Vince was up in Edinburgh this week (not, contrary to some reports, flying business class and staying in luxury). After an early start to do budget media stuff, he voted on the budget at 6:30 or so and caught a flight an hour later. He and Christine Jardine got to the Edinburgh West dinner at about 9:45 and both were in sparkling form.
In fact, I think that the speech Vince gave was better than his Conference speech. There was none of the schoolboy, carry-on style humour, and just a very simple, effective liberal message. He talked about needing to be honest with people about the future funding of public services – we will need to pay more tax. He talked about Brexit and our desire to stop it too, but he had plenty of vision about helping those who need it most – putting more money into Universal Credit and stopping its rollout until the problems with it are sorted out. He talked of his surprise that Labour had abstained on he Tory tax cut for better off people as he led our MPs to oppose it.
Timed to coincide with his visit was an op-ed in the Scotsman which he used to describe the detrimental impact that Brexit is already having on us:
Take Jaguar Land Rover. This great British brand employs 40,000 people in the UK and has just suffered a sales slide of 13 per cent, in large part because of the uncertain landscape of Brexit. JLR’s management has been clear about the risks of cutting ourselves off from our European neighbours and business partners. JLR is cutting jobs and has been forced to pause production. This is the real-life impact of Brexit. And what Scots are missing out on under current leadership is the creative thinking to make real change happen. After a decade of the SNP, growth is flimsy and productivity is lagging. It couldn’t be clearer that investing in people through education and mental health is the way to make the most of the talents we already have right here on our doorstep.
And he emphasised that Brexit is not inevitable:
The march proved a crucial point: Brexit is not inevitable. Where there is public and political will, there is a way. We can still secure an exit from the Conservatives’ chaotic Brexit through a People’s Vote.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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16 Comments
The way he got to Edinburgh should be pointed out in no uncertain terms ie strong language and what he said mentioned on facebook etc. Whilst we are the nice party that does not mean we cannot have a sting in our tail.
“needing to be honest with people about the future funding of public services – we will need to pay more tax”. This a crucial point. The budget this week has simply put-off the decisions that need to be made about funding of public services until the spending review next year and perhaps the outcome of any negotiated Brexit deal.
However, in or out of the EU, demographic trends will require an increasing level of resources devoted to health and social care and large increases in the funding required for state pensions.
The Mirrlees Review pointed the way in how the UK tax system could be reformed in ways that could significantly increase people’s welfare and improve the performance of the economy”
The review recommended the rate structure for income tax should be simplified and merged with NI.
The zero rate of VAT applied to many goods and services also came under fire as “an expensive and highly inefficient” way of helping people on low incomes. For example, charging a reduced rate of VAT on domestic fuel consumption “effectively subsidises energy use and encourages carbon emissions”. The review recommends VAT should be applied to nearly all spending to reduce complexity and avoid costly distortions to consumption choices.
Stamp duty land tax, which is paid when buying a home, should be abolished, and council tax reformed so payments are “fully proportional to house value and based on up-to-date values”. This would effectively be in place of VAT on housing consumption.
Differing tax treatments for different forms of savings have served to distort people’s decisions. The review recommended that in addition to the tax relief available on Isas and pensions, standard bank and building society accounts should be completely tax free, but interest earned above the “normal” rate of return on savings (typically the rate that can be earned on gilts) or other risky investments should be taxed as earned income.
Corporation tax effectively discourages investment financed by equity in favour of debt. Neither is the tax properly integrated with personal taxes, creating further complexity and opportunities for avoidance. To iron out these problems an allowance for corporate equity should be introduced to ensure equal treatment of equity and debt-financed investments, only profits above the “normal” rate of return should be taxed, and the tax treatment of employment, self-employment and corporate-source income should be aligned.
How many of these proposals have we adopted as part of our own policies, and how far do we oppose them, please, Joe?
” we will need to pay more tax.”
Possibly. We would only, though, need to pay more tax to cool an overheating economy. And that would be a good problem to have!
But is it really overheating at the moment? Even if we spent more on the NHS and gave more to councils a lot of that Govt money would come back as extra tax revenue as the extra spending stimulated the economy.
So why try to counter a problem that doesn’t even exist? Especially as it will likely cost you votes.
Katherine,
the Mirrlees review recommendations have yet to be adopted by any party. They are based on economc efficiency, neutrality and equity in the tax system and aimed at increasing overall social welfare. Unfortunately what is rational will not always politically possible, at least in the short-term and we get stuck with a hodge podge of a tax system.
Peter Martin,
the need for tax rises comes about as a consequence of the dependency ratio i.e. the % of the population dependent on the working population. As the proportion of retirees grows year by year, a greater level of resources need to be allocated to the delivery of health and social care services. If these services are provided via the NHS (as opposed to the private sector) taxes will need to be increased to reallocate Labour and capital from private consumption to public service provision It sees quite likely that a significant element of the tax raising will have to come from taxes on wealth accumulated the older generation or there will be less provision of social care to retirees with savings and housing equity.
Thank you, Joe, but I had supposed that our party would perhaps be advocating the combination of national insurance and income tax, and also the much-needed reform of council tax, which, like the utility bills, is such a burden for ordinary people. I know we passed at Brighton in the Wealth motion a demand to create additional higher council tax bands, but the motion only suggested then ‘reviewing the case for replacing council tax with a simple percentage-based annual property tax based on up-to-date valuations’. Why do you think we agreed merely ‘reviewing’ such a widely advocated reform?
(Small additional request, please can you spell my name correctly with the central A?) Many thanks.
Katharine,
The reasons are set out my Polly Toynbee in her Guardian article today https://www.theguardian.com/commentisfree/2018/nov/06/raise-tax-british-political-disease-public-services – “Paying more for public services is the irreducible choice that no politician dare put to the British people.”
“UK business has stopped investing, at “virtually zero”, compared with business investment at 8% in Germany and the US.”
” A fifth of workers earn below the £9 national rate set by the Living Wage Foundation. Wage stagnation began long before the crash: Endemic low pay means a third of households will depend on universal credit – a third earning too little to survive, costing £60bn a year. That defines a dysfunctional economy.”
“Thirty years ago, 80% of 35-year-olds owned their homes; now that’s just 33% – and virtually none have the defined-benefit pensions that so enriched today’s over-65s.
On Office for Budget Responsibility reckonings, by 2068 nearly a quarter of our spending will be on the NHS, pensions and social care. This isn’t a guess, because the people who will need that care and those pensions are alive already. That means everything else will have to be severely cut back – or tax must rise to pay for it. Borrowing more is certainly possible, especially for investment. But paying more tax for services is the irreducible choice no politician dare put to the people.”
“…Every aspect of our system is riddled with loopholes – warped, perverse and distorted. Labour has no plan for fundamental reform. It’s good to take more from the richest – but without raising the basic rate, nothing like the sums needed can be levied.
This inability to raise tax is a fatal British political disease that has lasted since the war. Even in 1950 we raised far less than similar countries and the gap has remained. The Resolution Foundation points to OECD charts on tax take, showing how much less British people pay. The 2016 figures show us well below the OECD average, and miles below similar countries: Belgium pays 44%, Denmark 46% and France 45% – the UK pays just 33%.
To stay civilised, to recover from austerity and raise standards, we need to pay a lot more tax than we are used to – and that’s most of us, not just businesses and the rich. Should parties just lie and only raise tax once in power? If no party daring to tell this truth can ever be elected, what’s to become of us?”
Thanks Joe, I will study this. I presume then that we as a party need to take more detailed consideration of tax policies, so as to propose more subtle measures than just our favoured ‘Add penny on income tax for’ whatever is the most needy cause, currently health and social care.
@ Joe,
Of course the dependency ratio is an important factor in the economy.
But it doesn’t change the fact that money is the creation of Govt. The Govt first spends money into the economy and gets some of it back in taxes. It can’t get more back than it spends for the simple reason that the taxman will only accept Govt money. He won’t accept Bitcoins or pounds supposedly created by the commercial banks.
The Govt has to be in deficit. That’s not really a problem. The potential problem is overheating and possible inflation if Govt overdoes the spending. That’s the time to cool things down with higher taxes.
Peter,
“He [the Government] won’t accept Bitcoins or pounds supposedly created by the commercial banks.”
Virtually all taxes are paid by bank transfers not by cash created by government. In some cases (e.g inheritance tax) the tax liability can be settled by the tranfer of assets such as British government stock or by transfer of national heritage property to the state.
The bulk of the money supply in the economy is created by commercial banks and the flip side of that money creation is the is that with every new loan comes a new debt. This is the source of the UK’s mountain of personal debt: not borrowing from someone else’s life savings, but money that was created by banks. By 2008, the debt burden became too high, resulting in the wave of defaults that triggered the financial crisis. It is escalating again now just as Minsky’s financial instabiliy hypothesis suggested it would.
Polly Toynbee’s hard-hitting article in the Guardian on Tuesday about the necessity of British people being ready to pay more tax included a phrase, that ‘no party dare touch’ taxing inheritance. Objecting to this, I sent Polly an email to tell her about our policy passed at Brighton, Promoting a Fairer Distribution of Wealth, quoting sections of it including the proposal to abolish inheritance tax and instead tax recipients at income tax rates and ensure that all transfers are subject to tax. I suggested she read the whole policy on our Website, and that our thoughtful policies deserve publicity. She has replied, ‘Apologies. I entirely agree with this policy.’
Thanks for drawing our attention to Polly’s article, Joe B. She is an ally really, but a bit neglectful of us.
Well done, Katharine. Once shared a taxi with Polly Toynbee during the Darlington by-election back in ’83 when she was in the SDP.
She’s a proper radical and I thoroughly enjoyed her dismemberment of Osborne on TV a few days ago. Her loss shows what we have missed by the right of centre stuff the party indulged in post 2007.
@Katharine Pindar “our thoughtful policies deserve publicity”
It’s a shame that instead of such meaty issues, publicity and media coverage of the Brighton conference was dominated by speculation about Gina Miller’s party leadership credentials and Vince Cable’s “exotic spresm”! 🙁
Well done, Katharine. Let’s hope Polly acknowledges what has been happening with Libdem tax policy when she sends out her next missive lambasting us all for not facing reality.
We did indeed pass several substantial ‘meaty’ motions at Brighton, colleagues, which I am proud to help publicise. We should certainly be pressing the more serious columnists of the quality papers to take note of our proposals, so that there is more chance of them feeding into national acceptance and being carried out, which could happen quite rapidly at a time of major fluctuation in the political landscape.
But I suppose, Peter, reporters will always go first for the personal story, and it can be publicity we wouldn’t otherwise get. Irrelevantly and irreverently, I think I shall always cherish sightings of Exotic spresms now! 🙂