Jun 2013 24

Earlier in the month, at an event organised by YouGov in association with the Free Word Centre, I debated the issue of taxpayer funding of the arts with Harriet Harman, Shadow Culture Secretary; Sir Peter Bazalgette, chairman of the Arts Council; and Jude Kelly, Director of the South Bank Centre.

The debate was chaired by BBC Arts Editor, Will Gompertz, and the short highlights video above gives a flavour of the robust discussion we had, which was inspired by YouGov polling of both the general public and “opinion formers” regarding the degree to which taxpayers’ money should be subsiding the arts. You can see the research online by clicking hereI seemed to be very much the lone voice on the panel standing up for taxpayers against Establishment figures who seemed unconcerned about the need to find savings from the arts budget. It was especially alarming to hear the Arts Council chairman declare that “there will always be projects that you can take the mickey out of and sometimes they won’t come off because that’s what taking risks is about.”

I’m afraid, Sir Peter, when you are taking those risks with hard-earned taxpayers’ money, you have an immense and awesome responsibility to spend every penny wisely. Shrugging off my concerns and saying that we should accept that some of that money is always going to be heading down a drain is simply not good enough.

Our recent Bumper Book of Government Waste highlighted a number of examples of how the Arts Council has squandered our money on projects that don’t stand up to public scrutiny. They were not even risks with taxpayers’ money, since it was known exactly what was being funded: when the project in question is, for example, a £95,000 skip decorated with fairy lights in a square in the middle of Brighton, it is totally unjustifiable.

Incidentally, the video clip above did not include my rebuttal to Will Gompertz’s assertion that “individuals are much more inclined to be philanthropic if the Government [ie the taxpayer] is also supporting institutions”. I pointed out how the Royal National Lifeboat Institution was created independently in 1824, but starting taking government grants when it fell on hard times in the 1850s. Yet for every pound the government was putting in, the RNLI actually found it was losing thirty shillings (£1.50) in voluntary donations, because people could not see why they should be supporting a state-funded institution. As a result, the RNLI stopped taking taxpayers’ cash in 1869, and it has flourished ever since.

Similarly, before the Arts Council was founded in the late 1940s, the arts flourished in the country precisely because brilliant British musicians, artists, playwrights, poets and so on had to appeal to people – and not politicians or bureaucrats – for support. The bigger the subsidy they receive from the state, the less responsive they will be to the demands of the public.

And rather than making the arts more independent, that subsidy actually creates dependency around a single donor, whose tastes are often going to be informed by the political whims of the moment. If anything, isn’t that actually diminishing artistic freedom rather than enhancing it?

Pressure builds on Coalition to act on its words over empty property rates
Jun 2013 14

A leading expert in the field of Business Rates has slammed the Coalition’s half-baked proposals for empty property rate relief. Jerry Schurder, partner at a leading chartered surveyors and former President of the Rating Surveyors’ Association said they were “a waste of time and deeply flawed.”

At the Autumn Statement, George Osborne proposed that all newly built commercial properties should be exempt from empty property rates for 18 months. A damp squib, considering how vociferously senior coalition figures opposed the tax in opposition. Business Secretary Vince Cable described penalising property owners for their properties being vacant a “a ludicrous situation, completely counterproductive and economically very damaging.”

The recently published proposals reveal that the exemption period for new build developments will be at the discretion of local authorities. This adds to the many uncertainties developers face when weighing up whether to proceed with a project.

The scheme will also be subject to European State Aid rules which limit each company to a total benefit of £170,000 (€200,000) over a three year period. A limit like this is far too small to provide any meaningful incentive for large developments.

The construction sector has been one of the worst hit since the financial crisis, and is being held back by a combination of empty property rates and restrictive planning regulations which form a destructive cocktail, discouraging development

Our research earlier this year showed that the Treasury raked in more than £1.1 billion from landlords struggling to find tenants in 2011-12. The ineffectiveness of the current policy has also been demonstrated by a survey from the Royal Institution of Chartered Surveyors, which showed an overwhelming consensus that the policy has been ineffective in reducing rents and incentivising landlords to let out property.

The Government needs to radically rethink these feeble proposals if they are to have any impact, and at the very least offer the relief that was available before Gordon Brown removed it.

The Government’s terrible recall bill must be rejected
Jun 2013 05

The Coalition has waded into the long grass this week to retrieve the recall proposals it kicked there after it came to power. However, Nick Clegg’s now revived proposals aren’t a proper right of recall and he knows it. In response to Zac Goldsmith (someone who knows what real recall is and has fought valiantly to promote it) the Deputy Prime Minister called the Government’s proposed scheme a “back stop reassurance”. But we deserve and require more than a back stop.

The case of Patrick Mercer has shown all too well why we need a recall power. He felt his actions demanded that he resign from his party and not seek re-election in 2015, but the very constituents to whom he owes his seat in Parliament have no opportunity for their voices to be heard on the matter. Unless he were to quit the Commons of his own choice and cause a by-election, Mr Mercer will happily remain MP for Newark for two more years, continuing to claim his annual £65,738 salary plus expenses throughout that time. The same democratic deficit is also faced by the electorate represented by Falkirk MP, Eric Joyce, who has quit the Labour Party and announced that he won’t stand again, but intends sitting out the remainder of the Parliament.

It’s clear to see we need a proper recall mechanism and we need it now. Yet the Government has revived its Frankenstein recall proposals which won’t even be introduced until next summer.

The Government’s proposal is terrible; in fact, it’s almost worse than no recall at all. It would centralise more power in Westminster, rather than handing it to the real independent experts, the local electorates . Under the Government’s plans, before any recall ballot could be held, an MP would need to be censured by a Commons committee, and only then would just 10 per cent of a constituency electorate be able to trigger a by-election. This simply hands power to a parliamentary committee comprising members of the political elite. This committee would in effect determine whether someone is sent packing from Westminster back to their constituency, rather than the other way around. Such a decision might well be made because of serious wrongdoing, but (call me a cynic) the committee could be influenced against a particular member if he or she has annoyed the powers-that-be. Given the power of the party apparatuses, these proposals would be bad news for independent-minded MPs who serve their constituents well, but may be a thorn in the side of the Westminster elite.

And what about MPs who don’t technically break any rule and therefore avoid a parliamentary censure, but whose behaviour warrants scrutiny between elections? I’m thinking of the hypothetical MP who heads off on holidays for months on end, fails to contribute in Parliament from one year to the next, breaks solemn election promises, refuses to meet with constituents seeking their help, or simply decides that they prefer to the live the life of a cat

The case for a proper recall system is incredibly strong which is why all three major parties recognised that the public wanted recall and pledged to introduce it in their 2010 manifestos. Yet after the election, when those in charge of the Coalition realised the implications of handing power to people who actually might want to exercise it, they dropped the plans like a hot brick. And we wonder why people have little or no faith in politicians.

The events of the last week have made the case for recall irrefutable, but it is important that the Government’s Frankenstein bill is rejected in favour of something that gives people more power, not less.

Patrick Mercer case raises need for voters to have proper recall mechanism
May 2013 31

Commenting on the decision by Patrick Mercer MP to resign the Conservative whip today, Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“MPs must be absolutely transparent about declaring all outside income and obey the appropriate Commons rules.  Any failure to do so is a very serious matter. “Details of the precise allegations against Mr Mercer are yet to emerge, but Newark residents will be intrigued as to why their MP has resigned from his party but not from Parliament. “Mr Mercer’s constituents should have the right to hold him to account for his actions if they feel he has let them down, but they cannot do so because the Government has failed to introduce the recall mechanism it promised in the Coalition Agreement. “Without a proper right of recall, MPs remain able to sit out a full five-year term, regardless of their conduct.

Click here to read We need a proper recall system, not a Westminster stitch-up 


Reaction to today’s Public Accounts Commitee: We need tax reform, not empty moralising
May 2013 16

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 Taxcan be found here.

Our reaction to today’s NAO report on HS2
May 2013 16

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.”

Camden Council and this year’s Town Hall Rich List
May 2013 13

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. 

Remuneration bands

Senior officers 1Senior officers 2

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 4 employees who received between £100,000 to £104,999 whereas the table for ‘senior officers’ remuneration displays only 3 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.

Corporation Tax progress undone by Business Rates and National Insurance, says Justin King
May 2013 10

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

Comment: Sorry Mr Hammond, MPs don’t deserve a pay rise
Apr 2013 24

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.

Click here to continue reading the full article 

The rocketing cost of council pensions in Waltham Forest
Mar 2013 26

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.

Don’t believe the nonsense, the Work Programme worked for Cait Reilly
Mar 2013 19

This afternoon Parliament will likely make emergency changes to welfare legislation following the fallout from the Cait Reilly Poundland case.  Critics of the policy 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 to 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 because of 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.

Tim Watts WM by taxpayersalliance

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.

New MashBeerTax.org A4 campaign poster. Have you signed up to tell your MP enough’s enough?
Mar 2013 13

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!

MBT poster image

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.

Click here or on the picture above to download the MashBeerTax poster

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