9 May 2015, 6:41pm


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  • England’s shy Tories take the day

    Surprise result to the election it appears, well a surprise to the punditry though not necessarily to the odd canny investor 🙂 Shy Tories turned out in force and David Cameron is back in No 10, without the moderating influence of the crybaby Nick Clegg, who marched his party to their greatest success and their greatest doom all in the same action. I had a temptation to go with the headline England goes John Galt but that’s probably taking it a little bit too far, even in search of a decent headline. Why are shy Tories shy? – presumably because of the Scruton doctrine

    ‘Leftwing people find it very hard to get on with rightwing people, because they believe that they are evil. Whereas I have no problem getting on with leftwing people, because I simply believe that they are mistaken’

    Most people pursing financial independence will probably benefit on the finance front relative to other possible outcomes, some of the key items of the Tory manifesto are

    • Take everyone earning less than £12,500 pa out of Income Tax altogether 1

    Now on a technicality pension income doesn’t count as ‘earning’ although it’s subject to income tax, but the Tories probably don’t want to piss pensioners off either. The changes in personal allowance are quite transformational for the value of pension income, particularly when combined with Osborne’s changes. Before the Coalition, the personal allowance was £7,200 – with the best will in the world it’s probably a struggle to live well with an income below that even if you have paid your house off and gotten shot of the kids, whereas according to TFS £10,000 p.a. allows for relative luxuries including a serious consumption of alcohol which is just as well since it appears that pensioners are a bibulous bunch going on regular benders.

    I could wish for an end to the theatre of of passing laws to try and embed rises in taxes etc. The whole point of government is to pass laws, and to unmake them, so this is a damn fool waste of parliamentary time. As the old boy Yoda said, do or do not, there is no try. There’s no need for a faux legalistic framework, simply follow your manifesto and don’t put up the specific range of taxes you said you wouldn’t.It’s not like last time, Dave, where you could blame Nick for stopping you implementing Conservative manifesto promises. And let’s face it, you landed the mother of all sucker punches by getting Nick to renege on his no rise in tuition fees 2010 manifesto promise 😉 Nearly all voters have a dog in that race – either their children entering university or their grandchildren

    For those working and earning well I guess

    • we will raise the 40p Income Tax threshold to £50,000

    will be sort of welcome, though it’s not such a huge raise on what it was when I was working, unless it interacts with the notably raised personal allowance, in which case the combination is probably a decent lift on what it was five years ago.

    And yet the Ermine does wonder if we will get the 1980s back. Let’s have a song

    because on page 8 there is

    • We will find £12 billion from welfare savings

    Let’s hope that the theory is true that in the developed world we are all becoming more peaceful and less violent people because of the removal of tetraethyl lead from petrol. Caitlin Moran makes an interesting point in the Times (paywall, but free syndicated version in the Australian – Google is always your friend to read the Times for free – search the title 🙂 )

    Push the highest rate of tax for a few thousand people to 90 per cent and let the bin-men go on strike. Annoying but not fatal. If you are generally secure, a government can inconvenience you, make you poorer or make you angrier – it can, let’s be frank, be a massive, incompetent, depressing, maybe even immoral pain in the arse – but you, and your family, and your social circle will survive it. It is unlikely that the course of your life will be much different under one government than the next, however diverse their ideas.

    By way of contrast, what’s the worst – the very worst – that a government policy can do to you if you’re poor? Food-bank poor? Dependant-on-the- government poor? Well, everything. It can suddenly freeze, drop, or cancel your benefits – leaving you in the panic of unpayable bills and deciding which meals to skip.

    I have been lucky enough to have been in the first category, and now is time to tip a hat to Lady Luck, particularly as I came from a working class background, I grew up in a much much poorer Britain but perhaps a kinder one, and particularly one a bit more meritocratic. It’s not all luck – I didn’t spend money I hadn’t earned other than having a mortgage, which I did pay off, and I didn’t have children I couldn’t afford.

    We are all much, much richer now in material terms, but that is not enough – the contrast between us is widening 2it’s now much, much greater than they were when I was growing up. The rich are richer, strict rationalists will say the poor are richer than they used to be too, but humans are social animals who compare themselves against each other, so there be trouble in this materially better off paradise. And that, sadly, is part of the problem with how rich or poor we all feel, together with macro shifts in employment that are destroying the ability of the Average Joe to earn a living enough to buy a house and raise up to two children. It’s hard to establish what is really the cause of this – some blame the Establishment, some blame the inherent complexity and interconnectedness of the world and a loss of shared narratives, some blame peak oil and resource crunches 3, some blame the rich for ratcheting up the expectations of us all and pricing us out of the markets for fundamentals.  Take your pick, and of course remember the bearish argument always sounds smarter.

    I really hope that those £12bn of benefit cuts (can I nominate the £2bn welfare benefits for rich landowners be included in the roster of cuts) don’t give us another roll-call like the 1980s – Brixton, Toxteth, Southall, Lewisham, the Battle of Trafalgar Square. In a narrow sense I will probably be richer with the result of the elections, though there probably isn’t that much in it – I am not rich enough or poor enough to have been in great hazard from any likely government action. But I am fearful – of social unrest. As a student in London I shot grainy images of the soup kitchens under Charing Cross railway arches. That was not the Trussell Trust, but maybe it’s where it is going.

    Though I am in good health I am fearful of what will happen to the NHS in the next 30,40 years -I will need a larger emergency fund to deal with that, although at least the fear and loathing that is the US medical system is still some distance away.

    The Ermine will become richer soon…

    because I am getting older, specifically at some point I will pass the 55 mark and all of a sudden I will get hands on some of my own savings 4. Along with the saying that coffee is there to help me with the things I can do something about, red wine to help with the things I can’t, it is time to look to some of my values. I used to have a CAF card from years ago, but on that fateful day in Feb 2009 when I realised I was going to retire early I shut down all such activities. I have tried to reactivate this, because although I will become richer I will take every step not to pay tax 5. However, even as a non-taxpayer but an investor I do pay some tax, just not very much, in the form of dividend tax credits. There are in fact two great benefits of using a CAF card. The most specific one is that it makes it possible to take advantage of gift-aid and have it recorded and totted up in a way I can see, and presumably print off in evidence should I ever need to for HMRC, along with my dividend tax credits – I can track that I am not over-claiming.

    It should be noted that you can only set dividend tax credits in unwrapped accounts against Gift Aid – so ISAs don’t count. However, I have significant unwrapped holdings, and once I get hold of my own savings I will prioritise transferring SIPP money into ISA savings over unwinding capital gains allowances. So I will probably have enough unwrapped dividend tax credits for my relatively modest plans, at least until I become a taxpayer again as a pensioner.

    The second benefit is in some ways far greater. The trouble with charities nowadays is that they have adopted many of the traits of business, and in particular once they have your personal details they will pester you shitless with requests for more money, and if you’re unlucky, sell your details to some sort of do-gooding sucker’s list to other like minded sorts. I originally got a CAF card to avoid that malarkey. The Ermine has a simple principle when it comes to charities – unless there’s some sort of return, like with my RSPB membership 6 where it actually does something for me to reveal who I am then I want anonymity. Particularly if it’s a charity that deals with human problems, anonymity is king – don’t call me, I’ll call you, because of this selling of mugs lists.



    1. Conservative Manifesto 2015 page 5
    2. As an example, CEO pay was about 40 times that of the grunts (US study, Table 6), compared to over 200 times now
    3. I generally fall into this category, though I subscribe a little to the other camps too
    4. Yeah, I know, I don’t so much become richer but I get access to my own money
    5. I will run out of road on that once I draw my main pension, but I still have a few years of flying under the HMRC personal allowance to go
    6. where I get into RSPB reserves like Minsmere that normally charge for free or effectively prepaid with membership. Most RSPB reserves don’t charge.

    Funny how when I saw the pledge of take everyone earning less than ยฃ12.5k out of the tax bracket, I only really applied it to people on minimum wage but of course, it applies to pensioners too. This could change my strategy, which was to save more in my ISA rather than my SIPP because of the tax thing (when I come to withdraw).

    Anyway, thanks for quoting Yoda – made my day!

    9 May 2015, 9:04pm
    by SpreadsheetMan


    Good post Mr E. The new Tory government will probably help me personally, but I don’t feel good about it ๐Ÿ™

    BTW: Have you seen Dr Doom’s FI blog? Terrific stuff, especially the long work experience series. (http://livingafi.com/)

    I echo Spreadsheetman – I will probably benefit personally (even if I am made redundant as I’m old enough for it not to matter). But this personal gain matters very little when measured against having to live in an uncaring and selfish society. We shouldn’t have to resort to giving to charities to make us feel better, we should be paying fair taxes because that is the right way to be governed. Dark days ahead.

    @weenie combined with Osborne’s changes it really has changed the value of a SIPP. Although the income from a pension isn’t earnings it’s still taxed as income, so you will be able to take out ยฃ12.5k p.a. tax-free (plus 25% if you do that ongoing rather than as a up-front PCLS, which is nearly ยฃ15k p.a.)

    @SpreadsheetMan – thanks for the DrDoom headsup – I’m glad to find someone who celebrates the principle that work is overrated!!!

    @Cerridwen I guess society is more than the government in all fairness, though I guess people did choose across the range of options on offer. Interesting how different people in Scotland feel about things, too.

    Hi ermine,

    As you say, society is definitely more than government, but I think that government policy does tend to set the “tone” by encouraging and rewarding certain types of thinking and behaving above others (along with the press/media).

    Yes, Scottish people can’t be fundamentally that different can they? Maybe there is hope after all. ๐Ÿ™‚

    (btw sorry to be so pompously negative in my previous comment)

    @Cerridwen there’s no’wt wrong with a little bit of passion on a Sunday morning!

    I guess government is both a mirror and an influencer, in the words of Walt Kelly summing up the human conditionwe have met the enemy and he is us.

    Something gives me the feeling that I will need a passport to cross the Tweed the next time. Dunno about a blue channel through Customs ๐Ÿ˜‰

    Fascinating article. Clearly we are approaching a crunch point here in the UK where we have to work out what we need and what we don’t. However, I don’t think this means that we should have a less compassionate state. Far from it. We just need to really ascertain what gives greatest value to the greatest number of people.

    The CAF card is fascinating. I have never come across that before. I will, I think, start using that. It is a rather nice idea.

    @Dividend Drive – a bit of soul searching into what we need wouldn’t go amiss, all round. There’s absolutely nothing wrong in wants, but qualifying needs first seems to be a dying art, along the lines of all these sorts of things

    I think CAF have moved the card to a Individual account. If you don’t need to track Gift Aid (probably most earners) then donatign anonymously might be as simple as using this CAF page.

    Just after I got my original card The Firm had an excellent scheme where I could donate from payroll (ie before tax and NI) and they would part match fund for a particular list of causes including the lot I was giving to so I used that instead because it was free money, but tracking GiftAid makes this a win now.

    I’m absolutely gutted by this result. (I don’t even like the Labour guys, but the Tories are just something else!)

    I don’t think I’ll ever be able to own an even half decent (in location or quality) place in London now. Due to my previous life expanding human knowledge I’m a long way behind where I could potentially be in my career and wealth accumulation. My only hope is that my (ungeared) spread betting experiment turns out to be a money spinner – normal saving & investing simply won’t do it in time. (And no I don’t want to become a cleaner in Bolton. No I don’t want to become a parasite in the Finance industry.)

    As for most of their promises & policies, I think the best outcome is that it turns out they have been lying and don’t do them. (E.g. Right to buy, which is the most unfair and ludicrous policy I’ve heard of. Surely that will just be scrapped? Surely??? Surely they won’t trash the recovery again?)

    I suppose it demonstrates the power of a nasty campaign of disinformation and fear, as well as having the media on-side; but we all knew that from the AV campaign.

    I had a read of the Scruton stuff and it came across as standard philosopher self-important pompous waffle; I don’t buy this Scruton doctrine at all. I think the median Tory voter is just as poorly informed and gullible as any other voter and about as evil. Of course, the right wing does have its sociopathic monsters like Melanie Phillips and now this Hopkins woman, but they are just at the extremes. (The UK left does seem to lack the equivalent though!)

    What does annoy me is the smug “oh you lefties are so naive; of _course_ we need to stiff people right on the bread-line and give the money to the people who caused this mess in the first place, otherwise the magical market gods will punish us” crap that gets spouted. So much Dunning Kruger… ๐Ÿ™

    The average punter doesn’t even understand the basics of what an “economy” is, but will happily parrot lies propagated by the Tory (and even non-Tory after it became established “fact”) press. Wren-Lewis’ concept of mediamacro is a good one.

    It annoys be when people think that their back-of-fag-packet ideas they heard on TV should be treated with similar weight of proper study. (Ok, in economics research, the quality is piss-poor but better than nothing.) At least in my former field, it was so difficult to grasp that Joe Public just left us to it – apart from silly stories about us potentially ending the world by turning a machine on! People are quite happy to leave the gravitational wave pattern given off by co-rotating black holes to people who have spent years/decades studying it, but everyone has an opinion on Global Warming (or evolution in the US). Similarly, the “household budget” analogy is ludicrous, but people spout it.

    Truth is not democratic. Deal with it.

    I nearly forgot, now the Tories are free to bring back their Snoopers charter and other bills that make a mockery of human rights. Oh wait, we’re going to scrap the Human Rights Act too! So that’s all right then. They will also be able to change the constituency boundaries and cement their position so I suppose I had better get used to it.

    As for the investment consequences of the Tories getting in, I’ll have to have a think when I’ve calmed down. (Though any changes will be tinkering at the edges – I have a core that I leave alone.) I can’t see interest rates going anywhere for a long time now.

    Having said all of the above, most of the world has it far worse than us! (Though that’s not an excuse for needless suffering for all but a lucky few.)

    Right, I’m off to have a lie down. ๐Ÿ™‚


    (I’m having trouble posting btw. I first thought it was due to the epic length of my stream of consciousness, but that doesn’t seem to be it. I’ve removed a link to the mainlymacro site in case that was the cause)

    @greg once again, there’s n’owt wrong with passion and the mainlymacro site is here mebbe it’s the jetpack plugin being ornery. I will try and talk it into being less aggressive!

    @Greg although I was having a bit of a laugh with Scruton, in researching this I came across this BBC programme from last year that indicated the changing experiences of life for Millenials might shift economic attitudes rightwards compared to previous generations, while social attitudes are much more accepting of diversity. I did get there from this Torygraph article, however!

    Interesting link to the lead/crime link article. I would have thought that the introduction of the internet around 20 years ago also has something to do with the falling crime rate, as erstwhile delinquent kids are too busy texting, twitting and instagramming with each other instead ๐Ÿ™‚

    Thanks for the link to the 10K post – “serious consumption of alcohol” made me chuckle, but it is an issue I would very much like to avoid hence tracking my consumption now ๐Ÿ™‚

    As usual your posts are an internet rabbit hole leading to many other very interesting posts and articles, it’s kept me busy for the last two days and still haven’t finished reading everything!

    The most interesting two of which perhaps (not directly through your post – I went to Quietly saving -> @paddys_hat (twitter) and then…) http://www.somethingnew.org.uk/our_policies (happens to be very local to me. The “party leader” is an Engineer as well so should appeal to both our mindsets I would have thought) and subsequently http://openpolitics.org.uk/manifesto/
    Both look like great ideas although are very David vs Goliath in nature of course.
    Definitely worth further investigation if you ask me, check them out if you get the time!


    p.s. I notice you have the follow comments plug in installed already, top stuff. I will follow this thread and await eagerly for your reply ๐Ÿ˜‰

    > I would have thought that the introduction of the internet around 20 years ago also has something to do with the falling crime rate, as erstwhile delinquent kids are too busy texting, twitting and instagramming with each other instead

    Ah, you don’t recall the ne’er-do-wells using BBM during the Summer of Rage four years ago? The intertubes aren’t just keeping folks busy shopping, indulging in onanistic pleasures and gawping at LOLcats…

    The trouble with many alternative approaches to government is the how do we get from here to there. Some of the ideas are good but the process is going to be tough, particularly running up against existing vested interests.

    I like the ability to thread that the plugin gives, but I hope Greg’s troubles aren’t symptomatic of something I’ve set wrong!

    Haha, who could forget?! I don’t know why but I think it’s cranked up another notch since then though. No selfie mode on a BB as far as I was aware for a start. Now people can just be totally self obsessed they don’t even have to bother with the outside world

    Commenting seems fine for me so hopefully it was just a one off!

    @Ermine – I’m sure you’re right when you say we’ll all adapt and survive but there will be more struggle for for quite a few. However, I don’t feel quite as deflated as the second and third Tory wins in the eighties – maybe it’s because the Scots are coming! I’m looking forward to seeing how that goes down in The House! At best it will be a kick up the a*** for the old school – at worst- some amusing moments (hopefully).
    Now – should I move to Scotland? Hmmmmm.

    Ah, the Scots are coming but they may be going in the medium term. Lots to be said for moving – the Aberdeenshire sticky-out nose is pleasantly fertile and dry for Scotland because the rain has been dumped on the Cairngorms, has no end of stone circles, and Pethshire is delightfully green and charming. Thw winters are a bummer though!

    The theatre of this was a laugh and the SNP laying claim to the Lib Dem’s second party perks has chutzpah, though I believe Labour is still numerically the primary Opposition party.

    […] of my thoughts rants on the whole thing. I’m not too bothered about the result as such, as ermineย notes FI chasers and early retirees are likely to do ok in the next 5 years, but peoples attitudes and […]


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