1909

Today is the centenary of the Old Age Pensions Act, 1908

Jock — Fri, 01 Aug 2008 07:25:01 +0100

On 1st August 1908 the Old Age Pensions Act completed its parliamentary stages, the first step in the development of the modern benefits and welfare system by Asquith's Liberal government and the culmination of several decades of debate and lobbying for some provision to be made for the "deserving" poor in their old age. An alternative to the Poor Laws. On 1st January 1909 half a million or so people over 70 years old became entitled to a 5 shillings a week non-contributory payment administered via the Post Office.

It was not universal; only 5% of people lived beyond 70 in any case - and most were women. It was kept deliberately quite low in order to encourage as many as possible to make their own savings arrangements to top it up.

The BBC has a useful little comparison of then and now pensions arrangements, and you can read the whole act here.

According to an article I dug up last year Lord Roseberry described the Act as the most important piece of legislation since the Great Reform Act of 1832.

I'll refrain from a rant about how it's been a hundred years of mostly Tory and Labour government since and we still have 20% of pensioners living in poverty and dependent on additional means tested benefits and how we can solve this by continuing the legacy of liberal economic reforms those pioneers started. Let's just enjoy the birthday shall we? read more »

Economics as if people mattered

Jock — Thu, 06 Mar 2008 17:50:39 +0000

Conference is coming, and I'll have an opportunity on Saturday evening to share a platform with Vince Cable and James Graham at the ALTER fringe event, entitled "Economics as if People Mattered" (Saturday, 18:30, Arena Hall 2n, for anyone interested - note the change of venue from the conference program). My task is to set out some more details of the book of essays we propose to publish in time for the Autumn Conference, entitled "The Liberal Alternative". And since I shall also be seeing Vince tomorrow evening at the Oxford East constituency dinner, I thought I ought to prepare what I am going to say on Saturday so I can let him have a copy tomorrow night. So here goes with a first draft...

Tough on poverty, tough on the causes of poverty!

By the next time most of us get together again at Bournemouth in September we will have celebrated the sixtieth anniversary of the National Health Service and the centenary of the legislation that gave us the first Old Age Pension. Both of course were the triumph of political economists steeped in a tradition of liberal economics and concern for the least well off in society.

So we've decided that for our big project for the year, and to prepare for next year's centenary of David Lloyd-George's great 1909 People's Budget, we're going to publish a book of essays investigating some of the problems they faced both at the turn of the last century and in the widespread domestic poverty after World War Two that Beveridge sought to address through his "war on the five wants".

We want to show that despite throwing ever increasing resources at tackling the unequal outcomes of our economic system, successive socialist and conservative governments have completely failed to address the causes of inequality that Lloyd-George, drawing on that long tradition started to attempt in that budget.

And we want to persuade you, and the party more widely, that that tradition, never really given the chance to show its potential since then - a whole century ago, is just as relevant today. That it remains a precondition to creating an economically and therefore socially equitable society.

Prevention, in economics as much as in health, is always better than trying to cure or treat the symptoms once a malaise has taken hold. For as the cures become ever more expensive, and consume ever more of our productivity, so they also become steadily less liberal.

We are more, not less, dependent on the decisions of politicians where they deliver monopolistic public services. And the more of our labour they appropriate to pay for those services the less we are able to make our own choices anyway.

Talking of "choice", I know that some of us seem instinctively to shy away from choice, because we feel that it excludes the least well off. But I'll bet we all deep down believe that choice, unlimited choice, would be great if only we could ensure everyone was able to afford to participate in such a market place.

Well that's what we want to show you can happen when we address the central inequities of the economic system we have inherited. Taxing income and productive investment slows the creation of wealth for all of us. Failing properly to tax land allows those who happen to own or have inherited the best locations to absorb much of the value of our labour and productive investment, and especially the labour of the poorest. The wealthiest grow fabulously rich off the back of the labourer through land. And even, in this era of widespread home ownership, as it's called, many benefit unfairly, while paying, through their other taxes, for the attempts to relieve the poverty this system sustains!

If we took that tax shift seriously, our economy could be as much as a third bigger, and distribute that extra wealth more equitably according to what we put into it - our work and our savings. We would be better able to compete with the newly emerging economies of the world without retreating into hiding behind protectionism. We would be able to allow people more choice over their lives and the services that sustain them, whether that be health and education, housing, or basic needs like food.

I want to end with a brief quote from Herbert Spencer, who, writing in 1851 said:

"To mitigate distress appearing needful for the production of the “greatest happiness,” the English people have sanctioned upwards of one hundred acts in Parliament having this end in view, each of them arising out of the failure or incompleteness of previous legislation. Men are nevertheless still discontented with the Poor Laws, and we are seemingly as far as ever from their satisfactory settlement."

I suggest that 150 years later, we are still tinkering with laws, often ever more coercive laws to try and reach that nirvana of the "greatest happiness" through government intervention. We take more from everyone in the process and limit everyone's ability to decide for themselves. Addressing the central causes of our economic inequity has not been tried since 1909. 2009 is high time we put this, left, right and centre at the forefront of the new liberal political economy for the next century.

So, having read roughly what I'm going to say, you can now come along to theALTER fringe and hear Vince Cable (who will I hope by then have been formally adopted along with Nick Clegg as an ALTER Vice-President!) and James Graham as well!

"Economics as if People Mattered" (Saturday, 18:30, Arena Hall 2n - note the change of venue from the conference
program) read more »

Ricardo’s Law - The Great Tax Clawback Scam

Jock — Mon, 25 Feb 2008 21:16:50 +0000

Hat tip to US Georgist tax researcher "Taxpayer" who highlights that Fred Harrison has made a seven or so minute introduction/video advert for his book "Ricardo's Law: House Prices and the Great Tax Clawback Scam"

If you want to understand a bit about just how unfair a tax system based on incomes is, have a watch, and hopefully buy the book - it goes into a lot more detail and will leave you I am sure convinced of the place of LVT.

But the trouble with "economic liberalism"...

Jock — Sat, 08 Dec 2007 15:34:41 +0000

...is that it always seems that the first steps towards it, the first things to be cut away from the protectionism ridden form of capitalism we have now, hurt the small person more than the big person. If the "average Joe" (and no, it's just a phrase, not meant for you Joe O or Joe T!) cannot see the benefits to them of peeling away layers of protectionism and bureaucracy why would they support removing the state's comfort blanket?

Much of what we remember about Thatcher era attempts to roll back the economic power of the state, for example, centers around mining and industrial communities with their "hearts ripped out" and of the "haves" becoming the "have mores" through privatisation whilst those often for whom the state industry had been the economic lifeline were cut off. Or of the rise of the oligarchs in Russia, leeching off the common property of the people of that country in the form of its natural wealth. read more »

Repealing the People's Budget

Jock — Wed, 10 Oct 2007 02:30:29 +0100

Over at The 1909 Group website - I argue that the past few days have seen the final repeal of all that was good about the People's Budget of 1909. Liberals everywhere should be outraged.

Cable and Campbell invoke the Wizard

Jock — Fri, 13 Jul 2007 00:26:49 +0100

No, they've not pre-released the final chapter of Harry Potter, but dared to conjure up the lowest income tax since Reginald McKenna's first budget in 1916 just before the Wizard, Lloyd-George, took the premiership.

Now, I don't want to do down the significance of this. Any move towards the eventual abolition of income taxes is surely a good thing. And, whilst the media and other bloggers seem to pick up on Local Income Tax as the preferred replacement for the Council Tax (even if it would put back most of the four pence cut in national Income Tax proposed), to me it is conspicuous by its absence in the actual press release. It merely uses the code "replacing [Council Tax] with a tax based on ability to pay".

So it may be wishful thinking, but the door is surely not closed for those of us who would prefer not to create a twenty grand rise in already unaffordable house prices to argue still for Site Value Rating on housing instead of LIT - even if the Tax Commission II has not fulfilled its remit from last year's conference to work up more concrete policy on Land Value Tax.

I note, however, one or two commentators on the blogs picking up on the continuing problem of high marginal tax rates where the least well off come off benefits, especially Housing Benefit and I wonder what happened to our good idea from last year of maybe taking everyone up to minimum wage levels out of income tax altogether.

In the People's Budget of 1909, it is interesting to look at the levels at which income tax kicked in. At £160 per year earnings it was in fact well over average earnings. On a purely price inflation basis it equates to approximately £11,000 personal allowance today. On a measure of wage inflation, however, it is more like £58,000 per year - which would take 70% of earners out of income tax today, as then. LG's higher rate would have kicked in at an earnings equivalent level today of nearly three quarters of a million pounds a year!

But of course he was proposing other ways making up the balance, by taxing land wealth - a type of wealth that the beneficiary does nothing to create or earn. An idea that today would help address many other pressing issues than just how to pay the government's wage bill - housing costs, regional economic development, non-domiciled tax refugees, the unsustainable levels of private debt, mostly secured on those artificially inflated land values. And if we taxed land values fully, we could solve these marginal tax rates for good, with a universal entitlement to a Citizen's Income instead of most of these income poor benefits together with low or no income taxes at all.

It's also worth noting that the author of that 1916 budget, Reginald McKenna, was to become one of Britain's most important bank managers, as Director of the Midland Bank. He understood what we have largely forgotten about money:

"I am afraid that ordinary citizens will not like to be told that the banks can, and do, create and destroy money. And they who control the credit of the nation direct the policy of governments, and hold in the hollow of their hands the destiny of the people."

If we want to form a twenty-first century Liberal government, we should invoke those greats from our past, and learn from them the sort of policies we need more than ever today to make free trade and economic development the real way of achieving equality of opportunity and equity for all. I only hope this is just the beginning.

Technorati Tags: land value tax, lib dems, ming campbell, property tax, vince cable

Quaequam Blog!

Jock — Sun, 08 Jul 2007 21:50:52 +0100

Quaequam Blog!

Could the OFT deliver LVT?

Jock — Fri, 22 Jun 2007 22:18:16 +0100

The Office of Fair Trading today announced that it was to conduct a review of the UK's house-building sector. One of the aspects of the market it will be looking at is:

how land that is suitable for development is brought through the
planning process...and...how land with planning approval is
converted into new homes. read more »

Churchill's "Tax Switch"

Jock — Thu, 14 Jun 2007 06:52:02 +0100

New at 1909, how the People's Budget was intended to change the whole ethos of tax, asking not merely "how much have you got?" but also "how did you get it?" and giving us ideas just as pertinent today for differentiating between people's justified wealth and wealth gained by exploiting the common wealth and the needs of others.