All for Brexit’s Wedding

A Modern Political Fable.

Brexit. Is it the most stupid action ever by any UK government, perhaps the most stupid action ever by any government in the world? Heaven knows what was going through Cameron’s tiny mind when he embarked on this utterly ridiculous exercise. To solve the problem of the idiot right wing Tories defecting to UKIP and damaging the Tory’s electoral chances (step forward and take a bow Messrs. Cash, Redwood and Rees-Mogg, you know you want to), he decided to shut them up permanently by proving once and for all that most Brits were European at heart. He was so confident that he would win, that he did very little proper campaigning and, worst of all, he didn’t bother to think through what he would do if he lost. Well, when I say what he would do, I meant what the country would do, because we all know what he personally would do, because he did it. He pissed off to make loads of money, helped out by the mates he helped out when he was PM, and left the rest of us in a great pile of steaming ordure. In any case, what made him think that the loony Tory’s BritNat wing would shut up just because they lost a vote. Was never going to happen.

With Cameron off to make money elsewhere, The Tories needed a new leader with a plan to stop them sinking into the aforementioned ordure. All seemed lost until Treeza started spinning and, in a puff of smoke, revealed herself to be WonderMay. We must embrace Brexit, she said. Brexit is Brexit, she said. We’ll have the biggest, hardest Brexit that anyone has ever had, she said. We’ll show them all that we’re the bestest Brexiteers in the history of Brexitting, she said, especially those f’ing Europeans. Cue Tory cheering. We’ve found our saviour, they said.

Little did they know then that their idol had feet of clay, or do I mean head of clay, and, unfortunately, events over the following year only showed that the clay was of the thickest, most impenetrable kind as May stumbled from one self-made crisis to another, her only solution being to throw money at them. She threw money at the DUP. She threw money at the EU. She even threw money at Scotland, although that turned out to be more like Monopoly money, the kind you can’t spend, except when you’re playing games.

But even the peasants were starting to get restless. Some of them were openly expressing the opinion that SuperMay wasn’t really all that super, that she wasn’t in control of Brexit, that Brexit was really in control of her, that she was just as stupid as she appeared. Some were even questioning the whole Brexit idea and saying that another referendum was needed. This had to stop. Money was at stake. Super-rich money.

Make no mistake, money is what Brexit is all about. The ability of the super-rich to keep all the money they’ve got and make much, much more. Brexit has nothing to do with improving the lives of most of the UK population. Taking back control is nothing more than a slogan invented by the Brexiteers and parroted by the media to sway enough the masses. It is years of anti-EU propaganda finally paying off. There was never any intention to take back control. If the intention had been to take back control, why the efforts to prevent the UK Parliament having any involvement in Brexit, why the secrecy about putting documents before parliamentary committees and why have the government not bothered to work out the impact of Brexit on the economy. The intention has always been to remove the EU from any involvement in UK lawmaking and transfer total control to the super-rich, fronted by a bunch of compliant politicians, well paid for their efforts. The EU was proving too big for the super rich to control and the last straw was an EU proposal to introduce rules to prevent multi-national companies from transferring their profits out of higher taxed EU countries to lower (or zero) taxed off-shore tax havens. A proposal likely to take effect in the Spring of 2019. Does that date ring a bell? The proposal would particularly impact the City of London, which has been described as the world’s biggest tax haven through its use of a multitude of British Overseas Territories and Dependencies where serious amounts of super-rich money is hidden away. The UK and its territories represent a haven for over 25% of the world’s offshore funds.

But it was all going wrong. NoLongerSuperMay had proved incapable of driving the changes necessary while keeping enough of the population onside. A popular movement against Brexit could derail the whole project. But what to do? Replacing NoLongerSuperMay would almost certainly strengthen the feeling against Brexit among much of the population, so that was not really an option. The choice of actions was extremely limited.

There was only one last hope. They had to deploy their ultimate weapon. They called in the “Family”. Yes, it was time for the thermonuclear royal device. Never previously known to fail, the thermonuclear royal device could take two forms, either the baby royal strategy (BARS) or the wedding royal strategy (WARS). The only decision to be made was which to go for. It was a hard choice, but there had to be something to take everyone’s attention away from Brexit and the disaster it had become.

In conjunction with the Family, the Tory government did what they always do in such circumstances, they set up a committee. And here the Tories made what might turn out to be a fatal mistake. Given the seriousness of the problem, they set up two committees, one to examine the BARS option and one to examine the WARS option. But each committee was determined to be the winner in the race to prove that their strategy was the bestest, that their strategy was the one to give the best possible result in the shortest possible time, so neither team wanted to share information and, as a result, communication between the BARS team and the WARS team was almost non-existent.

With the agreement of the Family, the BARS team had set out a development plan with a scheduled completion date of April, 2018, so, because of the strict timetabling in place for projects of this type, a start had to be made in July. Everything was put in place. The Royal Prince Willie was prepared to do his duty and the Royal Princess was said to be receptive, though, as with any plan (except Brexit, Ed.), a number of backup strategies were readied, in case the first attempt flopped. However, we won’t go into details of the backups just now.

The WARS team had more flexibility in making their arrangements and initially had aimed for the merger to take place much earlier, but their plans were delayed by indecision on the part of certain senior members of the Family and uncertainty that the Princely participant had completely run out of wild oats. Finally, agreement was reached and a date in May 2018 was set.

Imagine the shock when it was realised that the two events almost coincided. Images of babies being breast-fed during the wedding ceremony or even crying while the Royal vows were being exchanged flashed through people’s minds. How would that go down with the TV audience? After all, the solemnity of the occasion was what kept the audience glued to the screen. Turning it into a comedy show could have the opposite effect. Was this bad timing just an unfortunate coincidence or was it proof that, under the stress of the situation, even the Family were losing their touch? Another Royal baby and another Royal wedding in the same year? Surely one of them should have been delayed for twelve months to take our minds off Brexit. Isn’t that what the Royals are for?

To be slightly more serious for a moment, does the whole ongoing fiasco that is Brexit, combined with the disaster it represents for most of us should it actually happen, not mean we need to be doing all we can to get away from it? Do we really want to be ruled by a bunch of BritNat idiots who can’t tell truth from lies. Do we really want to live in a world created by David Davis, Liam Fox, Michael Gove, Boris Johnson and Theresa May. David Davis, who doesn’t seem to know if he has any documents or not. Liam Fox, who tells us he can magic trade agreements out of thin air. Michael Gove, Rupert Murdoch’s little placeman in the UK Government. Boris Johnson, surely the UK’s worst ever Foreign Secretary, who’s desperate to do whatever it takes to be in charge. And Theresa May, whose only interest is in creating laws which allow her husband to further enrich himself and his super-rich clients. And that’s before we get to the likes of Jeremy Hunt, whose job it is to give away the NHS as quickly as possible, mainly to Richard Branson.

Is that the future for Scotland we are happy to see? Or is there another way? Surely now is the time for us to create our own future. Surely now is the time for another indyref.

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Money, money, money, it’s a rich man’s world

Last week we had a budget statement from the chancellor.  Note I said “a budget statement” and not “the budget statement”.  I’m certainly old enough to remember when there was only one budget a year and most folk looked forward with apprehension to how much the chancellor was going to slap on drinks and smokes.  The media were full of suggestions for days in advance about what should be announced and, afterwards, the analysis of winners and losers went on for more days.    Now we seem to have a budget announcement about every month and anything interesting is leaked to the media by the Treasury in advance of the statement so everyone has a decent excuse for sleeping through Phil’s speech.

For Scotland, the best news appeared to be an extra £2bn on the Scottish block grant and the decision to remove the VAT liability from Scottish emergency services.  However, a more careful look at the announcement shows a slightly less optimistic view.

Firstly, looking at block grant, the £2bn (actually £1.97bn) is the total effect on Barnet consequentials of the UK spending changes announced in the Budget for the four year period from 2017 to 2021.  It includes over £1.1bn of financial transactions, money which has to be repaid to the UK Treasury.  Let’s call it a loan.  Perhaps Scotland only gets given the money so that Westminster can have the fun of taking it back, now that we don’t have a Labour First Minister to return money they can’t think of anything to spend it on (© Jack McConnell et al, 2000-2007)  Of the remaining approximately £850m, £500m are increases in capital spending, leaving only £350m for additional day-to-day spending.  Of course, that’s the raw cash terms amount, but that increase represents a reduction when inflation is taken into account.  So perhaps not just as good a settlement as the UK Government, and of course the Tories and the BritNat media, would try to make us believe.

Secondly, the VAT change.  In the period since its inception in 2013, Scottish Police and Fire have been the only UK forces not able to reclaim VAT, costing the Scottish emergency services well over £100m.  Over this whole period, the Scottish Government and the SNP MPs have constantly pointed out the unfairness of the situation, but have been more or less ignored by the UK Government, whose only response had been to say “Suck it up, Scotland.  We told you we would screw you, so you can’t complain now”.

So, what has changed?  The cynical amongst us (not me, of course) might point out that the only change is the election of a few more Tory MPs.   Hammond, somewhat pathetically, tried to justify his decision to remove the liability as a consequence (more consequentials?) of the new Scottish Tory MPs being able to explain the problem in such simple language, that even he could understand.  Well, I have heard that the new Scottish Tory MPs are quite good at being simple.  Given they have Fluffy Mundell, the master of simple, as their mentor, I suppose it’s no real surprise.  However, I’m not sure what bit of “It’s no fair” was proving difficult for Hammond to grasp.

Of course, there’s another interpretation that can be placed on the reluctance of the UK Government to do the right thing.  In 2011, Scots elected a majority of SNP MSPs to the Scottish Parliament, something that the voting system was expressly designed to prevent.  It wasn’t supposed to happen and it was baad.  To make matters worse, in 2015, Scots elected a majority of SNP MPs to the UK Parliament.  That was even more baad.  It was very baad.  The aforementioned cynics might even suggest that the Tory government’s decision to retain the VAT liability had more to do with punishing the Scots for having the temerity to elect a government that Westminster and the BritNats didn’t approve of, rather than any rule based logic.  In fact, the change requested by the Scottish Government was little different to the rule introduced by Westminster in 2011 to make schools which became academies exempt from VAT.  OK for English schools, but not for Scottish police and fire services.  In fact, the same cynics could argue that Westminster recognised they were wrong and took the first available politically expedient opportunity to get out of an increasingly embarrassing hole.  However, they were not sufficiently embarrassed to return the money they had stolen since 2013.  Perhaps that would have really given the game away.

All this comes at a time when Brexit could change everything, but the establishment have a cunning plan to stop folk thinking about bad Brexit stuff.  Can you guess what that is, readers?  Come back shortly for an update.

 

Lies, dammed lies and GERS

There has been much said in the press about the famous (or should that be infamous) GERS report over the last few days varying from the National’s “Deficit cut by 1.3Bn” to the Scottish Daily Express’s “Nationalists Fake-onomics exposed”, while the Herald and Scotsman both decided that bringing up (again) the figures from the referendum White Paper would portray the evil Nats in the worst possible light.  Surprisingly, both BBC and STV took a more factual approach, obviously thinking that the £13Bn deficit was enough on its own to scare the punters away from independence, without need to add the usual level of exaggeration and misinformation.

To be clear, the GERS report has nothing to do with the latest football match played by a well known Scottish team (I know it’s an old joke, but still), but it’s the annual statement of Scotland’s economic performance, Government Expenditure and Revenue Scotland.

But what about the figures themselves.  For years, certainly since the run up to the referendum, GERS, and the UK economy in so far as it affects Scotland, has been the subject of considerable public debate.

Should Scots be paying a share of “UK” projects that appear to produce little or no benefit to Scotland.  London Olympics; HS2 from London to Birmingham and, if we’re lucky (is that the right word?) to Leeds and Manchester some time later; and the London sewer upgrade come to mind, but there are many more.  You may have spotted that, in all these projects, the region which appears to benefit consistently from the spending is London, but that may just be coincidence.  My “favourite” is the English Tourist agency, which Scots pay towards because it’s considered a national organisation as it covers more than one region of the UK (all in England, of course), while the English don’t make a contribution to the Scottish Tourist agency, because it’s considered to be a regional organisation, the whole of Scotland being just a single region of the UK.

GERS has also been the subject of much discussion, mainly because so many of the figures are estimates, particularly on the income side, and because so much of the expenditure is controlled by Westminster and spent without so much as a by-your-leave, mostly outside Scotland.

But now a further possible problem with the figures has been suggested, courtesy of Richard Murphy, an accountant and economist who has previously presented evidence on GERS to the Finance Committee at Holyrood.  It should be stated at this stage, as Richard Murphy himself had said, that these are just preliminary ideas, not yet fully formed, but it may give all of us some food for thought.

In GERS, there appears to be no relationship between income and the money spent to generate that income, the expenditure.  In normal accrual accounting, the spend to achieve a particular income and the income amount are both put through the books at the same time, so you can tell how profitable an activity is, because you know how much you earned and how much you had to spend to earn it.  However, in GERS, by design, this relationship doesn’t seem to exist.  Both income and expenditure are treated separately.

But what difference does that make to the figures in GERS?

The cost of Westminster providing a particular service to Scotland is generally calculated as a proportion of the total UK cost of the service and recorded in GERS as Scottish expenditure.  However, because the fact that Scotland paid for the service is not known or not taken into account when the income is allocated, the income generated by that activity is allocated to the location where the income occurred.  As a simple example, if civil servants in the MoD in London work on an activity which a deemed to benefit the whole of the UK, Scotland will be responsible for a part share, calculated on a population basis, so about 8.5% of the cost will be allocated to Scotland and recorded in GERS.  So, if the total cost of the service is £1M, then £85,000 would be entered into GERS.

But what about the income?

This is where we seem to have a problem.  Because the income data is processed without reference to who paid the cost of generating the income, it’s not possible to allocate the income in the same way as the expenditure.  If we think of our earlier example, the civil servants employed by the MoD in London are paid a salary from which tax is deducted.  This tax, or at least 8.5% of it, should be treated as income in GERS, Scottish income, because Scotland paid for it, but because this is not known when the income data is processed, the tax is allocated to the place where it was paid, in London.

So there we have the problem in a nutshell.  Expenditure is always allocated to the Scottish account, but the income generated by that spending generally isn’t, except in the few cases where the income is actually generated in Scotland.  By failing to include in GERS much of the income that should be attributed to Scotland, the deficit is massively overstated.

In fact, the situation is much worse than that because of something called the multiplier effect.  When your civil servant in London gets paid, he will then spend his income on goods and services, probably mainly locally.  And the recipient of that spending then spends the money received, and the recipient of that spending then spends the money received, and so on, so the money spent ripples down through the economy of the region where the spend happens. If, as is suspected, GERS is not being credited with the income generated by Government spending, Scotland will be losing out, not only on that income, but also on the further impact of that revenue to the Scottish economy.

As I said at the beginning, these may be just preliminary ideas, but they do have a ring of truth about them.

For those who want more information, look at Richard Murphy’s blog, which, apart from a much more detailed explanation, also has a number of very interesting comments.
http://www.taxresearch.org.uk/Blog/2017/08/25/gers-is-this-why-it-always-says-the-scottish-deficit-is-so-large/