We must help the poor – but hurting the rich makes no sense
MORE Ferraris are now sold in the UK than in any other European country. No fewer than 677 of the Italian supercars were delivered to the UK, out of total global sales of 7,000, more even than Germany, home of autobahns with no speed limits.
Many people will be upset at this. Real wages are still falling in the UK (though hopefully not for much longer), unemployment remains elevated and many people have been frozen out of our horrendously under-supplied housing market. Surely, many folk will argue, it cannot be right under such circumstances that some people are spending such crazy amounts of money on a car?
It is essential that more be done to provide greater opportunities to the many who are failing to enjoy the fruits of the recovery. But demonising the rich, or chasing away the Russians and Arabs who purchase many of the Ferraris, won’t make a single one of our problems go away, and will merely reduce the opportunities for the rest of us. The poor aren’t poor because the rich are rich. London’s success is due to our continued embrace of capitalism, our openness to international executives and investors and our ability to serve as a servicing centre for global flows of money. There are now more people working in financial and professional services in the capital than before the recession, according to CityUK, and there has been an explosion in tech jobs; the income tax alone paid by the 300,000 or so highest income individuals accounts for 7.5 per cent of all tax revenues, financing a huge chunk of the welfare state.
Britain desperately needs more well-paying jobs and affordable homes – but waging war on the Ferrari-owning classes would be tantamount to the most spectacular of own goals.
YES TO REAL TARTAN BONDS
TARTAN bonds are a good idea. George Osborne is right: Scotland should be allowed to tap the capital markets. It makes sense for tiers of government other than merely the centre in Westminster to be allowed to do this; this has long happened in the US, where municipal bonds are a huge market. There are a few important caveats, however.
A tartan bond issued by the Scottish government must not be seen as a sovereign bond backed by the UK. In theory, Scotland could default; if it does, the UK government (and taxpayers outside of Scotland) should not be forced to put their hands in their pockets. Local governments or cities sometimes go bankrupt in the US, often in a highly painful manner, and (unfortunately) that is as it should be. Safeguards are needed in Scotland.
The broader problem with Osborne’s policy is that it doesn’t go far enough. While it is good to give Scotland the ability to borrow money, that’s the easy option. Harder would be not just to allow but also to force Scotland to pay for a much greater share of its spending by raising its own taxes. And why aren’t any of the other UK component nations being given similar powers? Why can’t England have its own devolved parliament, and be in charge of raising taxes and delivering education, healthcare, welfare and much else besides? And what about London? Shouldn’t we be given more fiscal rights and duties? If devo-max – or an improved version thereof – is good for Scotland, then it should be good for everybody else.
It is easy for politicians to spend the money they are given and to constantly lobby for ever greater amounts, safe that some other group will be picking up most or all of the bill; it is harder, but not that much, for them to borrow more. But it is extremely tough for them to have to look their own voters in the eye, having just imposed new taxes on them. Fiscal decentralisation is a good thing. It is just a shame that, as with so much else, the coalition doesn’t seem to see the need to push its ideas to their logical conclusion.
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