Emily Carver: Has Truss’s classical liberal vision just run head-first into the Red Wall?

3 Aug

Emily Carver is Head of Media at the Institute of Economic Affairs.

They say a day is a long time in politics, perhaps no more so than during a leadership campaign. Liz Truss’ team have been churning out policy ideas quicker than even the most industrious Westminster think tank could.

But announcing new and rather bold promises almost every day increases the risk of it all going a bit pear-shaped.

This is how the frontrunner has made her first major unforced error. Less than 24 hours after her team announced a policy for regional pay boards for the public sector, she canned it. Her U-turn comes after outrage from social media, the media, Labour, and Rishi Sunak’s supporters.

Truss quickly claimed that there had been a “wilful misrepresentation” of the proposal by critics. But this is only partially true.

Yes, the media headlines and Sunak’s campaign exaggerated that the plan would leave millions of nurses, police officers and soldiers £1,500 a year worse off;the proposal made clear that “any new pay scales would apply only to new recruits”, at least for now. Nor was the initial plan meant to apply beyond civil servants.

But the underlying idea – that public sector pay should begin to vary across the country – was very much printed in black and white. This was not helped by the Truss campaign’s media release using an estimate of savings that included savings across the public sector.

However, the proposal does make sense. It also fits with the ‘levelling up’ agenda, despite what Angela Rayner and others may say.

Public sector wages can dominate and crowd out the private sector in less prosperous areas of the country, and businesses often find themselves unable to compete with taxpayer-funded salaries. We also know that the cost of living varies depending on where you live. The average house price or rental in Cambridge is going to set you back rather a lot more than in Doncaster.

Why, then, should public sector workers necessarily be paid the same wherever they choose to reside? We’re already accustomed to London weighting.

Economists have argued for many years that there should be variations in civil service pay depending on regions. The same has been said with regard to minimum wages. On paper, it’s logical.

There is also a very strong case to say that the UK should abandon national pay bargaining altogether to give public services more flexibility. For example, if a school in Yorkshire is struggling to recruit a maths teacher, yet there is a surplus elsewhere, surely it makes little sense for the under-staffed school to be limited by national pay scales in what they can offer to attract applicants.

However, the Foreign Secretray’s shake-up would in reality be very difficult to implement, practically as well as politically. It would be tricky to deliver depending on aggregation level – do we decide by region, town, council?

However, for Truss, it appears the classical liberal motor is crashing into the Red Wall of reality. Her proposals may be sound, but the reaction demonstrates the scale of the challenge undertaking reform of the public sector would be, in regions where public sector jobs are often the most lucrative.

It’s pretty hard for her to maintain credibility that she’s the one to shake up “the Blob” when she immediately backtracks, explaining to the BBC that her reason for ditching the policy was that she was “concerned that people were worried”.

Some have pointed out that it was a bit of rogue move for Truss to, first, take such a risk when she’s miles ahead in the polls, and two, frame the policy as waging a “war” on Whitehall waste which can so easily be presented as cruel by her detractors.

But more fundamentally, announcing what could have been a flagship policy without full time to develop it, figure out potential criticisms, and ensure it is water tight, is a mistake.

And perhaps it was always foolish to shift beyond the country’s immediate and very visible challenges – inflation, energy costs and NHS waiting lists, to name a few.

The real question is how we boost productivity, and that’s where Truss’ strengths lie. She knows that lower taxes and less red tape are what businesses are crying out for. Plans to slash the number of diversity and inclusion jobs, for example, will also go down very well with Conservative members who are sick of taxpayer money going to expensive non-jobs.

One of the flaws of Boris’ leadership of the Conservative Party and the country was his propensity to u-turn – from windfall taxes to vaccine passports.

If Truss seriously wants to take on Whitehall and boost productivity in the civil service, she’s going to need the strength to commit to a policy, communicate it well and see it through. Weakness and ill-worded press statements are not an option.

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Nicholas Boys Smith: The Levelling Up Bill’s plan for housing and how it can be made to work

17 May

Nicholas Boys Smith is Director of Create Streets and Chair of the Government’s Office for Place.

“Was none who would be foremost/

To lead such dire attack:/

But those behind cried ‘Forward!’/

And those before cried ‘Back!’/

And backward now and forward/

Wavers the deep array;/

And on the tossing sea of steel,/

To and fro the standards reel;/

And the victorious trumpet-peal/

Dies fitfully away.”

Horatius, Thomas Babington Macaulay

Who would be in charge of planning reform and meeting our desperate housing needs? The next generation, cruelly shut out of the homeowning democracy, cry “forward”. Meanwhile the declining majority of us who are well housed, too often cry “back”.

The local politics are vicious: those who vote in by-elections, general elections and local elections vote “no”. And who can blame politicians if, just occasionally, they are tempted to listen? We all know the answer (build more houses) but, somehow, we never get there.

Meanwhile the lack of sufficient homes in good places clogs up the labour market, retards economic growth, probably makes us less happy (a theme for the forthcoming Restitch Summit) and even enhances the unsustainable weight we exert upon the planet.

Do we face the same fate as Lars Porsena’s calamitous attack upon Rome in Macaulay’s schoolboy epic, Horatius; of failing to achieve what should be blindingly simple? More than one politician has been cruelly speared in the melee.

There have been a quiver-full of White Papers and relevant Acts over the last 20 years. Can one more help? The latest White Paper, on Levelling Up, came in February and the latest Bill came last week, safely after the local elections.

It is more ambitious than some of its predecessors, less apparently radical than others and, for the first time, marries meeting housing demand firmly to the need to regenerate our “left behind” towns and places.

Will it go the way of all flesh, as too many of its predecessors have, or will it have a long-term impact? Here are some “in flight” comments on why the Bill matters and on what it says. Full disclosure: it is 338 pages long and I have certainly not understood them all yet. I’ve also written some of the papers that appear to have influenced it, so may not be entirely objective.

First some points on context.

  • Never forget that, for all its high ideals, the English planning system is highly regressive. Ambitious in its morals but anarchic in its mores, English planning speaks of progress but is regressive in practice. Its high risk, high up-front cost, discretionary model is almost unique in comparative terms, breaks pretty much all tenants of good regulation and has created an oligopoly. We have the most concentrated development sector with the smallest proportion of SMEs or self-build. The current system has rich defenders. Ultimately, they need to be faced down.
  • We need more homes. A smaller proportion of people born between 1981 and 2000 are homeowners, at this life stage, than for any previous generation since 1926. And their rent payments have increased from 10 per cent of net income 30 years ago to around 30 per cent now. This has enhanced generational inequality on a seismic scale. As Iain Macleod, put it: “You cannot ask men to stand on their own two feet if you give them no ground to stand on.” Is it surprising that the politics of so many of the educated urban young are becoming so flippantly revolutionary? What do they have to lose?
  • If we don’t fundamentally change the politics on new housing then we will never win. Michael Gove has coined a typically catchy acronym: BIDEN. Communities will support new housing if they are confident that it will be beautiful, have the right infrastructure, respond to local democracy, enrich the environment and support their neighbourhoods. This list is about right and is matched by my research into why people oppose new housing: there are many reasons but, at the heart, is a now inbuilt and firm cultural assumption that development will make existing place worse and carry a high level of risk for existing residents’ quality of life. 60 per cent of the public support more homes in principle. But only two per cent trust developers in practice. Only seven per cent trust planners. We shave a big problem and a generational requirement to ensure that fewer people fear development.
  • Big simple problems never have big simple solutions. And meeting housing need certainly does not. Like it or not, we cannot ‘turn off’ the current system or our reliance on volume housebuilders. The trick is trialling many new ways in which existing home-owners, small firms, community and neighbourhood groups and technical innovators can create new homes and good places without the disastrously high levels of risk, delay and the up-front costs that shut out most small builders or self-builders.

And some tentative points about the bill itself.

  1. The bill is trying to fix local plans. As the late Sir Roger Scruton and I observed in our final repot of the Building Better Building Better Commission, the current English plan-making system in England is broken. It is not reflecting local preferences, and is neither timely nor effective. 61 per cent of councils don’t have an up-to-date local plan. Too many plans are over-ambitious but repetitive, opaque and unclear. They have spiralled out of local political control. They don’t set clear requirements, but reserve the right to opine on an unpredictable case by case basis. This is the worst possible situation: the state’s involvement is not setting quality standards, but is acting as a barrier to investment and development. The Bill sets out at least four ways (and probably more) to improve local plans; by making them more clearly subservient to national policy, by making them quicker to create; by piloting ‘street votes’ to allow streets to vote on local intensification and by requiring more clearly visual statements of what is expected (‘design codes’) rather than unhelpful requirements for ‘good design’ which are a lawyer’s charter, and which too readily diverge from what people actually like and want.
  2. The Bill is more radical than it sounds. It does not “talk the talk” of radical reform but, make no mistake, these are potentially very big changes. As one planning barrister blogged last week, ‘it’s a radically different approach to what we have now.’
  3. The Bill is right to link housing and ‘levelling up’, but the sequencing is going to be very hard. The problem in the left behind neighbourhoods of our poorer regions is not lack of homes but lack of demand. The ‘economics of attraction’ are broken. The Bill will work if more people want to live, work, start businesses, and raise families in towns with little current “place attraction”; if people born there with “get up and go“ instead choose to “get up and stay.” Better transport, schools and places are all essential to re-starting that virtuous circle of place. It will not be easy, but only this will take the pressure off the Cheshams, Cheams, Chiswicks and Chelseas of the South. The path to housing affordability in Sussex and Greater London runs through Sunderland and Grimsby.
  4. As the Bill progresses the test must be: will it make it easier for more self-builders, local builders, market entrants, innovators and neighbourhood groups to create new homes and beautiful places? The Bill will work if it makes it far, far easier for the millions of people who own a home, or with enough wherewithal and capital to build one, to become part of the solution to our housing needs rather than part of the problem. We cannot continue to remain so dependent on so small a number of developers, experts at dropping boxes in a field (they call it ‘greenfield development’) or at erecting tower block leviathans in constrained former railway goods yards (they call it ‘brownfield development’). Our towns need to relearn how to intensify gently, gradually and beautifully more widely. And with neighbourly consent.

Let’s not kid ourselves. This is not easy. But one thing is certain: we need to find ways to work with local people not against them. More people need to cry “forward” not “back.” Over a generation, the assumption needs to become that new development will cherish the neighbourhood not despoil it. The problem is national. But the answer must be local.

Scott Benton: Ministers must seize this chance to put English football on a fair financial footing

31 Mar

Scott Benton is MP for Blackpool South

At the General Election, we promised to help people live more fulfilling lives by levelling up living standards and well-being across the country. We’ve since set ourselves the bold mission of increasing pride and celebrating the heritage of our local communities.

As we move forward from the pandemic, it’s time to get back to delivering on the promise we made to the country just three years ago. One way we can do so is by making sure our football clubs have a strong foundation and fair funding for the future.

Our English Football League (EFL) clubs – like my local club, Blackpool FC – are at the heart of so many communities; rich in cultural heritage and tradition, and central to local prosperity. More than a third of these clubs are in northern constituencies, where many now have a Conservative MP following the gains we made at the last election.

Across the country, 36 million people live within ten miles of an EFL club. They employ tens of thousands of people and can make a real difference to businesses in our local town centres and high streets.

Yet because of the unfairness and imbalance of football finances the vast majority of our great clubs are being pushed closer and closer to financial ruin. Just 20 Premier League clubs enjoying over £4billion more in income annually than the 72 EFL clubs combined

Blackpool are now enjoying being back in the Championship after some really difficult years, but we know all too well how vulnerable our clubs can be and how this impacts local communities pride and prosperity.

The financial gap between the Premier League and the rest is growing all the time, and becoming more and more unsustainable. My fear is that, if we do not act now, there is a real risk of more examples of proud English clubs being in financial distress – whether in Bury, Macclesfield, Portsmouth or, most recently, Derby.

Thankfully, the Government now has a chance to act and to show how the Conservative Party values our football clubs and the heritage and future of our great towns.

The Fan Led Review, chaired by my colleague Tracey Crouch, is a once-in-a-generation opportunity to deliver a financial reset that can protect clubs in our communities and across the country for the long term.

The two central recommendations of the report – introducing an independent regulator to ensure clubs are run properly, and ensuring a fairer split of revenue between the Premier League and the rest of the football pyramid – would make a major difference to clubs like Blackpool.

For example, if broadcast revenues could be split 75/25 between the Premier League and the rest of English football, as the EFL has said, it would help to halve the financial gap that currently exists between the top two divisions and wipe out the current operating losses of clubs in Leagues One and Two.

This would also eliminate the need for the existing system of parachute payments, which are paid to clubs relegated from the Premier League and make it ever harder for those without them to compete.

A recent report by Sheffield Hallam University found that clubs in receipt of parachute payments were three times more likely to get promoted than clubs without. The effect of this extra money is that it fuels unsustainable losses among rival clubs, who feel compelled to spend more in order to keep pace with their better funded rivals. The danger is that should owner investment dry up, clubs and fans are then left to pick up the pieces.

The dual approach, of a fairer economic model and the introduction of an independent regulator, needs to go hand-in-hand. It would ensure that football fans in communities across the country can be confident that their club is solvent and sustainable.

If we get this right, it can also be achieved without harming the competitiveness of our top clubs in Europe (the Premier League would still be the richest league in the world by some considerable margin) or top-flight football’s attractiveness to broadcasters or investors.

In the coming weeks, the Government will announce its response. I know that many of my colleagues, who have seen first-hand the damage our broken model of football finance can cause, will be joining me in urging the Government to seize this moment.

If we do, we can take another step in delivering on the promises we made to voters in 2019 and demonstrate what levelling up means for communities like mine. Better still, we can do so without any expense to the taxpayer.

Rob Loughenbury: Better housing is the key to making ‘Levelling Up’ a reality

4 Nov

Rob Loughenbury is the lead officer for Homes for the North (H4N), an alliance of developing housing associations campaigning for policies that will deliver more and better homes in Northern England, and Director of Strategy at Onward Homes.

Levelling Up. ‘A big idea in search of a policy’. I’ve never understood why some say this as a criticism. Surely it is a better starting point than having a policy in search of a big idea?

There is clearly work to do on defining and delivering Levelling Up before we see its benefits enjoyed by people, families and communities. But the clock is ticking on the next election and it is increasingly clear that voter experience of Levelling Up is a big theme.

This is why Homes for the North (H4N) commissioned opinion research, undertaken by Public First, into how housing and place features in public perceptions of Levelling Up.

We found that people support the principles of Levelling Up, albeit with a dash of scepticism about delivery. But the key finding is that people say visible investment in homes, neighbourhoods and high streets is a great way to make it real to them. It goes a long way towards defining their pride in the place where they live.

Our research included opinion polling and focus groups drawn from different parts of England. It was notable that Levelling Up is popular everywhere but for different reasons. In places facing bigger social and economic challenges, it means better housing and high streets. In places that are doing relatively well already, it means building new homes where there is greater need for investment.

80:20: the policy that makes Levelling Up impossible

So what would a Levelling Up policy for more homes in better places look like?

A good place to start is that it would not look anything like what we currently have. The under-publicised 80:20 rule results in Northern England being unable to access 80% per cent of key Homes England funding streams. The rule is a silent assassin of a spatial strategy that actively works against Levelling Up. Too few people seem to realise it even exists, which is why we did this research previously.

Most damaging is that 80:20 is applied to Housing Infrastructure Funding. Only four of the 72 local authorities in the North are entitled to bid on 80 per cent of the main programme of national resources for infrastructure to enable house building, including land supply, roads and drainage. The other 68 Northern local authorities must bid on a reserved budget of 20 per cent of national resources, along with other areas primarily in the Midlands and South West. As a result, the North gets around 12 per cent of this funding, despite having around 23 per cent of the population of England.

This approach could have been designed to do the opposite of Levelling Up. Even the Government seems to agree, previously saying it would scrap it. Nothing has happened yet.

Time for a housing spending strategy that Levels Up

Instead of 80:20, we need a transparent and comprehensive national strategy that targets housing and place funding where it will deliver Levelling Up.

H4N has created a Levelling Up Place Index that does precisely this. Backed up by original research, our Index ranks local authorities by the scale of opportunity they provide for building homes, widening home ownership, creating jobs, boosting GDP, and reducing inequality. We think this is a pretty good definition of Levelling Up and appreciate others will chip in with their own views on this point.

Simply put, our Place Index puts a spotlight on the places where the Government will get a better Levelling Up Return on Investment. This would be an essential correction to the cold logic of the Green Book and its narrow interpretation of Return on Investment.

As well as being applied to future housing infrastructure funding, our Levelling Up Place Index could tie together and coordinate the various place-based capital pots of money flying around, from the Levelling Up Fund to the Shared Prosperity Fund and everything in-between. A more coordinated approach to these very welcome funding streams will yield greater results per pound spent.

Our proposed methodology and evidence base are transparent. We concede that they can be debated and improved. But what really matters is that a Levelling Up strategy must be baked into how the Government, and Homes England, spend money on new and better homes. The ultimate impact of such a strategy would be felt by voters in places that provide the greatest opportunity for Levelling Up; in the North, West Midlands, coastal areas and every corner of England.

Greg Smith and Dehenna Davison: Introducing ’30 Ideas for 2030′, a free-market blueprint for levelling up

17 Sep

Greg Smith is the MP for Buckingham. Dehenna Davison is MP for Bishop Auckland. They are co-chairs of the Free Market Forum.

Of Boris Johnson many successes, his ability to sell the Conservative message to members of the public who had hitherto never considered voting for our party is among the most impressive.

During the 2019 general election, Conservative candidates who were “doing their time” by standing in unwinnable seats quickly came to realise voters were developing a healthy appetite for low taxes and Conservative economics – for the sunlit uplands of opportunity that could come from ‘taking back control’ – both of our national policies and of their own lives.

Since the election the Government has, of course, devoted most of its time towards the two overriding issues of Brexit and Covid. These have prevented it from undertaking the type of free market policies that many of we newer MPs might have wished for.

It was of course right for the state to step in and protect lives and livelihoods during Covid, and it may have been necessary for the government to simply replicate large tracts of EU rules initially in order to give businesses some certainty during the immediate transition from EU membership to full independence. But with a Brexit deal done and Covid believed to be endemic, it is time to consider what comes next.

The Free Market Forum aims to promote ideas and stimulate discussion over how we make Britain economically and socially freer, boosting the economic opportunities and growth across the nation, encouraging innovation and creating jobs. We want to lead the conversation within the Conservative Party on the importance of retaining the traditions of fiscal prudence, low-taxes, and limited regulation – key pillars to support growth and opportunity.

For many in left behind parts of the country, the reality is that the private sector is stifled by a bloated public sector that is almost Soviet-sized in some areas of the North. Thirteen years of Labour – whose ambition seemed to amount to little more than throwing money at those left behind and hope for the best – was followed by little change from by well-meaning Conservative governments since 2010.

This has meant that for decades, many of our communities could not even begin to imagine a world where they could succeed through entrepreneurism or seizing opportunities for themselves, rather than just waiting for the state to do it for them.

Innovate UK polling indicates that the confidence to start a new business, for example, is far lower in left behind Britain than in the more affluent parts. In the North East, a shocking 44 per cent of those with an idea and desire to start a new business lack the confidence to take the plunge and go for it (compared to less than 30 per cent nationwide). Clearly, restoring a culture of risk is needed if we are going to help these places succeed.

Our new paper, 30 Ideas for 2030, is our first effort to dip our toes in the water. The 30 ideas – from MPs, peers and respected academics – cover a broad swathe of policy areas, from reducing occupational regulation to reforming the BBC, from using technology to enhance teaching in our classrooms to removing the barriers to self-employment and alternative business models. While not a policy prospectus, we are hopeful that these options for cutting the state and instead empowering the individual will provide some food for thought in government.

As you might expect, considering the almost historic levels of taxation as a proportion of GDP and a state that seems to be growing ever larger, many of the ideas revolve around tax reform.

The former Chancellor, George Osborne, dubbed our tax code “one of the most complex and opaque tax codes in the world” on assuming office in 2010. Yet a decade later we still have, at over 10 million words, the longest tax code in the world, 48 times the length that of Hong Kong – which is considered to be the gold standard by most tax accountants. This tax complexity results in dozens of loopholes and offsets which reduce government income and also distort the economic activity of both businesses and individuals.

Taxes should be as low as possible, but it is equally important that they should be simple and universal.

With our economy still weak from the Covid lockdowns, and considering the additional tax burden the government is now choosing to add on to National Insurance, we should be scrapping the planned increase in Corporation Tax and looking to simplify the tax system more broadly. Other tax reforms which should be under consideration include the wholesale abolition of Stamp Duty Land Tax, which, alongside prudent free market reforms to planning regulations, could do much to alleviate the worst of our housing crisis and get more young people onto the property ladder.

There is much to do over the next ten years as we build back better following Covid. But it is only by embracing freedom and economic liberalism, and continuing to make the case for it instead of becoming an increasingly paternalistic, state-controlled nation by default, that we will make a real difference to those left behind, and make Britain a richer, stronger country.

Ryan Bourne: The tax hikes that could fall in the south. And tear the Tory coalition apart

22 Jun

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

Who’s going to pay for all this? Andrew Neil’s GB News interview of Rishi Sunak has changed the fiscal conversation. The Chancellor deflected the question by saying he couldn’t discuss tax policy outside of Parliamentary “fiscal events.” Convenient. But many commentators are “rolling the pitch” for higher taxes to fund all this higher government spending already – often devoid of context of today’s true burden.

Much debate starts with the ahistorical view that the UK is a “low tax” economy. Yet revenues from taxes are already forecast to exceed 34 percent of GDP every year from 2023/24 onwards—a threshold not breached in consecutive years since Hugh Gaitskell and Rab Butler were Chancellors in the early 1950s. The world wars don’t bode well for the longer-term legacy of an acute borrowing shock either. Ten years’ after World War One, the tax burden was 12.5 per cent of GDP higher than pre-war; ten years’ after WW2, it was 11.4 percent higher again.

The pandemic is shorter and less destructive than mass mobilisation wars. We also don’t need a second welfare state. But we do have an aging population and slower growth. With those pressures, any government unwilling to reform age-related entitlements and committed to major new state investments will need revenues eventually.

Internationally, many Western European countries tax their populations more heavily than us. The UK was just below the OECD average as a share of GDP in 2019. But UK taxes are already higher than in English-speaking developed economies: Australia, New Zealand, Ireland and the United States. The rises that Sunak has pre-announced would take us close to the levels of pre-pandemic Spain and Poland. Go a bit further, and we will have gone Germanic.

That, sadly, appears where we are headed. ConHome’s Editor explained yesterday that  “levelling up” need not mean just more tax-and-spend, but might be centred on the supply-side. He should tell CCHQ. The “levelling up” member survey recently used that banner to ask for views on more NHS spending, the “lifetime skills guarantee,” catch-up schools funding, infrastructure investment, the Towns Fund, and money for high-street regeneration. The direction of travel is clear: levelling up means more redistribution—hence why a strange coalition of fiscal conservatives and certain level-uppers want to whack up taxes on the old Tory base to shower the new.

This is where the politics of tax becomes interesting though. For the “progressives of all the parties” have talked so far as if “someone else will pay” for any largesse. Polly Toynbee says that UK voters want a Scandivanian welfare state with US-style tax rates. But it’s the redistributionists that are selling the Red Wall something for nothing. How about “asking for more” from the top one per cent, big tech companies, wealthy homeowners, tax-avoiding multinationals or other bogeymen, they say? Ordinary hard-working families will be spared for all the goodies.

As a new Institute for Fiscal Studies tax tool shows, however, the difference between the UK and the big governments of Western Europe is not lower taxes on the rich. No, broad-based social security contributions are higher in Europe. The evidence there suggests a more generous welfare state or higher permanent spatial redistribution requires tax rises “larger for the median worker than for one near the top of the distribution”. Good luck selling to your new blue-collar voters.

And so, thus far, an unwillingness for broader hikes, coupled with an uncertainty about the wisdom of burning the old base, has meant that the “tax debate” has been all smoke and mirrors. Efforts to raise revenues have been stealthy. The headline Corporation Tax rate is being raised again, with Sunak stating that it was “fair and necessary to ask businesses to contribute.” Of course, research shows the ultimate burden of profit taxes falls on workers, as well as shareholders – not the message the Chancellor would be keen to promote.

Income tax thresholds have similarly been frozen until 2026, and the 45p rate threshold has been kept at £150,000 since 2010. This will slowly lure more and more upper middle income families into higher tax nets. The problem is that spiralling spending demands quickly use up the options which voters don’t notice. Eventually you need other big sources of revenue, and that’s when the discussion usually re-centres on taxing savings income or pensions more heavily, or indeed hiking property taxes—despite the fact that the UK has the highest overall property tax burden in the OECD already.

Let’s leave aside the economics here. What do these policies all have in common? Well, the highest earners, the more expensive properties, and those with the highest savings are more likely to reside in the South East. The only Conservatives making the running on the “who is going to pay for it?” question so far, then, are those level-uppers who want to whack the South East to keep the goodies for the north flowing.

Yet not all are convinced. This is a growing Conservative faultline among MPs and the party’s voters. The Brexit coalition incorporated relatively affluent home counties’ areas and a working class elderly base nationwide. For some Westminster types, it simply makes sense to deliver for the new voters by squeezing the south.

Others, though, think the older working class Northerners don’t want Labour-lite, and that the best way to deliver for both would be targeted hawkishness on spending. For what it’s worth, Dominic Cummings told me: “the gvt wastes so much I’d rather save and not put up taxes.” He usually understands what these voters truly want, but would Johnson’s government slay any meaningful spending projects without him?

Tax policy, I suspect, will really test this Tory coalition. Hot housing markets in the South East have widened regional wealth inequality in the past 15 years, but after-housing-cost incomes have risen slower in London as people rent or service large mortgages. So many people feel squeezed, even before new tax bills come in. And massive geographic redistribution occurs already: London and the South East generate large public sector surpluses—averaging net public surpluses of £4,350 and £2,380 per person.

Now I’m not going to go all Mary Riddell and suggest last week’s by-election result already reflected a middle-class tax revolt. But if the mood music is for higher and higher spending in the North, and the conversation about paying for it focuses on raising property taxes, raiding pension pots, taxing savings, alongside stealthy income tax squeezes for the middle-classes, would it be surprising if voters in traditional Tory heartlands reassessed their allegiances? In a world of ever-rising spending and an unwillingness for broadening tax bases, there’s only so long the Chancellor can obfuscate on who will really pay.

Bob Seely: The case against planning revolutionaries – and their flawed assumptions about how to get housing done

18 Jun

Bob Seely is the MP for the Isle of Wight.

ConHome has kindly allowed me another article as part of the debate on planning, in relation to Henry Hill’s pieces. I am grateful for the opportunity.

Supporters of a planning “revolution” broadly argue three things. First, house prices in the South are overheated because demand far outstrips supply, so we must build more houses. Second, the North doesn’t need more housing. Third, communities should be deprived of the right to object to development.

There are three flawed assumptions in these arguments.

First, building more homes alone does not solve the affordability problem. There are many other factors, such type of home, interest rates, etc. Evidence? Despite a strong increase in supply from 2013, average house prices have continued to rise – going up 10.2 percent between March 2020 and March 2021 alone. Reversing just this most recent 12-month rise using only housing supply would take 20 years, according to one estimate.

Therefore, there are two routes of action. Either flood the South with so much housing that you force the price down, or find alternatives. The first is economically, environmentally and socially disastrous – as well as politically suicidal – and the problem with political suicides is, as Winston Churchill noted, you live to regret them. The alternative, which I support, requires finding a new approach.

Second, planning “revolutionaries” argue that the relative affordability and lower demand in the North means a) fewer homes need to be built, and b) infrastructure support for housebuilding is not needed.

However, household projections are not an indicator of housing demand but a representation of how many homes are required should current trends continue. In plain English, if you want to change things – and that’s fundamentally what Levelling Up is about – don’t base assumptions on how the current planning methodology works because it primarily reinforces historic trends and projects them into the future. It does not encourage new thinking. The current methodology, 2020 Standard Method, is better than the pre-2020 version and increases targets in Northern cities – as a result of direct ministerial intervention – but it retains the same conceptual flaw.

Third, this model deprives the North (apologies for the generalised terms) of infrastructure funding and helps suppress demand for housing, according to property experts Knight Frank, which explains why, in a valuable document, here. UK public expenditure on housing in the North is already only 17.8 per cent of the total; down from 24.5 percent in 1998-99. The Housing Infrastructure Fund allocated the equivalent of £115 per head in the East of England but only £4 per head than in Yorkshire and Humber, according to Onward research.

Put in plain English, focusing house building on the South, with the accompanying construction and support jobs, infrastructure spend and household spending, becomes self-reinforcing and self-defeating. It continues – reductio ad absurdum – with the hamster wheel of unsustainable greenfield development in the overheated South. It is, in the words of the 1980s band The Talking Heads, a Road to Nowhere.

Even the Government now admits this.

To overcome market failure, we need to throw money at brownfield clean-up and affordable homes. To see Levelling Up as an investment in rebuilding communities and regions. One option would be to tax greenfield sites and use the money for brownfield clean-up. Sadly, the chances of “pricing in” the true cost of greenfield is slim. However, planning should be environment-led.

Third, Mr Hill says communities should not be able to “stymie expansion.” To me, that sounds like an arrogant way of dealing with people. Like most conservatives, I am fed up with those who try to silence others. I never thought I’d hear it from a ConservativeHome columnist, though.

It is also self-defeating. Communities help development happen, as long as they can shape it. One initial study, albeit limited, found that areas with a neighbourhood plan saw a 10 per cent increase in housing allocations. Therefore, working with communities gets better results than treating them as the planning equivalent of a foie gras goose, with evermore housing shoved down their gullets.

However, the development that communities need is not what developers want. An example: 80 per cent of greenfield applications in Areas of Outstanding Natural Beauty (AONB) are approved. Yet the majority of property built is “executive homes”, not first-time buyer properties. How on earth does this help first-time buyers? Answer: it doesn’t. Therefore, planning needs to be community-led.

In his previous piece, Mr Hill dismissed community champions as NIMBYs. “Seeing down” voters is dumb in a democracy, as sadly I fear many councillors and some MPs will eventually find out.

So summing up, we hope that the Planning Bill will move to a levelling-up led, community-led and environment-led agenda. We fear that it will contain the same flawed assumptions. I have made a case for change. But we need evolution, not revolution. Ripping up local democracy is a fool’s errand. Venerating a self-reinforcing methodology is a dead end.

We need to do planning better. Let’s start now. I wish ConHome readers a good weekend.

Bob Seely: The Government’s current approach to housing needs intelligent, sensitive reforms – not a complete overhaul

5 Jun

Bob Seely is the MP for the Isle of Wight.

I always enjoy reading Henry Hill’s articles, but I take issue with his ideas on housing. I’d like to put another side to this argument, as it’s important to the future of millions of people and this Conservative government. Rather than the developers’ charter which is, we fear, what will be proposed in upcoming reforms, we need a community-led, environment-led and levelling-up lead approach to housing.

First, though, let’s agree what we agree on. Housing is a divisive and political issue. It is clear that we need to help the young without alienating the old. Henry rightly points out that, concisely put, older people tend to be homeowners and vote Tory, while younger people rent and don’t vote Tory. We agree that Tories need to be the party of the homeowners and the more we create, the better for us; all agreed.

In addition, Tory MPs are sympathetic to Robert Jenrick, the Secretary of State’s, aims. However, I – and others – feel Jenrick and his minsters have not made the case as to why we need to scrap the current approach, rather than intelligently and sensitively reform it. The system is, like any, imperfect, but we know its flaws and we would be more likely to achieve our aims through reform.

But over and above that, there are a series of ideas being championed that are – at best – questionable.

For example, Henry says: more and cheaper housing “scares off existing Conservative voters.” Sorry, but this is just wrong. What scares voters is not sensitively built, small-scale housing projects with a decent affordable element (for their kids) which add positively to existing communities, but environmentally destructive, unsustainable, mass-produced, large-scale, low quality, low density, car dependent, greenfield housing estates that despoil the areas they are built on. Oh, and which run a coach and horses through the Government carbon targets and environmental plans too.

Behind much supposed Government briefing is the lazy argument that we are not building. That is not true. For sure, the UK has historically struggled, but last year we built a quarter of a million properties, the best for nearly 35 years. If Boris Johnson’s target – which, by the way, is completely arbitrary – had been 250,000 rather than 300,000 homes a year, we would already be on target. The claim that we must change the system to start to build the houses we are not building is false.

Indeed, so efficient has the planning system been that the big developers are sitting on one million unused permissions. This begs the question: if the fault is with the planners or the developers who “landbank” permissions to restrict supply and inflate price? Rather than giving developers even more land and even less scrutiny, why don’t we reform the system to make sure developers keep their promises?

Henry argues: “Some of the arguments advanced by the Conservative rear-guard have indeed been breathtakingly disingenuous,” such as more housing in the South equals a betrayal of levelling-up. I see where he is going with this argument, but I don’t buy it. The purpose of levelling up is to reorientate development outside the South East. The Government has said that housing will be pump-primed with infrastructure funding; ergo: the more infrastructure projects in the South, the less in the Red Wall. One can’t spend the same money twice, all the time, as we are beginning to find out. Am I missing something?

Henry then argues, bizarrely, that “mass housebuilding isn’t part of the economic interventions needs to succeed.” That’s one hell of an assumption! So Levelling Up doesn’t need more housing? Clearly Henry hasn’t talked to the same Red Wall MPs I do. More economic development outside the South East will require more people and more homes. Again, am I missing something?

In addition, I am utterly fed up of hearing how places like the Isle of Wight must build more. For the record; in the last 50 years, the Island has increased its population by 50,000 – 50 percent. In the meantime a dozen midland and northern cities have seen absolute declines in population. Meantime, we continue to export our young people as housing is not build for Islanders!  We now face overdevelopment. This will kill our economy, much of which is visitor-dependent, and damage our quality of life. If there is one thing guaranteed to feed anger from so-called ordinary folks is the casual dismissal of concerns of overdevelopment by the Westminster commentariat.

We care about planning because we care about our environment, our people and our communities.  In a place like the Isle of Wight, that means building houses which are genuinely affordable (so yes, Council or Housing Association), in sensitive numbers, in a local style, in existing communities, for our local people and with their support. Post Covid, that also means using housing to revive our towns. Yet, the development that developers want; low density, four-bed, retiree cash purchase, has absolutely nothing to do with that vision or our need.  And a developer-led system will make that worse. A developers’ charters will not help to build for generation rent, nor will it help Islanders.

Finally, Henry warns of a NIMBY backlash, yet another slur on NIMBYs that makes me think this is not an accident but a theme being encouraged. This is foolish and bad politics. Rather than see NIMBYs as a latter day Zombie army of the planning undead, which is clearly how the debate is being tediously framed, one could instead see them by their other name: Conservative voters.

Anyone – anyone – who has dealt in any way with formulating local plans will know that many of these so-called dreaded NIMBYs have participated and often led the development of local plans that recognise the need for housing, but distinguish between the development their communities – and kids – need and the developments they don’t: faceless, greenfield estates built by developers whose approach is, literally, thoughtless.

Henry is clearly a student of politics. Implicit in plans as currently understood is the removal of a significant layer of local democracy and local input from the planning process. I hope this changes, but if not, these threaten to give Labour, the Lib Dems and Greens throughout England a rallying cry: Save local democracy from the Tories and their developer chums. We will haemorrhage council seats and support across England. Good politics? I think not.

Conservatives backbenchers are brimming with good ideas to reform intelligently the planning system; changing it to a community-led, environment-led and levelling-up approach. What we are against is dumping on our own voters and our communities to wave through a developer-led system which, many fear, threatens even more land-banking and even less scrupulousness in how developers treat or engage with communities.

Robert Palmer: To support the levelling up agenda, the Government should follow Biden’s plan to tackle corporate tax avoidance

19 Apr

Robert Palmer is the Executive Director of Tax Justice UK.

Few issues annoy Conservative voters more than Facebook, Google and other global companies paying ultra-low levels of tax in the UK.

Whether it’s pensioners, Brexiteers, Red Wallers, people with degrees or those who failed to get a single GCSE, polling shows that they all unite in frustration at companies that avoid their obligations on tax.

Conservatives like Kevin Hollinrake, the MP for Thirsk and Malton, and Anthony Browne, who represents South Cambridgeshire, understand these frustrations. Companies like Netflix have been hauled over the coals in parliament, with MPs across parties demanding it explain why it paid so little UK tax.

Netflix, famous for box sets like The Crown, hit boom times during the pandemic. Even before Covid, the entertainment tech giant booked £860 million in subscriptions from UK customers alone via its Amsterdam-based subsidiary, but paid very little tax here. MPs are understandably concerned to make sure the likes of Netflix pay a fair share in the UK.

In a parliamentary debate last year, Browne said: “What any fair-minded person objects to is aggressive tax avoidance which results in companies or people paying less tax than is clearly their fair share.”

In its 2019 manifesto, the Conservative Party pledged to continue to lead “the international fight against aggressive tax avoidance and offshore tax havens”.

Last week President Joe Biden announced a plan that could end the “race to the bottom” on corporate tax. It comes just a month after Rishi Sunak pledged in the March Budget to increase corporation tax to 25 per cent by 2023.

The US President is proposing that companies should pay at least 21 per cent on their profits as part of a package of global reforms. This would make it much harder for global companies, like Amazon, to get away with paying very low rates of tax by stashing their profits in offshore tax havens.

Far from stifling UK businesses, the Biden plan would give companies a chance to compete fairly against the global giants and their clever accounting.

Areas of the UK that lost out under globalisation, could reap the rewards from the overdue reform of the way global multinationals are taxed. There’s nothing buccaneering about keeping our antiquated global tax system in place.

Research shows that the plan for a global minimum corporation tax could raise £13.5 billion a year in the UK.

Raising corporation tax is popular among Conservative voters and the rest of the voting population. Bringing in more money from companies is also compatible with the levelling up agenda.

The centre-right think tank Onward, recently called for the Government to level up the tax system. Its research highlights that corporation tax receipts are concentrated in the wealthy South East of the country. This is partly skewed by the fact that many companies are headquartered in London. However, even with this factored in, over the last decade the corporate tax take has declined in the North and Scotland, while it has risen in the South.

Red Wall voters are desperate to see investment in their communities. The £13.5 billion that could be raised through adopting Biden’s plan, much of it likely to be paid by tech giants, would help us invest in things like broadband to bridge the gap between rural and urban areas.

It’s clear that the Conservatives’ new electoral coalition is more left wing on economic issues. This is in part driven by increasing support in the Red Wall constituencies in the North and Midlands. These voters want to see higher levels of public investment and support tax increase to help deliver this.

So far there’s been some indication that the UK government is interested in the idea of a global minimum corporate tax rate, but won’t yet sign up to Biden’s proposed 21 per cent rate.

On Wednesday, the Treasury Minister Lord Agnew responded to a question in the House of Lords about Biden’s plan from the Green Party’s Baroness Bennett. The Minister said that “the UK was at the forefront of initiating global action on international tax”. He backed global efforts to reform the global corporate tax rules and said that the Treasury was looking at the US proposals.

In June, Johnson will show leadership to the world as the UK plays host to the world’s richest countries at the G7 summit. Getting global agreement for a global minimum corporation tax will be near the top of the agenda for the US President.

The 2013 G8 summit in Northern Ireland saw a Conservative-led government push through a global agreement to tackle tax evasion and avoidance. Those changes have made a real difference and ended some of the more egregious practices.

A G7 summit in our own backyard will be front page news in the UK. It’s in this government’s interests to support President Biden’s plans to tackle corporate tax avoidance. This would be good politics given the popularity of cracking down on tax loopholes and the billions that could be raised to support levelling up.

Paul Howell: Left behind communities must be the priority as the Government plots a recovery from the Covid pandemic

16 Apr

Paul Howell MP for Sedgefield & co-chair of the All-Party Parliamentary Group for ‘left behind’ neighbourhoods.

Since I was elected in December 2019, the world has become a very different place. As I entered office, I pledged to support the Government’s “levelling up” agenda but I feel it’s now more important than ever, as the pandemic has tended to hit communities which were already struggling the hardest.

In my role as co-chair of the All-Party Parliamentary Group for ‘left behind’ neighbourhoods, I’ve seen data and heard stories demonstrating the numerous difficulties these neighbourhoods face over the past year.

Most recently, we looked at the difference good transport connectivity can make, an issue I’m familiar with from my own constituency and the efforts I have made alongside local people to secure investment to reopen a local railway station. I know public transport can mean the difference between access to employment opportunities or unemployment, and in some cases a lack of access to life-saving services.

The APPG’s latest report, Connecting communities: improving transport to get ‘left behind’ neighbourhoods back on track produced by Campaign for Better Transport draws on the latest research and data. It highlights how people living in “left behind” areas, which are predominantly in post-industrial and coastal areas in the North and the Midlands on the edge of towns and cities, suffer from the highest levels of economic deprivation.

They also have low levels of physical connectivity – 84 per cent of “left behind” neighbourhoods have worse connectivity than the average across England. Many are more reliant on public transport as 40 per cent of households have no car, compared to 26 per cent which is the national average.

The report also examines the impact of the 1960s Beeching cuts to the railway system and found that 50 per cent of all rail stations in “left behind” neighbourhoods were closed following the landmark report, while 74 per cent have no rail station at all now compared to 60 per cent pre-1960s.

I’m grateful that in my constituency of Sedgefield, Ferryhill station has been awarded government funding to help restore it. Once re-opened the station will provide a link for local people to nearby towns and cities, making opportunities slightly further afield more accessible.

The re-opening of this station is a comparatively low-cost project but will open the North’s railways system to many who need it.

Ferryhill is one of 15 rail schemes awarded up to £50,000 to accelerate plans that could restore lines and stations to communities, but for many people across the country there is still a dire need for better rail and bus links to connect them to essential services.

225 “left behind” neighbourhoods in England not only rank within the top 10 per cent of places on the Index of Multiple Deprivation, but also within the same percentile of the Community Needs Index (CNI). The CNI considers the provision of places to meet, the presence of an active and engaged community and how connected a place is, both in terms of digital connectivity and transport provision. The combination of these factors leaves “left behind” neighbourhoods in a vulnerable place, with little opportunity or resources to improve their own outcomes.

However, what we have also seen demonstrated through evidence given at the APPG for “left behind” neighbourhoods is that when deprived places receive targeted, hyper-local funding, these opportunities don’t seem so unattainable. Where there are places to meet, and spaces for people to form connections and ideas, and identify funding to help get projects off the ground, residents can make a huge difference, because it is local people who know what is best for their area.

In terms of transport, local funding could lead to support for a community minibus to help those who are less mobile get to the town centre or to a hospital appointment, or it might help to create a community-led transport strategy for discussion with their local authority. What is important is that residents have the opportunity to determine their own needs and access services that meet them and it’s because of this that it is investment in both people and places that will deliver the best outcomes in the long-term for residents of “left behind” neighbourhoods.

I’m pleased to see the Government’s Bus Back Better strategy’s pledge to invest in local authorities to help them deliver better local bus provision, as well as a mention of community consultation. It seems like this foundational investment in our country’s buses will be a brilliant start to reconnecting some of our most “left behind” neighbourhoods.

But, if we are to achieve long-term lasting change in these places, we must also build capacity and confidence within communities, so they are able to advocate for their needs, as well as investment in the vital social infrastructure they rely upon.

As we hopefully leave the most immediate effects of the pandemic behind us, the longer-term repercussions will undoubtedly be felt for some time. It is critical that we not only stimulate the UK economy, but also prioritise the important process of levelling up to ensure communities which have already suffered for so long do not fall even further behind.