Month: October 2010

It was good to receive an email this week from the Department to say they were removing the M4 bus lane. Soon the broadcasts were alive with the message that the war on the motorist was ended.

I welcome the news about the bus lane. There should be no place for Zil lanes in modern Britain. Mr Blair’s famous use of the lane summed up all many of us disliked about it.

Cancelling it does not, however, restore a sense of proportion into our use of the car. Doing so requires not just changes at the Department of Transport, but also in many Town Halls and County Halls around the country. We need leaders who recognise that 86% of our passenger and goods travel is by road, and who understand that not many people can go shopping on the train or ride a cycle to work.

Of course national and local government has to regulate road traffic for safety reasons. Of course when we are pedestrians or at home in our residences we expect traffic to be properly shepherded so it does not harm or annoy us. Much of the traffic management we now experience goes well beyond that, making the life of the motorist difficult and unpleasant.

Car parking is a case in point. Making car parking more readily available is a good idea, not a wicked one. If you can find cheap or free parking near to your destination, and find it easily, it removes traffic from circulation going round and round trying to find a parking space. If you want a leisurely shop, it takes the panic out from realising that if you get delayed for five more minutes at the till you will be wheel clamped and face a huge fine. If there is enough car parking provided with modern housing, it avoids cars blocking side roads and neighbours drives.

Many politicians say they want more town centre shopping and less shopping at the mega stores on the by pass. One of the main reasons people prefer the out of town store is they can drive straight there and park for free outside the shop. They can park for as long as they need to do the shopping, and can put any heavy items purchased straight into the boot of the car. Going into the town centre means running the gauntlet of a whole series of different speed limits, chicanes, one way roads and a welter of signs with orders you have to obey, followed by study of the complex and detailed regulations over whether you can park and if so for how long and what cost. One car park is Wokingham is notorious for catching people out, as they park in the private part of a public car park, only to get wheel clamped and fined for doing so. Councils seem to delight in threatening their Council tax payers with heavy fines should they overstay their time in a public car park by a few minutes. Why not just ask them to pay for the extra time?

Other politicians say we should tax people for workplace car parking, or make employers charge. Many people drive to work because it is the only way to get there on time. Employees with children of school age may need to drive the children to school first and then drive on to work. There are often no buses to complete the complex journeys the school and work run takes, or no combination of buses that allow you to travel in a realistic time. At work it makes sense to allow the employee to park near the office for free. The employer can afford that, but may not be able to afford car park charges and taxes that some now wish to impose.

One of the main reasons many people in the UK do not feel local and national governement has been on their side in recent years is the way the motorist has been hounded. There are too many rules and regulations that do not go to heart of safety but are for other purposes. The rules are often difficult to grasp and comply with. Some straghtforward rules to prevent accidents are most welcome. The current jungle of traffic mismanagement will take more than the abolition of the M4 bus lane. It is nonetheless a welcome sign of better things to come.

The Chancellor told us his preferred mixture of tax increases and spending cuts to curb the deficit was 20% tax rises and 80% spending cuts. Mr Ed Miliband favours something closer to 50/50.

In the government Budget Red Book we learn that the public sector net borrowing requirement was £154.7 billion in 2009-10. This falls to £37 billion by 2014-15 on the government’s plans. Over that time period tax revenue rises by £176 billion and total public spending by £68 billion (currrent spending plus £92 billion, capital spending minus £24 billion). Calculated crudely, tax increases account for practically all the deficit reduction.

The Treasury scores it differently. Presumably they count reductions in the rate of growth in spending as contributions to deficit reduction. On their figures in 2010-11 tax increases account for 41% of the deficit reduction and in 2011-12 for 43%. It pays to examine the figures before using the soundbites.

I will be speaking at the following meetings:

Monday 4th October 9 am Open the Freedom Zone
followed by “Free Trade not state aid” Austin Court

5.45 The Role of manufacturing in the Uk economy Enterprise Forum Fortissimo Room Hyatt Regency B1 2JZ

Tuesday 5 October 8 am Tax Reform Policy Exchange Room 101 Jury’s Inn Hotel 245 Broad Street

I was glad to hear this morning that the Conservatives intend to inject some hope and optimism into the government’s narrative. You can overdo the dire warnings about cuts to come, especially when the plan is to increase public spending each year for the next five years. If they do announce difficult cuts in particular departments and programmes it will be because the public sector is unable to manage with a 6% cash increase this year and another 2.5% next year.

I have long been pointing out that over the five years of this government’s plans total public current spending will rise by an annual £92.1 billion from the last Labour year. I should also add today that over the same time period tax will go up by £176.8 billion a year. In the last Labour year they collected £479.7 billion in tax. This government plans to collect £656.5 billion in tax in 2014-15. ( Budget Red book forecast p 100). The annual tax increase by year five of the planned increases will be £3000 for every person in the country or £12,000 for a family of four.

I look forward to Conservative Ministers dealing robustly with those who like Ed Mililband think there is scope for yet more tax increases. Mr Osborne has already proposed raising more than 20% of the planned deficit reduction from tax increases, and has made tax increases do more of the work in the first two years.
This morning we learn that maybe 1 in 4 hedge fund managers has already changed their personal domicile to avoid 50% income tax, whilst some whole funds have also gone, taking their substantial tax payments with them. Many politicians do not like hedge funds. They may discover there is one thing worse than having them in your tax jurisdiction, and that is to lose them.

Looking at the figures it is very difficult to claim that the Uk is undertaxed, or that tax is not carrying more than its fair share of reducing the deficit. The Chancellor wisely backed off from putting CGT up to 40% or 50%, realising that such high rates would result in less revenue, not more. He should also do some more analysis of the impact on revenue of our current income and capital tax rates. I think he would find on any sensible analysis that he would raise more tax if the rates were set at more competitive levels internationally. I always say we need to tax the rich more, and the way to do it is to lower the rates.

In 1989-90, Maragret Thatcher’s last year as PM, total taxes raised brought in £190 billion. It’s quite a thought that the Coalition government plans to raise taxes by almost as much as total taxes 20 years ago.

Before Mr Ed Miliband had been elected or had uttered a word as Leader Labour his party was ahead in the polls. Just five months after their mauling in the General Election, the public was giving them more than 40% support. How can this be?

I do not find it very surprising. For the last few months the main message coming out of the Coalition is the message of “deep cuts”. The long rambling spending review has allowed Labour politicians to get on the airwaves and excite concern about a long list of possible cuts. It has allowed all sorts of special interest groups free rein to parade the importance of their public spending and imply it is about be cut in clumsy ways. It has allowed Mr Balls to confidently predict a double dip recession based on the cuts he expects. It has damaged domestic confidence, and even led to a Monetary Policy Committee member demanding more money printing. Labour’s focus groups and polls show them they need to project some optimism and hope into the bleak economic and spending landscape. The government should do so before they lose the argument.

I do find it suprising that Conservatives leaders have allowed this to happen . I thought they understood that an image of a party that wants to cut well loved public services is not helpful. Nor is it a true reflection of past Conservatives in government. An image of a party which can cut out waste and less desirable public spending cannot be won by words. It can only be won by quietly and successfully doing just that. Five months into Coalition government, and public spending is more than 10% higher than a year ago, yet the government already has a reputation for cutting hard and cutting too much.

Coming out of past recessions Conservative government in 1981 and 1992 did cut the rate of growth in public spending and the plans for extra public spending as a necessary part of delivering a decent recovery. This time it was important to make it clear that the deficit is to be brought down more quickly than under Labour’s plans. That part of the strategy has worked, bringing interest rates on government borrowing down and seeing off a possible Greek or Irish style borrowing crisis. So far so good. Now we need to hear from Ministers that they can bring the deficit down whilst still increasing public spending every year. Their aim is better public service. They intend to achieve this with smaller increases in money. The previous government showed it was possible to shower the public services with extra money but get very little back for it. This government should be able to reform and improve public service with smaller extra sums.

They just make the task a whole lot harder if they allow the impression to gain hold that they are in it for the cuts. That will unite the Union hotheads with Labour to fight harder. It might even make firebrands of some moderates within the public services. We are all in this together. Temperate language about public spending which reflects the truth of how much money is available will serve them better than the harsh language of cuts.