Memo to Dave

The rise in social care fees is a tax, say Labour http://bbc.in/sTDdNU

Aren't politicians lovely. Labour dump a huge financial mess on all of us and then pick on pieces as if the current government are to blame. In a sense of course they are, but that is for failing to come up with a real plan to deal with the mess, they are not to blame for the mess and certainly not for increases in social care charges. Such increases are inevitable in a system funded from current day tax receipts when receipts fall or life lengthens. At the moment we have the perfect storm of both of those occuring simultaneously, alongside a huge bulge in the number of people turning 65.

The success of the NHS and better standards of living in keeping people alive longer is the problem. Longer lives mean more social care, more NHS care and more pensions. This triple whammy means that my fag packet jottings tell me that for every additional person living from 85 to 95 we need to find an extra £300,000 just for those 10 years of life. At some point in the next few years there will be a further 1 million of them, meaning an additional £300bn in tax or charges needs to come from somewhere on top of the current deficit.

In sense, then Labour are right. The charges for social care are a tax, and they arise from the doomed attempt to fund our health, pensions and social care from current day taxation. This simply must stop, it is barely affordable today and as I have just shown it will get worse at speed.

The Unofficial Big Society Green Paper argues for an entirely new system with a clean break from the past. It suggests complete honesty and transparency with all of us about what we put in and what we will get out. If you are worried that we are leaving our children an impossible situation, you are right. It is time for bold and decisive action, not another pile of debris pushed quietly under the carpet. That bulge in the carpet is already quite large and without real strategic action at some point in the next 10 years Britannia is going to trip over the carpet and find that she has sustained injuries from which there will be no recovery.

Please act now.

Gareth

Memo to Dave

Hi Dave

Paul Krugman has written an insightful piece on defeatism within the Depression. http://krugman.blogs.nytimes.com/2011/12/27/the-defeatism-of-depression/?smid=tw-NytimesKrugman&seid=auto. I actually see it as depression within Depression, and one with a huge human cost.

Krugman is right, people do get blinkered into thinking that there is no other way and it is a bit scary when he points out that it was WW2 which really dragged the world out of the last enduring slump. A demand driven recovery is obviously the way forward, but an organic one that makes and invests profit, not another bubble and certainly not a global conflict, is what is needed. The thrust of Krugman's piece is that if only government would let go of its prejudices the depression could be fixed within months.

I am not sure about that, it is not prejudices which hold back the UK, and possibly not the USA either. It is deeply ingrained systems which enable the rich 1% to use the effort and money of the 99% to print themselves more cash. It is the attachment to capitalism which requires examination and I am a capitalist. At the moment too much capital leaves the system to easily and for too little risk. The free market is now a free for for all for the elite. In the Unofficial Big Society Green Paper (available to buy at www.bigsocietygreenpaper.org) I have worked to outline an alternative way forward which would preserve the central functions of capital within our system. There will be others.

It would be great if you could begin 2012 by renouncing your admirable but irrational attachment to the status quo and commission a thorough examination of the alternatives before it is too late. The UK has a unique set of challenges and the myriad policies being rushed through fit neither our needs or each other.

A period of reflection and strategic planning would be invaluable and might reverse the depression within the Depression, if not the Depression itself. Whilst I am sure there isn't a quick or painless solution, I am equally sure that unless we start doing the right things, and quickly, decline is inevitable. The UK has to behave more like a business. That means investing for the future, living within our means and energising the population to success through a clear strategic plan. The alternative is a bigger and bigger black market (paying less tax), more people excluded from society and an eventual breakdown of that society along with a complete loss of our global position.

Gareth

What to say when asked if Father Christmas is real, and God, ghosts and social enterprise

I just had a very interesting conversation with my ten year old triggered by yesterday's Radio 4's Today programme advising listeners that Father Christmas is just an invention. Having sort of managed to talk my way out of it, and ending up in a potted philosophical life history in the process, I write this in the hope that it might help others in the same position.

I began my response by changing the subject, something learned from Dave and his friends, to buy time to think or, if I get really lucky, to avoid the issue altogether. I changed the subject to ghosts, asking a question in response to the original question (another tactic our political friends mastered long ago): "do you believe in ghosts?". There is some complicated family history around this, but suffice to say that he thinks he does because of an event when he was an infant, which we were all part of. "What about God?" was my next question, and his response was telling, "I think so, and I definitely believe in Jesus". The discussion evolved to establish that the belief in Jesus did not extend to the entire contents of the Bible and an understanding that the book had evolved over time. He then added that Christmas Day is Jesus' birthday.

This was an excellent starting point for my wriggling. Ghosts I said could be all in our mind, we nearly all see 'things' from time to time but some dismiss them as normal things with a rational explanation, others ignore them hoping they will go away and some embrace them. The point is the more you embrace it the more you see whatever it is as real, and, perhaps, the more likely you are to see it again. The same is true of the Bible.

The ten year old then countered with the tale of the Italian priests who have seen tears on religious statues or even apparitions of holy beings. He asked if it was more likely that priests would see that type of thing, and I had to say that I don't know. I can see it is logical however that if you believe in something when you see, or receive, an unexplained phenomenon it is easier to believe and maybe more reassuring if you can relate it to your belief.

So what about Father Christmas I was asked again. "I believe in Father Christmas", I was able to reply, truthfully. "But it is you that fills my stocking, not him?" came the challenge, and I had to agree. But this does not mean that Father Christmas, or ghosts, or God do not exist, I said. I have seen what I think is a ghost and I know that my son has heard one because he used language and names he could not have got elsewhere at that age, when he was barely talking.

The fact that I have never seen God or Father Christmas in the 'flesh' does not stop me believing in them, and helping them whenever I can. When I fill a Christmas stocking it reinforces someone's belief in Father Christmas. When I do someone a good turn, especially if they are a stranger and are unaware it was me, it reinforces their belief in whatever it is they believe in, in the way of a benevolent or guarding spirit. Whether that is God, Allah or Father Christmas is not important, what is important is that they will believe it more. They do not have to believe that some ghostly figure or mysterious manifestation was behind what happened, they just have to know that something did happen and that it happened to them, perhaps in a time of need. And they have to commit as part of their belief to helping people and in that way reinforcing the beliefs of others.

It is therefore what you believe and what you do with it that is important, and I was able to give this example. Nearly 30 years ago I was close to death aged 18 with a dual bout of Ulcerative Colitis and Crohn's Disease, topical today due to the struggle of footballer Darren Fletcher against the illness. At that point (oddly for someone not especially religious in the accepted sense before or since) I felt very close to God and actually refused a potentially life-saving colostomy in favour of whatever God chose for me. The truth is that I was more frightened of the 'bag for life' than of meeting my maker. And yet I am still here.

Back then, after several months of serious illness I was discharged from hospital, weighing around 5 and a half stone (I am now 15) just before Christmas 1983. I had vowed that I would be out of hospital for Christmas and I was. At times I think the nurses thought I was completely mad. I was incredibly lucky, the illness was brought under control by intravenous doses of then new drugs at a level far higher than they were eventually licensed for. This ruined my eyesight and a few other things (and I later had an aids scare as some of the blood used in transfusion was found to be infected) but it jointly saved my life, along with the power of my belief that I was doing the right thing. Incidentally, through a total exclusion diet and a further helping of luck I later traced the cause of the illness to an allergy set, mainly to caffeine and coffee, and have been well and drug free for over 20 years, which may give hope to some current sufferers that it is not always an entirely random illness.

One irony in all of this is that I was advised by my consultant to avoid dairy products so for years afterwards I was controlling the illness with drugs with nasty side effects and drinking black tea and coffee, merrily making myself worse. All the while convinced by medical science that I was doing the right thing. It can be argued therefore that I had more success following what for some would be an irrational belief  than I did when following the accepted scientific 'fact' of the day.

So, what do I believe in? Everything that I can see is good and that I cannot prove does not exist. The more I help God and Father Christmas the more other people can believe in them too, and hopefully find comfort in them in times of need and at certain times of the year when families come together to remember Jesus. For that is what Christmas is. It celebrates the birth of Christ and Father Christmas has become an essential part of that. No-one will ever convince me that these things are not real, even if they do not always manage to do what we hope they will on their own. Just because they might not have an existence were it not for us, does not make them imaginary.

So how does that relate to social enterprise?

Totally and completely - it is the embodiment of it. Social enterprise will only prosper and solve our problems if we believe in it. It is why have spent my recent working life in the sector and why I have just written a book with the explicit aim of persuading our government to give social enterprise more of a chance and a central place in our lives. Social enterprise is not charity or random good deeds, it is a force which can aggregate the goodwill and positive beliefs of all of us. It can be bigger and more visible than Father Christmas and it has the power to do huge amounts of good. This can be through community projects or investment, through individual support and deeds or by changing the commercial landscape through the creation of more socially responsible corporations. It has endless potential. Even if you don't believe in Father Christmas, you must believe in social enterprise. Shop with one this Christmas and do good for someone you have never met while treating your family and friends.

Memo to Dave

Good morning Dave,

A difficult week at the EU then! I'm not sure Nick is as close behind you as you think, and friendly fire can be more dangerous than any enemy, so remain alert. That said, I think no-one in Europe believed we would use the veto. As a result they piled a load of anti-British moves into their supposed Euro rescue, which is of course nothing of the sort. It is an instrument of further control which is supposed to persuade the loony fringe to behave more like Germany. Which would be fine if they had any industry or exports and wanted to work like Germans at the expense of having a life. They don't, they never have and I can't see them changing. The Euro as it stands is therefore just as doomed as it was and we are best off out of the way. We will probably suffer more than the euro zone if it collapses, as they will just create a new currency at a rate favourable to them ruining our banking system (again), but giving them our financial system as a condition of helping them to clear up their own mess was clearly not something we could agree to and so they can do what they like. We can always print some more money to further devalue the £ if we need to.

This leads me to the ticklish subject of solutions. Clearly the Euro is still flawed, and clearly the puppet dwarf wanted you cornered. There is no way you could have gone with the proposals and Sarkozy knew it, possibly even planned it. Also, we do not know to what extent Merkel is pulling his strings. That is fine, every now and then you have to point out to people that you are prepared to stand up to them, but to really end the bullying you also have to give them a slap. Metaphorically speaking.

The end result so far is that we are excluded from a group which has already revealed that it wants to take business from the UK and make it sit within their countries. This is not what we meant by a single market and we clearly need to get back on the high ground if we are to carry on the fight. I agree with you that London's status as a financial centre is key to Britain's success. It is key to inward investment as well as a revenue earner in its own right. It also has the long term potential to build relationships with the new powers which will in turn drive business and revenue to us. That is why the rest of Europe want our dominance broken up.

However, on the whole I think they have played an obvious hand to extinction. They haven't thought it through to the end. Voices in Germany are saying that if we want to sit outside the Euro we should also sit outside the EU, using Switzerland as a model. Do they really mean that? Switzerland is rich, well-invested and happily neutral. It has a sound banking system and punches way above its weight. If the UK could be like Switzerland and it requires being out of the EU and the euro to achieve, bring it on!

Of course, what the Sarko/Merkel alliance have overlooked is that we are bigger and more dangerous than Switzerland. We have some international trade of our own and a platform on which to build whichever way we choose to go. That is an important phrase - it should be us who choose which way to go. Now that you have been cornered by the dwarf and his mates, who clearly thought they had you over a barrel, if I can mix those two metaphors, they have left you with no choice. Clearly, their next move will be to enact measures harmful to the UK to try and force you back to the table, cap in hand. We cannot afford to wait for that.

Instead, put Europe in play. Carefully and strategically. I dare you.

You are already aware that if you held a referendum perhaps 70% of those who voted would be in favour of leaving Europe. The dwarf knows that and so it must be built into the plan. This will also have the side effect of vastly increasing your credibility with UK voters although I am sure that you would not see that as a  reason to act in a certain way! Here's what you do:

1. Acknowledge that the world is now a very complicated place and that no real 'public' review of Britain's EU membership has ever been carried out.

2. Form a body, composed of eminent economists and businessmen to spend a period, perhaps six months, fully reviewing all aspects of our EU membership and of the alternative.

3. Task them with publicly delivering a fully referenced and researched report, perhaps some kind of balanced scorecard as well, with no recommendations, only numbers.

4. This is important. It must not have recommendations, It is not a review of whether we should be in or out, it is a review of the economic and financial costs and lost opportunity of being in or out, which draws a financial conclusion only. It is not a political document, it is a financial one.

5. It must capture as far as possible all costs and do so on a menu basis so that as things change, for example they remove from our banks the ability to trade Euro derivatives, we can re-assess quickly and easily.

6. The Report must be in the form of a 10 year financial forecast, perhaps with alternative scenarios, so that a fair estimate can be made of our chances of growth both in and out of the EU.

7. Promise the people of the UK now that if the cost of staying in is greater than the cost of leaving that you will immediately call a referendum on the subject. Or reduce our contributions/limit our losses to restore the balance.

8. We all know that such reports can be twisted to a variety of outcomes, but for the good of democracy let us for once do some proper research and share the outcomes with the people, even if they do need some help to make the right decision.

Alongside this you will need to say to our EU 'partners' that you have been forced into a course of action which may lead to you having to make an entirely new offer to them around our membership. This is because all of the others only assess their membership on the basis of what it does for them. We were one of the few countries to genuinely subscribe to the view that a growing and stronger Europe will be better for all of us and we were therefore prepared to contribute. What we have now seen is that a stronger Europe will eat its neighbours when it suits. We are clearly on their menu and the best defence will be attack.

The EU may well spend a period wondering if we will be in or out. That will be good for them. If we decide to stay in after this review it will be because it is best for us or because we want to, accepting that the cost is a price worth paying despite the risk of mugging. If we decide to come out, the report mentioned above will form the basis of a set of benefits which we must set out to capture. We will need a taxation and banking system which is highly robust and ideally provides tax breaks to EU manufacturers, banks and services coming here. We will need investment in our own infrastructure and trading systems, such as those discussed in the Unofficial Big Society Green Paper to control flows of capital, and we will be able to relax laws. Not all of them, and not ones that affect quality of life (especially in working conditions), but ones that we all see add cost and decrease competitiveness. The ones that will have been identified as contributing to our cost of membership in the Report suggested above.

This might sound drastic, but we have yet to see what the EU plan to do to save the Euro, apart from to try and cripple London as a financial centre. We need our own plan and they need to know that we have one. Once the full scale of what we could achieve as an independent nation, right on their door step with tax breaks and new financial instruments and incentives to do business here through less red tape, is clear, the Sarkozy group will be less so. Cosy that is. It might even begin to be apparent to them that to attempt to mug us in such an obvious and brutal way was less than wise. We need to show them that they need us as much, if not more, than we need them.

That in a nutshell is this week's challenge. To turn the tables on them until they regret their actions.

Bon chance!

Gareth

Memo to Dave and Nick

Many thanks for responding to my twittering by setting aside £1bn to help get youngsters into work. The speed with which you have dreamed up and then announced this measure is very impressive and shows just how much you care about the votes of this, sorry, I mean the lives of this damaged group.

Yet again, however, the speed at which you are operating does suggest the possibility of error. You might just want to have a look back through the detail.

What is effectively a relaxation of the minimum wage for the young, in which you pay them the difference, is an interesting idea. However, a scheme with a direct subsidy to the employer against wages seems dangerous. How many employers will just grab some cheap labour and then, in six months, let that lot go and grab some more? It's a difficult one to guard against, and a longer scheme is probably a luxury we cannot afford. Or is it? What is the true cost of crime and exclusion? Of broken families? Of girls and boys doing things they will regret to earn blackmarket cash? Things that lead them to a permanent lifestyle outside the system, or worse.

It is tempting to say that you could have avoided the obvious riposte from the left if you had costed this human tragedy which will burden all of us and announced it as part of the scheme funding. Savings in this area might even enable you to justify a bigger or longer scheme. Even if that does not stack all the way up, it must account for some of it. If you paid on achievement of externally-moderated qualifications, rather than as a wage subsidy, it might make employers concentrate more on providing meaningful work than was the case in some of the YTS placements that I saw years ago. And then, at least if employers did let people go the employee would have something tangible to take with them. If the savings across the wider system were measured and captured as the scheme builds, it might even be possible to lengthen the placements once people are in situ.

In this way, by fully counting the societal benefits and the value of the qualifications, I would expect that you could argue this scheme to be a fine investment in the future. There would be some tangible immediate benefits alongside significant longer term impacts. I am also sure our young people would prefer to think that their government is investing in them, and their long term future, rather than just bribing someone to get them to empty the bins for a few months.

I am probably being a bit harsh with the last statement, but that is they way the 'man on the street' is talking about this. However well intentioned it is seen as government trying to capture votes by giving out cash. Change that to an investment and return dynamic, perhaps in the style of an Impact Bond, and change the scheme to have more meaningful and measured outcomes. You could make everyone happy.

Giving our money away

Hi Dave

I am not at all convinced by your idea to give £400m to private property developers in an attempt to get the housing market moving, although I do appreciate that you are thinking of us.

Many people offered £400m would simply emigrate. Some statistics suggest that 98% of the FT-SE 100 do not pay UK corporation tax, so I suspect many of these developers have got enough money from us and gone already. I suppose they might pop back for a few days to get some more if you make it worth their while. These commercial undertakings have no need of government help and as many of the larger firms do not pay tax in this country or have all of their shareholders here you could well be helping other nations more than us. Perhaps we should calculate by how much and add this to our international aid total so at least the rest of the world knows how generous we are.

For the government to try and help companies build houses in this way is one thing, but to then try and persuade people to buy them with state guaranteed mortgages is entirely another. OK, so the banks are terrified to lend as they need to clear the overhang of 'imaginary' debt which they invented to create a bubble, to look to their clients like they knew what they were doing and then pay their last tranche of handsome bonuses based on market movements that were just a result of financial wizardry. We all know that, but if you're going to guarantee the banks' debts you might as well take them all over. It would have been better if you could have come up with some stunning new mortgage product (there's one idea in the Green Paper) and sold it through Northern Rock, but you sold Northern Rock instead. For less than it cost. And kept the bad debts. Not sure about that either.

So, to summarise. You propose to help companies which operate entirely for profit, profit which is likely to end up outside the UK, to build houses which they are then going to seduce people into buying using incentives which they can afford to offer thanks to your generosity with our money through mortgages on which I, and all my fellow taxpayers, will take the risk.

Please do not do that. If I wanted to lend my future state pension to someone for a mortgage which they can barely afford even with interest rates at an all time low, on a newly-built house sold for more than it is worth because it is the only way the buyer can get a mortgage, I would have done so already.

You talk regularly of the big society. Would a big society help corporations to make money in this way? Would it encourage imprudence from its citizens? I think not. What is stopping housebuilders building is that the market is flat. Mortgages are not out there unless you have a huge deposit. Surely it would be better, if you insist on handing out our money, to give people an advance on their future earnings or tax, through some kind of mutual lender, secured on the value of the house being bought, but which can sit alongside their mortgage until the house is sold or their earnings improve? This could be targeted at first time buyers, those in low paid but essential jobs or any number of deserving groups that we would all approve of you helping and it might even repay you with a vote or two. I am not saying this is a good idea, but it seems more prudent than just giving money away, if you really believe that you must do something to shut the housebuilders up. It would at least enable everyone trying to sell a house (property developer or not) to have a roughly equal chance of selling it, match the money given away against a fairly-valued asset and give us a chance of getting the money back. Much better I think than just using a large giveaway to create another capitalist bubble adding to the bank balances of property developers at our expense.

If you could get the market moving in this way, people who need to sell their house to reduce debt or realise cash might actually be able to do so, which would of course be much more useful to our economy than loading the balance sheets of property developers and guaranteeing the loans of the banks.

Please therefore run through this plan again before spending our cash, just to see where the benefit will really sit. I am sure there is a better plan just around the corner. In the Big Society Green Paper perhaps, where there are full details of my thoughts on giving away our money and a proposal for a new and far better way of enabling people to buy residential property. One which would in itself strengthen the balance sheets of the banks, safeguard the interests of the housebuyer and bring the market back to life through real transactions at fair value without government subsidy.

Many thanks

Gareth

Welcome!

Thank-you for finding this blog! Gareth Stephenson is also on Twitter at @biggreensociety and Facebook as The Unofficial Big Society Green Paper. If you find this on Blogspot, it is also at www.bigsocietygreenpaper.org from 28th November 2011 along with more information and detail of how to buy the paperback and eBook.

All the best

Gareth