Not Mid Morning Matters

JD in the Morning, off air…

Tag: debt

So, that’s that then?

It’s Christmas time and there’s no reason to be afraid? Maybe this is the very essence of what we have all enjoyed in the last few days? This time of year is fraught with fear, danger and emotional hurdles to overcome. Have you bought the right present, have you made the right choices for food, have you bought enough, drank enough, eaten enough or eaten too much?

Christmas is a time for very few answers. This time of year is the real balance between need and want, and want seems to have the balance tipped to its favour. We have all just gone through a period of want, from wanting it to be the best Christmas ever to wanting ‘the’ present and probably having to put on the ‘you shouldn’t have’ face on when you really meant ‘why did you?’.

We are now all the other side of this commercial and financial excess. The festive payday reckoning will come for us all in January. We can all take comfort or face the fear from the reality of our own personal debt. And if we didn’t get what we really wanted on the big day, we can always go and buy it at a huge discount in the sales. This is assuming you haven’t already done so on-line on Christmas day. Jesus would be so proud.

It is hard to know what this ‘most wonderful’ time of year really means? Family plays a huge part in its definition and it did for me. Spending time with mine was a real gift tainted with sadness and a good dash of hope. Yet there was something lacking, something missing, something not there. As I was sitting watching the joy of my two youngest children opening their gifts while I was stuffing discarded wrapping paper into a bin bag, I wondered what they were really thinking. Do they want all their gifts, let alone need them? Is the paper that I am ‘recycling’ only going to cover more gifts next year, which will be enjoyed all to briefly before being put on a shelf or in a cupboard as we all move on into another new year? Probably.

The opened gift in the cupboard is a sad indictment on our way of life. It is proof that we are driven by an economy that requires us to keep buying stuff to keep the ball rolling and our economic world spinning, whether we have the actual money or not. Real incomes have fallen in the last five-year and despite the personal injection of over £10 billion PPI cash in to many pockets, paid back to us by banks who took it from us illegally in the first place under Labours ‘light touch’ financial regulation, the current government needs us to spend this and more or we will economically die. Our principal political leaders and their party’s need us to continue to want and not to think too hard about what we need.

In 2015 we all face a number of choices ranging from who we pay off first to who will form the next government and lead us for the next five years. Each party will claim they have a plan for our financial security, to give us more of ‘our money’ in our pockets so we can shop and buy stuff. Yet they will all talk about cuts and belt-tightening. They are all guilty of a basic hypocrisy, suggesting it’s not you but someone else and they are on your side. In reality it is you who must be on your side first and foremost by taking responsibility.

We all need to work out the difference between want and need. Maybe, regardless of who gets their hand on the tiller of power next May, we can all give our loved ones what they need next year and want to do it too.

Black Friday, a dark day.

On Friday 28th November 2014 people were queuing at midnight and police were called to deal with scuffling crowds as fights broke out. This was not the end of days due to rumoured shortages or social unrest at austerity and the lack of a pay rise for years, although the pictures might imply otherwise. This was all about shopping and buying stuff. This was all about want, not need. This was about a bargain. This was Black Friday, the most successful day on-line merchant of everything Amazon ever had. Their sales “surpassed all expectations”, selling more than 5.5 million items. This was about billions of pounds being spent. Black Friday has arrived and we all loved it.

Being in the ‘black’ is about being in credit. This is how business entered income into the sales ledger in the time before the PC, in black ink. Being in the ‘red’ is about being in debt, entered in the books in red ink. So the irony of creating a day called Black Friday to get you and me to shop for a bargain or three should not be lost on us. The chances are that on day so named about being in credit may well have pushed many further in to debt.

One of the biggest con tricks that has been played on us all by successive governments and the financial Services industry is changing the word ‘debt’ into ‘credit’. A credit card or a loan is a debt and to call it anything else is delusional, yet we have all become deluded. Since the invention of the credit card in the early 1970’s our governments have created a financial world, through ‘light touch regulation’, to convince us all that credit is good, buying things you want but don’t need is good and more stuff you have the better your life is. And if you don’t have enough stuff, get another credit card or more easy, flexible credit (terms and conditions apply) and it can be yours. Even Mortgages, a word based on the French for death, have been re-branded to be less scary and more cuddly Home Loans. How cute because there is no place like home, even if you will never actually, really own one and you are in debt, sorry credit, for the rest of your life.

Black Friday is, of course, a business construct. It is a simple marketing tool to get us to buy goods, so perpetuating the consumer lead recovery much denied by our current government. They wanted our recovery to be a manufacturing led recovery, built on making things and on construction. Actually the only real government construction I’ve noticed being done are the concrete walls springing up dividing our motorway carriages. These concrete walls in our central reservations are a very strange bit of new infrastructure. If I were to crash on a motorway I’d rather hit a metal ribbon than a concrete wall.

Black Friday was simple to create, based on the post Thanks Giving holiday from our american cousins. Here in the UK it married the last working day of the month with the last payday before Christmas. It marketed and advertise deals that had to be had and we the willing consumer, flush with our hard-earned cash and ‘credit cards’ were ripe for the buying. And we shopped. I bought a coat.

So what does Black Friday say about us, about you? Is this time of year about a great deal on a Smart telly or a coat? Is this time of year about eating, drinking and making merry? Is this time of year about excess or is it actually about something else? I am not a religious man. I will leave that for others but I do worry that getting a 40’’ Smart TV for £120 is more important for some than anything else. This worries me and it should worry you too.

If Black Friday doesn’t worry you then you always have Cyber Monday and the Boxing Day sales to come. And you can buy more stuff on-line on Christmas afternoon. The baby Jesus would be so proud.

You are going to have pay more tax.

In the west, Bath and North East Somerset have revealed that they are looking to cut spending on early years provision by £2.3 million over the next two years. Bristol City Council is now facing further budget cuts of £90 million on top of what they have already have cut. Central Government will also have to cut more public services and welfare if the country is ever likely to pay back the debt. All rather bleak isn’t it?

Does it have to be like this? Could you pay more?

There are a number of painful realities we all need to face here. If you or the country borrow money then you have to pay it back. The only way to do that is by using the money you earn to do it. If you don’t earn enough you either prioritize your income so you pay what you’ve borrowed back or you have to earn more money to do it. The reality is hard and, for many, very difficult but there is no other way, other than to extend the length of time you pay the debt back. This will always cost you more money.

There are those who think public services are a right and public money grows on trees. There answer is to tax the wealthy more to pay for it. The trotting out of ‘tax the bankers bonuses more’ is a very popular solution offered to the public spending shortfall. That, like the idea of the Big Society, is utter tosh.

If you want an NHS that does what you want and when you want it you have to pay for it. If you want trains with seat you can sit on, at times you want to go then you have to pay for it. If you want local services, real and proper care for your elderly relatives or loved ones, decent schools or the rubbish collected on time then you have to pay for it. And there are only two ways. Either you pay more tax, buy it yourself or you give more to charity. We all have to pay more or give more. It’s worth remembering that less than 100 years ago charity provided health care, education, social mobility and social care before central government decided it could do it better.

HMRC have released some figures that don’t sit well with the silly cries of bankers paying more tax on their bonuses or with the premise of the big society filling in the gap. Out of almost 30 million people now working just 703,000 people will earn at least £100,000 or more this year through wages, bonuses, self-employed income, dividends, rents and interest. Of those, 320,000 will make at least £150,000 and 287,000 of these will pay the 45p top rate. This IS loads more than the 236,000 that paid the 50p tax rate in 2010-11.

This may surprise you too. Just 18,000 people will earn over £1m, which is up on the 13,000 in the previous two years and it was 10,000 in 2010.

But this is the killer number to the argument that rich need to pay more income tax than you. The 6,000 people on £2m or more will pay more in income tax (£13.2bn) than you and the 12.5m other taxpayers who earn under £20,000 a year. They are coughing up less with cumulative £11.5bn.

Simply, the top 1 per cent of UK earners have 13.7 per cent of all income but they pay a record 29.8 per cent of all income tax. In 2004-05, the top 1 per cent paid 21.4 per cent of all income tax. So who is taxed more and paying more? It is certainly not the 2 million more who will pay no tax at all in the next year compare to last year.

One last thing; these top earners are most likely to buy the services they need and are paying tax to the government for those who can’t. So should these top pay more tax? Your answer to that is most likely to be yes, but then you should pay more tax too if you want the things that are being cut. Or maybe we should hand it all over to charities to provide as it use to be.

One last thing. £35 billion in tax goes uncollected every year.

Painful, isn’t it.

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