CentreRight

There are huge political opportunities in climate change policy, for any party ready to take them

This morning, Tim blogged about the enemies of the next Conservative government.  One of his entries was:

"The climate change industry or energy consumers. One of these groups will end up unhappy. The Tory leadership can keep the climate change industry happy by pursuing expensive renewables and avoiding coal or it can keep energy prices down. Tory members are convinced that energy consumers should be the group we protect."

As we have discussed in the comments on earlier CentreRight posts, I think there is a huge political opportunity in this area.  The Conservatives currently appear to be stuck around the narrow majority or hung parliament level in the polls.  By promising a reformed climate change policy that cuts people's energy costs, they could really offer ordinary new, tangible reasons to vote Conservative that could change that situation and put them on the path to greater electoral success.

Recently we released a report on the Emissions Trading Scheme, and the burden it has imposed on consumers across Europe.  In Britain, the bill is about £3 billion, equivalent to around £117 per family.  That means higher electricity bills and spells trouble for manufacturing companies, as energy is often one of their biggest costs.  Important policy objectives like diversifying the British economy so it is less reliant on financial services and reducing fuel poverty are being undermined by the ETS and other regulations like the Renewables Obligation.  Climate change policies make up 14% of domestic electricity bills and 21% of industrial electricity bills.

At the same time, these policies aren’t doing much to curb climate change.  As research (PDF) for the LSE Mackinder Programme and the Institute for Science, Innovation & Society at the University of Oxford has argued, existing policy has abjectly failed to decarbonise the European economies that have adopted it most enthusiastically.  Our report shows the big problem with the ETS - the carbon price is hopelessly volatile, and that isn’t going to change.  As the supply of allowances is capped any change in demand is reflected entirely in the price, leading to wild swings.  The Renewables Obligation provides huge subsidies for wind farms that do little to cater for our need for reliable base load power.

The EU Emissions Trading Scheme cost British consumers £3 billion in 2008

Most Britons will never have heard of the EU Emissions Trading Scheme.  But it is costing them a fortune.  Our new study estimates that the bill in 2008 was £3 billion, equivalent to around £117 per family.  Across the EU the cost was around €93 billion between January 2005, when the scheme was introduced, and the end of 2008.  When the ETS is added to other climate change policies such as the Renewables Obligation, they amount to 14 per cent of the average household electricity bill.

That burden has fallen disproportionately on the poor and elderly.  They spend a far larger proportion of their income on electricity, often twice as much as those who are on a higher income or younger.  That means that there are serious social consequences as the poor face greater hardship thanks to government climate change policies.

Another group who suffer are manufacturing industries.  Energy is a significant part of the cost base of a range of firms.  While attempts are made to help them in various ways, that is a poor substitute for not having their competitiveness undermined in the first place.

The ETS is therefore not just expensive, but also undermining key policy objectives: We're imposing a significant burden on people with low incomes, thereby increasing welfare dependency.  And, we're hurting industry which will only make us more dependent on the City and increase regional inequality.

For all that, it is pretty ineffective at cutting emissions.  Prominent environmentalists and energy companies have called for a floor on the price, as it keeps collapsing.  That would bring into question the whole point of the trading scheme.  The volatility of the price both makes it that bit harder for families and businesses to manage their budgets and weakens the incentive to invest in cutting emissions.

The scheme should be abolished.  Making sure developed and developing countries are rich, free and democratic enough to deal with whatever nature throws at them and investing in technology, so we have better options than the uneconomic alternatives to fossil fuels available now, is a better way forward.

“Dodgy” bacon was heroin

I think this is a new candidate for best government press release title ever.

Alphabet soup government

Today at the TaxPayers' Alliance we've released a new report on the range and scale of the semi-autonomous bodies (SAPBs) that do so much of the work of government these days.  The 1,152 national SAPBs (the term "quango" is responsible for a lot of the confusion that surrounds this issue) employ over half a million staff and spend more than £90 billion.

There are a series of problems with so much of government being conducted through these organisations:

• Accountability. Too often, SAPBs are used to avoid Ministers being held to account for the performance of public services.  The SATs fiasco, and the Government's attempt to avoid its share of responsibility for that failure, is a classic example of this problem.

• Once SAPBs are established they are incredibly difficult to kill off, even if they aren't performing, and their cost and scale tends to grow.  Regional Development Agencies are a good example of this, as we set out in our earlier report The Case for Abolishing Regional Development Agencies (PDF).

• A lot of the taxpayer funded politics in our recent report (PDF) on Taxpayer Funded Lobbying and Political Campaigning was supported by SAPBs.

• There have been ongoing concerns at the amount of cronyism in the SAPB sector. Forthcoming TPA research will be exploring this problem in much more depth.

• Too many SAPBs replicate the work of other SAPBs, local government or the central government departments.

The Conservatives need to be a lot more ambitious about cutting back SAPBs.  In our recent work with the IoD and today's report we've suggested some dead wood which could be used to start a decent sized bonfire.

Why I stopped reading the Economist and the attitude that led to the financial crisis

At one point I was an avid reader but, as the Economist descended into nothing more than a witty distillation of the conventional wisdom of the moment, it stopped being interesting.  This piece really exposes their thinking:

"Here's the thing: as history progresses, things change. And societies try to adapt to those changes. Experts come up with solutions to the problems the societies face. Those solutions often entail discomfiting established interest groups. And the solutions the experts come up with almost always entail some degree of perverse counterreaction, some kinds of problems or inefficiencies or whatever. It can be very interesting to focus on those counterreactions; it can generate fascinating, eye-grabbing journalism. But in the overwhelming majority of cases, the counterreactions aren't as big as the first-order effects of the solutions. The minimum wage may price a few people out of the labour market, but it mostly raises low-income people's wages. Raising marginal income taxes does slightly lower rich people's incentives to generate income, but it mostly raises government revenue. In other words, the little contrarian thing is almost never anywhere near as important as the big first-order thing it rides on. And as journalism has come increasingly to focus on contrarianism, it has become less and less adept at actually describing the world."

We can argue about the specific things claims they've made.  For example, the effect of tax cuts and hikes on revenue clearly depends on which tax and over which time period.  There is plenty of evidence (PDF) that corporate tax cuts increase revenue quite quickly, for example.  And, abolishing the 50p rate would increase revenue as well.  I haven't read the Superfreakonomics book that is the main subject of their article.  But what really struck me was their overall argument that journalists should pay less attention to second-order, unintended consequences of proposed policies. 

Keeping Britain moving: the roads are the key

At the TaxPayers' Alliance we're working with the Drivers' Alliance to produce new research on transport and environmental policy.  The first product of that new partnership is a new research note (PDF) out today setting out how much is spent on different forms of transport per passenger kilometre.

The transport budget is likely to face cuts as part of the response to the fiscal crisis.  Leaked reports have suggested that transport as a whole might lose as much as £29 billion in over ten years.  That means politicians will need to set priorities.

The key priority should be easing congestion and overcrowding.  We need to keep Britain moving despite the fiscal crisis and the roads are gridlocked and commuter trains packed out.  That means the key criteria should be how many passenger kilometres each mode of transport can provide for a given amount of public spending.  Our report shows that more than ten times as much is spent on the trains for every passenger kilometre travelled on them as is spent on the roads.  The roads move a lot more people a lot further for every pound spent.  The same goes for freight, the roads move more goods further for every pound spent.

People might argue that we need to prioritise railways in order to make up for the environmental costs of motoring.  But, motorists more than pay in taxes for both the roads and the social cost of their emissions - with £18.4 billion to spare.

Politicians in Westminster need to understand that for most of the country driving is by far the most important mode of transport.  The road network has to take priority over flashy new rail projects if we are going to make the best use of whatever resources are available.

£6m of our money spent to scare the children

Nature have called it the Worst. Climate. Campaign. Ever.  The Register's report has more detail of what has happened, including a quote I gave earlier today.

£6 million of our hard-earned cash went on this.  That's a lot of money.  We're facing arguably the greatest fiscal crisis in our history and the Government spend millions on an attempt to scare children into thinking that if they leave the lights on it'll drown their dog and make bunnies cry.  The mind boggles.

China and climate change

It's worth trying to read between the lines in Hu Jintao's speech at the UN climate change conference in New York yesterday.  Leaving aside the waffle that you always get in any politician's speech on the subject, the BBC cuts to the important bit about what China might be prepared to do:

1. Cut carbon intensity (emissions per unit of GDP) from the 2005 level by 2020.  This probably doesn't require any policy interventions at all.  As technology continues to increase efficiency, giving us better cars and better power plants among other things, most countries produce more with less.  Across the OECD, between 1993 and 2005, emissions intensity fell (PDF) by around 1.64% each year.  The difference between unspecified cuts in emissions intensity and specific cuts in emissions, of the kind we have signed up to, is huge and this pledge doesn't really mean anything in terms of reaching the kind of global targets people are throwing around.

2. Increase the amount of renewable and nuclear energy, rising to around 15% by 2020.  Currently, about 6% of China's power comes from hydroelectric plants and 1% from nuclear.  Other renewables produce 0.06%.  This pledge will mean more dams and more nuclear plants, not more windmills.  Again, that's a very good idea but it's very different to the direction of policy in the West.  Environmentalists tend to be sceptical of some dams and nuclear power.

3. Increase forest coverage.  If you look at this measure, then we may seriously need to reappraise the performance of the United States.  In his book Hard Green, Peter Huber argues that America releases about 1.6 Petagrams of carbon into the air each year by burning fossil fuels but then takes about 1.7 Petagrams in through terrestrial uptake.  That is thought to be driven by a number of factors including regrowth of forest cover on abandoned farmland and previously logged forests.

4. Spend on technology.  This is going to happen, most of the spending will come from the private sector but it would be reasonable to complement the existing incentives produced by the patent system with a rigorous system of prizes.

The background to all this is that China is playing climate change poker ahead of the negotiations at Copenhagen.  They want to make a deal that involves little or no action that might imperil economic growth while making plenty of pledges that sound serious, and allow them to demand payment from the West for their trouble.  This is all about a hard headed assessment of what is in China's national interest.

Environmentalists have a democracy problem

Most politicians, of all parties, are certainly signed up to the idea we should do radical things to cut greenhouse gas emissions.  The Climate Change Act - which could easily require (PDF) cutting the size of our economy by over 75% in 2050 to meet the 80% target - was passed with overwhelming support despite unseasonable October snows that evening.  The environmentalists aren't doing quite as well at convincing ordinary people.

Recently the IPPR did some focus group research (PDF) into how to design "climate-change communications" and encourage people to make choices that will cut emissions.  Their very first point?  "Don't focus on climate change".  Apparently, the best way to convince people is to tell them they'll save money.  Even if you can do that though, they'll just spend the money on a foreign holiday or - according to one quote - an Audi TT.

Public opinion on policy is also far from encouraging for the environmentalists.  YouGov found (PDF) that the public were against increased taxes on petrol, increased airline fares and increased taxes to subsidise wind and solar energy.  Only greater use of nuclear power was supported on balance.

The democratic response to this would be to try and convince ordinary people.  Green groups pay lip service to attempting to convince ordinary people, and churn out plenty of press releases of varying quality, but their real focus is still on the richest and most powerful.  A government press release tells me that the ridiculously named global 'tck tck tck' campaign is trying to sign up Britain's top 100 business leaders and top 100 media personalities.

Taxpayer funded lobbying and political campaigning abroad

In our recent report on taxpayer funded lobbying and political campaigning (PDF) we highlighted some of the key problems with government spending money on lobbying and political campaigning.  In particular:

• "It distorts the public policy process in favour of the interests and perspectives of a narrow political elite.
• It slows adjustments in the direction of policy in response to changing circumstances.
• It increases political apathy among the public, particularly because taxpayers are forced to fund views they may seriously disagree with."

Recently, some examples have come to light that show this isn't just a matter of politicians and bureaucrats using taxpayers' money to push their agendas at home.  They're also trying to influence debates in other democracies with messages that the British public are unlikely to care about or agree with.  There are a number of examples:

• According to a YouGov poll (PDF) for The Economist, 74% of British people are in favour of the death penalty for murderers in some or all circumstances.  Yet, the Foreign Office see it as a fundamental part of their work to go around the world trying to convince countries, even democratic allies like the Republic of Korea, that they should abolish capital punishment.  Regardless of your views on the issue, I'm opposed to capital punishment personally, we live in a democracy and the idea that the public don't just not get what they want on this issue but have their money spent advocating a cause they don't believe in abroad is incredibly troubling.

• At the TPA, we've put out a press release with the CEI today attacking the Carbon Trust's foreign ventures.  An organisation funded by British taxpayers is trying to expand into new territories as if it is a multinational company.  The Carbon Trust has always been among the worst examples of unaccountable government bureaucracy, financed with taxpayers’ cash but not subject to public scrutiny through vital democratic tools like the Freedom of Information Act.  Now it’s trying to export that model to other countries, using British taxpayers’ money to lobby foreign politicians to fund its new franchises abroad.  Our release was reported in the Daily Mail, who say in their leader that Gordon Brown should "start with the Carbon Trust" if he is looking for public spending cuts, and I've fisked the Carbon Trust Chief Executive's response on our blog.

• The Foreign Office have funded a report on the activities of the Israeli Defence Force in Gaza.  Of course, there's nothing wrong with having a debate over the conduct of the IDF, and there was a serious inquiry in Israel after the war in Lebanon, but the idea there is any pressing British national interest in funding one side of that debate is absurd, particularly when doubts have been raised over the veracity of the research.  Dan Kosky sets out some of the problems in an article for Comment is Free.

This is an area we're interested in looking into at the TPA, can any commenters think of any other particularly telling cases?

This is all part of the same trend as funding for domestic campaigns, from Demos to the Campaign for Better Transport.  Our political elite clearly have no respect for the fact that they are playing with other people's money and have no right to use public resources to further their own political agendas.

How £38 million of taxpayer-funded lobbying and political campaigning is distorting the public policy process

At the TPA, we've just released another new report, Taxpayer funded lobbying and political campaigning.  Mara MacSeoinin wrote up the idea of abolishing taxpayer funded lobbying for the Star Chamber recently using Conservative research into the extent that public sector bodies have been hiring political consultancies.

Our research builds on that work and not only looks at more contracts with lobbying firms but also at the amounts paid to big taxpayer funded trade associations - the Local Government Agency, the Association of Police Authorities and the NHS Confederation - and the amount paid to support political campaigns.  In total, we found around £38 million of taxpayer funded lobbying and political campaigning, despite adopting a conservative methodology that left out less clear cut examples like publicity budgets used for PR and big charities that received a lot of money and did a lot of campaigning but whose primary purpose was policy delivery - like Oxfam.

That £38 million is just about the amount that all three main parties spent through their central campaigns at the last General Election, a huge amount of money in political terms.  It buys an awful lot of power.  Alcohol Concern get over half a million pounds.  Action on Smoking and Health nearly £200,000.  The Family Planning Association get £130,000.  A group that the Local Government blog exposed trying to start a partisan campaign, the Campaign for Better Transport, get over £400,000.  These are important voices in our public debate, often the first people that the media will go to for an independent opinion on new government policies, but they aren't remotely financially independent.

Even think-tanks get significant taxpayer funding.  The New Economics Foundation, whose ranking of different countries I wrote about recently on this blog, get at least £601,518, Demos get £553,004 and the IPPR at least £350,330.

As we mentioned in the report, there are three big problems with taxpayer funded lobbying and political campaigning:

• It distorts the public policy process in favour of the interests and perspectives of a narrow political elite.
• It slows adjustments in the direction of policy in response to changing circumstances.
• It increases political apathy among the public, particularly because taxpayers are forced to fund views with which they may seriously disagree.

The Conservatives have said (PDF) that they intend to stop government lobbying government.  If they're serious about that pledge they should cut the spending identified in our report.  Then they should put in place spending transparency so that the public can know how their money is being spent and this kind of wasteful and undemocratic use of public money can be stopped before it takes hold in future.  It is vital that they take a strong line so that taxpayer funded politics doesn't continue to undermine .  Just banning the hiring of external consultants will probably just force public sector organisations to be a little more inventive and take the work in house or outsource it to outright campaigns.

What happens if we don't get the trampoline recovery Darling is relying on?

From the day of the Budget economists have been pointing out that the Treasury's projections are very optimistic.  Ruth Lea wrote, in a blog for the TPA: "There should be a health warning on the Chancellor’s forecast; “Do not believe.”  What we haven't had is a concrete idea of what it will mean if things don't go that well.  Today a new report for the TPA by the Centre for Economics and Business Research gives us an idea of what it will mean if the economy recovers more slowly, these are the figures:

Of course, it could be that we get the trampoline recovery that the Treasury are projecting.  Recent academic research suggests that financial crises tend to be followed by far more protracted and messy recoveries than ordinary recessions though, which doesn't bode well.

The research also looks at the consequences of attempting to fill the hole in the public finances with tax hikes.  The dynamic modelling, building on earlier CEBR work for the TPA in 2007, shows that the 50p rate will mean less growth and less employment, never raise any revenue and lead to £1.8 billion greater borrowing by 2020/21.

Some of the scenarios explored by this report are uncomfortable, for low tax campaigners like us as much as anyone.  But it is vital that we understand the scale of the crisis in the public finances so that we know the scale of the challenge we’re facing.  The last thing anyone wants is for the next government to address the public finances in a panic, pushing through clumsy spending cuts or disastrous tax hikes.

We are facing this crisis in the public finances because the Government were far too optimistic.  They increased public spending on the basis that an economy which had seen the back of "boom and bust" could afford to.  That turned out to be an expensive mistake and we're all set to pay a steep price.  British taxpayers can't afford for politicians to make the same error again.

Anti-semitism

Last week the Community Security Trust (CST) released an interim report (PDF) on anti-semitic incidents since the start of this year.  Between 1998 and 2008 there had already been a big rise in the number of incidents, their last annual report (PDF) contained this graph:

The new report reveals that this year, in just six months, there have already been 609 incidents, beating the previous annual record with only half the year gone.  Clearly the rise is connected to the conflict in Gaza but it builds on a long term trend of rising incidents and it cannot be acceptable that the security of Jews in Britain depends on an elusive peace in the Middle East.

Working at the TaxPayers' Alliance, we go along and speak at quite a few different venues, to different audiences.  Not so long ago, I spoke at a Jewish school.  The children were bright, attentive and, when they disagreed with what I was saying, a challenge.  Unfortunately, there was also the sad sight of a number of security guards lining the entrance to the school.  While it was obviously good news that they were there, it was incredibly disappointing that they had to be and really brought the reality of anti-semitism home.  It felt like such an awful failure that, in our country, a school should need that kind of security to defend the children in its charge against racist attacks.

No one wants some sense of victimhood to define the Jewish community, the CST put it well on their blog when they say that  "Antisemitism does not define the British Jewish experience and Britain is a good place to be Jewish. Our community is, generally speaking, well integrated, highly educated and relatively prosperous."   Action is urgently needed though, to fight the scourge of anti-semitism.

The 50p rate will mean fewer entrepreneurs and fewer jobs

At the TPA, we've just released a new report that I've co-authored with Jonathan M. Scott, a Teaching Fellow at Queen's University Belfast and blogger.  Tax and Entrepreneurship looks at the relationship between the tax system and people's decision to start a new firm.  It points out that in order for the risks association with starting a new firm to be financially worthwhile, there need to be rich rewards if things go well.  Often, those rewards will go beyond someone's immediate needs and be saved and then passed on to children, it's no accident that Theo Paphitis on Dragon's Den refers to the money he invests as "my children's inheritance."

Unfortunately, that gets taxed heavily and repeatedly.  The money is taxed when it is earned, when it is saved and invested in a company and then again when it is passed on to children - even before it is spent.  That adds up to a total top marginal tax rate of 90% even with the current income tax regime and a top rate of 40p.  Throw the new 50p top rate into the mix and you're talking about a top marginal tax rate of a massive 92%.  20% of the amount people are left with right now will be taken away with the introduction of the new top rate.  That is a massive burden and will reduce the incentives to start a new firm.

That means that the 50p rate shouldn't just concern the rich.  The vast majority of new jobs are created by new firms, particularly the high growth "gazelles".  If we see fewer of those firms thanks to the new 50p rate then more people losing their jobs now thanks to the recession will have to wait longer to find work again.

Why are we giving aid to Burma? They score higher than we do...

...on the New Economics Foundation's Happy Planet Index!

See the rankings here (PDF, page 63) - they come 39th.  Other highlights include Jamaica (3rd) - with one of the highest murder rates in the world - higher than Sweden (53rd) and Mexico (23rd) higher than the United States (114th) - apparently no one told the millions of Mexican immigrants in the States.  In a measure that is supposed to show how we can live happily while not harming the planet, bizarrely the Saudis (13th) do much better than we do (74th).

This index is always absurd, I wrote a response for the TPA website last year.  That doesn't mean it should be ignored, though.  In the Happy Planet Index we see the priorities of the environmental movement in action.  The New Economics Foundation aren't embarassed about the index's results and major groups like Friends of the Earth have signed up to the "Happy Planet Charter".  Results like those above are what you get if you combine a complete disregard for material prosperity with fetishising resource efficiency, and that's what the environmental movement do.

Development aid

My colleague Ben Farrugia, at the TaxPayers' Alliance, has written a post on 'One World Conservatism'.  He welcomes the focus on improving how aid money is spent, but makes it very clear that the 0.7% target is a bad idea:

"Which may be all well and good if the Conservatives really had a way of establishing what development aid works and what doesn't, but doubters are right to be sceptical. Compared to other countries, much of our £9.1 billion will be spent 'relatively' well. However, a lot won't be, lost in waste or counter-productive initiatives. It will be lost in expensive consultations, handouts and charity advocacy. Jasmine Whitbread, Chief Executive of Save the Children, writes in the Times today that ineffective aid projects are a thing of the 1980's (a point made in the Green paper too). They aren't. Maybe fish factories in the middle of deserts are rarer, but internet cafes with no access to the internet are still being built, and some charities that carry out no aid work are in receipt of taxpayers development spending.

More importantly, the measurements of 'effectiveness' are (or at least should be) highly contentious; the number of children in school has increased dramatically over the past ten years Ms Whitbread writes, which is true, but at the same time most developing countries have seen a matching rise in teacher / pupil ratios. When class rooms are packed to the hilt, quality of learning declines. Deciding what constitutes aid effectiveness will be a hard job (one that has defied previous DfID administrations). Until the Conservatives have cracked it, they should at best commit to current levels of spending, but not to major increases.

Ring-fencing budgets has an obvious political appeal, but with the international aid budget - and with health too - there is plenty to cut and reapportion before we start talking about increases. Importantly too, as we encourage NGO's and Governmental organisations to spend development funding better, essentially guaranteeing them current funding levels is counter-intuitive; the threat of budget squeezes tends to focus minds. Unfortunately though, with large and influential charities such as Ms Whitbread's in receipt of considerable taxpayer funding (Save the Children received £11.4 million last year) the political pressure for 'ring-fencing' of the DfID budget will be considerable."

Polly Toynbee is wrong, public sector staff are better paid

Yesterday, Polly Toynbee used her column in the Guardian to attack the idea that staff in the public sector are now better paid than those in private sector.  In that piece, she accused us of "using conveniently deceptive figures" because we cite the Office for National Statistics' Annual Survey of Hours and Earnings which shows public sector staff are paid significantly more.

We've responded on Comment Is Free today setting out the problems with her argument, concluding that:

"The evidence for Toynbee's argument that the gap between average public and private sector pay is down to a great mass of menial workers having been outsourced to the private sector appears extremely dubious. Her case relies upon misleading comparisons between very different jobs and an, at times, extremely selective reading of the evidence.

The true gap in remuneration between the public and private sectors may be even larger than the ONS statistics suggest. The Institute for Fiscal Studies estimate that "relatively generous public sector pensions mean that a public sector worker is on average around 12% better off than a private sector worker on the same basic salary.

There are a number of factors that have contributed to rewards in the public sector leaving those in the private sector behind. Public sector staff are more heavily unionised, public sector organisations are run by politicians who aren't spending their own money, as many private sector managers are. Shareholders, who can take their money elsewhere, are better able to exert control than taxpayers, who sometimes aren't even able to find out how much the most senior staff are paid. Quite how the gap in remuneration between the public and private sectors arose and how it might be tackled is open to question. What is clear though is that the gap is far from a myth."

Conservative transport policy goes up in fiscal smoke

The nationalisation of the National Express route from Kings Cross to Edinburgh has rightly been getting a lot of attention.  The taxpayer has just lost out to the tune of over £1 billion as a big company uses dodgy accounting practices to avoid paying the price for making a far too optimistic bid for the route.  Hopefully Iain Murray, who has some experience in this area, will have the time to give us his thoughts on how similar problems might be avoided in the future.

This week's other transport story is arguably going to be far more important to far more people though.  The news that £29 billion is going to be cut from the transport budget over a 10-year period has huge implications, arguably even more serious for the Conservatives than for the Government.  I've opposed the policy of stopping the growth of Heathrow for some time on the grounds that international travel shouldn't be put beyond the reach of ordinary people and is economically vital.  The proposed high speed line would be an inadequate replacement and phenomenally expensive.

That policy now needs to be reassessed, even if you didn't find my earlier arguments persuasive, as it is simply unaffordable.

City AM describes the potential consequences of a £29 billion cut over ten years:

"The £16bn Crossrail scheme linking Heathrow to Canary Wharf and Essex could be delayed; a £6bn motorway improvement scheme could be cut; a mooted high-speed rail route may be delayed; and train fares could rise substantially, with the current one per cent plus inflation cap on fares lifted."

The argument that Theresa Villiers used to make, that the £15.6 billion (in public subsidy alone) high speed line could be funded from the Transport budget without compromising other projects, is clearly untenable.  Other projects are already being compromised even without another big new commitment.

The Conservatives need to keep their promise to cut inheritance tax

By Mark Wallace, TaxPayers' Alliance Campaign Director

When Ken Clarke joined the Shadow Cabinet he suggested that the Conservative Party's flagship pledge to cut Inheritance Tax was now an aspiration, now Neil O’Brien of Policy Exchange makes the case that the pledge should be dropped in the Daily Telegraph today. Neil argues – correctly – that the Tories must prove to the public that they appreciate how tough times are, and demonstrate their willingness to be bold and even controversial in order to balance the books at the Treasury. However, his conclusion that abandoning the pledge to all but abolish Inheritance Tax is the way to do that is deeply flawed.

George Osborne struck the right note at the start of the week when he began explaining to the public that some very difficult decisions need to be made in coming years, both as a product of the recession and of Gordon Brown’s irresponsible and wasteful borrowing binge. As well as being factually correct, this is politically the right tack to take, too – the public know things are bad and they will respect politicians who come clean with them and are brave enough to take really tough decisions.

Is it really a brave or tough decision to tax people more, though? The answer is no. Gordon Brown has demonstrated in the last 12 years beyond any doubt exactly how easy it is for a politician to slap the public time and again with higher taxes, whilst posturing as a generous leader by lavishing money on public spending. The public are sick of it. What would be really radical, and truly brave, would be to look at the other side of the equation and cut spending. What’s more, once the plunge was taken it would be popular and productive. 

Housing MPs in the Olympic Village

Jonathan wrote about the possibility of housing MPs in the Olympic Village back in April, after Cllr Ian McCord floated the idea with a petition on the Number Ten website.  As part of our response to the MPs' expenses scandal, at the TaxPayers' Alliance we've released a short research note going through some of the practical considerations around housing MPs in the Olympic Village.

Having government-owned apartments does seem a reasonable way of avoiding MPs profiting from their expenses, and all the recent scandals over things like flipping.  However, with investment budgets being slashed, the idea that we can't afford to build roads but can afford to build new homes for MPs would not sit well with the public.  Using the Olympic Village, which is being paid for by the taxpayer anyway, avoids that problems and provides a range of homes a short commute from central London:

For more details, see our research note.

Re: Greening the Blue

Radomir Tylecote makes the case for conservatives to embrace environmentalist policy in response to potential global warming.  He describes the attitudes of British conservative thinkers on this subject as “atrophied”.  Unfortunately, there are a number of distortions in his article which result in a failure to really engage with the conservative critique of the current direction of global warming policy, the direction that Radomir urges us to follow.

He argues that it is ironic that conservatives “scorn” requests from renewable energy firms for “better government support” as many of them are more sympathetic towards nuclear power, which also struggles without subsidy.  This isn’t really ironic, it is simply the result of the fact that nuclear power gets far less subsidy per KWh and generates far more useful power, as it is less volatile than wind in particular.

Renewables firms currently get over £50 for every Renewables Obligation Certificate (ROC) they sell and they get one of those for every megawatt of power they generate.  That is a massive subsidy, adding around 50% to their income, above the amount they’ll get from the market for actually selling the electricity (PDF).

Radomir thinks that nuclear has had “massive state subsidy”, but it has never enjoyed anything like the level of generosity currently being extended to renewables.  Despite that, nuclear power has supplied a substantial portion of our electricity demand for decades, something that renewables have never done.  Conservatives are right to be sceptical of sources of power that aren’t economical without the level of government support renewables currently receive, particularly given that it is vulnerable manufacturing industries and the poor who suffer most when prices rise.

Re: UKIP's flaw

JP,

I'm not particularly interested in a debate over the UKIP, but your case against pulling out of the European Union seems flawed.  This section is critical, as it is your empirical case that the EU will act against its economic interests and stop free trade between the EU and an independent UK:

"No, posturing against us would be the logical outcome of us pulling out.  Look at how they reacted to the Lisbon Treaty referenda.  Look at how they react to the Conservatives’ pulling out of the EPP.  Not conciliatory.  Not in their own economic interest."

In neither of those cases was there a significant economic interest at stake.  No one is going to lose their job because Barroso condemned the Conservatives leaving the EPP, or thanks to the eurocrats contempt for the views of Irish voters.

Of course, countries can act against their economic interests for the sake of some political goal.  However, if the UK were to leave, what would the political interest in attacking us be?

Our scepticism would no longer be a threat to ever greater union, and there would therefore no longer be a reason to punish it.  If they wanted us to return to the EU, the very worst thing the remaining EU members could do would be to lash out at the British public.

So your case, essentially, comes down to the idea that the remaining members would be stupid enough to lash out, in pride, at us, despite that being entirely counterproductive.  And, that they could sustain that position despite it adding to their already high levels of unemployment and making a lot of valuable voters poorer.

If you really think that the EU will act in that way.  I'm surprised you are willing to have anything to do with such an institution.  Surely that level of blind stupidity will also render them deaf to any calls for reform?

Will the Conservatives hold a retrospective referendum on the Lisbon Treaty?

In his speech this morning, David Cameron said that:

"We will therefore hold a referendum on the Lisbon Treaty, pass a law requiring a referendum to approve any further transfers of power to the EU, negotiate the return of powers, and require far more detailed scrutiny in Parliament of EU legislation, regulation and spending."

The pledge to hold a referendum wasn't accompanied by the qualification that such a referendum will only occur if the treaty is not already in place. That is quite an omission and, in such an important speech, a strange thing to leave out by mistake or to save time.

Is the Conservative Party moving towards a more robust opposition to the Lisbon Treaty? Are they committing themselves to a retrospective referendum on the Treaty, just like Harold Wilson held a retrospective referendum on Common Market membership?

The Speaker resigns

It is good news that Michael Martin is going to resign.  His credibility was destroyed when he tried, in vain, to use taxpayers' money to prevent taxpayers discovering the details of MPs' expenses claims.  With the scale of the abuses uncovered by the Telegraph, it is now quite clear that was nothing more than a taxpayer funded cover up.  After that, there was never any chance that Michael Martin could lead the reforms needed to restore the reputation of parliament.  Douglas Carswell deserves huge credit for his strong and early stand on this issue.

There are now three things that need to happen:

1. MPs' can't assume that the resignation of the Speaker draws a line under this affair.  He bore a significant measure of responsibility but so do the MPs' who made the unethical claims in the first place.

2. His resignation has to be immediate, he can't get a big payoff and there can be no question of shuffling him on to the Lords.

3. The next Speaker needs to be someone committed to transparency and democratic accountability.  We can't just have a new face leading the same old attempts to hold back reform of the system.

The TPA has issued a statement.

Matthew Elliott, Chief Executive of the TaxPayers’ Alliance, said:

“Michael Martin has been an awful Speaker and his arrogance and incompetence have betrayed the interests of taxpayers and Parliament, so his resignation is welcome. He has allowed MPs to get away with outrageous expenses claims, and wasted taxpayers’ money on legal action to try to keep those expenses secret. His resignation should be immediate, he should get no payoff and he absolutely must not be elevated to the Lords. The next Speaker must have a commitment to full transparency and democratic accountability.”

Many, many MPs have been unethical in their expenses claims

"Melanchthon" has written a defence of MPs' extravagant expenses claims on the Platform.  His argument starts from the premise that MPs' do need to have some kind of provision for having two homes.  I'm not sure anyone disagrees with that, except when they don't attend Parliament for ideological reasons or live close enough to London that many of their constituents commute.

From that, he argues that we should, except in those cases where actual fraud has been committed, stop attacking MPs whose claims appear excessive because that's somehow just the way expenses work.  Apparently everyone claims for things that aren't necessary to do their job, so we should shut up and stop whining when politicians do the same with taxpayers' money.

Clearly, penny pinching could be taken too far.  But, no one is yet suggesting that MPs sleep in tents on the floor of Westminster Hall.  The basic standard that most people appear to be working to is that, just because the MPs are away from home, ordinary people shouldn't be expected to subsidise a lifestyle for their elected representatives that is significantly more luxurious than their own.  That isn't too much to ask.

For most people, around £700 is a pretty large amount to spend on a television and thousands of pounds is taking the piss.  As such, they find the idea that Shahid Malik submitted a claim for that offensive.  Equally, most people don't have moats and MPs' homes are supposed to be just that, not the kind of ambassador's residences that "Melanchthon" suggests they are.

Most companies aren't nearly as generous as "Melanchthon" pretends.  Certainly, at the TaxPayers' Alliance, it isn't seen as acceptable to claim your meals as expenses just because you happen to be on a work trip.  And it isn't just us, plenty of people from all walks of life have written into their newspapers making it clear that MPs are enjoying, at taxpayers expense, treatment ordinary people would never expect where they work.