* Paul Walter is a Liberal Democrat activist and member of the Liberal Democrat Voice team. He blogs at Liberal Burblings.
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47 Comments
The People have already had their vote. He must mean the Losers’ Vote.
Peter
A people’s vote on the deal is the only democratic way to resolve the mess that the government has made of the negotiations to leave the EU. Yes, the people could decide that staying in the EU is the best course for the country given the dire alternatives on offer, but it is the people who would decide that – not Vince Cable or the Liberal Democrats.
Very good speech from Vince:
“Nowhere is inequality more marked than in the housing market. Property wealth for the fortunate coexists with growing insecurity and homelessness for many others. Home ownership, which spread wealth for generations, is no longer a realistic prospect for younger people with moderate means.
To put this right, we must end the stranglehold of oligarchs and speculators in our housing market.
Homes are to live in; they’re not pieces on a Monopoly board. But whatever we do with existing homes will not be enough. A doubling of annual housing supply to buy and rent is needed.
For years politicians have waffled about house building while tinkering at the edges of the market. I want to recapture the pioneering spirit that in the mid-20th century brought about developments like Milton Keynes and the new towns…I want to see a new generation of garden cities and garden villages spring up in places where demand presently outstrips supply.
But we know that private developers alone will not make this happen. Just as social reformers in the 1950s and 60s saw government roll up its sleeves and get involved with building, government today has a responsibility to be bold…and to build more of the homes we need for the 21st century. It is utterly absurd that councils are allowed to borrow to speculate in commercial property…but are stopped from borrowing to build affordable council houses.
This triumph of ideological dogma over common sense must stop. Government must take the lead…and get building. The housing crisis is at the heart of a growing and deeply corrosive inequality…between generations… young people face employment that is insecure, and unaffordable housing. And – now – a future of narrowing horizons and closing frontiers, which the vast majority of under 25s never voted for. As Britain’s government of the future, Liberal Democrats will always be their voice and their champion.”
Following on from Vince’s speech interesting piece tonight on BBC News at 10 https://www.bbc.co.uk/iplayer/episode/b0bk1czg/bbc-news-at-ten-18092018# starting 20:15 minutes in.
The reporter says “The annual profits from the grant of planning consents amounts to £13 billion a year in the UK. That is more than the global profits of Amazon, Coca-Cola and MacDonald’s combined for doing absolutely nothing.”
Julia Goldsworthy of the United Communities Housing Association said “that housing associations have given up bidding for private market plots as they simply cannot compete with private developers. ”
Marvin Rees, Mayor of Bristol, had added his voice to calls for reform of the 1961 Land Compensation Act to allow local authorities to acquire Land at prices close to its existing use value rather than the much higher prices obtaining if planning consent for residential development is factored in.
The trade body, Country Land and Business Association argues that a change in the law will see landowners ceasing to put land on the market for development and do other things with, although it was not specified exactly what will be done with.
This is why we need both a change in the law to allow public authorities to assemble large scale public landbanks for social housing; and a land value tax to incentivise the productive use of land rather than have big landowners sitting on vast acreages waiting for a change of government to reverse the changes in the law.
@Paul Walter – the people already had a vote, and voted to leave. We either leave with a deal or without one, and that’s up to parliament to approve – there’s no need for a referendum on the terms.
@Peter
‘The People have already had their vote. He must mean the Losers’ Vote.’
The People had their vote in 1975 and voted IN. The ‘losers’ vote’ in 2016 was won by a coalition of leavers with a whole spectrum of views of what Leave meant; the fact that the subset of leavers who have the power to implement it (The Tories and DUP in parliament) can’t agree among themselves what it means demonstrates this.
Since 2016 more people have become aware of how Brexit will mess up their lives, because of details that never emerged in 2016.
2016 was also a gerrymandered vote, in that two groups of voters with much to lose – Brits overseas and EU citizens here – were denied their vote.
The third category with most to lose from Brexit, who were denied a vote in 2016 – 16 and 17 year-olds then – are now of age.
All this has changed since 2016; of course, a Strong and Stable government (as advertised by Mrs. May in 2017) would have long ago taken the decision that Brexit was a Dead Duck. A People’s Vote offers us, the People, a chance to stop the Tories, aided by DUP and Labour fellow-travellers from taking us over the cliff.
@Rob Parker
“the people already had a vote, and voted to leave. We either leave with a deal or without one, and that’s up to parliament to approve – there’s no need for a referendum on the terms.”
The vote was to leave the EU. That is not now the issue. The issue is, is it in the country’s interest to accept whatever deal, if any, Theresa May agrees with the EU or crash out without a deal, or go with other alternatives such as remaining in the customs union, or remaining in the EEA, or remaining in both the EEA and customs union, or remaining in the EU. Only the people can decide on this.
Why should the people, without a vote, accept Theresa May’s awful notion of Chequers, which is likely to be severely bent out of shape by the EU in the negotiations?
Why should the people, without a vote, accept a No Deal Brexit, which will be historically catastrophic for the country?
You can’t on the one hand argue that the people have a right to speak on EU membership, but don’t have a right to speak saving the country from Chequers or No Deal, both of which will be disastrous.
Paul Walter: How do you know that a No Deal Brexit or Chequers will be “historically catastrophic” or disastrous or is that just a party slogan ?
@ nvelope2003 And how, Mr nvelope, do you know it won’t ? I suspect the Governor of the Bank of England has a tad more expertise in these matters than you do,
Bank governor’s warning on ‘no deal’ Brexit
Sky News – 18 Jul 2018
3:20
Brexit Warnings: Bank of England Governor warns of consequences of …
euronews (in English)
YouTube – 5 days ago
Joe B, I agree that the affordability of housing, be that to buy or to rent is a real challenge today. I think that action is required at the top of the housing market as an important contribution to bringing it back into control. I think that only people who are resident in the country should be able to buy homes, or alternatively, companies that are incorporated in the UK, and are purchasing for rental purposes. Owners of second homes could be required to pay double council tax, unless rented out / occupied full time by others. Rental companies could pay additional tax for properties that are not rented out for extended periods (I am sure someone could work out a mechanism). I also wonder if a simple rent control mechanism cannot be established based on council tax banding. Anyway, pressure on demand at the top of the market, combined with sensible regulation hopefully would have a positive effect throughout.
Paul D B,
Vince in his speech says ” I want to see fierce tax penalties on the acquisition of property for investment purposes, by overseas residents. And I want to see rural communities protected from the blight of absentee second home ownership, which devastates local economies and pushes young people away from the places where they grew up. ”
Personally, I can see no good reason why property rental businesses, domestic or foreign-owned, are not treated in the exact same way as other commercial businesses and pay business rates. If properties are left empty they will still be required to pay rates.
The motion just passed at conference would reform business rates and assess a Commercial Landowner Levy on the rental value at a rate of 59p in the pound on land rents only, compared with a current rate of 47.9p on the combined value of both land and buildings.
Vince’s speech also spells our the differences in economic approach with the labour party.
“Their (labour) basic appeal is to offer something for nothing. All paid for by someone else. For them budgeting is just a bourgeois hobby…money and priorities define the crucial difference between us and Labour. We understand that to govern is to choose. And they don’t.
if we want a decent NHS, we’ve all got to pay for it. For starters, Liberal Democrats will continue to argue for another penny in the pound on income tax to pay for it.
That means more than £6bn extra each year for the NHS and social care, and the funding we need for our priority…proper care for those suffering mental illness.
The attraction of the Labour campaign, however, was that it offered hope. Hope counters despair. Hope can inspire. Hope can achieve change. But what hope cannot do is make 2+2=7. What the country needs is hope AND realism.
Because without a successful economy we won’t have the resources to fix an overstretched NHS,underfunded schools, understaffed police forces,and perilously overcrowded prisons.
We currently have a low productivity, low wage economy lagging well behind Germany. and France. What the country needs…more investment; more innovation; more training and retraining; more patient, long term capital; the renaissance of manufacturing and the nurturing of creative industries; the greening of the economy.
Public investment complements private investment. This country needs a massive injection of public investment.…in the railway network – across the north of England and the Midlands to Wales and the South West. …and in broadband.…and in housing.
Every pound spent building modern Britain will be returned many times over. Never in British economic history has it been cheaper for a bold, active government to borrow for productive investment, alongside the private sector. “
@ Joe B,
“……..if we want a decent NHS, we’ve all got to pay for it.”
Yes in the sense that we have to provide the real resources for it,
“Liberal Democrats will continue to argue for another penny in the pound on income tax to pay for it.”
On the assumption that raising taxes doesn’t depress the economy, but also on the assumption that this will raise more money. Both are bad assumptions.
Then when it doesn’t work you’ll be arguing for 2p on income tax. When you need more money for your schools and the education system you’ll have to say lets make it 3p. Then it will be 4p if we want pensions to rise, 5p to pay for a housing program etc etc . Then you’ll say that tax revenues haven’t risen as expected, and so VAT will have to rise to 25%
Every tax rise will depress the economy and reduce Govt revenue. Lib Dem economics, therefore, has a similar logic to a dog chasing its own tail. It might seem a good idea but it will never get there.
If you want to depress the economy to fight inflation then by all means raise taxes. But don’t think they’ll give you any more ‘spending money’. The economy doesn’t work like that. You can only provide the resources when the economy is running at close to full capacity. When people who want to be doctors, nurses and teachers etc are offered a pathway to doing what they want to do.
I have just seen the latest lib Dems party broadcast where there was no Welsh voices despite a Welsh lib Dems being the only one in government? Several posts about Scotland and English devolution on here so hoping that the rebuilding job in Wales hasn’t been forgotten or seen as just another region.
Peter,
Three weeks ago, Sir James Mirrlees, one of the finest economists this country has ever produced passed away at the age of 82. In 1996, he and William Vickrey were awarded the Nobel Prize in economics “for their fundamental contributions to the economic theory of incentives under asymmetric information.”
Mirrlees found that the top marginal tax rate should be only about 20 percent; and moreover, it should be about the same 20 percent for everyone. In short, Mirrlees’s work justified what is now known as a “flat tax,” more appropriately called a “flat tax rate.”
Mirrlees wrote, “I must confess that I had expected the rigorous analysis of income taxation in the utilitarian manner to provide arguments for high tax rates. It has not done so.”
To achieve what mant say they want to achieve – a fairer society for all requires a certain attention to detail. The deadweight effect of taxation is most pronouned at the margin, particularly where there is a steep jump in marginal rates as there currently is when income goes from 20% to 40%.
Mirrlees worl also proved that the only tax that carry’s no deadweight tax is Land Value tax and that additional taxes should be levied on consumption not production. The optimum system of taxation (carrying the least deadweight costs) is one based on a foundation of Land Value tax that addresses equity and inequality, a flat rate income tax and consumption taxes llke VAT, alcohol, tobacco and fuel duties.
Most countries have some form of health insurance services rather than the nationalised system in the UK. The NHS being funded via taxes simply means that our spending on health services is pooled nationwide rather than individually determined by direct insurance premium payments.
There is a deepening staffing crisis in the NHS https://www.theguardian.com/society/2018/jul/26/nhs-in-england-facing-deepening-staffing-crisis-figures-show as Vacancies go unfilled, and with a shortage of domestic labour then we may need to turn to increased overseas recruitment to fill these posts.
Reading the speech (so I’ve not yet heard how it was delivered) it seems pretty good, but I’m disappointed once again by the Lib Dem approach to grammar schools.
… so far so good …
Huh?
Surely after that litany the conclusion should be “It is totally wrong.”, but no, the Lib Dem “moderate” policy seems to be to complain about grammar schools to one audience while doing nothing to risk alienating another one.
Sorry, Mr. Watson, but the passage on Grammar Schools was one of the better bits and reflects established Liberal policy going way back to the 1960’s.
I suggest you discuss it with Shirley Williams (and Margaret Thatcher who also led the move away from arbitrary sheep and goats selection)….. or maybe, for evidence based info, download the article below by Professor Chris Husbands, Director of the Institute of Education at London University.
Selection at 11 – a very English debate – Sec-Ed
http://www.sec-ed.co.uk/best-practice/selection-at-11-a-very-english-debate/
4 Dec 2014 – The public debate over academic selection at 11 has once again ignited. Professor Chris Husbands wonders why, when all the evidence argues … The heyday of the 11-plus, and of grammar school education, was a time …
@David Raw “the passage on Grammar Schools was one of the better bits and reflects established Liberal policy going way back to the 1960’s.”
The article to which you link includes the line “some existing grammar schools do a good job for those who attend them, but that in itself is not an argument for sustaining or extending them”.
In that context, my complaint is that Lib Dem policy appears to oppose extending them but is happy to sustain them. Despite what is often quite strong criticism of grammar schools and selection, the party seems actively to avoid an explicit policy of working towards scrapping them (despite a conference vote which appeared to call for just that a couple of years ago), and to me that maintenance of the status quo looks weak and unprincipled.
@ JoeB,
I’m not sure what relevance Sir James Mirrlees’ views on marginal tax rates had to do with my comments. Maybe you are confusing me with someone else?
Whether he’s right or wrong doesn’t change the fact that taxation is not about raising spending money for the NHS or anything else. Government spends then it taxes to prevent inflation. So you can’t just have a shopping list of everything you’d like Govt to spend money on and say “we’ll pay for that with a 1p on income tax” or an extra 1% on VAT, or whatever. For one thing the voters just won’t believe it. They know, instinctively, it just won’t work. They know that 1p on income tax is going to be neither here nor there in terms of the scale of the problem. They know that 1p this year is going to be 2p next year, 3p year after and so on for the foreseeable future.
If the NHS advertises for more more nurses, they aren’t going to be overwhelmed by local applicants. That’s for two reasons. We aren’t training enough of our young people. When we do, we want to charge them an arm and a leg for the privilege. With the ones who do make it through we burn them out in a matter of a few years by expecting them to cope with ultra stressful working conditions. So they go off and do something else!
Quelle surprise!
Furthermore Vince Cable’s doesn’t seem to understand that it’s not Govt’s role to make money. “Every pound spent building modern Britain will be returned many times over.”
The Govt is the currency issuer. It’s not like a household!
Neither does he seem to understand that interest rates are whatever the Govt wants them to be. It’s more like we should be taking advantage of good weather in his mind. So he has no answer when anyone asks but what will happen when interest rates rise again. The pound is an IOU of Govt so the whole concept of Govt “borrowing” is flawed. If you take my IOU how can I borrow it back? All I’ll be doing is swapping one IOU for another.
@David
“Governor of the Bank of England has a tad more expertise in these matters than you do,”
And he has achieved what exactly, for his huge salary?
Apart from polish the seat of his office chair.
Nvelope2003
“Paul Walter: How do you know that a No Deal Brexit or Chequers will be “historically catastrophic” or disastrous or is that just a party slogan ?”
Because I spent 35 years working in an international supply chain with multiple border crossings everyday and I have seen for myself what chaos and delay happens when you do not have rapid and seamless transport across borders.
@Paul
I. too. think leaving the EU is, on balance, a mistake but be reasonable. Of the 193 sovereign states in the UN only 28 were ever in the EU at all.
The Remain campaign was a disaster and a rerun may be worse. The aim was to instil fear and to threaten dire consequences, easily the best way to invoke the opposite response. Remain is still following the same tack.
Innocent Bystander 20th Sep ’18 – 9:25am…………………I. too. think leaving the EU is, on balance, a mistake but be reasonable. Of the 193 sovereign states in the UN only 28 were ever in the EU at all………………………
Perhaps, but the EU countries all rank among the world’s wealthiest trading nations.
On leaving, good luck in making viable trade deals with Liberia, CAR, Burundi, Malawi, etc.
Expats:
The EU already has the Cotonou agreement which includes Malawi (I have not bothered to look up the others). Brexit ends this agreement.
Peter Martin,
when you make statements like “every tax rise will depress the economy and reduce Govt revenue. Lib Dem economics, therefore, has a similar logic to a dog chasing its own tail. It might seem a good idea but it will never get there.” – it might be a good idea to have at least a passing acquaintance with the work of the preeminent economist in the study of such aspects of taxation. The Mirrlees Review, a comprehensive review of the UK tax system by the Institute for Fiscal Studies in 2011, considered such issues.
An increase of 1p in income tax to fund increased spending in the NHS will shift resources in the economy from consumer spending to the provision of health services. A shift in the constitution of output from consumption to health services is unlikely to have any significant effect on aggregate output in the economy. Conversely, an increase in marginal rates of tax on higher incomes above £80k, (as proposed by Labour) may well see a significant deadweight impact on GDP as both Mirrlees and Arthur Laffer (of the Laffer curve) argued.
The optimal solution (in terms of both equity and efficiency) is Land Value Taxation. A levy that has no such deadweight effects on productive output.
The UK is not a closed a economy. The UK economy is intertwined with the global economy and wholly dependent on International trade and inflows of foreign capital to maintain living standards. Consequently, UK interest rates are to a large extent determined by rates offered in International markets and in particular the rates set by the US federal reserve. This is in contrast to countries like Japan or Germany who are exporters of surplus savings not absorbed by domestic investment. These surplus international savings can be put to productive use in the UK if invested intelligently in modernising the UK economy.
David Raw: It is interesting that so many people, including teachers and university staff, who oppose grammar schools either went to and/or send their own children to fee paying so called public schools. I wonder why. Could it be (as I have heard some of them say) that they do not want “oiks” taking jobs from their own expensively educated children ? You have to go to public school now to get any really good job. That was never the case when every town had a grammar school. Is it surprising that those who live in one of the few places which still has one do everything they can to get their children in ? Not many people needed to use tutors when grammar schools were everywhere. Maybe you should make a few inquiries about where the children of certain prominent and not so prominent Liberal Democrats go to school. The party will be unlikely to increase its support with such blatantly unfair policies as this.
I am afraid that what I have seen and heard of the Liberal Democrat Party Conference, with a few honourable exceptions, seems to indicate a rather elitist group of people who think they know what is good for other people, which did not used to be the case. With the present state of the Labour Party it must be hard for many people to know who to vote for now. I hope turnout at elections does not drop even further but fear it might.
Paul Walter: Thank you for your reply to my comment. It is nice to know someone actually knows what they are talking about. The problem is that those who voted to leave seem to be immune to any argument which contradicts their view even when it appears that the leading Brexiteers are putting their money into Ireland or somewhere else in the EU before we leave and even advising their friends to leave the UK after Brexit as it might take 50 years for the benefits to accrue when even those now at school might be retired.
Peter,
Vince Cable’s speech on the economy and tax included the following quite pragmatic proposals:
“We can start to put this right, by breaking with the economically foolish conventions of public sector accounting which treat borrowing for productive investment in the same way as day-to-day spending.
We need to reverse the trend of fewer and fewer people hoarding the nation’s wealth.
But the wealthiest should pay more. We would tax capital gains from assets at the same rate as income from employment, instead of discriminating against workers and the self-employed.
We would abolish inheritance tax and replace it with a levy on large financial gifts received over a lifetime And we would rebalance pension tax relief away from the highest earners, towards those least able to save.
These reforms could raise substantial sums. We would not splash the money on short term spending. It could be invested in a sovereign wealth fund, saving for the future. And that fund would be further boosted by the eventual sale of RBS shares.
The public do need to be assured that their taxes are put to good use. That is why we argue for a penny in the pound on income tax, earmarked for the NHS and social care, as a stepping stone to a tax specifically set aside for the NHS.
And we would concentrate funding on the mental health crisis, building on Norman Lamb’s work in government. There are other services crying out for money.
Schools are seriously underfunded. The police are being cut back to dangerous levels and crime is rising as a consequence. And local government has been outrageously undermined.
Addressing these and other interventions will require additional tax revenue. When the next election comes, our manifesto will spell out progressive tax reforms. And also an honest approach to tax.
The principle is clear: every citizen and company should pay their fair share, and get back something for what they put in.
Nothing gets up the noses of honest taxpayers more than a government squeezing every penny it can out of small firms, while rolling out the red carpet for world-class tax-dodgers like Amazon, Facebook and Google .
To that end, we want a renewed offensive against individual and corporate tax dodging. In addition, we will: …scrap outdated business rates, which are destroying our high streets.…And reform company taxation for the digital age.
@ JoeB,
I notice you often resort to obfuscation when you are faced with the problem of trying to defend the indefensible.
The effect on the economy of raising taxes, especially such as income taxes and VAT, is to cause us all to have less spending money. That’s actually the purpose of taxation as you well know. We don’t need the input of Sir James Mirrlees on that point. It’s self evident that if the Government increase taxes they’ll be deflating the economy.
When Keynes wrote his 1940 pamphlet “How to Pay for the War” he didn’t think in terms of how much income tax or various purchase taxes would have to rise to pay the theoretical cost. If he’d thought along present day LIb Dem neoliberal lines he would have concluded that the sensible thing to do was surrender before a shot was fired.
Instead he sensibly concluded that “the first step for Britain to effectively conduct a war against Germany was to mobilize all its resources”. Now I know we aren’t fighting a war and I’m not suggesting that we re-introduce rationing or putting up barrage balloons over London, but the same principle applies. If we are fighting against poverty, bad housing, poor health care etc then we need to mobilise all our resources. We don’t do that by depressing the economy.
Yes, sure, if the economy is running so hot that tax rises are necessary then we have tax rises. Just like we did during the WW2 economy. But those taxes didn’t “pay for the war” as Keynes well understood and explained.
@ Joe B,
Just noticed your later comments. Yes there are good arguments for helping the high street via rates reform. Yes the wealthy should pay more tax. Yes I agree that we shouldn’t let Amazon or anyone else get away with tax dodging. I’m sure you know that already.
Yes I also agree that:
“Schools are seriously underfunded. The police are being cut back to dangerous levels and crime is rising as a consequence. And local government has been outrageously undermined.”
But your aren’t going to solve these problems with “put a penny on income tax” thinking.
I’m sure you know that already too.
Peter Martin,
it’s not difficult to understand and requires no obfuscation. We have a National Health Service that requires more resources to meet its remit. Those resources are hospitals, equipment, staff, drugs and all the paraphernalia of modern medical service provision.
In a private system of medical insurance, premiums would increase as the demographic pressures of an aging population require a greater proportion of income be allocated to health services. In a nationalized system, increased taxes perform the job of reallocating resources from consumer spending to health provision.
Overall output is unaffected, it is simply a reallocation of spending within the economy from one component of GDP – Household consumption to another – Government spending.
Taxation is necessary to preserve the purchasing power of the currency. How and from what sources taxes are collected will determine how effective we are in fighting against poverty, bad housing, poor health care etc.
The resources for WW2 were in large part funded via Lend-lease and Loans from the US and Canada. Top rates of tax in the US reached 94% in WW2 and in the UK during the 1950s and 1960s, income tax was at its highest levels reaching 90% as war loans had to be repaid over a 50 year period.
Peter Martin,
“But your aren’t going to solve these problems with “put a penny on income tax” thinking.”
The 1p on income tax is described as a “stepping stone to a tax specifically set aside for the NHS.”
When we talk about government spending it can be useful to distinguish between
Government purchases (expenditures on newly produced goods and services) and tranfer payments ( spending in which the government redistributes income).
The government can smooth tax collection by borrowing to cover current spending and taxing later, but this is only sustainable over a relatively short period until the government comes up against its budget restraint when the economy is close to full employment. Borrowing for investment is predicated on growing per capita GDPat a sufficient rate to justify debt service costs.
Transfer payments are not a component of GDP they are purely a reallocation of national income effected through the mechanism of tax collection and redistribution.
Taxation serves the purpose of recycling (or destroying and recreating) money spent into the economy and optimally is collected from the income generated from the factors of production i.e. land rents, the wages of labour, interest on capital and the profits of entrepreneurs. To ensure that taxes don’t unnecessarily depress economic output, the burden of taxes should optimally fall firstly on non-productive land rents and only then proportionally on the productive factors.
Ultimately, as a nation, we can only consume what we collectively produce from the application of labour and physical capital to natural resources like land and raw materials.
The 1p on income tax is described as a “stepping stone to a tax specifically set aside for the NHS.”
Hypothecated taxes are a mirage – and a penny on income tax is a very small fig leaf failing to cover a lack of determined action.
The more I consider historical politics the more I admire Attlee, Bevan & co for having the bravery and the guts to do what was right and to give me the life chances and the health that my parents never had.
David Raw: There was a National Health Service before 1948 when it was nationalised. I have some letters dated 1923 headed “National Health Service”. Improvements in medical practices and new drugs also contributed to health care. None of this should detract from what we have now of course.
@ JoeB,
“Ultimately, as a nation, we can only consume what we collectively produce from the application of labour and physical capital to natural resources like land and raw materials.”
You’ve mentioned “countries like Japan or Germany who are exporters of surplus savings”. I’m not sure I agree about Japan, but you’re right about Germany. This means they keep our capital account in surplus. Ergo, our current account has to be in deficit. The two have to sum to zero. This means we can and do consume more than we collectively produce.
“…….the government comes up against its budget restraint when the economy is close to full employment.”
OK but the economy is not close to “full employment”. The Govt has simply acted to make it very difficult for anyone to claim to be unemployed and be paid unemployment benefits. Many don’t want the hassle of having to show they are spending their day applying for jobs they’ve no hope of getting and which may not even exist. They don’t want the humiliation of being ‘sanctioned’ if they can’t make it to an appointment. Unless they really are desperate. Even so we do still have 1.5 million unemployed!
We do have lots of people supposedly ‘self employed’ or working in ZHCs, or in very poorly paid part-time or low productivity work. It’s the so-called ‘gig economy’ which has created a huge new category of underemployed who should really be counted, or at least partly counted, as unemployed.
There’s lots of resources going to waste at the same time as many are saying there aren’t enough resources available to run the NHS properly. As Keynes would put it we aren’t efficiently using all our available resources.
@ nvelop I don’t know whether you’re being provocative or just ill informed. Probably both.
Before the NHS was introduced in 1948 the patchwork of voluntary, poor law and charity hospitals had significant drawbacks. The 1911 Lloyd George, system of National Health Insurance offered benefits to contributors below a certain level of income. It did NOT include dependants. Contributions were not graduated according to income but were a flat rate. Everything else had to be paid for. For the unemployed – tough luck.
For these contributions, individuals received cash benefits for sickness, accident and disability – at a fixed rate, regardless of severity – distributed through insurance companies. Contributors had free but limited care from a doctor on a local panel – but were only entitled to hospital treatment when suffering from one thing – tuberculosis. Doctors, received a ‘capitation fee’ – a standard payment for each panel patient regardless of the illness..
The Poor Law offered relief to the impoverished. Some workhouses provided their own infirmaries. Some local government areas provided school meals and health education.
Some Voluntary hospitals offered care to patients before the advent of the NHS. Most were supported by donations from subscribers who could sponsor patients for admission – but many foundered in the 1930’s financial crisis.
The British system, pre-1948, was a patchwork of institutions not accessible according to need. The deficiencies were lack of access to hospitals and lack of access to health care for dependants – the families of working men. Many had no formal health cover and used self-medication or medicines bought over the chemists counter. As a result, illness, or paying for medical attendance at a birth, could cause major financial problems for many families.
On a personal note, my Granddad had five children. Two of the little boys (my uncles) died of pneumonia in 1926 because they were dependants. As a miner Granddad could not pay doctors fees.
Don’t bother to respond…. because I won’t.
Peter,
we consume what we produce. To the extent we consume more imports than we export, then we produce assets that overseas investors can invest their trade surpluses in.
At 4% we have the lowest rate of recorded unemployment since 1974. The figures are based on a Labour force survey not on JSA claimants. It is generally considered that at any time approx. 2.5% of the workforce (circa 750,000 people) are between jobs i.e. so called frictional unemployment . The Long-term unemployment rate is down to 1.1%.
Flexible working suits some people (58% according to the Taylor review) and welfare rules limit working hours to 16 or pay to £120 pw for ESA claimants for up to 52 weeks.
There are nonetheless many working in the gig economy earning low pay. The UK has for decades hollowed out manufacturing leaving only lower paying and low productivity services industry jobs. That is a consequence of globalisation and decades of large trade deficits relative to other developed countries.
I don’t see how you turn around a low pay low productivity economy without the kind of Industrial strategy and long-term investment in technology and automation that Vince Cable advocates.
David Raw,
I don’t think anyone could credibly argue that pre-1948 health provision was anything other than patchwork of voluntary, poor law and charity hospitals. However, The NHS didn’t suddenly appear from nothing on July 5, 1948.
During the war, a new centralised state-run Emergency Hospital Service employed doctors and nurses to care for those injured by enemy action and arrange for their treatment in whichever hospital was available. The existence of the service made voluntary hospitals dependent on the Government and there was a recognition that many would be in financial trouble once peace arrived. The need to do something to guarantee the voluntary hospitals meant that hospital care drove the impetus for reform.
Nye Bevan nationalised the existing system across the UK. He decided that the only thing to do was to create an entirely new hospital service, to take over the voluntary hospitals, and to take over the local government hospitals and to organise them as a single hospital service. The revolutionary change was to make all services freely available to everyone. For the first time, hospitals, doctors, nurses, pharmacists, opticians and dentists are brought together under one umbrella organisation to provide services that are free for all at the point of delivery.
Half of Scotland was already covered by a rudimentary state-funded health system serving the whole community and directly run from Edinburgh. The Highlands and Islands Medical Service had been set up 35 years earlier. The London County Council also ran an extensive network.
I think you may be right in saying Hypothecated taxes are a mirage – and I think everyone recognises that a penny on income tax is not of itself going to solve the problem. The NHS does have to get the money it needs from somewhere though. If it’s not through tax reforms that direct more funding to the NHS, then it’s direct charges for GP visits and non-essential treatments.
I would like to thank David Raw and Joe B for their insight into the pre NHS situation. I knew a bit, but nothing like the helpful detail they provided. It would be interesting to know what level of provision was made by all local councils and compare it with political control and also local wealth. My instinct would be better provision would be in richer areas but less in Conservative ones – A reminder that excessive localism can lead to significant problems. But I could be wrong. Does anyone know if any research is publicly available on this?
@ Joe B “If it’s not through tax reforms that direct more funding to the NHS, then it’s direct charges for GP visits and non-essential treatments.”
Direct charges for GP visits ? Absolutely not. It takes no account of ability to pay, would lead to bureaucratic additional cost and be a totally backward step. It would inevitably lead to minor issues escalating into more serious issues because of a drift away from early intervention.
@ Old Liberal Try this : Health and Heartbreak – Healthcare Before the NHS by Jeannie Duckworth (ISBN: 9781784558147)
@ Joe B I agree that the Second World War created a climate for healthcare reform in Britain………….. an odd paradox where awful adversity leads to more social cohesion…… which was responded to by the Attlee and Bevan government between 1946 and 1948.
I sometimes wonder (even though penicillin was not then available) that if Lloyd George/Asquith had set up the NHS in 1911 there would have been more UK survivors from the Spanish Flu pandemic of 1918. As it happens the UK death toll was 228,000.
It took twenty years of mostly Tory rule, and another world war, before the NHS was born. I was a war baby – and I know my parents had to pay for Mum’s confinement with the help and support of relatives.
@ Joe B One last thought. Interesting to note Asquith made sixteen major policy speeches in the 1920 Paisley by-election when he was returned to the Commons. All later published in book form. Your favourite….The Land Question……. was the subject of one of the speeches.
No mention of Health – or of Education – in an industrial textile town. Yet another signal of the long term Liberal tail spin of decline.
Thank you for the interesting information about the pre 1948 National Health service as a result of my brief comment about the situation before that time. I was aware of most of it but not all the details. Many working men did pay small sums into Friendly Societies for help with doctors’ bills. One of my grandfathers was a railway guard and had nine children. The other one worked on the permanent way (a ganger). I am immensely grateful for the NHS but there are problems with it as anyone who has used it knows. I am also grateful for the care I had from my own family as I must have been something of a worry because of various problems and maybe also my ability to see both sides of an argument which can be a real pain !
As I said to Vince Cable during his Q&A session at conference, hypothecated taxes are a huge con trick, because all taxes are fungible. That, for the uninitiated, means that taxes can be spent on anything the government wants and so called hypothecated taxes for the NHS or any other service cannot be protected or guaranteed into the future. A new chancellor or a new government can simply tear up the present arrangements AT ANY TIME and institute different ones. National insurance contributions were established supposedly to pay for benefits and health care, but for the whole of my lifetime they have just formed part of general taxation and in any event have never been enough to cover the costs of those items.
The only way to give sufficient resources to the NHS is a political commitment to do so and the political will to carry it out. MPs have to vote the extra resources out of taxation. Politicians, especially Liberal Democrat ones, have to be honest with the electorate and not try to kid them with talk of hypothecated taxes. 1p in the pound is totally insufficient and we should stop trying to pretend it is. An honest political party would say that we need to spend however many billions extra on the NHS and that means taxes have to rise and then indicate what this would mean in terms of various different taxes or new ones, like the taxation of wealth and land the party has just agreed.
People don’t trust politicians and the sort of obfuscation that is being shown in relation to funding the NHS is guaranteed to make that worse.
@ Mick Taylor,
“……..hypothecated taxes are a huge con trick, because all taxes are fungible. ”
Exactly right. The Westminster Govt collects tax pounds like a theatre collects its own tickets, or the post office collects its own stamps. It puts them in the (usually digital) shredder!
Even for the Welsh Assembly which does tax and spend in the way most people think taxation and spending works, we can’t earmark the particular digits for future spending in a certain way.
As you say, “the only way to give sufficient resources to the NHS is by a political commitment to do so”.
A Political commitment to restoring the ability of the NHS to meet its targets for health outcomes requires tackling the issue of domiciliary and residential social care provided predominately by local authorities. As with the NHS there are 100,000 unfilled vacancies in the sector today and that can only get worse with tighter immigration controls on lower skilled workers and a continuing squeeze on local authority financing.
Funding adult social care provision is going to require implementing the Dilnot proposals in one form or another https://www.theguardian.com/society/2017/apr/06/andrew-dilnot-social-care-reviewer-condemns-uk-system-and-calls-for-new-tax