By Mark Wallace
Follow Mark on Twitter.
As reported by Guido, a range of think tanks and campaign groups have this afternoon written to the Government expressing concerns about the impact of the Lobbying Bill on their work:
We wish to highlight our grave concern about the Government’s Lobbying Bill, a piece of legislation that poses a significant threat to legitimate campaigning freedom of speech, political activism and informed public debate.
Part II of the bill threatens the ability of charities, research and campaigning organisations to inform the public debate, fulfil their missions and raise awareness of important issues. The current drafting would capture a huge number of organisations who would not presently be considered as relevant to electoral law and who do not receive any state funding. It also threatens to dramatically expand the range of activity regulated far beyond any common sense understanding of commercial lobbying.
We do not regard the Cabinet Office’s assurances as sufficient given the widespread legal doubts expressed from across the political spectrum. It cannot be a prudent approach to legislate on the basis of assurances that enforcement will not be to the full extent of the law. The exceptions offered are unclear and unconvincing.
The lack of clarity in the legislation further exacerbates its complexity, while granting a remarkably broad discretion to the Electoral Commission. The potential tidal wave of bureaucracy could cripple even well-established organisations, while forcing groups to reconsider activity if there is a perceived risk of falling foul of the law. This self-censorship is an inevitable consequence of the bill as it stands.
We urge the Government to reconsider its approach and to urgently address the fundamental failings in this legislation.
Mark Littlewood, Director General, Institute for Economic Affairs, Simon Richards, Director, The Freedom Association, Tim Knox, Director, Centre for Policy Studies, Matthew Sinclair, Chief Executive, Taxpayers’ Alliance, Jo Glanville, Director, English PEN, Emma Carr, Deputy Director, Big Brother Watch, Eamonn Butler, Director, the Adam Smith Institute
Britain is in the grip of a housing crisis. House prices may have fallen a bit since 2008, but so have incomes. In many parts of the country prices are rising steadily, particularly in London, where house prices have risen by 3.5% over the past year. And over the past fifty years house prices have risen well above inflation: Shelter has pointed out that if grocery prices had risen at the same rate, the price of a whole chicken at Tesco would now be £51.
To address this, the government has launched the 'Help to Buy' scheme. This consists of an 'equity loan' for home buyers, where the taxpayer will lend up to 20 per cent of the value of a newly-built home interest-free for five years, and a mortgage guarantee scheme, which offers banks insurance on mortgages they make with loan-to-value ratios of 80 per cent or above – in other words, where buyers have made a deposit of less than 20 per cent of the value of the house.
In fact, we all work for the government because the taxes we pay support its activities. For most of us that includes income tax and National Insurance. For some it includes tobacco duty, alcohol excise duty and fuel tax. For all of us it includes VAT, and for most it will include council tax. The list of the different taxes we pay to fund government is mind-bogglingly long, but the Adam Smith Institute has painstakingly listed and costed them all, as it has done for 25 years in order to calculate how long we spend working for the government.
The good news is that the average person in the UK ceases to work for government from today. In other words, today, May 30th, is Tax Freedom Day, after which people start working for themselves. The concept is a simple one. We add up all the taxes, direct and indirect, visible or stealth, and work out what they amount to as a proportion of the UK's net national income. This year it comes to 41.5 percent. That same percentage, expressed as a proportion of days in the year, comes to 150 days. So, if we had paid everything to the government since January 1st, it would have taken 150 days before the average person had paid the amount the government takes from them each year.
By Tim Montgomerie
Follow Tim on Twitter
Matt Sinclair of the TaxPayers' Alliance liked the populist measures - #Crosbynomics according to Matthew d'Ancona - but worried about the Budget's complexity:
"Unfortunately, the great limitation of this budget was that it relied far too much on complicated targeted reliefs instead of tax cuts across the board. Simpler, strategic tax reforms that reduce the overall burden would be fairer and do more to produce the stronger economy Britain needs."
David Skelton of Policy Exchange also welcomed what he called the "Boddingtons Budget," citing the end of the beer duty escalator and another freeze in petrol duty. He worried, however, that more could have been done on housebuilding:
“Although measures to help first time buyers are welcome, the UK is still on track to preside over the lowest level of housebuilding since the 1920s. More radical planning reforms combined with the introduction of measures such as self-build should be introduced to get Britain building.”
Professor Philip Booth of the IEA is concerned that the Chancellor's housing measures have actually learnt little from recent economic history:
"The decision to provide further Treasury guarantees for mortgages is leading the government to get involved in exactly the sort of reckless behaviour that led to the failure of major banks in 2007-2008. Any attempts to provide support for the housing market whilst not liberalising the planning system will simply lead to higher house prices and rents.”
On behalf of the CPS, Ewen Stewart commented:
“The most significant announcement today was the proposed changes to the Bank of England’s inflation targeting remit. Whilst lip service was paid to maintaining the 2% inflation target, it’s clear Mark Carney will be given significant rope to engage in even more expansionary monetary policy. So far QE, despite being larger as a proportion of GDP than that undertaken in the US, has failed to generate growth. A further loosening risks embedding inflation and sterling weakness.”
Also from CPS Kathy Gyngell echoed my concerns from earlier today about the anti-family dimension to the Budget:
“This budget is worse than nothing for the stay at home mother (the single earner couple family). Already grossly penalised in the tax and benefits system for the instinctive and reasonable choice to care for their infants at home, now this couple are meant to subsidise rich working women’s nannies.”
The Adam Smith Institute lists its good, back and ugly conclusions here.
A few think tank reactions to the Autumn Statement...
Mark Littlewood, Director General at the Institute of Economic Affairs, focused on the big picture and the fact that Britain is becoming a high debt nation: "The Chancellor has basically stuck to his spending plans, but not to his deficit plans. Low growth and weak tax revenues demanded that he made greater reductions in spending today. His plan is now to add around £6,000 to the national debt for every man, woman and child in the UK between 2013 and 2018. By the end of this Parliament this will mean the UK’s national debt is close to £65,000 per household. It’s clear the government is still failing to take the necessary action to restore economic credibility. It’s all very well acknowledging the need to get public spending under control, but it requires substantial reform. Limiting benefit rises to 1%, scrapping the planned fuel duty increase, devolving power over teacher pay to schools and cutting corporation tax are steps in the right direction. But they are tiny, tinkering measures – not radical reforms."
Sam Bowman of the Adam Smith Institute was even more depressed at the Chancellor's lack of boldness on spending and public service reform: "Deeper cuts to public spending are clearly needed to cut the deficit, but these are not possible without a fundamental shift away from socialistic monoliths like the NHS. The only way real cuts to expenditure can be made is by shifting to more efficient, market-based models of social insurance for healthcare and welfare. The claim that we can make substantial savings by ‘trimming waste’ is a lie – and we’re fast learning what a dangerous one it has been.”
Graeme Leach, speaking for the Institute of Directors, was more positive: "Graeme Leach, Chief Economist at the Institute of Directors, said: “This was a tricky job, well done by George Osborne. Faced with a weaker outlook for GDP growth, the Chancellor needed to raise business confidence whilst at the same time keeping the deficit on a downward path. And he largely succeeded, particularly with the surprise reduction in Corporation Tax. Ideally, we would have wished for further and faster deficit reduction but political reality always made this unlikely. Our key concern is that the OBR’s growth forecasts will yet again prove too optimistic, with the result that the deficit in the out years will be much higher than forecast. Business confidence will be boosted by the corporation tax cut.”While welcoming many of the Chancellor's measures Jonathan Isaby of the TaxPayers' Alliance expressed concern at the increasing number of people paying the 40p tax band: "The Chancellor has sent out entirely the wrong message to those earning, or hoping to earn, the increasingly modest wage where almost half of your income starts to be taken in Income Tax and National Insurance. Hundreds of thousands of new people are being ensnared by a punitive rate of tax."
Christian Guy of the Centre for Social Justice regretted that - yet again - the Chancellor had failed to introduce a tax allowance for married couples: “The Government said it would introduce a transferable tax allowance for married couples, it is disappointing that this pledge has still to be fulfilled as it is shown that it would have a positive impact on the incomes of the poorest working households. It would also play a part in tackling the perverse incentives which currently persuade many people on low incomes to reject couple formation and the stability of marriage.”
By Matthew Barrett
Follow Matthew on Twitter.
Following the Queen's Speech this morning, several think tanks have reacted to the legislation announced (full details of which can be found here). I've collected them below.
8pm update: Open Europe have given their reaction to the proposed European Union Bill:
"The UK government is likely to sell the measure as a guarantee that it will never again be forced to indirectly contribute to eurozone bailout funds - a few papers have already run with that story. At the same December summit, Britain won a political declaration and an EU decision that the article that forced it to contribute to the EU-wide bailout funds, the EFSM, won't be used again (Article 122 - for background, see here and here). However, the legal status of this guarantee is uncertain. It is not part of the treaty change itself, and MPs may argue that a guarantee that isn't anchored in the Treaties could well prove ineffective. After all, the UK has received guarantees before which proved to be pretty worthless (clue: Charter of Fundamental Rights, Working Time Directive). If MPs wake up to the legal ambiguity underpinning the 'guarantee' they may ask for something firmer in return for ratifying the treaty change."
7.15pm update: Nick Pickles, the Director of Big Brother Watch, has commented on the surveillance aspects of the Queen's Speech:
"So there we have it – the Communication Capabilities Development Programme will have it’s day in Parliament. We don’t know what the draft clauses will be or when we will see them, but the Government remains intent on pursuing legislation in the coming session of Parliament. If someone is suspected of plotting an attack the powers already exist to tap their phone, read their email and follow them on the street. Instead of scaremongering the Home Office should come forward and engage with the debate about how we improve public safety, rather than pursue a policy that will indiscriminately spy on everyone online while the real threats are driven underground and escape surveillance."
2.45pm update: The Centre for Policy Studies' Head of Economic Research, Ryan Bourne has commented:
"What’s needed now is for the Government to use the Enterprise and Regulatory Reform Bill to get serious about deregulation and repealing unnecessary legislation, especially for small businesses. This should include reform of employment legislation and the recommendations of the Beecroft report. Unfortunately, the emphasis on being family-friendly will, in some areas, directly contradict this liberalisation. Flexible parental leave, for example, is unlikely to be popular with many employers. In other areas, such as tax reform, planning, infrastructure and energy policy, it’s a case of wait and hope. Though there wasn’t anywhere near enough in the way of growth bills, it was welcoming to see the Government highlight the need to see through pensions reform. Finalising the creation of the single tier pension is a sensible step. This should be undertaken as soon as possible to put the Government in a better bargaining position with the public sector trade unions on pensioner poverty. The decision to continue with the 10 year period of protection for public sector employees approaching retirement will, however, eliminate much in the way of any early cash savings from public sector pensions reform."
The Institute of Directors has commented on a number of the specific measures announced. Simon Walker, Director General of the Institute of Directors, gave his reaction to the Speech overall:
“The Government is right to place deficit reduction and economic stability at the forefront of their programme. However, we need to see them pursued enthusiastically in practice, not just in principle. To restore business confidence, which is the real key to growth, there must be drastic measures to cut costly regulation and continue to tackle the deficit. Tweaking the edges of the system will not be enough – it’s not the number of Bills that matters, it’s what is in them that really counts.”
The TaxPayers' Alliance is, on the whole, pleased with the Budget:
“There is a lot of good news in the Budget for families who have struggled in the recession. The cuts in corporate and top rate taxes will improve the incentive to invest and innovate, meaning higher wages before tax. Then a higher personal allowance will mean they can keep more of the money they earn. Unfortunately some of the money is coming from higher taxes on pensioners; there is no relief for motorists from terribly high taxes on petrol and diesel; higher taxes on tobacco will be a boon for criminals selling dodgy cigarettes; and yet another higher rate on Stamp Duty is an unfortunate hike in an ugly tax. But overall this is a Budget that should ease the pressure on people’s living standards and allow most of them to keep more of their money.”
The Adam Smith Institute fears the cut in the 50p rate to only 45p will institionalise the top rate of tax at a new high level:
"It’s encouraging to see some steps in this budget towards greater tax simplification. Cutting the 50p tax rate to 45 percent is a step in the right direction, but the Chancellor should have scrapped this altogether. The danger is that the 45p will become a permanent rate. It is also very welcome that the personal allowance has been raised, but the reduction of 40p rate threshold will mean that only basic rate taxpayers will benefit from the personal allowance rise. Up to 300,000 people will now find themselves upper rate taxpayers as a result. This will hit single-earner families particularly hard."
By Harry Phibbs
Last week I wrote a blog for the Daily Mail asking "Who will campaign for capitalism?"
Amidst the complexities of bankers bonuses some of the basic truths have been confused. Dr Madsen Pirie, the President of the Adam Smith Institute has been seeking to address this with an excellent series of YouTube films addressing - so far- the subjects of value, price, specialisation and trade.
An excellent intiative.
By Matthew Barrett
Follow Matthew on Twitter.
Pasted below are some reactions to the GDP growth figures announced this morning. Updated at bottom.
Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“It is not surprising that the latest economic growth figures are grim given the headwinds from the Eurozone. However, this should not tempt the government to change track on deficit reduction. There is no evidence that increasing government borrowing will increase economic growth. Indeed, if anything, part of the setback in growth has been caused by the necessary reversal of the irresponsible government borrowing in the immediate post-crash period. Whilst the government cannot solve the Eurozone crisis, it can radically deregulate the UK economy to create the best possible conditions for economic growth. The government must press ahead with planning reform and begin to deregulate the British labour market. In this area, the government has been moving in precisely the wrong direction and it must change course.”
Tony Dolphin, Senior Economist and Associate Director for Economic Policy at the Institute for Public Policy Research, wrote on LeftFootForward:
"In the short term, as I have been warning for some time, things are unlikely to get much better.There is some good news: energy firms are bringing down their charges and petrol prices have fallen. This will ease the squeeze on households’ spending power. But, as the IMF warned only yesterday, when it revised its forecast for growth in the euro zone in 2012 down from +1.1 per cent to -0.5 per cent, the euro zone crisis is an increasing threat to the global economy. Meanwhile, the government is sticking stubbornly to its deficit reduction plans, meaning further cuts in public sector jobs and taking more demand out of the economy. With public sector austerity at home and a potential crisis in the euro zone on their doorstep, it seems unlikely the private sector will step up its recruitment or investment plans any time soon. Together, these GDP figures and the short term outlook suggest the UK economy has slipped back into recession. The feared ‘double-dip’ began in the final quarter of 2011."
By Tim Montgomerie
Follow Tim on Twitter
Pasted below are some reactions of centre right thinkers to the Chancellor's statement on banking reform.
Tim Ambler, Senior Fellow at the Adam Smith Institute, says:
“The Chancellor may be rushing out his 80 page response to the Vickers report to get the Business Secretary off his back rather than because of any real urgency. Implementation is not until 2019. Most of the detail is left unclear and consultations will continue. But it is a pity that he has nailed his colours to the mast when most independent expert commentary has shown that the Vickers commission proposals will be bad overall for Britain, especially for SMEs, and bad for the international competitiveness of our bankers. The government cannot claim that competition on the High Street would flow from the Vickers report as it barely discussed the matter. The target was to ensure the Treasury would not have to pick up the tab for failures by freezing the banking sector and making it even less competitive. But what banking in the UK really needs is more, not less, competition. It wasn't investment banks that caused the banking crisis, but the supposedly 'safe' retail banks such as Northern Rock and HBOS. Ring-fencing is simply the wrong solution to the wrong problem."
Prof. Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“There is a clear lack of decisiveness about how to approach the problem of banking regulation from the government. On the one hand, welcome action has been taken to ensure that depositors are treated preferentially in the event of a bank failure and to ensure that banks can be wound up in an orderly fashion. On the other hand, the government wants banks to hold much more capital to ensure that they very, very rarely fail. Discouraging failure so strongly also militates against the government's other objective of promoting a dynamic market with healthy competition from new entrants because it prevents the established banks from failing and exiting the market. The ring fencing of EEA deposit business is a clumsy mechanism that would not have made any difference to the banking crash of 2008. A more imaginative approach would have been to give the Bank of England a primary legal responsibility to ensure that banks could be wound up safely in the event of failure and also to give the Bank of England the power to impose structural change if and only if it was necessary to do so.”