General

Old and Stupid?

Having recently spent some time with my parents, it made me think about the impact of technology.  My father has just past his 85^th birthday and is on the outside of the digital revolution.  I feel this is a real shame as he has a huge curiosity about life and the world around him.  Unfortunately dealing with computers and the web is not something that comes naturally to him.  It is often thought by younger generations that the old are slow and backward, caused by the fact that the technology around today , by its very essence is beyond their capabilities because it wasn’t present when they were younger.  This has to be a fallacy, one look at the complexity of a Roll Royce Merlin engine or ingenuity required to discover the workings of our solar system should put that idea beyond doubt.  Unfortunately the slowness of older people is not unique to the present age; this is due to the ageing process and something that potentially affects us all, unless medical science can make the kinds of breakthroughs for the brain that have been achieved with the body.  With this in mind it came as a bit of a surprise and disappointment that one of my favourite commentators Richard Ingrams of the ‘Independent’ was rather scathing about some of the changes that technology has brought to our society.  I appreciate that Mr Ingrams makes a living out of being an oldie but he has more often than not stuck me as one of the few commentators today that manages to bring something to modern debate which is beyond the obvious and  hackneyed remarks which everybody else in the media is saying.  Because of this it came as even more of a surprise when he was bemoaning the end of cheques and coin accepting phone boxes.  No doubt people were uncomfortable when cheques first arrived or perhaps when note were first introduced or when coins were introduced having symbolic value and people no longer exchanged usable commodities.  Would he have been up in arms when William Caxton introduced the printing press into this country and put all the scribes out of work, maybe he would have written a similar piece in his paper like the one he wrote in January but on reflection perhaps not.

Taxing changes

You may well have noticed that the budget is due soon.  As usual, businesses are trying to persuade the chancellor that they are so overtaxed they can hardly make ends meet and could he please reduce taxes so they don't have to go abroad.

Except that businesses are taxed far more lightly than we mere mortals are.  For a start, businesses are taxed on their profit; we are taxed on our turnover.  Businesses can have a turnover of billions, yet only pay tax on the few millions they make in profit.

Individuals don't get that luxury.  We pay our tax on our turnover, that is, our income.  We cannot take legitimate expenses out, such as the utility bills, that businesses take out.  Neither is our rent/mortgage taken into account, unlike a business.

We have to pay the full running costs of our vehicles and, to add insult to injury, whilst businesses can write off car depreciation against tax, the company car holders pay tax on the 'benefit' of having a car for business purposes.

So I have an idea that will save the Inland Revenue (IR) a fortune in tax collecting and administration and even out the imbalance.

Both businesses and individuals should pay a flat rate tax on their turnover, say 10%.  There will be no expenses to put against a tax payment in order to reduce it, saving the IR heaps of money in processing claims and the fights over what can be claimed and what can't be claimed.  The rule book can then be simplified and this would cut down on accountants fees saving the IR and businesses a truckload of cash.

We'd still need a tax free amount for people and businesses (say the first 10% of wages/turnover or £10,000 whichever is greater), to help the help those on low pay and small businesses, but on the whole it would be far easier to administrate than the system we have now. 

Of course it may put a few accountants out of business and mean that businesses and the wealthy suffer a bit more, but it would mean that everyone is taxed in the same way.  Or am I being too socialist in my desire for equality?

Are footballers overpaid?

Ask anyone in the street about footballer's pay and most will tell you that they are paid too much.  The same applies to actors, singers and anyone involved in entertainment or the media.

But are they overpaid?  It all depends on the direction you look at it from.  If you look at it from the direction of a club chairman, paying a player £100,000 per week is a good deal if that player ensures Champions league football and the revenue that competition brings in.  Also what about shirt sales.  David Beckham's arrival at Real Madrid increased the shirt sales exponentially, not to mention their global commercial footprint so the wage they paid him was more than compensated for by the increase in commercial traffic.

If you look at it from the fans perspective, and they are the ones who are ultimately paying the player, as most of them won't be earning more than £30,000 per year, footballers can seem grossly overpaid for what they do.

The same is true for actors or musicians or models.  If an actor can guarantee a film will make a large profit, then it's worth paying them millions per film. 

In both cases, it could be argued, it's also worth the while of the club chairman, movie studio record executive etc to 'overlook' what can politely be called eccentricities in the pursuit of profits.  Fans will still pay for season tickets, movie goers will still pay to watch the films and buy the DVDs and fans will still buy the CDs, despite the bad behaviour that the fans and moviegoers complain about.

The other factor to be taken into account is this:  If the money wasn't going to footballers, where would it go?  The romantics may believe that it would lower ticket prices or the price of shirts and other merchandise, but I doubt it.  The chances are that the excess money would go into the pockets of chairman or, in some cases, shareholders. 

The basic principle of business is that if someone is willing to pay a price, then someone else will charge it. As long as football fans are willing to pay for overpriced season tickets then the prices will remain high.  As long as they remain high, then someone has to get the money generated.  If it's not the footballers, who will it be?  Who would you prefer?

Employment to Self-Employment

The government is, and past governments have, put a fair amount of time, effort and money into getting people into self-employment.  As one of the recent beneficiaries of these schemes (new deal being the current one) I have to say that they are a good idea and, for the most part, succeed in their attempts to give people at least a chance of becoming self-employed.

But one, in my opinion big, problem with these systems is that they are run by employed people who have little or no experience of self-employed people.  Their helpers are people who have little idea of what it is to be employed for over twenty years as they have spent all or most of their lives self-employed.  Consequently, people who have made the transition are rare in the system, when they are the people most needed.

To take my example, the lady I dealt with at the jobcentre was very efficient at her job, but had no idea what self-employment was or what basic skills you needed to be self-employed.  My helper was excellent at being self-employed, but had never been an employee.  Had I not been dabbling with the idea under my own steam  since being made redundant I would have been thrown into this cold.

So here's what I think needs to be changed.

1) An initial course in the soft skills for self-employment.  This would need to cover looking for opportunities; how to advertise; how to deal with con-men and bad customers; dealing with the inland revenue and customs; how to be polite to people (Stop sniggering at the back) and why; do you need a website.  The full list would be longer. It would take a week to cover this ground, but would leave people far better equipped than the current set up allows.  There providers of this help around the country, but the jobcentres are not allowed to publicise them (They can have adverts for the army, but not for self-employment training).

2) Extend the six month period.  The current new deal allows six months to get yourself off the ground, during which you still get benefits and you can plow all your money back into the business.  However, it can take six months to get yourself known, let alone build a business.  After six months I had just managed to change my way of thinking to be on the lookout for opportunities and find out what methods of advertising didn't work.  So, if the business is proving viable after six months, extend the period by a further six months during which time benefits are slowly reduced, 10% per month, although housing benefit remains at the full level.

For my part I started out planning to fix PCs for homes and businesses based at home.  It is something that I still do, but I expanded into others areas, such as website building, graphic design and writing.  Individually none of them pay enough to live on, but collectively they do.  It may be that in a few years time one or more of these activities will cease and I can rely on one or two of them.  But if I wasn't taught to look for opportunities, or even have the skills to do these different things I would have had to quit self-employment and find a 'proper job'.

I know of one person who spent the six months building up his business and making lots of mistakes.  By the end of the period he'd got a handle on what to do but ran out of time.  Instead being self-employed he's now back in the rat race wondering 'what if'.  For him an extra six months could have resulted in a company employing others being created.

The new deal is good, but it needs tweaking.