A high tax primal scream – it’s what you keep, not what you earn

Over at Monevator, there is a thread on taxation that also holds a primal scream therapy session about the iniquity of taxation of Londoners these days. While I was born in the Great Wen, grew up there, went to university there and started work there, I fear my City of London passport has run out, so I shut my cakehole as far as London taxation was concerned. I am not clever enough to know if Londoners are overtaxed. London has over a tenth of the population of the UK1, although I suspect most of that population isn’t exercised by the tax issues in that thread. It occurred to me, however, to ask myself how much a lowly London-living mustelid paid in tax, and whether there was the same amount of steam coming out of his ears.

ermine at the BBC

I did try and find a BBC payslip, but it’s nearly 40 years ago, so an annual increment will have to do, £8412 in April 1985, to which we have to add the shift allowance2 to make £9352. The Bank of England tell us this is £27022 p.a. in today’s money, considerably below the median wage of £33,280, so this mustelid was obviously sleeping in a curl under Charing Cross railway bridge.

A sleeping stoat
A sleeping mustelid

Not so fast young fellow, bear in mind this is 38 years ago. We were all much poorer then. You may bitch about the cost of living now but 40 years of globalisation and growth did count for something even if we did conclude we don’t need any more of that malarkey in 2016. When I computed the value of my first kitchen portering job it ended up considerably below the current NMW. People in work earn more in real terms than in the 1980s.

BBC TV payslip

The single person’s allowance was £2205 in 1985. The married man’s allowance was 3345, but I got 2205, so right off the bat you can see I was paying 30% (that was the rate!) tax on three-quarters of my pay. NI was 9%3. It’s always the devil’s own job to compute NI, so I am going to approximate this as a combined tax rate of 39% on three-quarters of my pay. That’s 2787, leaving me £6564, a composite tax rate of 29%. Times were tough back in the day, cue the Four Yorkshiremen sketch. If it makes the overtaxed primal screamers feel any better, nowadays you’d have to earn £68000 gross to end up paying a composite tax rate of 29%. That’s over twice the median wage. Even that young Ermine benefited from lower taxes through Thatcher compared to what the Beatles grizzled about in 1966.

No, I couldn’t afford to buy a house in London either, although this was before I thought of such things. I shared, first with ex-university friends, then as they slowly paired off, I ended in a bedsit in Ealing. I had gone up the greasy pole at the BBC, doing an MSc and returning on a higher pay grade at Designs Department. But I had gone down in my housing situation, because I hated paying rent, and I hated having to move because of other people’s changing circumstances. A bedsit with a shared bog is pretty much the last station before the park bench IMO, and this wasn’t because I couldn’t pay. I didn’t want to pay, because rent is throwing money away. Monevator would have approved of my bohemianism, but it was a ‘king miserable way to live.

When I get my time machine sorted in the garage, I will still first go back to my former mustelid self fearfully unemployed post graduation, with a fistful of sovereigns 4 and tell him chin up, this too will pass. I am the ghost of your Future Self, do not forego travelling to America to see your favourite lady singer at the height of her success. You have the money already, this gift is to give you the balls to deploy it. But while I’m at it, I’ll pick up a flat wet fish from the market stall and and go to that dump in Ealing and slap him round the chops with it – “Wrong way, Do not enter, do not continue, turn back now. GTFO of London, preferably where there’s more than one employer in commuting distance, and for God’s sake don’t buy a house until 1993 at the earliest

I have never felt so lonely as that time in London5, coming back from work on the A40 Westway on my bike in the dark, setting about the perimeter of the carpet with salt to stop the invasion of the black slugs, then sticking enough 50ps in the meter to warm up a pie in the Baby Belling pie heater, with enough in hand to make sure the power doesn’t go off and the Linn Sondek grinds to a halt which would probably wreck the record and the stylus. I needed the aforementioned lady singer to tell me not to stop believing that bad days would pass. This transiently drowned out the feeling I was basically shit on a 40-something IBM worker’s shoe – he was the landlord of this ghastly HMO 😉 WTF is it with rich middle-class workers6 being surgically nailed to the delights of Rachmanesque landlordism? There has to be a better way of making money that doesn’t shit on the young.

But my fish-wielding older self would have to deliver the coup de grace – “you’re a bottom-feeder here, young stoat, by choice not by necessity”. Ah yes, that’s to save some of the deposit that I could spaff on a house in a few years time which the early 90s housing crash would destroy, stamp on and then take twice as much again. Well done me. I should have drunk it. Or spent it on records. Or, shock, horror, gone upmarket to get a toilet in the same room, otherwise known as a ‘studio flat’ which I think is a bedsit with a bog in it. It’s not fine living to bring a bird back to a joint like that, and she asks where’s the bathroom and you say out the door, up the stairs and check that it’s empty. People were more used to crappy situations like that in those days, but it wasn’t gracious living.

Imperial Southside halls of residence now

I never found out why Imperial demolished Southside halls of residence in 2005 and rebuilt , but part of me wonders if students today are too soft to have 8 people share one bog and bathroom. Or it may have been two bogs and a bathroom and a shower, since it was a mixed flat I think the girls had their own loo, the luxury 😉

Imperial Southside halls of residence then. No, I don’t know why my gormless student self was such an incompetent photographer. There’s no point in using slide film if you can’t focus the split-screen element in the SLR viewfinder better than that.

I’m kinda with that young mustelid on not wanting to buy a flat, though. Hell is other people. And their blasted dogs and kids. I listened to Pink Floyd dialed up to 11 some nights to drown out the screaming baby next door in my first house (single brick thickness Victorian party walls) and the battleaxe hollering SHUT UP SINEAD for a year or so. Sartre was right, l’enfer, c’est les autres.

The flat prejudice was amplified by my Dad’s voice ringing in my ears that buying leasehold isn’t buying the property. How did he know that? Because he got to have to rustle up £1500 (~£8000 now) in the mid 1970s to buy the freehold of the land the house was on from the Crown Estate. The solicitor they asked said you run, don’t walk, towards that sort of offer, but it did make them suck their gut in somewhat, particularly as they had to clear the residue of the mortgage else it was going to cost more in fees. I believe they were aware of this issue at the time of purchase several years before, they probably accepted this to be able to buy in a better area than they could afford freehold.

These days “freehold” can be subject to obnoxious covenants and restrictions – basically don’t buy a new house with the developer’s solicitor 😉 I’d personally generalise that to ‘don’t buy a new house’ full stop, I’ve never understood the attraction of new-build.

living in a high cost of living area is like paying for everything with a credit card

The Londoners are taxed too much whinge is pithily summarised by commenter Tax Credits

most can’t hope to 1) have a family, 2) own a house and 3) save for retirement any longer, but when I started saying that ooh, nearly 18 years ago after housing had already become very expensive relative to wages, I never thought it would get to the point where 100k+ earners would be included in having to make choices between the three options.
Yet here we are, at least in the south east.

What puzzles me is that a young mustelid saw this problem a long way back. I was too poor to live in London. So guess what? I moved out. I was only concerned with 2) at the time, fortune favoured my fur in that 3) tended to be done by employers at the sort of level of jobs I was aiming for at the time.
The structure of the tax system has been known about for many years. Although it’s true that fiscal drag is accelerated, the high level story is simple.

It’s not what you earn…

Your lifestyle is not set by what you earn. I know everybody starts off with that assumption, but it’s not true. Your lifestyle is more set by your disposable income, which is the difference between what you earn after tax and what you have to spend. In general you have to pay something for shelter, for essential consumables (water, food, power, broadband, mobile, netflix in descending order of essentialness) . If you want to have children and want to pay for other people to take the job of raising them off your hands so you can work, then all that will also fall into the essential spend, as will the bigger house you may need.

This cost of living has to be paid for, and when you are young you have to earn that money. You’ll struggle to do ‘owt for less than £12k p.a. so you will be paying basic rate tax. If you can get your living done for < £38.2k take home (earning £50,270 gross) as a single person or £76.4k as a couple then you can avoid higher-rate tax. Let’s study the tax system. In some ways it’s very much like paying for all your spend on a credit card, and eating the interest. Personal finance types tend to look down on people who do that, but tax is like interest on your time. I was surprised by the following charts, which I plotted using listentotaxman, because calculating NI is complex.

Take home (blue) and tax+NI (red) as a proportion of your gross in the UK tax system. The kink at the end is because I increased the sampling interval to 5k from 2k. People at this end of the income curve have staff to compute their tax affairs 😉

The first surprise is that they are monotonic. Given the amount of bellyaching about thresholds, I expected to find switchbacks, ie where earning more delivers less, net. It’s possible that my 2k increments aren’t fine enough to pick up the detail, but it is not a major problem.

I do know that the withdrawal of child benefit at the higher rate tax threshold is an issue for some, but my violin is small, because higher-rate taxpayers claiming benefits is kinda off from the get go. I also hear the SAHMs whingeing in the background, but the thing is, your feminist sistahs wanted to be taxed individually rather than as a household and won the fight in the 1990s. What tends to go along with that is an optimal situation where both partners earn about the same amount of money, which maximises the value of the tax allowances. Benefits, however, tend to be computed on a household basis. Some of that is inherent in the whole subsidising your children thang, since HMRC have to link them to the taxpayers they live with. Yes, they could make an exception for CB, but then you are travelling back in the direction that taxation is on a household basis, so that wrinkle is the price of freedom from patriarchy in this specific aspect of life.

Your composite tax ratio with (blue) and without (red) 45k student loan Plan 4. the x-axis is you take-home (net) pay, because that’s what most people care about. The usurous 1985 high tax regime of that Thatcher woman is also shown, scaled by 2.9 to allow for inflation 1985-2023. The weird non-monotonic kink is because National Insurance was levied at 9%, and the UEL was somewhere in between the personal allowance and the higher rate tax threshold. So when you get above the UEL but still in the BRT area, the composite tax rate gets a little bit lower due to the marginal rate of NI dropping to 0 above UEL. Taxes really were a lot higher back in the day. Even student loan payers have it easy, up to about 40k take-home.

The second chart is the interest rate on the credit card, for any given (individual) take-home pay. That is, what is your composite tax rate (CTR), ie the equivalent percentage as if it were levied on your entire gross salary, regardless of tax bands and thresholds, and including NI. It’s about 25% by the time you reach the higher-rate tax threshold, and we’d usually tell anyone paying 25% on their credit card to try and get that down. Aim to take home more than 40k (earning 54k) and you are running into treacle. Wanna double that take-home to 80k? You’re pitching to earn 132k gross, which is more than 40% more than the doubling of gross you’d think, and a CTR of 39%. So in an ideal world you either get your household operating in the 80k p.a. for a couple earning about the same each at a CTR of 25%, or you go really big. If you can name your price, obviously to hell with  the CTR. Someone with a Plan 4 student loan7 at a typical level of 45k on graduation. starts to run uphill pretty quickly after 30k. Even if they earn 100k it will take them about seven years to discharge it. Someone earning 60k gross will have 41k net and will carry that loan for over 15 years – student finance is a tough load to carry.

That’s the problem of choosing a HCOL area – it means you have to earn disproportionately more, and your marginal cost of anything is dearer, you have to earn more for every £100 than in a LCOL area. There are many reasons why the cost of living is high in the Great Wen. High earners and foreign money push the price of housing up more. Everybody comes to London thinking the streets are paved with gold, which increases competition for housing and services making them dearer. The one thing that is generally cheaper in London is public transport, because economies of scale and that fact this is where the seat of government is means there’s cash to do it better. But seriously, how much as a proportion of housing/food/power are your transport costs?

The progressive tax system is a given part of your environment. You’re not going to change it. It doesn’t matter how much you read the Torygraph fulminating and winding you up how ‘snot fair. Take a clue from Nature. Plants take the environment as it is8. There’s a reason why you don’t get grass growing along the middle of the M1. That’s because the tax on any plants that try the enterprise is nearly 100%, they get mown down by passing cars. Grass can grow in the middle of roads, if usage is low enough. Still better to try it in fields or verges. Go with the flow.

In high cost of living (HCOL) places like London, you’re going to be paying more tax, even on your budget for the essentials. Sure, if you work in high finance (FvL doesn’t work in high finance my bad for assuming all decent London earners work in finance 😉 ) like FireVLondon, then you are probably earning well over the 45% threshold, so you can pull the sheet anchor of high taxation. After all, FvL’s wants are £100k, at 45% tax he’s going to need to earn £180k to do that. From the Primal Scream thread, I’d say that unless you are getting on for £300k p.a.9 you’re too poor to live in London and have what people living in a LCOL region would consider a middle class lifestyle. FvL is clearly an outlier, let’s just say that it would be a major source of stress to me if someone said “here is £100k, you have just one year to spend it on restaurants, travel, taxis, alcohol and shopping”. But this is why a mustelid felt poor in decadent London. We probably bend a few grand on restaurants a year, I’m just not in that league 😉

There’s a continuum in the HCOL/LCOL axis, between Kensington and Chelsea and Westminster at the tony end of living, and Jaywick, which is basically the arse end of nowhere where hope died before it reached the main drag. I passed through there once, with the ambition of recording the old civil defence/flood warning sirens which were tested once a month. I was grateful for the function (new to me at the time) of the vehicle automatically locking the doors over 5mph, the area had the feeling that if you stopped for any time you’d end up with the vehicle up on bricks and the cat nicked. While the perps get on the phone and auction any other easily removable bits. I let the field recording opportunity go. Sometimes you gotta go with your gut.

It may come a surprise to Londoners, and as a young Londoner I shared the prejudice a bit10, but the sea around Britain does not actually start just outside the M25.

If you want to do something that will inflame your cost of living bigly11, obvious candidates being having children or wanting to live somewhere other than a room/flat, then maybe don’t start with a high-cost-of-living place? Housing is the dominant element in the cost of living in the UK, and getting your accommodation costs down is key. See if you can earn less and pay much less for your housing. GTFO of the South-East while you’re at it. Income tax is particularly hard to finesse – your only choice here is usually pension contributions, which is fine for getting your tax bill down but not in a useful way other than for your future self. If you want to live in a HCOL area then you’re going to be paying a lot of tax. If you aim to bring these children up as a couple earning enough in a HCOL area this will mandate both parents working (because you have more personal allowance/BRT allowance space for any given household income), which raises the cost of looking after those children when you are at work.

Sure, if you are going to favour a LCOL area you need to preferably move somewhere there there are employment clusters. You need to move out far enough to avoid the HCOL city, but still access the employers. Parents have the additional concern of being far enough away from sink areas that the schools aren’t impaired by dealing with seriously disruptive children.
I made a major tactical fail with The Firm as the only major employer for my specialism in Suffolk, and there’s an argument that Ipswich was too close to the coast, which diminishes your commuting catchment area. Which is how I got to retire early when my job started to go titsup in the GFC. I didn’t have other options at a similar level. Favour clusters and resilience.

Beware of clusters around one big firm. There were a few small electronics firms around Portland and Weymouth, but they depended on the Royal Navy, and the peace dividend did for the lot.

There are some hardy souls that commute from Ipswich to London, because the train terminates on Liverpool Street Station, which is in the curtilage of the City of London so easy for the finance district. That’s great if everything goes right, but, well, good luck with that…

Commuting is still a tax on your time. There’s no functional difference between walking 10 mins to work or commuting two hours each way for a job paying 50% more. In the first you get to work 8 hours for £x, in the second you get to work 12 hours for £1.5x. In practice the taxman sees you earning more, so your functional hourly rate drops12. You do still get to take home more, the tax is on your time and nervous energy here.

Conversely, retirees and people who earn money entirely virtually WFH or who are of independent means due to investment income may want to favour picturesque areas away from centres of employment. Industry rarely improves an area aesthetically. You’re probably still better off avoiding coastal areas though, unless sea-fishing or yachting is your passion. Without the need for employment, you’ll get more house and more scenic beauty closer to home for your money. It does pay to consider how well you are placed for the motorway network. I’d quite like to live on the Penwith peninsula, with it’s wonderful richness of standing stones, but a three hour drive along non-dualled roads to get anywhere outside Cornwall takes the shine off the idea somewhat.

As a young mustelid I spent nowhere near enough time balancing all these variables about where to work and live. I spent too much time in London because I hadn’t realised that headline salary is not the determining factor in your lifestyle, and I wasn’t that switched onto the need for resilience in employer. In some fields this is what draws young folk to London, which has a terrific resilience of employers in finance, for instance.

The Telegraph quipped ‘No city for old men: how London has become a workhouse for the young’ and to some extent when you are young, free and single you can tolerate crappy living conditions. Particularly for young men there is prior art to living in wastelands like oil rigs, military installations in the back of beyond and mining facilities trying to make their fortunes for a few years. The problem with London is that it will relieve of a surprising amount of your fortune in just keeping a roof over your head.

Young digital nomads can also consider living on boats or campervans. These folk could consider geo-arbitrage more widely. It’s a shame that a bunch of crusty old gits voted to deprive you of the right to work in other European countries in 2016, but you can probably get away with it for limited periods. Pays to avoid getting on a bit with that lifestyle, however, as the book Nomadland and the movie show. And the weather in the UK is not favourable to vanlife in the winter.

who unpaved the gold on the streets of London?

They didn’t. But they made sure it’s less evenly spread 😉 I knew a blue collar worker who bought a house in London from a standing start in the 1960s. He was in his thirties at the time. Single blue collar wage, SAHM. He was my Dad, and he stayed in London for all of his life. So it could be done, once upon a time.

So what happened? London specialised, and ran normies out of town. In the early 1980s I travelled to the BBC on the train from my parents’ place. They lived in the south east, which is the arse end of the city13. When they moved to Eltham it was a sort of fading grace, IMO it went downhill over time. Perhaps I went upmarket, as I have this feeling about several places I have lived. Maybe it’s me! The Tube didn’t really do SE London back in the day, firstly because nobody that matters lived south of the river, and obviously the river was an impediment to tube tunnelling, particularly in the east. So I used British Rail, the train rattled its way from Lee station through Lewisham, New Cross and London Bridge to terminate at Cannon Street. These were all elevated sections of track, and when I did that journey in the late 1970s I could see all sorts of light industry from the train – there was one joint making pumps that used to have a yard with the stock visible from the train.

Some of you won’t believe me that they used to make pumps in London. This hand-me-down from my Dad proved they did. Carter was not the firm I saw from the train

After university I worked in Beckenham for a while before moving to the BBC in White City, and I used the train to Charing Cross then the tube until I got a house share. Thatcher’s Big Bang revolution was running these companies out of town, and with them the horny handed blue collar grunts that worked there. It took time, but when I took the bus/tube/train from a concert at the Albert Hall via Charing Cross to Eltham to stay with my mother in 2013 I saw no industry at all from the train.

London has been specialising in making money ever since Thatcher’s Big Bang, which worked very well. I had a look on Zoopla and I could buy a detached house in Eltham, although it would consume a higher than acceptable amount of my capital. Some of the houses are weird – they are huge and have far too many bedrooms, there’s a 5-bed semi FFS, so perhaps part of peripheral London’s problem is the mix is wrong. Flats seem barmy, I’d never consider spending half a million sods on a two-bed flat in Eltham where for an extra 50 to 100k I’d get a house and garden.

So if you are going to fill the city with finance bods and corporate HQ sorts and thin out the normies, then house prices will go up. Because the finance bods are well paid. There are other problems, kleptocrats and oligarchs like to buy property in London as a safe deposit box, because property rights are reasonably secure compared to what they are used to, and the UK facilitates opaque ownership14 through shell companies.

So all of Monevator’s primal screamers that wanted to follow my dad’s footsteps, and raise kids in London, well, you’re half a century too late. Who unpaved the gold from the city streets, well, it’s probably back to Margaret Thatcher shaking up the City. In this specific area, I am probably with her15, I don’t really think they should be making pumps in London any more, it’s low rent, probably done in China, and Masters of the Universe making money is perhaps a better use of resources. Although I observe the briefing paper note

There is significant regional disparity in the availability of social housing, with the largest waiting lists for social housing in London. This disparity matches with sales under ‘right to buy’, with the largest number of sales in London.

I find it difficult to feel that much for the right to social housing in London. It’s an expensive city, I was too poor to live there, so I moved out. The modern world has a tendency towards concentration, and HCOL places tend to squeeze the poor out. There is the argument where do the firefighters and nurses live? In the past, such organisations were more vertically integrated and had the equivalent of the company town – I used to drive past the nurses’ accommodation blocks in Ipswich near the general hospital, these were sold off in some cost-cutting drive. Other employers had tied housing. Vicars, for example, weren’t usually rich enough to buy a house, but you can often see where they lived in houses named the Rectory, or the places these have been sold off in roads called Glebe something. Up until the late 1970s the BBC had hostels in London for some of their lowly staff.

I knew someone who taught at the Fire Services Training Training College in Moreton in Marsh is in the Cotswolds, in those days the college subsidised housing for the staff, because this is the Cotswolds. I recall looking at the prices when I was at the BBC’s engineering training dept at Wood Norton in Evesham and thinking how much?

The Fire Services place was sold off to Capita in 2015, so presumably their teaching staff live in their cars nowadays.

if you want to have kids, or live in a house not a flat,avoid HCOL places

Or be of independent means. It’s the high earning required to fund the essentials in a HCOL area that kills you if you need income to fund your HCOL housing. With an extra hit associated with kids – you need a bigger house and the cost of childcare is higher. The earning is the problem – I have an income that is lower than anybody reading this who is working FT and aiming for FI/RE. I could buy a house in London because I have capital, and would pay cash if I were that insane as to misallocate it in this direction. Any mortgage firm would give me the bum’s rush as soon as I told them my income.

Primal screaming may be satisfying, but there are doubts as to the efficacy (how the hell do you do the double-blind test or even run the counterfactual?). There are enough examples of successful FI/RE sorts with kids beyond the Great Wen – GFF for example. I have done much handwaving here because I was lazy, but MoneyMage has a more detailed comparison. It’s stark, but London wannabe parents not of independent means have two choices. Go really big – or GTFO. The tax system is absolutely not on your side. You can’t fight that. Take a tip from Nature, and plant yourself where the environment is on your side. Grow with your kids outside a HCOL area. Else it will make you miserable or you’ll have to run like hell. Primal screaming is supposed to help with historical trauma, but having to earn a lot to pay high taxes in a HCOL area is a continuing and present trauma. The direction of travel with fiscal drag is not on your side either.

I am proud City of London. my heart of darkness has only space for the 1% to breathe free. The rest I consume

It took for too long for a young Ermine to realise I was too poor to live in London, because I anchored on pay rather than cost. I moved to get a significant pay rise, which helped, and went further out of London. It was easier to change what I did than try and change the world so I didn’t have to change what I did. Life is a bitch like that. Maybe there should be an inverted Statue of Liberty in the City of London.

“Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.”

I am the Great Wen, and you lot can piss right off, my heart of darkness has only space for the 1% to breathe free. The rest I consume.

I lived a quarter of a century in London, and the city is cyclical. One day civilians may be able to thrive within the M25 on earned income. But if you find that you can’t do that at the moment, then go big on income. Or get out. There are alternatives, but they tend not to be legal 😉

  1. Source GLA 8.797M and ONS 67.5M 
  2. I worked as a studio engineer on the AP shift pattern on shift 2, which were 7 up to 12 hour days out of a fortnight. This was a good pattern for a young single person in London, subject to the fact that you are working every other weekend which constrains socialising with normal workers. 
  3. The contracted out rate was less, and I was in the BBC pension scheme, However, I couldn’t take that with me when I left, so my contributions were refunded, less the difference in NI rates. As such I had more SERPS that a typical graduate of that time would have. I think this meant I had to make up less NI after I quit work, I haven’t got 40 years. I’d really like to say that I put the refunded contributions in a SIPP, but a) they didn’t exist back then and b) I spaffed it on something or other. 
  4. Pre-1982, natch, else those future-dated sovs will raise eyebrows when the young ermine goes to turn them into cash. No point taking cash, this plastic garbage would land the poor fellow some time at Her Majesty’s Pleasure for forging the currency of the realm with massive ineptitude, plus who the hell is that old bat in the Queen’s picture 😉 “That’s what it’ll look like in forty years’ time” is going to be a tough wicket for m’learned friend the defence to bat on. 
  5. I find the notion of a quarter-life crisis quite convincing. I had gotten myself into a hole – I was earning OK in London. I wasn’t living with my parents, so tick a win on two important rites of passage, but it wasn’t enough. Capitalism has a solution to this, which presumably costs money. I can’t quite work out if I am just a cynical “That which does not kill you makes you stronger” or this really is a thing. I watched founder Chloe’s puff piece, but I’m not sure I learned anything. Other than she should sack the meedja studies eejit that recorded the slot from too far away with too much ambient echo, noises off, traffic rumble and mic preamp hiss. I also had the suspicion she deepens her voice a la Elizabeth Holmes to get more gravitas, which slightly jars with the vocal fry. But maybe that’s the meedja eejit. As to summarise what she said, I think it’s “this is an experiential thing, you gotta do it to know it, it doesn’t dredge up your past like therapy does”. So I learned the difference between life coaching and therapy I guess. The quarter-life crisis is amplified by the dissonance between cultural expectations of what success looks like and the lived experience. There’s also no effective rite of passage for this life-stage in the West, and I’d say the notional age of 18 is a bit too young to have mostly adulted, which raises expectations. 
  6. IBM had a near death experience in the 1990s so perhaps Mr IBM was going to see the tide drawing out in a few years like I did in the GFC. So maybe he was smarter than I thought. Being in my 20s he looked old to me, but he was probably only in the danger zone of 40-50. 
  7. I don’t know anything about student loan plans, I took the latest on offer from ListenToTaxman 
  8. I know, plants do also transform the environment over time through succession. There will be a day when grass grows in the middle of the M1. 
  9. In supporting evidence for this assertion I cite FireVLondon’s taxonomy of London salaries. Rescaling the real value of the 2015 £200k level to 2023 takes us to £258k 
  10. it felt you were in foreign territory once you passed the Blue Boar at Watford gap. Part of the trouble is as a 20-something without a car I hadn’t travelled this septic isle that much, and I suffered from London-centric myopia as a result 
  11. I’m with Trump here, it sounds like big-league to me. But bigly is just so wonderful, particularly as it seems to be a word, let us revel in the twisted growth that is English ;) 
  12. Say a mustelid works 220 8-hour days at minimum wage of £10.42 earning £18,339 p.a. He takes home £16,495, a net hourly rate of £9.37 and a tax rate of 11%. He listens to politicians droning on about work is the way out of poverty, goes to night school after work, and gets a job two hours away paying £15.63. He earns £27,508, of which he takes home £22,730. Assume he gets there by bike at no incremental cost. That’s an hourly rate of £8.61 and he feels tired all the time, though he has calf muscles like steel hawsers. His hourly rate has actually gone down 9%, although he does have more money in the bank. if he uses the bus at £2 each way he takes home 21,850 and his hourly rate drops to 8.28. I used listentotaxman to compute the tax and NI, because life is short and NI is murderously complex. 
  13. In the UK the prevailing winds are from the west, so the stink ends up in the east, so the toffs tend to favour the western areas of a city ;) 
  14. The cadastral records for the UK are obscure as hell, because the landed gentry kneecaps the Land Registry, they look after their own. With regard to financial transparency of land ownership, the UK is more like a stable banana republic than a modern European State. Go into the Mairie in any French district and you can inspect the cadastral records and know who owns that part of France. Who Owns England? Depends who and where you are, true banana republic style. Not that it really matters in the end, since “Land ownership in England and Wales is based on historical feudal principles. The Crown owns all land in England and Wales”. You, my dear serf, hold estates in land either directly or indirectly from the Crown (for example, a freehold estate or a leasehold estate). 
  15. It feels a bit weird to bat on Thatcher’s side in anything housing related. The evidence is mounting that she was a malign influence on British housing in general. Right to Buy came at the expense of putative council tenants first, but 40% of right to buy ended up rented out to punters privately. “Research from the Brookings Institution, a US-based public policy organisation, has suggested that right to buy and a reduction in construction of social housing has caused a revival in the private rental sector. “. So there you go. If you want to know why landlords own all the things it’s Thatcher wot dunnit. 

36 thoughts on “A high tax primal scream – it’s what you keep, not what you earn”

  1. >> I never found out why Imperial demolished Southside halls of residence in 2005

    Ah a good reminder of the Southside Hall at Imperial, I visited the Southside student bar a fair few times in my first year with college friends! I was sad when the original building was demolished, it was an interesting example of post war architecture – I remember marvelling at the exposed concrete and my friends rooms. Apparently although a listed building, it had problems https://c20society.org.uk/casework/imperial-college-why-we-sometimes-have-to-admit-defeat

    I remember being envious of others who got a Southside room. In my first year 1982 I had a shared room in the smallest college student house just off Cromwell Road in a side street opposite the Natural History. Museum. I think it was £11 a week then, but three of us in a room with a sink, shared bathroom upstairs. That’s slumming it by the looks of what hall students get these days. Not bad rent for South Kensington though even allowing for inflation! I didn’t stay in London for work but did end up in Surrey, bouncing around lodgings was a pain initially though.

    Liked by 1 person

    1. > Big chunks of concrete are now falling off the precast façade

      Wow. I can see why they levelled it 😉 I bet the mews residents were chuffed to get some light back. IC had problems with falling masonry elsewhere – I think the Elec Eng building had some issue with tiles falling off the facade.

      The shared bogs are clearly an issue

      Unspoken remained the issue that new en-suite bedrooms are a popular source of university revenues as conference accommodation during the long summer months (we frequently see this issue raise its greedy head and threaten listed student bedrooms throughout the many other university buildings we deal with).

      Interesting note that “there is a courtly bow to the Oxbridge tradition and study bedrooms are clustered in groups around staircases.”. I did an MSc in Southampton and stayed in halls for that year, they had a similar structure of a flat with 8 rooms off a corridor. Still the same shared bog situation but you got a kitchen, which was a major development compared to Southside, where you were meant to eat in the refectory. I didn’t know that was a copy of Oxbridge tradition.

      Liked by 1 person

      1. Former Southside (Tizard Hall) resident here, and also student in the Elec Eng building you mention (great views from the roof where the IC Radio Society G5YC/G8EYC was located – not to be confused with the upstart student radio station which liked to call itself IC Radio). I was always bemused by the four halls being spaced vertically as well as horizontally, the rooms being off a staircase rather than a corridor and, indeed, the amount of bare concrete on show. My memory is that each staircase had one small kitchen – it was certainly not big enough for each student to self-cater and we were expected to eat in the refectory.

        Liked by 1 person

      2. > I was always bemused by the four halls being spaced vertically as well as horizontally, the rooms being off a staircase rather than a corridor and, indeed, the amount of bare concrete on show.

        Apparently RIBA call the style the “Modern Movement

        The style became characterised by an emphasis on volume, asymmetrical compositions, and minimal ornamentation.

        More photos of Southside, this time taken by people who were competently in charge of their cameras unlike my late teen self.

        I was in Falmouth Hall, and my recollection is there being one kitchen for the whole hall. Soon after arriving, I got together with another guy and we bought a family size chicken pie to do in the oven. Either that cooker had an element or two out, or, looking back, perhaps we failed to observe the difference between grill and oven, both of us were used to gas at home.

        After an hour and a half we gave up and ate the lukewarm pie as it is, which is how I know that unlike my mustelid alter ego humans don’t really have the dentition to eat raw chicken. Presumably the beer we swilled after eating it neutralised the biohazard. I always think of that when I see the dire warnings “don’t even think of washing raw chicken, treat as medical waste until cooked” and all that bull about “piping hot” whatever that’s supposed to mean. You can survive anything when you’re young and healthy.

        Looks like HAMSOC is no more as of 2001. Shame, I’d have given them a call, for old time’s sake


      3. Shame IC Radio Society is no more. I guess the change of name to IC Amateur Radio Society was inevitable once student radio started calling themselves IC Radio. We never called ourselves HAMSOC in those days – I think the term Ham Radio had overtones of Tony Hancock then. I was there at the time of Chris Byard, the first correspondent on the website you link. As I was at IC 1972-75 I missed out on the summer 1972 expedition to Andorra, but did go with Chris’s Land-Rover and a 2-metre rig to Scotland in 1973 and Wales in 1974 (I think it was that way round).

        You could be right about one kitchen per hall. I may have been lucky in that Tizard’s one kitchen was on my staircase. I don’t recall any chicken pie incidents like yours – I was content to eat in the refectory, referred to in those days as going for a Mooney, named after the catering manager.


  2. I find it odd that people seem to think a city like London that has thrived on globalization should be relatively affordable at a domestic level. It just won’t be. Neither is New York, SanFran, Singapore etc.

    I moved out from Zone 3 London into Surrey (still inside M25) a decade ago for a variety of reasons. Primarily for the space and to be in a semi-rural area. Partially to capture the ridiculous property premium. The ratio was basically 2.5:1 in price per sq ft: for an extra 10 mins on the train into Victoria or Waterloo. I was already WFH 2-3 days a week so the commuting damage was tolerable. WFH was going to only get more popular.

    The third reason was that even in 2013 the signs that globalisation was going into reverse were starting to be seen (Koc indices etc). It’s only accelerated since then as we move to a more regionally based approach with friendshoring and a new Cold War etc. Imagine doing something really silly and leaving your closest regional economic bloc just as globalization wanes and regionalization takes it’s place. Thank God we didn’t do that!

    Anyway, as you say London is cyclical. If it’s risen on the wave of globalization, it will probably fall (relatively) if that process continues to falter.

    Liked by 1 person

    1. haha, I had a look on Zoopla, Oxshott looks quite nice. I was taken with this but apparently it’s a mock-up of the house design, which you get to build on the plot shown on Google Earth. I could cope with the lower end of detached, indeed I’m surprised at the ‘modesty’ of some of the prices, it looks like prices are falling in that region. So maybe the cycle is turning in London. It will still be a while before normies will slowly creep back in to the city, but not unimaginable.

      Certainly when I was a child most of the talk about London was of depopulation, it seemed to reach a low-water mark in 1980. So credit where credit is due, maybe it is Mrs T wot dunnit to turn the city’s fortunes around. And while even I am not cynical enough to think that this was intentional, kicking the poor out of London by RTB proxy selling 40% of their council houses to private landlords made space, as well as clearing the light manufacturing firms for brownfield.


    2. ‘Imagine doing something really silly and leaving your closest regional economic bloc just as globalization wanes and regionalization takes it’s place.’

      …..then imagine spurning the last cheap, already plumbed-in fossil fuel source close by, setting off an energy-price spiral that’ll never come back down.

      …..then imagine your import-dependent economy doubling down by sabre-rattling against China, which does most of the world’s current manufacturing.

      I also left London for Surrey after a couple of years of massive council tax increases, when I heard ‘we’ had won the Olympic bid and remembering that taxpayers of those other cities that had hosted it previously were still paying the ‘honor’ off years later.

      Hindsight says that was a decision I actually got right.

      Liked by 1 person

    3. “Imagine doing something really silly and leaving your closest regional economic bloc just as globalization wanes and regionalization takes it’s place. Thank God we didn’t do that!”

      Brexit is just getting into its stride, I fear. The conclusion of Chris Grey’s latest piece on his excellent Brexit blog https://chrisgreybrexitblog.blogspot.com/ closely echoes my own thoughts over the past couple of years on where it will end:

      “I increasingly wonder and worry about how much more incremental damage can Britain take. Each individual example isn’t necessarily so terrible. Each can be, and is, argued away by Brexiters as overstated or ‘not a complete disaster’. A billion pounds here, ten billion there – big numbers, for sure, but not overwhelming. But it is the cumulative impact which is so alarming, and the way it is ripping through every sector of the economy, from cars to farming, from higher education to financial services, from social care to live music.”

      Liked by 1 person

      1. ‘where it will end:’

        No foreign labour to make cheese and mouse ‘toast’, (no energy for the grill to work anyway) maybe no cheese either, just cold mouse in over-glutenated bread that swells your stomach?



  3. I graduated a couple of years after you and do remember the house price boom and bust that cost you so dear. I only just narrowly avoided it.

    I was renting in the very late 80’s/early 90’s when the poll tax came in. I was renting a room in a very large house. It simultaneously made my landlord better off and me, since I had never had to
    pay the old rates, worse off. A simple raid on my income reduce his expenses as there was no rent reduction when I had to start paying the poll tax.

    Glad when it went but the new council tax does not seem a lot better.

    I also remember VAT going up a lot around that sort of time with cuts to income tax. I was a junior developer back then. One of the senior project managers I worked with was delighted as it made him better off, but it seemed regressive, since poorer people have a lower propensity to save that higher income earners.

    I was always a permanent employee so had very limited scope to pay less tax. I was fortunately in a final salary pension scheme then though.
    (I remember paying AVC’s to Equitable Life – that didn’t go well!)

    So I was a little surprised by the moaning about tax, as it is generally lower now, by historic standards especially for people on higher and additional rate tax, as a result of all the changes I have seen in my working life.

    I believe the push towards house owning was started in the USA in the 1950’s as a bulwark against
    communism. If people own their own house they were less likely to want to start a revolution, according the thinking at the time. (Reds under the bed and all that.) It was simple copied by Margaret Thatcher in the 1980’s.

    I know I am now better off as a result of the tax changes, but I am concerned about level of inequality between rich and poor. Reading Thomas Picketty’s Capital in the 21st Century, we are on track to match the worst level’s of inequality we have ever had. The USA is on track to break even those historic levels. Not sure what to do about it though, there are no easy answers in an age of mobile people and where capital can be moved overseas in a few mouse clicks.

    Liked by 1 person

    1. VAT went up a lot with Margaret Thatcher in June 1979, almost doubling from 8% to 15%.

      But yes, I am puzzled by the bellyaching in the Torygraph which seems to have become a rag for winding old fossils up about so-called highest taxation ever. It’s highest in nominal terms because of inflation – these old fossils should also remember the much higher rates in the past. That Beatles Taxman record showed they were much, much higher in the 1960s.

      Interesting idea of home-ownership being counter-revolutionary 😉


  4. I had a pal who was an investment manager in Edinburgh. I said that surely he could make more money by moving to London. “Don’t be daft I couldn’t afford my way of life in London.”

    Liked by 1 person

  5. First time commenting on your site. Long time reader. I agree with most of your main points here and sometimes go months avoiding monevator comment sections because of the occasional comments of otherwise very smart and decent people regarding their ‘struggles’ living in the top percentiles of the income distribution. As much as everyone is very civil, I sometimes just have to stop reading comments.

    As I have politely said on monevator comments a few times now in various guises – if you are in the extreme tails of the income distribution and ‘struggling’ by whatever metric you care to define, then the problem is on the expenses side of the equation. Sadly, many otherwise bright people do not seem to understand this, or think they are hard done by with no other viable options.

    Regarding your example of taxes, in Scotland, you actually benefit at about ~£50k income, as from ~£43.3k income you pay 42% tax and 12% NI, but from about ~£50k income you pay 42% tax and only 2% NI, so unless I am mistaken here, the rate of ‘lost’/taken income goes down after ~£50k due to the drop in NI once the 2% NI rate kicks in. This also means that the most profitable income to salary sacrifice into a pension is £43.3k to about £50k. My annual income is only rarely skirting around these figures due to pay fluctuation and other factors, so after my pension contributions to get maximum employer match, most years I don’t even make it into the 42% tax bracket. Am I poor and struggling on this salary?, should I be ranting about the cost of housing etc? – I know how very fortunate and lucky I am to have such high income, and outside of the major cities, high quality houses, as large as 4 bedrooms can be purchased for ~£250k. Yes, this is still a lot of money, but London people take note.

    Your point about child benefit is a pertinent one as well around this limit, as earning over £50k wipes out all child benefit, so you have married people salary sacrificing just enough to take them under the £50k to get child benefit (if their partners taxable income is <£30k), and sometimes down to £43.5k to avoid all marginal tax bands over 21% tax and 12% NI. If I was in such a situation I would probably do this too, but the whole thing is complicated nonsense in every aspect; (1) the fact a couple earning ~£115k combined as ~85k+30k can potentially legally manipulate income via salary sacrifice so they avoid the 42% tax bracket and get child benefit, as well as (2) the general absurdity of the tax system where you can get £100 in your pension instead of £46 in your take home pay (and then likely an additional employer contribution on top of that £100), but then withdraw it in such a way that your tax could be 0% or at most 21% if you use ISA's+pensions optimally.

    I do happily optimise my tax arrangements via salary sacrifice and ISA's – not exactly accountant requiring tricks, any fool can do them, HMRC view it as the system working exactly as intended, but I am not naive enough to think this is a good sensible system. I just follow the rules in place.

    I could easily be earning at least 2-3 times what I am now if I was in London (jobs are available that I am vastly overqualified for at much higher salaries), but the cost of living and associated tax hits would mean I would be far worse off.

    I view London a bit like the emperors new clothes story – if you step back and evaluate the costs of everything for what you get, and ask yourself what you are experiencing for your money, some people might realise that there is not really anything of extreme value there. Granted, artistic types and those highly cultured might conclude London has what they want and has the value they seek such as great theatres and shows, but anyone who could do their career elsewhere at lower cost (and lower income), but with a better overall standard of living, could consider those options.

    As is the case with monevator posts, I have no interest in upsetting anyone – I assume anyone smart enough to earn 6 or 7 figure salaries in London is also smart enough to weigh up their options and make decisions suitable for their circumstances.

    Liked by 1 person

    1. Presumably tax is devolved in Scotland but NI isn’t, so yes, you’ll have the similar case like in 1985 where the NI break is part-way through the HRT band.

      > I assume anyone smart enough to earn 6 or 7 figure salaries in London is also smart enough to weigh up their options and make decisions suitable for their circumstances.

      I do think it’s easy to get caught up on the income side of things, because it’s the easiest measurable, a single quantifiable number, whereas your necessary costs can be quite opaque, and add up across a number of things. It’s hard to qualify these. At any rate that’s the excuse I’d make for my younger self, who took far too long to jump to that 😉 London is good to live in as a young person with a social network, and I had mine from university and some extent from school, so perhaps that added to the mix. But particularly if you start your first job there, you don’t have the experience of the counterfactual.

      I do wonder about the fulmination about tax nowadays. Absolutely fair enough to optimise it, arguably the CB issue gets parents to save better for their retirement. I used nearly all my CGT allowance last year, in no way am I saying people should pay more tax than they have to. But whenever I hear grousing about levels of tax now, I recall paying tax on 2/3 of my salary in those early days and think you lot just don’t know that you’re born.

      Unlike that stupid bint Liz Truss, Thatcher as befitting a grocer’s daughter did not start to erode the tax revenue until she started to benefit from the free money from North Sea Oil and gas. From the profile of that I’d say the direction of travel in taxation is probably more towards 1985 than more giveaways…


    2. The Monevator article was odd in that we had people with additional rate income complain they cannot afford to live well . The reality is, of course, they can afford to live well but they cannot afford to live as well as they expected. I see this at (private) school pickup. People complain about pay, tax, rising school fees while driving a Range Rover Sport and holding a rather expensive handbag. Priorities?

      As for the convulsions people went through to avoid tax in that article, it only helped to explain why productivity in the public sector has dropped through the floor in recent years! As I said in the Monevator article, the UK tax burden is not especially high at around 33%. It’s below most of the OECD, G7 and EU. It will go up toward 37-38% over the next 5 years which will put it abofe the post war high seen in the 1960s. But what do people expect if the state continues to grow in size? You cannot have the NHS, more pensioners getting 10%+ pay rises etc and not expect to pay more.

      Liked by 1 person

  6. “it’s what you keep, not what you earn”: it’s just occurred to me – an economist who particularly emphasised that point was Laffer.

    You want to be careful about associating with Laffer: the Guardian will darkly call you Right Wing and hint that you’re damned near a neo-Nazi.


    1. Ah, the much vaunted Laffer Curve. The tragedy of this is that it seems susceptible to no analytical solution between the relatively well-defined outer boundary conditions. So its value is much more as a magical incantation for low tax advocacy. Back in 1985 you could get an appointment with doctor, and an NHS dentist, these days, not so much. The power of magic spells and repeated rituals, eh, who sez supersitition is dead in the modern West 😉


  7. iirc bar a couple of Iranian oil magnate’s kids and the like, we were all so skint at uni in the early ’70s that it became like water to fish.

    I also suffered bedsitland back then, a dirty, cold, mice-ridden health risk somewhere in Manchester’s less salubrious parts for the bargain price of £4.50 a week. The shared toilet was moderately disgusting. I don’t even remember the washing facilities. I suppose there must have been some. One evening I was toasting some cheese under the grill for supper; when I pulled it out there were two mice sitting on top of it, fighting over the cheese. I still ate it. I could hear them scampering behind the skirting boards as I lay in bed. Dickensian really.

    Liked by 1 person

    1. > two mice sitting on top of it, fighting over the cheese. I still ate it.

      Now that’s hard core 🙂 Doing battle with vertebrate vermin for your supper is taking it to a whole new level!


  8. I have my pay slips and my P60 from 1985 and I was then earning less than you were at the BBC. Our earnings were probably typical for graduates in their early twenties in London at that time, but you were probably a year ahead of me. I had scraped on to the bottom rung of the housing ladder at that time and was able to cling on and just about break even on property ownership after a decade. Favourable timing allowed us to move up from a flat to a house in the mid-90’s as my earnings were peaking and house prices in London were bottoming. We didn’t think of having a family until much later, by which time the mortgage was paid off. There’s some luck in the timing of all this.

    Liked by 1 person

  9. Continuing the 1985 theme – I was studying for O levels and worked 15 hours in a supermarket 9 miles from home. I was being paid £1.22 per hour – that minimum wage looks generous now!

    IIRC a pint of cider was about 85p and you could have a good night out in the pubs for £5 with chips.

    I bought my first house at 28, ex local authority 3 bed-semi for £50k (~1998 in the north west) a few years earlier the same houses had been selling for close to £80k. My sister had negative equity and bridging loans – which can’t have been fun.

    No idea what’s going to happen to house prices with talk of 6-7% interest rates – the volume of people on long term fixes is making the event a slow-motion house-crash

    On another subject from 1985 – it was harder to get an A in ‘O’ level maths than it is to get a First class degree today

    Liked by 1 person

    1. 3 bed semi -@50k, that’s the way to do it. Ex-council houses tended to have enough room to swing a cat in and half decent gardens. Muggins here spaffed that much on a two-up-two down FFS, and it took years to break even on such an overwhelming epic financial fail.

      Incidentally, Time Like Infinity made the case that if you use RPI the scale factor becomes 4 not 3. People have bitched about RPI for donkey’s years but nevertheless, I thought I’d seem what happens using 4 as a scale factor. While it lowers the point where student loan payers may feel aggrieved, the 1985 situation still starts earlier and is higher than current HRT/ART taxation.

      Composite tax rate against take-home pay (x-axis), 1985 rescaled to 2023 by RPI (~4x)


      1. Just for fun I looked at the price history for an identical property on the estate:

        1984 £20k (my parents bought)
        Early 90’s ~ £77k estimate
        1998 £50k (I bought)
        2005 £136k (I sold)
        2018 £180k (parents sold)
        2023 £220k current zoopla estimate

        Hope this doesn’t trigger anyone too much!

        My dad was always upset by how much he paid as my aunty and uncle lived with us for a couple of years to save a deposit, and bought a nicer house in the early 70’s for about £3k.

        Apparently my granddad bought his council house for £1200 – no idea when

        Liked by 1 person

      2. > 1984 £20k (my parents bought)
        Early 90’s ~ £77k estimate

        clearly this almost quadrupling in 10 years, where the Bank of England Inflation calculator says the 20k capital value appreciated to £30,870, had absolutely zero to do with firstly Thatcher’s RTB, and secondly her 1986 liberalisation of mortgage finance with the building societies act 1986. Before then building society fund for lending out were limited to deposits – the downside of that was that is was a bear to get a mortgage in the first place.

        So liberalisation was terrific. Building societies were no longer limited to funds raised from customers, and I think banks were allowed to join in the fun. Fast-forward a few decades and every bugger can get a mortgage. The problem is no bugger can afford a house, because as Taylor Swift didn’t say, “lenders gonna lend” and that means more money chasing roughly the same housing stock jacked prices into the sky at low interest rates. Unlike Americans, Brits can’t resort of jingle mail and any negative equity follows them around like a lost dog.

        No. That’ll never happen again. Right? Riiiight…?


    2. > No idea what’s going to happen to house prices with talk of 6-7% interest rates – the volume of people on long term fixes is making the event a slow-motion house-crash

      Arguably the tragedy is how people have been suckered into repeated two year or sometimes 5 year fixes. People used to say how terrific this was towards the end of my time at work, I never got the attraction, personally. Let us inspect the many ways the accident can happen:

      Firstly you get to experience 12 two year fixes in any 25 year mortgage term. You get to enjoy paying the fees of mortgage brokers and/or arrangement fees in some way or another 12 times. You get to pay the mortgage indemnity guarantee few times at the start when your LTV is still too high.

      12 times in your mortgage career you get tested if you earn enough to pay it, Sure, if you are paying it down perhaps that fades after the first few times. but say you are an old git towards the end of your career and the company you work for wants to off some of this deadwood. All of a sudden you fail the test, even if you have savings enough to keep paying the mortgage.

      The speed with which mortgage brokers told me to sling my hook when I wanted to bridge two properties was shocking, despite owning the old house outright and having free cash flow enough for half the new one, and ISA capital to clear the debt. ‘Cus it’s all about income, innit, no Brit who wants a mortgage has two brass farthings to rub together.

      So in general -serial fixes, WTAF? Why do people do this to themselves, apart to make mortgage brokers fat. Two of five years ain’t a useful amount of time for a fix in a 25-year term, the simulacrum of security at the cost of inflating tail risks and you still get killed until you are five years from settling up.


  10. Interesting piece, as usual @ermine – thank you.
    Thank you too for the name check. Point of information: I have never worked in high finance.
    I find myself with many half-formed thoughts after this piece. I’ll try to fully-form a few.
    One is that the US:EU/UK difference is quite profound – increasingly so, according to GDP/capita stats. I think it hard to imagine that you would exist / have your views in the USA. What is cause, and what is effect? I can argue both sides.

    Liked by 1 person

    1. > Point of information: I have never worked in high finance.

      Apologies, correction made. I jumped to the conclusion both assuming London high earners work i finance and indeed because your finance content is well above my pay grade 😉


  11. That was a very interesting read ermine as always. I make sure I get a cuppa ready as I know it’s always a nice long read hehe.

    I live in the north so I can’t relate to much of this from my own experience but I have had two friends who have moved down to London due to the bait of high salaries. Of these two that I know, one moved back after 5 years because in his words ‘the extra money just isn’t worth it when I end up spending more anyway’ and then another person stays there because in his words ‘I love the lifestyle, everything is here, everything is a tube ride away even though it’s as expensive as hell’.

    I will happily stay up the mythical (does it really exist?) north :D.


    Liked by 1 person

    1. > I love the lifestyle, everything is here, everything is a tube ride away even though it’s as expensive as hell

      I think London is very Marmitey like that, as a world city there’s lots to do, and surprisingly on the cultural side it often doesn’t actually cost very much. It also has a surprising amount of green space compared with LA or NYC, and decently distributed over the city. Although as a country mouse I still found the rumble of traffic noise loud, even in the middle of Hyde Park, that’s something you just can’t get away from.

      The downside is it’s easy to end up running hard to stay still or slowly drift backwards, and the attraction seems to pall as you get out of your twenties. It seems to rise again for those past middle age who have established themselves and their social circle – perhaps they don’t suffer the housing costs issues so much. That cohort often value the cultural offerings, and have the time to use them extensively.


  12. Being (slightly) early retired and mortgage free in London we have
    access to world class museums, galleries, concerts by music students, walking in parks & nearby countryside or along the Thames all with no charge plus free transport throughout Greater London for over 60s. It’s not so bad!

    Liked by 1 person

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