@SamuelCoates: Find it hard to believe that Tory & LibDem treasurers would've accepted that £520k bequest if it was presented to them in the way reported.
Spiv and Feldman on the Tory side, who's the Lib Dem?
Hoping for a conflict of interest are you, tim?
Cabinet Office Minister and Party leader?
There will be so much precedent on these types of bequest that the whole process will have been near automatic. And I would expect there to be many examples of Labour benefitting in the same way from previous wills.
Cul-de-sac, tim.
It's a genuine question, we know Spiv and Feldman are responsible on the Tory side, who's the Lib Dem?
Well, if Shapps and Feldman set a precedent by arranging for the Crown to direct that the funds be transferred to the political parties forming the government, then there should be a public debate.
But what odds would you give me that there is no precedent, policy or practice established for such bequests?
At a guess the Attorney General, Cabinet Office Minister and Secretary and Lord President of the Council would have been involved before the party officers got their say.
What solution to the cost of living crisis are Labour proposing ? A nice income tax cut ???
Ending taxpayer subsidies for house price inflation perhaps?
How will that make me better off ?
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Of course Avery, the history of the last 25 years tells us the housing benefit falls as house prices rise
You are probably confusing volume and rate.
That was taught at Eton in the first year.
Charles would never have been so confused.
Charles the vaccine and housing expert who sees no danger in house price subsidies but lots of danger in MMR, yes that was money well spent
They are not "subsidies", at least at this stage of the schemes.
The equity participation schemes involve the borrowing of funds by central government to purchase an asset. The asset value in the books matches the loan liability in the books, so there is no net borrowing.
The only way in which this may not be the case is if the government make a provision for a proportion of the loan to be a future loss, but this would be very unusual at this stage of the loan's maturity and would be regarded as questionable practice if done, say, by a private sector property investment company. There has to be reasonable grounds for making a loss provision.
The guarantee scheme involves no entry for additional borrowing in the National Accounts as, at present, no National Accounts enter contingent liabilities into the books. In future, the guarantee will be treated as an insurance scheme with bank payments to the government entered as premium revenue and the "contingent liability" entered as the insured loss. Again, unless there is a good reason for believing that is insured loss will not be covered by the premium income, there would be no subsidy from the taxpayer.
Why should one talk about a Victorian judgement needlessly when on the face of it,it seems that the spirit of this lady`s will was not followed.She wanted the money spent for the national good,instead the parties decided to fill their coffers.If the parties had some decency,they`ll apologise for the mistake and use it for the public good.
Why should one talk about a Victorian judgement needlessly when on the face of it,it seems that the spirit of this lady`s will was not followed.She wanted the money spent for the national good,instead the parties decided to fill their coffers.If the parties had some decency,they`ll apologise for the mistake and use it for the public good.
What a neighbour is alleged to have said to an inquiring journalist does not constitute binding directions for the executors of a deceased person's estate. Nor, I am certain, would you consider it should be.
The will is the testament to the legator's intentions.
And there will be legal precedents as to how such bequests should and may be handled.
I have provided a pre-Victorian example (George III was on the throne at the time) and await a PBer to publish later statute or judgement which might vary the findings of the 1809 ruling.
What solution to the cost of living crisis are Labour proposing ? A nice income tax cut ???
Ending taxpayer subsidies for house price inflation perhaps?
How will that make me better off ?
...
...
Of course Avery, the history of the last 25 years tells us the housing benefit falls as house prices rise
You are probably confusing volume and rate.
That was taught at Eton in the first year.
Charles would never have been so confused.
Charles the vaccine and housing expert who sees no danger in house price subsidies but lots of danger in MMR, yes that was money well spent
They are not "subsidies", at least at this stage of the schemes.
The equity participation schemes involve the borrowing of funds by central government to purchase an asset. The asset value in the books matches the loan liability in the books, so there is no net borrowing.
The only way in which this may not be the case is if the government make a provision for a proportion of the loan to be a future loss, but this would be very unusual at this stage of the loan's maturity and would be regarded as questionable practice if done, say, by a private sector property investment company. There has to be reasonable grounds for making a loss provision.
The guarantee scheme involves no entry for additional borrowing in the National Accounts as, at present, no National Accounts enter contingent liabilities into the books. In future, the guarantee will be treated as an insurance scheme with bank payments to the government entered as premium revenue and the "contingent liability" entered as the insured loss. Again, unless there is a good reason for believing that is insured loss will not be covered by the premium income, there would be no subsidy from the taxpayer.
What you're describing there is a subsidy combined with an accounting fiddle. I'm sure you'd be able to see that if it was Gordon Brown who was doing it.
That Daily Mail donation thing is a bad bad story for the Coalition, if true. They need to hand the money back, immediately.
UGH!
Last word on party membership: anyone who doesn't realise old-fashioned party membership is dead is an idiot. The Lib Dems are dying, the Tories are on the way, Labour will die too. It is inevitable. The idea of static agreement, loyal support and annual subscriptions feels about 50 years out of date. Like going to a record shop. And this is as it should be: people are much better informed.
The future belongs to the first party who can harness the internet and social media to fashion a new internetty party: or at least to use the power of social media to create a new kind of membership, fluid, argumentative, disloyal - but powerful.
This might come from the libertarian right or the smarter Left, or both. But it will happen.
That sounds like a good summary of the Pirate Party. More on the organization angle in Falkvinge's book: falkvinge.net/2013/02/14/swarmwise-the-tactical-manual-to-changing-the-world-chapter-one/
What you're describing there is a subsidy combined with an accounting fiddle. I'm sure you'd be able to see that if it was Gordon Brown who was doing it.
Not really, Artful.
I certainly support plans to treat government guarantees in the National Accounts as insurance transactions. This is much better than ignoring contingent liabilities altogether on the grounds that they are unquanitifiable.
I am all for transparency and disclosure, which is why I oppose the PSND vs PSND ex trick by Brown and the ONS. Although the National Accounts do publish both the narrative is skewed towards discussion only of the subset net debt figures.
And the term "net debt" is also a skew in itself, as most analysts want to see gross assets and gross liabilities stated, so that they can look at movements in both net positions and gross positions. Again this is possible but you just need to dig deeper into the impenetrable figures to find what you are looking for.
So, as a treatment of net debt and insurance (guarantee), I have no complaint against the ONS treatment. For the transactions to be fully transparent would require the gross figures to be more clearly stated. I would support that too.
But I see no reason to conclude that the accounting treatment of the Help to Buy schemes is either a fiddle or that a net subsidy exists.
What you're describing there is a subsidy combined with an accounting fiddle. I'm sure you'd be able to see that if it was Gordon Brown who was doing it.
Not really, Artful.
I certainly support plans to treat government guarantees in the National Accounts as insurance transactions. This is much better than ignoring contingent liabilities altogether on the grounds that they are unquanitifiable.
I am all for transparency and disclosure, which is why I oppose the PSND vs PSND ex trick by Brown and the ONS. Although the National Accounts do publish both the narrative is skewed towards discussion only of the subset net debt figures.
And the term "net debt" is also a skew in itself, as most analysts want to see gross assets and gross liabilities stated, so that they can look at movements in both net positions and gross positions. Again this is possible but you just need to dig deeper into the impenetrable figures to find what you are looking for.
So, as a treatment of net debt and insurance (guarantee), I have no complaint against the ONS treatment. For the transactions to be fully transparent would require the gross figures to be more clearly stated. I would support that too.
But I see no reason to conclude that the accounting treatment of the Help to Buy schemes is either a fiddle or that a net subsidy exists.
What you're describing there is a subsidy combined with an accounting fiddle. I'm sure you'd be able to see that if it was Gordon Brown who was doing it.
Not really, Artful.
I certainly support plans to treat government guarantees in the National Accounts as insurance transactions. This is much better than ignoring contingent liabilities altogether on the grounds that they are unquanitifiable.
I am all for transparency and disclosure, which is why I oppose the PSND vs PSND ex trick by Brown and the ONS. Although the National Accounts do publish both the narrative is skewed towards discussion only of the subset net debt figures.
And the term "net debt" is also a skew in itself, as most analysts want to see gross assets and gross liabilities stated, so that they can look at movements in both net positions and gross positions. Again this is possible but you just need to dig deeper into the impenetrable figures to find what you are looking for.
So, as a treatment of net debt and insurance (guarantee), I have no complaint against the ONS treatment. For the transactions to be fully transparent would require the gross figures to be more clearly stated. I would support that too.
But I see no reason to conclude that the accounting treatment of the Help to Buy schemes is either a fiddle or that a net subsidy exists.
The risk of default obviously isn't zero, otherwise you wouldn't need the guarantee in the first place. What's the upside the taxpayer gets in return for guaranteeing the loan?
The risk of default obviously isn't zero, otherwise you wouldn't need the guarantee in the first place. What's the upside the taxpayer gets in return for guaranteeing the loan?
Yes. One of the main reasons for looking at gross assets and liabilities is to assess risk. Net debt may not change if a government doubles both borrowing and asset cover but risk may.
But the question isn't whether the risk of default is zero (it clearly isn't). It is whether the risk of default, say on a guaranteed loan, exceeds on average across the entire book of similar loans, the fees received for the guarantee. Or in insurance terms, whether the premia paid by all insured covers the cost of meeting loss claims by some.
So in the case of the government providing guarantees under the Help to Buy scheme, a net subsidy would arise when on a true and fair assessment of risk the premia would not meet expected losses. It is only then that the accounts should start to carry a provision for loss and a net subsidy would arise.
At the beginning of any insurance scheme such as this, one would expect the risk assessment to have been done with due diligence and for there to be no current expectation of loss. That is different from there being no risk of loss and stress tests would need to be applied to estimate a downside. The accounts should however state most likely outcome rather than upside or downside outcomes.
On the equity participation scheme the risks are that asset values fall and.that the borrower defaults solely for this reason. This risk lessens as property prices rise and time passes. If property prices were to be falling then the accounts should start to show provisions for loss. Again the risk doesn't disappear if property prices increase as we still have a burst bubble risk, but provided that is not the most likely outcome then it shouldn;t be stated in the National Accounts, Once again a stress test should be carried out to quantify the upside and downside risks.
Banks have regulatory requirements to cover downside risk with adequate capital to protect against the taxpayer having to step in to cover losses. This doesn't apply to governments but, in the interests of transparency, it would be helpful if the same stress tests applied to banks were carried out on government schemes.
At least we would then know what the net subsidy would be in a worst case scenario and the net benefit in a best case.
What's the upside the taxpayer gets in return for guaranteeing the loan?
We need to step aside from the accounting treatments and the quantification of transaction subsidy and benefit to look at the wider economic benefit.
The BoE stated in its most recent inflation report that although investment in private sector dwellings only accounted for 3% of GDP, the wider impact of the house price falls experienced as a result of the financial crisis accounted for 15% of the total recessionary contraction.
The same argument in reverse applies. It is the muliplier effect of house prices rising on the wider economy that will be the real benefit.
When house prices fall, consumers lose confidence, stop buying generally and demand falls.
When house prices rise, consumer confidence rises, people spend more and demand increases.
For this reason house price increases are an engine of economic growth. Provided that the increases are not allowed to get out of hand then the impact on the economy is a net benefit.
Well, Cameron and Osborne inherited a growing economy. More than can be said for most of their time in office.
Whether inflating an asset bubble via deregulated finance is the "right strategy" or not. I suppose time will tell, but recent history, when that approach sent most of the world into recession and deficit, suggests not.
Growth generated by sucking forward capex - effectively a Ponzi scheme. Additionally, government debt was growing at a faster rate - not a sustainable model.
Reducing the deficit as much as they have, while still not tipping the country back into recession is a decent achievement.
Strange measure of achievement. Most of Labour's time in office was characterised by VERY low Govt debt and deficit, and powering economic growth, until the financial crisis hit.
The crisis that was caused by the very same finance bubble policies that Cameron and Osborne are now wedded to.
Heroin addiction is not a perfect parallel, but it works ok.
The UK economy was running faster and faster on a toxic cocktail of cheap money , irrational exuberance and poor supervision.
When the crash came it was nearly heart-stopping for the financial system. Without a financial system to pump money around, the economy just can't function.
So we have a choice: cold turkey or trying to wean the addict off slowly with methodone.
If you can reduce the intake of methodone as quickly as possible without inducing a heart attack that is a good outcome.
You are of course right it is difficult to predict.
He didn't say that anything is difficult to predict, he said you are a numpty. Ill mannered perhaps, but difficult to disagree.
Numpty: a) Someone who (sometimes unwittingly) by speech or action demonstrates a lack of knowledge or misconception of a particular subject or situation to the amusement of others.
Comments
That was taught at Eton in the first year.
Charles would never have been so confused.
But what odds would you give me that there is no precedent, policy or practice established for such bequests?
At a guess the Attorney General, Cabinet Office Minister and Secretary and Lord President of the Council would have been involved before the party officers got their say.
But it may all just be 'signatures to automatic'.
The equity participation schemes involve the borrowing of funds by central government to purchase an asset. The asset value in the books matches the loan liability in the books, so there is no net borrowing.
The only way in which this may not be the case is if the government make a provision for a proportion of the loan to be a future loss, but this would be very unusual at this stage of the loan's maturity and would be regarded as questionable practice if done, say, by a private sector property investment company. There has to be reasonable grounds for making a loss provision.
The guarantee scheme involves no entry for additional borrowing in the National Accounts as, at present, no National Accounts enter contingent liabilities into the books. In future, the guarantee will be treated as an insurance scheme with bank payments to the government entered as premium revenue and the "contingent liability" entered as the insured loss. Again, unless there is a good reason for believing that is insured loss will not be covered by the premium income, there would be no subsidy from the taxpayer.
Bequests to the government can be disposed of at the discretion of the Queen who always acts on the advice of her ministers.
Find any later law or precedent to the contrary and we can advance the debate on PB.
Otherwise it is dead.
The will is the testament to the legator's intentions.
And there will be legal precedents as to how such bequests should and may be handled.
I have provided a pre-Victorian example (George III was on the throne at the time) and await a PBer to publish later statute or judgement which might vary the findings of the 1809 ruling.
Is LIAMT or a bona-fide probate lawyer out there?
falkvinge.net/2013/02/14/swarmwise-the-tactical-manual-to-changing-the-world-chapter-one/
What you're describing there is a subsidy combined with an accounting fiddle. I'm sure you'd be able to see that if it was Gordon Brown who was doing it.
Not really, Artful.
I certainly support plans to treat government guarantees in the National Accounts as insurance transactions. This is much better than ignoring contingent liabilities altogether on the grounds that they are unquanitifiable.
I am all for transparency and disclosure, which is why I oppose the PSND vs PSND ex trick by Brown and the ONS. Although the National Accounts do publish both the narrative is skewed towards discussion only of the subset net debt figures.
And the term "net debt" is also a skew in itself, as most analysts want to see gross assets and gross liabilities stated, so that they can look at movements in both net positions and gross positions. Again this is possible but you just need to dig deeper into the impenetrable figures to find what you are looking for.
So, as a treatment of net debt and insurance (guarantee), I have no complaint against the ONS treatment. For the transactions to be fully transparent would require the gross figures to be more clearly stated. I would support that too.
But I see no reason to conclude that the accounting treatment of the Help to Buy schemes is either a fiddle or that a net subsidy exists.
The risk of default obviously isn't zero, otherwise you wouldn't need the guarantee in the first place. What's the upside the taxpayer gets in return for guaranteeing the loan?
Yes. One of the main reasons for looking at gross assets and liabilities is to assess risk. Net debt may not change if a government doubles both borrowing and asset cover but risk may.
But the question isn't whether the risk of default is zero (it clearly isn't). It is whether the risk of default, say on a guaranteed loan, exceeds on average across the entire book of similar loans, the fees received for the guarantee. Or in insurance terms, whether the premia paid by all insured covers the cost of meeting loss claims by some.
So in the case of the government providing guarantees under the Help to Buy scheme, a net subsidy would arise when on a true and fair assessment of risk the premia would not meet expected losses. It is only then that the accounts should start to carry a provision for loss and a net subsidy would arise.
At the beginning of any insurance scheme such as this, one would expect the risk assessment to have been done with due diligence and for there to be no current expectation of loss. That is different from there being no risk of loss and stress tests would need to be applied to estimate a downside. The accounts should however state most likely outcome rather than upside or downside outcomes.
On the equity participation scheme the risks are that asset values fall and.that the borrower defaults solely for this reason. This risk lessens as property prices rise and time passes. If property prices were to be falling then the accounts should start to show provisions for loss. Again the risk doesn't disappear if property prices increase as we still have a burst bubble risk, but provided that is not the most likely outcome then it shouldn;t be stated in the National Accounts, Once again a stress test should be carried out to quantify the upside and downside risks.
Banks have regulatory requirements to cover downside risk with adequate capital to protect against the taxpayer having to step in to cover losses. This doesn't apply to governments but, in the interests of transparency, it would be helpful if the same stress tests applied to banks were carried out on government schemes.
At least we would then know what the net subsidy would be in a worst case scenario and the net benefit in a best case.
What's the upside the taxpayer gets in return for guaranteeing the loan?
We need to step aside from the accounting treatments and the quantification of transaction subsidy and benefit to look at the wider economic benefit.
The BoE stated in its most recent inflation report that although investment in private sector dwellings only accounted for 3% of GDP, the wider impact of the house price falls experienced as a result of the financial crisis accounted for 15% of the total recessionary contraction.
The same argument in reverse applies. It is the muliplier effect of house prices rising on the wider economy that will be the real benefit.
When house prices fall, consumers lose confidence, stop buying generally and demand falls.
When house prices rise, consumer confidence rises, people spend more and demand increases.
For this reason house price increases are an engine of economic growth. Provided that the increases are not allowed to get out of hand then the impact on the economy is a net benefit.
The UK economy was running faster and faster on a toxic cocktail of cheap money , irrational exuberance and poor supervision.
When the crash came it was nearly heart-stopping for the financial system. Without a financial system to pump money around, the economy just can't function.
So we have a choice: cold turkey or trying to wean the addict off slowly with methodone.
If you can reduce the intake of methodone as quickly as possible without inducing a heart attack that is a good outcome.
http://www.urbandictionary.com/define.php?term=numpty
I think that's fair comment, not ill-mannered!