Author Archives: Adam Corlett

Should we move our government to Manchester?

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Big Ben has been silenced. At some point in the next 6 years, MPs and Lords must leave the Palace of Westminster too, with renovation needed in the face of ‘impending crisis’. A lot has been written about where parliament might go temporarily, with some even suggesting a few years out of London. But we need to be more ambitious than a mere temporary move of parliamentarians.

We should permanently move both parliament and ‘Whitehall’ to Manchester. Undoubtedly, political parties, think tanks, charities, much of the printed and broadcast press, quangos, embassies and lobbyists would eventually follow, as well as other corporate offices: with further knock-on effects through the spending power of these 10s or even 100s of thousands of jobs.

Politicians talk a lot about ‘rebalancing’ the UK but this is one way – perhaps the only way – in which the state can actually do it at the stroke of a pen. For those currently working in or around parliament and central government – including journalists (and myself) – it would be painfully disruptive. But for most voters in the South East an easing of population pressure should be welcome. As Jeremy Cliffe at The Economist writes:

Moving government out of London would free up housing, transport and office capacity that the current capital badly needs. … Meanwhile that city would of course remain Britain’s economic centre and gateway to the world; a Barcelona to Manchester’s Madrid; a Glasgow to Manchester’s Edinburgh; a New York to Manchester’s Washington. The city on the Thames is surely dynamic enough to absorb the change without breaking a sweat.

Posted in Op-eds | Tagged and | 54 Comments

Raising tax for health and social care: National insurance or income tax?

Last month, the independent panel of health experts set up by Norman Lamb published its interim report on “a new deal for Britain’s Health and Social Care Services”. The panel were “unanimously of the opinion that it is necessary to raise additional revenue for health and care through taxation” and Spring Conference seemed to agree. Similar views may partly explain why the Conservatives have so far (sensibly) refused to rule out any headline tax rises in the next Parliament.

The interim report, which may influence the Lib Dem manifesto, concludes with three options: 1) raise Income Tax (e.g. raising all rates by 1p); 2) raise National Insurance (NI); or 3) introduce a dedicated health and care tax. All have their pros and cons, and in the grand scheme of things Income Tax and NI rate increases raise similar revenue and are both very progressive. But in this post I want to highlight a few reasons why the current NI system might not be the fairest vehicle for boosting health and social care – points that are also important for considering what a ‘dedicated’ tax should involve.

Don’t raise employer National Insurance

First up, there’s a question about what forms of NI would be increased under that option. In short, you would want to raise the personal forms of NI that individuals – employees and the self-employed – pay, but not employer NI. That might sound backward – hitting individuals but not companies (though in the long run both just reduce take-home pay). But the existing employer NI system already creates damaging and expensive distortions. Foremost, it creates a large incentive for companies (and you and me) to use self-employed labour rather than employees. No-one seems to be suggesting this but for the avoidance of doubt: unless/until that major problem is solved, don’t raise employer NI further.

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Reversing Conservative cuts remains the big social security challenge

The conference policy paper on “Mending the Safety Net” contains lots of good stuff on a wide range of welfare policy, even if I say so as a member of its working group. But, at Conference and beyond, I think it’s important not to get distracted from the big issue of the £13bn of cuts planned by the Conservatives. Reversing these – and indeed going further – is what will make the biggest difference to people’s lives, to UK inequality and even to the economy (and hopefully win a few votes in the process). Within this, here are three goals that the party should be fighting for.

Increasing working-age benefits in line with inflation – and ultimately earnings

George Osborne announced that most non-pensioner benefits would be frozen at their 2015 levels for 4 more years. Even before the Brexit vote, this was expected to be a massive drag on living standards. But inflation over the next few years is now expected to be higher than previously predicted – driven by rising import prices due to the weaker pound – and unemployment is predicted to rise too. This means the freeze will be even harsher than Osborne intended. And if the economy at any point needs a boost through fiscal policy, cutting the incomes of poorer households would be just about the worst policy you can think of, as The Economist recently noted.

So the party should be pressuring the new Chancellor to scrap the freeze and increase working-age benefits in line with inflation. But the policy paper goes further and argues that benefits should ultimately rise in line with average earnings – alongside a return to some form of housing cost link for Housing Benefit (soon to be part of UC). This would help ensure that when the economy and tax receipts are growing, everyone shares in that and inequality doesn’t widen. It may sound boring, but choices about benefit uprating in the long-term can compound to be more important than almost any other welfare or tax choice for poverty and inequality.

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What they don’t tell you about TTIP

Countless articles, emails and campaigns have expressed anger about TTIP. This is the Transatlantic Trade and Investment Partnership, which would cover over 800 million people in the EU and US, as well as helping determine the shape of future agreements the world over. There are numerous concerns – some entirely misguided, some merely exaggerated – and from reading the literature of campaign groups like 38 Degrees it might be hard to know whether there are any benefits at all from this trade deal. So supporters of free trade need to straightforwardly spell out some of TTIP’s advantages.

In particular, lost among the scaremongering and obscure debates has been the very foundation of TTIP: an abolition of almost all the remaining import and export tariffs between the US and EU. It’s true, as both supporters and opponents of TTIP say, that tariffs are only a part of the deal: harmonising regulations (without lowering standards) is now often more important. But when the entire process is under attack, the scrapping of tariffs should not be glossed over. I hope it’s not too insulting to suggest that many of those attacking TTIP or signing petitions (not to mention those who haven’t heard of TTIP) may have no idea that it includes the scrapping of import and export tariffs.

Posted in Europe / International and Op-eds | Tagged , , and | 69 Comments

Conference Countdown 2015: Cutting VAT for tourism would be a costly mistake

In the run-up to Autumn Conference in Bournemouth, we’ll be looking ahead to examine the highlights in the debating hall, the fringe and training rooms. You can find the papers here. You can find all the posts in the series here.

One of the motions at conference is for reducing VAT on tourism as far as possible. Here’s why that’s a bad idea.

The idea is to reduce VAT on hotels and selected attractions from the standard rate of 20% to 5% – the minimum allowed by the EU. This is something the British Hospitality Association has been lobbying the Treasury on for years. The motion refers to the importance of tourism more generally, with figures that include all restaurants, pubs and outbound flights, amongst other things, but I assume its VAT proposal is (mercifully) more limited.

The government’s response to this lobbying (under both Labour and the Coalition of which we were a part) has been to point to the substantial price tag. The cost of cutting VAT for accommodation alone would be £2 billion a year, with amusement parks and similar adding another £200 million. This is serious money. A comparable total would be the cost of the Pupil Premium that Lib Dems fought so hard to introduce.

Posted in Conference, Events and News | Tagged , , and | 22 Comments

Opinion: Do UKIP’s sums add up? Absolutely not!

ukip manifestoLike the Lib Dems and Greens (and unlike the biggest two parties), UKIP have released a manifesto that includes a list of what each policy costs (see pages 74-75). They have even had an independent body check that those costs sound reasonable, and put a lot of emphasis on their manifesto being “fully costed”. Kudos to them, you might say, but unfortunately their sums don’t add up.

For 2019-20 they have identified £32 billion of savings – largely from slashing overseas aid, ending EU contributions, cancelling HS2 and reducing Scottish spending. And £32 billion is then used for tax cuts (such as scrapping inheritance tax) and some spending increases. In this sense – and assuming all of these costs are indeed correct – the sums do balance. But…

Posted in News | 17 Comments

Opinion: Should Britain copy Obama’s capital gains proposals?

President Obama has announced proposals to increase taxes on the wealthy and help those on lower incomes (such as by boosting tax credits). The plans include reforms to capital gains tax (CGT): increasing its rate and ending a loophole. Should we do the same in the UK, and how do the Lib Dems’ proposals compare?

Posted in News and Op-eds | Tagged and | 14 Comments

Opinion: No taxation without explanation – tax summaries are welcome but flawed

budget breakdownStarting yesterday, and over the next month or so, ‘tax summaries’ will be delivered to 24 million taxpayers, detailing how much income tax and National Insurance they paid in 2013-14, and where that money went. You can see examples here.

As Nick Clegg said in 2012, this will deliver “greater transparency accountability in government … empowering citizens” with information on what they pay in, and how their taxes are spent. It sounds rather like the ‘Annual Tax Contract’ policy from the party’s manifesto in 1997 and 2001:

No taxation without explanation: Central Government should inform taxpayers of the ways in which their money is raised and spent, just as local councils now do.

You can draw your own conclusions from the pie chart on the right, but it looks like these annual tax summaries will be important.

Posted in Op-eds | Tagged | 25 Comments

Opinion: Nick Clegg’s fiscal target – splitting the difference

Calculating Taxes Up And DownStephen Tall writes that “in terms of policies, there wasn’t much that was new” in Nick Clegg’s Bloomberg speech. Giles Wilkes and others have suggested that, on the contrary, Nick’s fiscal targets are a welcome change from the excessive deficit reduction the Coalition has pencilled in for the next parliament.

These commentators think that Nick’s deficit target (below) is a continuation of Labour and current Coalition policy – to balance the budget excluding capital spending. My understanding, however, is that what Nick said …

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Opinion: Of driverless cars and passengerless trains

"Driverless Car in Bonita Springs" by Chris Griffith

Driverless cars may not be quite as revolutionary as the 19th century spread of the railway, but there are huge benefits coming into view. The sooner we can deliver them, and the sooner policymakers can take them into account, the better – with mixed results for railways.

To be conservative, let’s imagine it’s 2044 – 30 years from now. We will look back at the idea of people customarily directing 1 tonne cars at speed as madness. Millions

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Opinion: Towards a sensible welfare system

Piles of money. Photo credit: czbalazs - http://www.sxc.hu/photo/1236662Where is the development of Lib Dem welfare policy? It’s hard to see any. Even the recent living standards policy paper (pdf) said “we do not believe that this paper is the appropriate place to determine a Liberal Democrat approach to welfare reform. this is an area that needs further debate within the Party.”

We all want a society in which technology, employment, education, high pay, low inequality, progressive taxation and cheap homes reduce the need for means-tested benefits, but this long-term …

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Opinion: Lib Dems only party to vote against khat drug ban

Julian Huppert, Lib Dem PPC for Cambridge“To ban, or not to ban, khat is the question”, tweeted Julian Huppert on Monday morning. Unfortunately, Labour MPs later in the day joined their Tory (and DUP) counterparts in a statutory instrument committee to vote in favour of a ban. The two Lib Dem MPs, Huppert and Greg Mulholland, were defeated 16-2 and the khat trade now looks set to be criminalised.

On The Guardian website, Julian writes:

a mild stimulant – roughly on a par with a strong cup of coffee. It is not considered particularly addictive, and there’s no clear evidence that it causes either physical or social harms. It is imported perfectly legally, and taxes are paid on it, to the tune of £12.8m each year.

When the Advisory Council on the Misuse of Drugs, the government’s expert advisors, were asked to consider khat, they said that it would be “inappropriate and disproportionate” to ban it. The cross-party home affairs select committee, on which I serve, produced a unanimous report opposing a ban. And yet the home secretary plans to do it anyway.

Posted in Op-eds | Tagged and | 35 Comments

Opinion: Lib Dems should get behind renaming of National Insurance

Tory MP Ben Gummer is today introducing a 10-minute rule bill “to make provision for National Insurance to be known as Earnings Tax”. It’s a very simple renaming proposal. But branding is important, not least in politics. The Chancellor is “said to be attracted to the idea”, so if Danny Alexander and Nick Clegg were to support it, the change could make it into the Budget.

It’s well known that National Insurance is an extra income tax in all but name. As far back as 1994, Lib Dem policy was “to abolish national insurance contributions and create an integrated tax …

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Opinion: Making allowances – 12 conclusions about the Personal Allowance policy

CentreForum today published ‘Making allowances’ – a paper all about the Lib Dems’ flagship policy of raising the income tax Personal Allowance. Here are some of my conclusions – some obvious, some more obscure – to help inform future tax cuts.

1) The costs are huge. The coalition’s Personal Allowance increases have cost £11bn, and the Lib Dems’ minimum wage tax target would cost at least the same again. With this combined total, we could (roughly) reduce VAT to 15%; scrap council tax or business rates; easily deliver quality universal childcare; or

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The Independent View: I know what next month’s living wage will be and it doesn’t relate to the cost of living

On 4 November we will learn the level of the new Living Wage, which many employers have volunteered to pay as a minimum. At present it is £7.45 an hour outside London. I’m betting that next month it will rise to £7.65.* How do I know? Well, the current calculation is remarkably simple, and it has nothing to do with the cost of living. What’s more, future increases risk making proposed living wage policies unaffordable or even damaging.

Academics at Loughborough University do calculate the wage needed to fund, after tax and benefits, what members of the public consider a basic …

Posted in Op-eds and The Independent View | Tagged and | 4 Comments

Opinion: Where is the Liberal Democrat influence over drugs policy?

qatYesterday we learnt that the Home Secretary has decided to ban the drug ‘khat’, against the recommendation of the Advisory Council on the Misuse of Drugs (ACMD). The Lib Dems were reportedly against this move, and the decision lay with Theresa May. This and other decisions suggest that drugs minister Jeremy Browne has been given a script but no power.

The disappointing decision to make khat a Class C drug follows the view of the ACMD in January that it should remain legal (having said the same thing …

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Opinion: Are current state pension arrangements fair?

Two stories jumped out at me this week as being deeply connected. Stephen Tall praised Ed Balls for not ignoring the huge chunk of welfare spending that goes to pensioners. Then, a new website from Public Health England reminded us of the country’s large health inequalities. These inequalities should give us extra cause to question the fairness of current spending on pensioners.

As Stephen wrote “Spending on the state pension will increase by nearly 20% in real terms between 2010–11 and 2017–18.” The challenge of an ageing population was present even before the financial crisis. It’s now …

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Opinion: Who’s been hit hardest by the coalition’s cuts?

The budget on March 20th is likely to concentrate on growth, on avoiding an ‘omnishambles’, and on fighting the notion that Osborne has taken the country from triple A to triple dip. But it’s also the time to take stock of who’s bearing the brunt of (attempted) deficit reduction. This graph shows the combined effect of all the coalition’s tax and welfare changes, as modelled by the Institute for Fiscal Studies. It doesn’t look good.

Impact of modelled tax and benefit reforms since Jan 2010, by income decile group (Copyright of the IFS*)

The blue …

Posted in Op-eds | Tagged and | 15 Comments

CentreForum: Three tax changes to help rebalance the economy

Tax ConsiderationsVince Cable this month launched our new publication on helping small and medium sized businesses access stock market finance. Here, I’d like to concentrate on three tax changes that could address the broader challenge of ‘rebalancing the economy’ away from an over-reliance on debt and unproductive investment.

I’m all for a highly progressive tax system that doesn’t privilege ‘capital income’, but that doesn’t mean the current system works in a fair or sensible way, as these three bizarre distortions show.

Corporation tax

As George Osborne said in opposition:

Our corporate sector’s

Posted in Op-eds | Tagged | 36 Comments

Opinion: Does the Prime Minister really care about free speech?

The Prime Minister is concerned that Leveson’s “essential” legislative underpinning for press self-regulation would cross a line. “We should be wary of any legislation that has the potential to infringe free speech and a free press”, he stated, saying that we should be proud of our “great tradition” of freedom of speech. But the UK has many laws that restrict citizens’ free expression and which we should be deeply ashamed of. Will the PM be campaigning to end these?

There’s ‘Section 5’, under which – for example – a 16 year old was summoned to court for holding a placard saying, “Scientology is not a religion. It is a dangerous cult.” Thankfully, after pressure from MPs and the Reform Section 5 campaign, the Home Office consulted on the law and – separately – the Lords will tomorrow vote on amending it. Reformists (including the Deputy Prime Minister) can presumably count on the PM’s support!

Posted in Op-eds | Tagged and | 5 Comments

Opinion: It’s time to reform child benefit

Child benefit and child tax credits represent the second biggest area of welfare spending, after pensioners. Public spending should be invested disproportionately in ensuring that all children fulfil their potential and develop the skills needed for tomorrow’s jobs, and that we intervene early to prevent, rather than react to, problems. However, this does not mean that current child-related expenditure is spent as well as it could be. Here are two considerations ahead of the Autumn Statement.

Firstly, any real-terms reduction in spending on child-related cash transfers should go alongside increased investment in early years support and childcare, especially for poorer families.

By …

Posted in News | Tagged | 9 Comments

CentreForum’s proposals for the Chancellor’s Autumn Statement

Ahead of December 5th’s Autumn Statement, we have suggested £17 billion of revenue-raising measures for the coalition parties to consider. Our proposals offer ways to narrow the deficit with as little pain as possible, and further measures to unlock growth.

These include what might be called “wealth taxes” – those on property, inheritance, and financial assets. One of our key themes is that substantial revenue can be raised simply by ending wealth and income tax breaks. Spending cuts should therefore include cuts to ‘tax expenditures’. Many of the measures below would make the tax system simpler, fairer and more efficient …

Posted in Op-eds | 6 Comments

Opinion: Taking minimum wage work out of tax would deliver the Living Wage

With greater ambition, the Liberal Democrats’ policy of increasing the personal allowance would equalise the Living Wage and the minimum wage, without risking jobs.

It was announced yesterday that the national ‘Living Wage’ for 2013/14 will be £7.45. This compares to the National Minimum Wage of £6.19. Boris Johnson has urged more companies to adopt the Living Wage, and Labour are even considering giving tax incentives for firms to pay the Living Wage.

Few would argue with the benefits of higher pay for employees, or with other Living Wage benefits such as lower staff turnover. But evidently most employers …

Posted in Op-eds | Tagged and | 15 Comments

Calling them granny taxes doesn’t mean they’re unfair

The phasing out of the additional personal allowance was decried as a ‘granny tax’ but that move did not go far enough. A new CentreForum report looks at two unjustified and deeply regressive age-related tax breaks: the tax-free lump sum and the exemption from National Insurance.

There are many lonely, vulnerable and poor pensioners who need support. But it’s insulting to suggest that everyone over 60 or 65 can be lumped into the category of frail granny (to say nothing of grandpas!). There is a huge range of incomes amongst pensioners. At the very top, the average annual pension …

Posted in News and Op-eds | Tagged , and | 20 Comments

Opinion: Is this the start of Plan A+?

It looks like the coming months will see new initiatives to boost the economy, following the second quarter contraction (now revised up slightly to -0.5%) and a record trade deficit.

As The Spectator reports,

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Opinion: Ritual slaughter – One law for all

Ritual slaughter has had a reasonably low profile in the UK, despite vigorous debate abroad, in the European parliament, and now in the Commons. David Cameron, Nick Clegg and Sarah Ludford MEP (FT) have expressed some level of support for the practice, but I must disagree.

The law requires that animals be stunned before slaughter, for their welfare, but there is an exemption for Muslim and Jewish food production.

Posted in Op-eds | Tagged and | 27 Comments

Opinion: The lottery winner who would be King or Queen

Hereditary monarchy has no place in a “fair, free and open society” but royalists and republicans seem to be talking different languages. To bridge the divide we need to choose our head of state by lottery. I agree with William Summers who recently wrote herethat he “cannot support a system of monarchy whereby power is inherited and all but one family is excluded from being head of state.” This is on top of questions of transparency, corruption and political influence, or of historical connotation. But republicans have failed to make the case for any alternative. Arguments from principle

Posted in Op-eds | Tagged | 15 Comments

Opinion: This graph of income tax rates might surprise you

If this graph seems confusing, it’s because it accurately describes taxation of income in the UK. What alternative can Lib Dems offer? I think there are four key problems and solutions.

  • Firstly, while the personal allowance is rising (to £9,205 next year), the National Insurance thresholds lag behind. As I’ve written previously, raising these is more progressive and, so, equalising the thresholds and the allowance must be the priority before going beyond £10,000.

  • Then there’s the withdrawal of the

Posted in Op-eds | Tagged | 28 Comments

Opinion: If Cameron won’t attend Rio+20 then Clegg should

The Rio ‘Earth’ Summit in 1992 was the “world’s biggest ever political gathering” with 108 heads of state or government. Its successes and failures on the environment and development continue to shape those debates.

In June, Rio de Janeiro will host the UN Conference on Sustainable Development, a.k.a. Rio+20. A very early draft document suggests it will cover a wide range of topics, including access to food, water and energy; marine litter and pollution; eliminating “market distorting and environmentally harmful subsidies including those on fossil fuels, agriculture and fisheries” (I’ll believe it when I see …

Posted in Op-eds | Tagged , , , , and | 4 Comments

Opinion: “The first £10,000 you earn tax-free”? Not unless we act on National Insurance

At Conference, Danny Alexander repeated his view that the personal allowance for income tax should be raised beyond £10,000, saying:

In the next Parliament, I want us to go further; our aspiration should be that someone working full time on the minimum wage should pay no income tax at all. An income tax threshold of £12,500 – think what that would do to work incentives, think what it would mean for basic fairness. Let’s put that on the front page of our next manifesto.

The idea certainly seems popular within the party. But remarkably absent from these discussions is any mention of National Insurance. The very first point in our 2010 manifesto was “the first £10,000 you earn tax-free” but, while it later clarified it meant income tax (IT), it’s hard to see why the parallel income tax that is National Insurance (NI) should be treated any differently.

Posted in Op-eds | Tagged , and | 24 Comments
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  • User AvatarPaul Holmes 23rd Sep - 10:53am
    Labour's worst result (seats and votes) of modern times (post WW2) was in 1983 when they took around 28% of the vote and elected just...
  • User Avatartheakes 23rd Sep - 9:56am
    Gosh Glenn, coming from you any suggesttion of an increase in vote is equivalent to a Tsunami!
  • User AvatarJayne Mansfield 23rd Sep - 9:49am
    @ David Evans, It is not like you to be so careless with language, When did Labour want a Labour Brexit? It may be some...
  • User AvatarRoger Lake 23rd Sep - 9:48am
    Katharine Pindar I agree with almost everything you say to me above; but I believe I have been unclear: so far any figures I have...
  • User AvatarRodney Watts 23rd Sep - 9:37am
    Yes, Layla, agree all the way. Having left academia at 36 I had the rewarding experience of teaching all levels of ability students. Some of...
  • User AvatarGlenn 23rd Sep - 9:27am
    Alex Macfie, We'll see. I suspect the Lib Dem vote will increase a little, but not anything like as much as enthusiast of Revoke think.
Thu 10th Oct 2019