Daily Archives: November 17, 2010

Taking on the rich and powerful

It’s too early to tell whether they’ll have any success where previous governments have failed.  But the current government’s announcements have once again impressed me.  They’re taking on some of our richest and most powerful lobbies.  More specifically, those who enrich themselves at great cost to the taxpayer and society.  What’s more, they’re tackling sacred cows: money gifted to the parasitic rich in the name of good causes – “the poor”, and “access to justice”.

First came landlords, with the announcement that housing benefit will no longer rise without limit.  This is a huge benefit to society at large.  Most obviously the genuinely poor who are stuck with having to pay artificially inflated rents and who cannot reasonably compete with housing benefit in the market.  But also first-time housebuyers who will in future face a little less competition from property pimps propped up by the public purse.

As against that, benefits reform looks far too limited.  The principle that work should pay is good, so why will the lowest-paid still lose (apparently) 65% of their earnings through loss of benefit?  Admittedly it’s a big improvement on what happened to me in 2003 when my effective tax rate compared to benefits was close to 300%[1], but it’s still hardly a great incentive to work.

This week they’ve impressed again, taking on an even more sacred cow, the bloated legal profession and the spiraling burden of legal aid.  This is a more ‘respectable’ and long-established class than landlords (the old aristocracy being now secondary to a nouveau-riche spiv class in the open market), and if the government can tackle their taxpayer-trough I’ll be all the more impressed.  Though having said that, if they really valued justice over ritual they’d disband the entire court system as we know it, and dispense entirely with the grossly overpaid adversarial advocates in its replacement.

At the same time, some of the government’s plans are alarming.  I find the rising cost of higher education deeply disturbing.  Not just because of the conflicting signals being sent to our young people and the terrible burden of debt for some, but also because the complexity of the new terms surrounding student finance look nightmareish (up with the worst of ex-chancellor Brown’s creations), full of perverse incentives, and designed to put social engineering ahead of academic excellence.  Ugh.

[1] That’s due to cascading benefits.  Earn £60/week, and lose not only income support (about £54/week), but also a host of other benefits given to those on income support – most notably ~£100/week in housing and council tax benefit.