Let’s keep the issue simple so that it does not become too involved

The Bank of England is making a great mistake in clamping down on borrowing so late in the economic cycle when it should really have been addressed far earlier. Their proposal for mortgage ‘stress testing’ is badly thought out and will inevitably be subject to the law of unforeseen consequences by penalising buyers in poorer areas of the country

Firstly the BOE dropped interest rates to artificially unrealistic levels and held them in this depressed state for a number of years, whilst ignoring the impact on savers, who were held out to dry

Secondly the BOE imposed no controls (stress testing) early on at the start of the economic cycle on mortgage affordability and took no account of interest rates inevitably returning to their mean. They now seem surprised that anyone who could, took out unaffordable mortgages, at unrealistic long term interest rates, on unrestricted multiples of income. What did the BOE really think would happen with the introduction of cheap money – one doesn’t really need a crystal ball to predict the outcome?

Now both the BOE and politicians are caught in a dichotomy between economic and social considerations, because interest rates cannot be raised without the inevitable social fallout when mortgage repayments rise and existing home owners cannot afford their repayments. We are told that a 0.5% rise in rates will cause problems for 750k mortgagees and no politician likes the prospect of political suicide such as this

Nevertheless this is the present reality, so what is to be done?

The simple facts are

  • Any housing bubble will be driven by London and the South East in the main, although there are other pockets throughout the country as well
  • Other areas in the county are either stagnant or have falling house prices

The question therefore is how to curb one without affecting the other.

With this in mind, we need to ask what element under state control affects housing irrespective of location and remains pliable. Surely the answer is the rating system and by controlling the rates it is surely remarkably simple to influence the housing market, as well as raising money from wealthy areas to support those that are less fortunate

The current rates system has a cap at the highest band H, which equated to a house price of £320k as at April 1991 (or approximately an average of £1.05m today)

Therefore by definition anyone with a house valued at more than band H is getting a ‘free ride’ by not paying the same proportion of their house value as those lower down the scale; furthermore, the greater the house value the more inequitable the whole situation becomes

Possible Solution

Adopting the following simple approach would allow the weighting to be in favour of those areas in the country where house process have stagnated whilst potentially curbing possible housing bubbles in areas such as London

Change the rating system to be a single percentage for all domestic properties (say – 0.3%) over the entire country and use the latest Land Registry purchase as the base value of the property

  • Easy to implement & collect
  • Simple to change the percentage if necessary
  • Automatic adjustment every year according to Land Registry records – no challenge to RV possible
  • Accommodates asset rich/cash poor who have owned their house for many years
  • Everyone pays the same percentage on the last purchase price of their house

Naturally there will be objections but on balance this is probbaly the simplest and fairest solution to a difficult issue. After all if one can afford to purchase an expensive house then you should be able to cover the running costs; alternatively don't buy the property, it really is very simple


Mansion Tax Acceptable Idea With Shambolic Presentation

Tags: , | Categories: Bank of England | UK Government

David Cameron and other leaders (including Angela Merkel) have historically expressed severe reservations about Jean-Claude Juncker being the right man for the job as president of the executive European Commission

These doubts are underpinned by the fact that Juncker is a staunch supporter of a federal European state and therefore unlikely to change the ‘status quo’. Although, this stance would seem to be totally at odds with the very clear message which seems to have been recently sent by the electorate in many EU countries that change must happen

Furthermore, to all accounts Jean-Claude Juncker is described by colleagues as an ‘inveterate drinker’ and has been on record as the subject of various drunken outbursts in the past whilst in office; which in itself should surely ring warning bells. The extraordinary thing is that all this is glossed over and ignored by the European political elite – however, in another context, no country in the EU would allow a person who was drunk to drive a motor car (Germany limits are 0.5 mg per ml) so why is it deemed acceptable to have someone who is an ‘old soak’ eligible for the top European Commission appointment; where the damage he could inflict is immense?

Now everything seems to have altered almost overnight and Juncker is flavour of the month, so what happened to change people’s minds about Junckers suitability for the job?

According to the Sunday Times - 20 June 2014 there is more to this than meets the eye - claiming:


‘.. European Commission sources say Bild’s publishers were given assurances by Juncker’s team that, if elected, he would support them in their long-running battle with Google ..’


Which in turn resulted in the following article in Bild


Bild - Juncker muss Präsident warden – 30 May 2014

‘..So was geht vielleicht in der DDR oder in rechtsnationalistischen Bananenrepubliken ..’

Translated as

‘..So what is going on perhaps in the GDR or in right-wing nationalist banana republics ..’


Therefore on the face of it, Bild and Mathias Döpfner (CEO of Axel Springer SE) would seem to categorise the UK as a ‘.. right-wing nationalist banana republic ..’ – which coming from a German newspaper in an article written 6 days prior to the 70th anniversary of the D-Day landings really is a bit rich!

Well ‘seig heil’ –  Where have we heard this chant before?

Anyway to get back to the underlying issues

If these allegations by the Sundays Times are actually remotely true they raise all manner of questions which really need to be answered by Bild, Angela Merkel and Junckers

The fact that Google and Bild (Springer empire) are at loggerheads is a matter of record and identified by the Financial Times – 09 June 2014


‘.. Where Mr Döpfner led, politics followed. In May, Sigmar Gabriel, Germany’s economy minister, publicly called for the possible break-up of Google should the company be found to have abused its dominant position ..’

‘.. But the latest demonstration of Springer’s power came after the European elections, when Angela Merkel changed course over backing Jean-Claude Juncker for the presidency of the European Commission hours after Bild backed him in an editorial ..’


Naturally there is nothing wrong with Angela Merkel changing her mind based upon a newspaper article, after all that is her prerogative. Nevertheless, she would be well advised to understand the underlying motives for the Bild article in the first place and whether it arose out of a ‘behind the scenes’ deal between Bild and Jean-Claude Juncker, because being potentially manipulated by bribery and a corrupt undisclosed arrangement by someone hoping for EU office as president of the executive European Commission, would be very damaging indeed

Perhaps Angela Merkel would like to state her case for interference on the basis of the following and explain the justification for her recommendation:


Letter in the Times of 22 June 2014

Correct route to selecting the EU president

The relevant provision is Article 17 of the Treaty on European Union

Members of the commission “shall neither seek nor take instructions from any Government or other institution” — including the European Parliament

In making its choice the European Council must “[take] into account the elections to the European Parliament”. This time, the elections have shown the deep disaffection of many citizens throughout the Union. The president of the commission must be someone who can respond to this challenge and maintain the credibility and independence of the commission.


Therefore, in the light of all these matters, has ‘.. a senior member of Juncker’s team had held talks with Springer over Google ..’ and if so, was a bribe offered to Mr Döpfner over supporting Springer in their spat with Google?

If this was the case then surely it graphically demonstrates another reason on precisely why Jean-Claude Juncker is not the right person for the job; or does Angela Merkel wish to turn yet another blind eye to the reality of a corrupt Europe?

Disclosure over this matter really is required and the standard method of Junckers avoiding to engage on uncomfortable issues should not be regarded as acceptable

Tags: , , | Categories: European Union

Defeat of the Boundary Change proposals was wholly predictable and has previously been discussed on this site prior to actually knowing the end result - Nick Clegg Blocking Boundary Change Like A Spoilt Selfish Child

These proposals were originally suggested in to avoid the situation of different classes of voters; where some peoples votes are worth more than others because of the inequality of the number of constituents within existing boundaries. Clearly where one boundary contains 100,000 voters and another contains 50,000 voters, one set of voters has twice as much influence as another

‘.. For example, 87,000 voters in the East Ham constituency together get one say in the government.  The 66,000 voters living 10 miles away in Islington North get one say too.  So, if you live in Islington, your voice counts for more ..’

Obviously so far as the Labour party is concerned this is a highly beneficial situation because other parties need to work a lot harder to win an election

However, just to recap on the Liberal Democrats stance. So far as they were concerned it was never about the best interests of the country but the advantages / returns their party could achieve by either prostituting themselves to the highest bidder or sulking because they could not get their own way over the House of Lords

Nick Clegg has already addressed this in the past - House of Commons - Tuesday 26 October 2010

“.. It is one of the founding principles of any democracy that votes should be valued in the same way, wherever they are cast.  Over the years, all sorts of anomalies have developed, such that different people's votes are simply not worth the same in elections to this place.  That surely cannot be right..."

What more can one say about this disgraceful, hypocritical man who places the interest of himself and his party above those of the country? Furthermore, he obviously has a short memory!

Tags: | Categories: UK Government

Boundary Commission - What is Proposed

The underlying question is whether the current UK electoral boundaries give an equitable and representative indication of the number of registered electors in a constituency; without excessive bias towards one party or another

The present proposal aims to accomplish two things:

  • Reduce the number of constituencies from 533 to 502
  • ensure each constituency contains a similar number of registered electors

The upshot of the proposals is that inevitably there will be winners and losers - with suggested losers being Labour and Lib Dems.

However, the real problem arises because Nick Clegg is trying to 'horse-trade' over reforms to the House of Lords in exchange for his support over this matter and essentially if he doesn't get his own way, will block any boundary changes in retaliation as a spoiling action

This is not about whether boundary changes are the right or wrong decision for the country as a whole but rather whether Nick Clegg can get his own way like a spoilt child; and if he cannot then he will retaliate by being spiteful

Well Mr Clegg (and other politicians) needs to take a wider view for the good of the country - by all means block the proposals if he believes that there is no benefit for the country as a whole or the electorate.

However, to take any other approach and adopt a childish stance because he has not got his own way in another area, simply shows him up for the opportunist he really is and renders a great dis-service to the country

Do we really need 'self-serving' representatives or should all those of his ilk be simply kicked out

Tags: | Categories: UK Government