Archive for June, 2014

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Scrutiny

June 19, 2014

I was a bit boggled by this, from the Law Society Gazette, when the link made the rounds on twitter last week.  I mean,

The City of London Law Society revenue law committee has called for the creation of an independent body with the power to veto tax legislation.

Seriously?  I can deal with THAT in 140 characters:

 

I saw the same thing floating around again this morning, so this time I went and looked at what the City of London Law Society revenue law committee actually said.  You can download their report here, and the relevant paragraphs would seem to be

8.3 We believe it would be useful to create an independent body which would have the power to veto the promulgation of tax legislation where either the legislation itself or the policy behind it are insufficiently developed having regard to its proposed effective date. … Whilst to some extent inevitable in a democracy, these phenomena are hugely damaging to the UK tax regime’s reputation for stability, and the creation of a constitutional check to limit the scope for them to occur would in our view be of real benefit.

8.4 Whether or not an independent body is feasible, we would urge a more realistic and open dialogue between ministers and officials about whether proposals are ready to be implemented than would appear to occur at present…

Which is slightly less worrying: the government already allows regulatory proposals to be reviewed by an independent body, the Regulatory Policy Committee, who issue an opinion on whether the evidence base for the impact assessment is of sufficient quality to support the policy proposal.  When the RPC was invented HMRC and HMT waged a successful campaign to have tax measures and their TIINs excluded from this external scrutiny but now that I’m outside looking in, I can see that there might be some merit in the idea, particularly as I wouldn’t have to be involved in doing any of it (!)

But actually I think the City lawyers may have been looking in the wrong direction.  Although there isn’t a mechanism in place for external scrutiny of tax proposals other than Parliamentary debate (and improving the quality of Parliamentary “debate” requires an entire constitution of reform) there IS, of course, a mechanism in place for improving the quality of tax legislation.

It’s called Tax Policy Making: A New Approach and it was invented by the coalition, announced and implemented to some degree of approval from both politicians and the tax profession, and then swiftly allowed to fall into disuse.

In other words, City of London Law Society, I think with the greatest respect that you’re focusing on the wrong issue.  It isn’t the relationship between Ministers and officials that you should be trying to improve (how do you know what it is?  How would you be able to tell if it was better?) but the relationship between Ministers and officials on one side, and the rest of us – tax muggles and tax wizards alike – on the other.  If consultation actually happened when it was supposed to, involved the right people (including some serious effort at involving small firms and individuals affected, spending some money on conducting small firms impact tests and consulting citizen juries, for example), and the New Approach was actually implemented…

…well, it just might work.

Posted in Bit of politics, Consultation | Tagged , | Leave a Comment »

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Checking in

June 11, 2014

So this rumour about the coalition running out of ideas and running out of steam, are they actually true, do we think?  I mean, there are “only” 68 open consultations across government listed on the Gov.uk website today.  68 sounds like a lot, but in comparison with other times I’ve checked it seems, well, peanuts.

The open consultations from HMRC (in order of closure date) are:

21 Jun 2014    Implementing a capital gains tax charge on non-residents
27 Jun 2014    Tax-Free Childcare: consultation on childcare account provision
29 Jul 2014     Direct recovery of debts
29 Aug 2014   Inheritance tax: A fairer way of calculating trust charges

and again, I go, where are the consultations linked to Budget announcements?

Wait a minute.  Let’s have a quick look at what was announced in the Budget (taking the ones that are costed in chapter 2 here and reproduced below the cut): how many of these are new?  How many of them are planned to be in next year’s Finance Bill?  How many of them would, therefore, we expect to find the subject of consultation over the summer?  As I said in an earlier post, are we just not bothering to consult any more?

Interesting times…

Read the rest of this entry ?

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Hot off the press

June 9, 2014

One of the things I often wonder about, in my post-civil-service, proto-academic career, is why on earth hadn’t I heard any of this stuff before?

In other words, why do more civil servants not know about the academic study of, well, civil servants?

I had an inkling, when I was working on the introduction of CIS, the Construction Industry Scheme, and was invited to an academic conference where I discovered to my amazement that there was a whole field of study devoted to understanding the construction industry, and that I could network with more construction industry stakeholders in that one afternoon than in months of going to HMRC-organised “stakeholder” events.  But as for HMRC understanding that there are people who study how tax, how public administration, how government works? Well, let’s just say my email offering to share my conference paper from last year with them didn’t even merit the courtesy of a response.

 

Christopher Hood is the guru of academic writing about government, so far as I’m concerned (or, to be more precisely accurate, so far as I’ve read to date) and if you follow the link in his tweet you’ll find a blog entry which is well worth reading and which gives some of the flavour of what to expect in his forthcoming book (and, if anyone would like to send me a review copy…?!)

Look at this extract from the blog entry:

As for cost-cutting, far from falling, the administration or running costs of UK civil departments actually rose by about two-fifths in constant-price terms over the three decades from 1980 to 2010

So for my entire civil service career – which I experienced as a constant erosion of professional standards, working conditions and ancillary resources – running costs were rising as standards were falling.

And where was the money going?

when we look at the pattern more closely, that increase in administration costs turns out to have come from non-payroll items such as consultancy and IT, while paybill – what it cost to hire civil servants – stayed roughly the same in constant-price terms over the period as a whole.

I was looking for a witty or at least a pithy way to end this blog entry, but all that’s coming to mind is “so there!”

Posted in Research | Leave a Comment »

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Minimum wage

June 5, 2014

Could you live on the minimum wage?  Do you even know what the minimum wage is?

It’s £6.31 an hour, if you’re over 21.  That’s £227.16 a week if you’re on a 36 hour week.  Just under twelve grand a  year.  (And a couple of grand of that is still taxed, too)

Now imagine you’re in a crappy job that doesn’t quite pay you twelve grand a year, and you have to drive around to old people’s houses and make their dinners or get them in and out of bed, and you’re not paid except for the time you’re actually in the room with the client, because the rest of the time you’re on a “rest break” (because driving from one side of the city to another in the middle of the day is so restful) and you’re vaguely aware there’s something wrong with your wage packet because you seem to have been working like a dog for forty seven hours, counting from when you left the house till when you got home, but you’ve still got barely two hundred quid in your wage packet.

What are you going to do?

Because if you complain, if you stick your head over the parapet, why, you aren’t going to work again next week, are you?  And when you go to sign on, you’re as like as not to be told you’ve made yourself voluntarily unemployed so go away and starve quietly…

There’s an asymmetry, in other words, between the employer and the employee.  In the twentieth century you might have said, well, they ought to join a union, but Thatcher did for unions, didn’t she, so these days you’d say, well, there’s minimum wage legislation.  Ring the HMRC hotline…

Which is good, but HMRC have issued a “look how brilliant we are” press release today which has really got my goat.

First thing: is is legal to refuse to pay travelling time under those circumstances?  I don’t know, but the practice is so widely reported that I had assumed it must be.  But look at the middle of page 14 of this HMRC report which says that “time work” includes

travelling in connection with their work. This includes time spent:

o travelling between appointments (but not rest breaks)

o travelling from work to a training venue

Well, if travelling time IS included in minimum wage calculations, why not clearly say so?  Instead of issuing a press release bragging that you have

recovered average arrears of around £205 per worker.

Two hundred quid???  I mean, if it’s money they’re entitled to then, yes, they should have it – but I’d be a lot more impressed if there had been some prosecutions or that the

issued 652 financial penalties, worth £815,269

had been 652 penalties averaging £800 grand instead of totalling £815k – and so averaging £1250.  I mean, scary, right?  Plenty to keep some bastard employer from screwing his poorly-paid staff out of the money they’re entitled to in order to bump up his massive profits.  Oops – sorry, I’m being normative again…

Let’s look at the worked examples in that HMRC paper for a moment again, shall we?  Turn back to page 14 and look at example 1.

Example 1 Domiciliary care worker A is paid £6.35 per hour and is paid weekly. The employer has paid the worker £190.50 for 30 hours worked. Time records show the worker spent a total of 45 minutes that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 30.75 hours = £194.03

The worker was paid £190.50 so therefore has been underpaid the NMW by £3.53 that week (£194.03 minus £190.50).

Now, just hold on a minute there – the worker is paid £6.35 per hour.  They have been paid for 30 hours when they should have been paid for 30 hours and 45 minutes.  So they have been underpaid by .75x £4.76, but HMRC will only pursue for the difference between the NMWxhours worked and pay, and not for the difference between ACTUAL pay rate x hours worked and amount paid?  In this instance (and the 45 minutes is a pretty unbelievable travel time but let that go) it only amounts to a few pence but how is the worker to collect it?

Look at example two:

Example 2 Domiciliary worker B is paid £7.50 per hour and is paid weekly. The employer has paid the worker £225 for 30 hours worked (30 x £7.50) Time records show the worker spent 2 hours that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 32 hours = £201.92 As the worker was paid above £201.92 (i.e. above the NMW amount) no arrears are due even after taking account of the additional 2 hours working time spent travelling.

They have, however, been stiffed out of £15 – two hours’ pay – they should have been paid £240 (32 x £7.50) rather than £225 (30 x £7.50).  But because the amount they have been paid is more than the legal minimum, the HMRC NMW enforcement team is going to be no use to them.

That’s like saying everyone’s entitled to £57.35 a week, so if I come along and mug you and nick fifty quid out of your purse, the police won’t do anything about it if I leave you with £57.35, isn’t it?

Ah yes, but the administration of the benefits system and the justice system are different, and so are the administration of the NMW and employment law, right?  So the HMRC team that enforces National Minimum Wage can’t get involved if your employer is ripping you off in some way that doesn’t involve breaking the NMW legislation, right?

Sod that.  There’s an easy fix.  First, make it crystal clear that travelling time – except home to the first visit, and last visit to home – is working time.  Publicise THAT and the press release might be worth having.  Second, issue the workers and the employers with an official HMRC document at the end of any investigation which says clearly the rate of pay and the number of hours worked.  This then would be prima facie evidence that the worker could use to sue the employer for the rest of it, the amount they’ve ripped off that isn’t covered by minimum wage legislation – the five pence not enforced by HMRC in the first example, and the fifteen quid HMRC weren’t interested in, in the second example.

How would the worker make use of that?  Well, an individual worker could sue separately, but it’s likely to be too small an amount for an individual to take the risk.  But maybe for a collection of workers you might get, god help us, the claims management companies stepping in and suing the employer on behalf of a number of workers.  Or – and here’s a thought – how about some kind of collective worker organisation picking up the slack and advertising their services?  Anyone know any trades unions???

Posted in Bit of politics, Employment, Equality, HMRC | Tagged , | 3 Comments »