£12.5 Billion to Spend?

Temporarily cutting the VAT rate to 15% will cost taxpayers in the region of £12.5bn. The government's stated aims in doing this are to give consumers a little bit of extra cash to spend, in the hope that this will stave off some of the recession. Clearly, it's far to early to tell whether this has actually worked, despite what many people who are opposed to the idea think, but that doesn't make it a good use of such a large sum of money. Is there a better way to spend it to try and achieve the same aims? I happen to think so and will come on to my ideas in a moment but first, what is wrong with the current policy?

Well, disregarding a higher tax burden in the longer term, there are more fundamental problems with it. For a start, it's not exactly a fair distribution of taxation relief, is it? Those who can afford to spend the most get the most extra cash. While it's true to say that the richest are probably suffering most in the recession, there's no reason not to target this enormous pot of money more effectively. Related to this is another issue: because everyone benefits from it (and some benefit much more than others), a large percentage of people don't benefit very much, so it may not increase spending across the board.

What could be done instead? How about combining the aims above with others, particularly related to climate change? What sort of schemes would save people money, stave off the recession and help to reduce the country's carbon emissions?

Here's one such proposal. Given an average cost of £4000 (ignoring any savings related to the economies of scale) a time, how about installing solar water heating in three million homes? It would save people money (not just now but year on year in the long term), help to create jobs in manufacturing and service industries at a time when it is needed most and reduce our reliance on fossil fuels to heat water, thus helping to combat climate change. And, maybe best of all, it could be targetted at the people who can least afford to do it themselves.

Can you think of other ways to spend such a large amount of money to the benefit of the country and the environment, too?

Council Tax Idea

Given that the chancellor is going to be announcing a raft of tax-cuts tomorrow in the hope that they will soften the landing as the economy heads further downwards, allow me to set out the basis of an idea that could be used to help reduce the financial burden of council tax while, at the same time, improving the local environment and possibly even fostering better community spirit.

The inspiration for this came from the very intriguing Orange Rockcorps [http://www.orangerockcorps.co.uk/]. If you haven't heard of it before, the idea was this: there was a concert at the Albert Hall featuring a pretty good lineup. Tickets for this concert could not be bought; rather, they had to be earned by doing 4 hours of voluntary work on a community-based project run by the organisers. A great idea that puts a value on people's time and uses it as currency.

So, I thought, why not extend this idea and allow people to pay off part of their coucil tax by volunteering their services to the council during weekends? Here's how it might work:

The council wants to improve the character of the local town centre and commissions a programme of work including jobs like removal of graffitti, clearing the rubbish out of ponds and streams, repainting the local subways and trimming back the undergrowth in the park. All of these could, to some extent and with varying levels of supervision & training, be carried out by volunteers, who, in return for their time, get a reduction in their council tax bill.

Of course, there are many kinks that need ironing out and any fully-realised plan would have to:
a) set a value on people's time that is high enough to induce people to get involved but low enough to ensure that the council doesn't end up with a smaller pot of money to fund all its other services
b) appease any fears that unions may have over council workers' jobs
c) be administered as effectively as possible to minimise the overhead on the part of the council

Would a scheme like this be a success? Well, I've got some ideas on that, to but I thought I'd see what you have to say about the idea before I lay out my reasoning. So, please, let me know what you think.