Services or lower taxes?

I went to a local town meeting where the county and district councillors were proud to show that they had either reduced their council tax or kept it fixed for another year. Now this is commendable in trying to save people money but does it?

The cost was 600 job loses, which have meant cuts to youth services, merging of planning services with a neighbouring authority and a loss of the more skilled and experienced council workers to be replaced by cheaper and less experienced staff. Is that really a saving?

Next the county councillor tells us that the budget for the year for road projects within the area is £10,000 but we can get some of that if we can find our own contribution. A new set of traffic lights is £40,000 so that is quite a contribution for the parish to make. So keeping the council tax at its current level actually just means shifting where you get the money from to the parish who you can then call names for raising their component of the tax!

Added to this they have drawn a circle of 3 miles radius around the local secondary school and said anyone inside can walk as it is safe. That is an hour walk - in all weathers and in the dark in winter along a road where we have had a fatal accident in the last 5 years. That is very safe and so parents will have to pay for their children to go by bus ... but after all the council tax didn't go up did it?

Lastly the dear district councillor said that the cuts did not affect services (despite her own admission five minutes before that they had lost the local expertise in planning and that she had grave concerns about merging services with the neighbouring district!). "Ten years ago you would have gone into the council office and seen one member of staff reading the paper, one on the phone to a friend and only one doing any work. Now they are all working all the time", she says.

Nice, very interesting as a friend of mine worked for one of the big four accountants and they certainly did not work all the time. He told me of the hours watching the fish screen saver in Windows. So that means no slack to take up emergency problems, that means no contingency and it means over-worked and over-stressed employees with poor performance. Besides wasn't her party and many of the current leadership group running the council ten years ago? So it was their incompetence that created the situation she describes. She cannot have it both ways.

Someone also pointed out that no council staff on more than £22k have had a pay increase for the last three years. All of this is putting off paying now what you will have to pay later. You will also have to pay much more because of the lack of investment in the infrastructure and degradation of service. This is a ticking time bomb waiting for the next lot of councillors when these self-congratulatory pensioners (who alll have nice nest-eggs thank you, as well as their council allowances) finally shuffle off into "retirement" from public service.

Osborne's Charities

George Osborne has been "shocked" by seeing some of the tax returns of the rich. Some of the scoundrels have only been handing over 10% of their income in tax when they should be handing over about 1/3. This leads to two points for George to ponder:

1. If they are cheating the system and hoarding all this cash then why did he reduce the 50% rate? His argument is that by reducing it to 45% he will induce the rich to invest and so promote growth through their entrepreneurial expertise. Now we can see they were only paying 10% anyway but we haven't been seeing any of this growth George expects. That is because they do not spend their excess income on growing UK PLC. They spend it on luxury German cars, multiple homes and foreign bolt-holes as well as off-shore accounts, in places like say Belize.
2. How are they using charities to launder their money? Surely there are rules in place to make sure this kind of abuse does not occur. Legitimate charities have actually been badly hit by his recent budget where there will now be a cap on tax relief for donations at 50,000 or 25% of income. This might cost charities up to £1 billion.

• BBC Chancellor Shocked
• Daily Mail - Tax Evasion
• Evening Standard - Donor Cap costs charities
• Daily Telegraph Charity anger
• BBC Donor Cap
• No 10 Rich use donations to avoid tax

Enter Karl Rove stage right

I have to admit I was surprised that Santorum quit the race before the vote in his home state. This suggests that he was likely to lose the state and so become unelectable. It was certainly too close to call from the opinion polls which have Romney ahead in one and Santorum ahead in most of the others.

Polls

What was more significant was the GOP big brass moving after the April 3rd primaries that were won by Romney and declaring that the point of inflection had been reached and now that Romney was clearly going to make it.

Rove on point of inflection
Rove and the 12 point gap

But is this true or is it a lot of spin from one of the masters of manipulation? It is clear spin, looking at the past polling data it is far from clear Romney would win Pennsylvania as Santorum was ahead in most polls and there was no big movement after that Tuesday. Romney has not built up significant momentum but he needs to if he is going to beat Obama in November and so the contest has to end now. So the focus can move to the fight against Obama.

What is in it for Santorum? A V.P. position? I wouldn't as he has been destructive to GOP party unity. Most likely he will be given some other government post like homeland security and fade away. It depends on how much shit Rove's guys have been able to dig up on him as to how much he will be able to bargain for. If Rove managed to score big we might never hear from Rick Santorum again.

There are two serious threats to the future of the Euro:

1. Angela Merkel
2. US control of the IMF

Why is Greece not on my list? Well Greece always was a basket case in economic terms but what made this crisis was the delay in the bail-out which allowed to crisis to deepen and the markets to lose confidence. The head of the IMF had warned when they were called in that a rapid deal was needed and that the other members of the euro-zone needed to come to an agreement quickly.

The person who held an agreement up was Merkel, with France threatening to walk away from the euro she finally had to yield but now it is a much bigger task to protect the euro than it would have been a week ago. At home the opposition is using this crisis to weaken her government as she wants to impose tight regulation on trading. This is also leading to a big rise in anti-euro feeling in Germany. The FT warned yesterday about th consequences of this beggar my neighbour attitiude.

This attitude of acting in the selfish national interest actually is the real root of the problem and the reason for putting my second point. The US senate just backed a resolution 94:0 to prevent the IMF using its funds for any more bail-outs of Greece like situations. As the IMF needs an over 85% majority to intervene and the US holds 15% of the votes this means the IMF cannot now bail out Spain or Portugal if the go all Greek. This is given that the ECB helped the US when they had the sub-prime crisis that brought about the first crash. If we are globalised you have to think globally. All of the worlds currencies are currently devaluing because of Quantitative Easing and the debt problems. This is forcing up the price of gold and London property into another bubble.

So the markets have to ask themselves the question. If you do sink the euro what will the politicians do in response? Are you going to get lighter regulation? Are you going to be allowed to continue trading as usual? Is it going to be good for you in the long term? Right after all those NO answers go out there and do something useful and tell the politicians how they can undo this log-jam that you created by selfish greed.

Referendum

At last some people hitting the AV referendum on the head. These are letters from Metro:

Margaret Thatcher rightly called referendums "the device of dictators and demagogues". \The AV plebiscite proved her point. Adult politicians were reduced to demagogic populist attacks of each other full of half-lies, innuendo and grotesque exaggeration. And over what? In Gulliver's Travels the Lilliputians go to war over whether to crack a boiled egg at the big or little end. The difference between First Past the Post and AV is even smaller. No wonder the majority of voters said no thanks to participating in one of the most pointless and shameless playpen episodes in recent British Politics

Denis MacShane MP for Rotherham.

You mock the "chattering classes" in Inner London boroughs for backing AV (May 9), which was roundly rejected nationally. Is it not more telling that nationally Essex voted by the widest margin against AV, whilst Oxford and Cambridge, home of many of the most brilliant minds in the world, voted "yes" to AV?

Tom Brown, SW5