Stephen Hodgson

Archive for the ‘Tax’ Category

Today is Budget day and a key milestone before the General Election.

Yesterday Conservative Party chairman Eric Pickles announced that he wants the public to help wade through the detail of the Budget in a “crowdsourcing” initiative – a ‘many hands make light work’ approach via the Internet.

Eric Pickles writes:

Tomorrow we have what will hopefully be this Government’s last ever Budget. We all know what Labour’s Budgets are like by now – they’ll go for the headlines with a giveaway of glittering goodies, whilst stashing away all the nasty stuff into the small print.

Wading through all this small print ourselves is a huge job. This year we’ve decided to do something a bit different – we’re going to crowdsource our response to the Budget. Once the Budget’s out, we’ll publish it in a simple format as soon as possible so you can have a good dig into it. The Treasury has hundreds of civil servants working on all this and there’s no way we can match their resources – so it’s important for as many of you as possible to lend a hand in analysing the detail.

All you have to do is log on to Conservatives.com tomorrow afternoon, have a look, and start picking out anything that might be misleading or hidden away. Together, we can make sure we hold this Government to account over its economic incompetence.

As someone who works in both politics and in tax, Budget day is always an event for me and this initiative will make today even more interesting than usual, as well as speeding up the process of spotting the small print and hidden tax rises.

There has been a lot of bleating in the last few days by Labour politicians about the role of Conservative Party Deputy Chairman Lord Ashcroft in financing the Conservative campaign since he revealed that he is a ‘non dom’ (someone who doesn’t pay UK tax on overseas earnings because of overseas heritage). Alan Johnson, the Home Secretary, has even said that the idea of a non dom donating money to British politics is ‘unpatriotic‘. All this despite the Labour Party being far more reliant on non dom donors than the Conservative Party. Labour’s high-rolling non dom donors include Lord Paul, Lakshmi Mittal, Sir Ronald Cohen, Sir Christopher Ondaatje, Sir Gulam Noon, Mahmoud Khayami and Dr David Potter. Since 2001 Labour have received £10m of donations from wealthy non doms. In the same period, the Conservatives have received £5m from Lord Ashcroft.

Between 2001 and 2008 wealthy Labour non dom Lord Paul claimed £281,000 in Lords expenses. During that time Lord Ashcroft didn’t claim a penny in Lords expenses (regardless of the fact he attended the Lords).

Labour politicians would have the public believe that Lord Ashcroft has untold power and influence over the Conservative Party, especially in marginal seats like Loughborough. Loughborough MP Andy Reed has repeatedly said that Lord Ashcroft has a big influence in Loughborough (in fact, he said it again just yesterday). Last year Andy Reed even accused one local Conservative prospective MP – Ross Grant in Leicester South – of ‘laundering’ money on behalf of Lord Ashcroft!

The truth of campaign funding in Loughborough was revealed in an article in Saturday’s Independent (27 February 2010, published online in part).

The Independent revealed that just 18 percent of money spent by the Conservatives in marginal seats is funded by Lord Ashcroft, with the other 82 percent being money raised locally.

The Independent print edition even lists local party spending for the years 2007 and 2008 (combined) across the 55 most marginal seats in the country. The Independent’s findings in relation to Loughborough are as follows:

Loughborough Conservatives Total Income: £45,676
of which donations from Lord Ashcroft: £11,778

Loughborough Labour Total Income: £51,430

Loughborough MP Andy Reed also claims the Parliamentary ‘Communications Allowance’ expense. He has claimed an average of £9,348 of the £10,000 annual allowance producing and distributing his annual report. The cost of the local Conservative candidate’s annual report has to come out of general donations. That puts like-for-like spending for the time period examined by the Independent at:

Loughborough Conservatives: £45,676

Loughborough Labour: £60,778 – £70,126*

* A range is given because the Communications Allowance was not introduced until the 2007/2008 financial year

Labour politicians can complain all they like about Lord Ashcroft’s money but the Labour Party receives more non dom money than the Conservative Party and, in Loughborough, the local Labour Party has, on a like-for-like basis, outspent the local Conservative Party by as much as 53 percent. This must make Labour’s repeated local election defeats in Leicestershire even more frustrating and bitter.

David Cameron has said that if the Conservatives are elected they will change the law so that all politicians sitting in the House of Commons and the House of Lords must pay full UK tax. Gordon Brown hasn’t made any similar promise. The Conservatives have also pledged to scrap the ‘Communications Allowance’ which allows sitting MPs to produce and distribute literature at taxpayers’ expense.

Loughborough’s second biggest employer and Britain’s second largest pharmaceutical company – AstraZeneca – has announced that its Loughborough site will close by the end of 2011. The site employs 1,200 people, around 800 of whom are thought to live in Charnwood.

As of January 2010, the official measure of unemployment in Loughborough (as a constituency) showed 2,043 people were unemployed. The loss of a further 1,200 jobs in Loughborough will push unemployment in the area to almost 3,250 people. There will be the inevitable knock-on effects for other parts of the Loughborough economy as spending in the town and surrounding areas falls.

This is devastating news for Loughborough and also for Charnwood and for Leicestershire.

In the wake of this announcement it is impossible to ignore the role of the present Labour government in hurting enterprise and jobs across the UK. The Labour government has created a tax and regulatory regime which has made it increasingly difficult for large businesses to operate competitively in the UK and the pharmaceuticals industry is particularly sensitive to tax and regulation. Just last week AstraZeneca agreed to pay £505m to HM Revenue & Customs to settle an on-going UK tax dispute – that’s five times more than the £100m that the company invested in its Loughborough site over the last 10 years. Most of that money will now be spent paying off the government’s record debt – or servicing the interest on that debt. We can’t go on like this.

On Saturday Conservative Shadow Chancellor George Osborne announced that, if elected, the Conservatives would unveil an emergency enterprise budget within 50 days of forming the new government. The top rate of corporation tax would be reduced from 28 percent to 25 percent and the lower rate of corporation tax would be reduced to 20 percent. These are tax cuts for businesses that would come within just weeks of a Conservative election victory and which would signal to businesses – both large and small – that the UK is enterprise-friendly and open for business.

It’s impossible to say that an emergency enterprise budget might reverse AstraZeneca’s decision but we can be confident that it would bolster both the financial position and the morale of employers and enterprises of all sizes – and the knock-on effect is likely to be that jobs are saved and new jobs are created across the UK.

The Times reports that Lib Dem Treasury spokesman Vince Cable today referred to Conservative peer Lord Ashcroft as a “non-dom” in the House of Commons (taking advantage of parliamentary privilege, which means Cable’s claim cannot be challenged in court).

There seems to be growing controversy about the role of non-doms in UK politics because they enjoy UK tax advantages that most UK residents (who are UK domiciled) don’t enjoy. Just days ago David Cameron pledged that under a Conservative government all MPs and peers would have to pay full UK tax and non-doms in Parliament would effectively lose the tax advantages of being non-domiciled.

Loughborough MP Andy Reed is also concerned the involvement of non-doms in UK politics – which he describes as “serious for democracy”. Mr Reed’s concern focuses on Conservative peer Lord Ashcroft.

It is not publicly known if Lord Ashcroft is a non-dom (and Vince Cable didn’t produce any evidence today), however, we do know that Gordon Brown confidante and Labour peer Lord Paul (who recently stepped down at Deputy Speaker of the House of Lords because of questions about £38,000 of expenses) and Labour supporter and packaged foods tycoon Sir Gulam Noon are non-doms. Lord Paul and Sir Gulam are key Labour supporters and donors yet they are non-doms.

If Loughborough MP Andy Reed is seriously concerned about the involvement of non-doms in UK politics – as members of the House of Lords or as donors or otherwise – then perhaps he should make his concerns known to Gordon Brown and urge Gordon Brown and the Labour Party to cut their ties with non-doms. However, I don’t hold out much hope that Andy Reed will do this: (i) because Gordon Brown has recently rewarded Lord Paul by making him a privy counsellor and (ii) because Andy Reed is a hypocrite.

Today’s Pre Budget Report was correctly labelled by George Osborne as more of a “Pre Election Report”. Alistair Darling avoided taking the decisions necessary to start to repair Britain’s ruined economy and reduce the record levels of public debt – clearly running scared of being open with the public so close to the General Election. However, it’s already clear the interest payments on the nation’s debt will haunt future generations for years and severely stifle any economic recovery.

Anyone who earns more than £7,000 will see their income taxed at a minimum marginal rate of 32 percent following National Insurance increases. And at a time of record youth unemployment the Chancellor’s Employer’s National Insurance increases will also make it considerably more expensive for businesses to employ staff – something that has rightly been described as a “tax on jobs”. Unemployment in Loughborough almost doubled between September 2008 and November 2009 and Labour’s “solution” is to make it more difficult and expensive for employers to take on staff.

But despite huge tax increases, Brown and Darling laid out plans to continue borrowing and spending money that they don’t have – in the process doubling the national debt to £1.5 trillion. You don’t have to be an expert to work out that the basic laws of maths and economics mean the government’s current plans will result in the country running out of money. What makes this scenario even more depressing is that, as chancellor, Gordon Brown wasted the good years from 1997 to 2007 during which he could have managed public spending and put money aside for any economic shock. Incredibly Brown and Darling are still in denial about the state of the economy – with Darling claiming that he was presenting the Pre Budget Report “from a position of strength” whilst simultaneously admitting the economy has shrunk by a far greater amount than forecast and that the UK is the only G20 economy in recession!

Families in Loughborough will pay at least £370 a year more in taxes if Gordon Brown wins the General Election yet not a penny of this tax rise will be used to pay down the record public debt. Low paid public sector workers will be particularly hard hit with a combination of a pay freeze and large increases in National Insurance and VAT – meaning a guaranteed real terms reduction in disposable income. Loughborough’s incumbent Labour MP Andy Reed has said he “genuinely welcomes the overall direction” of these measures. I doubt people in Loughborough share his views.

We need an open and straightforward government that recognises the country’s dire economic state and which is willing to implement the changes we radically need to get the economy back on-track such as pursuing the significant efficiency savings needed across all parts of government rather than punishing ordinary working people for the government’s reckless borrowing by aggressively increasing taxes on anyone earning more than £20,000. We need a Conservative government which will repair our broken society and our broken economy. It will come as no surprise to readers that I say the only way this will happen is with the election of Nicky Morgan as the Conservative MP for Loughborough and the election of David Cameron as Prime Minister.