Eamonn Butler: Today, after more than five months of working for the Chancellor, we are finally starting to earn for ourselves.

8 Jun

Dr Eamonn Butler is the Director of the Adam Smith Institute.

At (long) last, it’s Tax Freedom Day – that day in the year when the average UK citizen has earned enough to pay off all the taxes that politicians dump on them. Today, after more than five months of working for the Chancellor, we are finally starting to earn for ourselves.

That’s bad news, not just for taxpayers, but for the country. All our aspirations for health, social care, education, security, prosperity, environment and the rest depend on having a strong economy. But we’ve taken a big hit: look down any high street and it’s plain that we need to build new businesses, and expand the surviving ones, on a massive scale. And the one thing that kills business creation and investment is high taxes, because they raise the risks of something that is already risky.

Yet this Government – a Conservative Government – is raising taxes all over the place. This year, it plans to spend £1.05 trillion, paid for by you and me. That is £15,625 for every adult, child and infant, or £62,500 for a family of four. If you are silly enough to save, you will pay a ten per cent inflation tax on your nest-egg too. And if the Government can’t quite balance its books (which it can’t), it will borrow and get your children and grandchildren to pay instead.

You might think that only rich people pay so much tax. But taxes are everywhere. There’s income tax, of course, but also VAT on pretty much everything we buy. Plus duties on beer, wine, spirits, tobacco, petrol and much else. There are taxes on the oil, gas and electricity we use to keep warm. Taxes on travel, and taxes on our homes. Stealth taxes on our pensions. And maybe the most damaging of all, the absurd tax on jobs that is National Insurance – which this Government (yes, a Conservative Government) has increased.

Indeed, the total tax burden on the country, which Tax Freedom Day neatly measures, has increased, at a nose-bleedingly alarming rate – and not just because of Covid, or Brexit, or the Ukraine war. Governments – Tory, Labour or Coalition—have been upping our taxes for years. Back in 2015, Tax Freedom Day fell on May 20th, eighteen days earlier than this year. In 1996 it was May 1st, five weeks earlier. In the 1960s, it fell in mid-April—a full eight weeks’ less servitude than we endure today.

It’s serfdom: but even mediaeval serfs were better off. They only had to work around a third of their time on behalf of their feudal overlords. On OBR’s budget projections, Tax Freedom Day 2026 will fall on June 24th. In other words, we will be working nearly half our time for our political overlords. Working so they can spend our money on what they want, rather than what we want. Compared to today, even the era of arch-stealth-taxer Gordon Brown seems like paradise.

Government ministers are keen to big up post-Brexit Britain as a world player. But it is hard to see how we can regrow, recover and compete when so much of what we produce is consumed by a bloated bureaucracy.

We need a radical growth policy, yet the Government shows no sign of getting our growth-crushing tax burden down. Quite the opposite: they seem to be promoting one new high-cost project after another, creating one new bureaucracy after another, and distributing one new handout after another. It’s cakeism, and it doesn’t work. Before long, the politicians haven’t left people with enough money in their pockets to risk starting or expanding a business. Costs rise, revenue falls and we’re in a downward spiral like we were in the 1970s.

That downward spiral was reversed only by radical, but common sense policy. Eventually, you run out of other people’s money. You have to balance the books. You have to tighten the Government’s belt just as individuals and businesses have to tighten theirs. You have to kill inflation stone dead. You have to be clearly committed to creating a low-tax economy. You have to trim the bureaucracy and keep it out of productive people’s way. You have to stop interfering and trying to manipulate and second-guess markets. You have to take difficult decisions and weather the criticism you will assuredly get.

As part of that revival plan, we need a farsighted tax and spend reduction strategy. We need a clear commitment to reduce the burdens on working people. A commitment to enable people to keep more of their own money to spend and invest on their own plans – not Whitehall’s. To make space for people to grow their own businesses, boost jobs and revive economic life. Is that too much to ask of a Conservative Government?

The post Eamonn Butler: Today, after more than five months of working for the Chancellor, we are finally starting to earn for ourselves. first appeared on Conservative Home.

David Hare: How Javid can ensure the elective recovery plan for the NHS delivers

18 Feb

David Hare is Chief Executive of the Independent Healthcare Providers Network

“It’s NHS waiting lists, stupid” should be the mantra for all political parties as we head towards the next general election.

With NHS waiting lists at a record high – recent figures show 6.1 million are currently waiting – and improving access to NHS care consistently rated as the number one priority for the public, tackling the backlog in NHS treatment must be top of the to-do list for the Government/ a government in waiting.

This is especially sensitive since, from April, people and businesses will be paying more in National Insurance for the health service, and, not unreasonably, will want to see something tangible in return.

Tax rises are always controversial but with a cost-of-living crisis on the horizon due to rising inflation and energy prices, this new health and care levy represents yet another additional squeeze on people’s already-stretched finances – and one which the Government will come under ever increasing pressure to justify.

Last week Sajid Javid, the Health and Social Care Secretary, announced the NHS’s new “elective recovery plan” setting out how the NHS intends to tackle the backlog of treatment. The plan includes some important goals including eliminating the number of people waiting more than a year for treatment, with the anticipation that waiting lists will start coming down from 2024.

It also sets out how it will bring in more capacity to a desperately stretched NHS, including making more use of independent sector capacity and giving people greater information and choice over where they can receive their NHS care.

These measures are welcome and recognise the important lessons of how the Blair/Brown government successfully tackled record waiting lists in the 2000s. But how do we turn the plan into concrete action to make sure the public gets value for money from the new levy?

First, as this is essentially a question of demand for NHS services currently outpacing supply, let’s make it easy and straightforward for new providers to open up services for NHS patients.

There are currently over 400 independent healthcare facilities in the country with capacity available in every clinical commissioning group location. And like the establishment of “Independent Sector Treatment Centres” set up in the Blair years, new investment could swiftly be brought in to establish even more local services for patients to help bring down the waiting list.

Second of all is getting the finances right. The public will not be happy with billions of pounds going to the health service with no way of understanding what it has bought. It’s therefore important that the principle of “payment by results” or, more simply, “money following the patient” is retained so there’s a clear trail of where the additional money for the NHS has gone, and a real incentive for as much activity to be delivered as possible.

Third, to real see change in the NHS, there needs to be a relentless focus on driving down NHS waiting times with every part of the health system understanding its role. The plan published this week sets out some welcome ambitions to reduce the waiting list from 2024 and eliminate the number of people waiting over one year by 2023.

But while the public don’t expect miracles overnight, they are unlikely to be content sitting tight for two years before they see any tangible impacts on their access to care. Clear milestones setting out how exactly the NHS will get reach these targets are therefore needed to reassure people that action is being taken now to clear the backlog.

There’s no doubt that the health service has a mountain to climb in bringing waits down for patients and that those working in the health system have already moved mountains for their patients. But higher taxes for a materially poorer NHS is simply not an option for the Government. The hard work of delivery needs to start now.

Places need power if they’re to level up

3 Feb

Do you remember the Third Way?  It was Tony Blair’s attempt to spray gloss a veneer of political philosophy on New Labour’s ruthlessly focused election machine – rejecting a choice between “prosperous and efficient Britain” (Thatcher’s Conservatives) and a “caring and compassionate Britain” (Old Labour).

For a while, the Third Way attracted commentary, praise from Blair groupies, and criticism – before Gordon Brown put the slogan out of its misery.  The era of marginalising the Tories and the Left had come to an end.

Then came the Big Society.  This was David Cameron’s big idea, or should I say Steve Hilton’s?  Again, it was an attempt to give a political project definition, but Hilton was empowered to further the idea, or try to – before the then Prime Minister lost patience with it (and him).

But for a few years, the Big Society was all the rage – at least among  organisations seeking cash, thinkers and doers seeking patronage, civil servants recasting projects, and a mass of others trying to get in on the act.

Levelling up has provoked the same pattern of behaviour, and my sense as an Editor is that no subject since Brexit has attracted more submissions to ConservativeHome (with the exception of Tory MPs offering pieces backing of Net Zero, often because they have a constituency interest in green energy).

Schools, work, skills, productivity, infrastructure, transport, housing, science, procurement, high streets, law and order, elected mayors, health, broadband, sport, parks, culture: nothing human and indeed unhuman is alien to levelling up.

This provokes the criticism that if levelling up is about everything it is thus about nothing – assuming that it’s understood in the first place.  “People find it confusing and then, when it’s explained to them, mildly irritating,” Rachel Wolf, the co-author of the 2019 Conservative Manifesto, wrote on this site.

All the same, the central message of levelling up seems clear enough to me: at heart, it’s about redressing the economic, cultural and social imbalance between the Greater South East and much of the rest of Britain.

If this isn’t One Nation conservatism in post-Brexit guise, I don’t know what is.  The heartland of the Leave vote in the 2016 referendum was provincial England, which thereby rejected the status quo – including an economic model heavily reliant on unskilled migration, financial services, low wages, and London plus its hinterland.

Michael Gove said more or less as much in the Commons yesterday.  “While talent is spread equally across the United Kingdom, opportunity is not.”

“We need to tackle and reverse the inequality that is limiting so many horizons and that also harms our economy. The gap between much of the south-east and the rest of the country in productivity, in health outcomes, in wages, in school results and in job opportunities must be closed.”

It’s therefore evident not only what levelling up is but what it isn’t.  Fundamentally, it isn’t focused on prosperity, though this would certainly be a by-product of the project were it to work.

After all, a Government focused simply on prosperity, or at least growth, might well double down on the present economic model, supplemented by tax cuts, a reinvigorated private sector, and deregulation. This seems to me to be precisely what some in the centre-right thinks believe we should do.

“The intention to spread government R&D around the country could damage the success story of the Oxford-Cambridge corridor,” the Institute of Economic Affairs said in its response to the White Paper.

This suggests the nightmare endpoint of a levelling up policy which makes the Greater South East worse off than it otherwise would be while leaving much of the rest of the country not much better off than it is now.  You can bet that what the IEA is saying some Tory MPs with home counties seats will be thinking.

If levelling up isn’t fundamentally about prosperity, it isn’t exactly about people either.  Government could help to upskill the next generation only for it to up sticks and head for the Greater South East, as so many have done before.

No, levelling up is primarily about place (and therefore includes in its ambit those bits of the South East that aren’t well off at all).  In which context, that long list of concerns begins to become explicable, since all help to make a place what it is and can be.

Having said which, some of the core elements of levelling up – better transport, joining up towns and cities and skills – look a lot like George Osborne’s Northern Powerhouse.

Let me leave aside such disparate questions about the White Paper as: how many of the proposals are actually reannouncements?  Are targets for 2030 really meaningful?  What’s the knock on for target seats?  And will Gove now vanish from public view again?

Instead, it’s worth reflecting on the magnitude of the task which the Government has set itself, perhaps as much by accident as anything else.

The gravitational pull of London on the rest of the country is more powerful than that of the capital cities of comparable neighbouring countries. Although it has a great deal of poverty within it, the city of which Boris Johnson was once Mayor is an international hub, the centrepiece of a relatively open economy.

Read accounts of how parts of the country boomed when Neville Chamberlain was Chancellor, with a mass of housing and roads being built in and around London, and you will see how little has changed.

If one element of the White Paper has the capacity to drive change is the localism proposals – cautious though these are now that this Parliament approaches its mid-term.  The best time for radicalism is at the start of a new government and that moment has gone.

But whether the matter to hand is better skills, industrial strategy, apprenticeships, emission reduction, integrated transport or a joined-up plan to implement net-zero carbon, central government is badly placed to do the job

Gove referred yesterday to giving such local Mayors as Ben Houchen, Dan Jarvis and Andy Street more powers, and held out the prospect of creating new mayors “where people want them”.  That may be as much as he wanted to do, or his colleagues would let him get away with.

“Whatever you’re doing in terms of devolution, double it. In terms of local taxation, double it,” Osborne said last year in an interview with ConservativeHome.

Without ambition on that scale, along the localist lines of Douglas Carswell and Daniel Hannan’s The Plan, there will be no irreversible shift in the balance of power and wealth in favour of the provinces, to misquote Tony Benn.  Places need power if they’re to level up.

Professor Pollard’s warning about unsustainable vaccine boosters should actually give us hope

6 Jan

With the success and speed of the Government’s vaccine booster programme, it’s easy to think that this is the future now; that going forward, the nation will be jabbed at monthly intervals, so as to keep Coronavirus under control.

However, over the last week, Professor Pollard, Chair of the Joint Committee on Vaccine and Immunisation, as well as Director of the Oxford Vaccine Group, cast doubt on this plan. In a newspaper interview, he warned that vaccinating the planet every six months was not affordable or sustainable, and that there still isn’t “full certainty” on the benefits of a fourth booster, even though Israel has gone ahead with it for members of the population aged over 60.

What does this mean for the Government’s strategy going forward? Although Pollard doesn’t make any decisions on its policies – due to his involvement making vaccines – he’s still one of the most important advisers in the country, and his words offer clues about what ministers’ next moves and thinking may be.

For one, Pollard suggested that it’s “not unreasonable” to think a future Covid vaccine scheme could be like the flu programme, albeit the latter has a more seasonal pattern. The comparison between the two diseases has been made before, but it’s become much easier to argue for in recent times, due to the Omicron variant – symbolising that we may have milder variants to come  – and immunity building in the population, either naturally or through the vaccine. It would mean that far from giving everyone multiple vaccines, we become more selective, with only the vulnerable contacted and inoculated.

Pollard also said that we need to vaccinate the whole planet “not just our little corner of it”. This is not the first time he has offered such a warning. In July, writing for The Times, he urged the public to think of its “responsibility to humanity”, flagging the fact that without even, widespread distribution, new variants can emerge. He concluded by saying “It is difficult to justify getting third doses ourselves, especially if not clearly needed, ahead of zero-dose people whose lives remain at risk.”

This argument has been one that hasn’t gained much traction over the last few years. Although the UK takes part in the COVAX scheme, which has provided huge numbers of vaccines (100 million doses by June 2022), there hasn’t been palpable public support for letting other nations “catch up” before moving onto boosters.

One imagines attitudes might have changed here, however, though. Gordon Brown recently became one of the most vocal supporters of better worldwide distribution, calling the current situation a “stain on our soul”, and, in general, there’s more awareness that current jabs could be rendered ineffective if variants grow elsewhere. In 2022, we can expect an even greater drive from governments and the World Health Organization, to get the world jabbed.

Overall, even though Pollard’s words appeared to surprise many – sparking a lot of dramatic headlines – there was quite a positive message underneath them, with him saying that the worst of the pandemic is “behind us”.

Given that more than 90 per cent of over 12s having had their first vaccine in Britain, and 80 per cent having had two doses of it, we have every reason to be hopeful moving forward. In an encouraging sign that we can expect less lockdowns, Pollard said that society has to open up at some point – and that there’s no point in trying to stop all infections.

Sometimes it’s hard to forget, too, that there are plenty of unknown variables that will shape our future battle(s) with Covid, just as the vaccine was a game changer. Scientists continue to work on even better inoculations, so that they’re better tailored to new variants. 

Moreover, they are being developed into different forms, which, in turn, should make them easier to distribute around the world. One company, for instance, is developing a dry-powder formulation of a Covid vaccine for a single-user inhaler; another, a pill, targets mucosal cells in the intestine; and researchers in Lancaster are looking into nasal spray, and that’s just the start of it.

All in all, while it’s could be taken as a bad sign that boosters aren’t “sustainable”, Pollard’s interview indicates a “new normal” to which we can all aspire.

Charlotte Gill’s Podcast Review 8) Matt Chorley with Andrew Gimson, Nick Robinson with Ed Balls

5 Jan

Every fortnight, ConservativeHome will compile a handful of podcast recommendations – content that has been published in the weeks preceding – for its readers. Although these will mainly focus on podcasts for conservative listeners, we will try to include other options – should they be particularly interesting. Sometimes this feature will contain other types of media.

Title: Red Box Politics Podcast
Host: Matt Chorley
Episode: Gimson’s PMs: Thatcher to Johnson

Duration: 1 hour, 1 minute
Published: December 12
Link: Here

What’s it about?

In this fun exchange with Matt Chorley, Andrew Gimson, Contributing Editor to ConservativeHome, author and historian, takes Matt Chorley on a passage through time of Britain’s Prime Ministers, starting with Margaret Thatcher and ending with Boris Johnson. The episode, recorded towards the end of last year, marks 300 years since Britain got its first Prime Minister, in the shape of Robert Walpole, in 1721. It’s packed with insights, as well as comparisons between leaders; find out who Gimson thinks Johnson most closely resembles towards the end.

Some teaser quotes:
  • “Blair knew how to talk to everyone, from a duchess to a cleaning lady. He could adopt the right tone and he had a genius, I’m afraid, for annoying his own party and thereby convincing Middle England that he must be a sound-enough chap and he was really a bit of a Tory.”
  • On Gordon Brown: “Who knows, perhaps he would have been a very great Prime Minister if he’d come in ’97, but he’d waited for 10 years, pretending to be satisfied with the job of Chancellor of the Exchequer”.
  • On David Cameron: “He was a very Anglican figure in some ways; he very much believed in good behaviour and compromise, but – as far as doctrine was concerned – he was fairly flexible about that.”
Verdict:

Very informative, and the hour goes by fast.

Title: Political Thinking with Nick Robinson
Host: Nick Robinson
Episode: The Ed Balls Christmas Special One

Duration: 37 minutes
Published: December 27
Link: Here

What’s it about?

Recorded before Christmas, in this interview Nick Robinson sits down with Ed Balls, former Secretary of State for Children, Schools and Families, to discuss a huge amount, from his life outside of politics, from his love of cooking, to teaching at King’s College London, to the 10 years he has spent learning the piano. Perhaps the most interesting part of the discussion is when Balls discusses his interest in understanding people with whom he disagrees; it makes a nice change from some of the name-calling that Conservatives and/ or Brexiteers have got used to, from the Opposition benches, in recent years.

Some teaser quotes:
  • On a career in politics – “It’s not a conventional career, where you can rise up and you can see your future stretching before you… In politics, it’s totally not predictable, and there’s so much luck, whether you happen to be in the right place and the moment opens up, but when you get the opportunity, it’s brilliant, hard, such a responsibility, such an honour.”
  • “Genuinely, I thought I’m in danger of having a midlife crisis – so therefore I should plan it.”
  • “One of the key things you have to do in politics is you have to be reaching out to people who need to be persuaded. And if you’re going to take the current situation, there are people who voted Conservative in 2019, who voted Labour in 2015 or 2010… Labour’s not going to win unless it persuades those people to come back. And if it sometimes sounds as if Labour is saying ‘you voted for the evil guys’… I mean, how bad, how reprehensible.”
Verdict:

An interesting exchange – indicating a man who has yet to tire of the limelight.

Title: The Brendan O’Neill Show
Host: Brendan O’Neill
Episode: David Starkey: Lockdown is the revenge of the elites

Duration: 58:29 minutes
Published: December 24

What’s it about?

In this jam-packed episode, David Starkey leaves you under no illusions around what he thinks of Boris Johnson – clue: it ain’t pretty – his government and lockdowns. What’s especially interesting, is that, despite vehemently opposing the Government’s pandemic measures, Starkey has a fairly no-nonsense approach to the vaccine hesitant – taking listeners through the reasons why he thinks libertarian arguments have failed here.

Some teaser quotes:
  • On Boris Johnson: “He doesn’t seem really to believe in anything very much… he lurches from one position to another; and…, as very often happens to people in power who don’t have strong views, he has been captured.”
  • “We’ve got a government that thinks it knows better than those who elected it, because it’s powered by a civil service, it’s powered by a judiciary, it’s powered by… various kinds of medical elites”.
  • “All the time we hear ‘the science says’. Science doesn’t say; science isn’t a device for manipulating popular opinion; science is speculative; science is hesitant; science debates. Instead it’s being turned into a weapon of propaganda and manipulation, and above all a gigantic alibi for incompetence.”
Verdict:

As with Gimson’s interview, you get your money’s worth – in terms of a large amount of insight packed into one episode. Starkey challenges stereotypical notions of what a conservative should support in terms of Covid measures.

Sarah Ingham: People voted to take back control of Britain’s borders – the time is well overdue for some political will

26 Nov

Sarah Ingham is author of The Military Covenant: its impact on civil-military relations in Britain.

This weekend brings the First Sunday in Advent, the start of the liturgical year in the Christian calendar.

For most of us, it signals that other annual rite – the Countdown to Christmas. Shopping! Santa! Sleighbells in the snow! And endless lists: cards to be sent, presents to be given, food to be shopped for. It’s little wonder that those responsible for producing lunch or dinner on the 25th collapse into a Quality Street-Netflix coma on the sofa on Boxing Day.

‘The more the merrier’ is the plucky response to the arrival of unexpected guests. It is Christmas, after all. Time to eat, drink and be merry. There’s plenty of room around the table (‘budge up’) and the garden chairs can be brought in from the shed. Extra roast spuds mean no-one will notice any shortage of turkey, but if it looks like guests might go short, FHB.

Family Holds Back brings us to the vexed issue of immigration, dominating the headlines again with the tragedy in the Channel on Wednesday.

Although immigration is an area of public policy that affects each and every citizen, governments throughout this Elizabethan age have allowed it to become so seemingly intractable that they have frequently appeared to give up on it – or to make maladroit interventions such as the Hostile Environment strategy.

Never mind the 2005 ‘Are You Thinking What We’re Thinking?’ series of election campaign posters, what on earth were the Coalition thinking in 2012 when it signed off the Hostile Environment as a good idea? In 2018, this was blamed for the Windrush Scandal, which continues to cause misery for those affected and blight the reputation of Conservatives.

Further entangling immigration with the always sensitive issue of race is not the most sensible way of resolving a problem which frequently troubles so much of the electorate. This concern peaked in 2014 and stood at around 45 per cent in the months leading up to the June 2016 Referendum, according to IPSOS-MORI’s regular Issues Index poll. After the vote for Brexit, voters were no longer so bothered. As an issue worrying them, it plummeted to 10 per cent in late 2019, the lowest level since March 2001.

This contraction of concern suggests that, while the association between race and immigration looms large in the minds of policymakers – often to toxic effect – most voters are able to decouple the two issues.

Indeed, the electorate could well suspect that invoking racism has long been a convenient if cynical means by which politicians close down any debate on the immigration, perhaps in the forlorn hope that the problem will go away. This was reflected by Gordon Brown during his mask-slipping encounter on the 2010 campaign trail with ‘that bigoted woman’.

In voting to end free movement of people in the Brexit Referendum, voters showed the country of origin of those people was pretty irrelevant. Belgium or Brazil or Benin, who cares? To paraphrase the PM, they issued their instruction: they wanted Britain to take back control of our borders.

Earlier this month, YouGov reported that immigration is once again back among on the public’s agenda, with 73 per cent saying the Government is handling the issue badly. Ministers must brave opponents’ inevitable if hackneyed accusations of ‘dog whistle politics’ (ironically, itself a dog whistle for accusations of racism) and exert some political will.

Voters are alarmed, not just by the tens of thousands of migrants landing on Britain’s beaches in the past year, but by the latest terrorist attack in Liverpool on Remembrance Sunday. The suicide bomber, a failed asylum seeker, was able to game the deportation system for seven years, not least by faking conversion to Christianity. Adding to disquiet is what appears to be an act of hybrid war against the West: the recent weaponization of migration by Belarus, who encouraged migrants illegally to enter the EU via its borders with Poland and Lithuania.

In squaring up to confront immigration, ministers could do worse than re-read the 2019 General Election manifesto. Even the most hardened Corbynista could not object to a system that aimed to be ‘firm, fair and compassionate’. The current apparent free-for-all is grossly unfair to almost everyone apart from people smugglers, but especially to the 27 migrants who drowned off the French coast on Wednesday.

With net migration to the UK standing at 313,000 in the 12 months to March 2020, policymakers should be asking themselves whose quality of life worsens thanks to the current unplanned mess. Hint: it’s not, for example, the residents of Surrey’s ritziest gated communities, who can access private schools, private hospitals, private dentists, private doctors, private carers for their old age and private security guards. Former Prime Ministers with extensive property portfolios also escape the adverse impact of too many people chasing too few resources.

To permit such massive influxes from overseas without providing commensurate public services is have spent the past two decades expecting the vast majority of the British public, whatever their ethnic background, constantly to budge up. Successive governments have not bothered to get in the extra spuds; Family Holds Back seems to have been the overarching policy response – if one indeed exists.

The Conservative party is the party of immigrants, many living the British dream who make a positive contribution to the country. Despite missteps like the Hostile Environment, we are the party of hope, not hate.

The time is long overdue for a government with a near 80-seat majority and a Cabinet which includes Sunak, Patel, Javid, Zahawi and Raab, not to mention ministers Sharma, Badenoch, Cleverly and Kwarteng to take control of immigration

Ryan Bourne: Don’t write off the Budget. It showed that the Treasury is taking incentives and tax coherence seriously again

3 Nov

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Before George Osborne’s 2013 Budget, his biographer, Janan Ganesh, wrote a revealing column for The Financial Times. “The Treasury regards Labour’s call for a fiscal loosening as dangerously wrong but at least coherent,” Ganesh explained. “It is some of the Tory right’s proposals for growth – such as tax cuts financed by deeper spending cuts, so that there is no actual overall stimulus – that really mystify.”

That raised alarm bells among those of us who think lower tax rates enhance a country’s growth potential. Osborne’s Treasury saw tax cuts as mere “demand stimulus,” on par with additional borrowing for government spending. It apparently did not think or did not understand that tax rates had important incentive effects for the economy’s supply-side: that people’s marginal rates (the proportion of additional income given up in higher taxes or lost benefits) influences their willingness to work, earn more, or invest in human capital, all affecting potential GDP.

That shone through into policy too. Osborne worried little about 1.5 million more people getting dragged into the higher income tax bands, or about the incentive effects of his new child benefit withdrawal reform, or about extremely high effective marginal rates within the novel Universal Credit system. The combined tax and benefit code got shot to bits with perverse incentives right across the income spectrum.

Rishi Sunak’s Budget last week is no classical liberal document. In tone and substance, it really could have been delivered by Gordon Brown. And yet, there were signs his Treasury is taking incentives and tax coherence seriously again. Though the overall tax burden is projected to rise to its highest level since 1949, Sunak extolled principles that point to the possibility of meaningful pro-growth reform of how revenues are raised.

The first indicator was the decision to lower the Universal Credit (UC) taper rate from 63p per £ to 55p. Sunak sold it, rightly, as an effective marginal tax rate (MTR) cut for those on low incomes, improving their incentive to work or earn more.

When you add in income tax and the new higher employees’ NICs rate, the effective MTR faced by UC recipients earning above £12,750 will fall from just over 75 per cent to 70 per cent in 2022. The MTR cuts the policy delivers for people moving into work or on lower income levels will be higher still.

For families with two children and no rental costs, in fact, marginal rates will fall for all earning around £6,000 per year to just over £30,000 per year (although the lower taper naturally raises the numbers of people on UC’s higher MTRs further up the income scale).

As the Office for Budget Responsibility concluded, these changes “can be expected to increase the labour supply of those affected – with evidence suggesting the most significant effects are likely to be in bringing non-working mothers into the labour market.” And if Sunak is convinced of the distortionary impacts of high marginal rates, there is plenty of low hanging fruit to attack in future Budgets.

There’s Osborne’s “high income child benefit tax charge” that, due to child benefit’s withdrawal, will raise effective MTRs for individuals earning between £50,000 and £60,000 with three children to as high as 68.25 per cent in 2022.

There’s the tapering of the income tax personal allowance, which will create an effective 63.25 percent marginal tax rate for those earning between £100,000 and £125,140.  There’s the marriage allowance penalty for those moving into the higher income tax bracket, which can result in a cliff-edge marginal rate of over 2,800 percent.

And, of course, there’s more people being dragged into higher income tax bands. The number of higher rate and additional rate taxpayers has increased by around 1.2 million since 2010. From 2022, the base combined MTR (income tax plus employees’ NICs) will be 43.25 percent and 48.25 percent for 40p and 45p income tax ratepayers.

Smoothing all these high rates out would have less support than the UC changes, as they are “non-progressive” reforms. But Sunak’s argument makes the intellectual case for action. What’s more, his Budget reform of rationalising alcohol duties, a domain usually of interest to just a few tax experts and academics, shows he is not afraid to improve the code in politically non-salient areas.

The old alcohol tax system was a complete mess, with the tax rate per unit of alcohol completely unmoored from “pricing in” the worst social costs of drinking. Under Sunak’s reforms, the number of duty rates is reduced from 15 to 6, with rates progressively increasing in steps with alcohol content. Yes, there are anomalies: cider is more lightly taxed than wine, spirits, or beer. But overall the system is more coherent, with less distortions, and the highest tax charges well-targeted at genuine high-strength “problem” drinks.

It’s the rationale behind prioritising this which is perhaps most intriguing. Nobody was spoiling for alcohol taxation reform as a Budget demand. I doubt it’ll affect how many people vote in the next election. This was good, old-fashioned policy change – making economic improvements to the world without any large direct political rewards. And if Sunak is willing to reform a whole area of taxation in this Budget, might it signify his intention to live up to the portrait he has of Nigel Lawson by reforming another at each future Budget?

Some free-market friends will regard this as a glass half-full take. Though Sunak talked about how he aims to deliver actual tax cuts in future, for now that is rhetoric against the reality of a historically high tax burden and the ever-growing demands of an aging population.

The interesting thing about both the Universal Credit and alcohol changes though are that they actually added to the deficit – the former eventually costing £3 billion per year and the latter being greased with a one year freeze in alcohol duties.  As with the sensible reform of business rates to more frequent revaluations, this highlights a truth I’ve outlined here before: any tax reform worth doing usually requires at least a temporary tax cut to ensure there aren’t too many losers who kick up a stink.

Given the Chancellor is hemmed in by spending demands and needs a more efficient economy to ease the pressure, pro-growth tax reforms that broaden bases and reduce marginal rates become even more important. If Sunak really does intend to ease the tax burden in the coming years, I’d say this Budget suggested that he will prioritise targeted cuts towards greasing the wheels for meaningful, lasting reforms. That would be a welcome change given the legacy of recent Chancellors.

Georgia L. Gilholy: Gordon Brown is right. Legalising euthanasia would spell disaster for the vulnerable.

22 Oct

Georgia L. Gilholy is a Young Voices UK contributor.

Today Lady Meacher’s Assisted Dying Bill will receive its second reading in the House of Lords. As they stand, the plans aim to legalise physician-assisted suicide for patients with a terminal illness and who can be “reasonably” expected to die in less than six months.

Over the past few days, numerous faith leaders including the Archbishop of Canterbury, the Chief Rabbi of the Commonwealth and even former Prime Minister Gordon Brown have spoken against the move, and they are right to do so.

While much of the assisted suicide lobby seems genuinely motivated by the noble cause of reducing harm, jurisdictions, where the procedure has been legalised, show that this is rarely the overall result.

There are two main types of assisted death, and those that end the lives of those experiencing “pain and suffering” are termed euthanasia. Assisted dying generally describes the ending of a patient’s life by a medical professional.

Assisted suicide, though technically a form of assisted dying, involves a medical professional handing a patient the chemical toolkit to end their own life. The narrative of mercy may dominate campaigns to legalise both these procedures, but all too often airbrush their grim reality.

Dr Joel Zivot, a physician who researched the autopsies of over 200 executed US prisoners, has emphasised how the common assisted suicide method of ingesting pills can be “horrendous” and often leads to a paralysing injection being administered “because many individuals are not able to swallow”.

In a process Zivot has described as akin to drowning or being strangled, the patient’s ability to move or breathe is gone, but they are not blocked from potential awareness. This gives the false impression of a person’s ease and consent, while the final moments of their life are characterised by excruciating pain that is in no doubt exacerbated by the psychological distress of physical and verbal paralysis.

This dystopic step has already been banned as part of capital punishment in most US states that still permit the penalty, due to its obvious cruelty. It however remains a staple of assisted dying in the “liberal” state of Oregon, whose framework the Meacher Bill proudly models itself on.

While the Meacher Bill itself does not acknowledge a role for doctors to take over and end life when complications occur — as they do in from 15 per cent to 25 per cent of cases in Oregon — how long until it is suggested that the law be expanded to facilitate this role? How many doctors will do so without fear of an autopsy revealing their criminality, given that the cause of death will be predetermined?

If the supporters insist that the procedure only be legal when consent is given, why do they laud a system in which consent can surely not be truly secured, as so many patients are entirely deprived of their senses while their mortality is set in motion?

In any case, we are wrong to assume that consent and choice are free-floating values, magically disconnected from social realities. Almost all of our choices, from the trivial to the life-altering, are influenced by external factors, including the people we surround ourselves with, and these influences are almost always exaggerated depending on the gravity of the decision we face.

A report published this year by the Oregon Health Authority demonstrated just this. In a study that examined the state’s policy of medical assisted death from its introduction in 1998 to 2020, it was found that out of all patients who underwent an assisted suicide in 2020, over half were motivated by concerns that they were a “burden on family, friends/caregivers”.

Is it hardly a leap, therefore, to suggest that stresses over social and economic support are an overwhelming factor in the majority of assisted deaths and that shoehorning in the policy as another “form of treatment” NHS doctors are obliged to offer the terminally ill at a time of increasing socio-economic crisis would open the door to certain disaster?

Another, disturbing side to this factor is the threat of pressuring vulnerable people to end their lives, and the inadequacy of busy doctors to detect social manipulation and coercion that families and partners wishing for a death they think will work to their financial or social advantage or even doctors who themselves come to see it as merciful to kill.

Indeed, as Professor John Keown, of Georgetown University, explored well over a decade ago, courts in the Netherlands already hold that just as the “relief of suffering” can justify voluntary requests for euthanasia, it can equally justify the termination of those who are in no position to give voluntary consent.

There are also plenty of patients who may simply come to see it as their duty to end their life as they become “too” old, ill or depressed, and will opt for an assisted death due to an internal sense of guilt and obligation. The Meacher Bill itself would not permit such an individual a voluntary death unless a doctor could estimate that they were in six months of death, but given that such legislation has been expanded in almost every jurisdiction where it has been permitted, this Bill if passed, would surely be no exception?

Although, unlike in the Netherlands, Belgium and elsewhere, the Meacher Bill outlines strict preconditions for assisted suicide that do not include “suffering”, it is clear that the thrust of the euthanasia campaign is based on the premise that this is the reason why the practice must be legalised.

Ask the average supporter why they support the procedure, and their first answer will probably revolve around helping people escape pain. Even the article in which The Sunday Times announced it would be campaigning on behalf of the Meacher Bill, led with the claim that it aims to stop “unbearable suffering”.

So either campaigners for the Meacher Bill are arguing — quite irrationally — that mental and physical anguish only qualify as “unbearable” when a patient has a terminal illness likely to kill them within six months, and whom can give “voluntary consent” — the conditions for assisted suicide the Bill sets out — or these more moderate plans are geared toward getting their foot in the door by ensuring we first accept that assisted death is legally and morally permissible before they can then argue that it ought to be expanded? Alas, whether naivety or dishonesty is to blame, they must be stopped.

Given that any measurement of suffering and pain is somewhat arbitrary and subjective, how can one comfortably claim that the anguish of grief or clinical depression, for example, is less painful than an injury or physical disease? These sensations cannot be measured in litres or decibels, and every person reacts differently to them.

It follows that the natural result of permitting state-sanctioned suicide due to ‘suffering’ is the extension of the permission for any person who judges themself to be suffering sufficiently to feel suicidal, whether it be a 90-nine year old with terminal cancer, or a 14-year-old girl starving herself due to anorexia. The question of obtaining “clear” consent also persists in both situations. Is it even possible for a person with clinical depression, or say, a depression prompted by a major disease, to make an uncompromised choice to pursue death?

This is already a reality in places many Britons are so apt to envision as progressive paradises. In October 2020, a healthy 90-year-old Canadian named Nancy Russell ended her life by euthanasia after stating she wished to die rather than endure another Coronavirus lockdown.

Canada’s Bill C-7, passed in March, further opened up euthanasia legislation to people of any age with disabilities or mental health conditions. Belgian law allows euthanasia if the patient is in a state of constant physical or psychological pain; while in the Netherlands doctors can secretly sedate patients who have dementia before euthanising them, and euthanasia for anyone over the age of 16 is legal.

Already, throughout the pandemic, we have seen elements of the health system betray the dignity and right to life of persons with disabilities or mental conditions by issuing “do not resuscitate” orders without consulting patients or their families.

These decisions were not just likely to have been unlawful, but are directly connected to several deaths, including that of a 58-year-old woman with schizophrenia and a deaf man in his sixties. If our strained system has lowered itself to this point while healthcare professionals are still legally required to preserve life, what will be the knock-on impact of further cheapening the regard for human life, and the Hippocratic oath, by legalising assisted death?

I do not doubt that most euthanasia campaigners are likely motivated by a genuine desire to reduce suffering, but I believe they are misled about what the true impact of this legal and cultural watershed would be.

There are, obviously, a small number of compelling cases that make it easy for people to support the theoretical liberty of euthanasia, however, it is right that a small fraction of individuals in exceptional cases not be permitted to legally access assisted suicide if by doing so we would put vast swathes of vulnerable people at risk of unwanted and unwarranted deaths. The hypothetical liberties of a select few cannot be permitted to trump all other considerations.

John Redwood: The EU has become the biggest threat to the Union of the UK. Lord Frost must move swiftly to protect its integrity.

18 Oct

Sir John Redwood is MP for Wokingham, and is a former Secretary of State for Wales.

The Government is strongly in favour of the Union of the UK. So is the Official Opposition. Scotland held a referendum and voted to stay in the Union. At the time all parties agreed it would be a vote for a generation, though the SNP now wobble over the desirability and timing of a much earlier re-run of the vote they lost. The rest of the Union has not campaigned for a vote about their membership. So why is there such nervousness about the subject?

The biggest threat today to the Union comes from the EU. There is a strand of EU thinking that has surfaced in press briefings and the odd comment that says there must be a price to Brexit for the UK, and that price should be the detachment of Northern Ireland from the UK.

The official public line is the EU needs to insist on special governance arrangements in Northern Ireland to avoid goods coming across the border into the Republic from the UK that might not be compliant with EU rules and customs.

To make this difficult the EU chooses to interpret the peace Agreement governing the two communities of Northern Ireland as meaning there should be no border controls, though throughout the UK’s time in the EU there were VAT, Excise and currency controls governing trade between Northern Ireland and the Republic. These were largely handled through electronic means, and away from the physical border.

The UK has offered several ways in which it can make sure non compliant goods do not wander from NI to the Republic without imposing new border posts. Mutual enforcement of the rules would do it, with the UK authorities ensuring there is no passage of non compliant goods.

Electronic manifests for each consignment, to be inspected before arrival by EU officials, would do it. Trusted trader schemes where most firms were trusted to enforce the EU rules and avoid non compliant deliveries would do it. There has always been smuggling across the NI/Republic border, and there has been a long history of co-operation by the authorities on both sides to avoid it becoming excessive and to punish those who still try it. That will continue after the new arrangements.

The fact that the EU has rejected all these sensible proposals implies it does not want to solve the narrow issue of trade. It may be that the immediate objective is to divert large amounts of trade from GB/NI into Republic to NI trade. That is what is happening.

Faced with the EU blockage of simple GB/NI movement of goods in the way we used to enjoy, consumers in NI are being forced to buy from the EU via the Republic instead to get their deliveries on time. The EU is assisting a large diversion of GB/NI trade. This is expressly against the Protocol which rules out such a diversion in Article 16. The UK for that reason alone can legally change things unilaterally to stop this happening.

It may be that it is part of a wider EU plan to ensure more common governance of Northern Ireland with the Republic under EU control. The wish is to impose every regulation and directive on NI that the EU regards as important to its single market.

The remit of the single market is now very large, encompassing everything from environment policy to labour policy, from transport policy to energy policy, alongside the more normal definition concentrating on product standards and trade terms. The EU wishes NI to accept large amounts of EU law with no voice and vote in its making and no right to repeal or amend.

The NI Protocol rightly expresses strong support for the peace process, which is based on the mutual consent of both parties. The EU claims to champion this, yet fails to grasp the fundamental problem with its approach.

Its demand that it can legislate for NI and control many things in NI in the name of preserving the integrity of its single market does not have the consent of the Unionist population. Indeed the EU has united Unionists against its Protocol because they see the EU seeking to split NI off from UK law and NI consumers from GB suppliers, going well beyond its legitimate needs to police its trade.

The Protocol stresses at the beginning “the importance of maintaining the integral place of Northern Ireland in the UK’s internal market”. The EU is doing the opposite. It says “This Protocol respects the essential state functions and territorial integration of the UK”. It does not feel like that to many in NI.

When the UK challenges the EU over its wish to govern Northern Ireland in a different way to the rest of the UK, the EU asks why the UK keeps on going on about sovereignty. If it wishes to show sympathy for Northern Ireland and wish to understand the nature of the problem it needs to grasp that sovereignty as at the heart of the issues long dividing the two communities. The EU’s view of it does not work for the Unionists.

The UK government needs to see off this needless threat to the Union by insisting on UK control of GB/NI trade as is required under the Protocol. People in NI have to be free to have easy access to products available elsewhere in the UK within our internal market.

The EU should take up one of the many generous schemes the UK has put forward to ensure full co-operation to avoid non compliant products passing on from NI to the Republic. Lord Frost needs to move swiftly now, as much damage is being done to the view of the EU amongst the Unionists and much trade is being diverted against the wishes of the public and against the words of the protocol.

Meanwhile in Scotland the SNP say they want an early referendum, but not one yet. Doubtless they are watching opinion polls which still do not show a clear window for majority support to reverse the last referendum result. Many Scottish voters want to get on with their lives without further uncertainty over this issue, and many want to see the SNP make devolution work to deliver a better outcome.

The UK government should not fall for the Gordon Brown line again that a bit more devolution will solve this problem. Brown’s passion for devolution gave the SNP a bigger platform and gave them the opportunity of a referendum on the Union.

Devolution did not end the matter as Brown promised. UK Ministers who are keen to buttress the Union need to show by their deeds and words why the Union is good for all its parts, and need to govern wisely so people join in with their support.

Suggesting more powers for just one part of the UK in response to the campaigns of those who wish to split the UK is a bad idea. Voters wanting Scottish independence will not be won over. They will see it as a weakness by the Union government, and propose a further push to secure full independence.

If it is right for the Scottish Parliament to have more powers, what is the stopping point in powers before you reach independence? How would you draw a stable and defensible line? The way to defend the Union is to stand up for it, and to show how the Union powers are benefitting all its parts.

Howard Flight: It’s time Conservative MPs opposed the Treasury’s spending bandwagon

11 Oct

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

It is particularly disappointing to see the Prime Minister and Chancellor abandoning Tory tax principles. While the Treasury pulled the right levers during the Covid crisis, allowing government spending to rise to keep the economy afloat (and avoiding a crash), it is now raising taxes too soon and arguably more than is presently necessary.

The key way to restoring the public finances is a strong and growing economy, itself leading to increased tax revenues. In the four months since the March budget, government borrowing has been £26 billion lower than forecast by the OBR. The Treasury should be letting things run and not risk stalling economic growth with tax increases or threatened tax increases.

We need a long-term strategic framework for the tax system, giving a clear map for both its structure and the target levels of key tax rates. In the absence of this and without strong control of public spending, the default position is higher taxes and more complications. What we need is lower and stable taxes, and minimum government intervention. Back to 1979, whenever they reasonably could, Conservative governments have cut taxes.

The main problem is the NHS; there will always be limitless demand for free goods. The Government needs to face up to this and copy France to install NHS charges at modest levels and with exemptions for low-income individuals. We need to examine the French, German and other European health systems to identify appropriate funding models.

When John Major took over as Prime Minister, NHS costs were £36 billion p.a. Last year the total was £212 billion, which included £60 billion of Covid expenditure. To meet the pressures of Covid, the Government is now spending an additional £36 billion over the next three years and an additional £5.4 billion in England over the next six months. I suspect this is more than is really necessary and is politically inspired.

History is repeating itself in reverse. Back in 2002, Gordon Brown’s budget raised National Insurance contributions to pay for a record increase in funding for healthcare. Boris Johnson then criticised the NHS, where he pointed out that other European economies’ health systems were doing better than the UK.

He criticised Chancellor Brown for setting his face against the experience of other countries. He pointed out that the provision of European health services outstrips the UK because they do not rely exclusively on a top-down health service.

Back in 2002 Johnson’s contribution was that is was all very well to treat the NHS as a religion, but it is legitimate for some of us to point out that it is letting down some of its customers badly.

NHS expenditure is by far the largest public expenditure – defence at £43 billion p.a., for example, is no where near NHS levels. Most of the NHS’s core budget is funding for spending on day-to-day items such as staff salaries and medicines. A significant reason for the huge increase in expenditure has been the increase in staff remuneration.

The announcement of extra funds for the NHS also comes without any clear plan of how the money is going to be spent. Alas, the likely outcome is that the extra funding will disappear into the “black hole”, causing subsequent increases in the NHS social care levy and taking the overall tax burden to still higher levels.

For those who understand and support the advantages of a low-tax economy, a new vision of the future is needed which must include a reformed NHS and care industry. In the short-term Conservative MPs should muster their strength to oppose the spending bandwagon and to support tax reductions where they can be found.

Politicians and civil servants need to relearn that the route to lower taxes lies in sustained economic growth and discipline on public expenditure – and the route to economic growth lies in lower taxes. The public spending announcements arose from the lack of clear strategic thinking in the Treasury, a failure to understand economic reality and too much input for short term political positions.