Apr 2008 24

We’ve already responded to the story that two new bosses for the failing National Programme for IT are going to be appointed at a cost of nearly half a million pounds a year in salaries alone, from the Telegraph report:

"Matthew Elliot, the chief executive of The TaxPayers’ Alliance, said: "The direct, centralised management of the NHS is a massive task that no individual can seriously manage, and that flawed structure has undoubtedly contributed to the disastrous mismanagement of large-scale NHS projects.

"Centralisation has created a behemoth that is simply unmanageable – and patients and taxpayers are paying the price.""

The NHS is so large, centralised and full of quangoes that it is essentially unmanageable.  The unmanageable NHS has given birth to a monster of an unmanageable project; the NPfIT.  Thought to be the largest IT project in the world and coming in at a mighty £12.4 billion (up from £2.3 billion when the project was being sold, as set out in our report (PDF) on big government projects).  Despite all that money, only 9 per cent of doctors are optimistic about the programme’s potential to improve the NHS and Foundation Trusts have serious concerns about its functionality.

The signs are not good that these new staff will improve things:

"One individual is responsible and accoun-table for the vision, linking with policy, and also the strategic leadership, and one is focused working in partnership with the NHS in the delivery of [IT] programmes."

A lot of the problems with the NPfIT are rooted in the fact that the structure was imposed from the top-down and didn’t really address the needs of doctors.  In that context, is splitting the "vision" and "partnership" roles into different jobs really the best idea?

Apr 2008 24

An interesting new paper, written by economist Keith Marsden and published by the Centre for Policy Studies, presents further evidence of how smaller governments perform better on a range of measures than do larger governments.

The paper shows how countries with low taxes and spending relative to GDP enjoy faster economic and employment growth, lower debt and higher spending growth on public services (as opposed to income transfers) but do not suffer from higher inequality or lower tertiary education rates than countries with higher tax and spending ratios.


Mr Marsden concludes:

These overall findings suggest that the analysis and prescriptions of the early supply-siders were correct. Of course, tax rates and levels, and the size and nature of government interventions, are not the only factors affecting a country’s economic performance. But this evidence rejects the widely-held view that lower taxes inevitably result in cuts in public services, or at best their slower growth, and widening income inequalities.

Although the turmoil in financial markets is preoccupying policy makers at present, they should not lose sight of the stimulus that tax cuts and the pruning of inefficient government programmes could give to sluggish economies. The need to realign some governmental priorities is also revealed.

Apr 2008 24

Two words guaranteed to strike fear into the heart of any good believer in small, efficient government!

Tewkesbury_floodsFurther to our recent work with the Cut the VAT coalition on the amount of money the Treasury made from the 2007 floods, the excellent EUReferendum blog has waded in (apologies for the pun) to criticise us for not mentioning the EU, which of course has control of VAT.

I could reassure Helen and Richard by pointing to my rather solid eurorealist credentials, but rather than talk shop, I’ll make it clear.

Yes, I’m well aware (and the Cut the VAT coalition is, too) that the EU controls VAT rates, and that it is a difficult job wrangling a VAT reduction from the other member states. As it happens, I personally think it is wrong that our democratically elected Parliament does not have control over the taxes levied in this country.

That does not change the fact that reducing VAT would be a good thing, and there is a strong case for doing so – as well as a strong feeling in the relevant industries that it would be beneficial. Ideally I would like to cut it to 0%, but the EU forbids that – something I resent, but not something we can get around on this issue.

In terms of whether we are "blaming the wrong government", I think it is obvious that if you want a reduction in this application of VAT, the first people you need to get to agree are the British Government. It may be difficult to get permission from the EU to do it, but it is absolutely impossible without the British Government on side. That means they must be persuaded before we can get anywhere.

There are carrots to offer them – a VAT cut will help the housing stock, encourage energy saving measures and increase VAT revenues – but you also need a stick, and that stick involves embarassing them as the VAT collecting agents. Using VAT, the Treasury raked in huge amounts of money from the floods and levies taxes on disabled people for essential alterations to their homes – both disgraceful activities that they should be ashamed of.

As it happens, I think the case is so strong – for economic, housing and green reasons as well as those of political embarassment – that there is a decent chance of success on this one. The EU has already dipped its toe in the water by trialling a reduction on the Isle of Man, which resulted in an increase in the amount of money raise in VAT revenues, so they’ve shown some interest in the idea already.

And from Richard and Helen’s eurorealist point of view, what is the worst case scenario? A strong case is built up, good media coverage rallies public support for a VAT cut and a wide coalition from industry is on side. I would like to see that result in lower VAT, but if it doesn’t and the campaign is rebuffed by a Government unable to control its own taxation as a result of the ceding of powers to the EU, then it will make even clearer the sorry state of sovereignty in this country to an influential collection of organisations. The Government and Treasury officials come under pressure to do something popular and beneficial and are frustrated by the fact that they can’t grab those popularity points because they’ve given the power to do so unilaterally away.

I want to see this tax reduced, and I think this is the best way of going about it. If the bare worst that can happen is that the campaign highlights the fact that our democratically elected Government has been emasculated and no longer has control of important tax rates then surely that is a helpful thing to the eurosceptic cause, too. I hope Richard and Helen will be signing up at www.cutthevat.co.uk

Taxpayer funding for political parties – a weak case weakens more
Apr 2008 23

An excellent Policy Exchange report out today has hammered some important nails into the coffin of taxpayer funding for political parties. We’ve long argued that the reason parties are struggling financially is nothing to do with the needs of the modern political industry, and all to do with the fact that they are failing to sell their product to the public.

The fall in voter turnout and the corresponding collapse in donations from the wider public show that people are deeply unattracted by both the behaviour of many politicians and more fundamentally put off by the policies (or in some cases lack of policies) on offer. They are an industry whose product is simply not selling.

So, instead of updating their business model and improving the product to meet what customers want, they have simply decided that their work is perfect, rather it is the modern environment which is wrong. The keystone of that argument is that there has been a political “arms race”, with costly advertising and glossy literature becoming essential and driving costs upwards, beyond what can be covered by donations.

The Policy Exchange paper holes that idea below the water line by calculating that the parties spend the same amount – and less in some cases – than they did 40 years ago. It also rightly points out that there is already huge subsidy of political parties through Special Advisers, party political broadcasts, Short Money, councillors’ allowances and various other sources.

Given the recent spectacle over MPs’ expenses, the public’s attitude to the idea of even more taxpayer funding of political parties is already hostile – this report does a great deal to further that opposition and sweep the legs from under the already dubious argument put forward by politicians who simply aren’t willing to change to engage the public.

Apr 2008 23


All of us here at the TaxPayers’ Alliance would like to wish all our supporters and activists a happy St. George’s Day. 

On this day for England, however, please also spare a thought for the Barnett Formula.

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