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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.

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

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.

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

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 

John Penrose: The conventional wisdom about this leadership election is wrong. Hunt’s spending plans are neither unaffordable nor irresponsible.

John Penrose is MP for Weston-super-Mare and a Northern Ireland Office Minister.

If you listen to the sober-sided, serious economists at the Institute for Fiscal Studies, or to the Chancellor Philip Hammond himself, you’d think the Conservative leadership election is a horrible bidding war of doolally spending promises from Jeremy Hunt and Boris Johnson. Has the party of sound money lost its soul? Betrayed its heritage? Are Margaret Thatcher and Milton Friedman spinning in their graves as leadership contenders try to out-Corbyn each other with unaffordable spending promises?

Well no, not really. I can’t speak for Boris Johnson but, as someone who’s been involved in a lot of Jeremy Hunt’s policy development work, that’s not what we’re doing at all.

Let’s start with the charge that, if it was right to introduce austerity in 2010, we should do the same for Brexit in 2019. Otherwise we aren’t being consistent.

But the problem in 2019 isn’t the same as 2010. Brexit isn’t the banking crisis, thank goodness. And if the problem is different, the answers should be too.

By 2010, Gordon Brown was trying to keep the economy going with huge increases in public spending, paid for with ballooning debt. Something like one pound in every four the Government spent had to be borrowed, to be repaid by taxpayers later. If we’d carried on like that, pretty soon the country’s credit card would have been snipped up and the bailiffs would have been knocking at the door. So we simply had to throttle back, to stop spending money we hadn’t got.

But today is different. Public spending isn’t ballooning and borrowing is under control. We’re living within our means, and there’s even headroom for a bit more spending if we’re careful. We’ve come a long way, and it hasn’t been easy. You can understand why Hammond doesn’t want the next Prime Minister to blow it.

What are today’s problems, if they’re different from 2010? The biggest is that some – although certainly not all – firms are putting off growth-creating investments until after the Brexit fog has cleared. And that no-one knows whether our trade with the EU will be easy or awful once we’ve left.

So it makes sense to spend a bit of money to promote economic growth. Post-Brexit Britain needs a stronger, more dynamic, more energetic, turbocharged economy, so we’re prepared for the challenges of life outside the EU. And Jeremy Hunt’s plans to cut corporation tax to 12 and a half per cent, increase investment allowances and exempt small high street firms from business rates would do exactly that. They would spark economic renewal and investment in UKplc, making us more resilient in economic shocks and recessions, and more productive and efficient so we can grow faster too.

In other words, it’s OK to use different answers in 2019 than in 2010. But what about the charge that we’re making the same mistake as Brown, by spending and borrowing unaffordably?

Hunt is on pretty firm ground here, because he agrees we’ve got to keep the national debt falling relative to the size of our economy. That means borrowing can’t balloon, and we’ll always be able to repay our debts. And his business career helps here too, because his plans to turbocharge post-Brexit Britain’s economy would mean we’d be investing to grow. They’re sensible investments in our economic future, not pale copies of unworkable, hard-left Corbynomic plans.

Nor is he expecting to do everything at once. We’d need to raise defence spending progressively over five years, for example, to allow time to plan. Otherwise you’d simply waste money on the wrong things.

The same goes for fixing illiteracy. That will take ten years, building on the huge progress over the last decade that has seen more pupils being taught in good or outstanding schools than ever before.

And some of the plans would only be temporary, too. The pledge to help farmers adjust to a post-Brexit world has to be a hard-headed, short term plan to help re-equip machinery, buildings and breeding for new global markets, for example. Not a woolly, open-ended subsidy.

The plans have got to be about changing things, so we’re ready for a new world. Not expensively preserving the way they were before we voted to leave. Transformation and preparation, not status quo. But, for Hunt’s proposals at least, they are sound, practical, affordable ideas. And, most important of all, they’re thoroughly Conservative too.

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

Johnson’s August 3) Delivering campaign pledges – in so far as he can without a durable majority

It is now overwhelmingly likely that Boris Johnson will be the next Conservative Party leader and become Prime Minister.

He may well face a no confidence vote in September, and the Brexit extension expires at the end of October in any event.

So he and his new team will have to hit the ground running in August. We continue our series on what he should do during that month and late July before the Commons is due to return on September 3.

– – – – – – – – – –

According to our weekly updated list, Boris Johnson has made some 25 policy pledges during the Conservative leadership election.  In the probable event of a general election in the autumn, he won’t be able to deliver on many of them.  And he will soon have a working majority of only three in any event.

Which surely rules out a Special Budget in September.  It would have to contain more provisions for No Deal, and wrapping them up in this way would only encourage MPs to vote them down.  He would do better to try any that he needs on the Commons piecemeal.

MPs would also vote down any tax cuts “for the rich” – a category who they would collectively argue includes those who pay the higher rate of income tax, the threshold of which Johnson has promised to raise.

It would be impossible in effect to cut income tax rates in time for a snap election anyway, though the Commons might nod through a rise in the national insurance threshold for lower paid workers, another of his pledges.

But just because Johnson can’t do everything – or even anything much that requires a Bill – doesn’t mean that he can only do nothing.

Governments have greater discretion on spending than tax.  So, for example, he could start to deliver on increasing funding per pupil in secondary schools and raising police numbers.  That would come in handy with an autumn election looming.

The latter move would go hand in hand with a battle with Chief Constables and others over the best use of new resources.  Voters want to see more police on the streets and more use of stop and search.  Johnson’s new Home Secretary should pile in.

And while he will have little legislative room for manoeuvre, he will be able to propose some relatively uncontentious Bills for September – settling the status, for example, of EU citizens.

Then there are measures that he could announce the new Government will not proceed with, as well as those that he wants to proceed with.  Theresa May is providing a growing list of the former.

Not to put too fine a point on it, he should take an axe to parts of her legacy programme – including, as Henry Hill has argued, the hostage to fortune that is the proposed Office for Tackling Injustices.

He will also want to show a direction of travel on some major policy issues.  We do not believe that refusing to commit to a reduction in immigration is sustainable.  As a starting-point to establishing control, he could do a lot worse than take up the Onward proposals floated on this site yesterday by Mark Harper.

There is a limited amount that the new Government will be able to do a in single month – not least when the new Prime Minister is bound to be out of London for parts of it, Parliament isn’t sitting, there is a new Brexit policy to get into shape, and the threat of a no confidence vote in September.

What Johnson can do is form a team, shape a Cabinet – of which more later – begin the Brexit negotiation’s new phase, and show what his priorities are: police, schools and infrastructure, with a particular stress when it comes to the latter on the Midlands and the North.

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

Iain Mansfield: Brexit by October 31. Stop using the Left’s language. And stand for skilled workers. Essentials for our next Prime Minister

Iain Mansfield is a former senior civil servant, winner of the Institute of Economic Affairs Brexit prize and a Conservative councillor candidate. He writes in a personal capacity.

Our next Prime Minister will take office at the most challenging time since the 1970s. Not only is there Brexit – an issue of fundamental national importance, that has destroyed the last two Prime Ministers and poses an existential challenge to the future of the Conservative Party – but the old political assumptions are changing. Across the West, traditional voter coalitions are shifting, as citizens reject centrist compromises. Flatlining productivity, unaffordable houses and millions of voters feeling abandoned, either culturally or economically, are just some of the challenges they will face.

Many of those who voted for David Cameron in 2010 are lost to the party, alienated by Brexit. In Britain today, age and education level are better predictors of a person’s vote than class. To win a general election, our next Prime Minister must forge a new coalition of voters that unites the traditional Tory shires with the left-behind Leave voters in the Midlands and North. Even more importantly, they must deliver authentic right-wing policies that address the causes of ordinary working people’s dissatisfaction. People want change and, if the Conservative Party does not deliver it, they are likely to seek answers in the flawed blandishments of Jeremy Corbyn’s socialism.

In that context, there are three essentials that our next Prime Minister must prioritise for the good of the people, the nation and the party:

  • Leave the EU by 31 October, on WTO terms if needed.
  • Openly champion conservative values rather than speaking the language of the left.
  • Reposition the party as the natural home of the skilled working and lower middle classes.

Leave the EU by 31 October, on WTO terms if needed

Not only is delivering on the outcome of the referendum a democratic imperative, it is vital for the continued existence of the party. Recent polling shows that, if we have not left the EU, the Conservatives are likely to suffer devastating losses in a general election; these figures could be even worse if large numbers of members, councillors or even entire associations defect to the Brexit Party. Many members have held on over the last few months purely out of hope that the next Prime Minister would deliver where May failed: another betrayal in October would see these members permanently lost.

Leaving with a deal is preferable, if some changes to the backstop can be agreed and Parliament will pass it. If not, as I have argued previously on this site, we have nothing to fear from No Deal. Preparations for such should be put into top gear on the first day in office. The Prime Minister must make clear that they will under no circumstances ask for an extension; and that they are, if needed, prepared to systematically veto any measure put forward by the EU on regular business if the UK is for some reason kept in. While every effort should be made to secure a deal, if it cannot be reached, Parliament must be faced with the simple choice of permitting a WTO exit or voting no confidence in the Prime Minister – a gamble, admittedly, but one that is preferable to another disastrous extension.

Openly champion conservative values rather than speaking the language of the left

In recent years too many Conservative politicians have allowed our opponents to define the playing field. We cannot beat the socialists by adopting the language and assumptions of socialism. Our next Prime Minister must stop feeding the narrative of identity, grievance and division, with its assumption that an individual’s potential is defined by their characteristics, that so-called ‘burning injustices’ are solely the responsibility of the state to address, and that the government always no best.

Changing the narrative will be a long endeavour. The systematic appointment of those with conservative values into key ministerially appointed positions; an authentically right-wing approach to policy making in Whitehall; and the withdrawal of state funding from the network of organisations that maintain the left’s grip on the policy narrative are essential. But over and above this, the Prime Minister must be willing to personally stand up and champion individual liberties and freedoms; to condemn progressive authoritarianism and to be visibly proud of Britain, our culture and the rich global heritage of our citizens.

Reposition the party as the natural home of the skilled working and lower middle classes

Young, metropolitan graduates may once have been natural Conservatives, but no longer. There is little hope of reversing this in the immediate aftermath of Brexit. Instead of squandering our effort here, our new Prime Minister should instead make the party the natural home of the skilled working and lower middle classes, particularly in the midlands and north.

Such voters have a natural affinity to the traditional conservative values of low tax and individual liberty, but also greatly value and rely day-to-day onn strong public services. This places the Conservatives in a difficult position after a decade of austerity: Labour made hay campaigning on cuts to police numbers and falls in per pupil spending in 2017. But how to fund significant increases in core services without raising taxes or alienating core Conservative voters, such as via the disastrous proposals on social care in the 2017 manifesto?

To find the funding the next Prime Minister must be bold enough to slay the progressive sacred cows that soak up billions annually in public funding. Three immediately spring to mind:

With the additional £15 billion plus a year, the Prime Minister could at a stroke increase police funding by 25 per cent (£3 billion), boost school funding per pupil by 20 per cent (£8 billion) and increase spending on social care by 20 per cent (£4 billion). And then split the proceeds of further growth between public services and tax cuts.

As well as this, we should champion the interests of the high street, enterprise and small businesses and oppose crony corporatism. Multinational companies that make use of aggressive tax avoidance, abuse their market position or actively work against UK sovereignty should not enjoy government grants, procurement or time in No. 10. Fundamentally, our next Prime Minister should spend more time listening to the Federation of Small Businesses and less time listening to the CBI.

Conclusion

As members, we have two candidates set before us. Both are able politicians and tested leaders who represent the best the Parliamentary party has to offer. As we assess who should be not just our next leader, but our Prime Minister, we should do so against their ability to deliver these vital elements.

Both have committed to delivering Brexit by October 31 – but which one has the ability, the genuine will and the courage to do so by any means necessary? Both are true-blue Conservatives – but which one will truly champion our values, taking the battle to our adversaries with the eloquence and conviction of a Thatcher or a Churchill? Both recognise the importance of reaching out to new voters – but which one can devise and push through the policies needed to unite the Tory shires with the Leave voters of the north? Consider carefully and cast your vote.

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Growing Patriot Podcast: No Taxation Without Representation

New episode of the Growing Patriot Podcast for kids!

Britain had to pay for the French and Indian War and, through things like the Stamp Act, were raising taxes on American Colonists to do it. The colonists didn’t think it was fair that they could be taxed when their voices weren’t even being heard by the British- they weren’t being represented. The cry of “no taxation without representation” took hold in the American Colonies, and the idea that people deserved to be heard by their government was one that would change the world.

To listen to the episode and find other resources like coloring pages for kids, click here.

For the episode alone, click below.

The post Growing Patriot Podcast: No Taxation Without Representation appeared first on RedState.

Westlake Legal Group GP_Facebook_1-300x171 Growing Patriot Podcast: No Taxation Without Representation Taxes Taxation Tax Podcast no taxation without representation History growing patriots Front Page Stories Featured Story Education Allow Media Exception   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Daniel Hannan: For Brexit to work, power must be stripped from the quangorats – and returned to people we elect

Daniel Hannan is an MEP for South-East England, and a journalist, author and broadcaster. His most recent book is What Next: How to Get the Best from Brexit.

When Donald Trump entered the White House, his then senior adviser, Steve Bannon, set out the administration’s three priorities. First, “national security and sovereignty” (hurrah!) Second, “economic nationalism” (boo!) Third, “the deconstruction of the administrative state” (huh?)

Few Americans had much idea of what “the administrative state” was; but conservative think-tankers and writers were ecstatic. Indeed, Trump’s readiness to act against the administrative state (or the regulatory state) is, along with his judicial appointments, the main reason that they overlook his character flaws and back him.

In Britain, we call it “the quango state”. We mean the alphabet soup of regulatory agencies that can set rules without legislation, raise money without taxation, and impose decisions without accountability. We mean bodies like the Charity Commission, the National Lottery Community Fund, the Education and Skills Funding Agency, the Carbon Trust, the Export Guarantees Advisory Council, the Care Quality Commission, the Food Standards Agency, the Low Pay Commission, the Information Commissioner’s Office, UK Sport, the Highways Agency and a hundred others.

There may be occasions when MPs need narrowly and contingently to delegate authority. But what has happened in Britain, as in other large democracies, goes well beyond specific outsourced functions. We have seen the growth of an imperium in imperio, a network of bodies staffed by people who think in similar ways, and who pursue their agendas more or less independently of the wishes of Parliament or people.

Naturally, those who share the quangocrat outlook – fondness for higher public spending, obsession with diversity and inclusiveness, enthusiasm for the EU – are untroubled by this state of affairs. But Conservatives have never much cared for it, and fitfully go through phases of scrapping the more obviously obsolete quangos while encouraging people from beyond the Left to apply for the others. This website, for example, runs a regular “Calling Conservatives” feature, aimed at encouraging more Tory applications to some of these bodies. None the less, perhaps inevitably, the system remains dominated by Blairite smoothies.

So pervasive is the soft Left culture in our administrative state that attempts to even the balance are often seen as an invasion, and the few Conservatives who take on positions on even purely advisory bodies can be hounded out of them. Just ask Roger Scruton.

The first task of the new prime minister in a couple of weeks’ time will be to reassert the supremacy of our elected representatives over our functionaries. That might strike you as an eccentric statement. Surely the new Prime Minister’s first task will be Brexit?

Yes, but the two things can no longer be separated. Over the past three years, we have seen large chunks of our standing bureaucracy – civil servants, quangocrats and other officials –working to frustrate the referendum result. The Electoral Commission and the Information Commissioner’s Office have harassed Vote Leave campaigners. Eurosceptic donors even appear to have been targeted by the tax authorities. At the same time, senior civil servants have taken full advantage of Theresa May’s disastrous readiness to be ruled by official advice.

What I am saying should be uncontroversial. The purpose of having elected ministers at the top of departments is to ensure that those departments – including the quangos they fund – work for the general population rather than for themselves. A minister who simply does what his officials tell him is guaranteed a quiet life. He will be well regarded. He will get a reputation as a safe pair of hands. Approving remarks about him will find their way into the papers. But he is utterly failing to do his job.

Not every Secretary of State is like this, of course. Indeed, the starting line-up in the current Conservative leadership election included some of the ministers who had shown themselves most prepared to impose themselves on their departments. But, in general, May preferred – and offered preferment to – ministers in her own image: that is, ministers who deferred to the experts, said little in public and declined to rock the boat.

Well, that won’t do any more. Not at a time like this. We need the entire government machine to be working to make a success of Brexit. We need to be cutting taxes, especially business taxes, so as to attract investment. We need to be exploiting the regulatory freedoms we acquire as we diverge from Brussels. We need to let our financial services, in particular, compete against their global rivals. We need to remove tariffs and trade barriers, unilaterally if necessary. These things will require an act of collective national endeavour. We simply can’t afford to let Sir Humphrey frustrate things because of his sincere but, in the circumstances, inadmissible belief that we must cling on to every aspect of EU membership.

I’d be tempted to give Michael Gove the task of streamlining our standing functionariat, with Dominic Cummings as his SpAd. That should sort things out.

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Mark Harper: If the Conservative Party is not the party of sound money, then what on earth are we for?

Mark Harper is a former Chief Whip, and is MP for the Forest of Dean.

Recently, I made my first ‘appearance’ on BBC Radio 4’s Dead Ringers, where they said that the only interesting thing about me was being a Chartered Accountant.  Now, this may not make me Box Office – but at least I know how to balance the books.

As the Conservative leadership race has gone on, both candidates have increased the amount of taxpayers’ money they have spent. Between them, adding up estimates by the independent and respected Institute for Fiscal Studies (IFS), the two remaining candidates have already clocked up tax and spending promises of around £51 billion per year.

The recent BBC documentary series on Margaret Thatcher reminded me of a fundamental truth that she talked about at the 1983 Conservative Party Conference: ‘If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay—that “someone else” is you. There is no such thing as public money; there is only taxpayers’ money’.

And that truth is one of the reasons why I’m a Conservative. If the Conservative Party is not the Party of sound money, then what on earth are we for?

What do I mean by sound money?  There are two effective checks on state spending: it’s Government committing to live within its means, and ensuring people keep more of their own money.

In other words, reducing debt as a share of the economy, and reducing the tax burden.

Living within your means is clearly something that Labour doesn’t believe in – you only have to look at their policies. Take John McDonnell’s plan to nationalise the water industry in England for instance; according to the Social Market Foundation, that could cost as much as £90 billion and add five per cent to the national debt.  Lots of cost with no benefit to consumers or citizens.

When we came to power in 2010, taking over from Labour, the Government was borrowing £1 in every £4 we spent.  The budget deficit was just under ten per cent of the size of the economy, at £150 billion a year.  We had to make difficult decisions to get the public finances back under control and Labour opposed us every step of the way.

Despite Labour’s opposition, we have reduced the cash deficit to £42.9 billion—down by over 70 per cent —and the deficit as a proportion of the size of the economy is down by 75 per cent to 2.4 per cent.

We should remember, and stick to, our 2015 and 2017 Manifesto commitments to reduce national debt as a share of GDP.

The tax burden is at a 50 year high.  That’s not a comfortable place for a Conservative Government to be. As Conservatives, we want to reduce the tax burden over time to allow hard working people to keep more of their own money. Recent polling by the Onward think tank showed that the majority of people, both young and old, want to keep more of the money they earn.

We do not help people with the cost of living by putting their taxes up. Our focus should be on reducing taxes for lower and middle income earners. We should always remember that the purpose of taxes is only to raise what is necessary to pay for public services and things which only the state can do, such as defence and security.

As Conservatives, we should also recognise that there is a difference between rates of tax and how much revenue is raised from them.  Conservative chancellors from Nigel Lawson to George Osborne have recognised that cutting tax rates, reducing allowances and simplifying the tax system can lead to collecting more tax revenue. Lawson did this with income tax, Osborne with corporation tax.

There are always many pressures on public spending. We need to invest in social care, our schools and colleges, policing and the NHS.  One of the biggest challenges facing the new Prime Minister will be their approach to public spending and the need to set priorities.

A good policy to follow would be to go back to the pre-financial crash Conservative policy to share the proceeds of growth between tax cuts, spending increases and reducing debt. Each year we should look at the growth and tax forecasts made independently by the Office for Budget Responsibility (OBR), and the pressures on public services to reach a balanced approach.

These decisions need to be taken in a careful, thoughtful way using methods which already exist like a Comprehensive Spending Review and the annual Budget. The Government has already announced a Comprehensive Spending Review which will set out spending plans for the next few years, until just beyond the next General Election. It’s going to require some very tough decisions, to be made by the new Prime Minister and Cabinet.

It is perfectly reasonable for leadership candidates to set out their preferred direction of travel in specific areas of tax and spending, but the scale of those commitments should be determined by the new Prime Minister and Cabinet in a proper, balanced process.

The new Conservative Leader and Prime Minister has three tasks – deliver Brexit, govern as a Conservative, and beat Labour at the next general election. Key to defeating the Labour Party will be to win the argument on the economy. And winning the argument on the economy means winning the argument for lower taxes, for sensible levels of public spending (which involves making tough choices) and for reducing the burden of national debt.

As this leadership race comes to an end, we should not lose sight of the real finishing line – the next general election. We need to ensure that we finish this leadership contest in a better position to win it.

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Jacob Rees-Mogg: Why I believe that the NHS should cover social care

Jacob-Rees Mogg is MP for North East Somerset.

A proposal to solve the social care issue was one of the reasons for the Conservatives’ dismal performance at the last election. There has long been a need to develop a system – but that it had such stark electoral consequences is a reminder of the sensitivity of any policy solutions, though bringing it forward it showed how serious the issue is.

The current system does not work. It is arbitrary. Families argue with the authorities as to what part of care is medical and what is social and diseases of old age, especially dementia, seem to be excluded, at least in part. This leaves some families with bills of tens of thousands of pounds each year, potentially for many years, while those with heart disease or cancer will see all the costs fall on the state. This principle of health provision free at the point of use is one of the main stays of the British welfare state. It provides security for all of us if certain types of illness hit, but leaves the failure to provide social care, that has crossed a narrow boundary from medical care, appear all the more unfair.

Not only is there an arbitrariness in the definition but the rules of who pays what are complex and problematic. Council budgets take the strain for social care but the NHS for medical, which leads to people spending too long in hospital. All the while, budgets are argued over and higher-cost hospital beds remain occupied by people who ought to be elsewhere – possibly, with a little support, even back in their own homes.

Once the bureaucracy has determined the fall of costs, the ways that these fall on individuals are equally complex. Quite rightly, an individual who shares a home will not normally be expected to see the value of the property taken into account. Yet, the frail, elderly parent who has been looked after by a child for ten years who then spends the last year of their life in a home could see the family property taken, whereas if the child had moved in it would not be. Complex charging rules inevitably lead to the system falling harshly on some and not on others, contributing to changes in behaviour.

It is, perhaps, easy to set out the problem but less so the solution. An ageing population and the growing complexities of care make the costs high and move from self-paying to government-paying increases demand. This is an iron law of economics – there is more demand for something that is free. So why is Warwick Lightfoot of Policy Exchange right to say that the state must take on this burden?

It is the role of the state to save and shelter us from the overwhelming problem. The cost of long-term social care is more than all but the super-rich can easily afford, and the risk of it falls indiscriminately. The majority of families will not be hit in this way, but some will be hit completely.

It is also a continuation of the NHS principle of care free at the point of use: any constituency MP will have helped constituents argue what proportion of care is NHS and free and what is social, so paid.

Additionally, the cost, though high, is affordable if it is a priority. Lightfoot’s paper suggests £11 billion, but there would be some savings from the NHS budget as beds are freed up, reducing the misallocation of resources. The ONS has recently revised up the nation’s GDP to £2.2 trillion so this is 0.5 per cent of national income, a significant but not disproportionate amount to provide for the needs of the most vulnerable elderly.

To prevent a spiralling of costs, it is important to keep an affordable element of co-payment: £5000 per year seems to strike the right balance. Families would still have an incentive to keep their elderly relations at home, avoiding the probably vast cost of all this care falling on the state. However, once this amount had been spent, the rest of the base cost would fall on taxpayers, although families would be free to buy extra services and the supply would continue to be from private operators as no one wants to go back to council-run nursing homes.

There are some things that ought to fall on central taxation, and it is anomalous that social care does not, especially when the individual cost is potentially ruinous. It has become a near 100 per cent wealth or inheritance tax that falls randomly on an unlucky few. It is, therefore, a risk that it makes sense to pool but, with no insurance available, it is an area where it is right and fair for the state to step in.

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