Reacting to Thursday’s evidence at the Public Accounts Committee, Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:
“Yet again the Public Accounts Committee has offered stinging criticism of individual companies but no progress on the root cause of the problem, our broken tax system. Politicians are responsible for our hideously complex tax code and it’s up to them to simplify it to ensure that everyone pays their fair share, no more and no less.
“Until the system is simplified, HMRC will always face an uphill struggle against a 17,000-page tax code, which is full of loopholes being legally exploited by those with clever accountants and tax lawyers. We need serious and comprehensive tax reform, not empty moralising.”
The TaxPayers’ Alliance (TPA) proposed a comprehensive simplification of the tax system in the 2020 Tax Commission, a joint project between the TPA and Institute of Directors (IoD). The final report of the commission, The Single Income Tax, can be found here.
Reacting to today’s National Audit Office report High Speed 2: A review of early programme preparation
Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance said:
“HS2 will saddle every family in the country with a bill for at least £1,000, but it is based on flawed calculations, assumptions and
projections and will woefully fail to deliver the economic benefits it promises.
Even if the Government’s wildly optimistic numbers were realistic, the project would represent poor value for money, but with hidden costs and a
shoddy economic case the line is destined to be an expensive white elephant.
Ministers are squandering an incredible amount of taxpayers’ money on this disastrous project, and they should be urgently reviewing their plans
before burdening future generations with such an eye-watering bill.”
Councillors on Camden Council have disputed the numbers for their council in this year’s Town Hall Rich List, which was compiled using the council’s own accounts. This isn’t unusual: every year a few councils object to the figures and they’re usually mistaken, most frequently because they object to the idea of employer’s pension contributions being included in the total remuneration funded by taxpayers. Employers’ pension contributions should be included because it is part of the financial reward that senior staff get for their work.
Council leader Sarah Hayward repeatedly called the TPA’s spokesman a liar on Channel 5 News, stating that the number should have been 16. Theo Blackwell then blogged that the “actual figure is 16 (or 24 however you count it)”. Hayward then took to Twitter and suggested that the correct number could be 25. They can’t get their story straight.
The remuneration report of a council’s accounts is presented in two parts: a) a set of remuneration bands; b) a more detailed disclosure of senior officers’ pay. When compiling the Town Hall Rich List, our researchers have to determine whether or not the remuneration bands include the senior officers subject to further disclosure or not. Many councils make it easy for taxpayers to understand how their senior staff are paid by stating clearly whether the two lists overlap or not.
For councils like Camden which don’t make this clear, we have to work it out for ourselves by seeing whether or not the reported remuneration of the senior officers fits into the reported numbers in different pay bands. Bearing in mind that the numbers in the bands refer to remuneration excluding pension contributions, it was concluded that Camden’s accounts did not include the senior officers for two reasons:
1. R Stoppard, Director – Culture and environment, received remuneration of £159,510 in 2011-12. The highest band for 2011-12 is 150,000-154,999.
2. In the bands for 2011/12, there are two employees listed in the £110,000-£114,999 band. In the senior officers’ disclosure, we can see Assistant Director – Adult Social Care with remuneration of £111,055, Assistant Director – Housing Needs & Resources with remuneration of £110,219 and Deputy Director of Finance on £111,522. That makes three which would be in this band if the senior employees were included, but only two were reported.
We tried to call and confirm that interpretation but we were never put through to anyone who could help. With over four hundred local authorities, there are limits to the extent that we can chase up every single case and we have to rely on most council’s accounts providing enough clarity for someone to read them in good faith and understand their meaning.
Camden is now claiming that the bands do in fact include the senior officers and the TPA has double counted. For this to be true, Camden must not regard “variable pay” as part of remuneration, a bizarre definition that is not used by any other local authority, at least to my knowledge. If that is the case then the correct figure will not be as high as 40. But neither will it be anything like as low as the 16 they have been claiming.
Even if this is the case, none of the three figures used by Camden can be accurate. The number must in fact be at least 26. This is because the table of staff numbers in remuneration bands lists 6 employees who received between £100,000 to £104,999 whereas the table for ‘senior officers’ remuneration displays only 5 within that band. That means one employee must have received remuneration within that range who does not qualify as a ‘senior officer’. Meanwhile, the table detailing senior officers’ remuneration lists 25 employees who received over £100,000.
Both employers’ pension contributions and variable pay should be included and there are that many people making £100,000 a year in total remuneration just in the senior officers’ disclosure. That means that Camden is at least still in the top 10 councils by number of staff earning over £100,000 a year.
Blackwell’s blog also said that “the TPA seem to have got to their figure(s) by double counting (e.g. saying we have two Chief Execs in one year, which we did but not at the same time!)” It is very clearly explained in the report that “each entry refers to an individual not a position” and that is quite right. If there are two Chief Executives over that year and both of them manage to earn over £100,000 within that year, of course they should both be included in our list.
Hayward has demanded a correction and apology from the TPA, but she and her staff have yet to provide the coherent or consistent information that we need in order to be able to correct the report. Until they provide a clear statement with full details on all of their staff receiving total remuneration of more than £100,000 (including but not limited to employers’ pension contributions and variable pay) we cannot make a correction. It would be unfair on more transparent councils if we gave Camden special treatment.
There are three important conclusions:
1. If there is an error in the Town Hall Rich List it is the result of unclear and incomplete information in Camden council’s accounts. It does not imply any systematic problem with the way that the list is produced, as most local authorities make it easy to tell whether or not there is an overlap between the pay bands and the remuneration report.
2. Remuneration for senior staff at Camden council is among the most generous in the country, including a Director – Culture and Environment – who received as much as the head of MI5.
3. There should be greater standardisation in council accounts so they can’t evade transparency with creative reporting.
Sainsbury’s boss Justin King has criticised unfairness in the tax system, contrasting the bill for high street operators with their online counterparts. The supermarket giant’s chief executive also complained that the benefit from falling rates of Corporation Tax has been wiped out by rises in other taxes:
For every £1 we have benefited from the reduction in corporation tax we have incurred more than £2 of other taxes, in particular business rates and employers’ national insurance.
There is a difference between bricks and mortar retailers who pay rates, National Insurance and all the other domestic taxes that are due, and online retailers who by virtue of their lack of physical presence in the high street don’t contribute in the same way.
It’s not just supermarkets suffering under the weight of heavy taxes like Business Rate and employer’s National Insurance. Small businesses across the country have supported our Freeze Business Rates campaign while a pressure is building to abolish National Insurance.
The Government’s action on cutting Corporation Tax has been welcome. But it has been undone by their decision to close the deficit by increasing taxes rather than cutting spending. And the result has been families facing real austerity in their household budgets, companies holding back from investing and a flat-lining borderline double-dip economy where growth rates of half of a per cent are thought to be something to get excited about.
It’s time for change. To add your voice to the call to stop hiking Business Rates, visit FreezeBusinessRates.org
Writing for politics.co.uk TPA Campaign Manager Eleanor McGrath argues against a 60 per cent pay rise for MPs.
It emerged over the weekend that transport minister Stephen Hammond thinks MPs deserve a pay rise of 60%.
Yes, you read that correctly. According to The Sun on Sunday he responded to the Independent Parliamentary Standards Authority (IPSA) review into MPs’ pay with a call for their salaries to be increased to over £100,000.
In July last year, we revealed the substantial rise in council staff drawing pensions compared to those paying in. We also revealed in April last year the enormous black hole in the Local Government Pension Scheme (LGPS) – a gaping pensions deficit of £54 billion for which taxpayers are ultimately liable.
These figures were brought into sharp focus in Waltham Forest earlier this month at a full council meeting. In a report authored by John Turnbull, Director of Finance and Procurement, the following was brought to the attention of councillors:
The Actuary to the Pension Fund (Mercer) undertook the three year valuation of the Fund as at the 31 March 2010 in accordance with theLocal Government Pension Scheme regulations and determined that the Employer Contributions to the Pension Fund required from the Council are within the 2% annual increase assumed within the Medium Term Financial Strategy (MTFS). The actual increase for 2011/12 was 1.9% to 23.4%. The increase for 2012/13 is a further 1.8% to 25.2% and that for 2013/14 an additional 2% to 27.2%. Therefore the results of the 2010 Actuarial Valuation of the Pension Fund have not resulted in any additional burden on the Council’s finances in excess of that assumed in the MTFS.
The next three year valuation of the Fund is planned to take place in2013/14 and it is anticipated that the employer’s contribution rate will increase at a slower rate. For 2014/15 it is assumed an increase of 1.5% to 28.70%, with a further 1.5% increase in 2015/16.
Putting that into plain English, the employer’s pension contributions (paid for by taxpayers) has increased from 21.5 per cent in 2010/11 to 25.2 per cent in the current financial year. At the start of the next financial year on 1 April, taxpayers will have to fund another rise of 2 per cent, and it is anticipated that in 2015/16, taxpayers will have to make contributions of 30.2 per cent towards staff pensions. It wouldn’t surprise me if that figure increased again in the years to come.
We have stated in many reports that the LGPS, like all public sector pensions, is not sustainable in the long term. The public sector trade unions have hit back at us, disputing our figures, and have done their best to rubbish our reports despite the fact that they are sourced direct from council accounts, but here it is in black and white. At a time when Waltham Forest Council is having to rein in spending, the cost of providing generous staff pensions is rocketing.
If your cost of your council’s pension bill is going up, please let me know. Taxpayers cannot afford to continue picking up these increasingly larger bills.
This afternoon Parliament will likely make emergency changes to welfare legislation following the fallout from the Cait Reilly Poundland case . Critics of the policy being pursued by the Government, such as Shiv Malik in this particularly misleading Guardian article, argue that the DWP is somehow seeking to strike down the Court of Appeal judgement deny claimants compensation that they deserve for being made to “work for the benefits”. Don’t believe this nonsense. They are adjusting legislation that was illegal because of the way it was introduced, not what it did.
Campaigners in the Poundland case sought to portray the Work Programme as modern day slavery (something that is frankly insulting to those who have experienced genuine slavery in the modern era) and a breach of claimants’ “human rights”. The Court of Appeal utterly rejected this argument. Whilst ruling that the legislation used in Parliament to introduce the scheme was flawed, it certainly did not reject the principle of expecting those out of work to take part in mandatory work experience in return for some of their benefits.
Pretty embarrassing for the department, yes, but not a reason to compensate those involved in the scheme at the expense of taxpayers. The principles of the Work Programme and workfare as methods of helping those looking for a job and ensuring that welfare cannot be an alternative to work should be defended robustly. Those arguing that compensation is somehow due are mistaking a technical ruling for an endorsement of their vociferous campaign against the Work Programme. Their confusion should not place an extra burden on taxpayers and undermine important steps to help people back into work.
One of the biggest ironies of the Cait Reilly case is that it is an example of the Work Programme’s success. Despite her distaste for stacking shelves and sweeping floors in Poundland, Cait Reilly now works in Morrisons. So after work experience in a supermarket she now has a job in… surprise surprise, a supermarket. In this interview, Tim Watts of Pertemps, explains how her experience from the Work Programme helped his company find her work.
Cait Reilly’s now working, contributing to the taxman’s coffers and off welfare. A good result for her and taxpayers. Working in a supermarket might not be what she wants to do ultimately but it should, at least, act as the first rung on the job ladder. It was this type of job I (and many of my friends) took after university. Full time employment showed to future bosses I was up to the challenge of work and left me more money in my pocket.
Of course there must be protections to ensure the programme does not act as subsided labour for firms or reduce full-time employment elsewhere. But this is unlikely anyway given, as Tim Watts pointed out, taking on candidates from the Work Programme actually poses more of a risk to the employer than if they otherwise simply hired a member of staff through the normal interview process.
Work experience demonstrates to employers that someone is capable of holding down a full-time job and has the right mindset and ethos to get on. It can be incredibly difficult to go from being unemployed for a large amount of time to re-entering the workplace. Hiring someone in that situation is also a gamble for employers at a time when they are spoilt for choice for job seekers. The Work Programme provides an important stepping stone into a competitive job market. Don’t let those who oppose it remove this help from jobseekers and leave taxpayers with an even bigger benefits bill.
If you’re a pub landlord and you’d like to put up a poster in your pub to tell people about MashBeerTax.org (the campaign to stop yet another increase in drinks tax in the Budget) click the image below to download and print one out!
Signing the MashBeerTax.org campaign will send an email to your local MP to let them know you don’t want taxes on drinks to go up yet again.
Many local authorities are using the excuse of cuts in central government grants to increase Council Tax. But some are actually getting on with delivering good services without reaching into taxpayers’ pockets for even more cash.
The City of Westminster has frozen council tax for the sixth year in a row. Taking inflation into account, this amounts to a 23 per cent real terms cut over six years. The freeze will give Westminster the lowest Council Tax in the country and has been made possible by outsourcing, sharing senior staff with neighbouring councils and trimming direct funding of the arts.
Why not use the greater efficiency of the private sector to deliver public services? It is a complete mystery. Westminster also achieved substantial savings by merging administrative jobs with neighbouring Wandsworth and Kensington & Chelsea – what are other councils waiting for?
When is a tax not a tax? When it’s the “Bedroom Tax”, which is in fact a change to housing benefit and not a tax. Campaigners, charities and Ed Miliband have thrown this term around to describe the Government’s recent proposals to reclaim some of the Housing Benefit given to those claimants that have a spare room. As Guido points out, giving someone less in Housing Benefit because they have a spare room is a welfare reform or a benefit cut, but not a tax (regardless of what you think of the measure).
Just in case we’re not clear what a tax is, here is how the Concise Oxford English Dictionary that sits by my desk defines a tax:
A compulsory contribution to state revenue levied by government on personal income and business profits or added to the cost of some goods, service and transactions
So why has a benefit reduction, been labelled a tax? It’s all about the politics of language.
These days raising taxes is seen as a bad thing by all but a few committed ideologues, so labelling something a tax is designed to inspire opposition. It is designed to make people think that the proposals will mean ordinary homeowners face higher bills. As Mark Wallace (formerly of this parish) points out, the fact that many campaigners for higher spending (and in the end higher taxes) now accept that raising taxes is seen as a bad thing is actually very good news in the long run.
So, after you’ve cut through the spin, we’re left with the question: is reducing benefits for under occupancy the right thing to do? In principle yes, but it won’t address the fundamental problem of housing shortages and there are dangers the authorities need to address. The aim of the under occupancy charge is to stop a precious resource like council houses being underused. It is right to do something about the problem of scarce council houses not being given to those who need them the most.
There are some who still believe that a council house should be for life. It is tough to ask someone to leave where they have lived for the last ten years is, but when there are families of four and five queuing up for three bedroom properties how can we justify someone living in a council house with two spare rooms? Clearly there is a balance to be struck, and people should be encouraged to move on when they can.
The taxpayers paying for the system also need to be treated fairly. For many people, the idea of a spare room seems like quite a luxury. Most people my age (myself included) need to live with housemates and rent a room, let alone afford their own place and a spare room. So why should the benefits system provide a better standard for those in receipt of housing benefit than the people paying for those benefits enjoy themselves?
There is a serious risk that undermines the incentive to work.
The under occupancy charge may make the social housing system a little fairer but it only tackles the symptoms of the problem, not the cause. The real problem we face is that we aren’t building enough homes. With taxes depressing people’s income as well, that makes property very hard for many families to afford. Until the Government gets serious about cutting taxes and making it easier to build new homes, these reforms will just be a sticking plaster. There is an absolute thicket of regulation that does nothing but create an administrative burden and slow development, which they could cut away to increase development.
Those opposed to this new welfare reform will campaign against it aggressively. They will find some cases where, if it is applied too inflexibly, the reform creates real hardship. That’s why there should be a hardship fund which has been announced. But all those cases will show is that there does need to be some room for discretion at a local level, not that we should continue to abandon reforms that can make the whole system fairer and more affordable for taxpayers struggling to manage their own finances.
Reacting to David Cameron’s speech on the economy, Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance (TPA), said:
“The Prime Minister is absolutely right that easing the heavy burden of taxes is the best way to help families struggling to make ends meet. But he needs to do more than talk about the need for low taxes. He should ease the enormous pressure on people’s budgets by cutting taxes which depress their wages and increase the prices they pay at the shops.
“If staying the course means pressing on with a vain attempt to raise enough taxes to finance a public sector spending nearly half our national income, it will just mean going down with a sinking ship. The Government should be fiscally responsible, but our deficit is a result of politicians spending too much, not taxpayers paying too little.”
Earlier this year, TPA research showed that the Government has implemented or planned 299 separate tax rises but only 119 separate tax cuts during the course of this parliament. You can read the full report here.
A new book by TPA Research Fellow, Mike Denham, has been published today which exposes how wasteful spending and poor public sector performance is costing taxpayers as much as £140 billion per year.
Many people enjoy hitting their local high street and spending their hard-earned cash in their favourite stores. However, rising business rates are posing an increasingly serious threat to more and more local shops.
These rates are a massive burden and are a major bill which businesses have to pay regardless of whether they are making the money to pay it.
For example, I checked out how much my little neighbourhood bakery in South London has to pay in business rates. I found via www.gov.uk that this small business gets an annual bill for over £5,000 – on top of all the other costs of running the business.
These high costs deter many from setting up their own business.
At a time when the Government is calling for the private sector to step up to the plate and help the economy return to growth, freezing business rates would be a simple way to support businesses. Freezing these rates would be a great way of letting firms grow, prosper and create new jobs.
Research published this week by the Forum of Private Business, Tax priorities for the Coalition, found around 95% of all business owners feeling that the levels of business rates are too high, while two thirds saw no benefits for the amount of money they were taxed. So what can be done to help the shops on our local high street thrive?
We are working with the British Retail Consortium to make the case as to why business rates should be frozen. The website www.FreezeBusinessRates.org has been set up to allow people to contact their MP and ask them if they are going to stick up for small businesses by calling for a freeze in business rates.
So if you want to support local businesses then please do visit the website and urge your MP to back the campaign.