Sep 2013 04

In a major new report, the TaxPayers’ Alliance today outlines the next stage for welfare reform in the UK, Work for the Dole. Despite the creation of over three million jobs between 1997 and 2012, the number of people in the UK out of work has remained stubbornly high, even in times of prosperity. Work for the Dole, a programme of mandatory participation in community work and training in return for the continued payment of benefits, is the next step in getting people off welfare and into work. Based on successful programmes across the world, it is estimated the scheme would lead to annual savings of £3.51 billion and help 345,000 people off benefits over time.

Work for the Dole proposes that, after a certain time, anyone claiming the Universal Credit should undertake compulsory activity or – if claiming Incapacity Benefit or Employment Support Allowance – activity that they are physically able to do.  It would address the problem, as described recently by Lord Hutton of Furness, of those “who choose consciously not to work “.

Key recommendations:

  • Participants in Work for the Dole would be required to undertake 30 hours per week of either mandatory community work, physical and meaningful attendance at a job search centre; work for a registered charity; recognised training; or work experience.
  • For anyone already in work but claiming benefits, participation in Work for the Dole would top up their working time to at least 30 hours per week.
  • Work search activity would continue alongside the mandatory activity. If placements are with a commercial organisation, then there must be genuine skills development – it cannot simply be free labour for the commercial company.
  • The 30-hour benchmark may be adjusted downwards for people with childcare or similar obligations. For those with young children, pensioners or individuals with a severe disability there will be no requirement at all.
  • Non-compliance with Work for the Dole activity requirements would automatically result in suspension of all Universal Credit payments. This is based on evidence from the U.S. that suggests this is required to make the scheme fully effective

Importantly, the length of time before someone is automatically referred onto the scheme would be dependent on their National Insurance (NI) contributions. Those with a history of paying National Insurance would be referred onto the scheme after up to two years of claiming Universal Credit while those with little or no history of NI contributions would be expected to participate after three months of claiming Universal Credit. This would give more latitude to those who have paid into the system and strengthen the contributory principle in out of work benefits.

The introduction of Work for the Dole would end the ability to subsist on benefits instead of seeking work:

  • It is estimated that 575,000 people would be eligible for referral onto the programme on day one.
  • The cost of initially administering the programme is estimated at £1.05 billion in the first year.
  • The programme should rapidly lead to a gross saving of £3.51 billion per year on an on-going basis and a net saving of £2.46 billion in the first year.
  • Based on similar programmes around the world, 345,000 will come off benefitsover time.
  • Work for the Dole under the Universal Credit umbrella would remove the option of claiming benefits other than JSA and ESA (such as Housing Benefit and the Child Tax Credit) while not seeking work, which is currently possible

Polling has shown that the public overwhelmingly support the idea (net agreement of +75%) that those who can, should do full-time community service for their benefits. Even59 per cent of benefit claimants themselves now think benefits are too high and discourage work. Current reforms as they stand are not enough to fix welfare dependence. Work for the Dole would eliminate a great deal of fraud and provide a powerful incentive to seek a proper job while at the same time helping participants with the experience and credentials needed to get them onto the job ladder.

Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

Welfare should be a safety net for people who fall on hard times, not an alternative to working. The Government is improving the incentive to work but they need to go further and remove the option of sitting at home and claiming benefits entirely. Taxpayers rightly expect something back for the enormous amount they pay for out-of-work benefits, at the very least a real commitment to find a job as soon as possible. You should have to work for the dole.

Chris Philp, author of Work for the Dole, said:

“Despite the record number of jobs created in the UK economy in the last decade, welfare dependency remains a problem that costs taxpayers a fortune and ruins lives. Politicians of all sides acknowledge that that the current system encourages welfare dependency. Work for the Dole programmes in other countries have shown that this problem can be beaten and dependency dramatically cut. The public resoundingly back the idea that claimants should contribute for the benefits they receive and it’s time politicians caught up. Work for the Dole is an idea whose time has come.”

Frank Field, MP for Birkenhead, former Minister for Welfare Reform, responded to the publication by saying:

“Labour needs seriously to look again at Work for the Dole. The next Labour government must ensure that claimants are not simply left drawing benefit rather than having an offer of work. Benefit payments should help form the pool of resources to fund Labour’s future jobs fund Mark II.”

New research exposes the £2 billion “holiday tax”
Aug 2013 27
As millions of British families return from their holidays, our new research reveals just how much tax they have to pay in order to enjoy a well-earned break. Thanks to the highest taxes on flights in the world and other taxes on common holiday purchases, the tax burden on holidays abroad was £2 billion in 2012. That is a £500 million increase from the last TPA estimate in 2008. A family of four travelling to Florida are likely to have paid around £350 of tax on their flights and holiday purchases in the UK.

Key Facts:

  • In 2012 the estimated total tax bill for holidays abroad was over £2 billion. That is£56 for each of the holidays abroad taken
  • family of six travelling to Spain will have faced an average tax bill of £187 on their flights and holiday purchases in the UK
  • family of four travelling to Florida will have faced an average tax bill of £350on their flights and holiday purchases in the UK, an increase of £150 since 2008
  • couple travelling to Australia will have faced an average tax bill of £254 on their flights and holiday purchases in the UK

Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“People work hard all year to make ends meet, despite high taxes and rising prices. They look forward to a holiday as a blessed relief but sadly the tax man is waiting even when they try to take a well-earned break. Britain’s exceptionally high taxes on flights in particular make holidays much more expensive, as well as making it harder for Britain to compete as a destination for tourists and business investment. The Government should cut Air Passenger Duty and make flying more affordable.”

Well over a third of potential home buyers will pay over £7,500 in Stamp Duty by 2018
Aug 2013 23

Our latest research reveals that out of every 5 homes sold in 2012-13 will be subject to Stamp Duty within five years and that 40 per cent of homes sold will be subject to Stamp Duty of 3 per cent or more, leaving buyers with a bill of at least £7,500.

Property price forecasts by Savills Research imply a huge increase in the number of homes which will be subject to punitive rates of Stamp Duty. The forecast price rises will lead to the liability of nearly 100,000 homes which incurred 1 per cent Stamp Duty in 2012-13 more than tripling as they become subject to the 3 per cent rate of Stamp Duty.

The threat of much higher Stamp Duty rates will increase the pressure for the Chancellor to cut this unfair, double tax as called for by the TaxPayers’ Alliance Stamp Out Stamp Duty campaign.

Key Facts:

  • By 2017-18, four in every five homes sold will be subject to Stamp Duty
  • In five years, two in every five properties sold will be subject to Stamp Duty at 3 per cent or more, with bills of at least £7,500 each
  • Nearly a third of all homes where Stamp Duty of 1 per cent was paid in 2012-13 will be subject to the 3 per cent rate by 2017-18. The average bill for those properties will rise from £2,319 in 2012-13 to £8,445 by 2017-18
  • In five years, 220,593 of the 725,602 homes which were sold in 2012-13 will be subject to a higher rate of Stamp Duty
  • 99 per cent of homes in London will be liable for Stamp Duty in five years and five out of six homes will be subject to the 3 per cent rate
  • Three in five homes sold in the North West will be liable for Stamp Duty in 2017-18
  • The fastest increase in the number of homes liable for Stamp Duty will be in the East Midlands where the number of properties subject to Stamp Duty will rise from 50 per cent to 71 per cent by 2017-18
  • Three in five homes in the South East will be subject to Stamp Duty at the 3 per cent rate or higher by 2017-18
  • Over half of all homes in every region of England and Wales will be subject to Stamp Duty by 2017-18, including in 306 out of 347 local authority areas

Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“As the property market recovers, more and more people will be sucked into paying punitive rates of Stamp Duty and it will be more expensive to move than ever. High Stamp Duty rates stop young people buying a home and starting a family, discourage elderly people from downsizing and make it harder to move to a new place for a new job. The Government urgently need to cut Stamp Duty and ease the burden before the situation gets even worse.”

Big savings made on staff transport in Croydon
Aug 2013 20

Croydon Council has vastly reduced the cost of staff transport, resulting in a substantial saving for taxpayers. It previously spent £1.3 million a year on transport costs, but since reviewing the situation in 2010 the council is now seeing huge benefits.

It formerly relied on a combination of lease vehicles provided to staff and employee-owned vehicles. This combination not only meant that the Council was adding significantly to local congestion, it was also blighted by the fact that the Council had no real understanding of what state all these vehicles were in. Cllr Sara Bashford, Croydon’s cabinet member for corporate and voluntary services, admitted that it was “difficult to evaluate how fit for purpose these vehicles were at any one time”.

Identifying the problem is one thing, but dealing with the issue is an entirely different matter. Thankfully for local taxpayers, the 2010 transport review wasn’t just wasted paper but was actually acted upon. Croydon Council began a pilot scheme with Zipcar, the UK’s largest pay-as-you-go car network.

“The idea is simple”, said Cllr Bashford, “rather than owning a car outright or leasing a fleet, we have exclusive access to 23 vehicles during standard working hours”. By using local transport and having access to the cars when they actually need them, rather than frittering money away on an expensive fleet, the council has reported considerable savings:

  • Whilst the annual travel cost was previously an eye-watering £1.3 million, this has been reduced by 42 per cent to £756,000
  • Employee business miles fell by 42 per cent, from 1.1 million to 642,000 miles
  • Council car users have more than halved, as workers were encouraged to use London’s well connected public transport network

These savings are crucial and substantial. The lesson other councils should take from Croydon is that a seemingly small change in behaviour can quickly cut a colossal amount of waste. Councillors and council staff shouldn’t rely on doing things the way they always have because it’s easier and familiar.

Our recent edition of the Bumper Book of Government Waste uncovered other examples of costly transport bills that could be cut:

  • South Yorkshire Fire and Rescue Authority rang up a bill of £40,000 for luxury cars for three executives that few families in the county could afford
  • Liverpool Council took a similar attitude to its residents’ money, spending £90,000 on providing two senior employees with luxury cars, such as a BMW and an Alfa Romeo
  • Department of Energy & Climate change spent £176,000 on taxis for ministers in just 6 months
  • Department of Transport, despite running huge campaigns encouraging cycling, spent £97,875 on taxis between 2010-11
  • Ministry of Justice spent £4.5 million on taxi firms for moving prison staff and inmates around the country, a beyond-belief bill that must be cut

Croydon announced plans to increase Council Tax this year. Officials defended the added cost to residents by saying it was necessary to “protect frontline services”. But just looking at their transport savings shows how easily and quickly big savings can be made. Indeed, the saving of £544,000 is the equivalent of the Band D Council Tax bill for 464 families in Croydon.

When the Council can reduce just one bill by 42 per cent with some fresh thinking, claims that a Council Tax rise is necessary simply won’t wash with Croydon taxpayers.

New research shows potential for serious cuts to Stamp Duty
Aug 2013 16
  • New report shows how Stamp Duty could be simplified and cut without significantly impacting revenue to the Treasury
  • LSE research shows that cutting Stamp Duty significantly increases the number of housing transactions
  • Analysis from Walbrook Economics shows how an increase in transactions would mean new tax receipts and mitigate the cost of cutting Stamp Duty Land Tax
The Tax Payers’ Alliance (TPA) believes that Stamp Duty is an unfair double tax and should eventually be abolished. It stops young people buying a home and starting a family; discourages elderly people from downsizing and makes it harder for people to move to new places for new jobs. The TPA recently launched the Stamp Out Stamp Duty campaign calling for a cut in Stamp Duty, but new analysis shows that substantial reforms to ease the burden on home-buyers and limit the economic distortions created by the tax are possible with little or even no impact on overall tax receipts.
Key findings of this research:
  • Stamp Duty Land Tax raised £6.1bn in 2011/12 with residential property accounting for £4.2bn of that total. This represents 0.8 per cent of the £549bn of taxes raised in that year.
  • Work by Best and Kleven in their recent paper, ‘Housing market Responses to Transaction Taxes; Evidence From Notches and Stimulus in the UK (June 2013)’, clearly demonstrates a link between Stamp Duty transaction tax rates and valuations and activity levels. Reducing the rate of Stamp Duty by 1 per cent has increased volumes by 20% over a 16 month time frame in the past, with a permanent positive effect in the longer term.
  • Walbrook Economics estimate around 1.1m jobs are dependent directly and indirectly on the housing market. The fall in housing activity has cost 80,000 construction jobs and 80,000 to 100,000 associated positions in other trades.
  • They estimate that the decline in transaction volumes has cost the Treasury in excess of £1.3bn p.a. in lost Income Tax and National Insurance. VAT receipts will also be affected by the reduction in economic activity and their estimate is that the decline in transactions has reduced VAT receipts by £1.75bn p.a.
  • Stamp Duty accounts for less than 30% of the total tax receipts associated with housing transactions overall. Therefore – if higher tax rates reduce transaction volumes – higher receipts from other taxes, as well as more people paying the remaining Stamp Duty rates, will mitigate the loss in revenue when Stamp Duty is cut.
The TPA presents three proposals, all of which are designed to simplify Stamp Duty and reduce the burden on home-buyers:
  • Proposal 1 – Move to a marginal tax: The slab rate structure of Stamp Duty is unfair and creates enormous distortions. If people only paid each rate on the value above its threshold, rather than paying the highest rate for which their property is liable on the entire value, that would be a substantial tax cut and remove those anomalies. This proposal would particularly benefit those at the middle to low end of the market.
  • Proposal 2 – Double the thresholds: Stamp Duty currently has 5 rates, between 1% and 7%. If the thresholds were doubled, 77% of all transactions in 2011/12 would have been exempt from any Stamp Duty Land Tax.  This proposal would also particularly benefit those at the middle to low end of the market.
  • Proposal 3 – Halve the rates: Halving Stamp Duty rates would send a clear signal to householders that the Government was determined to encourage home ownership and mobility, and would benefit all home-buyers.

Each of these proposals would provide a substantial economic stimulus at little or no cost to the Exchequer. As the economy is finally showing some signs of recovery, this is an ideal time to act and cut Stamp Duty, before it becomes even more onerous.

Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“Stamp Duty is an unfair double tax that stops young people buying a home and starting a family, discourages elderly people from downsizing and makes it harder to move to new places for new jobs. The Government could cut Stamp Duty with a limited impact on the amount of money going into the Treasury’s coffers, as lower taxes would encourage more people to move and therefore increase the number of transactions being taxed. Politicians should seize this golden opportunity to reduce the burden and make things easier for the hundreds of thousands of people looking to buy or sell a home each year.”

Stamp Out Stamp Duty
Aug 2013 06

More than a quarter of home-buyers are now getting hit with a Stamp Duty bill for £7,500 or more, paying the punitive 3 per cent rate.

Stamp Duty is a challenging obstacle in the way of first-time buyers who dream of owning their own home. It also creates problems for anyone with a growing family and anyone who needs to move to take a new job. And it discourages elderly people from downsizing to a smaller property more suitable for their needs.

PLEASE CLICK HERE TO WRITE TO YOUR MP

The structure of the tax is a mess. The two major recent reviews of the tax system – the 2020 Tax Commission, from the TaxPayers’ Alliance and the Institute of Directors, and the Mirrlees Review from the Institute for Fiscal Studies – concluded that it should be abolished.

We are launching a new campaign – Stamp Out Stamp Duty – to do something about it. Our message is simple: the Government should cut Stamp Duty. New TaxPayers’ Alliance research out today shows how many people are affected by punitive rates of Stamp Duty; we are organising grassroots events around the country; and we need your help to put pressure on the politicians:

PLEASE CLICK HERE TO HELP US STAMP OUT STAMP DUTY

Once you have done that, there are other ways to help:

1. Please let your friends and family know about the campaign and encourage them to write to their MP, through the StampOutStampDuty.org website.
2. Let us know if you would be interested in organising a grassroots stall letting people know about the campaign in your area.

You can download the full research showing how much people pay at different rates in different areas here.

Serious Fraud Office investigates Welsh Government
Jul 2013 18

The Welsh Audit Office (WAO) has referred the sale of taxpayer owned land to the Serious Fraud Office. The Regeneration Investment Fund for Wales (RIFW) which is intended to generate investment in urban development, and is overseen by the Welsh Government, has been accused of selling off land that could have generated tens of millions more for Welsh taxpayers.

The WAO is focusing specifically on the case that the land was compiled into one property portfolio and then sold privately, rather than at a public auction. The Welsh Government has previously defended the sale of land to the Guernsey based company ‘South Wales Land Developments’.

The land which ranged from a brown field site in the South Wales Valleys, a section of a business park in Newport, also included 120 acres of farmland neighbouring the exclusive village of Lisvane in Cardiff where properties can fetch over £2m. The land in Lisvane was initially valued at an agriculture rate of £15,000 per acre but a few months later was included in Cardiff Council’s planning blueprint increasing the land value to a potential £1m per acre. Several other sites throughout Wales having similar figures attached.

There are a number of clawback mechanisms, however the BBC reports that it is no more than 50% of the increase. The Welsh Government has now suspended the joint Welsh Government and European funded RIFW and has launch two internal enquires. This is just another example of politicians burning our money and supports the argument that the Welsh Government is not fit for purpose

‘Stop the Energy Swindle’ hits Warrington
Jul 2013 15

On a scorching hot day last Saturday, TPA supporters met in Warrington to talk to local people about our ‘Stop the Energy Swindle’ campaign – people who are sick and tired of paying over the odds for their energy bills. Although the weather may have been glorious, they still remembered the cold winter and the cold spring we had all just endured. Many had just received bills are were surprised just how high they were. 

“If all you do is complain to your family and friends and then do nothing about it, don’t be surprised if nothing changes”, said one  of the people we spoke to. “I’ll be writing”, said many passers by.

Local TPA supporter, David Hartley, said, “All we can do is present people with the facts and make it easy for them to write to their MP. Ordinary people don’t know what’s going on. It’s great to be in a position to talk to them and also give them something practical to do.”

David’s view is the view of all the people who have helped us run our street stalls. We are in Salisbury tomorrow, and then in Darlington and Swansea on Saturday, and in Birmingham on Wednesday next week. If you would like to help on those stalls, or perhaps run one yourself, please contact National Grassroots Coordinator, Andrew Allison.

If you haven’t done so already, please write to your MP using the website energyswindle.org.

IPSA’s proposed pay hike for MPs is totally unpalatable
Jul 2013 11

Reacting to the proposals announced by IPSA this morningMatthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“The idea of hiking MPs’ pay when everyone else has been suffering such a squeeze on their earnings is totally unpalatable. MPs do an important job and work hard, but they already earn nearly three times the national average and more than most of their European counterparts.

“The extensive research commissioned by IPSA has demonstrated that people think the current level of pay to be broadly fair, so this announcement amounts to an unaccountable quango putting up two fingers to the British public.

“IPSA is right to be reforming the gold-plated parliamentary pensions and cutting golden goodbyes for retiring or defeated MPs, but it beggars belief that they have come up with a plan that will increase the cost of our politicians when everyone’s budgets are under such pressure.

“I hope that IPSA will reflect on the reaction to their proposals and come back with fresh plans which will be acceptable to the taxpayers picking up the bill.”

 

 IPSA commissioned ComRes to undertake extensive public opinion research into the issue of MPs’ remuneration, involving two full surveys of more than 2,000 people, four focus groups and two Citizens’ Juries. The 165-page report from ComRes could not have been clearer in its conclusion:

“Most people think that an MP’s salary is broadly fair once they have reflected on the nature of the work and comparative pay scales of other public sector workers… There is very little appetite for increasing the pay of MPs.”

Read the report in full here 

Revealed: Brussels gives environmentalists €100m to support expensive energy taxes
Jul 2013 05

Following the launch of Stop the Energy Swindle, our campaign fighting the taxes pushing up family and business energy bills, we can reveal that £86 million has been handed to environmentalist campaigns in the UK and the rest of the European Union since 1997. British taxpayers have paid for around £8.6 million of this budget.

Taxpayers are paying twice: once for the grants, and again in higher energy bills caused by successful environmentalist campaigns for energy taxes and new regulations.

Click here to read the report including a full list of funded groups

The key findings of this research are:

  • Total EU funding to environmentalist groups has been over €100 million since 1997, around £86 million at the current exchange rate.
  • Based on Britain’s share of gross contributions to the EU budget, that is around £8.6 million.
  • 25 groups have received more than €1 million eachup from 19 groups in the past year alone, including Friends of the Earth (£5.8 million) and the Climate Action Network (£2.2 million).
  • The European Environmental Bureau has received the most funding, at nearly €12 million (£10 million). With nearly 60 per cent of its funding coming from the public sector the organisation cannot be considered as a meaningfully independent non-governmental organisation.

This funding is an unfair subsidy at the expense of many people who may not agree with the environmentalist campaigns’ objectives:

  • Many environmentalist campaigns are largely funded with money raised in taxes and have an increasingly direct role in public sector decision making. Their status as true non-governmental organisations has been undermined and they should be subject to greater transparency.
  • Environmentalist campaigning often ends up colluding with commercial interests. Groups pressing for greater regulations create profits for some businesses and costs for others. Those costs are often passed on to consumers.
  • Taxpayer funded lobbying and political campaigning does not represent any independent economic or popular interest. It promotes the priorities of politicians or officials and allows them to cement or expand their existing influence. It acts to reinforce existing political judgements.
  • The organisations funded by LIFE+ also take political positions that contradict Britain’s interests, though they are in line with the policy goals of the European Union institutions.
Matthew Sinclair, Director of the TaxPayers’ Alliance, said:
It is a disgusting waste for Brussels to spend our money funding their pet environmentalists like Friends of the Earth. This is nothing more than a pathetic attempt to put a democratic gloss on fat subsidies for special interests in favoured industries like wind power. It would be funny if it was not so expensive for families already struggling to pay their bills. Taxpayer subsidies for radical environmentalists need to end. Politicians should be looking to put in place a more affordable energy policy rather than caving in to demands from their sock puppets for ever more onerous taxes and regulations.
COMMENT: Our MPs should want to represent the people, not pick up bigger pay packets
Jul 2013 02

Following suggestions that MPs should be given a 10 per cent pay rise, John O’ Connell argues against the increase in the Yorkshire post:

WHEN George Osborne delivered the Spending Review last week, he said that there would be a restriction of one per cent on public sector pay increases in the near future. On top of that, he called for an end to incremental pay increases. Both were welcome moves. Many public sector bodies have been dodging the earlier pay freeze, announced when the coalition came to power in 2010, by moving staff up within existing pay bands.

Click here to continue reading the full article

TaxPayers’ Alliance responds to suggestions MPs should receive £7,500 pay rise
Jul 2013 01

Responding to reports that the Independent Parliamentary Standards Authority (Ipsa) is considering setting a pay rise for MPs of around £7,500, taking the salary to £75,000, Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“MPs are already very well paid both in terms of European politicians and the average salary in this country.

“It would be particularly egregious for politicians to be handed a whopping great pay rise while hard-pressed taxpayers tighten their own belts.

“Ipsa must recognise that its own polling shows the public simply do not support an increase, nor would it be consistent for MPs to take a rise while rightly freezing pay elsewhere in the public sector.”

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