The TaxPayers’ Alliance is looking for talented and motivated new staff to be a part of its ambitious plans to grow and drive the policy debate on key fiscal issues in 2013.

In particular, we are seeking a new policy analyst and a new member of the campaign team that manages our engagement with the media and politicians.

Click here for more details and to apply

We today outline how to abolish National Insurance by 2017 to make the tax system simpler and more transparent. National Insurance serves no purpose and our new report sets out a package of measures to merge both employers’ and employees’ contributions with Income Tax. This detailed and extensive transition plan comes in the run up to the Autumn Statement and anticipates the long-awaited launch of the Office for Tax Simplification’s report into simplifying National Insurance, which itself will inform George Osborne’s policy consultation before next year’s Budget.

How to abolish National Insurance builds on the work of the 2020 Tax Commission, a joint project with the Institute of Directors. This research is the first in a series of Towards 2020 papers, which will show how the proposals in The Single Income Tax, the final report of the 2020 Tax Commission, can be achieved in practical and realistic individual steps.

This exciting new paper:

• Shows how to abolish National Insurance without pensioners and the self-employed losing out. It contains a detailed guide showing that pensioners, the self-employed and other groups will all receive a tax cut
• Reveals that 79 per cent of Institute of Directors members agree that National Insurance and Income Tax should be fully merged
• Exposes that 72 per cent of bosses think that high rates of National Insurance reduce the wages they can pay staff

Click here to read the full report

The report recommends that from April 2017 National Insurance and Income Tax should be fully merged:

• Self-employed rates of National Insurance and Income Tax should be replaced with a single rate of 30 per cent in April 2017.
• The standard rates of Income Tax at 20 per cent plus employer’s and employee’s National Insurance should be replaced with a single rate of 36 per cent in April 2017. It should be cut to 34 per cent in 2018 and cut again to 32 per cent in 2019.
• The 40 per cent higher rate of Income Tax should be cut to 36 per cent in 2018 and again to 33 per cent in 2019.
• From April 2020, all rates should be replaced with a Single Income Tax of 30 per cent.
• Those aged 60 or over on April 2017 (ie, born before April 1957) should be subject to a different set of tax rates when they reach the State Pension Age to protect their expectation of advantageous rates as a result of being exempt or expecting to become exempt from employee’s National Insurance.

To achieve this the following measures would be needed to make the system more transparent from April 2013 and then simplified from April 2015:

• National Insurance should immediately be renamed to accurately describe its genuine function.
• National Insurance should immediately be made transparent so employees can see on their payslips how much income tax they pay, how much employee’s National Insurance they pay, and how much employer’s National Insurance their employers pay on their behalf. All three figures should be added up into a Total Income Taxes figure.
• As an immediate simplification measure, employer’s and employee’s National Insurance rates should be equalised by cutting both to 11 per cent from April 2013 and employer’s and employee’s earnings thresholds should also be equalised by raising the employer’s level from £144 per week to match the employee’s level of £146 per week. From 2015 the main rates of National Insurance should be cut again to 10 per cent.
• The self-employed flat rate of £2.65 per week should be abolished and the rate on profits should be increased from 9 to 10 per cent, both in 2015.
• The Social Security (Categorisation of Earners) Regulations 1978 should be abolished in 2015 so that only one set of rules defines earnings across both Income Tax and National Insurance.
• National Insurance should also be changed in 2015 from a periodic, per-job applicability with weekly thresholds to an annual, per-person charge to match Income Tax. Employer’s National Insurance should continue to be assessed per-job.
• The Upper Earnings Limit for Employee’s National Insurance contributions should be aligned with the threshold for the higher rate of Income Tax. Contributions above this limit, currently 2 per cent, should be abolished in 2015.
• Voluntary National Insurance contributions should be abolished in 2015.

Click here to read the full report

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

“We desperately need a simpler, fairer tax system that works for families and businesses. Abolishing National Insurance will make taxes much more transparent and people will be able to see exactly what they hand over to the taxman when they receive their pay cheque. It would also remove a massive burden from Britain’s businesses, which are desperate to use their money to take on new staff and expand. The Government must focus on creating the conditions for economic growth, which will mean more jobs and ease the pressure on families struggling to make ends meet. But to achieve that we need wholesale tax reform, and the changes proposed in this report are a realistic first step towards restoring our economic fortunes while delivering a system taxpayers can trust.”

We can today reveal that the Department of Energy and Climate Change (DECC) has spent over £1.5 million on 3,496 flights over the last two and half years. Of these trips, 362 werebusiness class at a cost of nearly £600,000. The destinations of these flights include far-flung locations from Johannesburg to Jakarta while DECC staff have even flown business class on flights within the UK. Given that flights produce greenhouse gases, as well as being expensive, it is difficult to reconcile DECC’s rhetoric on climate change with the number of flights the department has taken.

Click here to read the full report

The key findings of this research are:

• The Department of Energy and Climate Change has spent over £1.5 million on 3,496 flights over the last two and half years. This includes the 2010-11 and 2011-12 financial years, and up to the end of August of the 2012-13 financial year.
• 362 flights were taken in business class over that period at a total cost of nearly £600,000.
• 3,017 flights were taken in economy class over that period at a total cost of over £835,000.
• DECC spent just over £250,000 on domestic flights over the period. 39 of these flights were taken in business class. This includes a £460 flight from Aberdeen to London, and two flights between Manchester and London that cost £188 each.
• Business class flights were booked between London other cities in the UK such as Glasgow and Edinburgh.
• The most expensive individual flight taken was a business class booking from Cancun to London, costing £5,792. Two business class flights from London to Cape Town cost £5,396 each, while two flights to Santiago cost £5,190 each.
• One flight from London to Lisbon was taken on first class at a cost of £500.
• Other destinations for DECC flights that cost over £4,000 included: Auckland, Cape Town, Nairobi, Jakarta, Washington, New York, Tokyo and Hong Kong.
• Business class flights were booked between London and other cities in Europe such as Budapest (£699), Madrid (£271), Cologne (£370), and Berlin (£474).

Click here to read the full report

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

“Despite being one of the departments making air travel more expensive for people paying their own way, the Department of Energy and Climate has spent an astonishing amount of taxpayers’ money on flights. This looks like breathtaking hypocrisy and extravagant waste from a department which can’t be trusted with more and more of our money, while others work hard to make savings.

“Officials urgently need to explain why they spend so much money on so many business class flights in particular. If Ministers can’t provide a satisfactory explanation for the number and cost of the air fares their department is racking up, then there have to be serious sanctions for officials who have left taxpayers with such an unfair bill.”

We have today joined forces with the British Retail Consortium (BRC) in a major new campaign calling on the Government to scrap the proposed increase in business rates due to come in next April. It coincides with the publication of new survey evidence revealing that thousands of jobs could be at risk if the rise goes ahead.

After punishing rises of 4.6 per cent in 2011 and 5.6 per cent in 2012, the proposed 2.6 per cent hike for next year poses a serious threat to the continued existence of shops on high streets up and down the UK, which could not only lead to reduced consumer choice, but also destroy jobs.

The campaign website, www.FreezeBusinessRates.org, enables supporters to lobby their Member of Parliament with an email asking them to back the campaign for a freeze in business rates.

Results of a new survey of BRC members – with respondents representing nearly a third of the British retail market and employing 900,000 people – have sounded alarm bells about the impact of the planned rise. Released to coincide with the launch of the campaign, it finds that:

• 70 per cent say another rates hike would force them to cut back on job creation and/or curtail investment in existing or new stores
• 15 per cent say that they would be forced to close stores

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

“Britain’s high streets have been suffering in recent years and excessive business rates make it much harder for stores to survive and prosper. Businesses of all kinds struggle with rates as they are a major bill that they have to pay in good times and bad, whether or not they are making the money to pay it. Freezing business rates would be a great way of letting firms grow, prosper and create new jobs.

“At the TaxPayers’ Alliance, we are very excited to be working with the British Retail Consortium to make the case that business rates should be frozen. High taxes are getting in the way of economic growth and a freeze is a reasonable proposal to help companies fighting their way out of the recession. Hopefully direct pressure from their constituents will encourage MPs to back action for lower rates.

“If MPs want to show that they are on the side of small businesses in their area, backing a freeze in business rates is a great way to do it.”

Stephen Robertson, Director General of the British Retail Consortium, added:

“MPs who care about their constituencies will recognise the importance of their high streets and the need to take action to prevent more shops falling empty. They will want to avoid the blow to investment and job creation that chief executives tell us would come from a third successive huge hike in business rates.

“I urge MPs of all parties to encourage the Chancellor to recognise that retail has already paid more than its fair share in recent years and to freeze business rates in 2013.

“The Government should also honour its commitment to review the mechanism for setting rates increases and introduce a fairer, more sustainable formula for the future.”

Taking part in City A.M’s forum debate with the Institute for Public Policy Research’s Clare McNeil, TPA Chief Executive Matthew Sinclair argues that we don’t need more wind farm (subsidies).

NO

Matthew Sinclair

If wind turbines were affordable, they wouldn’t need big subsidies. Wind power suppliers benefit not just from the carbon price – at around €8 (£6.50) per tonne of C02 – but also the renewables obligation of around £40 per megawatt hour, which is the premium generators get when they sell renewable energy.

Click here to read the fill debate

We can today reveal that trade unions received at least £113 million in subsidies from taxpayers in 2011-12. The value of this subsidy has been exposed in the most extensive survey of national and local government ever carried out by the TPA. It shows that trade unions received an estimated £92 million in paid staff time (facility time) plus £21 million in direct payments in 2011-12. The research also demonstrates for the first time that public bodies are often deducting trade union subscriptions in the payroll process without charging the unions for that additional administrative support, despite union claims to the contrary.

The Cabinet office has announced that it plans to curb the amount of facility time within the Civil Service. Yet this report demonstrates why these reforms must go further to include all of the public sector rather than just Whitehall and its quangos. Last month we published a legal briefing that made it clear that public sector bodies are failing to control facility time as envisaged by employment law. This latest report reveals that hundreds of public sector bodies are still failing to even record the extent of facility time.

The key findings of this report are:

• Trade unions received a subsidy of at least £113 million at taxpayers’ expense in 2011-12. This is made up of an estimated £92 million in paid staff time, plus£21 million in direct payments.
• At least 3,041 full-time equivalent public sector staff worked on trade union activities or duties at taxpayers’ expense in 2011-12.
• While total public sector employment fell by 6.5 per cent from 2011 Q2 to 2012 Q2,  the number of full-time equivalent staff working on union duties in bodies which provided data in both years declined from 3,065 to 2,977. That is a fall of less than three per cent which suggests the proportion of public sector staff working for trade unions may be rising.
• The number of full-time equivalent staff provided to trade unions is more than2.5 times as large as the workforce of HM Treasury.
• 480 public sector organisations (out of the 1,296 surveyed) either did not formally record facility time in 2011-12 or did not provide a clear response for at least one union, which means the estimate of 3,041 staff is almost certainly an underestimate.
• 1,087 public sector organisations deduct membership subscriptions for trade unions. Of those, only 21 per cent, or 233 bodies, charged the unions for that service. The most common charge was 2.5 per cent, applied by 74 organisations.
• In response to a parliamentary question, the Government has released an estimate that facility time is equivalent to 0.14 per cent of the total annual pay bill in the public sector, against 0.04 per cent in the private sector. 0.14 per cent of the public sector pay bill was around £240 million in 2011-12.  If the number of public sector staff found in this research to be working for the trade unions in 2011-12 were reduced in line with that estimate of the difference between the public and private sectors, 2,172 full-time equivalent public sector staff could return to work.
• The organisation with the highest number of staff working for trade unions was the Department for Work and Pensions with 272 full-time equivalent staff. HMRC had the second highest number with 169 full-time equivalent staff.
• Birmingham City Council was the local authority with the highest number of staff working for trade unions with 70 full-time equivalent staff working on trade union business. The second placed local authority was Nottingham City Council with 27 full-time equivalent staff.
• The quangos with the highest number of staff working for trade unions were the Scottish Prison Service with 34 full-time equivalent staff, Transport for London also with 34 full-time equivalent staff and Remploy with 30 full-time equivalent staff.
• In Wales, the Welsh Government had the highest number of full-time equivalent staff working for the trade unions at 14.
• In Northern Ireland, Belfast Health and Social Care Trust had the highest number of full-time equivalent staff working for the trade unions at 17.
• The police force with the highest number of full-time equivalent staff working for the trade unions (not including the Police Federation) is the Metropolitan Police with 16 full-time equivalent staff.
• The fire service with the highest number of full-time equivalent staff working for the trade unions is East Sussex Fire and Rescue Service with 4 full-time equivalent staff.

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

“It is simply wrong that taxpayers are seeing their money used to pay thousands of trade union activists who organise strikes which disrupt the services they rely on and pay for handsomely. Thousands of staff who should be working for public services are working for the trade unions instead. 

“Managers at too many public sector organisations are completely failing in their responsibility to control these costs and even keep proper records of the subsidies they are providing to the trade unions. Tens of millions of pounds are being wasted and supporting aggressive political campaigns. The Government needs at least to extend the proposed reforms to the entire public sector and cut this scandalous subsidy.”

We have today announced October’s recipients of our monthly awards to celebrate those in positions of power who have done the right – and wrong – thing by the taxpayer.

The man, woman or organisation to be congratulated for saving public money or acting in the interests of the hard-pressed taxpayer is named the TPA’s “Pin-Up of the Month”, whilst whoever is found to have shown the greatest disregard for taxpayers’ cash or their interests is shamed as the TPA’s “Pinhead of the Month”.

October 2012’s Pin-Up of the Month is Lord Hollick, the Labour peer and businessman.

This month he has made a call for the Government to scrap its plans to increase spending on international aid by the Department for International Development (DfID) to the arbitrary figure of 0.7 per cent of national income by the end of the parliament and instead for the basic rate of income tax to be cut. He told the House of Lords on October 22nd:

“I remain unconvinced that a further substantial increase in funding to an arbitrary level of gross national income is either desirable or manageable. If such funds are available, I would prefer to see the proposed increase in funding, equivalent to between 1.5p and 2p on the basic rate of taxation, used to reduce the basic rate of tax in the UK to stimulate demand, reduce the burden of recession on the hard-working squeezed middle and stimulate growth.”

His remarks echo the long-held TPA view that the international aid budget ought to be frozen when other departments are having to reduce their budgets, and that tax cuts should be introduced as a way of stimulating growth.

Meanwhile the TPA’s Pinhead of the Month for October is Cllr John Pollard, the cabinet portfolio holder for Localism, Sustainability and Development on Cornwall Council.

Writing for Public Service Europe Alex Wilds argues that the UK isn’t out of the woods yet despite today’s GDP figures.

Economic growth should always be welcomed. Especially so given the constant stream of dire news we have had over the last few years. The 1 per cent growth figure announced today was the strongest result in a single quarter for five years and exceeded the expectations of most analysts. It will doubtless come as a huge relief to the coalition government after last week’s ‘omnishambles’.

These figures should, however, be viewed with caution. The integrity of new growth figures is always somewhat dubious and when the revised figures are released, there will probably be movement in one direction or another. The one-off lift from Olympics has passed and the working days lost during the last quarter to the Jubilee bank holiday need to be factored in to any conclusions one might draw. Add to this the fact that the economy has grown from a low base, the seemingly eternal eurozone crisis and the United States’ approach to the edge of a fiscal cliff, all of a sudden things do not look so rosy.

Click here to continue reading the full article

Commenting on today’s announcement that the economy grew by 1.0 per cent in the third quarter of 2012, Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said:

“Stronger economic growth than most forecasters expected over the summer is extremely welcome news.

“One quarter of growth doesn’t change the overall picture of a weak and vulnerable recovery. The first estimate for each quarter’s growth should always be taken with a pinch of salt, but the new figures suggest that all those people working hard at companies struggling out of the recession are starting to get results.

“If the Government wants more of this kind of good news then they need to reform our dysfunctional tax system and create the right incentives for people to work, save and invest in Britain.”

The 2020 Tax Commission is a joint project between the TaxPayers’ Alliance and the Institute of Directors. The recommendations of its final report, The Single Income Tax, can be found here.

The TaxPayers’ Alliance (TPA) can today reveal that Government departments could have saved a potential £112 million on their estates bill if all departments were to use space as well as the most efficient departments. The new TPA research also exposes the vast differences in the amount of office space enjoyed by civil servants with the Cabinet Office using 21.7 m² per member of staff – nearly five times more than that of the Department for Communities and Local Government.

Click here to read the full research including breakdowns for all Whitehall departments

Departments based primarily in London, such as the Cabinet Office, may not be able to realise the full potential savings, as rents are far more expensive in the capital. Furthermore, departments that may have recently shut down quangos or ceased to operate a particular function may still be in possession of office space that is currently unoccupied. But Ministers at departments paying more than is necessary should urge their officials to learn from those which have secured better value for office space.

The key findings of this research are:

• Measured by cost per full time equivalent (FTE) staff member, Government departments could have saved a potential £112 million on their estates bill in the final quarter of 2011, if they had matched the cost achieved by the best performing department (HMRC).
• The Cabinet Office had the highest estates cost per FTE, at £6,301. HMRC was the best performing department, which had estates costs of £1,046 per FTE.
• The potential saving of the Cabinet Office matching HMRC could be as much as 83 per cent per FTE.
• The average cost of office space per employee across Government departments was£178 per m² .
• The Treasury had the highest estates cost in the last quarter of 2011 at £335 per m². HMRC had the lowest, at £67 per m².
• The Cabinet Office had the most office space per employee, at 21.7 m² per member of staff.
• The Department for Communities and Local Government had 4.5 m² per employee, making it the most efficient user of office space.

Click here to read the full research including breakdowns for all Whitehall departments

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

“Some departments are failing to do what they can to control their office costs. They are using more space and paying more per square metre than other departments which do a better job of getting value for taxpayers’ money.

“As ministers continue to look for savings in the public services and ask people to pay such high taxes, they must ensure that the departments they are responsible for manage resources like office space carefully. They need to explain why they think their costs have to be so high or take action. Taxpayers expect to see savings made.”

• The TaxPayers’ Alliance has led the way in calling for a reduction in this taxpayer subsidy to the unions
• Francis Maude’s new proposals go a considerable way to improving taxpayer value for money in Whitehall
• More action will still be needed to rein in the subsidy to unions elsewhere in the public sector

We welcome the  news that Cabinet Office Minister Francis Maude is to introduce new limits on the amount of taxpayer-funded time that civil servants can spend on trade union duties and activities.

Over the last few years we have led the way in campaigning for a reduction in the subsidy given to trade unions through taxpayer-funded facility time, which we calculated last year to be worth at least £80 million to the unions across the public sector.

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

“The Government’s proposals to crack down on the use and abuse of facility time by Civil Service staff are hugely welcome. The TaxPayers’ Alliance has long campaigned for the Government to take action to reduce this scandalous subsidy to the unions.

“Taxpayers shouldn’t be funding staff to work for trade unions, providing them with a huge activist base to support strikes and freeing up resources for political campaigns.  

“This move to reduce facility time in Whitehall will save taxpayers millions of pounds, which will be most welcome at a time when hard-pressed families across the UK are having to tighten their belts.

“However, similar action is also going to be required elsewhere in the public sector. Only then will the days of nurses and council staff working full-time for the union instead of doing the job for which they are paid be consigned to history.”

Notes

In September 2012 the TaxPayers’ Alliance published a legal briefing which demonstrated that public sector bodies were failing properly to control taxpayer-funded trade union time. Read the briefing here

At present 0.26% of the Civil Service’s paybill is spent on union representation, and the Cabinet Office propose to bring this down to 0.1%. This figure is 0.04% in the private sector.

Transport Secretary Patrick McLoughlin is facing a new raft of questions today as to whether his department’s case for High Speed Rail 2 (HS2) stacks up, in the wake of the West Coast Main Line (WCML) franchise fiasco.

Fundamental errors in calculations by Department for Transport officials caused the recently-appointed Secretary of State yesterday to abandon the award of the WCML franchise to FirstGroup. Concerns have now been renewed that the Government is proceeding with the HS2 project on the back of similarly-flawed assumptions and calculations.

Our Chief Executive  has today written to Mr McLoughlin outlining the questions that the Department for Transport must answer in order to prove that the cost benefit analysis for HS2 has been rigorous, robust and based on the most up-to-date information.

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

“The serious errors made over the West Coast rail franchise have cost the taxpayer tens of millions of pounds and the whole process is now rightly going to have to start from scratch. So when the Government is intent on spending £32 billion of our money on a project like HS2, we need to be absolutely certain that the go-ahead is not given on the back of similarly flawed calculations, assumptions and projections.

“Yet there are serious questions about the basis on which the Government is proceeding with HS2. Why has the Department for Transport assumed that no business traveller does work on a train? And why is an outdated forecasting model being used to project demand?

“Unless ministers can give credible answers to these and a number of other questions I have posed, taxpayers will have every right to remain anxious that their money is being squandered on a white elephant.”

Click here to read the full letter to Transport Secretary Patrick McLoughlin