The bureaucratic maze of the Economic Crime Act

If there is one generalisation I would extract from the political science literature, it is that it is no good passing legislation without considering issues of implementation and enforcement.   How much will the legislation cost to put into effect?   Will it impose time and money costs on actors outside government?

It is very tempting to act as a legislative factory: I well remember sitting in on the last few days of a California state legislature cycle and seeing a blizzard of bills passed, some of them contradictory and others devoid of any real content.   The EU is sometimes at risk of being a legislative factory, particularly as it is largely reliant on member states to implement and their willingness and capacity to do so varies considerably (even before we begin to consider the issue of corruption).

I do not think that company directors and even shareholders have taken fulyl on board the implications of the Economic Crime and Corporate Transparency Act 2023.  Indeed, two company directors of a property management company I spoke to had never heard of it.

Let me try and briefly describe my 'journey' with this legislation.   I am the (unpaid) director of a niche publishing company.   Fortunately we have an on the ball company secretary who alerted us to this legislation.

Essentially it is intended to combat the use of corporate arrangements in the UK for illicit and illegal purposes.

I then tried to comply online and was unsuccessful despite providing my passport number, home address etc.. So much for Tony Blair's assertion that everything can be digitised.  In the meantime our company secretary had contacted Companies House (the enforcement body).  It took about an hour to speak to a human and it is evident that they were overwhelmed.

I was advised to go to Warwick Post Office with a print out sent to me online and my passport.  Having managed to find a parking place in Warwick, I was told that the QR code had not printed successfully. A fellow director was told in London that there was a fault with the chip on her passport.

With a deadline looming, I decided to have a second attempt at Warwick Post Office, this time using the bus.  Driver S Gonzalez gave me a whirlwind tour of the extensive Warwick suburbs and industrial estates.

Once again my QR code was rejected, but a kind lady took pity on me, used my passport to generate a new code and then took my photograph.  I was verified as a bona fide UK citizen!

Much to my surprise I then got a letter from a heritage railway company in which I have shares.  They stated that they were now required to keep a full record of all their (many) shareholders.   Fortunately they provided a disclosure form I could scan and send back, but they did warn me that failure to provide the required information 'was a criminal offence'.

I am quite busy so the time spent on this was an unintended consequence of the legislation and many of those affected have clearly not heard about it.

I should caution that I am not a lawyer and you may need to seek legal advice if you are affected by this legislation.  

The magic money tree is back

One of the unfortunate consequences of the restoration of winter fuel payments is that voters' faith in the magic money tree has been restored.   Shake it hard enough and it will deliver!

Pensioners, of course, are much more likely to vote and those over 55 voting exceeded those under 55 at the last general election.    

The Government has suffered political pain for little fiscal gain.  Ironically, although I will be (rightly) taxed on the payment I receive, my partner will receive it tax free.

The policy change encouraged more pensioners to apply for pension credit which is a good if unintended outcome but it reduces the fiscal benefits even further.

Why did the Government do it?   I think they were genuinely spooked by the state they found the public finances in and thought this would be a current financial year win.

It also means that no one is likely to challenge the triple lock although it has delivered pensions £800 higher than they would otherwise be because of the earnings link.

Its defenders will say that state pensions are lower in the UK than elsewhere in Europe, but private pensions are higher.   Not everyone has them, but that is why we have pension credit.

This policy change will encourage backbench Labour MPs to demand retreats on benefit payments and qualifications which means that it will be difficult to avoid tax rises in the autumn.

Two big challenges for the Chancellor

Those who admire David Smith's balanced and sensible assessments of the British economy are spoilt for choice in the Sunday Times this morning as he has two articles.

One points to the increasing cost of financing government debt as coupons on gilt edged stock increase.  Part of this is the result of the uncertainty created by Donald Trump's policies with interest on US Treasuries also rising.

However, UK gilt edged interest rates are also higher than in comparable economies.   Like the US we are running a twin deficit: on our spending and on our balance of payments.

More generally, Smith draws attention to the political reluctance to rein in public spending.   (My words) UK taxpayers continue to think that they can have American levels of taxes and Nordic standards of public services.   As for soaking the rich, the top one per cent already pay nearly one third of income tax receipts.

If I had been Chancellor, I would not have scrapped the winter fuel allowance, although I would have made it taxable for the one million or so pensioners who (like me) are higher rate taxpayers.   I would also have ended the emergency 5p Ukraine war cut in fuel duty introduced by Rishi Sunak.

Reeves is now hemmed in by Labour's election pledge not to increase the three main sources of tax revenue while welfare benefits continue to increase.  She is also hamstrung by her fiscal rules: breaking them could provoke a market panic.

I dislike the 'Rachel from accounts' misogyny from the right-wing press, but she has just two more chances to get it right: the impending spending review and the autumn budget.