Five things to know about the EU's Apple tax ruling

This week, the European Commission ruled that Ireland provided State Aid to Apple through preferential tax rules. Unsurprisingly this has brought corporation tax rules into the spotlight, but there are a number of points about this particular case that many commentators have missed so far. Here are the key points:

1. Nothing has been proved (yet)

The EU Commission has yet to publicly show proof of any special deal between Apple and the Irish government. As such, we cannot judge its claims until its evidence is published. Central to the Commission’s claim that Ireland has provided a special “sweetheart deal” to Apple are two rulings by Ireland’s national tax authority, the Revenue Commissioners, which stated that Apple was in compliance with Irish tax rules.

However, it is very common for companies to seek clarification from tax authorities in order to ensure that they are keeping on the right side of the law, especially when dealing with new tax structures. A statement of compliance is not State Aid. While the Commission concedes this, its main argument is that Revenue found an internal profit allocating structure that has “no factual or economic justification” to be legal – and this amounted to State Aid.

So far, the Commission has issued a finding without releasing its evidence publicly, nor its methodology to coming to such a conclusion. The Commission has not provided any evidence of a deal, nor has it provided any evidence of State Aid. Its argument to date boils down to the Revenue providing Apple with a letter of comfort, and the Commission disagreeing with Revenue’s rationale.

2. Is this even a special deal?

Typically, for this to constitute State Aid under European Competition Law, the Commission would have to show that this is a special deal for Apple, within certain parameters. The fact that Apple was utilizing a uniqueness in Ireland’s tax law does not equal state aid. The uniqueness in question is that Irish tax rules state that non-resident companies are only charged Irish corporation tax on the profits attributable to Irish operations, and therefore, in the words of the Revenue Commissioners, “[t]he profits of non-resident companies that are not generated by their Irish branches – such as profits from technology, design and marketing that are generated outside Ireland – cannot be charged with Irish tax under Irish tax law”.

If this option is available to any non-resident company, it is a legitimate feature of Irish tax law as opposed to specific state aid. Even if Apple was the first and only company to do so, this would merely be taking advantage of a tax loophole – not State Aid.

The Office of the Revenue Commissioners has publicly confirmed that Apple has paid all tax due, and that there was no departure from Irish Tax Law in its treatment of Apple, nor was there any preference given to Apple in its application of the law.

It therefore looks to be unlikely that there was any special deal, but rather this is the case of Apple taking advantage of Irish tax rules, and the national tax authority merely confirming that what they were doing was legal.

3. The European Commission is being deeply political

The Commission stated on 31 August that Ireland is free to spend the €13bn of uncollected taxes how Ireland wishes. This, while being in direct contravention to European fiscal principles (which state that windfalls should be allocated to national debt reduction), was also political act designed to undermine the Irish government's reaction domestically.

The Irish government is currently a minority government composed of Fine Gael (a centrist Christian Democratic party) and mostly left-of-centre populist Independent MPs. The Commission’s statement could foment further unease domestically by providing pressure to the populist Independents not to support a cabinet decision to appeal the finding, which has potential to collapse the government. It is naturally very much within the Commission’s interests not to be challenged on this, and it appears that the Commission’s statement was designed to weaken the government’s political freedom to challenge it.

4. …and it was about more than just Ireland’s lax tax laws

The finding was a political warning shot against US companies keeping money effectively stateless until such a time as they can be brought to shore in the US. The EU has been pressuring US authorities over this mostly-untaxed money for years in its fight against tax avoidance (as opposed to evasion). This is more than about competitive Irish tax policies.

Companies, which naturally don’t want to pay punitive US corporate tax rates, have been keeping money offshore in the hope that the US will undertake substantial corporate tax reform. US firms have amassed a sizeable amount of money offshore, thought to be in the trillions of dollars.

American policymakers will therefore be none-to-keen about Europe making a grab for their rainy day fund. Indeed, the US Department of Treasury released a damning statement, just before the publication of the EU Commission’s decision, noting that the Commission’s Apple investigation went beyond regular “enforcement of competition and state aid law”.

5. It is fundamentally a question of sovereignty

Irish tax policy is and ought to be the sole business of the Irish government. Any intrusion into this by the EU should be resisted strongly unless it can be shown there was very specific preferential treatment that was more akin to a subsidy than a true feature of the tax system.

At the very fundamental level, unless there is a deal catered specifically to Apple, this amounts to a Commission overreach into national tax policy. Tax policy, as set out in European Law, is the sole competence of the Member States. If it becomes a case where the EU may declare tax law features “State Aid”, it sets a dangerous precedence for EU intervention in an area that should be the sole remit of national governments.

Ireland’s economic strategy is based on its competitive corporation tax regime. It is what fundamentally transformed the poorest country in Western Europe to one of the richest in the world in less than two decades. Ireland should therefore appeal this decision to the European Court of Justice, as a modest windfall should not be allowed to alter its successful strategy. Thankfully the main governing party, Fine Gael, recognises this. Let’s hope the populists do too.

Cillian Fleming is based in Dublin. These remarks have been written in a personal capacity and do not reflect the views of his employer.

Well spotted but this is how it's supposed to work

Interest rates are down again, the return to saving is ever lower. As a result people are saving less. So, yes, this is entirely true:

Record low interest rates, falling consumer prices and high employment levels have caused the largest collapse on record in Britain’s saving habits.

A monthly report from GfK shows that people’s desire to save money plummeted in August, dropping 16 points from July, in the same month that the Bank of England cut interest rates to a record low of 0.25 per cent.

This was the sharpest month-on-month fall in the survey’s history of conducting a savings index, which began in 1996.

The Times then headlines this as people being "Spendthrift". Which is really rather unkind. Because the very point of the cut in interest rates is to stop people saving and to get them our there going spend, spend, spend.

There's something called the paradox of thrift. When people save more this reduces demand in the economy. This slows down, in the short term at least, the growth of the economy. This then leads to people having less to save and so savings fall.

The solution, at least one and generally accepted one, to this is that when there's not enough demand in the economy cut interest rates to dissuade people from saving. This increases spending and gets the economy growing again.

Quite how valid this all is is up to you to decide. But to call people spendthrift just because they're doing what the Bank of England has deliberately changed policy to encourage them to do seems a bit off to us.

Scrapping the human rights act doesn't mean scrapping human rights

As the Justice Secretary announced her intention to push ahead with plans to scrap the Human Rights Act and replace it with a British Bill of Rights, social media was again whipped up into a frenzy of fear. The Human Rights Act was trending on Twitter with thousands of people claiming that scrapping the Human Rights Act would result in a curtailment of our civil liberties.

Such a claim is ludicrous for a number of reasons. For example, it ignores the fact that the English common law has developed over the centuries and has its foundation on the respect for life, liberty, and freedom. Such concepts are the golden thread which runs through English law and ensures and protects our basic human rights. Moreover, although the UK constitutional system recognises Parliamentary Supremacy, the remarks of former members of the judiciary- who speak more candidly once they retire- suggests that the law courts would be unwilling to enforce laws which run contrary to the respect for life, liberty, and freedom.

For example, former members of the Appellate Committee of the House of Lords have remarked that if Parliament enacted a law criminalising the marriage of white people to black people, or Christians to members of other religions, then they could not apply it. On a similar note, many former judges expressed the same view in regard to laws requiring members of the public to carry ID cards at all times. As a result, the judiciary has acted and will continue to act as a guardian of our rights and will protect those in this country from the more draconian measures of the State.

Furthermore, it would appear that successive governments have been more than willing to depart from the principles of the Human Rights Act and to curtail our civil liberties, all in the name of national security. For example, the Labour Government under Tony Blair had intended for the Terrorism Act 2006 to enable the police to detain suspected terrorists for up to 90 days without charge. Thankfully, such a move was opposed by Parliament who rightly argued that it was an unjustifiable retreat from habeas corpus. Therefore, we see that it was Parliament- actuated by the desire to follow a fundamental tenet of the English common law that thwarted the Government’s attempt to enact oppressive legislation. 

Not only has the Human Rights Act often been superfluous, it is also a poor guarantor of our freedom and liberty. This is down to two main reasons. First, it has no real teeth as although the Act requires that Parliament enact legislation which is compatible with the European Convention on Human Rights, if a court finds that a law is incompatible, the only power that the judiciary has is to declare that the legislation is incompatible- this has no legal effect and so the offending legislation will only be changed if Parliament chooses to do so. Its second weakness is that it is still simply an Act of Parliament. As a result- and as the Justice Secretary’s plans demonstrate- if the Government doesn’t like certain aspects of it then it will be repealed.

In addition, the Human Rights Act has actually diminished certain fundamental rights in the UK- which has not necessarily been the case when other countries have incorporated the European Convention on Human Rights into their own jurisdictions. This is because in the majority of European countries, if a human rights case is brought before a court, reference must be paid to the Bill of Rights enshrined in their constitution rather than the European Convention on Human Rights or any other international treaty.

This was not the case in the UK with the Human Rights Act. The UK, which does not have a constitution codified in a single document, incorporated the European Convention on Human Rights into UK law and instructed British judges to simply follow the precedents of the European Court of Human Rights in Strasbourg. The Court in Strasbourg has often favoured certain Articles of the Convention at the expense of others, and has stretched their meanings so that they no longer reflect their original definition.

This is particularly true with Article 8 which is supposed to protect the right to a private and family life. However, as Lord Sumption rightly pointed out

“This perfectly straightforward provision was originally devised as a protection against the surveillance state by totalitarian governments. But in the hands of the Strasbourg court it has been extended to cover the legal status of illegitimate children, immigration and deportation, extradition, aspects of criminal sentencing, abortion, homosexuality, assisted suicide, child abduction, the law of landlord and tenant, and a great deal else besides. None of these extensions are warranted by the express language of the Convention.”

As a result, Article 8 has often been used not to protect the fundamental right to a private and family life, but rather to undermine freedom of speech, conscience, and expression.
Therefore, scrapping the Human Rights Act and replacing it with a British Bill of Rights could actually strengthen the protection of fundamental human rights in this country. It will be challenging to get right, but, broadly speaking, a British Bill of Rights would have to ensure that the protection of individual freedom and liberty is at its core. It should also confer real power to the judiciary to enable them to strike down any legislation that is contrary to the Bill of Rights. Furthermore, it should also have special status so that it cannot simply be repealed or changed on the whim of Parliament. 

As a result, far from diminishing our human rights, replacing the Human Rights Act with a Bill of Rights would actually strengthen their protection.



Brussels’s treatment of Apple justifies Brexit

The European Commission’s ruling on Apple, and its €13 billion bill for back-taxes, raises some complex issues of tax law.

But the political issue is quite simple; it shows that those of us who argued for Brexit on constitutional grounds, that the EU had become an all-powerful super-state, were quite right.

First, the claim that tax is a national issue, for national governments and parliaments to decide on, is now entirely exploded.  A question of how Ireland operates its own tax system has been over-turned by the EU’s Commission, making it clear that no EU member country has control over its taxation.

We who work in tax have known for years that claims of national sovereignty over tax were nonsense; I was writing about the EU’s control over its members’ tax policy nearly fifteen years ago; but it is now clear to everyone.

Second, this wasn’t a question of allocating taxing rights between different EU countries, which possibly could have been argued to be a reasonable consequence of being within the “European Club”.  This was purely an internal Irish matter, but despite there being no EU dimension the EU Commission still intervened.

There was no other EU tax at stake in this ruling, and no other EU country was affected; no other EU country had lost tax because of Ireland’s deal with Apple and no other European country can charge Apple any more tax as a result of this ruling.  This was purely an internal matter for Ireland’s tax authority (or possibly the source of a future row between Ireland and the USA).

The implication is clear; the EU is no longer about promoting co-operation and resolving disputes between its sovereign Member States; it is a supranational body that lays down rules about how its members are to behave.

Third, the action Ireland must take in consequence of the EU’s ruling also demonstrates that supranational supremacy.

If the EU was a club of sovereign member countries, as many europhiles often imply, then Ireland would be fined for breaking the rules and that would be the end of the matter.

But that is not what has happened.  Instead, Apple must pay the additional “tax”.  This means that Ireland’s tax law has been set aside, the decisions of its tax authority has been over-ruled, and instead of the tax due under Irish law, the EU Commission has imposed the tax bill that it thinks should have been due.

In constitutional terms, Ireland has been treated like a misbehaving local council that has acted ultra vires, exceeded its authority.

And if Apple objects, the Irish courts will be in the dubious position of enforcing a tax bill that, under Irish tax law, should not be due.

As to the more complex legal matters, the EU Commission’s ruling has made rather a hole in the international tax system.  It has effectively said that because one branch of the Apple subsidiary’s operations was in Ireland, all the activities of that company should be taxable there.  That is a complete contradiction to over a hundred years of international tax.

The principle has always been that a company can have different branches in different countries, and that each branch has its profits taxed in the country where it operates.  When a UK company opens a branch in Paris, the profits of the Paris branch are taxable in France, but that does not make the company’s entire worldwide profits taxable there.  The EU Commission has torn that up, and has done so without putting any properly explained alternative position in place.

There will be much more written on Apple over the next few days, but one point is clear; for anyone who has any belief in any form of national sovereignty, the Apple affair shows that Brexit was the right decision.

Flash Boys aren't rigging the market

Michael Lewis is a great storyteller. This is probably why he's the on economics journalist to have had three of his books made into Oscar nominated movies. He has a real knack for turning wonky topics like Credit Default Swaps and the Eurozone debt crisis into simple, compelling stories. But as Tyler Cowen warns us, we should be suspicious of simple stories.

That's certainly the case with his recent(ish) best seller Flash Boys: A Wall Street Revolt, it looks at the relatively new phenomenon of algorithmic high-frequency trading. Lewis takes a dim view of the practice, seeing it as little more than an exercise in rent-seeking. His big concern was that High Frequency Traders were providing very little in the way of societal benefit, but were competing in a zero-sum game for rents. According to Lewis, this competition for rents had become an incredibly costly arms race. He points to firms spending hundreds of millions to build underground cable networks between stock exchanges with the not-so-lofty aim of shaving milliseconds off data connections between New York and Chicago.

What are the rents on offer? Lewis was worried about HFT firms being able to buy faster direct access to exchange quotation data. HFT firms could then use this data to predict changes in the data that most normal trading firms typically use to price trades. Whenever a discrepancy arises between the two, HFT firms can make risk-free trades - easy money. If that's the case, then there's a risk that firms will engage in socially costly arms races, buying faster connections at great prices, while providing little in the way of societal benefit. This has prompted many to call for increased regulation and even financial transaction taxes to deter any arms race. A sort of Nuclear Non-Proliferation treaty for finance.

Whether we need new taxes or regulations is ultimately an empirical question. A new paper from the University of California, Berkeley suggests that the answer is no. Robert Bartlett and Justin McCrary looked at a massive sample of time-stamped trades representing around $4tn in value over a whole month. Analysing that data they found that of the $4tn traded liquidity providers would have only saved around $11m had they switched from the standard data everyone uses to the faster direct access. In other words, it's just not worth it to engage in these expensive arms races that Lewis worries about.  It seems that the controversial rent seeking strategies described in Flash Boys are a thing of the past. 

As my colleague Ben Southwood points out. Once you look past Michael Lewis' unfounded fears about arms races, HFT firms are providing a social good. Attempts at regulating them ended up hurting retail investors and research from the ECB suggest they facilitate price discovery especially at times when markets are especially volatile.

In praise of the Neo Cafe

Mr. Chakrabortty has one of those pieces praising the people for doing it for themselves. This is what real community is, people simply working together, without direction, without central control, to make things better for themselves and those around them.

This apparently puts those two fingers up to The Man and shows that this neoliberal capitalism thing is all wrong.

Neo also runs a social supermarket, offering food – that the likes of Marks & Spencer and Tesco would otherwise plaster with yellow stickers or chuck away – to residents on a “pay what you feel” basis. One father, Jamie, detailed how he had picked up around £40 of groceries for £8. Later on, he told me how he’d recently been diagnosed with a vitamin B12 deficiency, a complaint that can be traced to the sustained lack of decent food. It had left him tired, forgetful and in pain. I wondered how much worse off he’d have been without Neo’s cut-price shopping.

All vital work – but it’s the next bit I really want you to hear. Because Wilkes and Doherty are doing something harder, rarer and perhaps more valuable than dispensing charity: they’ve begun restoring a sense of pride to a community left for dead by the rest of the country.

Take the centre the pair work out of. Once used by the council, it had long fallen into disrepair. Weeds thrust knee-high out of the paving and the paint on the railings was peeling. On opening day the gates were flung open, a bouncy castle was put up in the garden and some food was served up. The women, who are from neighbouring Wallasey, didn’t know what to expect. Then by the end of the first morning, the garden began to overflow with stuff: footballs, a racket ball set, climbing kit.

Neighbours who wouldn’t even say hello to each other were bringing over their kids’ playthings. When removal men brought over the giant M&S chiller cabinets for the social supermarket but left them outside, muttering about the wrong angles, it was the locals who stood guard against any nicking – and then shifted them inside.

The crucial line there is "Once used by the council, it had long fallen into disrepair. "

This is not two fingers to neoliberalism, this is neoliberalism. Which is, as we all know but all too many others don't, insisting upon the freedom and liberty which allows people to voluntarily cooperate. Sure, sometimes this is in the form of a capitalist style business. But in the smaller echelons of society it isn't and never has been. We actually have our inspiration in the rather more conservative idea of Burke and his "little platoons". 

We have absolutely nothing at all against the Neo Cafe. Indeed we'd hold it up as a shining example of how things ought to be. People getting together to do as they wish - this is freedom and liberty in action.

And note what was required before it happened. The State, in the form of the local bureaucracy, had to get out of the way in order for people to be able to use the assets previously colonised by said bureaucracy and State. And when that happens there is that flowering of voluntary cooperation that Mr. Chakrabortty so praises, as do we.

The usual technical term for this is that the State can be guilty of "crowding out" such activity. Or as we've been saying for a number of decades now, if you want the good society you're going to have to shrink said State so there is room for the good society to flourish.

Burke got it two centuries ago - pity it's a lesson all too many still don't grasp, isn't it?


Tax clampdowns make the rest of us poorer too

I’ve been warning of it for years, and we now have fresh evidence; the wealthy industrialised countries’ desperate search for more tax revenues is causing actual problems that risk seriously damaging the global economy.

Many European and American governments’ spending makes drunken sailors look restrained, but rather than looking at their own behaviour they are blaming their deficits on their citizens’ unwillingness to pay even more tax.

Offshore tax evasion is one culprit often blamed for deficits, even though real tax evasion, hiding income that really is taxable, is very rare.  HMRC estimates that it loses only a tiny 0.8% of tax revenues through tax evasion, and only a small part of that is from offshore evasion (most tax evasion is local, such as small businesses not reporting cash-in-hand income).

But a ‘clampdown on tax havens’ is seen by politicians as a convenient way of distracting attention from their failure to balance their budgets, promising that the latest schemes will bring in the lost billions and solve their financial problems.

The tax authorities’ current favoured tool is automatic exchange of information, whereby banks and other financial institutions around the world are forced to report their clients’ income, not just to the banks’ home tax authorities but, directly or indirectly, to their clients’ home country tax collectors, wherever they may be around the world.

The USA was an early adopter of this, with its 2010 Foreign Accounts Tax Compliance Act (FATCA), which imposed onerous reporting requirements on banks around the world.  In response, some banks stopped providing accounts to US nationals, because of the burden of compliance and risk of penalties for making mistakes in their unpaid work for the taxman, but the reach of the US economy meant that many had to comply.

FATCA, backed up by the long arm of Uncle Sam, spawned several related schemes, and now the OECD (the Organisation for Economic Co-operation and Development, which is helping its member governments collect more taxes whilst preserving its own tax-free status in Paris) has its own “Common Reporting Standard” to demand information from financial bodies.

So a massive information collection and reporting exercise has been created to pursue proportionately tiny amounts of tax, but as financial services businesses start to implement it we are seeing alarming evidence of the costs and risks that it is causing, costs that have to be passed on to the customer and that risk de-railing global growth.

Worse, by making international business more difficult, there is a danger of wider costs to the world economy and for society.

The latest evidence comes from compliance firm Sovos and financial researchers Aberdeen Group, who have produced an analysis of financial institutions which shows that financial services providers are struggling with the requirements of FATCA and similar measures.

The Sovos report found that less than half, only 44%, of FATCA returns are accurate, showing that the financial service sector is finding it difficult to comply with the demands made on it.

And although the systems are still new, the regulators are clearly not giving any leeway while the industry gets to grips with the requirements; the Sovos report found that firms subject to FATCA reported that they were paying an astonishing 6% of their turnover in fines, not for deliberately hiding information but for accidental mistakes in their reporting.

And note, that’s not 6% of profit; it’s 6% of turnover.  That’s going to wipe out a large chunk of the profits of any finance business.

Not surprisingly one of the reasons why finance businesses are finding this difficult is that governments just cannot make a decision and stick to it; 21% of finance businesses surveyed for the Sovos report said that “frequently changing regulatory standards” were a top challenge.

But the bigger issue is more fundamental; the Sovos report found that 26% of finance businesses see “reporting across multiple jurisdictions” as being a major problem.

And that problem is fundamental to FATCA and similar processes; large financial services providers have operations in different countries, possibly with different languages, and customers in different countries.  They are having to capture and collate information from all around the world, put it into various required formats and submit it to different tax authorities around the world, quite possibly for countries where they do not even operate.  And all of this is in addition, and generally different, to their domestic reporting requirements.

Computer systems, according to the Sovos report, are struggling to reconcile client information from multiple sources (only 45% success), to cleanse data of errors (as low as 32% success) and create reports with the correct formats and required encryption (as low as 25%) without expensive manual intervention.

Of course the procedures are still relatively new; as they bed in (if governments can ever resist tinkering for long enough to allow that), systems will be put in place to reduce costs and improve compliance, reducing fines.  Apparently Sovos, the authors of the report, have systems to do just that.  But the fundamental problem remains; the ever-increasing demands for more, and more complex, information from tax authorities is increasing the costs of providing financial services.  Those increased costs are going to be passed on to customers, both individuals and businesses.

It is difficult to justify that these complex, expensive processes are even needed.  The old days when money could be confidently hidden away in a “tax haven” have long gone.  Finance centres, including offshore ones, have operated for years on the basis of “information on demand”, whereby financial institutions, law firms and other intermediaries answer legitimate questions from tax authorities and other government bodies in other countries.  Those systems have now bedded in and are working well.

This was supported by the recent leaks of confidential information (Panama, Liechtenstein, Luxembourg and so on), which have not actually disclosed much tax evasion; by and large the supposedly “hidden” money has either been declared to the tax authorities or is legitimately not taxable.

It is therefore doubtful whether much extra tax will be collected from automatic information exchange; it looks more like the usual government desire to be seen to be doing something rather than actually doing something useful. 

But the costs of compliance are huge, and because these reporting requirements are increasingly about international investors, the cost of doing cross-border financial business is going to rise disproportionately.  Worse, it is likely that some financial services providers will pull out of some jurisdictions, or stop serving customers from some countries, because the compliance costs of reporting on them to the various tax authorities will just be more trouble than it’s worth.

That is a serious problem for the world economy.  Global financial integration, making it easier to move money to trade and invest around the world, has played a major role in the growth in world trade and reduction in world poverty in recent decades.  Reducing financial integration, by making it more costly for financial services providers to operate in, or serve customers from, various countries, risks stalling this growth.

Nor is this just a “first world” problem; when businesses pull out of countries, they pull out of the least profitable first, and that means that less developed countries are going to find it increasingly difficult to access world financial markets because banks will decide they just aren’t worth the costs and risks of dealing with the compliance regulations.

IMF research estimated that a 10% reduction in global financial integration would reduce annual GDP growth by 0.3 percentage points.  That may not sound like much, but it would have pretty much wiped out all economic growth in the EU for the last eight years.

Governments’ misguided attempts to prevent the relatively tiny problem of offshore tax evasion risks causing horrifying damage to the world economy.  Is it really worth that, just to demonise a minor problem of offshore tax evasion which is already far more myth than reality?

Damn right too

It has always been one of the great gaping holes in the British system that if at some point in life you need a helping hand with housing then you're likely to gain housing subsidy for the rest of your life. That is, if at some point in need of subsidised housing, council or housing association, then that subsidy is going to stay with you whatever your future income.

Thankfully this has changed:

More than 70,000 tenants face average rent rises of more than £1,000 a year under the government’s “pay to stay” policy aimed at ensuring supposedly high earners living in social housing are charged market rents.

This is as it should be. There is no reason at all why those on median income or above should have their housing subsidised by the rest of us. Thus those who make more than around and about median should indeed be paying full market rents, not something subsidised because at some point in the past they needed said subsidy.

And I'm afraid no, it is not possible to state that such housing is not subsidised. That would be to ignore opportunity costs. And whatever it is that you're doing when you do ignore opportunity costs it isn't economics.

That the welfare system stands there to offer a helping hand in times of trouble is just great. But such should not turn into a privileged economic position for life. As recent changes have stopped it being so and damn right too.

Some laws we don't have we shouldn't have

Good news from the House of Lords. We don't have certain laws that we shouldn't have:

Baroness Neville-Rolfe, the minister for business, energy and industrial strategy, said the Government had no such powers, and that it was up for the respective companies to decide on them.

This was in response to this bleating:

In a recent parliamentary question, he asked whether the Government was able to require that SoftBank provide financial support to ARM and whether it had reviewed SoftBank’s financial position before approving the deal.

The point being that ARM Holdings is a private sector company. This means that it is the private property of the shareholders, for them to dispose of as they see fit. For the government to have the powers to insist upon terms is as ludicrous as their deciding whether my spare shirts go up on e-Bay, stay in the cupboard or are given to Oxfam. They're my shirts - it's their company. I, they, get to decide on the disposition of my/their property.

That's just what private property means.

If Lord Myners thinks that ARM Holdings or any other organisation in the land should not be private property then he's entirely at liberty to campaign for their nationalisation. And to work out where to raise the money from. But until that day then private property really is private property.


There's a solution to this

If the NHS is not working as we would wish it to work (and there're few who would argue that the current situation is perfect) then obviously there's an argument that the way that the NHS works should be changed. Which brings us to two surprises, the first that the head of 38 Degrees agrees with us on this matter. The second that he doesn't see the obvious answer:

Politicians have failed the NHS. We need people power to save it

David Babbs

If the politicians have failed it then perhaps the answer is not to have it run by politicians?

Conventional politics has failed us when it comes to the NHS.

If that is so then conventional politics is the wrong system to be using to run the NHS then, isn't it?

One thing is certain: we know that when we leave the politics of the NHS to the politicians, it doesn’t end well. Now, more than ever, people-powered campaigning is critical to the future of the NHS.

The ultimate people power is of course people spending their own money in a marketplace. There will obviously be subsidy to those who simply cannot afford the treatments they need - as with France, Germany and many other advanced countries. It would even be possible to suggest the Singapore system. A combination of government catastrophic insurance and medical savings accounts for routine expenses. A system which provides health care as good or better than the NHS at half the cost.

But the central point being made seems obvious to us as well. The system of the politicians at the centre doling out the health care doesn't work as we would wish the system to work. The answer therefore is simple, move to a system which doesn't have the politicians at the centre doling out the health care.