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This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working
The BBC has been criticised by some for misleading reporting, but this is beyond the pale:
But overall, self-build saves money, supporters argue. The average new build home costs £189,940 compared to a self-build cost of £84,000 if you do the work yourself or £146,000 if you employ tradesmen to do it for you.
The difference between £189,940 and £84,000 is largely the cost of a plot of land with planning permission (minus a bit for builder’s profit margin and the value of your own labour). The difference between £189,940 and £146,000 is because a speculative builder takes risks and has to make a profit margin on top of his actual costs.
In any event, it’s not clear whether the £146,000 figure includes the land cost, as it seems wildly over-stated. My next-door neighbour had himself a massive semi-detached house built (in his side garden) with all mod cons. He told me it cost about £120,000 all-in; a basic house would have been about £80,000 but he got a bit carried away.
Lynda Williams was given a plot of land in mid Wales by her father. She didn’t have the money to hire a project manager so ended up building it herself from a timber frame. It took eight months and meant putting it together in the evening after work. The main motivation was getting value for money. Her mortgage was £110,000 but it is now valued at £260,000.
Let’s assume that the mortgage paid for the construction costs, the balancing figure of £150,000 is the (largely artificial) scarcity value of a plot of land with planning permission.
There’s been an outbreak of common sense at the Federation of Small Businesses. From the BBC:
The FSB is urging VAT be cut to 5% in the construction and tourism sectors. “Consumer demand is a key barrier to economic growth so such a cut would encourage people to spend in these areas,” the FSB said in its Voices of Small Business Report.
The FSB said: “Evidence from other EU countries shows that any lost revenue to the Exchequer by making VAT cuts will be met by earnings from additional demand, jobs and the wider economic activity.”
Although the basic EU rule is that the standard rate of VAT has to be at least 15%, it appears that countries can reduce the rate on specific sectors, which is what Ireland seems to have done recently. So far so good. The depressing bit is right at the end of the article:
A Treasury spokesperson said: “Reduced VAT rates of the kind suggested would make a significant impact on revenue. Any claim that a boost to foreign tourism or construction would outweigh these effects would need to be looked at very carefully indeed.”
In other words, they didn’t give these secondary effects any thought whatsoever when they hiked VAT from 15% to 17.5% to 20%, did they? Even Ed Balls seems to have finally grasped that you cannot keep merrily increasing VAT and expecting overall tax receipts to keep going up, for crying out loud.
From The Evening Standard:
Mothers, stay at home for a safer, cheaper birth
There’s a secret ritual a couple of weeks after having a baby: you sit down with your NCT group and compare notes on the birth.
My session last year was in a Crouch End coffee shop where six shell-shocked new mothers relived various birthing battles. Most of the salient details were hair-raisingly similar: chaotic, rude midwifery, lots of drugs and medical intervention, shoddy aftercare. Three of us ended up having emergency C-sections.
But one tale stood out – the home birth. Sure there were hairy [sic] moments, but these were comedic rather than life-threatening… Other friends who delivered their offspring at home have similar tales: very few stitches, barely any drugs and midwives treating them with respect.
Unless all those emergency Caesarians were entirely unnecessary, I’d say hats off to the NHS for identifying the potentially riskier births, wouldn’t you? If those three mothers who ended up having a Caesarian had insisted on a home-birth, heck knows what would have happened.
From The Metro:
Schoolgirl Aimee Bowen suffered severe sunburn during a sports day because her school has banned bottles of suncream.
Aimee, 10, returned home bright red and covered in blisters after the event. Her parents, Andrew and Victoria, said they were told pupils weren’t allowed to bring in sunblock in case other children had an allergic reaction to it.
Pennard Primary School, near Swansea, south Wales, said it followed sun safety guidelines and parents could go to school during the lunch break to reapply cream.
The European Parliament is attempting to rid the EU of speculators betting on Greece going bankrupt, voting for a ban on the practice of naked short-selling of credit default swaps… CDSs are insurance-like contracts that pay the buyer if a country or company goes bust.
Buying a CDS is analogous to buying insurance.
If you own a house, you are “long” of a house and you can insure it against the risk of it burning down. The insurance company doesn’t own your house (the bank does, probably). It is gambling on your house not burning down (or fewer houses burning down).
If you own Greek bonds, you are “long” of Greek bonds. You can insure against default by buying a CDS. The seller of the CDS doesn’t own Greek bonds, and is gambling on Greece not defaulting.
The owner buys insurance, the insurance company sells insurance. You buy a CDS, the insurer sells a CDS.
If you own Greek bonds and buy a CDS, your risk is ‘covered’ and you are now indifferent whether Greece defaults. The insurance company has sold you a “naked” CDS and has every interest in Greece not defaulting.
The general rule in insurance (apart from life insurance) is that you can only insure something up to the lower of its value or replacement cost; if you over-insure, you have every incentive to burn down your own house and pocket the difference.
Now imagine, I could buy “naked” insurance, i.e. I don’t own Greek bonds (or your house) – then I have every incentive to trigger a Greek default (or to burn down your house). And as we know, setting fire to a house is easier than preventing other people from doing so – there is assymetry of risk here.
So it’s the BUYERS of “naked” CDSs who cause the problem (to the extent that there is one) and not the SELLERS – all insurers are by definition “naked” sellers. Greece (or its new rulers, the EU) ought to be rejoicing every time a major financial institution sells naked CDSs because this institution has just put itself in to bat for Greece.
From the BBC:
Legislation aimed at making it easier to prosecute companies who make corrupt payments abroad has come into force.
The Bribery Act overhauls existing laws dating back to 1889 and creates offences that carry prison terms of up to 10 years and unlimited fines. It makes it illegal to offer or receive bribes and to fail to prevent bribery.
Both British and foreign companies are covered, provided they have some operations in the UK. The act also applies to individuals. The government says the act will cement the UK’s position as a global leader in the fight against business corruption.
Clearly, we ought to make bribery and corruption illegal within the UK because we are the ones being robbed (i.e. if civil servants enter into contracts on unfavourable terms for the taxpayer), although the UK government is pretty much world champion at this – if politiicians were held up to the same standards, they’d all be behind bars.
As to abroad, it’s difficult to approve of bribery, but ‘everybody else does it’ so if a UK business doesn’t get the contract, then somebody else will. Although it’s a negative sum game, it’s a bit like piracy, which was good for the UK for the simple reason that we were better at it than everybody else.
But think about it – if you are trying to bribe an official, where is it going to be easier – in a democratic country which is financed by taxes, or in a despotic country that is kept afloat with aid payments? The latter, surely, and didn’t our government recently boast about how much aid it wants us to pay, waffling on about soft power and all that?
To cut a long story short, the quickest way to reduce bribery and corruption would be to reduce government spending and especially aid spending.
Spotted by DNAse in The Grauniad:
… as of Friday, the state government of New South Wales will pay residents A$7,000 (£4,500) to leave [Sydney]. It’s part of a new scheme to boost the population and economy of country areas.
“Regional NSW is a great place to live, work and raise a family – these $7,000 grants will provide extra assistance,” said the NSW deputy premier, Andrew Stoner.
The one-off grants to move to country areas will be payable to individuals or families provided they sell their Sydney home and buy one in the country. The country home must be worth less than $600,000 (£390,000), something that won’t be hard in most rural areas. It will cost the taxpayer up to $47m (£30m) a year.
As much as boosting regional areas, the scheme is also about making Sydney more liveable. The city’s population is 4.5m and predicted to grow by 40% over the next 30 years, putting unprecedented pressure on infrastructure and housing.
The immediate point is that this is a subsidy to rural land values – the price of a country home will merely go up by $7,000 because yer ex-Sydney household has $7,000 more to spend. And of course, it’s only Sydney homeowners who get the bribe if they move, not Sydney tenants, so indirectly it must be a subsidy to Sydney homeowners as well.
But why encourage people in Sydney to sell their houses? How does this get the population down – won’t they sell their houses to, er, somebody who wants to move to Sydney?
Slapping Sydney homeowners with Land Value Tax would be a much more sensible way of going about things – such a tax tends to increase the population, of course (because small households will be replaced with larger households who are more able to share the cost), but they expect the population to increase anyway, so why not cash in?
This gives the government the money to pay for infrastructure improvements in Sydney, if appropriate, or they can spend the money on making the countryside a more attractive place to live, or paying for resettlement grants or a Rural Citizen’s Basic Income or something.
From a reader’s letter in yesterday’s Times (it’s a very old fashioned organisation so they don’t put their stuff online):
Mr Cameron… should look at taxing profits which stay in companies and are re-invested in markets and products differently from those that are paid in dividends and buy backs…”
Bob Bishoff, Managing Partner, SCCO International
OK, here’s a crash course in calculating corporation tax for people who have better things to do than making their “clients more valuable by providing solutions to the key management issues of Strategy and Structure.”
1. You calculate the company’s profits under normal accounting rules.
2. In arriving at the company’s profits under normal accounting rules you DEDUCT amounts that are spent on market research, R&D, product development, staff training, machinery, advertising etc (unless you are an idiot and don’t deduct them).
3. Therefore, by definition, that part of a company’s income which is re-invested in the business is excluded from accounting profits because it’s not profit – it’s an expense.
4. There’s then a bit of tomfoolery with add-backs and deductions, timing differences etc blah blah, which even out in the grander scheme of things to arrive at taxable profits (overall, taxable profits are much the same as accounting profits, sometimes higher, sometimes lower).
5. You multiply taxable profits by the corporation tax rate and that’s your corporation tax bill.
6. Therefore, only a complete moron would accuse the government of taxing re-invested profits at too high a rate, because the government does not tax re-invested profits at all because amounts re-invested in the business do not count as profits in the first place!!
Twat points to the first person to leave a comment saying that “But a company doesn’t get tax relief for money it spends on land and buildings”. Firstly, if you are a tenant you get a full deduction for the rents you pay; secondly, if you buy land and buildings, you still get a tax deduction for the interest you pay on the loan; and finally although you can’t claim much in the way of capital allowances any more, IBAs having been phased out, there is very little tax on the increase in value of the land and buildings, so fair’s fair.
From the DCLG website:
Grant Shapps said: “With 80 per cent of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder.
“FirstBuy will do just that – a Government-backed scheme making £500 million available to offer a valuable alternative to the Bank of Mum and Dad. Over the next two years, this will help as many as 10,000 people in England to get that much-needed deposit together and realise their dreams of owning their own home.
“And because this help will be available on newly-built properties, it will also offer a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country.”
Stewart Baseley, executive chairman of the Housebuilders Federation, said: “Firstbuy will help first time buyers, boost economic growth and provide a vital shot in the arm for the house-building industry. Our members have reacted decisively to support FirstBuy and recognise the scheme is an important first step.”
Or, they could just stop trying to prop up house prices and let young people get on the ladder without being saddled with extra debts of £50,000? That would be good for the taxpayer, good for the first time buyer and good for the economy. It would, of course, be bad for existing home owners, land owners and banks… ah, right.
And no, propping up house prices and underwriting the value of home-builders’ land banks does NOT boost economic growth, in case you were wondering.
From the Des Moines Register:
A rural Urbana woman died after a cow attacked her while she was feeding her animals, leaving people baffled.
“It’s pretty unusual for a cow to become aggressive,” said Terry Engelken, an associate professor at Iowa State University’s College of Veterinary Medicine. “We have a few instances of (cow attacks) across the country every year – but it’s uncommon. For it to result in a fatality is very uncommon.”
I also wonder why the URL includes the word “SPORT”, it’s only a sport from the cows’ point of view.