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Patrick Spencer: Some advice for the new Conservative leader. Stick to these three ideas to boost productivity.

Patrick Spencer is Head of Work and Welfare at the Centre for Social Justice.

The Conservative leadership contest has proved to be the battle of ideas that the party wants, needs and should probably have had back in 2016. Yes, Brexit has dominated the discussion, but in amongst chat of proroguing, No Deals and backstops, we have heard interesting ideas about, for example, tax reform, a national citizens’ service and early years support for young mothers. During the Parliamentary stage of the contest, the Centre for Social Justice hosted the Social Justice Caucus of Tory MPs, holding their own hustings event for the Conservative leadership, and the candidates didn’t disappoint.

The litany of new ideas stem from the fact that most of the candidates felt it is time to reshape the Government’s fiscal strategy. The last nine years have been defined by successive Coalition and Conservative government’s support for fiscal rebalancing. David Cameron and George Osborne successfully formed governments after two general elections on a platform of fiscal prudence.

However, the political landscape has changed. Younger voters who weren’t around to vote in 2010 now make up a sizeable chunk of the electorate. Years of austerity, job growth and a much healthier national balance sheet has meant that ‘austerity’ is increasingly unpopular.  Combine this with the perceived economic harm that a No Deal Brexit may cause, and the case for loosening austerity is compelling.

In this vein, Boris Johnson has argued for lower taxes on higher earners as well as increased spending on education. Esther McVey wanted to cut the International Aid budget and spend savings on the police and education. Dominic Raab called to raise the National Insurance Threshold and cut the basic rate of income tax. Michael Gove hoped to reform VAT so that it becomes a Sales Tax. And Sajid Javid said he would slow the rate of debt reduction, which would free up £25 billion for new spending commitments.

Even outside of the leadership circle, Tory MPs and right-of-centre think tanks are advocating for a new spending strategy.  Neil O’Brien has coined the ‘O’Brien Rule’, which allows for budget deficits as long as debt as a percentage of GDP is falling. This sentiment was echoed by Philip Hammond, who called on every leadership candidate to commit to keeping the deficit under two per cent of GDP as long as the national debt was falling.

Considering the appetite to do something, the next leader of the Conservative Party and Prime Minister should be warned that spending for spending’s sake is not a good idea. If the decision is taken therefore to loosen the fiscal taps, it should be carefully targeted so that this increases growth and more importantly, productivity.

The Centre for Social Justice released a report in 2017 that highlighted a clear policy agenda that used tax and spend policies to boost productivity across the UK. It is roundly recognised that the productivity conundrum in the UK has not been the result of any one issue but, rather, is a confluence of factors that have taken hold of our economic and social machine.

First and foremost, British companies do not invest and innovate enough. Compared to other countries we have lower levels of capital investment, lower uptake of new-generation technologies such as robotics, and entrepreneurs sell out too early. Britain has a proud history of innovation and technology, and yes we do have several world beating unicorn companies, but in recent years we have lost ground in the innovation stakes to the US, Germany and the Asian economies.

The CSJ recommended a raft of policies that could help reverse this, starting with a ramp up in public funds available for research and development. Public cash for R+D has a crowding in (as opposed to crowding out) effect. We also called (counter-intuitively) for the scrapping of Entrepreneurs Tax Relief. It is expensive and does little to help real entrepreneurs, and only acts as a tax loophole for asset strippers (this policy has recently been advocated by the Institute for Fiscal Studies and the Resolution Foundation). We also called for simplification of the tax system. Look at the Annual Investment Allowance, for instance, that was decreased by 75 per cent in 2012, increased by a factor of 10 in 2013, doubled in 2015, only for it to then be almost cut in half in 2016.

Second, the CSJ called for a radical increase in support for vocational education in the UK. While businesses needed some help to innovate and compete, the labour market needs support in terms of skills and competencies. Recommendations included a new spending commitment for FE colleges and more support for adult learners who are in low skilled work. The Augar Review called for the Government to make £1 billion available for colleges, a good start but realistically the Government will have to go much further in the future. here is an example of where public money can make a big difference in public policy.

Last, if the next Prime Minister wants to support productivity growth, they can look at rebalancing growth outside of London across Britain’s regions. London is home to less than a quarter of the UK’s population but contributes to 37 per cent of our economic output. It attracts a disproportionate number of high skilled and high paying jobs. Public spending on infrastructure in London dwarfs that spent in the North and Midlands. Reversing this trend will of course take a generation, but by boosting transport spending on inter-city transport (most obviously Northern Rail), tax breaks for companies that set up in struggling cities such as Doncaster, Wigan or Bradford, as well as more money for towns and cities to spend on green spaces and cultural assets (such as museums, public art, restaurants and bars) that attract young people.

These three productivity-generating policy areas will allow any Government to loosen the fiscal taps without bankrupting the country. When the next Prime Minister appoints his Chancellor, he or she would be well advised to stick to the basics of cutting taxes, spending more on education and rebalancing growth outside of London.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Tom Tugendhat: The last two men left standing in this contest must resist the temptation to slug it out

Tom Tugendhat is Chair of the Foreign Affairs Select Committee, and is MP for Tonbridge and Malling.

In a contest which has been framed around personality, it is striking how many ideas have been generated by the Conservative leadership contest.  Each of the ten candidates original candidates had something to say. Each has championed a new vision of Britain, and each has given Conservatives plenty to think about.

It’s also showcased some good news about how the Conservative Party is changing. Which other party in any other country could boast a contest that included a television presenter, two newspaper columnists, an entrepreneur, an old-school adventurer, a second generation Muslim immigrant, or the son of a Jewish refugee? Not as tokens, but each arguing on merit their own cause as an advocate of an idea.

I backed Michael Gove’s determination to do everything he can to strengthen our United Kingdom and make this country a cleaner, greener place to live. But there are parts from other campaigns that were inspiring. I love Esther McVey’s promoting of Blue Collar Conservatism that has underpinned the Conservative movement for generations and Dominic Raab’s focus on home-ownership and cutting taxes for the lowest-paid.

Andrea Leadsom’s defence of EU citizens who live in the UK and the need to give them (my wife included) certainty about their future status is a proposal I completely back and Matt Hancock’s continued emphasis on mastering cutting-edge digital technologies as the key to our country’s future prosperity is one I have been pushing for since I discovered that parts of Kent are less well connected than Kabul or Khartoum.

At a time when faith in politicians is waning, Rory Stewart showed us just how we can rebuild trust not only through outreach but by talking about the real issues that change people’s lives.

And Boris Johnson? What isn’t there to say about him? He has picked up school places and tech infrastructure, taxes and the living wage and, closest to my heart in our in a time of educational separation – apprenticeships. That, along with his ability to animate the faithful make his contribution so powerful.

But he’s not alone. No one could be unmoved by Sajid Javid’s back story and determination. His pledge to recruit 20,000 more police is a welcome return to the values many expect of us – protecting those most in need. And as chairman of the Foreign Affairs Committee, I’ve long admired Jeremy Hunt’s ability to master the widest of briefs and understand the details that drive change in our world. His commitment to fund our armed forces and diplomacy properly is also hugely welcome.

The range of these ideas gives me great hope for the future. Partly because they confound the lazy allegation that we have run out of them. Partly because none of them need be mutually exclusive. And partly because Brexit is the biggest shift in UK policy in generations with massive implications for everything from the NHS to housing policy: there is a massive opportunity for creative thinking.

While there is no shortage of ideas, there has been a shortage of leadership. We need a Prime Minister now who will take us through Brexit and confront the challenges beyond. The 2016 referendum, and the three years since our vote to leave, have revealed many profound political problems – common to many other countries – that we now have both an opportunity and a duty to address.

The poorest have felt the impact of the financial crisis hardest, while the benefits of our economic growth have been imperceptible to too many: especially those who do not live or work in our big cities. We have to build beautiful new housing that reflects the way we live today. We need to ensure that our education system is focused on endowing our young people with the skills that translate into career security in a world which has already been transformed by internet connectivity and will be further by automation and AI. Finally, everything we do must be sustainable. The policies we pursue today must not imperil our children’s future.

The temptation for the last two men left standing in this contest will be to slug it out. There is a real danger that the race becomes acrimonious and divisive.  We are at our best as a country when we are unified. I know from my time chairing the committee that has scrutinised both Foreign Secretaries that each man is above this.

Let us spend the next week scrutinising these two potential leaders. Then let’s unite behind whoever wins to deliver Brexit and a compelling vision of the future for this great country.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Bob Seely: Saving Britain billions. Ideas for the contenders in this leadership contest.

Bob Seely is a member of the Foreign Affairs Select Committee, and is MP for the Isle of Wight.

Throughout this coming week, the candidates for the Conservative Party leadership launch their campaigns in earnest.

Whoever wins faces a massive challenge. Not only do we have to deliver Brexit – and until we do Britons won’t listen to us on anything else – but we also need to introduce a raft of domestic and foreign policies to renew us in office.

We badly need new ideas and new projects , some of which will need new cash. We also need to cut taxes. To help with the coming battle for ideas, and to support Liz Truss’ work on the spending review, here below are ideas to save between £50-100 billion. That figure doesn’t include the £39bn from a nodeal Brexit.

– – –

First, some basic facts. Government spending made up 38.5 per cent of GDP in 2017-2018. Departmental budgets set by spending review (DEL) amounted to £358.4 billion in 2017-2018, but the total departmental expenditure, including spending which is difficult to predict, manage or forecast (AME) was £812.9 billion in 2017-2018. Of that, £734.9bn was spent on services.

So where could we save money?

High speed rail

First, scrap the planned High Speed Rail link – HS2 – and save £50-100 billion. HS2 initially cost £33.4 billion, then rose to £42.6 billionIt is now costed at £56 billion. One government-commissioned estimate suggests it could total a breath-taking £403 million per mile. The Institute of Economic Affairs estimates the real cost to be £80 billion, and even that may be too little.

Terry Morgan, former chair of HS2 Ltd, told the Lords “everybody has their own guesstimate” of cost and “nobody knows, actually, the number”. Doug Thornton, HS2’s former Land and Property Director, has said the valuation of properties along the route was “enormously wrong”The National Audit Office found that the estimated net cost to acquire land and property for Phase One was £1,120 million in 2012 (2011 prices) ,but £4,316 million was budgeted at the 2015 spending review (2015 prices). Every honest review has considered it bad return for the taxpayer. The Lords’ respected Economic Affairs Committee has suggested delaying HS2. Let’s bite the bullet and bin this white elephant.

As with all the ideas here, the money could be better used by giving it back to taxpayers in the form of tax cuts, or supporting local and regional infrastructure projects to counter London’s domination of infrastructure spending, or to right the injustice faced by female pensioners – the so-called WASPI women. Alternatively, the next Conservative Government could pledge to ensure fibretopremises broadband nationwide to deliver near unlimited broadband speeds.

The farce of HS2 highlights a wider issue; UK public projects cost much more than in other countries – construction cost per mile of HS2 maybe as much as nine times that of its French equivalentMegaprojects run over-budget and over-time – time after time.

Cost overruns for the Channel Tunnel were 80 percent and for the National Health Service IT System up to 700 percent. The Scottish Parliament was estimated to cost between £10 and £40 million. It cost £414 million and was delivered three years late. An excellent study by the Taxpayers Alliance found that 57 per cent of over 300 public schemes overran by an average of 33.7 per centAnother study in 2009 found total net overrun on 240 projects was more than £19 billion. Even by Government standards, these are eye-watering sums. Running public projects to time and budget would allow us to slash taxes and still leave billions for education, policing or defence.

Overseas aid

Second, reallocate the 0.7 percent legally defined amount that the UK needs to spend on overseas aid. Many traditional Labour and Conservative voters alike are losing faith with this figure.

Why? Because we now spend more on overseas aid than we do on policing. To keep public support for overseas aid, which is important, and to integrate our overseas policy, we need to change the definition of aid to give us more flexibility in how we spend, as I outlined in a Henry Jackson Society study six months ago.

We should continue and even increase the basic lifesaving and humanitarian development aid that we are rightly proud of. But there are other elements of the £14.5 billion aid bill that we can re-allocate to provide much-needed support to the Foreign & Commonwealth Office(FCO), Ministry of Defence (MoD) and Department for International Trade (DIT). The DfID money should fund:

  • The BBC World Service TV and Radio, tasking it with becoming the global broadcaster of integrity to counter the propaganda output of authoritarian states such as Russia and China.
  • Minstry of Defence peacekeeping operation.
  • Some of the Department of International Trade’s work, especially where that trade represents a moral as well as economic good, such as providing new and greener technologies for developing nations.

Whilst the above doesn’t offer money back to the Treasury, ieffectively gives a spending boost of £85 million to the FCO, £269 million to our Armed Forces and tens of millions to our trade missionswithout having to raise taxes or borrowing. In addition, £254 million for the World Service that comes from the licence fee can be returned to taxpayers or reinvested in the service.

Health and social care

Third, integrate health and social care with local government. This has a potential for big efficiency savings, allowing money to frontline services rather than bureaucracy.

Attempts to make this idea work so far have floundered. The Better Care Fund was intended to save £511 million for departments and partners in the first year. It failedNevertheless, the idea is a valid, one and the council in my constituency of the Isle of Wight is hoping to win Government support to set up a pilot scheme.

In an increasingly complex world integration, be it in overseasspending, or public servicesintegration is key to efficiency and delivery. Artificial Intelligence, tele-medicine and better use of big data will support this, especially in more isolated communities such as the Island.

Cut corporation tax

Fourth, cut tax to raise more in revenue. The principle is a sound one – we cut top rate tax in the 1980s and dramatically increased the tax take.

Slash rates of corporation tax to 12.5 per cent.  Britain has been willing to give the fiscal firepower to “pull every lever we’ve got” a no-deal BrexitDown from 28 per cent in 2008, Corporation tax will soon be set at 17 per cent, the lowest in the G20 – yet receipts have never been higher at £56.2 billion. Lower corporation tax would increase the demand for labour, which in turn raises wages and increases consumption.

Winter fuel payments

Fitth, there are more difficult areas to cover. For example means test winter fuel payments would not be popular but could save £2 billion a year. Despite being estimated to cost £1,967 million in 2018/19, these were described by the Work and Pensions Committee (114.) as a “blunt instrument” which “gives a cash payment to many households do not need it”.

According to the Social Market Foundation, pensioners, who are by far the wealthiest age group in society, “are likely to save rather than spend the value of the windfall. It asked: “Why should older, wealthier pensioners receive more money than poorer, younger ones?”

An estimate for 2012-13 stated if payments were only made to those in receipt of pension credit, expenditure would only be £600 million in 2012-13 (to nearest £100 million). Surely it is better to spend the money on increasing the basic state pension, or increasing the amount that poorer pensioners receive, than giving it to those need is less.

Street and motorway lighting

Next, there are smaller but no less valuable schemes that we could champion. For example, do we need to keep streetlighting on overnight in rural areasThere’s no link between having lights off or dimmed and an increase in crime. Do motorways lights have to be on throughout the night? On the Isle of Wightwe can vary our lighting from a central point. That has the potential to save tens or hundreds of thousands of pounds per annum.

Roadside verges

Next, why don’t we cut roadside verges less. They represent a natural habitat for wildlife, but often the way they are cut today during flowering season kills wildflowers and replaces them with thick grass which need more cutting. There are parts of verges, in roundabouts, on curves, which will need very regular cutting, but if we adopted verge cutting to encourage wildflowers and pollinators such as bees, we would beautify roadsides AND save moneyDorset saved £93,000 by ‘greening’ their verge cutting, and Monmouthshire County Council estimates it has saved £35,000 annually from reducing verge mowing. For councils’ up and down the country, every little helps, especially if it has an environmental and quality of life benefit.

Legalising cannabis

Sixth, there are other potential tax streams which have not been examined. Should we examine legalising cannabis, for example, especially weaker strains of it, not only to raise tax but also for reasons linked to mental health and crime reduction.

Colorado, with a population of under six million, raised $247 million in 2017 alone from marijuana tax. One of the most comprehensive studies into legalisation estimates that between £397 million and £871 millio, could be raised annually. A US-style system here could generate up to £2.26 billion a year from tax and fees.

n addition, there is money saved. The Taxpayers Alliance estimates that by legalising cannabis, the UK could save at least £891.7 million a year in reduced spending by police, prisons, courts and the NHS through pain relief treatments. Do we need a Royal Commission on this subject? Should we be treating cannabis, especially in mild form, as yet another sin tax, like smoking and alcohol?

Doing things better

Seventh, we need to do simple things better. There are more prosaic aspects of best practice, such as procurement.

Procurement amounts to around one third of public spending in the UK. In 2016/2017, the UK public sector spent an estimated £355 billion with external suppliers. Efficiencies, such as buying common goods and services on behalf of the whole government, saved £255 million through the Crown Commercial Service and £879 million through specialist commercial expertise.

We need a systematic method of driving procurement best practise across all of Government, from paperclips to tanks, and supporting new, smaller entrants into a market dominated by bigger players who too often bid, take their cut and sub-contract.

Finally, by leaving the EU we will have more power over procurement, buying locally as far as free markets allow. Some organisations believe that EU regulation costs the UK as much as £33.3 billion per year, potentially moreBy taking a common sense attitude to regulation post Brexit, we could save Britain billions.

– – –

These ideas are just a start. Ensuring a Conservative Government after the next General Election requires two things. First, we must deliver on Brexit, second, we need to produce ideas and policies that renew in office.

This is a contribution to the debate. Let’s see what the candidates offer in the week ahead. I wish them well.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Andrew Allum: New technology can save the NHS and social care system billions and improve patients’ lives

Andrew Allum is the Chairman of the TaxPayers’ Alliance.

If you were to ask anyone in the UK what made them proud to be British, they would probably name a few things. They might mention standing up to Hitler and defeating fascism, England winning the World Cup in 1966 (although perhaps not so much in Scotland or Wales), or our system of Parliamentary democracy (more unlikely now given current events). Many would also mention the NHS.

In many ways, this pride is understandable. It is great that people can receive healthcare regardless of their financial situation. It wouldn’t be right to see people turned away from receiving medical treatment because they do not have enough money. Or to see people facing crippling medical bills which drive them into poverty.

Anyone who has ever visited a busy A&E department will testify to the professionalism of many of the doctors, nurses, paramedics, and other medical professionals. They very often provide a great service and high standard of care, often in very challenging conditions.

However, we know it’s not all rosy. Increases in life expectancy mean that there will be added pressure on the health and social care systems both now and into the future. This, in turn, will place additional burdens on the already overstretched public finances.

Many contributors to ConservativeHome, including some of my TPA colleagues, talk about the need for systemic reform of the NHS, so that it is financially sustainable while still free at the point of use. But we know how thorny that debate can be.

That’s why it’s important to capitalise on things that can help the NHS improve right now. Our new paper examines the use of AI and automation in health and social care, which we launched today with Matt Hancock, the Secretary of State for Health and Social Care.

Ben Ramanauskas, the paper’s author, found that increasing the use of automation and AI has the potential to save the NHS £12.5 billion each year, and the social care system £5.9 billion. This brings a combined savings of £18.5 billion. 

So, where do all these savings come from? Well, fewer people could be admitted to hospitals at busy times thanks to software that tracks admission numbers. Fewer people being prescribed medication for mental health conditions as they are able to receive the help they need, when they need it. Virtual eye clinics that diagnose and treat patients without having to attend a physical clinic. These are just a few of the ways in which we can reduce the financial pressures facing health and social care in the UK.

It is not just the financial strain which will be eased. Pressure will be taken off health and social care professionals, too. The technology exists to take up admin work, or collect supplies for patients. There are also robots being used in hospitals and care homes in Japan which help to lift patients and assists them with bathing and other things. These technologies will free up doctors, nurses, and care workers and give them much more time to focus on what they love to do and the thing they do best: caring for their patients.

Not only will automation free up healthcare professionals to focus on patient care, it will create new and exciting jobs. Throughout history people have been concerned that new technologies will lead to job losses and mass unemployment. They have always been mistaken. Some jobs do cease to exist, but new ones are created to replace them. Automation in health and social care is no exception.

It also offers much more flexibility to patients. Meeting with a GP in person will be absolutely right for many patients, as will attending hospitals and clinics. However, we live in an age in which people are increasingly busy and in which people – especially millennials – are used to getting around cities and towns, ordering food, and finding love using their smartphones. Technology allows people to have a consultation with a GP via their smartphone, so let’s use it more widely. This will give greater flexibility to people who would prefer to access medical care in a way which suits them, while also making more in person appointments available for those who need them. Embracing new technology will also allow patients to monitor chronic conditions using their smartphones and to receive advice without having to attend a hospital or a clinic. 

The TPA naturally backs changes that deliver savings. But ultimately, embracing technology is primarily about patient outcomes. AI systems which are currently being developed are able to read medical scans and samples much faster, and with a greater degree of accuracy, than doctors and pathologists. This can mean that heart conditions and cancer can be spotted much earlier, thereby increasing survival rates for patients. It will mean that people suffering from mental health conditions no longer have to wait years to receive therapy, people will convalesce more quickly from surgery, and the elderly will be able to receive care in their own homes for longer.

Matt Hancock has shown a welcome willingness to embrace technology. If he succeeds, then we will save vast sums of money, reduce the burden on health and social care professionals, and save lives.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com