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Neil O’Brien: Fifty shades of conservatism

Neil O’Brien is MP for Market Harborough.

You might say socialism and liberalism are ideologies, while Conservatism is more like a character trait. But that’s not quite right. Socialism and liberalism are ideologies about maximising one thing, be it equality or freedom. In contrast, Conservatives believe in a wider variety of ideals.

So what kind of conservative are you?

Since the classic Liberal party gave way to Labour, we’ve been the party of the free market and sound money, even more so since the Thatcher/Reagan era. The free market is a such huge part of what we are about, it tends to dominate, but there’s much more to conservatism.

Perhaps you are a law and order Conservative: patron saint Thomas Hobbes, who, inspired by his experience of the civil war, observed that without strong authority and law and order, life tends to be “nasty, brutish and short.”

But in a nice example of how conservative ideas fit together, a strong law and order policy is also a One Nation policy: because who suffers when there is crime and disorder? Those who live in the most deprived fifth of neighbourhoods are 50 per cent more likely to be victims of crime than those in the richest fifth.

Or perhaps you are a constitutional conservative. Do you believe in keeping the Monarchy? A House of Lords that isn’t elected? Do you believe in keeping first past post elections, and an unwritten constitution? Do you believe in the common law and rule of law? Those ideas are more important now Labour believes in expropriation of your pension, your shares, your house, and anything else that isn’t screwed down.

Perhaps you’re a conservative because you believe in Liberty. Habeas Corpus. Limits on Government. Legal protection of personal and family life. Liberty always raises contentious issues like hunting or drugs. Or think of recent cases like the gay marriage cake. I thought the courts got it right: a business can’t refuse to serve gay people, but people can’t be made to promote political views they don’t hold, even if I disagree with those views.

What do we think about the growing deployment of live facial recognition technology in public places? Liberty lovers might want to ban it. Law and order fans might want to allow it.

Liberty-loving conservatism can also clash with another ideal – social conservatism. Are you worried about family breakdown? What do you think about transgender issues? What do you think about full facial veils? That question pits liberty against traditional pattern of our society. France banned them, we allow them.

Do you think what you get out of the welfare system should be linked to what you put in? And how should we make choices about immigration: do we just think about migrants’ skills and earnings, or how easily they will integrate into our culture? I incline to the latter view.

One big idea that I think fits under social conservatism is the idea of the nation state. National self-determination and the lack of a shared European demos powers the idea of Brexit, but it also explains why we are prepared to make compromises to try and keep the United Kingdom together.

Zooming down from the nation to the individual, conservatism is about individual self-reliance. That’s why we strongly support individual home ownership. Mrs Thatcher expressed this well. She said that people: “are casting their problems at society. And, you know, there’s no such thing as society. There are individual men and women and there are families. And no government can do anything except through people, and people must look after themselves first. It is our duty to look after ourselves and then, also, to look after our neighbours.”

Things like the doubling of the Income Tax Personal Allowance and the National Living Wage – and also welfare reforms – are about self reliance. George Osborne was onto something when he talked about a “higher wage, lower tax, lower welfare spending” society. Personally, I believe tax should be based on the ability to pay, and so we should bring back the higher tax allowances for children Labour abolished in the 1970s.

But conservatives don’t just believe in individualism. We are the society party. Civic conservatives know that many problems can’t be solved by either the free market or the state. David Cameron said: “There is such a thing as society, it’s just not the same as the state.” When we think about problems like loneliness in an ageing society, we can only solve them by catalysing and helping voluntary groups and family life. The Big Society may have been a good idea, badly timed. But the ideal of voluntary action remains very attractive, I find particularly to younger conservatives.

Conservatism is also about gradualism. Burke attacked the French revolution as a huge, risky, leap-in-the-dark.
Gradualism is behind all our biggest policy successes. Welfare reforms started under Peter Lilley, continued under New Labour, and then under another Conservative government – and now have the record employment. The academy schools programme also spanned governments: from Kenneth Baker to Gavin Williamson.

In contrast, Socialists believe in utopian leaps. In the USSR and under China’s Great Leap Forward millions died, yet John McDonell still says, “I am a Marxist”. In contrast we should be proud gradualists. What do we want? More use of evidence. When do we want it? After randomised control trials.

As well as gradualism, Conservatism is about pluralism and decentralisation. Environmentalists have shown us why it is dangerous to have a monoculture of anything, because if things then go wrong, they do so on a huge scale. Think about the Irish potato famine.

Take a more recent policy example: during the heyday of disastrous progressive teaching methods, they swept all before them. But independent schools and grammar schools were a bastion for traditional methods (like phonics), which could then make a comeback after trendy methods failed.

Devolution allows experimentation. In the US they say the states are “laboratories of democracy”. Ideas like welfare reform or zero tolerance policing were tried locally and taken up nationally when they worked. Conservatives also believe in pluralism in a deeper way. People have different ideas of the good life.

That’s one reason I think we should keep the honours system – to recognise those who are motivated by something other than money, whether they want to serve their country on the battlefield, or help their community by running a youth club. That should inform our thoughts on things like childcare. Do we just focus on maximising employment or education? Or let people choose if they want to be stay at home parents?

I’m sure readers will point out things I’ve missed. But those are some of the main elements of Conservatism.
Law and order. The Constitution. Liberty. Social Conservatism. Civic Conservatism. Individual-self reliance.
Gradualism. Pluralism. Ideas that are sometimes in tension, but which fit together.

Conservatism is a bit like the roof of parliament’s Westminster Hall: which is held up by a lot of huge, ancient beams all resting on each other. Likewise, the elements of conservatism fit together, and have also made something really strong and enduring.

This article is based on a contribution by the author to a Centre for Policy Studies event, “Free Exchange: The case for conservatism”, at last week’s Conservative Party Conference.

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

James Frayne: To win working-class voters, Conservatives must start talking tax

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

This coming election’s most important coherent block of swing voters live in provincial England. They’re mostly older and female, they’re mostly working class (C2/D), and they’re highly eurosceptic.

Other groups matter too, of course – such as the mostly Southern, suburban professionals – but they’re smaller in number. Things might change but, painful as it is for some to accept, this election will primarily be decided by the provincial English. This working-class group is emphatically not locked down for the Conservatives.

The Conservatives’ last campaign – with its threat to penalise careful, thrifty pensioners with massive social care costs, and implicit threats of general tax rises – prevented the Conservatives carrying working-class voters in what should have been a landslide.

Lessons have been learned and the announcements made by the Prime Minister and crafted by Vote Leave alumni to date have been crafted tailored to this group. The coming manifesto will be better targeted too.

Much of the manifesto writes itself, with obvious demands for action on Brexit, public services, and crime. But there’s an area slowly creeping onto the agenda in the same way crime did a year ago: tax. Long dismissed as an issue of limited electoral potency, things are slowly but definitely changing. In crafting an economic policy for working-class and lower-middle-class swing voters, the Conservatives need a set of attractive policies on tax.

What should these policies look like? Over the summer, I ran a detailed opinion research exercise for the TaxPayers’ Alliance to probe working class attitudes to prospective tax policies. Combining a 4,000 nat-rep poll with half-a-dozen focus groups of swing voters in seats with heavy working-class representation – Walsall, Stoke North, and Bristol North West – we tested a long list of options the political parties might realistically announce for the next election.

(While all polls date fast in the current environment, by polling at the high point of the Brexit Party’s prominence and the low-point of the Conservatives’ recent polling performance, we can at least gauge the softness of Conservative pledged support and therefore the number of their voters who are essentially swing voters in this block).

You can read the full tables and judge for yourself here. However, two main things stand out. Firstly, most importantly: working-class voters want a system that looks to them much fairer than the current system. Secondly, and more surprisingly: they want government to help businesses – mainly start-ups and local businesses, but businesses generally – because they’re worried about the state of the economy.

This second lesson contradicts popular wisdom in Westminster. Both require more explanation. Given a list of prospective tax cuts, working class voters have a clear view of who should be the primary recipients of help via tax cuts, and who should take on more of the financial burden through tax rises.

For example, we found support for: a reduction in the basic rate of tax; higher tax thresholds so people are not dragged into higher bands by rising inflation; an increase in the threshold at which stamp duty kicks in; and National Insurance rebates for those that don’t claim Jobseekers Allowance for five years.

On the other hand, we also found support for: a higher rate of tax on top earners; and higher taxes on second homes. Working class voters don’t just want a system that benefits “people like them” (although they do want that), they want a system that supports those that need it – and in their eyes deserves it.

This research showed not only that working-class voters are supportive of business tax cuts, but they’re also much more supportive of business tax cuts than middle-class professional voters. They have a bias towards supporting tax cuts for new businesses (for start-ups), for small businesses, and for local businesses. For example, they strongly favour start-ups paying no corporation tax (often a heavy burden) for their first three years of operation, and tax cuts for small businesses and the self-employed. But they favour generally pro-business tax cuts too: they favour a reduction in employers’ PAYE contribution, and a general cut in corporation tax too.

The focus groups help us to understand why this might be. Fundamentally, it’s because working-class voters are much more concerned about their jobs – generally, but specifically in the context of Brexit – and they see more clearly what their communities would look like with fewer jobs.

In places like Stoke, for example, where the potteries went a while ago, all that’s really left, in local people’s eyes, are distribution centres, warehouses, and call centres. Politicians and left-wing activists sneer at these sorts of jobs, but local people don’t and local people fear that higher taxes will drive businesses away and leave them with nothing.

Working class support for business has been a real phenomenon for a while now – certainly since the referendum – and I have been arguing here for a while these arguments about voters thinking “capitalism is broken” are miles off. I fear that – like the ideas the public want everything in optimistic Obama-esque language, or that every policy should be designed to help the very poorest – this has captured Conservative politicians’ minds.

Conservatives need to un-learn this “lesson”. Working-class voters want to hear policies that will help their employers, not that those that might drive them away.

Tax isn’t a tier-one issue yet, but it’s going up in the public’s mind – and particularly amongst working class voters. They are, after all, people that have not had a pay rise in a long time and who struggle with rising costs. They are also people that live side-by-side with those they think don’t work hard, and who live comfortable lives on welfare. And they are people that fear what a weaker economy might mean for their long-term financial health.

For all these reasons, tax will become an issue that politicians have to start talking about soon.

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

Corbyn’s speech showed his fear of losing his anti-establishment street cred

Michael Foot, one of Jeremy Corbyn’s predecessor as Leader of the Labour Party, was not always a great champion of the judiciary. In 1972, in a speech to Scottish Miners’ Gala in Edinburgh, Foot referred to the National Industrial Relations Court and its President, Sir John Donaldson. Foot asked:

“How long will it be before the cry goes up: ‘Let’s kill all the judges’?”

This afternoon in Brighton, we had a rather different tone from Corbyn. Given his record of honouring terrorists it might stretch credulity to champion the rule of law. But he did his best saying:

“The highest court in the land has found that Boris Johnson broke the law when he tried to shut down democratic accountability at a crucial moment for our public life…There was no reason – “let alone a good reason”, the judges concluded, for the Prime Minister to have shut down parliament. Conference, he thought he could do whatever he liked just as he always does. He thinks he’s above us all. He is part of an elite that disdains democracy. He is not fit to be prime minister. Let me quote the Supreme Court’s conclusion: “Unlawful, null and of no effect and should be quashed” – they’ve got the prime minister down to a tee.”

What is the answer?

“This crisis can only be settled with a general election.”

But not quite yet:

“That election needs to take place as soon as this government’s threat of a disastrous No Deal is taken off the table. That condition is what MPs passed into law before Boris Johnson illegally closed down parliament.”

Of course, Labour was offered the chance of an election before October 31st. I suppose there would be still just about time for one to take place before then. On that schedule surely a Labour Government could have averted “no deal” by seeking an extension or negotiating a deal. The only hitch that occurs to some of is that Labour might have had the nagging doubt that it would have faced defeat.

There wasn’t much about Brexit but Corbyn did make clear that his indecision was final:

“We need to get Brexit sorted and do it in a way that doesn’t leave our economy or our democracy broken. The Tories want to crash out without a deal and the Liberal Democrats want to cancel the country’s largest ever democratic vote with a parliamentary stitch-up.

“Labour will end the Brexit crisis by taking the decision back to the people with the choice of a credible leave deal alongside remain. That’s not complicated Labour is a democratic party that trusts the people. After three and a half years of Tory Brexit failure and division, the only way we can settle this issue and bring people back together is by taking the decision out of the hands of politicians and letting the people decide.”

An important part of Corbyn’s appeal in the 2017 General Election was that he was an anti-establishment champion. In the coming General Election that role looks as though it will be snatched by Johnson. It might seem contradictory in normal times to have an anti establishment Prime Minister. But these are not normal times. There can hardly be any more establishment cause than the European Union. Nor any more anti-establishment cause than honouring a referendum result which politicians have thwarted. Corbyn has spotted the risk and said:

“In a shameless bid to turn reality on its head Boris Johnson’s born-to-rule Tories are now claiming to be the voice of the people. A political party that exists to protect the establishment is pretending to be anti-establishment. Johnson and his wealthy friends are not only on the side of the establishment they are the establishment. They will never be on the side of the people when supporting the people might hit them and their super-rich sponsors where it hurts – in their wallets and offshore bank accounts.”

The tried and trusted class war themes were run through. He would take on the vested interests, the powerful and the wealthy. Themes about taxing the rich – carefully limited to the “richest five per cent” – and renationalising the privatised utilities combine enthusing left wing activists while also enjoying broad support from the general public.

There is an ideological challenge for the Conservatives where a genuine grievance is identified and a socialist remedy is offered. For instance in this passage Corbyn says:

“I met Luis Walker, a wonderful nine-year-old boy. Luis is living with cystic fibrosis. Every day he needs at least four hours of treatment and is often in hospital keeping him from school and his friends. Luis’ life could be very different with the aid of a medicine called Orkambi. But Luis is denied the medicine he needs because its manufacturer refuses to sell the drug to the NHS for an affordable price.

Luis, and tens of thousands of others suffering from illnesses such as cystic fibrosis hepatitis C and breast cancer are being denied life-saving medicines by a system that puts profits for shareholders before people’s lives.

Labour will tackle this. We will redesign the system to serve public health – not private wealth – using compulsory licensing to secure generic versions of patented medicines. We’ll tell the drugs companies that if they want public research funding then they’ll have to make their drugs affordable for all. And we will create a new publicly owned generic drugs manufacturer to supply cheaper medicines to our NHS saving our health service money and saving lives. We are the party that created the NHS. Only Labour can be trusted with its future.”

Tim Worstall had a piece on CapX this week which argued that overpriced drugs was a regulatory rather than a market failure. It is a matter of the patents being applied for the right length of time. “The first pill can cost $1 to $2 billion to get through that process. The second can be made for $1 usually enough. If anyone is allowed to make that second pill as they wish then the $2 billion put in to make the first won’t happen.”  But sometimes mistakes are made – which is why insulin, which has been around for over a century, is much more expensive in the United States than in Europe.

Anyway, that is a shrewd cause for Corbyn to take up. It is the sort of issue that free market Conservatives need to offer alternative solution. Donald Trump is certainly sensitive to it and keen to get costs down in America

But where Labour surely overreached in their socialist ambition is the policy they passed this week not only to abolish independent schools but to confiscate the property of these institutions. Corbyn didn’t mention it in his speech and he might well feel it was indiscreet to make the demand public even if he agrees with it. Also missing from the speech was any mention of Tom Watson, the Deputy Leader.

With Ed Milband there was a dilemma for the Conservatives as to whether to attack him for being weak or extreme. Yet Corbyn is both more extreme and more weak than his Miliband was. The attempts to deselect his opponents and abolish the post of Deputy Leader suggest an extremist ambition to stamp out dissent to his Marxist cabal. Yet for these efforts to be botched indicate weakness. For all the difficult news this morning for the Conservatives from the Supreme Court this has been a bad weak for Labour. Far from the Conference giving them any “bounce” it is one most Labour MPs will be keen to forget.


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

Neil O’Brien: How to rebalance Britain’s unbalanced economy – by levelling up, not levelling down

Neil O’Brien is MP for Harborough.

Even Brexit, it turns out, is about location, location, location. Ben Ansell, an Oxford professor, has found that in wealthier areas, where the price of a house averages £500,000, 70 per cent voted to remain. Poorer areas, where the average house price was £100,000, were an exact mirror image, with 70 per cent voting to leave.

Like a disclosing tablet, the EU referendum highlighted the different economic experiences of different places over recent decades: booming London and the most prosperous home counties voted to Remain, as did Scotland, the next richest part of the country. The reviving cores of our large cities did likewise. But smaller towns and cities, the countryside and coastal places voted overwhelmingly to Leave, as did Wales.

In response, Boris Johnson recently set out his ambition to “level up” poorer areas in a fantastic speech in Manchester. It’s the right thing to do – and it makes political sense too. The 2017 election saw us losing ground in wealthier-but-Remainy areas, and gaining former Labour seats in the midlands (and north) which we’d never gained before. We have huge potential to win in seats where people have felt taken for granted and left behind for many decades.

The economic case for levelling up is clear too. There are no G20 countries which have a more regionally imbalanced economy than the UK and are also richer than the UK. Conversely, all large countries that are richer per head than the UK have a more balanced economy.

In other words, a more balanced economy is a stronger one. In a highly unbalanced economy, resources like land and infrastructure end up overloaded in some parts of the country, and under-used in others, which is costly and wasteful. Given that workers (particularly lower skilled people) don’t simply move away from their families in the face of local economic problems, having greater distances between unemployed workers and job opportunities may well compound problems matching people to job opportunities. There might even be compounding mechanisms: if some areas have high unemployment that can lock in patterns of worklessness.

But to bring about a more balanced economy, there are two big lessons that the Prime Minister must draw from previous successes and failures.

First, the crucial thing is to attract private sector employment – particularly jobs that are knowledge and investment-intensive. The work of academics like Enrico Moretti and think tanks like the Centre for Cities shows how gaining “brain jobs” in the private sector has a much bigger multiplier effect than just moving public sector jobs to an area.

Tax breaks for inward investment can be very effective in attracting in new investment, which is why most other countries offer them. Within the UK, probably our most successful ever regional intervention was Margaret Thatcher luring Nissan to Sunderland with a mix of investment tax breaks, lobbying and the offer of cheap land (an old airfield). It’s now one of the most successful plants in the world.

When people think about regeneration, they often start with plans for a new tram or shiny cultural facility, which tend to be popular, and can indeed help growth in areas that are already motoring along. But such investments aren’t going to do much for areas where the economic engine has rusted up and needs restarting. Detroit famously built a fancy monorail intended to fight its economic decline: but in a city where every factory was gone it remained largely unused, drifting through a city that looked like it had been bombed flat. Without private sector investment, there’s no demand for it or anything much else.

Second, different things work in different places and a different set of policies are needed for our towns than our city centres. During the 1970s and 1980s the “inner cities” were a byword for decline. But in recent decades capital cities and the centres of other larger cities have outperformed other areas, right across the world. The shift from a manufacturing to a professional services economy (plus the growth of universities) revived the centres of our cities.

There are still many problems to solve in our cities, but the places that have struggled the most in recent decades have been rural areas, smaller towns and cities, and the outer parts of large cities (even outer London). Places on the coast and places without a university have suffered particularly badly from a brain drain. Labour have tried to capitalise on their discontent with glossy ads like their film “our town”.

What to do for towns is even trickier than helping big cities grow. Though there are trendy small towns from Hebden Bridge to Hay-on-Wye, simply copying ideas from big cities, like “culture-led regeneration”, is often a recipe for failure in small towns.

Improving connections between city centres and towns might help – Tom Forth has highlighted just how bad we are at this in Britain. The Prime Minister’s new fund to help regenerate town centres is a good move and will make them more attractive. We should do things like re-examine funding historic funding formulas for government spending on science, transport and housing, which are still heavily geared towards supporting London and other areas that are already growing fast. And we should offer devolved economic powers to counties, not just big cities.
The more we can use free market mechanisms to help poorer towns, the more likely we are to succeed.

Looking at Britain as a whole, chronically low investment rates are a big part of our long-term productivity problem. We should cut taxes on business investment across the whole country, and make the UK’s capital allowances among the most generous in the world (at present they’re among the least).

But to level up poorer areas we should go further, and have even more generous tax breaks for investment there, where the problem of low investment and low productivity is most severe. We should also empower the Department for International Trade to take part in the same aggressive tax competition for inward investment that countries in Asia, the US, and our neighbours in Ireland do so successfully. And we should use those tools to encourage inward investment into poorer places.

More generous capital allowances would help lagging regions anyway, even if introduced across the board. While manufacturing accounted for around a quarter of productivity growth nationally since 1997, it provided 40–50 per cent of productivity growth in poorer regions like Wales, the West Midlands and North West. Manufacturing requires roughly twice as much capital investment as the rest of the economy, so an investment-hostile tax system hits poorer places harder.

Ever since the referendum, there’s rightly been renewed focus on how to help poorer places. Helpfully there is decades of evidence about what does and doesn’t work. If we can join up an energetic new Prime Minister with the bit between his teeth, plus a new agenda for left-behind places, then we can really get things moving.

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

James Frayne: An election is coming. Here are the messages – beyond Brexit – that the Conservatives need to win it.

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

Let’s assume an election soon. While the Conservatives are surely finished if they don’t go into the campaign as the clear choice for Brexit voters, this won’t be enough to secure a majority. The next election will not be a re-run of the referendum: people will be make their final decision on a broad range of issues. It’ll fundamentally be like any other election.

Last time around, the Conservatives slipped up badly with prospective voters. This has been endlessly discussed but three mistakes still stand out: firstly, they made no effort to own the “change” narrative even though public demands for change must have been clearly audible in their focus groups; secondly, they angered vast numbers of people by suggesting those that had lived a careful and modest life – owning a house with savings – should be punished with massive social care costs; and, thirdly, the threat to raise people’s taxes was mad. Brexit aside, there was comparatively little to attract working class and lower middle class swing voters – which explains the party’s patchy performance amongst them.

Politics is so volatile it’s hard to predict where the Conservatives’ relative strengths and weaknesses will be in a week, let alone two months. As I write, the weakness of Corbyn’s Labour and the lack of a powerful and credible anti-Brexit party means the prospects for the Conservatives look good. However, the Party still has vulnerabilities it must address fast. I won’t dwell on the obvious – like the NHS (and the text on that bus) – and instead look at those areas that haven’t received the political attention they deserve. And I’ll look at vulnerabilities amongst the working class and lower middle class of provincial England – who the Party needs to turn out in massive numbers and where this column has always focused.

Everyday life in England’s towns. In focus groups I’ve moderated in recent times, I’ve been struck by how people across provincial England are in despair about the state and prospects of their towns and suburbs. We’re a country that enjoys self-deprecation about our own backyards. But pessimism has intensified recently. People have come to terms with industrial decline as time has passed, but bad memories are returning now they’re witnessing the rapid decline of their town centres – as shops, pubs and services close, as anti-social behaviour and crime increase, as aggressive begging comes to small towns from cities, as visible drug use rises, and as more and more kids leave school and college with few local career prospects.

The Conservatives recently pledged new funds to support British high streets. This shows they’re hearing something. But they need to be careful not to misread or underplay what’s really being said. People don’t look at their town centres and just think: “we need more shops”; in fact, many people think high street shops are a rip-off, open at stupidly inconvenient times, and have a tiny range of interesting or useful goods. Rather, above all, the residents of these towns want to feel like they live in a proper community. They want safe and clean streets, integrated populations, free and cheap leisure facilities and parks, buzzing high streets and nice, affordable local pubs. The question the Conservatives need to answer is not “how do you save the high street?”, but “how do you improve everyday life in provincial towns?” It’s a completely different question. (And the Party’s approach to crime should be framed partly through improving communities, not just, say, dealing with serious violence).

People know the answer does not lie in simply throwing huge amounts of cash at these places. But, in the absence of ideas, the Conservatives are highly vulnerable to a Labour offer of vast new spending on things like public transport, libraries, parks, leisure centres, social housing, homeless shelters, drug rehabilitation programmes, community integration programmes, youth clubs, CCTV, policing and security guards and so on. The Conservatives need to think about the challenges of living happily in these towns, not narrowly around simply more shops or more police.

The party of the rich. When the audiences we’re thinking about here are asked about the Conservatives, one thing always comes up: “they’re the party of the rich, while Labour are the party of the working class”. This perception has been widespread for years, and the recent defection of working class voters from Labour to the Conservatives has barely changed this fact. Boris Johnson’s only mis-step in his leadership campaign was to give disproportionate attention to tax paid by higher earners and he is lucky this was barely noticed by the electorate. The Conservatives need to ensure they do everything possible to avoid looking like they’re a party of the rich, for the rich. (Incidentally, it doesn’t matter necessarily that Boris Johnson is rich and posh).

What does this mean in practice? A few obvious ones, which they surely won’t get wrong: target tax cuts on working class and lower middle class voters and don’t talk about helping higher earners; don’t ever talk about the benefits of private education; and ensure there are enough spokespeople from ordinary backgrounds.

But there are some less obvious ones, too: don’t focus economic and social policies purely on the poorest, which sends the message to working class and lower middle class audiences that they in turn must be rich; be careful about how you talk about aspiration, which can seem you’re saying their lives are substandard; and carve out some specific tax cuts directly targeted on the lives of working class and lower middle class voters (tax is really rising up the public’s list of priorities, incidentally, which I will write about in more detail here soon).

Education for all. (I should point out that my agency Public First has worked for many clients in the education world. Here, our work for Pearson and Universities UK is relevant.) The Conservatives’ reputation as the party of the rich is usually undeserved, but there are times, because relatively few of their senior team come from ordinary backgrounds, where they unintentionally make it look like they live on another planet. Two issues stand out, one specific and one general.

Firstly, in an act of breath-taking political stupidity, the Department for Education is consulting on the de-funding of the best known and respected vocational qualification, the BTEC. To be clear, this would mean telling the vast numbers of young people currently studying for BTECs that their courses are essentially worthless and introducing a new system that would make many of their chosen careers impossible. (James Kirkup of the Social Market Foundation wrote about this for the Spectator recently). Secondly, more generally, the Party still gives off the sense that it considers the expansion of universities to have been a mistake and that most students of newer universities are wasting their time.

The Conservatives should certainly be promoting academic excellence and indeed elite education where appropriate. In fact, I believe they should do this far more explicitly than they ever have done. But this does not mean they should not be promoting education for all – high quality education for those with differing interests and with different levels of academic ability. They should be on the side of educational progress and achievement full stop. Working class and lower middle class audiences will not mind if the Government promotes elite education for those that will thrive in such institutions (they have no hostility to these people) but they will mind if it looks like the Party wilfully opposes or misunderstands those institutions and courses that enable them to improve their children’s lives. (Personally, I would have focused on this way more than on things like teachers’ pay, which never comes up amongst ordinary voters).

Rewarding hard work. Over the last decade, and particularly under George Osborne’s time as Chancellor, the Conservatives began to establish a lead over Labour as the party that rewarded hard work. In focus groups I’ve run in the last few years, working class and lower middle class voters have consistently fumed at Labour’s excessively generous attitude to welfare and talked positively about Conservative welfare reforms (yes, including Universal Credit). Such is the strength of feeling on this issue, the Conservatives emphatically must not consider their lead secure and their reforms effectively banked with the public. And they must not confuse media criticism of UC with public opposition; the two are different. They must look at how to double down on their recent progress and take this further. The most obvious place to look is at introducing a much greater contributory element to the welfare state (another declaration of interest: Public First is working for the Centre for Policy Studies on creating such a system).

Ownership of the change narrative. Last time around, it seems likely that the Conservatives underplayed the change narrative because Theresa May was a new Prime Minister that theoretically embodied change. That wasn’t enough and it won’t be enough for the Conservatives this time around. Boris Johnson is seen as a different sort of politician and his early start has sent shockwaves through the political system. But, again, it’s vital that the Conservatives keep up the pace. Johnson has been around now on the frontline of British politics for over a decade and the Conservatives have been in power for nearly a decade. Many of their most visible politicians have also been around a long time. As a Government and Party, they look comparatively new but not absolutely so. They should be rolling out new faces consistently in coming weeks. Their general rhetoric – and how they package both fights and positive announcements – should focus on how they’re changing the political system as we know it. Before I bored everyone to death about the importance of lower middle class and working class voters, I used to bore people about the need to harness anti-politics as a force for change. Now is the time to do this in earnest.

In very difficult circumstances over the last few weeks, Johnson’s Government has not put a foot wrong politically. His team know the path to political and electoral success is extremely narrow, though, and it will be hard to deliver. In the next few weeks they’ll need to raise their game even further.

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Growing Patriot Podcast: Boston Tea Party

When Britain taxed tea, colonists proved that they meant it when they said “no taxation without representation!” In December of 1773, patriots snuck onto a ship carrying tea into Boston and threw it into the harbor. Hear all about how that happened, why, and what happened next.

You can listen to the episode below or find the episode plus other resources like coloring pages and videos here!


The post Growing Patriot Podcast: Boston Tea Party appeared first on RedState.

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New Trump stimulus idea: A payroll tax cut?

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I laughed when I got to the part of this Times story where “Administration officials said the idea had not been pushed with Mr. Trump and tried to tamp talk of it down.” I can just imagine how the chatter about a payroll tax cut got started in the Oval Office:

“If Powell doesn’t cut rates and we end up in a recession, I’m finished next year. We need a stimulus! Gimme ideas, now.”
“We’ve already cut income taxes, Mr. President. There’s always the payroll tax, I guess, but—”
“Payroll tax! Great idea. Let’s start pushing cuts.”
“No, wait. There are like eight different reasons why Pelosi would never–”
“Payroll tax cuts!”

Too late!

Why would Trump’s advisors be more cautious than he is in advertising a payroll tax cut proposal? For the simple reason that (a) Pelosi won’t lift a finger to help Trump goose the economy, knowing how that would help him in 2020, and, more importantly, (b) she can actually turn this around on Trump and use it as leverage to showcase unpopular parts of the GOP’s own agenda. Presumably POTUS understands the first point and thinks that he can use Pelosi’s refusal as electoral fodder against the Dems: “We proposed a tax cut that would directly benefit the middle class, not the rich. Democrats normally love the idea of cutting the payroll tax. But Pelosi turned us down because she doesn’t care about you!” And it’s true, incidentally, that Democrats typically prefer cutting the payroll tax to cutting income taxes since the payroll tax is regressive. In a vacuum, they’d be interested in this idea.

But we’re not in a vacuum, we’re 14 months out from an election in which Trump’s chances rest almost entirely on the pillar of economic growth. If that pillar starts to crumble, Nancy Pelosi isn’t racing in to reinforce it with a payroll tax stimulus. And, contra Trump’s suspicions, I don’t think it’d be easy to scapegoat her for refusing either. She’d have a salable argument against cutting payroll taxes, namely, that doing so would increase the risk that entitlements will be underfunded. We must save Social Security and Medicare! Then she’d go on offense, using Trump’s payroll tax proposal to refocus public attention on the less progressive tax initiatives the White House has championed in the past. Rick Newman sees it coming:

Pelosi and her fellow Dems would probably embrace the idea of a payroll tax—then ask Trump for a bunch of concessions he couldn’t possibly agree to. In exchange for Trump’s payroll tax, Democrats would need to show their own political base they got something to help their own election odds in 2020. What might that be?

They could agree to a payroll tax cut in exchange for rolling back the 2017 tax cuts for businesses and the wealthy. Or they could ask for a more aggressive estate tax and use the money raised to fund social programs. Or they could insist that the $10,000 cap on the deductibility of state and local income taxes, which hit Democratic states harder than Republican ones, be repealed. They could ask for all of those things.

Trump would say no to all of that, of course. The point here is to stimulate the economy by putting more money into the hands of taxpayers to spend, he’d note, not to take it out of the hands of the rich and deposit it into the Treasury. Nonetheless, lefties would use the debate to revisit all sorts of unpleasant trivia about the 2017 tax cuts that undercut Trump’s populist image:

Not only would Trump not end up getting his payroll tax cut, he’d end up with a snoutful of damaging Democratic messaging on tax policy for his trouble. Even if, against all odds, he managed to work something out with Pelosi, there’s no guarantee that he wouldn’t change his mind halfway through negotiations after Hannity or whoever started complaining loudly about the concessions he made to get a deal. And if that happened, with Trump walking away from a deal suddenly, Pelosi would then be able to argue that he’s the one ultimately who didn’t care enough about the middle class to make payroll tax cuts happen, not her.

His advisors see all of this coming from a mile away, which is why they’re eager to tell reporters that this idea isn’t seriously being pushed. Trump himself seems less concerned.

I wonder how he would react if Pelosi offered him a payroll tax cut in exchange for universal background checks on gun purchases. That’d be hugely risky on her part since both prongs of that deal would be very popular; if Trump agreed, he’d get a double shot of goodwill from the electorate, making it a huge miscalculation by Dems. The gamble on her part would be that he’s too afraid of disappointing his most populist fans on gun rights to agree to a deal like that and thus would rule out a measure that enjoys 90 percent popularity across the country. If/when he did, Pelosi would have a double whammy to use against him: “We were willing to work with the president to help the middle class but apparently he cares more about letting people buy guns without accountability than he does about putting money back in the pockets of the middle class.” Here he is this afternoon sounding more skeptical about expanding background checks after sounding much more enthusiastic two weeks ago.

The post New Trump stimulus idea: A payroll tax cut? appeared first on Hot Air.

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Howard Flight: Some guiding principles for Javid as he designs his tax policy

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

Sensible people believe that a high taxed economy is bad and a low taxed economy good. The classic case study of this was Cowperthwaite, as Financial Secretary in Hong Kong, who brought employment and prosperity to two million refugees, leaving Hong Kong with a GDP per capita significantly larger than that of the UK.

Secondly, wise taxation needs Laffer Curve guidance and appraisal. The concept here is of a rate of taxation which will optimise tax revenues: tax is not so high as to put people off spending, but high enough to optimise Income Tax. The taxation of cigarettes is an interesting case study here. Tax revenues from smoking would be substantially larger if tax rates were reduced, but this would mean more people smoking more cigarettes. This is a straight forward illustration of where tax policy can, rightly, be other than commercially based in specific circumstances.

It is self-evident that tax policies which are expensive to organise and to collect the tax are a bad thing – half the tax revenues can be lost in expensive collection. Higher rather than lower taxation of consumables normally makes sense as citizens have the choice of what and whether or not to consume most items. This is an argument for high rates of tax on luxury goods, mostly consumed by the rich.

I would steer away from tax policies supposed to lead to a particular economic result. There have been two tax policies in the last decade which have not achieved their alleged economic goals but have caused problems for citizens.

First is the huge increase in Stamp Duty on residential properties in the London area and particularly more expensive properties, regarding which I have written previously. As a result, the market has virtually dried up. Stamp Duty revenues have been much less than forecast. The professed objective was to make available more houses for the owner occupier market by reducing the Buy-to-Let market’s attractions for investors by installing higher taxation and higher Stamp Duty on Buy-to-Let. The relevant Treasury officials seem to have missed the point that the Buy-to-Let market and the owner occupier market are very much two separated markets; the relative pieces of property sit in one or the other market and rarely move from one to the other.

The second area in need of dynamic reform is Inheritance Tax.

All the surveys show that citizens of all walks of life dislike IHT and would like to get rid of it. When George Osborne announced at the 2007 Conservative Party Conference in Birmingham that he would raise the IHT threshold to £1 million (a policy which he never implemented in Government) this was very popular nationally. People see IHT as a form of theft or double taxation – taxing people on their savings on death, when they have already paid tax on the income from which the savings have been accumulated. The rate of 40 per cent, and the start threshold of £325,000, are penal.

There has been a global trend to get rid of IHT. Over the last 18 years, 14 OECD countries have removed the tax, including Sweden and Norway. Even India has abolished IHT, and the starting rate in the US is $12 million.

The UK’s penal IHT taxation combined with the tighter rules on domicile have led to a growing number of wealthy individuals leaving the UK, so reducing the overall UK tax take from wealthy non-doms substantially – a self-defeating piece of tax legislation.

IHT is a regressive tax, mostly avoidable by the more wealthy. Both politically and economically it would better be replaced by more progressive taxation. The removal of IHT would also encourage successful entrepreneurs to settle in the UK.

Fewer than five per cent of estates pay IHT: it raises around £4.5 billion per annum – 0.75 per cent of total, gross tax. Also, the net tax take is much lower owing to the high cost of collection of IHT. HMRC should be focussed on collecting larger amounts from richer and less costly tax streams. Getting rid of IHT would also offer the opportunity of getting rid of distorted investment behaviour for IHT reasons – particularly affecting land, these would become no longer necessary.

I am also horrified to learn that the Government has been cooperating with HMRC to reintroduce ‘Crown Preference’ – including VAT, PAYE and Employee NICS as priorities over debts owed by floating charges and unsecured creditors, in the event of business failures. Such plans pose a serious risk to UK business rescues and business lending.

In looking for replacement tax revenues the key ‘starter’ characteristics should be that the taxes are relatively cheap to collect. This makes VAT attractive territory: certainly, some of the areas enjoying reduced rate VAT (five per cent) could be brought into line at 20 per cent. VAT could be increased on luxury goods e.g. cars and jewellery. Post-Brexit we should no longer be constrained by pan-EU agreements on VAT rates and VAT applications. Some replacement of tax from income ought also to be automatic – e.g. the abolition of IHT is likely to result in many more people coming to live in the UK, in turn paying significant amounts of tax on their consumption of luxury goods and services.

Let us hope the new Prime Minister will seize the opportunity to get rid of IHT speedily which would be a correct economic and popular measure.

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Chris Philp: Cut Stamp Duty – and unleash a new Home Ownership Revolution

Chris Philp is has served as PPS in the Treasury and MHCLG, and on the Treasury Select Committee. He is MP for Croydon South.

One of the signal achievements of the Thatcher Government was the home ownership revolution. Millions of people were able to buy their own home for the first time – through right-to-buy and a more dynamic housing market generally. Sadly, much of that good work has been undone in the years since.

Home ownership rates have fallen from a high of 71 per cent in 2005 down to 63 per cent today. The falls are especially acute amongst those in their 20s and 30s, where home ownership rates have almost halved since the early 1990s. No wonder we have trouble getting younger people to vote Conservative.

Home ownership is an inherently beneficial thing. Those who own their own home enjoy secure tenure and lower housing costs than those renting. Over the long term, it is financially better to own rather than rent – even if house prices do not rise faster than inflation. And owning a property gives people a real sense of a place they can call home. It is no surprise, then, that 86 per cent of the public aspire to own their homes. Given only 63 per cent actually do, around a quarter of our fellow citizens wish to own their own home but do not. We should help them.

Stamp duty is a major barrier to buying a home. It is a cash cost that cannot be mortgage-funded. Given that up-front cash costs are the biggest impediment to buying, this is serious. Stamp duty acts as a barrier for buyers of all kinds, which means housing stock is not freed up by downsizers and there are negative effects on labour mobility.

It should be a legitimate – and popular – objective of public policy to help prospective home buyers. In the last ten years, owner occupiers have been crowded out by financial investors and second home buyers, often from overseas, who have superior financial firepower. They currently make up around a quarter of all residential sales, and even more of new build sales. The Government has already recognised this by abolishing stamp duty for first time buyers purchasing properties under £300,000 and cut it by £5,000 for those buying at under £500,000.

We need to do more. As I and Guy Miscampbell set out in a new report for Onward, the Government should:

  • Abolish stamp duty entirely for all purchases of a main home under £500,000.
  • Halve current rates of stamp duty for purchases of a main home over £500,000.

This would abolish stamp duty for nine out of ten owner-occupiers and save a family buying an average priced London home £13,000, or half of a five per cent deposit. The cost of this policy is £3.3 billion. But it would help more people buy their first home, and make moving house – for a new job, to downsize or to upsize – much easier. For the most expensive properties, where stamp duty is currently charged at a marginal rate of 12 per cent, it is likely that transaction volumes are being suppressed. Halving stamp duty for those properties should result in a positive Laffer effect, due to an increase in transaction levels.

But any new policy should be fiscally responsible. To fund the £3.3 per year billion cost, I propose a number of smaller tax changes, where there is broad public support for taxation and a clear case for action:

  • Introduce a one per cent annual tax on the value of homes left empty for more than 6 months in a year, raising £645 million.
  • Increase the current three per cent stamp duty surcharge on second homes and investment properties to 5 per cent, raising £790 million.
  • Introduce a further three per cent stamp duty surcharge of non-UK resident buyers of residential property, raising £540 million.
  • Introduce an extra higher band of council tax at a £1,700 per year council tax premium for the 0.4 per cent most expensive properties, raising £173 million.
  • End all council tax reliefs for vacant and second home property, raising £75 million.
  • Create a new eight per cent (up from five per cent) stamp duty band for the portion of commercial property purchases over £1 million, raising £682 million.
  • Levy stamp duty on residential properties transferred by selling the company that owns them via transparent ownership rules (which would also help combat money laundering), raising £175 million.
    Double the Annual Taxation on Enveloped Dwellings, raising £140 million.

These measures taken together will help first time buyers, down sizers, upsizers and people moving home to help their job. It will tax overseas investors (usually from the far east) who are treating UK homes as a financial asset and crowding out first time buyers with their superior financial firepower.

Tilting the playing field back towards UK-resident first time buyers and owner-occupiers is the right thig to do. The new Government should use the coming autumn budget to do exactly that.

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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.

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