Wednesday, 1 July 2015

Osborne should raise fuel duty by 50 per cent next month

Yesterday I wrote a piece for Conservative Home on fuel duty, reproduced below:

The days and weeks after an election win are critical for any Government. Five weeks in to the first Conservative Government in 18 years, the narrative looks dominated by Europe.
That is a narrative that can only last two years at most, but as George Osborne prepares to deliver his first Conservative-only budget on July 8, there is a once in a parliament opportunity to be bold and set a clear direction of travel which can shape the economic narrative over the whole parliament.
The Chancellor should act now to shift the burden of tax from income to consumption, setting a course for a radical reshaping on the tax debate that embeds fairness, efficiency and environmentalism at the core of our economic plans.

In his Budget of 2011, the Chancellor announced a long overdue plan to scrap the fuel duty escalator introduced by Gordon Brown and cut fuel duty in order to help hard pressed families. Inflation was running at close to five per cent and it was the right time to act.
Huge credit must go to the brilliant campaigning by Robert Halfon in putting an end to the escalator, and ensuring the Conservative Party in government acts in the interest of hard-working Britons.
In place of the escalator – which saw fuel duty rise by a penny a litre above inflation – the Chancellor introduced higher charges for oil companies who were benefiting from bumper prices: the so called fuel duty stabiliser.
Announcing the change in his Budget speech, George Osborne said:
“We can introduce a Fair Fuel Stabiliser. From tomorrow the supplementary charge levied on oil and gas production will increase from 20% to 32%… That will raise £2 billion additional revenue. But… if the oil price sustains a fall below $75, and we will consult on the precise figure, we will reintroduce the escalator and reduce the new oil tax in proportion.”
This was not a new idea. In fact it was a proposal he first made in 2008 as Shadow Chancellor, when as part of his justification he highlighted the need to stabilise the price of carbon and encourage investment in new low-carbon technologies: “In the case of fuel duty this works mainly by encouraging a long term shift towards lower emission vehicles and alternative methods of transport that do less damage to the environment.”
But what has happened? An unforeseen fall in the global oil price led to changes in the North Sea tax regime to support investment in new fields, but now oil has traded below $70 a barrel since September and there has been no increase in Fuel Duty. It looks like the fair duty stabiliser has been abandoned.
With the UK expected to be the fastest growing economy in the G7 for the second year running, employment at record levels and inflation tipping into negative territory, there is an opportunity now to be bold in championing workers by cutting the jobs tax.
So in his first all-Conservative Budget, the Chancellor should consider a hefty rise in Fuel Duty to fund a tax cut for working people.
one pence per litre hike in petrol and diesel duty raises £250m a year. For every penny hike in Fuel Duty you could raise the point at which we start to pay National Insurance by £104.
A 24 pence rise would allow the NI threshold to rise to match the Personal Allowance, taking around three million of the lowest paid out of this tax.
To ensure such a rise does not penalise communities who have little choice but to depend on their car, an adjustment can be made to the Rural Duty Relief Scheme.
Not only does such a change in taxation demonstrate our commitment to ensuring work always pays, taking the lowest paid out of the Jobs Tax meets our manifesto pledge to prioritise the lowest paid for tax cuts.
It is also delivers the Conservative plan, championed by Cameron in opposition, to shift the burden of tax from income to consumption. Doing so is greener and fairer, and more effective in raising tax and tackling avoidance.
It is also electorally essential. More than a million votes going to the Green Party in England and Wales at the General Election – 171,000 of those in London where we will need second preference votes to win in May 2016.
Now is the time to step up to the challenge and wrestle the environmental mantle back from the left by delivering ‘green’ policies in an economically Conservative manner.
With petrol prices down from their peak at over 140 pence a litre and currently averaging 116 pence per litre, the Chancellor could put fuel price back to where they were when he cancelled future rises by abolishing the escalator and deliver a £300 income tax cut to workers across Britain.
Post-election, riding high in the polls, this is the time to make bold decisions.

Monday, 22 June 2015

£12bn of welfare cuts can be matched with £12bn of tax cuts

Emerging from the General Election with a somewhat unexpected majority, the Chancellor now has two tasks in hand – the most talked about is finding £12bn of welfare cuts, but an equal priority for a Government wishing to create a “high wage, low tax, low welfare" economy must be to deliver tax cuts to low and middle income workers.

Perhaps the Coalition Government’s most popular tax policy was raising the personal allowance which will have given the majority of low and middle earner a tax cut of £825 a year. At the election, the Conservatives pledged to go further, pledging a “Tax Free Minimum Wage” and a personal allowance that would, by law, rise every year in line with incomes. This is a commendable aim, based on the Government delivering above inflationary increases to the NMW, reaching £8 by 2019, and a £12,500 Personal Allowance.

The cost of delivering a £12,500 allowance is roughly £12bn.

Giving workers £12bn of their hard earned money back, while at the same time seeking to find £12bn of savings in welfare. This should be a sign of joined up Government, not coincidence.

However, where Governments have failed in the past is to cut their cloth at the same (or faster) rate than they wish to cut taxes. Gordon Brown created a complex system of Tax Credits that are near impossible to unfold in any straight forward manner, he chose to do this rather than cut the taxes of same people who funded his spending sprees to allow him to take with one hand and give away with the other wasting our money on Government machinery along the way.

With the recent increases in the Personal Allowance – and those proposed over the next 5 years – allowing people to keep more of their own money, there is a diminishing need to continue the supply of Tax Credits to State-subsidise wages. But unless we reform both tax and welfare at the same time and in near equal measure, we will never be able to successfully remove the give-and-take welfare of the Tax Credit system.

In taking this step, which reduces the tax base – both in number of taxpayers and revenues – the Government must also make inroads into working welfare. According to the Treasury, about 4.5 million families received child and working tax credits in 2013-4, around 70% of those families are in work. Tax Credits which cost £28.6bn last year, and are forecast to rise to £35.4bn by 2018/19. That is a massive subsidy to employers of workers on the low pay.

I am instinctively a low tax Conservative. Whenever and wherever we can, we should seek to cut tax on income, especially those on the lower pay. Equally, in a globalised world where shifting income out of the grasp of the tax man is ever easier, I favour moving the burden of tax away from income towards consumption, as both a more effective way of raising revenue and reducing avoidance loopholes, as well as driving behaviour change for social, economic or ecological reasons

With the need to cut £12bn of welfare and £12bn of taxes the Chancellor is presented with a unique opportunity. If he fails to take on the challenge head on an unwind Gordon Brown’s disastrous legacy of Tax Credits, he will almost certainly come to regret it.  

Thursday, 9 April 2015

Don't forget to register to vote.

The deadline to register to vote in the general election is 20 April 2015.

With the election champaign in full swing, you might be making your mind up who to vote for on May 7th. But if you've never voted before, moved house in the last 5 years, or never registered, you might not be able to vote in 28 days time.

To ensure you have your vote and your say on May 7th, you need to register to vote. The Government have made this easier than ever with Individual Voter Registration online at

You can use this service to:

  • register to vote
  • update your name, address or other details on the electoral register

Registering takes less than 5 minutes, and must be completed by April 20th.
You’ll need your National Insurance number (from your pay slip), if you have one.

You can also requested register if you have lived in the UK (with the right to vote) in the last 15 years but are now living abroad.
If you're unlikely to be able to vote in person on May 7th, or would prefer to vote by post for any reason, you can also request a postal vote but need to complete a paper application which must reach your local council by 5pm on 21st April.

Monday, 6 April 2015

£825 in your pocket - Income Tax cuts today, a chance for greener taxes tomorrow?

In one of the biggest changes to personal tax in a generation, under this Government is amount you can earn before paying tax has has been gradually and dramatically increased from £6,475 to £10,600 from today. 

This huge change puts £825 of your own money back in to your pocket for anyone earning between £10,600 and £100,000. The lowest earning 3,000,000 workers have be taken out of income tax altogether. 

The Conservatives have made significant steps to cutting tax for the lowest paid, which have also set the path to deliver a key idea of the Cameron modernisation project, shifting the burden of tax away from income and towards consumption - so called 'pay as you burn, not pay as you earn'.

Not only does this help drive consumer behaviour towards greener consumption choices, but also makes it much more difficult, and less desirable, for high earners to avoid tax. As Budget 2015 revealed, the proportion of Government revenue raised from environmental taxes has nearly doubled over the last 5 years.

Having lifted the lowest paid out of tax, there is an opportunity to go much further with greater reductions in income tax across the income spectrum in the next parliament, funded by a shift in the burden of taxation towards 'pay as you burn'.

You can calculate how much you have saved via

Tuesday, 31 March 2015

The Truth Behind the Jobs Recovery

The headlines are clear - 1.9 million more people in work. That is the message this Government will take to voters over the next 6 weeks - 1,000 jobs created every day under this Government, and pledge to see 1,000 jobs a day under the next Conservative Government.

But many question whether those 1.9 millions jobs are real. So I thought it was worth looking in a bit more detail at not only this Government's record, but that of the last Labour Government as well.

Analysis of employment statistics from the ONS comparing the final 3 months of the previous Government with the latest 3 month period of this Government paints a very clear picture:

  • When Labour came to office in 1997, the employment rate was 70.9%, by April 2010 it had slumped to 70.2% despite 2.6 million more people in work (reflecting boom in population)
  • When the Conservatives came to office in 2010, employment was 70.2%, Today it stands at a record 73.3%, with 1.9 million more people in work.

  • Unemployment grew under 13 years of Labour from 7.2% to 8.0%.
  • In five years of Conservative Government, Unemployment has fallen from 8.0% to 5.7%

  • Inactivity under Labour remained flat over their entire 13 years at 23.6%
  • Under five years of Conservative Government, inactivity has fallen from 23.6% to 22.2%
Making a direct comparison between the performance of this Government and the performance of the last Labour Government, the annual growth rate for employment, employee jobs, self employment, full-time employment, full-time employees was all significantly greater under the Conservatives than Labour:

And as for the charge those jobs are not 'real' 
  • Over 75% of employment growth has come from people in work full-time.
  • Over 70% of jobs are employee jobs i.e. working for a business. 
  • 85.4% of employee jobs created since 2010 are full-time positions - a total of 1.14 million.
And for those still in doubt, questioning the definition of full-time? The ONS who compiled the data define it as: "Full-time defined as employees working more than 30 paid hours per week"
While it is right to say that more people are working part-time, up from 6.6 million in 2010 to 6.8 million today. As a percentage of the workforce employees working part-time has FALLEN from 27% under Labour to 26% under this Government. Under Labour the portion of employees working part-time rose from 25% in 1997 to 27% in 2010.

The percentage of workers on temporary contract has remained stable at 6% of employees through the last 5 years and those who state the reason as "could not find a permanent job" has fallen from 36% in 2010 to 34% in 2015.

The final charge against the Government claim has been that it is unfair to compare 13 years of Labour which ended in recession to 5 years of recovery. A perplexing claim in itself, but even taking the first 5 years of Labour Government after 1997, which inherited a very different economy to that of 2010 (and Labour stuck to Tory spending plans between 1997 and 1999 when the majority of the jobs recovery was made), the current Government out performed Labour with employment growing by twice as much, unemployment down more and a massive cut in inactivity - which Labour failed to reduce:

Friday, 16 January 2015

BBC's #SuperRichAndUs fails maths test

In Episode 2 of the BBC's The Super Rich and Us, in which presenter, Jacques Peretti "investigates how the super-rich are transforming Britain" he makes the rather astonishing claim that
"In reality two thirds of the jobs created since the crash are self employed." (42:30)
Putting aside the overtly political intentions of the show and the one-sided argument put forward, the facts don't support that statement and the entire segment of the show predicated on it.

If we look at the ONS data for the quarter in which employment hit its lowest point during the recession (Jan-Mar 2010) and compare it with the latest data (Aug-Oct 2014), we see that in fact 1.7 million more people are in work today than in March 2010, of which 1.2m of those, two thirds, are in employee jobs. Just 32% of new jobs since the downturn are self employed.

In fact, between March 2010 and October 2014:

  • There are 1,783,000 more people in work
  • Unemployment has fallen by 568,000
  • There are 1,185,000 more company employees, 82% of which are Full Time
  • Self Employment has risen by 581,000
Change in employment types Jan-Mar 10 -Aug-Oct 14

The facts destroy Mr Peretti's claim.

Taking Mr Peretti's assumption, the key question is whether self employment is driving changes in the jobs market rather than economic growth leading to more genuine jobs. As I've shown above that is not the case - 66% of new jobs since the recession are employee jobs, and 82% of those are full time.

If we look further at self employment as a percentage of the workforce, the recent increases in self employment is the continuation of a trend that started in 2001. In late 2001, self employment in the UK hit a historic low of 11.8% of the workforce. Looking just 6 years previous, in 1995 the self employed made up 13.9% of the workforce. Today that figure 14.7%.

An entrepreneurial society should welcome genuine increases in self employment. There is a challenge that only 55% of those self employed are full-time, but we have no indication of how many of those are part time through choice. With many finding appeal in the idea of a 'portfolio career' and the latest cohort to join the jobs market being the most entrepreneurial generation. a boom in self employment should be celebrated, not misrepresented.

Back to school time for Mr Peretti and the BBC.

Lambeth Council pushes up propaganda spending by 300 per cent

Back in November, the latest edition of Labour Lambeth’s propaganda rag dropped through my letter box. I’m not a fan of councils wasting huge sums of taxpayers’ cash to blow their own trumpets and have a record of campaigning against council newspapers.
I’ve also highlighted previously the use of Lambeth Talk to promote the Labour council’s agenda during election purdah.
But this edition was particularly frustrating. The council chose to use it as a mouthpiece to justify cuts in services, carrying their now famous scissors image attacking government cuts.
What price do we, council taxpayers, have to folk out for this?
My recent FOI Request reveals Labour Lambeth spending £210,600 a year of council taxpayers’ money on this pointless publication. That is the equivalent of the total Band D council tax of more than 172 households.
This is before accounting for the time of the communications team in writing copy for the publication.
Lambeth state:
“Lambeth Talk is overseen by a communications officer who edits the magazine and a designer. It also has contributions from the communications team, the wider council and partner organisations. The officers who oversee the magazine also have other responsibilities as well and only spend a percentage of their time working on the production of the magazine.”
Lambeth’s communications team has 15 staff and a budget of £1.25 million.
Perhaps even more shockingly, in a time of council austerity, Labour have chosen to expand the production of Lambeth Talk from four editions a year to monthly publication, while cutting other services.
Labour Lambeth have increased the ‘design, print and distribution costs’ of Lambeth Talk from £86,064.73 in 2011/12 to £191,238.77 in 2013/14, with a budget of £266,520.24 this year. A threefold increase in Labour’s self-promotion budget while, in their own words “Lambeth’s savings challenge means council services will stop and more staff will lose their jobs”.