Tuesday, March 29, 2011

Quote of the day

Eric Pickles yesterday when asked if he thought it was bizzare that Ed Milliband had compared his party's struggle to that of apartheid:

"Well, I suppose there comes an occasion, you turn up, there's a lot of people there-and you just start to talk. These things happen, and we should be in a forgiving mood. I mean, anybody can compare themselves to Martin Luther King."

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Wednesday, March 23, 2011

Taking on Whitehall

There have been a number of posts and articles of late claiming that Cameron was wrong to identify the Civil Service as an enemy of Enterprise in his speech to Spring Forum in Cardiff. It seems that no less that the head honcho of the Civil Service, Sir Gus O’Donnell has been tasked with telling No. 10 to “Cool-it”, in their anti civil service rhetoric.

The argument from pretty much every journalist doesn’t seem to have been that the Civil Service isn’t an Enemy of Enterprise but that it’s wrong to pull them up on it. You see you need the Civil Service to support you in putting through your reforms, so you shouldn’t upset them by telling them they’re not doing a good enough job.

Rubbish, this kind of thinking is exactly why they are the enemies of enterprise. No government has ever had the guts to take them on for fear of them holding up everything else, but if we are to fundamentally reform our public services and rebalance our economy then we have to. The media should be cheering the Prime Minister for having the strength to take on a powerful lobby and set of vested interests, or are they too worried about losing the Civil Service’s support and access, to tackle them too.

Update: As I wrote this James Forsyth at the Spectator posted a piece on Coffee House pointing out that even former Labour government insiders and minister agree that the Civil Service get in the way and have power without accountability, mainly because they can’t be sacked. In opposition I believe that Francis Maude had plans to put permanent secretaries on short term contracts to resolve this, but I understand this has met Civil Service resistance (anyone really surprised by that) and been quietly dropped, along with other proposed Civil Service reforms.

Bootnote: I think we can guess that the leaked budget that Balls held up in the Commons yesterday was from a disgruntled Civil Servant who didn't like the idea of being pulled up on his performance by the government.

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Tuesday, March 22, 2011

Our debt interest in perspective

As regular readers know I love a good visualisation, and CCHQ have just come up with a great one showing just how much we spend as a government every day. Unsurprisingly at present our daily debt interest dwarfs anything else, including schools and defence.

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Why Combine Income Tax and NI?

At the beginning of last week the Office for Tax Simplification (another new body, with an un-sexy name, but an important job), released its interim report into how to simplify the tax system. The coverage at the time was minimal (what with Libya imploding and Japan’s nuclear reactor’s exploding it’s hardly surprising), but since then and with the budget looming the media has suddenly started to pick-up on their most radical proposal, Scrapping National insurance in favour of a tax which combines National Insurance and income tax into one.

Why is this a good idea? Well firstly national insurance is quite complicated and calculating income tax deductions and national insurance deductions and completing the correct returns for the PAYE system is a time consuming process for business (especially smaller ones). In fact I am almost certain that there is research out there somewhere which shows that being responsible for the tax affairs of employees is one of the things that stops sole traders and one man band businesses from expanding into employers.

Secondly National Insurance is a tax that has had its day. It’s designed to act as an insurance payment, you pay in and get access to benefits and the NHS if you need them, if you don’t then your payments are paying for someone else to get them. Except you also get access to benefits and the NHS if you’ve never paid any National Insurance, because as a society we also look after the poorest and those that can’t work.

At present National Insurance raises £98.5bn a year against an annual welfare bill of £180bn and an annual bill for the NHS of £xxbn. In reality taxation from NI isn’t ring-fenced to pay for benefits and the NHS and if it was it wouldn’t be anywhere near enough anyway. It’s all just money for government coffers, and is just another form of tax on income with complicated rules and rates.

Removing National Insurance actually goes hand in hand with the benefit reforms which Ian Duncan Smith is currently pushing through. His suggestion that everyone will be entitled to a flat rate £140 a week pension removes not just the link to NI contributions over time, but also the complicated mechanism for NI top-ups, that make sure that someone isn’t left in poverty in their old age. So combining NI and income tax not only simplifies things on the employee side, but could also help reduce the huge bureaucracy which is required to administer our benefits system.

Finally of course if we do this then it’s more difficult for a future Labour government to put up taxes by stealth by increasing NI, because it’s all in one single payment. In reality at present the 20% tax rate, including NI is actually 32%, and the 40% rate is actually 52%. So not only would it be more difficult to put up taxes when we’re in opposition, but it’s also easier to convince people that they should be reduced when we’re in government.

So really it’s a win-win all round and something of a no brainer. My prediction is that the Chancellor will announce some kind of commitment to set-up a commission or inquiry into how this can be done in the budget, although who knows he may go further.

Bootnote: This was originally written last week and I've only just got around to looking up the tax income figures.

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The Ed Balls Strategy

Last week’s opposition day debate was supposed to be on the Police. As Shadow Secretary of State for the Home Office, Yvette Cooper had put her motion to the Speaker, lined up her speakers and was putting the finishing touches to her speech when suddenly her husband Ed Balls popped up and changed everything.

You see “the Balls”, as I’m sure he dreams people called him, appears to be leading on Labour strategy, and as far as he’s concerned it’s “the economy stupid” that matters and nothing else. The Tory-led government are taking risks and cutting too far too fast and that’s affecting the man on the street and it’s the only message the public care about.

That he’s committing Labour to fight the government on the economy almost alone is clear from today’s Treasury OPQ order paper, which shows a clear whipping effort from Balls to get his questions in there.

For those that don’t know the order of who asks a question at OPQs is the result of a ballot. You can enter the ballot by tabling either a topical question (which just gives you the right to ask any current topical question) or tabling a pre-written oral question. These are then put into “the shuffle” which I’m pretty sure is just a computer programme which randomly selects who will get to ask a question.

If you’ve ever looked at an order paper and wondered why so many people are on the same wave length and have asked the same question or almost the same question, then here’s the secret. The Whips send round a set of questions and ask their MPs to pick one that they like and submit it. There’s no formal whipping of it, i.e. no one says you must submit a question, or that you can’t put in your own question (many do), or at least there isn’t normally one.

However for today’s Treasury questions three times as many Labour MPs put in questions as for yesterday’s Education questions, so you have to ask who has been putting the pressure on, and my answer is of course “The Balls”. As a result of this effort the order paper is stuffed with Labour MPs and of course if they all submitted one of “The Balls’ ” questions then you end up with the same question many times (although the MP obviously gets to ask a supplementary as well, although this is supposed to be supplementary to their initial question).

So out of 25 questions the Chancellor will actually only be asked 16, and the country and Parliament is missing out on the chance to get an answer to 9 different questions .

Today’s order paper (questions grouped):
1) What assessment he has made of the effects on the economy of the trade in mortgage-backed securities and collateralised debt obligations. – to be asked by Bill Esterson (Sefton Central)

2) If he will bring forward proposals for a scheme to provide looked-after children with a savings account or trust fund funded by contributions from the Exchequer; and if he will make a statement. – to be asked by Sheila Gilmore (Edinburgh East)

3) If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel. – asked by Albert Owen (Ynys Môn), Vernon Coaker (Gedling), and Anas Sarwar (Glasgow Central)

4) What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax. – to be asked by Lindsay Roy (Glenrothes), and Mike Gapes (Ilford South)

5) What assessment he has made of the effect on consumer confidence of the increase in the standard rate of value added tax since his recent meeting with representatives of the retail industry. – to be asked by Eric Joyce (Falkirk)

6) What fiscal measures he has taken to support economic growth in the manufacturing sector. – to be asked by Stephen Metcalfe (South Basildon and East Thurrock), Andrew Stephenson (Pendle), and Amber Rudd (Hastings and Rye)

7) If he will review the pace of proposed reductions in public expenditure to take into account gross domestic product figures for the fourth quarter of 2010. – to be asked by Debbie Abrahams (Oldham East and Saddleworth), Graeme Morrice (Livingston), Barry Gardiner (Brent North), and Ian Mearns (Gateshead)

8) By what date he expects revenue to the Exchequer to match levels of public expenditure. – to be asked by Stephen Phillips (Sleaford and North Hykeham)

9) If he will (a) prepare and (b) publish an assessment of the relative effect of his forthcoming budget on women, families and ethnic minorities. – to be asked by Helen Goodman (Bishop Auckland)

10) What recent representations he has received on measures to reduce the budget deficit. – to be asked by Mark Lancaster (Milton Keynes North)

11) What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget. – to be asked by Mr Kevan Jones (North Durham), and Mr Geoffrey Robinson (Coventry North West):

12) What recent assessment he has made of trends in duty and value added tax on petrol. – to be asked by John Mann (Bassetlaw)

13) What steps he is taking to reduce the rate of inflation. – to be asked by Mr Douglas Carswell (Clacton)

14) What assessment he has made of the contribution of HM Revenue and Customs to reducing the budget deficit. – to be asked by Mrs Madeleine Moon (Bridgend)

15) If he will bring forward proposals for a further tax on bank bonuses. – to be asked by Heidi Alexander (Lewisham East)

16) What fiscal measures he has taken to support economic growth in Kent. – to be asked by Mrs Helen Grant (Maidstone and The Weald)

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Monday, March 14, 2011

Understatement of the Day

Ed Balls on Labour's handling of the economy:

“Did we spend every pound wisely? Of course we didn’t”

At least he's honest.

Hat-tip to Paul Waugh for spotting that gem.

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Tuesday, March 8, 2011

Exclusive Video: David Cameron talks to West Midlands Party members

After attending the LEP summit at the Ricoh Arena in Coventry, the Prime Minister attended a meet the members event with members from across the West Midlands. I was there and shot the video below of the PM strongly arguing for a no vote in the AV referndum, telling members to be proud of what's been achieved in government and catching someone out on the fact that the AV refendum means there are elections everywhere.

Shot and edited entirely on an iPhone 4, so sorry the sound is a little low

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Monday, March 7, 2011

IPSA spends £4,300 per member of staff on furniture

Fascinating news today that IPSA has spent £293,000 furnishing it's offices at an average of £4,300 per member of staff. IPSA bosses have apparently defended this by saying:

"IPSA is not part of the Parliamentary estate. Last year we walked into a shell of an office and needed to equip it - there is a cost associated in doing so. We followed the proper procedures - we held a competition through the Office of Government Commerce, where the Government has approved suppliers and rates,”

Now strangely enough our constituency office isn't part of the Parliamentary Estate either, and therefore doesn't get any furniture. It was in fact when we moved in, an empty shell of an office. However was there any budget from IPSA to get furniture or set-up the office? Perhaps something that IPSA would describe in terms of their own expenditure as "...a one off expenditure which we will not be repeating." Short answer, no. MPs are given a roughly £10,000 annual budget for anything they purchase for their offices that isn't rent, utility bills etc, from that as a new MP we had to buy some special software for tracking constituent contacts a one off cost of a few thousand pounds, letterheads and stationary, and have enough left over to pay ongoing running costs (such as toner for the Parliament supplied printers, a complete set of which costs about £500).

In reality our office is furnished with furniture from my own home office, and some items kindly leant to us from the office next door, who probably expected to get them back at some point and are slowly realising they won't. I would love to be able to have spent £465 for a relaxer lounger, or £262 for visitor chairs. I would more realistically love to be able to buy a sofa and stools for visitors to be able to have informal meetings sat on rather than having meetings formally across a desk but it's never going to happen because:
1) It will be published and misrepresented by a newspaper who will think it's appalling we've brought a £100 sofa from Ikea, and should instead be sitting on bare concrete floors;
2) IPSA haven't given us any money to do it.

Yes some MPs milked their personal expenses for profit and gain, but it is as much staff who are suffering now as the MPs, whilst IPSA continues to live in its own world.

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Thursday, March 3, 2011

Brown and Balls' gold sale has now cost country £9bn

Everyone knows that Gordon Brown sold off 400 tonnes of the government’s gold at the absolute bottom of the market in 1999. It is a fact so well known that gold traders even call it the “Brown Bottom” and of course this Conservative campaign poster helped as well.

However with gold reaching $1,437.20 an ounce yesterday, it’s becoming apparent just what that “mistake”, to which no Labour politician has ever apologised for, cost the country.

Then Chancellor Gordon Brown, and his advisors at the time, Ed Balls and Ed Milliband, who were copied into all correspondence relating to the sale, sold off our country’s Gold reserves at between $256 and $296 an ounce, raising £2.343 billion. If it was sold at today’s prices it would raise £11.2bn, an incredible £8.8bn difference.

To put that into perspective, a 1p reduction in fuel duty would cost the exchequer £500m, so this is enough to pay for a one year 18p reduction in fuel duty. Or to reverse the coming fuel duty rises scheduled by the last Labour government, and a few of those from the past for several years.

Before anyone says, ahhh but what about inflation, according to the inflation calculator at thisismoney.co.uk total inflation since 1999 has been 30%. So the value in today’s money of the £2.34bn would actually be £3.042bn (still a massive difference of £5.75bn)

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