A Time of Magic

Hardly a day goes by without some family living on social security being pointed out as a bunch of layabouts because they’ve seemingly made a positive choice to live that way rather than to look for a job, but with the rules as they are, why would they look for a job?

Taking as a basis the so-called typical family of two adults, two kids they can easily get clear of £15,000 a year net, equivalent to a gross salary of over £21,000 and closer to £25,000 by the time you add in even basic housing benefits for an average area of the country. The problem is that all of the example families pulled out by the newspapers seem to be fairly unskilled therefore probably able to attract a maximum salary of around £12,000 thus it’s rather unlikely that they’d be able to get a job paying over twice that.

That’s just for the basic benefits and there are a lot more to be had once you’re getting one of the passport benefits like job seekers. It’s impossible to list them all but some examples are free school meals, payments towards school uniforms, reduced fees (often zero) on courses, reduced entry fees to some places and so on. Depending on your interests that could easily add several thousand pounds a year to the payments. And, of course, that’s for an average family in an average area of the country: each additional child adds about £5,000 to that gross salary and more expensive areas of the country can add substantially to the housing benefit available.

No job certainly looks like quite an attractive option these days.

I’m sure that most people assume that shops basically have the same kinds of account that they do themselves albeit with larger throughput.

However, that’s not generally the case. Yes, they do have relatively normal bank accounts but for a whole host of reasons they can often accumulate countless other accounts with their suppliers and in particular for payment processing. To sell merchant account is very much a specialism as the requirements of businesses can vary considerably even when they are apparently similar.

Thus, for example, you can find that two quite similar hotels will operate their credit card processing in wildly different ways. Most will continue to use their normal bank but these days that’s not necessary nor desirable as there are outfits that can do it much cheaper and with more efficiency than a normal bank could.

One of the increasing problems for the UK government is the fact that large chunks of what were formerly nationwide financial decisions have been devolved to the regional governments which make for some peculiarities that are most noticeable in these difficult times.

Thus we have the national government saying that they will ring-fence health and, largely, education spending. A fine aim for sure, but both of those budgets are devolved to the regional governments which causes problems because those governments are financed by what’s called the block grant – essentially a big cheque to cover all of their bills.

The effect of this is that those block grants are what will be reduced (by anything from 25% to 40%) and it will be up to the regional governments to distribute those reductions amongst the areas within their responsibility. Taking Northern Ireland as an example we find that health and education take up around 60% of the total budget so if they are ringfenced by the regional government and the cut were 40% then all other departments would need to be closed down which is hardly a runner. Even at 25% that would mean a 60% cut in the other departments. Thus ringfencing health and education is hardly going to be possible, no matter how desirable it might be in principle.

I think it’s safe to say that we can expect some extremely difficult decisions from the regional governments in the coming months.