…for the record…this is migration, too?

Henley & Partners, which makes a fine living cosseting the wealthy, claims that between 2017 and 2023, 16,500 millionaires migrated from the UK. Henley, the “investment migration consultancy”, seems perturbed. “Provisional estimates for 2024 are even more concerning, with a massive net outflow of 9,500 millionaires projected for this year alone,” it says. As fate would have it, fewer millionaires fled Russia in 2022 (as it invaded Ukraine and became a sanctions piñata), than are expected to leave the UK this year.
[…]
We read a lot about people who help migrants move around and they come in all shapes and sizes. One kind capitalises on dehumanised people desperate to reach a friendly, safe and secure nation where they hope to contribute and build a new life. The other quite legally helps the ultra-wealthy, […] flee to nations which are much more tax-efficient, with far less sticky red tape. The former will dump you on a small dinghy, the latter will usher you on to a superyacht.

…&…when you think about it…a lot like the boats…when it comes to housing & such…you can stack one bunch up in a…more modest footprint…the occupants of those small boats aren’t building iceberg houses in chelsea…& in raw numbers the yacht crew routinely deny the taxman more of his due than many a small boat could hope to muster if all souls contribute every penny they ought to…& dip if it looks like they might be expected to put their hand in their pocket…so the story goes

You are a funny bunch. Some of you are the citizens “of nowhere” who Theresa May pointed her finger at, but others are the type who were desperate to “take back control”, who fly a crisply ironed union jack on a neatly manicured lawn; who belt out Rule, Britannia! during Last Night of the Proms, but do everything they can to shrink their tax exposure. But there is no more patriotic act than paying your taxes: contributing to the continued growth, prosperity and security of the land that might have made you wealthy, that schooled your children, that sustained your staff. So fleeing to what is basically a sauna with pretty skyscrapers in order to avoid paying taxes is not really a good look.

What was the straw that broke the camel’s back? Was it the primacy of culture wars here over competent economic stewardship? Of anti-immigration rhetoric over crude national necessity?

It might be mere coincidence that Britain’s three-quarters of a century-long reputation for being a millionaire magnet really began to wane from 2017 to 2023 – a year after the brainwave we called Brexit. With the abolition of the non-dom tax regime (which permitted the super-wealthy, including the prime minister’s wife, to avoid tax on foreign earnings), and the pending removal of the VAT exemption on private schools, Britain is not the fun-packed playground it once was for the cash rich. Worth saying that our playgrounds aren’t the playgrounds they used to be either: your lot built flats on many of them. You may be able to see that from 10,000ft as you head off.

https://www.theguardian.com/commentisfree/article/2024/jun/21/britain-millionaires-leave-tax-havens-uk

…but…the guardian would say that…what about…the FT?

Several advisers told FT Money more clients had become concerned about their tax position since the Budget, when the Conservatives announced a move to scrap existing non-dom rules — a policy the party adopted from Labour.

Chancellor Jeremy Hunt pledged to end the 200-year-old tax regime that exempts foreigners living in Britain, who are domiciled overseas, from paying UK tax on foreign income and capital gains for up to 15 years. This would be replaced by a new four-year system.

…you’d think they’d have more faith in their accountants…but…maybe it’s like the princess & the pea?

Non-dom inquiries surged again after the Labour party confirmed its plans to limit the tax breaks further — if elected — by removing the ability of non-doms to shield foreign assets held in a trust from inheritance tax.

The party, which is leading in the polls, has also pledged to change the tax treatment of private equity executives and apply VAT to private school fees.
[…]
Several countries crop up as popular destinations, including the UAE, which levies no personal taxes. The US is another popular choice.[…]

Law firm Withers has identified the most popular European choices for would-be UK émigrés as Italy, Greece, Portugal, Spain and Switzerland.

Greece and Italy both charge a maximum tax of €100,000 (£84,000) a year, which advisers said was attractive for anyone earning more than around €250,000 a year.

Vokes said Italy had been particularly successful at attracting wealthy people in the seven years since it introduced its regime. The country had “shamelessly copied” the UK’s non-dom rules and improved on them.

Italy is absolutely gaining at the UK’s expense,” she added. “People like [the tax regime’s] simplicity. You can explain it, you can understand it.”

…but…you know…there’s different sorts of new money/old money…& this isn’t a new narrative

Quantifying the trend for wealthy individuals to leave the UK is hard. Helen Miller, head of tax at the Institute for Fiscal Studies, said she had not seen any “reliable evidence” of an exodus.

“You can always find an adviser that has a client that’s leaving the country,” she said. “The question we’d like to know the answer to is how many more people are leaving than usual.”

“I’m not aware of a stampede for the door,” added Clare Munro, a tax adviser at Weatherbys Private Bank. She said some of her non-dom clients were reviewing their location, but these tended to be people with “shallow roots in the UK and homes in several countries”, so shifting residence was not difficult.

“But a lot of UK-based multimillionaires do not have that flexibility,” she added. “They might be older, they have homes and land here passed down generations and they have family. For them the tax regime would have to be a lot tougher to justify such a major upheaval.”

…so the logic goes

Vokes said that while non-doms and private equity executives were a “tiny” part of the population, they contribute an outsized amount both in tax and other areas such as business creation, employment and consumption.

“This is a group we should consider really valuable and should be trying to retain,” she added.

…don’t spook the thoroughbreds

Miller said: “If [policymakers] knew that by increasing taxes you would lose a lot of money as people would leave, that wouldn’t be a particularly smart move,” she added.

…in the end, though…isn’t it all about how vested your interests are?

However, Arun Advani, assistant professor at the University of Warwick, who has studied the tax response of non-doms to previous reforms, said he found the people who responded most to tax increases and left the country had the fewest economic connections to the UK.

“They don’t have much income in the UK and they don’t pay much tax in the UK, so it costs less if they leave,” he said.

What’s driving the UK’s wealthy towards the exit? [FT]

…huh…who’d have thunk…oh, wait…loads of people…most of them having seen it before…not to mention…you can earn decent money helping those vested interests not have to divest everything the taxman comes begging for…whereas

The average partner at top criminal London law firm Kingsley Napley earned about £450,000 last year, according to people with knowledge of the firm’s remuneration, more than five times the maximum £79,315 salary for a case controller at the Serious Fraud Office. Partners at larger firms such as UK “magic circle” outfit Linklaters, which also has a business crime practice, took home an average of £1.79mn in 2023.

The much lower pay at UK agencies including the SFO and Financial Conduct Authority, which are responsible for prosecuting white collar crimes, including bribery and insider trading, is one reason the bodies struggle to recruit more people from the private sector.

Both agencies have come under pressure over their enforcement efforts in recent years, with the SFO closing long-running investigations into miners Eurasian Natural Resources Corporation and Rio Tinto last year, while the FCA secured its first insider trading convictions this year since 2019.

…firms don’t throw money away on salaries…not if they’re the sort that sit at the top of their industry listings…so…if you work it back…how level is a playing field where being at the top of your game with a serious amount of form is “worth” less than you can get playing for the other team when you’re so fresh out of the box you’re still wet behind the ears?

Pay at the FCA, which is funded by the firms it regulates rather than the public purse, is slightly better than the SFO, with the most experienced lawyers at the agency earning as much as £144,000, according to the most recent information available. The Crown Prosecution Service pays its London lawyers between £42,650 and £122,550.

The gap between public and private sector pay for lawyers has been highlighted recently as a number of top City commercial firms have raised starting salaries for newly qualified lawyers [NQs] to £150,000 or more. Kingsley Napley pays NQs at least £70,000.
[…]
The dynamic is in contrast to the US system where young lawyers cut their teeth at the Department of Justice or similar before cashing in their experience at a top-flight law firm. Senior US partners also often return to the agencies to take up high profile roles due to the prestige linked to such positions.

While remuneration for public prosecutors in the US is also far below the private sector, a top lawyer at the DOJ can still earn almost twice the salary of the top pay band at the SFO at $191,800 (£151,000), and the power and future earning potential can make up for the temporary cut.

…maybe it’s just me…but if italy aims to steal that lunch money…that doesn’t feel like an unadulterated benefit…or maybe they’re better at running graft-adulterated books & they think they got the necessary game…I dunno…

“We do struggle sometimes to recruit the right kind of people into our organisation . . . and part of that is because we simply can’t command the kind of salaries that people can earn elsewhere,” Ephgrave said at the Royal United Services Institute think-tank in Whitehall in February. “We have to make sure it’s seen as a career-enhancing move to come to the SFO.”

The SFO said it was hiring from the private sector and the agency had increased its permanent staff by almost 10 per cent to 518 as of April.

Low pay for UK financial crime prosecutors hits efforts to hire top talent [FT]

…one of them products of our times

The USSR isn’t the only such artefact, of course. Randall Munroe, author of the webcomic XKCD, once put together a flow chart to date almost any world map made since the 19th century to within a few years by answering some simple questions. Does it show Constantinople rather than Istanbul? Does Tokyo exist but not South Africa or Rhodesia? Is Bolivia landlocked? Then your map is from between 1884 and 1895.

Such quirks are a valuable part of dating historical artefacts – and exposing historical frauds. For scholars of the 21st century, now and future, an equivalent rich text is being built in front of our eyes.

…the USSR was the biggest country…until it wasn’t…&…uh…russia was…how big was the difference?

…huge…but also sort of negligible…depending on how you look at it & how much skin you got in the game…so…drawing parallels with twitter is…serious &/or frivolous on a similar sort of spectrum, I suppose

In the real world, there’s more than just social sharing icons to go on for dating digital artefacts. In 2017, for instance, a corruption investigation into the daughter of Pakistan’s then prime minister was granted a key piece of evidence after investigators noticed that documents dating from 2006 were written in Calibri, a typeface only released to the public in January 2007. The web of lies spun by Craig Wright, who spent years falsely claiming he was the creator of bitcoin and suing anyone who said otherwise, was too big to be torn by any one thing, but including a code library released in 2013 in a file supposedly created in 2009 didn’t help.

But there’s something specifically poignant about those icons. Like the USSR, the dominance of Meta and its social networks feels unassailable. Can anyone seriously imagine a world where Instagram is toppled from its perch, or one where Facebook switches off its servers?

And yet the USSR did collapse, ending – like so many things – gradually then all at once. Perhaps the closest we’ll get is the fall of Twitter, a service that could have trucked along vaguely unchanged for a decade longer if a mad billionaire hadn’t decided to throw a significant portion of his entire wealth into running it into the ground.

Or, perhaps, the web is actually still in a period of flux. The USSR was almost 70 when it collapsed; of the largest companies in tech today, only IBM has beaten it. Apple and Microsoft are more than halfway there. The rest, including all the icons plastered over that pink flag, are barely out of their childhood. The big platforms being targeted for their gatekeeper powers by the EU and the UK’s Competition and Markets Authority do hold power in the here and now, but when their ascendancy is so recent, who can honestly be confident that their time at the top will last longer than their rise there?

The end of the all-powerful social networks seems inconceivable, but the disintegration of the Soviet giant once did too [Guardian]

[…incidentally…the author of the above shouts out a blog post as long as a book about the potential for artificial superintelligence making an appearance in the foreseeable future…so…these could be worse?]

…so…if we’re supposed to follow the money but the money seems…skittish…well…promises, promises?

A Labour government under Keir Starmer will fail to maximise the UK’s economic growth unless it takes the country back into the European Union’s single market and customs union, leading economists and diplomats have said.

…so…we know whose vote that sort of tack is liable to lose to a tempting tailwind-driven posture…but…kinda like overturning roe in the states, maybe?

The warnings come as an Opinium poll for the Observer finds that 56% of voters now believe Brexit has been bad for the UK economy as a whole, compared with just 12% who believe it has been economically beneficial.

Some 62% of people questioned also believe Brexit has contributed to higher prices in shops, against 8% who think that it has had the opposite effect.

…& yet

But there is increasing pressure on Starmer and the shadow chancellor, Rachel Reeves, to spell out how they plan to deliver on their manifesto pledge of securing the highest sustained economic growth of any G7 country while keeping within tight fiscal rules, and while post-Brexit barriers to trade remain in place between the UK and EU.

The Office for Budget Responsibility says UK GDP will be around 4% lower every year than it would have been had we remained inside the EU.

Starmer insisted while campaigning in south London that On Saturday he would not rejoin the bloc either in the short or longer term. “We are not rejoining the EU, we are not rejoining the single market or the customs union,” the Labour leader said.

Asked if he would ever reconsider this, he added: “No. It isn’t our plan, it never has been. I’ve never said that as leader of the Labour party and it is not in our manifesto.”

…what was that line of yoda’s…do or do not…there is no try?

While EU leaders are said to be determined not to allow a Starmer government to “cherry pick” its way to a preferential economic relationship without paying into the EU budget and accepting freedom of movement, Starmer said he still believed he could “get a better deal with the EU, and if we are elected to government that is what we will endeavour to do”.

Economists are clear, however, that without access to the single market, which allows goods to cross into the EU without extra costs and paperwork, and vice versa, the UK’s economic progress will be seriously impeded.

…impediments…like…uhhh

A report last week by the LSE found that the trade and cooperation agreement signed on 30 December 2020 by then prime minister Boris Johnson had “reduced exports to the EU by around 30% for small firms” and “perhaps around 20,000 small firms have stopped exporting goods to the EU entirely”.

…but…can’t be that simple, right?

Prof Stephen Millard of the National Institute of Economic and Social Research, who worked for 26 years at the Bank of England, said it was clear that single market membership would boost trade and competition. “The closer we are able to get to where we were [as full members of the EU] then the higher growth we will get out of it. We could certainly enjoy higher growth if we were to have a closer relationship with Europe.”

…uh

Former EU permanent representative to Brussels Kim Darroch described Brexit as an act of economic “self-harm” while another very senior EU diplomat said: “We used to be a far more effective trading nation than we are now. The cause of that is Brexit. There is no getting away from that.”

Opinium found that a total of 56% of voters now want a closer relationship with the EU, with 32% wanting to completely rejoin the bloc.

…big step from theory to practice…might say it’s a doozy

“No way is this election a done deal. The headlines about the clutch of MRP polls disguise a huge level of uncertainty.

Starmer’s growth plan ‘doomed’ without access to EU markets, warn economists [Guardian]

…that’s what doomed looks like?

…getting back some of what brexit cut off would be the tution-fees & the lib-dems all over again…a “promise” broken to flog the left with at the expense of the right while the preoccupations of the right remain a fiscal liability that dwarfs any tax increase the labour lot could wind up imposing on the steepest tax burden since last time there was a “phony war”…eh…maybe…can’t trust “people” to do the smart thing…but…I know it’s sunday & I already ran out of time to get this up…but…I got two tangets that sent me down…so…there’s more where that came from?

…ok…so…tangent #1…that “clutch of MRP polls” thing…you may not necessarily be familar with the name but basically if there’s an authority on the UK numbers…it’d be sir john curtice…&…according to him…there’s…six kinds of british voters

• Middle Britons (26%)
• Well-off Traditionalists (12%)
• Apolitical Centrists (17%)
• Left-Behind Patriots (15%)
• Urban Progressives (16%)
• Soft-Left Liberals (14%)

…& a 12-question sorting hat can take your “on a scale of 1 to 5 where 1 is “strongly agree” & 5 is “strongly disagree” & 3 is “neither agree nor disagree”…& “both agree & disagree depending on how you mean it & frankly can’t answer properly without rephrasing the question” is…nowhere in the picture…although I know someone who managed to get a response that said “You have an unusual combination of views. We’re not able to assign you to a voter type” & they actually have a vote to cast…even if it’s as small a sample size as you could hope for…still…if you like that sort of thing they’ve arranged for interactive graphics & all sorts of toys to play with…even put the whole dataset out there…so

In US politics, the Pew Research Center has provided a helpful map for understanding the underlying structure of ideological dividing lines within the electorate that the parties are seeking to navigate. For our own analysis of the electorate and how their values relate to party politics in this election, we needed a similar conceptual map for Britain.

At the National Centre for Social Research (NatCen), we have mapped out the underlying views and values of the British electorate by assessing which values and attitudes tend to cluster together, drawing on the enormous amount of data collected by the British Social Attitudes survey.

…&…at least the guy knows what he’s talking about

Small Area Estimation (SAE) methods, such as MRP, have grown in prominence in a range of research areas over the last two decades. It is all based on a similar premise – plug the gaps in what you know by ‘borrowing strength’ from supplementary data. The more data you gather, and the stronger the association between what you are trying to predict (e.g. voter types or voting intention) and the data you have gathered (e.g. demographic data), the better you will do.

Multilevel regression with poststratification (MRP) combines survey data with information about the characteristics of Parliamentary constituencies (or other small areas) to produce more accurate estimates of views, values or behaviours in those areas. The work is done in two stages.

First, relationships in the survey data are analysed. The survey data is often linked up with additional data at this stage, to help generate better predictions. We include detailed local area information about the location the respondent lives in, and YouGov’s (who describe their MRP method here) additions include information on the candidates standing for different parties in the constituency. This linked data is used to generate a model that predicts your outcome of interest. In our case, we’re predicting voter type. It’s possible to use multilevel regression for this – that’s the MR in MRP. We use machine learning (ML) instead. More on that later.

…I’m not saying I give him a pass for not calling it AI…but…he definitely scored points with me for that bit

Second, the prediction model that was generated in that first step is used to create an estimate for a specific constituency. This second step relies on having a highly detailed dataset that covers all the predictors your model requires. The process is known as poststratification – that’s the P in MRP.

To generate predictions, our project team used a machine learning classification algorithm, whereas more traditional MRP uses multilevel regression. We deemed a machine learning approach more suitable, given that we are estimating as many as six potential voter type allocations and taking into account possible non-linear relationships. For us, this decision was driven by wanting to ensure that the model performed as well as possible on the data we’re working with.

Our model can correctly predict which voter segment a randomly selected British adult belongs to in about one in three cases, based solely on that person’s demographics and local area information. That might not sound all that impressive. However, once you aggregate these assessments up across all adults in a constituency, model accuracy improves dramatically. A person you have mistakenly classified as an Apolitical Centrist might have turned out to be a Middle Briton, but another person in that same neighbourhood is statistically highly likely to have been miscoded in the opposite direction.

In estimating the distribution of our six voter profiles across the 575 constituencies in England and Wales, NatCen took into account 5.3 million combinations of personal and neighbourhood characteristics, using Census 2021 (ONS) data linked with other administrative data. For each of these 5.3 million combinations, we use our model to predict the likelihood of a person with these exact traits in this exact local area belonging to each voter type. We multiplied each of our predictions with the number of adults it applies to. Finally, we added all these individual predictions up to Parliamentary constituency level.

That all became very technical. If you are still reading – let’s get back to the politics.

https://samf.substack.com/p/mapping-voter-coalitions

…or…being sunday & all…let’s don’t & say we did?

…so…for the sake of trying to buck a trend…sorta…let’s have a look at what the pink pages think the antidote to climate doom looks like…you know…for funsies?

Where are you going this summer? Maybe you’re off to see the Maldives or Venice before they sink under the waves. Or perhaps you’re on a private jet, like Taylor Swift whose carbon-heavy mileage is starting to worry both protesters and fans.

…uh…guess that tells you who they think they’re trying to break out of that doom loop…my, how the other half lives…well…half the money…anyway

This is the climate change paradox. The more obvious it becomes that the weather is changing, the more we seem determined to enjoy the last hurrah. This week I met someone who has bought a second home in Spain — a decision they admitted is irrational, since it will increase their carbon footprint and probably become uninhabitable for parts of the year. But humans are short-termist, status-conscious pleasure seekers. Like the bankers who brought the financial system to the brink in 2008, we want to keep dancing until the music stops.

This is not denial: it’s more a kind of fatalistic acceptance. It’s not “Don’t Look Up” — the brilliant film satire on our ability to ignore global warming. It’s “Look Up, then Give Up”. As individuals, we feel powerless. In the UK, we know our country is small and our contribution even smaller. Plus, we have been told that technology would find a fix or governments would solve it, which has let us off the hook.

…not denial…but…not ideal, either…might go as far as to say…sub-optimal

Anger at the hypocrisy of elites — and the incompetence of governments — is bubbling up. In Europe, rightwing populists are harnessing a backlash against leaders imposing green policies on poorer people while appearing to make no sacrifices themselves. Farmers in Belgium, France, the Netherlands and Poland demonstrate against fuel taxes and attempts to ban chemical fertilisers, which threaten their livelihoods.

In Sri Lanka, when a ban on fertiliser sparked a food crisis, Tucker Carlson wasted no time in calling the country “a victim of ESG” on Fox News.

…probably not fair to monkeys to call him one of those…but…he’s certainly some sort of organ-grinder

The fight against climate change was always going to have to be a common endeavour, led by governments honest about the challenges. It doesn’t feel like that. There was an outcry last year when the far-right Freedom party pledged to pull the Netherlands out of the Paris climate accord. There was less coverage of the stark truth that the world is way off track to meeting the Paris goals, according to the UN.

A majority of European voters want action on climate change. But they are not stupid. Their taxes are being used to fund fossil fuel subsidies in record amounts, despite pledges to phase them out. The EU is cutting down ancient forests to burn wood pellets, some of them shipped from America, in biomass plants that have somehow got themselves labelled as “renewable”. Germany is burning brown coal, the dirtiest fossil fuel, having left itself woefully dependent on Russian oil after closing all its nuclear power plants. Meanwhile politicians urge people to buy expensive electric vehicles, despite growing concerns about the whole-life carbon emissions of cars powered by lithium batteries. Celebrities grandstand, while failing to practise what they preach. In such circumstances, why should ordinary people bother to make sacrifices?

…if they’ve tainted the brand for “effective altruism”…how about…I dunno…”enlightened altruism”…nobody gets left out of the set of “fucking everything & everyone”…so…arguably it’s the self-interested entry on this variant of pascal’s wager…but…I digress…& my perspective & that of the FT is…divergent…so…this is all on the squint anyway?

And we are not all equally powerless. The middle class in rich countries would have an outsize impact if we changed our own behaviour. Not only because we burn the most carbon, but also because the better-off can set a tone. Industrialising countries emulate American diets and skyscrapers. Royal fans buy Princess Catherine’s wardrobe. Tesla is a status symbol.

A recent American study divides free-riders into two groups. “Doubters” (likely to be younger, less educated and male) and “cynics”, who believe the science but do nothing about it. Doubters, the research suggest, would respond well to financial incentives — compensating farmers, for example, for their losses. Cynics are more likely to be influenced by their social circle. This is more difficult. But vegetarianism and vintage clothing are now fashionable. And role models are appearing. New York’s mayor, Eric Adams, the former police officer and no hippie, is vegan. That makes him much more authentic as he takes meat off school menus.

There are things we can do. We can make “The Jump”: six changes in our lives that could cut our carbon emissions by a quarter, according to analysis by the C40 group of cities and Arup. These include eating a largely vegetarian diet, buying only three new items of clothing a year, flying a lot less and keeping electronic gadgets for seven years, not constantly upgrading. If we all did that, it would soon become normal.

…but…I know the bit at the end had an unpleasantly familiar ring to it?

I used to think that if nothing else worked, if the science didn’t cut through and the oil companies kept lobbying, change would come at the eleventh hour from the visible reality of climate change. I was wrong.

How to break out of the climate doom loop [FT]

…so much more fun & diverting to castigate conservatives for triflingly small bets with peanuts for proceeds than look at the hand we’re playing all in for unlimited stakes…or answer more than a dozen multiple choice questions to be told something there’s a one in three chance would have been the same if you hadn’t bothered with the quiz

…that’s a productive use of your time & the available resources?

…fuck it…I’m off to listen to some tunes & see if some of them might be fit for public consumption…catch you later?