Economist 4/15/15

  1. On April 15th BlaBlaCar, the market leader in the ride-sharing sector, announced that it had bought two competitors in Europe: and AutoHop. Safer, less awkward ride-sharing has been good for business. While intracity services like Uber have dominated the headlines, services like BlaBlaCar, which works best for longer journeys, have encroached on traditional transport operators, such as train and coach firms. BlaBlaCar’s latest deals will help it expand its reach across Europe. Its new acquisitions bring the number of users of its services to 20m, up from just 6m a year ago, with operations in 18 different countries. Purchasing rivals may prove a cheap way to grow; developing operations from scratch often requires a firm to subsidise journeys in order to build up a critical mass of drivers and passengers.
  2. The Labour Party, campaigning for a general election on May 7th, has pledged to abolish non-domiciled (non-dom )status.Non-doms can choose whether to pay British taxes on their overseas earnings. If they have lived in Britain for at least seven of the previous nine years, they must pay an annual fee to avoid tax, ranging from £30,000 ($45,000) rising to £90,000, for longer stays. At the last count 47,000 of 111,000 non-doms took advantage of the opt-out, with 5,000 paying fees to the exchequer.The exemption is not needed to avoid double taxation. Instead, its main effect is to provide a “golden hello” for the rich and mobile, who can live in Britain without coughing up much to the exchequer—at least, relative to their means. Those who benefit most channel their overseas income through tax havens, so that it is taxed nowhere.
  3. In 2010 the new coalition government in Britain announced it was time for a revolution in welfare.The first, and the noisiest, was an attack on working-age welfare.The Tory work and pensions secretary, Iain Duncan Smith, meanwhile went after the roots of dependency by nudging people into work and by merging numerous benefits into a single “universal credit” (UC) that would taper only slowly as people found jobs, thus making work pay.Although the household welfare cap hardly saved any money—huge families subsisting on handouts being rarer than politicians think—the overall freeze on working-age welfare has slowed the rate of increase.Meanwhile, more quietly, a second big reform to social security has rolled along. The state pension, which accounts for two-fifths of welfare spending, is to be simplified: a complex dual-tier system is being replaced by a single flat-rate pension. In sharp contrast to working-age welfare, pensions are protected by what is known as a “triple-lock”: they rise each year in line with prices, average earnings or 2.5%, whichever is higher. People approaching retirement are therefore in luck—though the young will fare less well, since the retirement age is going up.
  4. The NHS was built in the 1940s, when health care was mostly about treating broken legs and infections in hospital. Its biggest task now is to improve the quality of life of chronically ill old people.  Although NHS spending has risen by an average of 0.7% a year in real terms, spending per person has been falling in England since 2013. Large accident-and-emergency wards often fail to see 95% of patients within four hours, as a government target suggests they should—and they are missing by bigger margins. In 2014 fully 3m people, the highest number in six years, were waiting for treatment. It does not help that money is being frittered away.  many think structural reform is overdue. Healthcare is currently separate from “social care”—a catch-all category encompassing mental-health services, nursing homes and the like, which are often run by local councils. Fusing the two seems sensible. And it would probably save money, if hospital beds could be emptied of people who could manage at home with a bit of extra help.
  5. The recession caused net migration (immigration minus emigration) to tail off towards the end of Labour’s term. But the economic recovery has drawn immigrants back. The latest figures show net migration was 298,000 in the year ending September 2014, higher than when the Conservative-Liberal Democrat coalition came to power. David Cameron’s tried.It abolished visas that allowed students to stay after completing their degrees. It squeezed the numbers of highly skilled migrants allowed entry and closed schemes allowing unskilled workers in from outside the EU. It insisted that Britons wanting to bring foreign spouses into the country earn at least £18,600 a year—more if the couple have children. Yet such measures have had little impact on the headline figure because they do not affect EU migrants. The latest to arrive are Romanians and Bulgarians, to whom Britain fully opened its labour market in January 2014.If elected, the Conservatives vow they would restrict new immigrants’ access to welfare and clamp down further on abuses of the system. Labour would get rid of the overall net-migration target—though it, too, would make EU migrants wait longer for out-of-work benefits. Britons have long disliked mass immigration. Even in 1995, when net migration was well under 100,000, two-thirds wanted it cut. Though voters cite immigration as the most pressing national issue, only one-fifth say it is the most important issue facing them or their families (the economy, health, pensions and tax all beat it).

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