policing around out-of-town mega-bases. According to the Register:

"This gives a basic blueprint along the following lines. Most conventional policing, and most police, will be at the ‘flexible warehouse’ that isn’t open to the public, but that is quite likely to occupy industrial estate sites. Visible policing (aside from the ones tearing around with flashing blue lights) will be in shop-style high street premises."

And the high street premises will be small kiosks in shops or libraries, manned by those Community Support "Numpties in Yellow Jackets" (see this blog), and only open 9-5. Need to see a cop outside office hours, and you’ll have to take your chances on waiting for a blue light car to come available. Which wasn’t good enough for 14 year old Jack Large who died earlier this month after being stabbed outside an unmanned station in Chigwell.

Regular BOM readers will already be aware of how this plays out in affluent areas. In places like Primrose Hill- part of LB Camden- local residents have given up on the police altogether, and hire private security guards to patrol the streets. That’s despite the fact that Camden reportedly has 827 police officers, 169 police staff and 98 Community Support Officers.

What do they all do? You know the answer- six out of every seven hours is spent doing admin and taking meal breaks (eg see here).

In Primrose Hill, residents buy their way round the problem. As with the rest of our dire public services, everything’s fine so long as you can afford to pay twice.

Of course, if you live in Chigwell or Cricklade and you can’t afford to pay twice, you’re stuck.

Bring on those elected sheriffs. The ones that have to serve their local customers or they get slung out.

HTP: John B

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