Category: Blog

Today is Easter Sunday.
What does Easter mean to modern Britain?

As I attended services on Good Friday, one of the biggest days of the Christian year, I noticed the attendances were not high given the size of the population. Regular practising Christians I have talked to recently feel they are now a minority group. We have passed through that time when the Church goers could assume that a majority of the rest of the population were Christian but just a bit busy at Church times on Sundays, to a feeling that religious belief and practise is for a series of minorities strongly supporting their own religion or their own Church.

We still have an established Church and an official religion. The shrewdness of the Elizabethan compromise settlement – bishops and liturgy, the bible and services in English, believe as you will on the wine and the bread – has proved long lasting. The Church of England and Christian observation is an important part of State as well as of Church, and still inspires our teaching and charitable traditions. Parliament starts every day with Prayers, and many of our schools have religious connections.

For most people in modern Britain Easter is a secular public holiday, an opportunity to have a long week-end off, a chance to go out with the family or to buy in enough food for a siege and have friends or family round to lunch. For others it is a very busy commercial opportunity, with the shops and service providers working hard ahead of the week-end. It’s a time for hair dos, for new clothes, for special meals, for spending time with family and friends. The local supermarket said it was a big selling point for turkeys and fresh vegetables, just like Christmas. When the weather permits it is the first big opportunity of the year to get out and about for pleasure.

The inconography of easter is more pagan fertility rite than Christian symbolism. Shops are full of bunnies and eggs, daffodils and greenery, signs of new life and fecundity. The easter egg is the main gift and currency of Easter. It is the chocolate industry’s opportunity to come to the retail party.

It is true the hot cross bun survives as a poignant reminder of the Cross and the sufferings of Christ, but in a six pack for 50p probably few pause to remember the events in Jerusalem almost 2000 years ago as they place it in the basket. As I put the eleven apostles on my Simnel cake I wondered how many households still bake one or recreate the gospel references in marzipan?

The muddle is very British. Easter is as each person defines it. Perhaps we should remember our great tradition – do not make windows into men’s souls.

This morning Labour put Geoffrey Robinson on to run up the white flag with the business leaders who have backed the Conservatives on National Insurance. That looked like wise and sensible politics, and he did it professionally. He told us the= business leaders were great guys who had a point of view, and that in one sense all taxes are taxes on jobs.

So why then did Lord Mandelson chose this same moment to attack Mr Diamond of Barclays? Unsubsidised banks are businesses too, as the Today interviewer spotted. Is Labour losing its touch? Is it rattled by the success of the first new tax cut of the campaign?

If Lord Mandelson is serious about rebuilding links with business, and if he wishes to stop the flow of new investment, company headquarters and new jobs to overseas countries with lower tax rates, he should announce an end date for the 50p Income Tax rate.

On Thursday I spent time talking to employees in a local super market. They were full of commonsense.

Together they were of one voice that too many people are on the dole and needing benefits. They feel strongly that the world is too tough on those who try hard and turn up for work, and not tough enough on those who prefer to stay at home when there are jobs available. They want a welfare reform that works – not to kick the crutches from the cripple, but to pull the duvet from the idle.

The younger ones face a big problem with housing. They want to climb the property ladder. In today’s conditions that is very difficult. House prices did fall as we thought on this site during the recession, but have been rising again more recently. They remain high compared to incomes. Banks under the new regulatory cosh are no longer prepared to lend 90% or 95% of the value, so buyers need substantial deposits. Mortgage rates for new mortgages are many times the 0.5% base rate Labour boast about, making monthly mortgage payments large for the beginner.

I went on from the supermarket to talk to a group of senior managers from a wide range of businesses. They too raised the house price issue. One of them recommended creating the conditions for a further subtsantial house price fall because he was worried about affordability. The others, all home owners, thought this a dreadful idea. They asked what the political parties thought. I said the parties thought there were a lot of home owners out there! Conservatives proposed removing the tax on first time buyer purchasers, and Labour have now done just that, which will help a little.

We are in bind. House prices are too high in many parts of the country for new buyers without rich or generous parents prepared to pay the deposit. The banks are forced to be more prudent, so many go without access to the credit they need. Any ideas?

The UK is over taxed. The deficit has not been brought on by taxing too little, but by spending and wasting too much. Labour’s offence is not for setting tax rates that are too low, but wasting so much money on self promotion, poor purchasing, too much bureaucracy, political correctness – and above all on far too many people out of work and living on benefits. The total benefits bill is larger than the massive deficit, including huge spending on more than 5.5million people of working age without a job.

The taxes which are most damaging are the ones which tax saving and earning. We need to work harder, earn more, invest more. To do that the enterprise economy needs lower taxes on effort and success. We are not going to get the deficit down enough without getting many of the 5.5 million into work. We are not going to get it down without more tax revenue, and more tax revenue requires lower rates of tax to stimulate more income to tax, and more jobs to cut the benefits bill.

So I am wholeheartedly behind George Osborne when he recommends making a start with a lower Corporation Tax rate, with the possible abolition of IR 35 and other penal taxes on self employment, the reduction of Labour’s very high National Insurance, and his removal of non millionaires from Inheritance Tax. It’s the right direction for policy. I think we will need to do more to be sure of sufficient response from the enterprise economy to boost jobs and the revenues by enough.

Labour’s petulant and shrill attack on George Osborne for his latest tax cutting proposal has back fired. The more Labour complains about the tax cut, the more business lines up to support it. Labour suddenly realises they face fighting the leaders of the UK’s biggest companies, instead of fighting George alone. They realise that whilst they can brief unpleasant things about George they will not get away with that about the UK’s main bosses.They must be regretting the amount of publicity they have given this popular, sensible and modest Conservative proposal.

So why did they do it? How did the King of Spin make such a mistake? They did it because they know a tax cutting Conservative party will be much more popular than a Conservative party wedded to Labour’s uncompetitive tax regime, based as it is on jealousy and folly. They did it because they have always thought they can lambaste the man and by undermining him damage the policy. This time it hasn’t worked.

They should remember a previous time when George Osborne outwitted them by proposing a tax cut. In the early autumn of 2007 Gordon Brown was riding high. The polls said he go for an early election and win it. Those of us who were keeping the flame of lower taxes alive in the Conservative party had not been having a good time. George Osborne emerged at the Conservative party conference, with the Conservatives staring a fourth General Election defeat in the face, and announced a cut in Inheritance Tax.

It was electrifying. You could feel the whole Conservative party transform from gloom to hope. More importantly, outside the Conference Hall opinion changed dramatically. A tax was going to be cut. People were allowed to aspire again. If you were successful your worldly goods were not to be confiscated by the state. The Conservatives shot up in the polls. Labour back tracked, to pursue a longer personal vendetta against George Osborne.

That is why Labour ware so worried when Mr Osborne returns to tax cutting, and this time proposes cutting a tax that practically all working people have to pay. Tax cuts are lethal chemicals in Labour’s timbers. To the rest of us they are yeast, providing hope, rising spirits, the prospect of a better tomorrow.

The irony is that lower tax rates will help cut the deficit. They are the main way to restore some enterprise, some more manufacturing, some more private sector jobs to a dangerously lop sided economy. The media complaint to George Osborne should not be that he has offered too big a tax cut, but that he will need to offer bigger ones still if we are to recreate a successful enterprise economy in a hurry,. as we need to do.

Labour are wrong, wrong, wrong to oppose the Conservative policy of cutting National Insurance taxes. They put substantial extra tax into their budget deficit cutting plans for the next four years which will only materialise on the scale imagined if they cut tax rates on company and individual incomes. As I have often argued on this site, the way to increase the tax take is to cut the tax rate.

Labour’s case against George Osborne is that his NI cut is “unfunded”. Well, that’s a bit rich from the people who have brought us £167 billion of wasteful and unfunded expenditure this year, and are planning almost as much again next year.

The Tories are right that the UK is no longer tax competitive. That matters. If we do not change that soon, more businesses will leave, fewer will come here to set up in the first place, more UK entrepreneurs will go on strike. The Tories say they will cut Corporation Tax to 25%, cut small business tax to 20%, and take 1% off NI. The only worthwhile question to ask is “Is that enough?” Once a country gets a reputation for being uncompetitive, once it gets out that the government hates the private sector and clobbers enterprise, a new government may need to send a very strong message that things have changed.

Holland offers a lower Corporation Tax rate and a 36% top rate of income tax. The UK at 28% and 50% is way off the pace. There need to be more tax cuts for stronger growth, more tax cuts even to hit Labour’s targets for the amount of extra tax we will get in from growth. I want to tax the rich more. To do so we need a top rate of 40%, not 50%.

One of the big advantages of a first past the post system of government is the electorate can sack an administration they do not like or is failing. The continental systems based on PR make it very difficult if not impossible for electorates to choose a government. The political parties and leaders do that once the result is known, through their negotiations over who will be in the coalition and what the coalition will stand for. In 1964, again in 1970 and again in 1979 the UK electorate voted for important changes in how they were governed, and did change the government.

It is an irony of our system that perhaps the biggest changes of government since 1979 have occurred through internal decisions of the two main parties. For whilst the UK electorate can change the government at elections, the main parties can change the government between elections. The Conservative decision to change from Margaret Thatcher to John Major represented a big change in the style and policy of the Conservative government. The change from Tony Blair to Gordon Brown was a big change in the Labour government. John Major went on to get limited public endorsement for his Premiership, only losing 40 seats compared to Margaret Thatcher. Gordon Brown stands in danger of losing many more seats and not getting that endorsement if the latest opinion polls are sustained.

John Major and Tony Blair shared a lot in common. Both fought difficult wars with NATO allies that the public did not always see the point of doing. Both were famous for their spin, and their fascination with how the media saw government. Both saw themselves as moderates, standing against some of the deeply held beliefs of their own parties. Both damaged themselves through loving Europe too much and the UK too little. John Major was unable to convince his party of the justice of Maastricht even with the excellent opt out from the Euro which he negotiated for the UK, whilst Tony Blair failed over a long period in government to ram the single currency through despite wishing to do so. He gave away huge powers elsewhere instead.

Margaret Thatcher was elected to sort out the mess that was the UK in 1979. She bravely tackled Trade Union reform, giving powers back to Union members. She tackled the huge deficit and unwieldy public sector by privatising large naitonalised industries and making them compete. She cut income tax rates decisively and ended exchange controls, allowing the UK to become a richer and more competitive economy.

Gordon Brown was chosen to put socialism back into the media spun politically ambiguous direction of Tony Blair. He has upped the taxes on success and the rich, nationalised two leading banks, greatly expanded the public payrolls, and greatly increased the benefit dependence of many. He has made the UK decisively less competitive and has brought rising living standards to a grinding halt.

The change from Tony Blair to Gordon Brown was a big change of government. It now has to face its first electoral test. The forthcoming election is about a very simple question – can you afford and do you want a truly socialist government? Do you want the poor living standards and low growth that always goes with high taxes and an overexpanded public sector?

The new Independent Authority has reached ts conclusions on what expenses MPs should be allowed to claim. There are some improvements for the taxpayer – no full fare first class travel, a lower amount for rent of a second home, and fewer extra items for that second home. Mortgage interest is disallowed.

Last night we were voting on the Budget until 11.30pm – later than the usual 10.30 pm finish on a Tuesday. That led to discussion amongst some MPs about the new list of constituencies not eligible for a second home allowance at all, on the grounds that they are within easy train travelling distance with sensible train times into and out of London. In Berkshire the determination is that Bracknell, Wokingham and Newbury are allowed second home costs but Maidenhead, Reading East, Reading West, Slough and Windsor are not. It’s the same pattern in all the Home Counties.

Personally I think IPSA has a very difficult job to do and they have gone about it sensibly. I just hope there is now public support for their scheme, so the MPs settle down to it. Last night in some areas – not the mentioned Berkshire MPs – there were unhappy MPs trying to work out how they could get home to their constituencies if they reached the station at midnight.

Labour want to nationalise care for the elderly. They think it would be their latest big idea, another large spending pledge which they hope will win them votes. Even they have recognised that in this climate people will ask “How is it going to be paid for?” That led them into the trap of the unpopular death tax, a tax on the estates of those who die leaving money to others. As a result last night they started to peddle back from it, and will instead go into the election offering a review of how to pay for this latest expensive nationalisation.

Let me explain the reality of the situation. Against the current bleak background for public spending there is no money to do as Labour wishes.

What is the alleged problem with current policy? The issue is that prudent pensioners who need to move into a care home for their final months have to use up their savings or sell their home to pay the bills of the care home. Their children often complain, believing that it should be part of the NHS service to provide the care home place free. They would like the money and the property to survive in the pensioner’s ownership, so it can be passed on to the children on death. For many years I have had to explain politely but firmly to constituents under Labour and Conservative governments that is not our system.

Our system does provide free care home provision for any pensioner who needs a place and has no savings or property of their own. It provides a free care home place for an elderly person with a home, if their husband or wife is also still alive and needs their own home to live in. The only elderly person that has to sell their former home is the one who was living on their own and has moved into the care home.

Our system also provides free health care for all who need it, including residents of care homes. The issue is who pays for the meals and the accommodaiton. Anyone continuing to live in their own home, whatever their age, has to pay for their meals and housing. The same regime applies to those living in care homes, if they have some money.

When the country is nearly bankrupt it is foolish to suggest that taxpayers need to take responsibility for paying for all care home bills, however much money the elderly person in the care home may have. The person in the care home does not need their former house, as they now live in the care home.

Children of elderly parents who have money themselves can always pay the bills for their elderly relative in order to inherit the property, if they do not wish it to be sold prior to the relative’s death. It is possible to take out insurance against the need to be in a care home. The good news is most people do not need to end their life in such a home, so insurance is affordable.

Listening to the Chancellor tonight on Channel 4 I wondered which economy he was talking about. It couldn’t have been the UK one which the Labour government has done so much to damage.

He told us they had “made the right judgement calls”. Does that include the decision to tax pension funds, or to sell gold at a low price, or to allow a huge build up of debt and credit, or to encourage banks to overexpand by failing to regulate cash and capital, or driving banks into grave difficulties by suddenly shifting to ultra tight money, or expanding public borrowing way beyond an affordable amount or to putting loads of borrowing off balance sheet in the public sector, or to waste so much public money or to fight two wars in the Middle east or to set up so much extra bureaucracy and quangocracy?

He did not seem to grasp the difference between debt and the deficit. The deficit is too large and that is the amount by which the debt is growing. He said he had a choice on how much of the savings in spending he had recently found he could use “to pay down debt”. He is years away from paying down debt. All his forecasts assume colossal increases in debt for years to come.

He conceded that he did not want a death tax to pay for elderly care after all, having spent weeks defending that option.

He said size did not matter on banks, seemingly unaware of the dangers created at RBS and Lloyds by the mega mergers the government allowed or encouraged.

He claimed Northern Rock had enough capital in 2007, apparently unaware that the Banking regulator in the last two years has required all banks to raise much more capital, implying they allowed Northern Rock to trade with too little.

Mr Darling’s positions either revealed a worrying ignorance of banking and the public accounts, or were constrained by the need to do as Mr Brown wishes. No wonder we are in such a mess.

It is good fortune that no less a person than Mr Blair himself will shortly tell us in a speech that Mr Cameron is not his heir. In typical Blair style he has of course already told us by leaking his own remarks in advance of bothering to tell his chosen audience.

The phrase “heir to Blair” was always two edged. To its supporters it meant another popular charismatic leader capable of making his party voter friendly enough to win after a long period in opposition – nothing wrong with that. To its critics it threatened to lumber the new Conservative Leader with Blair’s spin, his wars and his sofa style of politics.

The more reminders we can have of the deceits and the wars of the Blair era the better from the Conservative point of view. Mr Blair’s attempt to create pure red water between himself and Mr C is most helpful. Long may he intervene.