20 Mar 2013 14:45:10

Centre right think tanks don't like Budget's complexity

By Tim Montgomerie
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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.”

3.45pm updates....

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.

5 Dec 2012 16:48:59

Where's the radicalism George? Think tanks worry at Osborne's "tinkering".

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.”

27 Jul 2012 13:05:06

Matthew Sinclair becomes the new Chief Executive of the Taxpayers' Alliance

By Paul Goodman
^{Follow Paul on Twitter}

Congratulations to Matthew, who was the TPA's Director until this promotion - and is of course a regular contributor to this site.

Matthew Elliott is leaving the post: best wishes to him, too.  His leadership has helped to drive the TPA's success as an influential contributor to political debate and discussion in Britain.

And Jonathan Isaby, formerly of this parish, has taken on a beefed-up role for the TPA, dealing with the media as well as Parliament.

More as and when we have it.

25 Jul 2012 12:30:05

The Institute of Directors attacks "glacial speed" of Coalition's supply-side reforms

By Tim Montgomerie
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A few reactions to today's disappointing GDP numbers.

First from the Institute of Directors:

“Today’s figures come as a severe blow to business. The Eurozone countries show that we absolutely cannot afford to waver from the deficit reduction programme, but there are several steps the Government must take to boost the economy through supply-side reforms. New infrastructure projects financed by our low interest rates, proper relaxation of planning and employment red tape, and action to lower energy costs for manufacturers would all show Britain means business. Too often, programmes are moving ahead at glacial speed. To help unlock corporate cash piles, Government needs to show decisive leadership and a real sense of purpose.”

A similar message comes from Philip Booth, Editorial Director, at the Institute of Economic Affairs:

“An expanding private sector is the key to economic growth. The government must do more to prevent stagnation of the economy. The four key measures it could take are a serious liberalisation of planning law; deregulation of labour markets; an end to the completely incoherent “green” policies; and radical reform of the welfare state. There are many factors impeding growth that are beyond the government’s control, such as the eurozone crisis. That is not an excuse for inaction in those policy areas where the government can make a difference. Productivity and not unemployment is the main problem. As such, increasing government borrowing from current levels is clearly not the answer. It is time for bold supply side reform.”

The TaxPayers' Alliance reaction focused on the need to help the construction sector:

“Yet another quarter of economic contraction is dismal news for families already struggling to make ends meet. The evidence doesn’t support those blaming Britain’s economic woes on cuts in government spending though, as the Government and other services category actually expanded in the quarter. The most immediate problem is in the ailing construction sector. While public sector capital spending is set to be cut relatively sharply, the real problem is market uncertainty being compounded by new taxes like empty property rates, which massively increases the risk for investments in commercial property, and Section 106, an increasingly punishing tax on new developments. If the Government are serious about making the health of our economy their top priority, then they need to deliver a less onerous tax system, which doesn’t get in the way of the investment that can deliver more jobs and higher wages.”

8 Jun 2012 07:38:31

The TaxPayers' Alliance calls on the Government to oppose new loans to Argentina

By Matthew Barrett
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The TaxPayers' Alliance is launching a new campaign today calling for the Government to oppose further World Bank loans to Argentina. The campaign includes an e-petition and new research (pdf) looking at the scale of the funding - the TPA's findings show that taxpayers' money is supporting loans to Argentina worth over £225 million, despite Argentina advocating a boycott of British goods, and its hostile and belligerent attitude towards Britain's territory in the Falkland Islands. The TPA also argues that Argentina has no pressing humanitarian need for aid.

The TPA is also releasing the video below to highlight the petition:

TPA research shows that outstanding loans from World Bank institutions to Argentina were worth $16.2 billion in March this year. Based on Britain's shareholdings in the two responsible institutions, British taxpayers are responsible for more than £225 million in loans to Argentina. The TPA says that we would not be isolated by voting against new World Bank loans to Argentina - the Obama administration already has a policy of voting against new loans, because of Argentina’s treatment of existing creditors. British representatives could be instructed to support the American policy.

Continue reading "The TaxPayers' Alliance calls on the Government to oppose new loans to Argentina" »

21 Mar 2012 16:42:23

Think tanks give mixed reaction to Budget

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."

Continue reading "Think tanks give mixed reaction to Budget" »

8 Mar 2012 06:54:40

Matthew Sinclair: Abolish the EHRC, cancel high speed rail, cut business subsidies - how to save over £7 billion

Matthew Sinclair is Director of The TaxPayers' Alliance

The largest savings to be found in the public sector tend to be in the biggest budgets: welfare payments and remuneration for staff.  However it is also important to look at other, smaller budgets where it is possible to make cuts that don’t affect households in the same way.  Any savings there will make the overall fiscal austerity package easier for families to bear.  In this article I have looked at six: a further quango to abolish; cutting subsidies to business; freezing the foreign aid budget; cancelling high speed rail; and scrapping the Green Investment Bank.

The Institute for Fiscal Studies described how the “big winners” from the 2010 Spending Review were “the Department for International Development and the investment budget of the Department of Energy and Climate Change”.  These proposals would bring them into line with other Departmental budgets.  It would lead to a more balanced fiscal adjustment.

1) Abolish the Equality and Human Rights Commission - £48.9 million saving in 2011-12

There are more public sector bodies that could be abolished.  Just after the Coalition came to power, we wrote a series of letters to Ministers calling for specific organisations to be axed, focusing in particular on the Carbon Trust, Consumer Focus and the Equality and Human Rights Commission (EHRC).  Since then the Government has announced the abolition of Consumers Focus, its powers are being transferred to other bodies, and the removal of the core grant for the Carbon Trust.  But the Equality and Human Rights Commission is still there and is receiving total funding in 2011-12 of £48.9 million.

There are two key reasons why we called for the EHRC to be abolished: it has taken on a campaigning role that is inappropriate for a public sector body; and it has shown it cannot be trusted with taxpayers’ money.

The campaigning role should be particularly galling for Conservatives as the quango is setting itself up in opposition to what was party policy in the last manifesto.  Their “human rights strategy and programme of action” for 2009-12 set out “no regression in law from the levels of human rights protection and mechanisms for enforcement under the Human Rights Act and other ratified human rights treaties” as something they aim to achieve.  As I argued in our original letter calling for that quango’s abolition: that is a political objective, and while the public may want some law to deal with human rights, research suggests a majority think that “too many people take advantage of the Human Rights Act”.  It is clearly inappropriate for those people to see their money spent supporting a cause they do not believe in.

There was a new National Audit Office report in June 2011 that again found serious failures at the quango, with millions of pounds spent without proper authorisation.  Things may get slightly better and you would expect them to watch the money more carefully now that their budget is being cut.  But in the end this still isn’t an organisation that politicians should trust with our money.

Continue reading "Matthew Sinclair: Abolish the EHRC, cancel high speed rail, cut business subsidies - how to save over £7 billion " »

30 Jan 2012 07:37:43

Average family pays £656,000 tax over lifetime, calculates the TaxPayers' Alliance

By Joseph Willits 
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According to new research based on National Statistics data from the TaxPayers' Alliance, over the course of a lifetime the average household pays £656,000 in tax. This includes £250,000 in Income Tax and £101,000 in VAT.

The Taxpayers' Alliance's figures are based on the current rate of tax, calculated from a working life of 40 years and 15 years of retirement. The research is broken down in to quintiles, which are broken down into five household income groups, ranging from the highest to the lowest. Some of the key findings of their research are:

• £1.3 million in direct and indirect taxes will on average will be paid by households in the highest quintile. The figure for the lowest quintile is £235,000.
• Figures for the second income quintles are £392,000; third - £556,000; and fourth - £755,000.
• The taxes which are most burdensome to all households are Income Tax, VAT, employee National Insurance contributions and Council Tax.
• For the poorest households (those in the lowest quintile), this means paying an average of £57,000 in VAT, and £55,000 in Council Tax.

Responding to the findings, Director of the TaxPayers' Alliance Matthew Sinclair has said:

"Households in the UK now pay an incredible amount in tax over a lifetime, handing over a hefty slice of their income. The VAT hike has added to the cost of living and many taxpayers are really feeling the pinch with little prospect of improvement on the horizon. The Chancellor needs to deliver a tax cut in the Budget, to ease the burden and help the economy to grow. Simpler, fairer taxes can decrease the lifetime tax bill for households and leave everyone with more of their own money, so they can decide how to spend it." 

10 Jan 2012 12:51:44

Round-up of reactions to HS2 announcement

By Matthew Barrett
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Following the Government's approval of the first phase of the HS2 train line from London to Birmingham, several think-tanks and campaign groups have reacted to the news.

The Institute of Economic Affairs' Deputy Editorial Director, Dr Richard Wellings, said:

“The government is ploughing ahead with a hugely expensive project whose economic case is flawed, whose time-savings claims are dubious and whose environmental case is highly suspect. After having made such political capital out of opposing a third runway at Heathrow, one can only assume the government is forging ahead in the face of such criticism as a way of saving face. This project will do nothing to bridge the North-South divide and will instead burden the ever-hammered taxpayer with the task of funding what is a classic white elephant. The government should make one last effort to reconsider its position before it saddles the nation with a high-speed disaster.”

The TaxPayers' Alliance's Director, Matthew Sinclair issued the following statement:

"It is extremely disappointing that the Government is pressing ahead with plans for a new high speed rail line that will cost taxpayers a fortune. The economic case for the new line just isn’t credible and ministers still aren’t being honest about the hidden costs, or the consequences for towns getting a worse service and passengers paying higher fares under their current plans. There has never been a proper consideration of strategic alternatives that could deliver greater capacity more quickly and without the enormous bill. This white elephant will mean a faster journey for a fortunate few but at an enormous cost to the rest of us; it should be abandoned before too much money has been wasted."

Continue reading "Round-up of reactions to HS2 announcement" »

14 Dec 2011 07:11:09

New TaxPayers' Alliance report indicates council employees have spent 2,500 working years on paid suspension since 2009

By Matthew Barrett
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A report (pdf) from the TaxPayers' Alliance released today reveals that 1,328 Midlands council staff have been suspended for a total of 419 years since 2009, costing taxpayers £8.2 million.

If these figures were replicated nationally, in line with the spending power of Councils in the Midlands, the TPA estimates that since April 2009 7,852 staff would have been suspended for a total of 594,816 days, or almost 2,500 working years.

The suspended members of staff have been on full pay, and the average suspension lasts 76 days.

The worst-offending councils include:

• Leicester City Council, who paid out the most in salaries to suspended staff at almost £1.5 million for 107 incidents.
• Nottinghamshire Council had 167 cases of suspension since April 2009, the highest in the Midlands.
• 78 employees across the Midlands were suspended on full pay for more than 12 months.
• A manager on over £67,000 a year at Newark and Sherwood Council was suspended for 77 days before leaving the authority.
• An employee of Leicester City Council on a salary of £48,642 was suspended for 872 days. The total wages paid during suspension was in excess of £176,000. This was the largest amount paid during suspension.
• An employee at Lincolnshire Council on a salary of almost £65,000 a year received over £140,000 during a suspension of 523 days, before being dismissed.
• An employee of Nottingham City Council was suspended for 950 days – almost four years.

Six councils refused to provide any information, twelve did not provide salary details, one did not respond to the TPA's request, and two did not record requested details of any suspended staff.

Continue reading "New TaxPayers' Alliance report indicates council employees have spent 2,500 working years on paid suspension since 2009" »