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Sharing our discomfort – principles of personal hypothecation

13th February 2019

It’s nice being comfortable; with education, health, life events and money. Some of this is down to our own efforts, some of it inherited and some of it is luck. Some people are less fortunate; with their origins, sometimes through their own actions, bad luck or how they are helped or not helped by the state.

Those of us who are comfortable because we have good incomes and own our homes have become wealthier.  Many of us at or approaching retirement have had the benefit of our university education paid for, or even being paid to go to university. We have lived through a period of economic growth. We have seen the value of our homes as assets increase simply through having been able to buy them when we were younger.

Policies adopted by central and local government are amongst the influences improving the lot of some and making others worse. Locally we have had the tax we pay on our houses frozen for seven years, and that tax base has then restricted the value of later increases in Council Tax.  Changes to income tax result in us paying less tax on the same income.

The immediate consequence is that local and central government don’t have that money, so they can’t do things. But we don’t have to live with those decisions. We have been given back control of more of our money. We can decide what do with it.

In our youth many of us spent our student grants and our time listening to punk, reggae and two-tone music, a large part of whose message was social justice. As well as being able to buy the vinyl again some of us are now in a position to live up to at least some of those ideals.

So, what can we, the uncomfortable comfortable, do? Is there a simple way to decide what we might give up?

The simplest thing is the Winter Fuel Allowance. Many people who have no need of that still get it from the government. They choose to give it to people who do need it, and it is easy for them to see how much it is.

It’s not so difficult to work out the other benefits we’ve been given. Somerset County Council declined to increase our Council Tax for seven years. In their manifesto in May 2013 the Somerset Conservatives proclaimed they had saved us £400, and in May 2017 that they had saved us £300. I’m sure it would be possible to work out for each and how much this has saved, including how it has limited the value of increases since then, but £700 is nice round figure.

For income tax there are plenty of online calculators which work out how each budget affects the income tax people pay.  Broadly, people earning between about £9,000 and £46,000 a year are £155 a year better off, while people earning between £50,000 and £100,000 are £566 a year better off. So for 2018 £566 is a good starting point (or £411 if you just count the additional advantage of earning more).

If you give to a charity it can recover Gift Aid directly if you fill in the form. Higher rate taxpayers can also recover 20% of a donation to charity through their tax return so they should consider factoring that in. If you give £100 HMRC will give you back £20 so perhaps you should give that too.

Personal hypothecation is applying the money over which we have been given back control. It isn’t charity, it isn’t uplifting or compassionate. It’s about equity not equality. Locally it is enabling things to be done that our county council can’t do. It is supporting our community with money because we can.

We think, perhaps selfishly, there is a good argument that by doing this now we are saving ourselves money in the long term. If early interventions are effective they can often prevent or limit developments which might have wider negative impact on our communities. In this way, it can save public expenditure under other budgets .

We’ve looked locally at organisations most affected by cuts in public spending, and where their actions provide help not otherwise available for the people they help. We’ll both continue to do other things, with our time, skills and money. If you are fortunate enough to be able to do this, make your own choices.

Neil & Suzy Howlett, Supporters