Friday, 10 July 2015

To Be Honest

(As always :-))

The budget left me depressed, demoralised and completely down. I was a "winner" financially but feel patronised (who really believes all that "working people" nonsense when the cuts to tax credits will hit so hard) and disenfranchised.

I work alongside emergency duty social workers earning less than £40,000 who have to deal nightly with suicidal people wandering the train tracks, children needing emergency foster care and mental health patients who should be sectioned for their own protection, needing beds that no longer exist. Despite coping with an incredibly stressful job these dedicated professionals, along with the rest of the public sector (nurses, teachers, librarians, firemen) are now being told that we are not doing work that is worth a jot to the country.

I'm bowing out for the time being. Good luck to you all. :-)


  1. We are currently a low wage - high welfare economy, the end of that road is Greece. I agree in principal with the government that we need to transform to a high wage low welfare model. Lets see if they can execute on that.

    1. I agree that wages need to be sufficiently high to avoid the need for what is, in effect, subsidy to business in the form of tax credits. For that reason the increase in the minimum wage and hike in the tax threshold are welcome. However these measures will do very little, very slowly, and in the meantime millions of low income families will suffer. I heard the measures compared to taking a cast off a broken arm before it has mended. Incidentally one of the ways to encourage higher wages is to promote membership in an effective trade union movement and support collective bargaining. Instead this government intends to hack away at the unions - they plan to "outlaw any strike not voted for by at least 40% of eligible union members. Turnouts must reach 50%." In other words there must be a larger mandate for industrial action than that required to rule the country. This is at the same time as public sector workers are facing a continuing pay cap. (For some reason those of us who work in the public sector aren't included as "working people" in George Osborne's world.)

      As for the comparison with Greece I would suggest that we only have to listen to what the IMF is saying. Whilst on one hand they are clear that reforms in the Greek economy are badly needed on the other they have been highly critical of Osborne's austerity policies here which was possibly one of the reasons he slowed them down in the last parliament. It doesn't stop him using the rhetoric though. (Nor does the fact that he can't seem to get it right give me any confidence in him as a economic thinker of any real stature).

    2. FDR believed that people who work for the government should have no right to strike, and refused to recognise their unions.

    3. Agreed. He thought that collective bargaining could not be transplanted into the public services as they existed at that time, in that place and, in effect there was no need for it. Times change. :-)

      He also said "We have always known that heedless self-interest was bad morals; we know now that it is bad economics."

    4. And yet his career was a monument of self-interest. Insofar as anyone can tell what the little twister was up to half the time.

  2. woman of a certain age10 July 2015 at 16:57

    Cerridwen, you're not alone, and I hope you return soon. I appreciate your voice of compassion and groundedness. This budget will hit children hard, particularly those who do not have two parents living with them.

    1. Thank you. Children will suffer. It's all so unnecessary and fuelled by ideology.

      The world could be such a better place, but only if people could be persuaded to harness their altruist sides instead of fired up by the right wing press and cynical politicians to greed, self-interest and disdain for other people when they know nothing about their lives.

  3. Cerridwen,

    Sorry to hear you seem down after the budget however, I guess it was not a complete surprise after the Tories won the election - which in itself was probably a surprise to many.

    It seems to me that, for far too long as a nation, we have been living beyond our means - borrowing more year on year. Of course, it cannot continue forever and sooner or later the chickens come home to roost. We have a massive debt of around £1.5 trillion and we are continuing to add to it at the rate of £70bn each year.

    Part of this spiralling debt is the ever increasing welfare bill - the tax credit system has increased from £2bn when first introduced to currently £30bn. Many on the left are critical because it artificially keeps people in part time employment and also means employers can get away with continuing to pay low wages. The raising of the tax threshold should help to offset some of the impact and also many people will welcome the raising of the minimum wage to £9 per hr.

    Frontline work is never easy and I am sure many would find the work challenging - but surely this has always been the case. Nobody questions their dedication and commitment - they do a great job but equally I do not agree with you when you say these people are told their contribution is not worth a jot.

    Just to finish by saying I have enjoyed your contributions over the past 18m or so and hope you will be feeling a bit more positive soon and that your break is only temporary.


    1. Thank you.

      Of course I expected a budget that would hit welfare hard but not one as cynical and misleading as this.

      With regards to your analysis of the current economic situation/solution and the part Osborne is playing in this I would urge you to read this week's post on mainly macro . (And as many of the back posts as you've got time for). There is a very large, and prestigious, body of economists who think that the government's got things very wrong and has, in fact, hindered growth by using austerity policies rather than helped it. In fact contrary to Osborne's claims this week America is now predicted to be the fasted growing economy (and will also have a larger "state" than us when he's finished).

      Frontline work certainly isn't easy (I worked in an Unemployment Benefit Office in the 80's so I know :-)) but please understand, it is getting heartbreakingly difficult now that resources are so stretched. There is very real, daily suffering out there despite the fact that it isn't reported in the papers and having to see it daily (as my colleagues do) and put a plaster on it knowing that you can do very little to help is extremely demoralising. Not being valued as part of "working Britain" - the part that "needs a pay rise" is insulting.

      Thanks again for your kind words. I have come to the conclusion that this is not really the place for my increasingly politicised thoughts - I can't seem to separate them out from what's happening with my investments and, in fact, they are currently dwarfing the size of my bank balance into insignificance.

      For this reason I'm going to divert my energy elsewhere for the time being. (One of the things that will be occupying my time is an OU course on "Challenging Wealth and Income Inequality".) However, I will probably still update my portfolio monthly, if only for my own records, and I will still be reading, commenting on and keeping up with all the blogs out there. :-)

    2. Thanks for the full response Cerridwen.

      Of course, I understand your position and respect it but I believe the biggest issue right now is our huge debt and whether left or right (or ahead!), we will all pay the price if it is not addressed and reduced.

      Good luck with your OU course and I hope you will find a little time to share your thoughts on finances from time to time.

  4. Cerridwen,

    I am sorry to hear that the budget left you feeling so down. I hope the OU course will give you a chance to release the tensions. I hope you will come back to posing progress on your path to retirement and a well deserved rest from the frontline.

    Good luck and take care.

  5. Many thanks sparklebeeblog. Good fortune to you too :-)

  6. Totally agree with your sentiments Cerridwen. I am a Probation Officer and again and again I emphasise 'personal responsibility' as a means of changing many a dire situation I see. However there is a level of exploitation by the privileged which is continually ignored as a factor regarding our very sick society. There is also very clearly no equality of opportunity and the gap is widening! Even the maintenance grant has now been replaced by loans. I thank God I went to university in the early 80s. From my background I certainly wouldnt have been able to go now!

    1. No, me neither, nor my husband.

      The fact that privilege is being continually fed by the policies of the current government (the inheritance tax changes are yet more proof that this is the case) whilst those who just weren't "born lucky" (the children of the working poor or "feckless") are being given less and less chance to make a decent life for themselves, will eventually become such a divisive force in society that it will destabilise things I fear.

      But maybe that is what is needed.

      Thanks for your comment.

  7. UK investor Geek13 July 2015 at 07:39

    Cerridwen - I hope you don't bow out of the UK PF blog scene for very long because I really value your contributions.

    For what it's worth I have always considered myself economically right wing. I have a business background so can't even imagine the public service frontline you speak of. But I too have been frustrated and dismayed by Tory policy and now Tory practice (which is significantly different to their policy). I found myself debating it with some (older) friends in the pub recently who have just swallowed the Osborne spin hook line and sinker and the whole thing leaves me seething. My main grumbles:

    a) Housing policy. The <30s in my business face almost no realistic prospect of getting on the housing ladder unless supported by an inheritance or the bank of Mum & Dad (a UK phrase for what I think of as a silver spoon). Housing policy is a difficult one politically because obviously it is a clear cut case of haves vs have nots. But the measures the government has taken to prop up house prices are getting increasingly scandalous - the recent move to force housing associations to sell properties being an excellent case in point. The attack on buy-to-let landlords should finally be a move in the right direction but it is being done for the wrong reasons, and it reinforces my worries of endless largess to the silver spoons.

    b) Minimum wage hikes. We are departing firmly from economic theory when we bump minimum wages by 30% by fiat. Economic theory may be wrong but there is a good chance we'll see a significant rise in unemployment (more than the 60k that the government expects - which is a lot of misery in itself).

    c) Silver spoon-ism. Even leaving housing policy to one side, the Tories seem to believe the broadsheet myths about 'middle class' meaning people earning £100k+. While I agree with them that for an individual to want to pass things on to their children may be 'the most basic, human and natural' instinct - it is NOT the right thing for society as a whole to subsidise silver spoon-ism. I grew up in the UK when I felt it was a meritocracy, where my public sector low earning parents didn't disadvantage me or my ability to find opportunities. The next generation is getting increasingly screwed on this front. If your parents have a net worth of around zero, how are you supposed to be able to a) buy your own home or b) make good use of the £15k+ p.a. tax-efficient savings regime . I leave out c) pay for university because I broadly agree with the (bipartisan) government policy on student debts, but I understand people who don't.

    As it happens, as a big dividend investor, I got walloped by the budget, but I do accept that my former effective tax rate of about 30% does look unjust given my >£50k income, so while I am selfishly cross (and would have much preferred a mansion tax of some flavour) I can see the policy merit in what he's done with dividend taxes.

    Anyway, this is a longwinded way of saying:
    a) yes, not many of us liked the budget
    b) agreed, UK PF blogs are not the best forum for these topics
    c) no, please don't go - for very long at any rate!

    1. Thanks for your kind words and well reasoned comments. (It's good to get a bit of seething off the chest :-))

      Your point about the likely increase in unemployment is a good one - the raise in the minimum wage was done purely for newspaper headlines and not part of any over reaching economic plan.

      But, in general, you're right - this is not the place for "off topic" and unrestrained political rants. Despite the fact that is great to find some fellow thinkers - everyone else would just be sighing and muttering "there she goes again". At the moment I'm afraid I just can't help myself.

      (btw - sorry you got hit hard on the dividends front but it's very refreshing to find someone who's prepared to see the bigger picture :-))

  8. I find the reality of a conservative government pretty depressing despite being smack bang in the middle of their target audience: rich; small business owner; middle aged

    Milliband had it right when he said the conservatives find it impossible to stand up for the powerful and all to willing to dish it out to the powerless

    It will be an ugly five five years, not helped by the Labour party committing electoral self-mutilation

    1. All very true Neverland but 5 years is a long time and who knows what might happen. Hopefully Labour has time to reinvent themselves and develop the right tone to their "conversation" with the British public without sacrificing ideals. Fingers crossed :-)

  9. Hi Cerridwen

    Firstly, please don't go! Since I discovered your blog, I've really enjoyed reading about your journey to FI/early retirement and your occasional 'off topic' posts help me peek out of my own 'bubble' to see what is happening to other members of the society that don't fall within my circle of peers, ie those who work in the public sector, those who rely on benefits etc.

    I agree with UK Investor Geek that perhaps such posts aren't best for a UK PF blog but at the end of the day, it's your blog so you should be free to post what you want if you need to rant or get stuff off your chest!

    People trying to get to FI are affected by the budget so perhaps it was actually on topic in a way! :-)

    When the budget came out, I was still on my hols so I only saw snippets of it. In my own selfish bubble, my first thought was 'well, not a lot there that affects me too much'. I need to see the bigger picture and you help me do this.

    1. Hi weenie,

      Thank you so much for your lovely comments.

      I have really enjoyed writing my blog and probably will find my fingers itching to take it up again at some point, I just need to regain some positivity or I run the risk of becoming a "leftie" bore.

      In any case I will be continuing with monthly updates and keeping up with how you're all doing so you're not rid of me yet. :-)

  10. Hi Cerridwen,

    First of all, very nice to meet you in person in York! :)

    I think these sort of posts are what makes blogs stand out from the cookie cutter PF blog crowd so I wouldn't hold back from doing them in future. They are far more interesting to read (along with the subsequent comments) than my monthly expense reports, for example :)
    The only other idea might be to start up a separate blog to cover the more political thoughts/rants but to be honest I think it's all good just keeping it one place, unless you feel you have enough to say to make (at least) one post a week for example.

    It is Personal Finance after all and what we need to see from blogs is the authors personality (and therefore views on life and all that encompases) shine through and these kinds of post do that far better than any others I can think of.

    I see you've been posting in the meantime since writing this so looks like we haven't gotten rid of you so easy... which is great news! :)

    I look forward to hearing some more thoughts once you get into the meat and potatoes of your OU course, that sounds very interesting and will hopefully inspire you to write a few posts on the subjects you are studying? I'd definitely be interested in reading anyway. Thanks!

  11. Many thanks TFS and it was great to meet you too :-)

    I certainly will report back on the OU Course - I'm really looking forward to it.