Nude rambling, Barclays and moral hazard

In February this year, Leeds Magistrates Court fined Nigel Keer (pictured left) £315 for rambling through a popular beauty spot naked except for a backpack, boots and a baseball cap. (Read report here)

Why do I mention this case? And what on earth has it got to do with Barclays? (apart from an amusing link to 'moral hazard')

Well, the penalty handed down to Mr Keer for a minor public order offence (he provoked an onlooker to frown!) is tougher than the fine handed down to Barclays.


Barclays was handed a fine of £290 million on Wednesday for its role in conniving to fix the LIBOR rate (the interest rate used for inter-bank lending) as you may have seen (if not, a reasonable article here). 


So how is the £315 Mr Keer was fined more than the £290m Barclays fine ?


Well, the BBC's Paul Lewis tweeted this morning that Barclays fine was just ten days' profits for the banking behemoth.


So, assuming Mr Keer is an average earner, then his 10 day 'profit' (his disposable income after tax) is £205 - as the Telegraph reports that the average disposable income is £144 per week.


So there we have it, wandering scantily clad around the hills of the Leeds hinterland is worse than international banking fraud. 

A Tale of Two Frauds

In 2009, a Lancashire mother was found guilty of defrauding the state of £45,000. She claimed over £45,000 in housing benefit, council tax benefit and income support by not including her husband’s details on the claim forms.

She pleaded guilty and was jailed for 16 months.


A week ago, two men from Leeds were also found guilty of defrauding the state of £45,000. They made up false invoices and documents in order to make false VAT claims worth £45,000.

They pleaded guilty, but avoided jail. Instead they were given community sentences, and made to pay court costs.


What makes these cases interesting is that they were for exactly the same amount: £45,000 dishonestly defrauded from the state - and all defendants pleaded guilty to the charges. So why is it that benefit fraud is considered so much worse?

Why, when benefit fraud costs us £1.1 billion per year and tax evasion an estimated £70 billion, is so much more effort and opprobrium directed at benefit fraud?

Of course both crimes were wrong. But is someone who commits benefit fraud a danger to society - who needs to be locked away for over a year of their life? I don't think so.

It's the inevitable result of a society where successive governments and the tabloid media (step forward the Sun and Daily Mail) have whipped up hatred against those out of work. That prejudice is reflected in the sentences.

The same economic crime means very different time.

Jubilee nonsense from the IFS

I managed to avoid much of the Jubilee - and my strategically planned overnight break meant I was not in touching distance of a TV for the reportedly dull flotilla pageant or the queue of beknighted or wannabe-knighted pop stars serenading the billionaires of Buckingham.

One thing did catch my eye over the Jubilee weekend though: a report from the Institute for Fiscal Studies (IFS) 'Jubilees compared' - which compared 1977 (silver jubilee) with today (diamond jubilee).

This paragraph in particular raised my ire:

"We are of course much better off in this Diamond Jubilee year than we were back in the Silver Jubilee year of 1977. In the intervening 35 years, despite recent economic woes, household incomes have more than doubled. The work we do, the goods we own, how we spend our money, and how government spends our money, have changed almost beyond recognition."

It's utter bollocks! Here's just a few reasons why:

1. While incomes have doubled since 1977, some sizeable outgoings have more than doubled: housing costs in particular. In the 1970s the average house price was just under three and a half times the average wage; today it's over six times. Rental costs tell a similar story - back in 1977 about one-third of people lived in council housing and the private rental market was very small
2. (and housing costs are just one example, other outgoings like travel costs have increased massively too)
3. Incomes have not doubled in real terms for the majority. In fact, as the IFS itself points out, in 1977 the top 10% had an income worth three times someone in the bottom 10%. Today the top 10% have incomes four times the bottom 10%. And the figures are even more stark for the top 1% - who took home 3% of wages in 1977, but who now grab 9%
4. Twice as many people are unemployed today than in 1977 - if unemployment benefit had increased with average earnings since 1979 it would be over £110 per week today (instead it's £71)
5. There are more pensioners now than in 1977, but the basic state pension has decreased from 23% of average male earnings in 1977 to just 17% today

I'm not saying there haven't been technological changes or social advances that have made society better since 1977 - there have. However, we are a far less equal society now - and that matters (see Wilkinson & Pickett's Spirit Level).

The majority of working people have seen their incomes stagnate or fall - and that's predominantly because of this fact: in 1977 there were about 13 million trade union members in the UK workforce, today there are only half that.