Dear Tories, repetition doesn’t make something true. Cutting income tax for lowest paid was a Lib Dem idea and you know it.

lib dem manifesto tax cutFor some time now, the Conservative Party have been taking every opportunity to take credit for raising the tax threshold to £10,500 despite this being one great big fat distortion of the truth.

Most recently, Surrey Liberal Democrat councillor was distinctly unamused to find an email from Tory Treasury Minister Priti Patel in her inbox. It said:

Fiona,

See how much our income tax cuts will save you – try our quick calculator today.

The Conservatives believe in cutting taxes.

If you’re working hard to provide for your family, you should keep more of the money you earn.

That’s why we’ve cut income tax every year we’ve been in office – and why we’re committed to keep on cutting income tax after the next election.

Over 24 million people have had their income tax cut. To find out how much you’ll save, use our simple tax cut calculator today:

Find out how much you'll save

Yours,

Priti Patel

Nick Clegg told last year how he had to “drag the Tories kicking and screaming” to deliver the tax cut.

I will try and be polite on this. My coalition partners, by contrast, have been spectacularly inconsistent. At the beginning of the parliament they were first going on about inheritance tax cuts for millionaires. Then they wanted to fiddle around with the upper rate of income tax, then they wanted to fiddle around with taxes for married couples, then they wanted to fiddle around with taxes to give incentives for people to give up their employment rights to take up shares.

So they have got a fair amount of brass neck to now claim that somehow all they ever wanted all along was to see the allowance go up. That is not what they said in public and crucially it is not actually what they said in private either.

I have had to drag the Conservative party kicking and screaming in every single budget negotiation – by the way, not least recently when I talked about wanting to see this extra worker’s bonus – there was a very hostile reaction behind closed doors in Whitehall from my Conservative coalition partners.

So, look, I am delighted everybody is now scrambling to share authorship of a Liberal Democrat idea. But I would just ask for my coalition partners – indeed anybody else – just to be consistent in what you say in public and what you say in private and also consistent in what you say over one period of time on tax.

The Tories had two policies on tax in their 2010 manifesto. One was to cut taxes for rich, dead people by reducing Inheritance Tax. The other was their married couple’s tax break. That shows the rather narrow interests they serve if left to govern alone.

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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22 Comments

  • LOL, yes. You cant blame them – they are now realising it’s an excellent policy and they want in. What is more annoying is when the media let them get away with claiming it as their own.

  • The Lib Dem front-page manifesto pledge was for a £10,000 allowance “paid for in full by closing loopholes that unfairly benefit the wealthy and polluters”. That never happened.

    “The Tories had two policies on tax in their 2010 manifesto. One was to cut taxes for rich, dead people by reducing Inheritance Tax. The other was their married couple’s tax break.”

    To be fair to the Tories, that’s not actually true. Their most significant tax policy in 2010 was a national insurance cut for everybody earning between £7,100 and £45,400. This was explicitly given up (in the coalition agreement) for an increase in the personal income tax allowance.

    The first allowance increase, in the June 2010 budget, benefitted more low earners than the Tories’ NI cut would have done. But all subsequent allowance increases have been of no benefit to all to very low income earners who would have been better off if the Tories NI policy had been revived. The best outcome of all for these lowest earners would have been a hybrid of the two policies.

  • Caron
    Fighting over who can take credit for minimal fiddling with tax rates is like fighting over a luncheon voucher at The Ritz.
    You may win the luncheon voucher but it is not going to buy you a meal.

    Nobody is joining a queue to vote out of gratitude for whoever did whatever on this policy.
    Nobody thinks the government or any political party has cut their taxes and made them rich overnight.
    Nobody thinks they are better off than they were a few years ago.
    If you are a banker or one of the fortunate few you may be better off.
    Don’t go out and tell ordinary voters that they are better off — because they are not that stupid.

  • Alex Sabine 7th Feb '15 - 3:23pm

    Popular policies have many fathers, unpopular ones are orphans…

    The acute Lib Dem sensitivity about this is understandable: Tory attempts to ‘claim the credit’ for this policy – and gloss over its provenance – rankles with Lib Dems who are desperate to reap some electoral reward for the sacrifices made in coalition and the hammering they have taken.

    But however and politically necessary it may be, Nick Clegg’s attempt to paint this as a victory won in the face of unremitting Tory hostility doesn’t ring true.

    For one thing, it directly contradicts most accounts of the coalition negotiations, the most detailed of which is David Laws’s ’22 Days in May’. This suggests there was immediate agreement on the principle of raising the personal allowance, and no attempt by the Tories to trade this off against either their inheritance tax or marriage tax proposals.

    The issues that concerned George Osborne were:
    – the revenue cost, since raising the PA to £10K straight away would be massively expensive at a time when the budget deficit was 11% of GDP
    – his desire to deliver the Tory election pledge to stop Labour’s planned increase in NICs (aka the ‘jobs tax’)

    This is what Osborne said at the outset of the negotiations, as related by Laws: “Look, let’s start on the economy. We support raising the personal tax allowance. The issue is one of cost, and how much we can afford. But I am very happy to talk about that. But on tax, stopping some of Labour’s planned increase in national insurance contributions next year is a bottom-line issue for us. We won the argument for this during the election campaign, and I think you also agreed in the election that if we can afford to, we need to stop these rises.”

    Later in the negotiations, Osborne made it crystal clear that he would prioritise the PA over both the inheritance tax and marriage tax proposals, and that his only concern on the PA was the rate at which progress could be made towards the £10K goal.

    “On tax, we are very happy to make the £10,000 tax allowance a major tax priority, as our paper indicates. On inheritance tax, we won’t make this a priority – the allowance will come first. The same will be true on the marriage tax proposals which we have… The issue is how fast we can go on the £10,000 allowance. It will cost a lot. We need the Treasury’s advice on what it will cost.

    This was a wholly appropriate concern for a prospective Chancellor faced with the largest peacetime deficit in history. Interestingly, it was Osborne – rather than the Lib Dem negotiators – who suggested a way of reducing the cost of the policy.

    “How about if we cap the benefit to just basic rate taxpayers? If we did that we would make it less expensive to introduce, and we would focus more of the cash on people with lower incomes. I might need to do that.”

    This, of course, is exactly what he did do: he reduced the higher-rate threshold in order to limit most of the gains to basic-rate taxpayers and mitigate the revenue cost (dragging millions more into the 40p tax bracket in the process). I suspect the official Treasury would have strongly recommended this in any case: they would have been alarmed by the scale of the ‘giveaway’ (in Treasury speak) in the midst of a fiscal crisis, regardless of what other offsetting tax rises were implemented. But clearly Osborne had already settled on the idea; it was not at the prompting of the Lib Dems.

  • Alex Sabine 7th Feb '15 - 3:27pm

    As for the inheritance tax pledge, Osborne seemed delighted to have a pretext to dump a commitment that he had made in very different circumstances – and as a (successful) political gambit to stop Gordon Brown calling a snap election. According to one Lib Dem source cited in Janan Ganesh’s biography of Osborne“G certainly didn’t seem to be the slightest bit worried about dumping [the inheritance tax commitment] in the negotiations. He seemed to be relishing the opportunity.”

    Laws alludes to this by making a more general point about how the Tory and Lib Dem negotiating teams saw the opportunity to drop what they regarded as their less wise commitments.

    “The insistence by each party of holding to its ‘bottom line’ policy commitments soon became a real strength in the negotiations with the Conservatives. Instead of the negotiations leading to ‘lowest common denominator’ compromises, what actually happened was that on the whole we made a choice to include either the Lib Dem or the Conservative position, more or less in its entirety.

    “This created a sense that we were picking the best policies of each party, and it soon became a standing joke amongst the negotiating teams as each side agreed to drop its least favoured policies while embracing the better alternatives presented by the other party. No doubt some in both our parties would have been horrified to hear cherished policies being so happily cast onto the coalition bonfire.”

  • Alex Sabine 7th Feb '15 - 3:38pm

    It is also simply untrue to say that the Tories’ two tax commitments at the 2010 election were on inheritance tax and marriage. Their flagship tax policy – and a much bigger revenue commitment than either of those two – was their promise to ‘stop the jobs tax’, ie stop the increase in National Insurance contributions set out by Labour to take effect in 2011. The coalition did not deliver this in full, but did take the sting out of it for lower earners by raising thresholds. This move plus the large increase in the PA in th first budget necessitated a big hike in VAT to offset the cost, so the big picture at this stage was a switch in the balance of taxation from income and earnings to consumption.

  • Matthew Huntbach 7th Feb '15 - 10:49pm

    Raising the tax allowance cuts income tax for EVERYONE earning enough to reach that allowance. To call it “cutting income tax for the lowest paid” is a gross distortion of the truth, because it suggests it was just the lowest paid who were helped, when that is not at all the case. I cannot campaign on that line, I would be ashamed to do so.

  • Julian Gibb 7th Feb '15 - 11:40pm

    Sorry LibDems didn’t have enough votes to push through the tax allowance changes. The Tories delivered the reduction ans will get the credit. The LibDems have been played and will pay the price.
    If you fly with the crows then you will get shot with the crows.

  • Alex Sabine 8th Feb '15 - 4:43am

    Matthew:

    1. Raising the personal allowance in isolation – ie without accompanying changes to the 40p threshold – reduces the amount of income tax payable for everyone (well, not quite everyone, for reasons I’ll explain below) earning above the existing threshold, and reduces it by a uniform cash amount for those earning above the new threshold. So, for example, increasing the personal allowance by £1,000 (say from £10K to £11K) reduces income tax by £200 for those earning above £11,000.

    2. This uniform cash gain means that, when looked at on an individual level – and we do, after all, tax men and women independently in the UK – raising the personal allowance benefits the low-paid the most in percentage terms. £200 is clearly worth a lot more to someone earning £11,000 than to someone on £30,000 or £100,000. As a percentage of individual income, the respective gains are 1.8%, 0.7% and 0.2%.

    3. It looks less progressive when the impact is measured at the household level. The reason for this is simple. A two-earner couple (where each earns £11K or more) benefits twice over from the £200, reducing this household’s tax bill by £400. Because two-earner households tend to have higher incomes than single-earner households, the largest percentage gains arise in the middle and upper-middle of the household income scale (if households are ranked by income deciles, it is deciles 6/7/8 that tend to gain the most).

    4. Whether you see these widely dispersed gains as a ‘feature’ or a ‘bug’ of raising the personal allowance is a matter of taste. I suspect it is not lost on either the Tories or the Lib Dems that, in the process of helping the low-paid – which raising the PA undoubtedly does – they are also helping the ‘squeezed middle’ (and the slightly less squeezed middle) into the bargain. Indeed, I have often heard the Lib Dems boast not only of cutting income tax for the low-paid, but cutting it for 25 million people. No doubt this is a key reason why this policy is so popular with voters: most of them gain directly from it.

  • Alex Sabine 8th Feb '15 - 4:49am

    5. But while it might be desirable to cut income tax for 25 million people – and, in less straitened fiscal circumstances, I think it is – it is very ‘expensive’ to do so in terms of the revenue cost to the Exchequer. It is questionable, to say the least, whether this is affordable when we are still running a budget deficit of £80-90 billion. Even if it can be afforded, in isolation it increases the deficit still further; so it inescapably means larger tax increases elsewhere and/or larger spending cuts are required to hit a given borrowing target.

    6. As a means of helping the low-paid, it is simple and effective, but also poorly targeted and subject to diminishing returns. The more low-paid people are taken out of the income tax net, the more the gains from further increases in the PA will be focused on those higher up the income scale. For this reason – as Stephen Tall, Adam Corlett and others on LDV have argued – raising the National Insurance threshold would be a more powerful means of helping the low-paid, since NI now cuts in at a much lower level than income tax. Aligning the thresholds and tax bases for income tax and NI also makes sense on simplification grounds (ideally it would presage a full merger of these two taxes).

    7. One way of making increases in the PA both more affordable and better-targeted as a means of helping low-to-middle earners is to adjust the threshold at which the 40p rate cuts in, such that cash gains from the higher PA are focused on basic-rate taxpayers (ie 40p taxpayers see the gain from the higher PA cancelled out by the extra portion of their income taxed at 40% rather than 20%). That is what George Osborne suggested in the coalition negotiations by way of modification to the Lib Dem plan, and indeed he took this approach in his early budgets. The flip side, of course, is that you drag ever more people into the 40p tax bracket so they are paying a marginal rate that was originally reserved for those who were significantly better-off. The number of higher-rate taxpayers has ballooned from 675,000 in 1979-80 to 3.3 million in 2010-11 and an estimated 5 million in 2014-15.

    It is questionable whether this can be taken any further while keeping higher-rate tax at 40%. The Tories’ pledge to now increase the 40p threshold from roughly £42,000 to £50,000 (incidentally, the same level that the Lib Dems proposed back in 2006) is a response to the perceived backlash from middle-class salaried professionals. Of course, funding this together with their ambitious commitment on the personal allowance – and squaring both with their relatively demanding fiscal target of a surplus by 2019-20 – looks a pretty tall order!

    8. The reason a rise in the personal allowance benefits most but not all taxpayers is that, owing to a revenue-raising measure introduced at the fag-end of the last Labour government, the allowance is withdrawn once income exceeds £100,000 (by 50p for every additional £ of income). In combination with 40p tax, this creates an effective marginal tax rate of 60% (not including NI) – higher than the rate which is faced by those earning (say) £150,000 or £1 million. As the IFS have repeatedly argued, there is no good rationale in terms of either efficiency or equity for this withdrawal of the PA and anomalous spike in marginal tax rates.

  • Alex Sabine 8th Feb '15 - 4:55am

    9. Despite my reservations about affordability, in principle I support raising both the income tax PA and the NI starting threshold to £12,500 (or thereabouts). It makes no sense to set a minimum wage and then take a chunk out of the earnings of those who work full-time on that minimum wage. Nor to tax people with one hand and then give them means-tested benefits with the other, with the associated bureaucracy and overheads. I look forward to the day when the civil servants whose job it us to oversee this rigmarole are relieved of these duties and their talents put to more productive use… As a long-term goal we should aim to have a single tax-free allowance (having merged income tax and NI) pegged at the level of full-time minimum wage earnings. I would not support raising it any further than that, but we are still a long way from that point.

    10. Most Conservatives and right-wing commentators – who have never met a tax cut they don’t like – are keen on raising the personal allowance; hence the Tory pledge (shared with the Lib Dems) to raise it to £12,500 in the next parliament. But a minority disapprove because they fear it will lead to widespread ‘representation without taxation’, the ability to vote for public spending without having a stake in the tax system which must finance it, and an over-reliance for revenue on an ever shrinking proportion of the population. This strikes me as largely groundless. It overlooks the fact that we have numerous indirect taxes in the UK, notably VAT and a raft of heavy excise duties including petrol duty – so, even if their earnings were entirely untaxed, the low-paid would still be making a significant contribution to the public purse.

    Ironically, Matthew, you express the opposite fear: that it will have a ‘ratchet effect’ of shrinking the tax base and therefore the revenues with which to pay for public spending. Ideological sympathies aside, there is indeed a political judgement to be made about whether voters would prefer to keep more of their own money – to have higher post-tax private consumption – or more spent on collective goods provision; but in my judgement the answers are not immutable and are likely to change over time (in both directions). If postwar history is any guide – when the overall tax-to-GDP ratio has fluctuated by only a few percentage points in the 35-40% range under governments of varying complexions – it is unlikely to be one-way traffic.

  • Nick T Nick Thornsby 8th Feb '15 - 10:32am

    Matthew Huntbach

    “Raising the tax allowance cuts income tax for EVERYONE earning enough to reach that allowance.”

    That’s not correct. The personal allowance is phased out when you earn over £100k. https://www.gov.uk/income-tax-rates/income-over-100000

  • Nick T Nick Thornsby 8th Feb '15 - 10:39am

    And, of course, the coalition limited the benefit derived from some of the increases by offsetting the gains for higher rate taxpayers by reducing the higher rate threshold. So at least some of the benefit of raising the PA to £10k went only to those earning under c. £40k.

  • @Alex Sabine
    “It makes no sense to set a minimum wage and then take a chunk out of the earnings of those who work full-time on that minimum wage. Nor to tax people with one hand and then give them means-tested benefits with the other, with the associated bureaucracy and overheads. I look forward to the day when the civil servants whose job it us to oversee this rigmarole are relieved of these duties and their talents put to more productive use.”

    That depends on whether one thinks it’s right to give targeted means-tested support to people like part-time workers and parents. If one believes that it is, then your simplified do-it-all-through-the-personal-allowance system won’t work.

  • Alex Sabine 8th Feb '15 - 1:27pm

    @ Stuart

    I am not arguing against means-tested benefits or tax credits per se. But I do think, for both philosophical and practical reasons, that as far ad possible governments should get out of the business of ‘churn’ – of receiving and making payments to the same people. In policy terms this would mean removing low earners from the direct tax net and only then relying on means-tested support to further boost their incomes; removing universal benefits like child benefit and the universal pensioner benefits from the better-off; and eschewing middle-class subsidies like Labour’s proposal to reduce tuition fees (which I see as a simple ‘retail’ offer to relatively highly-paid graduates).

    As Adair Turner wrote way back in 2001, when Gordon Brown’s client state and tax credit behemoth was still in its infancy: “Whenever governments perform functions which they do not absolutely need to perform, functions which are neither inherently collective nor redistributive, they are using up limited tax capacity on non-essential objectives, endangering our ability to pay for the essential functions of the state within tax levels which avoid economic damage and which are acceptable to public opinion.”

    Of course, the more a government wants to use the levers at its disposal to re-engineer society, the more it will have to provide targeted support of various kinds to various interest groups. It would be better if it showed more humility, did less, and did it more competently.

    In any event, the ‘targeted’ support tends to become less and less well-targeted as the political incentive to give a larger group of people a ‘stake’ in the system thus created grows. So under Brown we had the absurdity of a tax credit system in which means-tested state support was given to families with household income of more than £60,000.

    And in many cases the ‘targeted’ support tends to be superimposed on top of costly yet thinly spread universal benefits. As part of its ‘austerity’ programme the coalition has trimmed this at the margins by starting to withdraw child benefit above £50K. But future governments will have to be bolder about this and the whole area of pensions and pensioner benefits if they want to control the (still growing) social security budget while delivering support where it is most needed.

    For instance, the IFS estimates that £4.8 billion could be saved if child benefit were scrapped while fully compensating those families with children who receive child tax credits (which will be subsumed into universal credit in future). As the IFS says: “This would be a radical change to the structure of the benefits system, but would mean that the system of support for families with children was much more coherent.” They also point out that 4.3 million better-off families would lose more than £1,000 per year, so I have no doubt this would be (in the Yes, Minister sense) a very ‘brave’ reform for a government to attempt.

    If it were considered too brave to take on this bastion of the middle-class welfare state in one fell swoop, it would be possible initially to set a somewhat higher threshold for the withdrawal of Child Benefit, building on the coalition’s reforms while improving their design.

    But this sort of radicalism is going to be required if the welfare system is to be made more coherent and more sustainable. I do not prefer the alternatives of continuing to recycle money to the better-off through the benefits system while (for example) repeatedly cutting the ‘work allowances’ in Universal Credit (before it has even been introduced!), which undermines the very work incentives UC is intended to improve.

    Social democrats often make a counter-argument on churn: that if middle and high income earners are recipients of benefits as well as payers of taxes, this creates commitment to the welfare state which would wither away if it were stripped back to its more purely redistributive role. Basically this asserts that higher earners will accept redistribution if it is disguised by churn. I do not find this appealing or convincing. As Turner argues: “The danger in this argument is that it increases marginal tax rates, and that it comes close to assuming that people can be fooled into redistributive policies they would not otherwise support. It is better to argue the case for the state’s essential roles – including redistribution – openly and honestly.”

  • Alex Sabine 8th Feb '15 - 2:32pm

    @ Nick
    “So at least some of the benefit of raising the PA to £10k went only to those earning under c. £40k.”

    Indeed, most of it did. The PA in 2010-11 was £6,475 and it is now £10,000 – an increase in cash terms of £3,525 (less in real terms, of course, but still large). With basic-rate tax of 20% this amounts to a cash gain of £705 for those above the threshold.

    Meanwhile the higher-rate threshold has actually fallen in nominal terms, from £43,875 in 2010-11 to £41,865 today – so there’s £2,010 of income now taxed at 40% rather than 20%, which in isolation means £402 higher tax liability. Of course, this is more than offset by the £705 reduction, but it means the overall cash gain for those with incomes above the 2010-11 higher-rate threshold (£43,875) has been £303 rather than the £705 enjoyed by basic-rate taxpayers.

    As a percentage of his or her income (and before adjusting for inflation – I don’t have the CPI figures or GDP deflator to hand – or factoring in reductions in tax credits based on net income), a taxpayer with £10,000 of income has gained 7% while someone on £50,000 has gained 0.6%. So while we also need to look at household income measures, we can see that simply calling the rise in the PA ‘regressive’ is incorrect and misleading. And as I mentioned in one of my earlier comments and you also pointed out, Nick, the PA is withdrawn above £100K – an undesirable, illogical and complicating aspect of the system though that is, it has ensured that those with the highest incomes have not benefited from the policy.

    What tended to happen under previous governments when the PA was raised is that the higher-rate threshold was ‘automatically’ bumped up by an equivalent amount (ie the ‘basic rate’ band was not reduced correspondingly) – so in effect higher-rate taxpayers gained twice over, once from the higher PA and again because more of their income was taxed at 20% rather than 40%.

    The coalition’s approach has been strikingly different. That’s why, despite low earnings growth, ‘bracket creep’ has been so dramatic: as I indicated above, there are now 1.7 million more higher-rate taxpayers than in 2010-11. Those on 1.5 times average earnings are facing a marginal tax rate of 40% (indeed 49% including employee and employer NI, but excluding tuition fee repayments).

    Personally (and I’m a basic-rate taxpayer) I don’t celebrate that trend, don’t think it can be taken much further, and think at some stage it will have to be put into reverse. But I reluctantly accept it, because given the budget deficit I don’t see how else the coalition could have afforded to implement its laudable increase in the personal allowance. It is a question of priorities.

  • Little Jackie Paper 8th Feb '15 - 3:15pm

    Alex Sabine – I don’t have any quarrel with most of your thinking here, but I would make three observations, not intended as criticism. Perhaps rather as additions.

    1 – The one that you don’t seem to mention is Housing Benefits. Or, as some might say, landlord subsidy. Talk of benefits/credits is well and good. But it’s not in isolation – real reform surely has to look at cause as much as symptom. Of course it would be, ‘brave,’ to try to reduce rents and house prices. However given the size of the housing benefit bill I think it is a legitimate place to look to for reform. High rents and house prices are naturally a matter of concern that no one seems to want to tackle meaningfully.

    2 – In a similar vein, you talk a lot about earnings. Quite reasonable. But I have to ask what about wealth, in particular house price wealth? Maybe this is opening up questions beyond benefit reform (although your introduction of fees into the discussion also seemed to me to be a wider issue). However I am simply astounded at the reluctance on the part of many that there is to see bubble-priced housing as wealth, and to look to it for solutions.

    Indeed, as a more general point, I am deeply worried about the intergenerational aspects of much of today’s policy choices.

    3 – All of this has to be seen through the prism of ringfenced spend. Ringfences have been a real feature of this Coalition. Health and pensioners have been protected and the implication in fiscal consolidation is deeper cuts elsewhere.

  • Alex Sabine 8th Feb '15 - 4:02pm

    LJO: Agree with most of that. My only quibble/qualification would be that on your second point, we need to differentiate between, on the one hand, capital and wealth accumulation – which is an essential precondition of developing a more productive economy that can support a higher level of real earnings – and, on the other, the wealth and economic rent that accrues to the owners of highly contested, ‘positional’ goods like houses as a result of the inherently fixed supply of land/natural resources and the granting of planning permission.

    The problem is easier to state than the solution, but I think it involves some combination of planning liberalisation, greater housebuilding, reform of housing benefit, reform of property taxes, scrapping demand-side schemes like Help to Buy and (eventually) normalising monetary policy so that it doesn’t fuel another hoyse price bubble. We should seek to remove the things which are artificially stimulating house prices. Even with all that, though, house prices in London will still be high and will probably continue to grow as a result of the geographic concentration of demand and economic activity. Schemes like HS2 (whatever its merits) will only strengthen that gravitational pull in my view. Efforts to address regional imbalances through housebuilding are misplaced unless they address the underlying causes of why people want to live in one area and don’t want to live in another.

    Fully agree with you on inter-generational equity. There are more dimensions to ‘fairness’ than income redistribution. That’s why I don’t support the pensions ‘triple lock’, the universal pensioner benefits, the existence of stamp duty on property while capital gains are untaxed, our over-restructive planning system that delivers windfall gains to property owners, routine deficit financing to pay for current spending (or even the whole capital budget) and thus hand the costs to future generations, etc.

    And, as I’ve agreed with you before, the budget ring-fences do indeed have that effect. The problem is that, amid all the political argument about the scale or timing of cuts, there is much less debate about the appropriate shape if the state, about what we expect it to do and why. My thoughts on ‘churn’ in the tax and benefit systems were intended as a minor contribution to that.

  • Alex Sabine 8th Feb '15 - 4:03pm

    (Sorry, typo, meant to address my response to you as LJP, obviously!)

  • Peter Galton 8th Feb '15 - 8:48pm

    This was always going to be the problem, the Tories taking the credit for anything good we have done.

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