John O’Connell: Presiding over the biggest tax burden in 70 years is surely a legacy Johnson must be keen to avoid

2 Feb

John O’Connell is the Chief Executive of the Taxpayers’ Alliance.

Boris Johnson is an admirer of Winston Churchill, to put it mildly. Churchill has a wartime legacy that Johnson knows he can’t match, but it’s hardly a secret the Prime Minister himself wishes to be remembered through the ages. He’s now tackling a once-in-a-generation crisis. But there is a little-known achievement of Churchill’s post-war administration which Johnson should try harder to emulate.

New research from the TaxPayers’ Alliance finds that the tax burden now stands at its highest sustained level – based on a five-year average – since 1951, when the UK was still demilitarising after the second world war. This was a level which Churchill was determined to cut, explaining in his election manifesto of that year that “British taxation is higher than in any country outside the Communist world.”

These are different times, but presiding over the biggest tax burden in 70 years is surely a legacy Johnson must be keen to avoid. The tax burden next year will be an estimated 34.2 per cent as a share of GDP. That will be the highest single year score since 1969-70, when a rise in consumption taxes to discourage imports at a time of foreign exchange difficulties saw a one-off spike during the last full year of the second premiership of Harold Wilson. In the first year free of the European Union, we are paying as much tax as we did in the years just before we joined.

Repairing the public finances after the hammerblow of Covid doesn’t have to mean tax increases. The objective for Johnson – and Rishi Sunak, of course – should be to create the conditions for a boom in growth. That means giving the private sector – currently on its knees – the room to stand tall. With that will come investment, growth and jobs.

But official forecasts say that the Prime Minister will be levying taxes at levels likely to be higher than they have been since Clement Attlee. Any tax rises in the March Budget will put that figure even higher.

Traditionally, increasing taxes is the hallmark of Labour prime ministers and this is then countered by their Tory successors. Churchill’s encore administration shaved off 4.5 percentage points from the tax burden following the Attlee years, before Heath arrived in the shadow of Wilson and reduced taxes by another 3.9 percentage points. Margaret Thatcher sliced off another 0.8.

These assumptions can no longer be taken for granted. Since Thatcher departed, when the tax burden was at left at 30.4 per cent, Tory tax cuts have been negligible and the burden has ratcheted up. During Churchill’s post-war government, taxes were lower than they have been under each of the last three Conservative prime ministers. Gordon Brown cut the tax burden more in his three years than they’ve managed in eleven.

Some might now be thinking that the British public, like the oblivious lobster, is unperturbed by continuous tax increases. But we know that Jeremy Corbyn, with his manifesto delivering an extraordinary estimated tax burden of 37.3 per cent, pushed too hard and was rejected by the electorate – twice. And he wouldn’t be the first Labour leader denied office by the prospect of tax rises. Conservatives have almost always bent over backwards to promise that taxes wouldn’t go up under them.

Is it different this time, because of the Conservatives’ new base of voters? This argument can misunderstand the working class: tax cuts can be popular.

Polling from just before the 2019 election told us the new blue collar Conservatives want to see their taxes go down. A cap on council tax rises was supported by more than three quarters of those polled; around six in 10 C2DE voters strongly favoured cutting the basic rate of income tax down to 15p in the pound. About the same number wanted to see employers’ PAYE taxes reduced to encourage businesses to hire more people, with even more (seven in 10) wanting to abolish the BBC licence fee. All of these were compatible with the 2019 Conservative manifesto, and what’s more, were more popular with C2DE voters than their ABC1 counterparts.

With tax bills at around £24,500 per household, and data from the ONS showing the poorest families pay almost half their income in tax, cuts like this wouldn’t go unnoticed. They will certainly be critical to a post-pandemic Britain trying to restore growth and prosperity, as Churchill noted when he said “for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”. With their commitment to opposing tax rises in March, and a renewed focus on fighting council tax rises, the Labour frontbench now understands that taxpayer value could hold the keys to Number 10.

Very soon, there will be a fork in the road out of the pandemic – which way would Churchill go? Johnson should choose that same route.

Iain Dale: Johnson can say all the right words. But not in a way the public relate to, as Blair and Cameron could.

29 Jan

Iain Dale presents the evening show on LBC Radio and the For the Many podcast with Jacqui Smith.

Sir Desmond Swayne is an adornment to our political life. Politics has always had mavericks and MPs who are outspoken, and he is the latest example.

However, his comments on “manipulated” Coronavirus statistics and interview with anti-vax champions were dangerous and outrageous.

He maintains that things he said in November were correct at the time – an assertion which in itself is questionable.

He then doubled down and claimed that it would be a “thought crime” for him to lose the Conservative Party whip.

Michael Gove has called on him to apologise, but he refuses.

I should make it clear that even though he has appeared with anti-vaxxers, whom he calls “nutty”, he is not one himself and maintains he is “evangelical” in his support for vaccinations.

He says that he didn’t know any of the people he was talking to were anti-vax and that he was purely talking about lockdowns.

For someone who loyally served David Cameron as Parliamentary Private Secretary, he has displayed the political judgement of a shrew on this issue.

– – – – – – – – –

It’s not been an easy week for the Prime Minister.

Quite naturally, when the 100,000 Covid death milestone was reached, he appeared before the press cameras looking very sober, and also somewhat exhausted and dishevelled.

He said all the right words, but was I alone in thinking that it just didn’t quite work?

Tony Blair and Cameron had a unique ability to not only say the right words, but to do so in a way that the public related to.

Not all politicians have that gift. Theresa May didn’t. Gordon Brown didn’t.

Boris Johnson is a politician made for the good times. His naturally sunny optimism is great in many circumstances.

Being sombre and downbeat, however, is not his natural demeanour.

I don’t blame him for that. None of us can change the way we are, merely do our best to say the right thing in the right way.

– – – – – – – – –

The suggestion from Nicola Sturgeon that Johnson shouldn’t have gone to Scotland yesterday is as ridiculous as it is insulting.

Johnson is Prime Minister of Scotland too, and in my view should be going to Scotland as often as possible and trying to build a relationship with Scots, which he doesn’t have at the moment.

She says in times of a pandemic he should not be rampaging across the UK.

He is the Prime Minister, not an ordinary member of the public. He has a duty to visit every part of the UK.

If the UK Prime Minister does not make the case for the union, who will? (And I say this as someone who is not unsympathetic to the notion of Scottish independence.)

Sturgeon sometimes appears drunk on her zealotry for Scottish independence.

She is in many ways an admirable political leader, and yet I wonder if she is about to overreach herself.

– – – – – – – – –

The calls for an immediate public inquiry into Covid have reappeared.

They should be resisted. I cannot see the logic of commencing an inquiry when the pandemic is still ongoing.

I am not saying it shouldn’t start until the last case has been eradicated, but surely its terms of reference cannot be decided until we have the end in sight.

Assuming the vaccine process has the desired effect, I’d have thought launching the inquiry at some point in the second part of the year was achievable and desirable.

Should it be a UK wide inquiry, or should there be four separate inquiries into the conduct of each of the four governments of the UK? These are the questions we need to ask.

Clearly the inquiry will seek to apportion blame for mistakes that were made, but these are mistakes that have been made by representatives of all the main political parties, who run the four different administrations.

Some are questioning the need for any inquiry at all on the basis it will cost a lot of money and will take years to report, by which time all the main political protagonists won’t be in office.

Surely it is absolutely vital to have a proper inquiry, from which everyone can learn the lessons for the next time something like this happens.

Not just the politicians, but the scientific and medical community too.

More fence sitting from Starmer as Labour MPs challenge deportation flight

4 Dec

This week, the Home Office’s plan to deport 50 convicted criminals to Jamaica for violent, sexual or drug offences was disrupted after a campaign by Labour MPs.

Two days before the flight was scheduled to take off, Clive Lewis wrote to Priti Patel to demand she “cancel the planned deportation of up to 50 Black British residents” adding that deportations “epitomise the Government’s continued ‘Hostile Environment’ agenda”, and that “[t]ackling institutionalised racism starts one step at a time.”

Nearly 70 mostly Labour MPs signed Lewis’s letter, including Diane Abbott, Jeremy Corbyn, Rebecca Long-Bailey, John McDonnell Lloyd Russell-Moyle, and celebrities such as Naomi Campbell and Thandie Newton wrote to airlines asking them not to carry out the Home Office’s orders. After a series of legal challenges, 30 criminals were taken off the flight, including a rapist and a London murderer.

Where was Keir Starmer in all this? Many noticed that he was not one of the signatories on the letter, nor was his deputy Angela Rayner, suggesting they disapprove of Lewis’s intervention (which, ironically, challenged a policy set by the last Labour government). But he has done nothing to indicate an opinion either way. Perhaps he thinks, like the Covid tiers, he can abstain his way out of the matter.

The incident raises questions about Starmer’s leadership, not least because of the degree of influence opposition backbenchers now have over Home Office policy. It is unusual for them to write these sorts of letters without the backing of shadow cabinet ministers. Notably, 12 other frontbenchers did not sign. So who is in charge?

Labour’s National Executive Committee even appeared to tell Starmer and Rayner off for not signing the letter, writing: “we are alarmed that there has been no comment from you both in response to the deportation flight scheduled for 2nd December… we request that you make a decisive and compassionate intervention.”

In his Labour Party Conference speech, Starmer famously promised “This is a party under new leadership”. He was keen to project the sense that he would bring the various factions of Labour together, though recent events are yet more evidence of how difficult that goal is, with Corbyn and McDonnell calling the shots elsewhere.

The bigger question, of course, is what this means for Starmer’s future policies. Many will remember him promising at his party’s conference “never again will Labour go into an election not being trust on national security”. But his refusal to comment, let alone act, on a matter involving murderers, rapists and violent criminals is hardly going to reassure many voters.

Part of the reason Starmer is reportedly quiet on some issues is down to advice from Joe Biden’s campaign team, which has instructed him not to get involved in “culture war issues”. But this mindset seems to have gradually extended to all manner of political policy. Often people think Starmer is calculated in his political moves, but too much fence sitting does not a Prime Minister make.

Michael Dugher: Covid-19 is a lesson in the three Rs for the government

7 Aug

Michael Dugher is CEO of the Betting and Gaming Council (BGC). This is a sponsored post by the BGC.

Regular readers of ConservativeHome may be surprised, even aghast, to see a former Labour MP, Shadow Secretary of State and adviser to Gordon Brown, writing in this forum. Corbynites, or the dregs of what is left of that calamitous project, will be less surprised, but certainly some of my former comrades on the Labour benches might raise an eyebrow too. But these are not normal times.

The Covid pandemic represents an unprecedented challenge for governments across the world. The human cost has been staggering, tragic and truly heartbreaking, with more than 18 million infected and 700,000 deaths worldwide.

The financial cost is still being calculated, but will likely have a bearing on the world’s economies for years to come.

To give the Government credit, its initial response to the economic challenges posed by Covid-19 was sure footed. The rescue package – from the furlough scheme to business rates support – was commensurate to the scale of the challenge. Not since the creation of the welfare state have we seen such an interventionist government – and a Conservative one at that. As I say, these are not normal times.

More recently, though, the Government has made a series of missteps that have begun to raise concerns in business circles like the one I represent now.

The latest example was the decision last week, announced at the last minute by the Prime Minister, to delay the piloting of certain live sport with attendances, plus reopening of some indoor entertainment venues such as casinos, bowling alleys and skating rinks that were due to open on August 1.

As someone who has worked at the heart of government, I know all too well that governing is a delicate balancing act, not least during a global pandemic that none of us have ever experienced. But there are certain core principles that should always inform government action – clarity and consistency. Both are in short supply.

Messages like “go on holiday”, “get back to work” and “eat out” have tangoed clumsily with parallel appeals to “avoid unnecessary travel”, “stay at home” and even “lose weight”.

The u-turn on casinos reopening is the latest example. The decision was all the more perplexing given that they had gone to extraordinary lengths and invested millions of pounds to ensure their venues were Covid-secure, with strict social distancing measures, hygiene protocols and sophisticated track and trace systems in place at venues across England.

The Government’s most senior health officials gave just over 100 casinos the green light, long after bingo halls and amusement arcades, never mind restaurants and 47,000 pubs, after their visit to a casino in London. The decision to reopen was announced by the Prime Minister on July 17.

The sense of relief was palpable across the industry. Staff, fearful of redundancy, were looking forward to returning to work for the first time in over four months and managers readied to give their businesses a go, even in the toughest of circumstances. Then, less than 12 hours before they were due to open their doors, England’s casinos were told they must remain shuttered in order to keep the virus under control.

We fully understand the Government’s determination to control the “R” infection rate, which is rising in parts of England. But public health officials and the Government’s scientific advisers have already confirmed that casinos pose what they described as a “negligible” risk to health, given their substantial investment in Covid safety protocols, and their relatively small number. What happened to “following the scientific advice?”

And a reminder again: there are 110 casinos in England, compared to 47,600 pubs. There are nearly nine times as many Wetherspoons alone as there are casinos.

In recent weeks, we have seen localised Covid spikes in parts of the North West of England and before that in Leicester. The right response was a localised lockdown, not a national shutdown. If there is a spike in Greater Manchester, why is it ok for pubs and restaurants to remain open in Greater Manchester but a casino in Bristol, where levels of Covid are low, must close?

In his July 17 statement, the Prime Minister ruled out the need for such a blanket national lockdown. Instead, the Government would control outbreaks of the virus through “targeted, local action.” By denying casinos the right to reopen, not for the first time, the Government is at odds with its own policy.

This illogical and inconsistent ruling will have a damaging – perhaps permanent – impact on casinos and the thousands of staff they employ. It couldn’t come at a worse time for an industry that is grappling with mounting and unsustainable costs.

A sector that contributes £140 million to the tourist economy and £300 million in taxes now stands on a cliff edge because of the Government’s decision to taper furlough payments and force employers to pay National Insurance and pension contributions, even though they remain closed. Some businesses may not survive. Around 6,000 workers – half of all casino industry jobs in England – are facing the dole.

While ministers are rightly focused on the health of the nation, no government can lose sight of the health economy. Remember when David Cameron and George Osborne used to say “a strong NHS depends on a strong economy?” The R infection rate has to be balanced against the two other Rs – recovery versus recession.

The consequences of getting this wrong are being felt in businesses across the country – stuck in a Covid no man’s land, forced to remain shuttered while bearing the everyday costs of business. What’s worse, it’s costing the Treasury around £5 million a week to keep casinos closed and their workers at home, when they could be raking in £5 million in much needed tax revenues.

Earlier this week, the decision to keep casinos closed was criticised by both Ed Miliband in the Guardian and Richard Littlejohn in the Daily Mail. I know these are not normal times, but seemingly uniting Miliband and Littlejohn in one common purpose is taking things too far.