Sunak opts to suck it and see

25 Nov

We must be thankful that no-one is forecasting that Government borrowing will rise to record levels this year.  Or Rishi Sunak wouldn’t have been in a position to announce that Government spending will rise at its fastest rate for 15 years.

Apologies for the sarcasm – which isn’t aimed at the Chancellor’s measures, but is meant instead to provide an introduction to the thinking behind them.

One response to a ballooning deficit is to cut the rate of growth of spending.  That’s what the Coalition did after 2010, when the deficit hit seven per cent of GDP.

The Office for Budget Responsibility is forecasting a peak of 19 per this year.  But Sunak’s response is to raise the rate of spending.  Why?

Because in 2010 George Osborne judged the deficit to be structural (he was right), and his successor judges this one to be exceptional (he’s right, too).

It is almost entirely a product of the pandemic and what has followed.  It is in this context that the OBR forecasts the economy to shrink by 11 per cent this year and unemployment to hit 2.6 million next year.

In these circumstances, the Chancellor has found it impossible to produce the four year spending review he hoped for, and has been forced to issue one for a single year instead.

Furthermore, his statement was only one side of the tax and spending coin. Today, we got the spending.  In the Spring, we will get the Budget – and the tax.

Given all this, it will be very odd if Sunak turns up then with large-scale tax rises to raise revenue quickly.  The foundation of his measures today appears to be: suck it and see.

Broadly speaking, the spending package suggests that the Chancellor is going for growth.  That’s the logic of the infrastructure spending, the coming review of regulation, the new northern bank and the enlarged Restart programme.

The Levelling-Up Fund is a classic Treasury exercise in the English centralist tradition, with its central feature of bids from the provinces to Westminster for money.  So it is in a country with relatively few local taxes.

On that point, Sunak announced “extra flexibility for Council Tax and Adult Social Care precept”.  Local authorities will like that, council taxpayers not so much.

It’s worth stressing that the OBR’s forecasts, like all such animals, shouldn’t be taken too seriously.  Our columnist Ryan Bourne debunked its record on this site earlier this week.

If you walk down the sunny side of the street, you will smack your lips at the thought of a Roaring Twenties effect, as employment recovers, consumers spend, the hospitality sector booms and people pile into holidays abroad.

And it may be that post-Covid changes even out for the better, with a shift in activity and spending from city centres to the suburbs and countryside, together with music, art, theatre and all the rest of it.

That might not be such a bad things for towns and their centres, at which the new Levelling Up Fund is partly aimed.  Our columnist James Frayne believes they are a core concern for provincial voters, and government listens to him.

If on the other hand you stick to the shady side, you will point to the economic equivalent of Long Covid: fearsome economic and social bills for damaged mental health, postponed operations, lost educational opportunities.

All that is a big minus for levelling-up – because it’s the disabled, poor and disadvantaged who have been hit hardest by restrictions and lockdowns, especially if they work in the private sector.

The background in recent years is not encouraging.  Since the financial crash exploded, we haven’t grown at more than 2.6 per cent a year.  That suggests recovery may be sticky.

Sunak’s persuasive manner, grip of detail and spare eloquence have served him well during this crisis.  Others holding his post would not have survived roughly ten major finance annoucements in less than a year.

It’s not as though he hasn’t sometimes had to recast his plans – as in October, when he pumped more money into his Job Support Scheme.

And if the economics of his strategy are straightforward enough, its politics was sometimes a bit odd.  If the Government’s overall plan in the short-term is expansionary, why raise the minimum wage but curb public sector pay?

If spending on nearly everything else is rising, why crack down on the 0.7 per cent aid spend?  Doing so because you think aid is wasted or the target is wasteful is one thing.

But that wasn’t the basis of Sunak’s decision – since, after all, he said that the Government intends to return to 0.7 per cent “when the fiscal situation allows”.

The Chancellor also left a big unresolved question hanging in the air.  What will the Government do about the Universal Credit uplift?  Will it be extended or not?

The sense of a statement with contradictory messages was picked up Rob Covile of the Centre for Policy Studies.  (The Treasury would do well when the Budget approaches to look at its supply side ideas.)

“Feels slightly like Treasury couldn’t decide whether the message was ‘tighten belts’ or ‘we’re still spending’,” he tweeted. “So we’re getting two or three minutes of each in turn.”

That first element in the Chancellor’s statement, plus the OBR’s horrid short-term forecasts, comes at a bad time for the Government.

For tomorrow, the toughened tiering details are announced. Lots of Conservative MPs won’t like them.  The detail of which tiers apply in which areas will be published, too.  Many Tory MPs will like those even less.

Graham Brady, Steve Baker, Mark Harper, and the Covid Recovery Group will say that the economic damage of restrictions is so severe that the Commons should not vote for more – at least, without an impact assessment.

They may not be alone.  “These measures may be a short-term strategy, but they cannot be a long-term one,” Jeremy Wright declared in the Commons during the recent debate on the lockdown regulations.

He and Edward Timpson (another ex-Minister) plus other MPs backed the Government but, sounded a cautionary note.

Will the prospect of vaccines be sufficient to rally the doubters round?  Or will they take a leaf from the book of Theresa May, who savaged the regulations during the same debate?

We shall see – but Ministers are not helping themselves by dodging requests for that impact assessment, urged by this site and others, and the subject of a dogged campaign by Mel Stride, Chair of the Treasury Select Committee.

All in all, Sunak is shaping up to go for growth.  Good for him.  Nonetheless, he must watch and wait to see how and when the economy rebounds.  Brady and company are less patient.

Andy Street: We must do more to save struggling town centres. Tackling business rates is a good place to start.

17 Nov

Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.

Our traditional town centres and high streets have faced unprecedented challenges in recent times. First, our town centres were impacted by the drive towards out-of-town retail parks. Next, the rise of digital shopping impacted, as doorstep delivery hit footfall.

Then came Coronavirus, and restrictions that have brought town centres to a juddering halt. Now, in what retailers call the “Golden Quarter” – the critical run-up to Christmas – they are coping with another month-long closure.

Through the Future High Streets Fund and Towns Fund, the Government is backing town centres, on top of the unprecedented support already shown for business throughout the pandemic. I believe that we must double down on this investment to secure the future of our high streets, but the challenge we face is also reliant on generating fresh ideas and local buy-in. It is not just about money – it is about how we spend it too.

While 2020 has brought unprecedented challenges, I firmly believe in the future of our towns and cities, and evidence suggests that many others do too.

During the Covid-19 pandemic, many reconnected with their local high streets. In lockdown, many chose to return to traditional butchers and grocers rather than face supermarket queues. When volunteers mobilised to deliver food to the vulnerable, it was often the local convenience store that provided a base, looking out for their regular customers.

And, when restrictions relaxed, people wanted to reconnect with town centres. Here in the West Midlands, Halesowen Town Centre saw the biggest bounceback in trade of anywhere in the country. Despite all the challenges, towns like this have a future because we are fundamentally a social species. After so long apart, we want to return as soon as possible to culture, to sport, to conferences – social pursuits that are so often in town and city centres.

However, it’s clear that investment is needed. Why? Our high streets matter. They matter because they are the heart of local communities. They matter politically, as they provide a tangible, visible sign of economic success. The Government recognises this, through its Towns Fund investment programme, as it seeks to “level up” the economy and reach out to former “Red Wall”’ areas. But we must think afresh.

Before Covid struck, we drew up our West Midlands blueprint to revitalise local high streets, the ambitions of which are even more pertinent today.

The blueprint aims to encourage a more personal shopping experience – the type you can’t get from a phone screen – while bringing local services into town centres, broadening appeal beyond retail.

We want to encourage more urban living in our town centres, which should also be the natural place for public services. The blueprint also aims to make our town centres greener and cleaner – with more opportunities to cycle and walk – and safe and secure with good lighting, proactive policing and CCTV.

Above all, strong local leadership must drive these ambitions, to build the partnerships and attract the investment needed. A key part of that leadership is pushing for a fairer tax system that levels the playing field between high street and online retailers.

Taxation remains a real issue. If a swift bounceback is evading us next year, then exemptions will be vital – but we must also tackle the long-term problem of business rates. They are simply outdated and, given the financial challenge we now face, the often-suggested online sales tax looks even more attractive.

Investment is also key to repositioning our high streets. In the West Midlands, we are putting millions on the table to back our blueprint.

Schemes vary in size from our £95.5 million investment in the Coventry City Centre South scheme, which will transform the City’s future, to £5 million towards a transformation of Kingshurst, in Solihull, creating a new village centre with shops, medical and community facilities.

Sometimes, it’s about removing eyesores that have blighted places for decades. The demolition of the Cavendish House office block symbolises that the regeneration of Dudley Town Centre is no longer a hope – it’s happening, thanks to regional funding. In West Bromwich, we are pulling down the hideous Bull Street Car Park, reclaiming the site to build new homes in the town centre – bringing much-needed footfall to existing businesses.

We’ve backed opening hotels in Walsall Town Centre and the heart of Coventry, and even helped bring an old rival from my John Lewis days, Marks and Spencer, into Sheldon’s high street in Birmingham.

Targeted investments like these demonstrate a confidence in the future of communities, and we are determined to do more locally. However, I want these investments to be a pilot for securing hundreds of millions from the Government’s Future High Streets Fund and Towns Fund. Across the region we have seen enthused communities, businesses and councils come together to work on their bids for this funding.

Perhaps the most ambitious of these is in the Black Country, where an energised Wolverhampton partnership is pitching for £48 million not just in the city centre, but crucially for high streets in Bilston and Wednesfield too. This funding would go alongside our own investment in the City’s future, like the £150 million new railway station and metro link which is nearing completion.

Elsewhere in the Black Country we have more towns in the running for game-changing investment – Brierley Hill, Bloxwich, Dudley, Rowley Regis, Smethwick, Walsall and West Bromwich – each with their own distinct pitch.

A great example is Brierley Hill – a traditional town centre that was badly hit by the opening of the huge Merry Hill shopping centre in 1990. Now we have the chance to reconfigure the town centre to open it up and ensure that shoppers visiting big retailers like Asda can easily access the rest of the high street. The extension of the West Midlands Metro into Brierley Hill will link it to the wider region.

Communities around smaller suburban high streets are grasping the opportunities of the Future High Streets Fun too. Erdington, in Birmingham, has a brilliant scheme designed not only to boost retail but to make the best of their assets, by opening up the historic Churchyard area to provide better, high-quality open space. They also want to turn the boarded-up Victorian baths into a job-creating business hub.

Too often the debate over “levelling up” is reduced to North versus South. Here in the Midlands, where the Red Wall was first breached, we are engaging with the opportunities to bring investment into our communities that will drive tangible, visible improvements.

The Government is putting in money. But as we plot our way out of the pandemic, it must be ready to double down on this investment, while enthusing communities to play a part in revitalising the civic centres they so cherish.

James Frayne: Perhaps the Conservatives should simply revert to being southern and posh

10 Nov

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

In my twenties, I took a serious interest in US politics and campaigns, naively coming to think of the UK and US as culturally similar. It’s an easy mistake: a shared history; mutual respect for each other’s institutions; similar attitudes to the free market, individual rights and the rule of law; overlapping tastes in popular culture.

But it’s a mistake nonetheless. When I lived and worked in Washington DC and New York City for a couple of years – theoretically culturally familiar places – I came to realise how utterly foreign the US is. While I love the US and believe they’re our closest ally, I’m culturally European. I’m now firmly of the view those people seeking to apply political and electoral lessons from the US to the UK are usually wasting their time.

As Nick Timothy pointed out yesterday in the Daily Telegraph, the idea that Boris Johnson’s conservatism is damaged by Donald Trump’s defeat is ludicrous – the two are cut from different cloth, despite persistent but silly commentary linking “Brexit and Trump”.

So I stress: those looking to learn lessons from the US are mostly wasting their time. But one important consideration does arise for British Conservatives.

This is the electoral danger of letting down the new working class voters who have flocked to Trump’s GOP and the Conservative Party respectively.

In the US, these voters are often called Reagan Democrats or sometimes Springsteen Democrats; in the UK, we tend to call them the “traditional working class”; either way, they’re the working class of industrial and post industrial areas. While their similarities stretch only so far, given the differing nature of British and American labour markets and industrial history, the theme of working class disappointment is relevant.

We shouldn’t over-simplify: there were many reasons why Trump won in 2016; aggressive cultural conservatism was only one of them. But Trump partly carried so-called “rust-belt” states by promising to bring back long-lost manufacturing jobs and heavy industry. In short, he pledged to bring back dignity to hard-up places. The fact that this hasn’t happened – despite a surge in the national economy – dented his re-election chances.

A reality check: it doesn’t appear that Joe Biden truly surged amongst working class voters, nor did Trump collapse. But they do appear to have shifted markedly away from him. Given his narrow lead amongst the working class – and indeed his narrow lead in rust-belt states, full stop – this shift was enough to cause serious electoral problems.

British Conservatives face a similar problem. No, they didn’t make the same sorts of promises to the traditional working class in 2019; they didn’t promise the equivalent of, say, bringing back coal and steel to the North of England.

But while “getting Brexit done” was the most important part of their campaign last December, “levelling up” has become the party’s central public narrative (Covid aside) ever since; it runs through almost all of their policy communications. Their promises to the working class are far less outlandish than Trump’s, but they’re arguably more defined by their promises because they’ve talked of little else.

Trump’s winning coalition was large, but it was shallow, because of its reliance on new voters with no history of voting Republican. The same is true here. The Conservatives’ 80 seat majority looks massive, but it’s also precarious because again it’s built on new voters with few loyalties.

While working class people will cut the Conservatives slack because of Covid, they’ll soon be asking what progress the Government has made for them. They will certainly not accept the opposite of “levelling up” – the further decline of their towns and cities (which is already happening).

Just like those long-term Democrats who asked whether shifting their votes to their historical economic and moral opponents was worth it after all, so those traditional working class Labour voters from the Midlands, North and the Coast will pose the same sort of question. They’ll ask whether the Conservatives were all talk. And as I’ve written before, Keir Starmer is a very different proposition for the working class than Jeremy Corbyn.

It’s reported today that Rishi Sunak has promised Northern MPs more resources and more attention in the post-Covid period, largely, apparently, in the form of new infrastructure spending. This is welcome. (Though what about other areas – not least the Midlands and the coast?)

But time isn’t on their side, and the task is huge. Unless they can offer meaningful social and economic progress in such places as Walsall, Wolverhampton, Derby, Rotherham and Oldham, they will be out. Yes, they’ll be able to blame Covid-19 – but so what?

In fact, such little progress is being made, with time rapidly running out, it will soon be time to consider whether the Conservatives should junk their presumed working class strategy and focus once again on the affluent South. And it’s possible that the party should indeed take the easy route, follow its heart, and go back to being Southern and posh; yes, I’m serious.

Where should the Conservatives focus? Infrastructure matters. Ultimately, however, improving the economy outside the prosperous South East will require radically improving education and skills at all levels – seeking to build new businesses and industries from this new base of skilled workers. But you’re talking of two or three Parliaments to see the fruits of any such decisions made now. The Conservatives don’t have that luxury.

Rapid progress will depend on being able to show town centres – and specifically high streets – have improved. This doesn’t just mean defending commerce; it means making town centres safer and more attractive and, crucially, fostering local pride. The Party should be throwing itself into this task. A useful immediate start to focus minds: use all those screens in the Cabinet Office to display figures from a Towns Dashboard.

Norman McKenzie-Richmond: A pro-business Government must reverse course on tax-free shopping

4 Nov

Norman McKenzie-Richmond is Chairman of the Together for Tourism Alliance  

As the country enters a new lockdown, the only certainty for businesses is that their struggle to survive will continue into 2021. Any lingering hopes of a ‘v-shaped’ bounce-back have disappeared as Covid-19 cases rise and the government attempts to bring the R-number back below one.

The impact of the second lockdown will be severe, Deutsche Bank predicts GDP could shrink by as much as 10 per cent in November, when the new restrictions take hold.

But unlike many on the pages of ConservativeHome, I remain optimistic for the future of the UK economy, perhaps not in the short term but certainly once we have adapted to and learned to live with Covid-19.

If the Government can successfully navigate the new post-Brexit order, then in a post-pandemic world we have the potential to demonstrate what a truly global Britain can be. Freed from the shackles of Brussels, there is no limit to what this country can achieve.

Which is why it’s so incomprehensible that the UK is about to embark on a path that could cripple large parts of the economy at the very time it is most vulnerable. On January 1, 2021 Britain will become the only country in Europe not to offer tax-free shopping to international visitors.

Some might think this is a niche issue affecting only high-end boutiques in the West End of London, but they couldn’t be more wrong.

The total annual spending by international visitors is more than £22bn. This ill-thought-out change will impact tourism, hospitality, and retail in every corner of the UK. With minimal consultation and even less scrutiny, the Government risks losing £10bn in tourist sales to our EU neighbours.

Emmanuel Macron is already seeking to capitalise on the proposed changes: the very day they come into effect the French will reduce the minimum spend for tax free spending from €175 to €100.

The numbers speak for themselves. Last year there were 40m international visitors to the UK, and they spent around £6bn in UK retail. That’s a massive contribution to an industry that employs more than three million people.

Then there is the travel and tourism sector. In the UK it provides 1.5m jobs, generating benefits in every region of the UK and £230bn for the economy. Foreign visitors that take advantage of tax-free shopping do pay VAT when they sleep in our hotels, eat at our restaurants and enjoy our arts, culture and heritage.

The UK has a unique global brand, its cultural and historical offerings are one of the key draws for foreign tourists. But tourists also love to shop, they are increasingly price-sensitivem and if they believe they can save money by shopping in Paris, Milan, or Amsterdam they will.

As we enter the uncertainty of 2021, the Government must ensure our tourism, hospitality, and retail industries are able to rebuild and compete with their rivals in the EU. It makes no sense to deliberately hobble key UK industries that provide millions of jobs and billions in tax receipts to the exchequer. Dropping the changes to the VAT Retail Export Scheme would protect jobs and provide a huge boost to the very parts of the economy that will help forge the new Global Britain.

Extending tax free shopping to EU citizens after Brexit would bolster the UK’s reputation as the destination of choice for tourists both in Europe and in the rest of the world. That’s why I have formed the Together for Tourism Alliance to campaign for the Government to drop the shop tax and protect thousands of jobs.

The VAT Retail Export Scheme is currently implemented through international visitors filling out paper-based forms at airports and ports as they leave the UK. Yet France, Spain, Portugal and Italy have already introduced fully digitised solutions to the VAT Retail Export Scheme.

If the government listens to our campaign and the proposed changes are reversed, the Together for Tourism Alliance stands ready to act as a partner for government to develop a fully digital end-to-end solution for the UK. This technology has already been developed by our private sector partners and could be implemented at scale with no cost to the taxpayer.

I decided to take a stand after my youngest daughter told me in September that she was about to lose her job because of the change to the VAT Retail Export Scheme. She explained that her job – and thousands across the UK – were now in jeopardy. I was in disbelief: How could a Conservative government, which I believed to be low-tax and pro-business, position the UK as the only European country without tax-free shopping incentives?

As the Treasury looks to navigate this period of immense uncertainty, there is an opportunity for it to undo something that will damage the economy when it is at its most vulnerable. It is the right thing to do. It is the Conservative thing to do.

Sign up to our campaign to Drop the Shop Tax.

Matt Vickers: I know from experience why the retail sector matters. So have your say on rates today.

30 Oct

Matt Vickers is the MP for Stockton South.

The debate around the challenges facing the retail sector, and particularly our high streets, isn’t new. Sadly, the current pandemic has only exacerbated the situation. As a former Woolworth’s employee and a keen Pic and Mix eater, I know only too well the high street titans who have been lost in this battle.

While the pandemic has left many industries in a state of flux, it has added to the challenges facing the retail sector rather than acting as the sole source of disruption.

Although we cannot deny that lockdown restrictions in the earlier part of the year were necessary to protect the health of the nation, they have had a devastating effect on the already dwindling footfall that many high streets and retail centres have experienced over recent years.

With people being asked to stay at home, more and more of them have turned to online traders to meet their needs. Complacency has meant that we have learned to live with online and physical retailers living in parallel. While we have known for some time, that online shopping has exercised a greater dominance, Covid-19, it feels, is giving online retailers full superiority.

From the incredible bum-wiping bonanza of 2020 that saw people stocks piling toilet rolls (which they probably still haven’t got through) to the huge demand for hand sanitiser, retail and supply chains were put to the test.

While recent figures from the British Retail Consortium show retail sales to September rebounded since re-opening in June, they remain significantly lower than sales at the beginning of the pandemic.

More worryingly, these figures indicate potentially permanent changes in consumer behaviour, since working from home has been normalised for many, and online sales continuing to boom despite shops being open. City centre retailers in particular have not benefited from increased footfall, as office blocks stand empty.

In less than six months, we have seen an industry worth nearly £400 billion, that directly employs three million people, encounter a seismic shift; the result of which could be hundreds of thousands of livelihoods destroyed.

While we have painted a bleak, yet sadly accurate picture of the retail sector, there are potential solutions to reverse the decline. If we want to see our high streets flourish once again, where our memories no longer drift back to a bygone era of nostalgia of what we have lost, we must be embrace bold, innovative and forward-looking policies.

The Government must cut the burdens that restrict business, and allow the entrepreneurial spirit to blow the wind of change through our high streets.

Our retail workers have been on the frontline in this pandemic, whilst others sought safety in their own home. They alongside our doctors, nurses and health professionals, are the key workers in this battle. And while they battle to supply us with the goods we require, it is sad to see that in recent times an alarming trend has emerged with the number shop workers being abused and assaulted increasing.

A recent British Consortium survey found that more than 400 retail workers face violence and abuse every day, often as the result of staff challenging shoplifters, or more recently trying to implement Covid-19 guidelines.

Locally, in my constituency of Stockton South, I have spent a great deal of time meeting retailers, and even worked a shift in a local Home Bargains (another past employer of mine). I have been delighted to hear how so many of them have benefited from the various support packages since this crisis began, whether that in question has been the business rates holiday or the world-leading furlough scheme.

There is that old adage, ‘the customer is always right’. But while that may be the case, there could be no customers without the staff that work so hard to keep our retail sector going. It really is an industry for the people and run by the people. It is our duty as policymakers to cultivate a supportive environment to ensure the industry has a thriving future.

An integral way in which we do this in the months ahead will be the biggest consultation on the issue that affects the industry most – a fundamental review of business rates and then publishing the terms of reference for the review at the Spring Budget. This call for evidence seeks views on how the business rates system currently works, what issues need to be addressed, ideas for change and a number of alternative taxes.

When the evidence and recommendations come in, we must listen, and we must do all we can to support the heart of the British economy. So have your say today.

Ryan Bourne: If you want to feed hungry children, don’t target food poverty. Aim to reduce poverty as a whole.

28 Oct

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

Covid-19’s initial economic impact fell disproportionately on those least able to mitigate it. An Institute for Fiscal Studies paper in July found that single parents, low educated poor households, and ethnic minority groups suffered the worst relative hit. Since then, workers in low-wage services industries such as hospitality, transport, and retail, have faced both the worst of unexpected job losses and uncertainty about their income.

With this unique shock, it is unsurprising that a welfare state built around previous experiences has exhibited failures in protecting against hardship. Falling incomes, especially for those without savings or access to government benefits, have consequences. The Food Standards Agency reports greater food bank use, self-reported hunger, and families eating out-of-date produce.

That context is why the Government faces intense pressure over extending free school meals during school holidays through Easter 2021. Given the uncertainty around the efficacy of other government support, you can see the temptation to follow the advice of Iain Martin, who proposes caving to Marcus Rashford’s campaign again. Give the “£20m, handshake with Marcus R on steps of Number 10 on Monday and Royal Commission into child poverty,” Martin tweeted.

That defeat might seem a small price to pay to end the optics of opposing meals for hungry children, regardless of any questions you might have about the realities, or the desirability of extending the government scheme. As Isabel Hardman writes, the belief that Conservatives are insensitive to “food poverty,” coming first in righteous anger over food bank use in 2010-2015 and now “free” school meals, has hung around the Conservatives for a decade, whether fair or not.

Martin’s short-term solution, however, neglects that campaigners won’t be satiated by extending out-of-term meal vouchers to Easter 2021. Rashford’s campaign’s ultimate aim, remember, is to implement the Dimbleby Review, which would double the number of kids on benefit-triggered free school meals by extending eligibility to every child from a Universal Credit household (an extra 1.5 million kids.)

Crossbench peer Baroness D’Souza is already pushing for out-of-term meal vouchers to become a permanent feature. Combined, that would be billions of pounds, year on year, not tens of millions.

Come next year, no matter the labour market’s health, the Government will face the same criticism. If much of austerity taught us anything, it’s that even when acute need passes, wrapping up programmess will renew accusations that Conservatives “want to starve kids” by “snatching” their lunches.

Milton Friedman’s warning that “there’s nothing more permanent than a temporary government programme,” in part stems from recipients’ aversion to losses. A Royal Commission packed with do-gooders who examine food poverty in isolation will bring further demands for spending and diet control.

That is why, I suspect, some Conservative MPs vociferously oppose the Rashford campaign. It’s not heartlessness, or even this specific extension they oppose, but the precedent and direction of travel. They can foresee the vision of government this type of reflexive policymaking and its paternalistic particulars end with.

The problem for them is that they are on a hiding to nothing in claiming this specific measure risks creating longer-term “dependency” or “nationalising children” if the public think today’s needs are real. Conservatives who believe in a small, limited state have to have answers —about what responsibility the Government should have in dealing with hardship, what tools it should use, and what its role should be for those falling through gaps.

After ten years in government and riding cycles of support for the welfare state, there’s a lack of clarity in the Party’s position, with a mix of preferences among its MPs for income support, service provision, civil society solutions, and combinations of the three. There is a clear, principled alternative vision of how to deal with poverty if the Tories want it. But it requires getting off the fence.

That alternative would say that “food poverty” is not distinct from poverty. Free school meal campaigners are broadly right that hunger is not usually caused by parental fecklessness.

Therefore, logically, food poverty largely results from insufficient disposable income for some families. If widespread hunger is evidenced, the debate should therefore be about whether benefit levels or eligibility are sufficient to meet basic needs—the goal of a safety net welfare state.

This type of limited support that trusts people to use top-ups for the betterment of their families is vastly preferable to a paternalistic state stripping us of responsibility, through demeaning out-of-term food vouchers akin to U.S. style food stamps.

In deep unexpected crises, the case for additional emergency income relief is greater. But if there really is a more structural problem of hunger, then it demands examining why wages plus benefits are insufficient to deliver acceptable living standards. Rather than just look at benefits then, we should examine living costs, too—the poor spend disproportionately high amounts on housing, energy, food, clothing and footwear, and transport.

My former colleague Kristian Niemietz wrote a free-market anti-poverty agenda back in 2011, which I’ve pushed MPs to adopt since. He showed that market-friendly policies on housing (planning reform), food and clothes (free trade), energy (ending high-cost green regulations), childcare (reversing the credentialism and stringent ratios), and cutting sin taxes to economically-justified levels could shrink poverty by slashing the cost of living for the poor, so reducing food hardship, homelessness and more.

Most of this agenda would require no extra spending or busybodying from government paternalists; some of the policies would bring the double-dividend of raising wages .

The Government has ambitious policies in a number of these areas. But why are they never linked to the poverty discussions? As they press for planning liberalisation, why is nobody highlighting how cheaper housing would lessen these tales of distress? Why is nobody identifying the discrepancy of some campaigning about food poverty while opposing trade deals that would make food, clothes, and manufactured goods cheaper, to the huge relative betterment of poor consumers?

Sure, there would be families who make bad decisions and find themselves in trouble, even in a world of cheap and abundant housing and an effective safety net.

But instances of poverty owing to lack of resources would be much lower and these thornier challenges (often stemming from addictions, loss, ill-health, criminality and more) are much better identified by local charities and civil society groups anyway, as Danny Kruger argued in the Commons last week in relation to hinger. Giving nearly three million kids “free” school meals year-round would be an absolute sledgehammer to crack any remaining nut.

In today’s emotive debates, it’s not enough to just oppose proposals when the need is perceived as urgent. Conservatives must be better at re-setting the debate on their terms—a task much easier if they held a clear vision of the role and limits of state action.

Simon Fell: Why there should be a permanent cut to business rates for retail

19 Oct

Simon Fell is MP for Barrow & Furness.

As Benjamin Franklin famously said, “in this world nothing can be said to be certain, except death and taxes.” Our business rates regime assures both: as a tax it is one of the biggest contributors to the death of high streets up and down the UK.

I see the consequences of this first hand in my own constituency of Barrow & Furness. Where once the high street was the beating heart of Barrow, the life is seeping away. Dalton Road, the high street in Barrow, was where local residents met up to shop, gossip and laugh. My constituency surgeries are full of residents and business owners telling me that something must be done.

And we must do everything possible to turn the tide. Covid-19 has hit the high street hard. But even before the onset of the pandemic, retailers – large and small – were struggling to cope with the ever increasing rise in business rates.

It is a regressive tax which is not fit for purpose. Since 1990, business rates receipts have increased from £8.8 billion to £27.3 billion in 2017/18, an increase of 210 per cent compared with a 75 per cent increase in inflation. The UK now has the highest property taxes in Europe, nearly double the rate of the next nearest country, and business rates is a large reason why.

It is a tax which hits hard-working business owners, it is a tax which is a barrier to investment, and it is a tax which costs jobs.

It imposes a double whammy on the high street too: we haemorrhage ‘anchor’ stores like M&S and Topshop which makes it harder to attract shoppers to our independent stores. Those independents are the plucky heroes of Barrow’s street scene and they thrive against all odds. We can’t allow them to pulled into the same downwards spiral.

This tax also hits the north hardest. New research today by WPI Strategy categorically proves that the business rates burden is highest in northern towns such as Barrow and Leigh. Using store data from the thousands of Tesco stores across England and Wales, the paper shows 75 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared to just 26 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.

The research shows that shops in the top 50 constituencies most burdened by rates have four times the business rates burden of those in the bottom 50. If the top 50 constituencies faced the same burden as those in the bottom 50, they would save £50 million a year.

It is even more important for constituencies such as mine that the Government does all it can to ensure retailers can survive and thrive. Retail makes up 25 per cent more of the job market in the North, Midlands and Wales than it does in London

During Coronavirus, retailers such as the big grocers, took on tens of thousands more staff to help feed the nation. The sector is also a stepping stone into the world of work for many people, offering apprenticeships for youngsters up and down the UK.

But retail provides more than simply an economic boon to northern towns. Shops play an important psychological and social role within neighbourhoods. They are often the only touch points for some of the more vulnerable members of our community.

Encouragingly, the Chancellor recognises the value of retail to our social fabric and economic prospects. At the start of the pandemic he announced that retailers as well as businesses in the hospitality and leisure sectors in England will not have to pay business rates for a year.

This was an extremely welcome move. There is further work going on here too: Town Deals and Future High Street Funds offer the chance to renew the high street and town centres like mine. But that renewal must be backed.

When the rates holiday comes to an end next year, we must continue to relieve the pressure on retailers. That is why I’m calling on the Government to introduce a permanent cut to business rates for retail. A 20 per cent reduction in the overall level of rates would make a huge difference to shop owners in towns like Barrow, Bury or Bolton. It would enable them to retain jobs, keep the doors open, and reduce the number of boarded up stores on our high streets.

Of all the low-hanging fruit available to the Government’s levelling up agenda, reducing business rates would be an easy win with an immediate positive impact.

Simon Fell: Why there should be a permanent cut to business rates for retail

19 Oct

Simon Fell is MP for Barrow & Furness.

As Benjamin Franklin famously said, “in this world nothing can be said to be certain, except death and taxes.” Our business rates regime assures both: as a tax it is one of the biggest contributors to the death of high streets up and down the UK.

I see the consequences of this first hand in my own constituency of Barrow & Furness. Where once the high street was the beating heart of Barrow, the life is seeping away. Dalton Road, the high street in Barrow, was where local residents met up to shop, gossip and laugh. My constituency surgeries are full of residents and business owners telling me that something must be done.

And we must do everything possible to turn the tide. Covid-19 has hit the high street hard. But even before the onset of the pandemic, retailers – large and small – were struggling to cope with the ever increasing rise in business rates.

It is a regressive tax which is not fit for purpose. Since 1990, business rates receipts have increased from £8.8 billion to £27.3 billion in 2017/18, an increase of 210 per cent compared with a 75 per cent increase in inflation. The UK now has the highest property taxes in Europe, nearly double the rate of the next nearest country, and business rates is a large reason why.

It is a tax which hits hard-working business owners, it is a tax which is a barrier to investment, and it is a tax which costs jobs.

It imposes a double whammy on the high street too: we haemorrhage ‘anchor’ stores like M&S and Topshop which makes it harder to attract shoppers to our independent stores. Those independents are the plucky heroes of Barrow’s street scene and they thrive against all odds. We can’t allow them to pulled into the same downwards spiral.

This tax also hits the north hardest. New research today by WPI Strategy categorically proves that the business rates burden is highest in northern towns such as Barrow and Leigh. Using store data from the thousands of Tesco stores across England and Wales, the paper shows 75 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared to just 26 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.

The research shows that shops in the top 50 constituencies most burdened by rates have four times the business rates burden of those in the bottom 50. If the top 50 constituencies faced the same burden as those in the bottom 50, they would save £50 million a year.

It is even more important for constituencies such as mine that the Government does all it can to ensure retailers can survive and thrive. Retail makes up 25 per cent more of the job market in the North, Midlands and Wales than it does in London

During Coronavirus, retailers such as the big grocers, took on tens of thousands more staff to help feed the nation. The sector is also a stepping stone into the world of work for many people, offering apprenticeships for youngsters up and down the UK.

But retail provides more than simply an economic boon to northern towns. Shops play an important psychological and social role within neighbourhoods. They are often the only touch points for some of the more vulnerable members of our community.

Encouragingly, the Chancellor recognises the value of retail to our social fabric and economic prospects. At the start of the pandemic he announced that retailers as well as businesses in the hospitality and leisure sectors in England will not have to pay business rates for a year.

This was an extremely welcome move. There is further work going on here too: Town Deals and Future High Street Funds offer the chance to renew the high street and town centres like mine. But that renewal must be backed.

When the rates holiday comes to an end next year, we must continue to relieve the pressure on retailers. That is why I’m calling on the Government to introduce a permanent cut to business rates for retail. A 20 per cent reduction in the overall level of rates would make a huge difference to shop owners in towns like Barrow, Bury or Bolton. It would enable them to retain jobs, keep the doors open, and reduce the number of boarded up stores on our high streets.

Of all the low-hanging fruit available to the Government’s levelling up agenda, reducing business rates would be an easy win with an immediate positive impact.

David Gauke: Covid-19. Conservative MPs should fear for their seats if they push for a Sweden-style policy – just as deaths are rising

10 Oct

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the recent general election.

Conservative MPs are restless. There is widespread disappointment with the Prime Minister, it is reported, with senior members of the 1922 Committee not just rebelling, but leading rebellions.

There are two sets of concerns about Boris Johnson. The first is that he is displaying insufficient grip, that he is a bumbling, incompetent figure unsuited to the role of Prime Minister at a time such as this.

The second is that his strategy on Covid-19 is wrong, and that he should be pursuing one that is based on living with the virus and allowing the economy to grow.

It would be fair to say that I am not a natural cheerleader for the Prime Minister but, on this occasion, I have limited sympathy for these MPs.

First, when it comes to competence, what exactly did they expect? I had plenty of discussions with my then colleagues about the attributes of the leadership candidates last summer. I do not recall anyone making the case that Boris Johnson would have a mastery of detail, or a command of the administrative challenges with which any Prime Minister has to deal.

They knew his limitations and were content to foist him upon the British people as their head of Government (a decision with which the British people were sufficiently content to give the Conservatives a big majority). I happen to think that Tory MPs and members should value competence in their leaders, but it is a bit late for that now. If competence was essential, there were always better options.

On the second complaint – that his Covid-19 strategy is too restrictive – there is a much stronger case to be made that this is not the Prime Minister for whom many voted. I touched on this in my last column on this site and it is true to say that he has not approached the Coronavirus with his characteristic carefree joie de vivre. But let us put ourselves in Johnson’s shoes.

He was widely criticised for locking down too late in March, with the consequence that, for a time, the UK was an outlier in terms of excess deaths. He is being advised that we are heading for a second wave of hospitalisations and deaths. The majority of scientists in this field, including his Chief Medical Officer, Chief Scientific Officer and SAGE, are calling for tighter restrictions. The devolved administrations are also going in that direction, and England taking a radically different position would put a strain on the union.

Yes, deaths remain low but they are rising. Let us not forget that on 23 March there were 48 Covid-19 deaths. Eighteen days later, 940 people died from it in the UK on a single day. An exact repetition is unlikely – treatment has resulted in lower mortality rates and cases are now disproportionately amongst the young – but, in all likelihood, we are going to see a substantial rise in deaths in the next few weeks.

It is true to say that the existing restrictions – let alone the new ones that will be announced shortly – severely diminish many people’s quality of life. It is very far from being cost-free. And there are alternative strategies put forward by a small number of reputable scientists. Serious people are making the case for the ‘Swedish approach’ and, for what it is worth, although very sceptical about this being the right answer, I happen to think that the Swedes got it right on schools.

However, I really do have to question their political sense of those Conservative MPs calling for the adoption of the Swedish approach,  The polling shows that further restrictions are popular – and that is before the death-rate starts to climb.

It might be callous to think about such matters in crude party political terms, but it is part of the job of a Party leader to calculate the implications of any policy. It is pretty obvious that the Prime Minister will have reached the conclusion that maintaining a relatively light-touch regime would leave him and the Conservative Party extremely vulnerable. The recent collapse in polling support for Donald Trump – especially amongst the elderly – should be a warning.

Just imagine the situation if, in a month’s time, deaths are running at several hundred a day after the Government had announced that, contrary to the advice of its scientists, it had decided to pursue a strategy of relaxing restrictions for England at the very point at which every other comparable country (and, indeed, every other nation in the UK) had tightened them.

It is hard to see how any Government, if it could survive, would come back from an approach that would be so spectacularly unpopular. Of course, the Prime Minister is not going to adopt such a strategy. And, on this point, I think that he will quickly see off his critics.

I can hear the counter-argument. “Lock down restrictions might be popular but they are economically disastrous. It is causing enormous damage to business which will soon feed through into people’s livelihoods. Conservatives should be prepared to take the tough decisions necessary to ensure we create wealth – even if unpopular. Without that wealth creation, everyone will suffer.”

By and large, I am usually sympathetic to arguments that put the economy first. Creating wealth is a pre-requisite to raising living standards (especially for the poor) and delivering high quality public services. And sometimes you have to take unpopular decisions – getting the public finances on a sound footing whilst maintaining a competitive business tax system, for example – in order to deliver that economic growth.

But there are a couple of problems with this argument. First, if the virus takes hold, it will not matter whether pubs have to close at 10pm, 11pm or 12pm. People will not want to go to the pub or restaurant, cinema, shop or office. Most of the economic damage caused by a virus is driven by people voluntarily changing their behaviour.

Second, if Conservative MPs are worried about the economy and business-damaging policies that will damage the UK’s capacity to create wealth, some of them might want to have a think about what they have been doing for the past four or more years in terms of our relationship with the European Union. They might also consider that, when it comes to the long term health of the UK economy, ensuring that the UK has a sensible deal in place before the end of the transitional period would be a better focus for their energies.

Hugh Osmond: Why care homes, schools and workplaces – and not Eat Out to Help Out – have boosted the resurgence of the virus

7 Oct

Hugh Osmond is an entrepreneur.

It is an indictment of the state of statistical rigour and numeracy in politics that a recent article by Ryan Bourne on this site about the wisdom of the Eat Out to Help Out scheme is gaining traction in some circles, without critical examination.

The thesis of the article is largely based upon one single chart produced in a recent Public Health England surveillance report, reproduced below, which shows events and activities reported by people testing positive, in the 2-7 days prior to symptom onset.

As we can see, a lot of people report that they had eaten out in the previous two to seven days, from which Bourne concludes that restaurants are a likely source of infection.

While a superficially attractive explanation, my O-level maths teacher would certainly have ejected me from the class for making this deduction without supporting evidence. So, before jumping to conclusions, here are a few important questions:

1. Given we know that approximately 50p out of every £1 spent on food in the UK is now spent eating out, is it surprising that 12,734 people out of 45,087 remembered going to a restaurant in the previous two to seven days? Does this fact therefore convey any information at all about where infection occurred?

2. Would this chart look any different for all the people who didn’t test positive that week? Or indeed from a cross section of the population of similar age and social profile to those who were tested?

3. Does this chart just represent a list of what you would expect a group of 45,000 people to remember doing in a week?

Without troubling the statisticians, I think we can answer a likely no to both parts of (1) and (2) and a very likely yes to (3). Which it makes it pretty much game over without further analysis.

But the article then goes on to make an even more egregious assertion. Faced with a chart showing that very few named contacts occurred in restaurants, it asserts: “But this is misleading. People don’t know strangers in restaurants to give them as named contacts.”

I confess I read this twice wondering if it was a joke. After all, we all know that restaurants are entirely full of people sitting on their own or randomly at tables with people they don’t know the names of. No, we don’t – I have been in the restaurant industry for more than 35 years, and can safely say I am confident that most people who visit restaurants sit at tables with people whose names they know – certainly by the end of the meal if not at the start. In fact, I would hazard that it is no more likely that you sit in a restaurant with people whose names you don’t know than you live in a house with unknown guests.

I am prepared to accept that, in a busy nightclub or stand up drinking pub, people get very close to strangers in poorly ventilated settings. But, in a sit-down restaurant with well-spaced tables and Covid-secure measures in place, I find the idea of mass infection by strangers from the table next door, facing the opposite direction, pretty hard to swallow.

The article gets worse as it next turns to the chart below:

Allegedly, this shows that incidents in restaurants grew significantly as a result of Eat Out to Help Out in weeks 32-35. (restaurants are the tiny purple bar). But if restaurants are a big source of infections, surely the big event would have been when they all reopened on July 4th? Or was the virus waiting to take advantage of Sunak’s special offer? After all EOHO added only maybe 10-20 per cent to sales, so one would expect to see the big surge after the grand industry reopening of pubs and restaurants on July 4th, followed by a small further blip up from week 32.

So, if restaurants are the problem, why can we barely even see the purple bar on the chart in the weeks following the grand reopening on 4th July?

No, all this actually shows is that, until restaurants reopened on July 4th, there were unsurprisingly no incidents in restaurants at all, and that, since reopening, a tiny percentage (three per cent – one in 30 – in the week shown) of incidents have been reported there.

“Significance” is entirely absent, as can be seen by comparing fluctuations in restaurant incidents with fluctuations in “other”. And why the fall in incidents in week 34, bang in the middle of EOHO, when you would expect to see the biggest effect? And why would these rise the week after EOHO ended and fall back in the following two weeks? In other words, total nonsense.

By contrast, as expected, what the chart actually shows (and all it shows in terms of significance) is that infections increased massively in care homes, educational settings and the workplace. Reprinted from the same report below of Acute Respiratory Incidents:

  • 772 new ARI incidents have been reported in week 38 (Figure 19).
  • 195 incidents were from care homes where 134 had at least one linked case that tested positive for SARS-CoV-2
  • 36 incidents were from hospitals where 31 had at least one linked case that tested posi- tive for SARS-CoV-2 and 1 tested positive for rhinovirus
  • 341 incidents were from educational settings where 222 had at least one linked case that tested positive for SARS-CoV-2
  • Six incidents were from prisons where 4 had at least one linked case that tested positive for SARS-CoV-2.
  • 124 incidents were from workplace settings where 102 had at least one linked case that tested positive for SARS-CoV-2.
  • 22 incidents were from food outlet/restaurant settings where 17 had at least one linked case that tested positive for SARS-CoV-2.
  • 48 incidents were from the other settings category where 22 had at least one linked case that tested positive for SARS-CoV-2.

Hmmm. 22 reported incidents in all food outlets and restaurants across the entire UK, out of 772 incidents in total; compared to 195 in care homes, 341 in schools and 124 in the work place. I mean, it’s obvious restaurants are a major source of infections according to the Government’s own report isn’t it? No. Actually, it shows that yet again, the major source of infections, and where they are by far the most dangerous, is in care homes.

In mathematical terms I could tell you that the statistical support for Bourne’s article’s hypothesis is zero. But that would be wrong: in fact, the statistical evidence points very strongly in entirely different directions.

Surprisingly to all of us in hospitality, there was absolutely no sign whatsoever of a rise in community infections following the reopening of pubs and restaurants on July the 4th; in fact, community infection rates continued to fall. I cannot explain this, but that’s what the data suggests. By contrast, the sudden jump in Week 37 is worst in care homes, then in educational settings and at work. Evidentially, this points the finger away from restaurants and instead at these other locations.

In other words, the data included with the article prove almost precisely the opposite to what was being suggested.

Finally (and it is not really necessary) I would mention actual transmission studies (as compared to theoretical contact tracing), most of which were conducted outside the UK, and which I don’t pretend are completely authoritative.

These indicate that secondary attack rates sitting a metre apart in a restaurant are around two to three per cent, compared to seven to 15 per cent (still low) in a household and potentially 60 per cent plus in a care home, hospital, ship or prison.

Although I do not have hard evidence for my next statement, I would suggest that, with social distancing and other Covid measures in place, this 1/50 chance of passing an infection on in a restaurant is now very much lower, further supporting all the other data suggesting that restaurants are not a common setting for infections.

In summary, the evidence and data all point the other way.