George….it’s time to embrace cutting income tax and slashing spending.  That’s a vote winner and it will bring us out of recession a damn sight quicker!

Cutting taxation.

A natural Conservative heartfelt belief.

It’s at our core.

And I hope we start saying it in the election campaign…..but I feel we wont because the Party will fear the attacks from Labour.

The mentality of Brown’s Government is that to raise more revenue it is essential to raise taxation: both in corporation tax and personal tax.  Hence why we saw the rise in personal taxation to 50p on earners above £150,000, (political ‘class war’ issues also played a hand to appease Labour’s traditional hard core vote).

What’s the result of the 50p tax……?  …….higher taxes are yielding LESS revenue as individuals are either using clever accountancy to avoid taxes, they are spending less or some even relocating from the UK, (the infamous Brain Drain).  The rich have less incentive to earn more, and more incentive to dodge tax.

As the Governor of the Bank of England has recognised.  Britain, with the low value of the pound, should be an extremely attractive place to set up business and be a haven for entrepreneurs.  It is also a great time to start, if you have money, to buy and invest in housing and shares as they have hit pretty much rock bottom — pending any seismic future shocks.

So to attract more business and investment to the UK, help turn the tide and bring the economy out of this damaging recession, now is the time that the Government should change tact and CUT TAX IMMEDIATELY. 

Firstly, to cut corporation tax.  Let’s stimulate our business to re-invest and take risks.  Let’s attract more business from abroad, who will of course invest, create much needed jobs, generate more revenue for the exchequer and importantly add to a growing sense of confidence in the business community.  This is surely better to stimulate the ‘engine’ of the economy than build up huge debts and pump money to prop up the economy and create thousands of jobs in the public sector.

Yes, confidence is the key word.  Imagine, a cut in personal taxation today.  It sends a bold message out, injects more money into people’s pockets, which as the slight uplift in retail sales shows, will be followed through into retail spending.  People need confidence and the tax system can be used to stimulate—prod—spur on confidence.  People need that fire lit under them.

This bold move is one that has been achieved in the past.  JFK boldly showed this theory is sound in 1960 and the Irish have clearly demonstrated this with lower corporation tax:  less tax means greater yields.  

And of course we can point to the Thatcher era when low taxes led to increased investment, greater confidence and rising exchequer revenue.  When Chancellor Nigel Lawson cut the top rate of income tax to 40% he unleashed unparalleled wealth creation and the government benefited from taking a smaller piece of a far larger pie. 

But Socialists and Lib Dems disagree vehemently with this and need proof.  Hence hopefully they will learn a lot from the table below taken from official HM Treasury statistics.

Just consider that the richest 1% currently pay 23% of all tax revenues collected.  The richest 5% pay 42% of the tax collected.  Only 11.5% comes from the bottom 50%.  Where should the Government concentrate it’s efforts to stimulate the economy and gain more tax revenue?  It does not take a huge brain to work that out!

“Share of total income liability” is available for selected years.  Expressed as a percentage

Note: from 1999, people taxed as individuals not families

The time has come for the British psyche to realise that the phrase ‘cutting taxes’ does not mean falling exchequer revenues….it means, when done properly, INCREASED exchequer revenues.   Increased revenues means less government debt, it means more employment for all….and guess what….a rise in the general living standards of all.

Let’s hear George Osbourne grab this mantle and if elected, demonstrate these principles in his first budget.

Chancellor Lawson:  He got it…and demonstrated it.  Lower tax = more revenue

Like watching a car speeding headfirst at 90mph towards stationary traffic ahead, so we witness Post Officers voting to strike this Christmas.   An act testament to corporate suicide! 

Dave Ward, Deputy Leader of the CWU, (Communications Workers Union), the man elected to protect Post Office members will precide over the insane position of the post office workers committing a very public suicide.  As workers vote to strike, the sad truth is that their actions threaten the future of the post office, millions of jobs and their Union leadership don’t get the gravity of the action they prescribe.

As companies, small business, individuals fight o overthrow the effects of the toughest recession since the 1930’s, the actions of Post Office workers act as a kick in the teeth of the man & woman on the street.  Many businesses, small, medium and large are depending on Christmas sales boosting revenues enough to keep their business solvent.  Note I say solvent, not making profits, just staying afloat. 

Strike action this Christmas will be the tipping point for many busineeses and individuals to investigate alternative ways to get their deliveries out.  A large proportion may decide never to return their business to the Royal Mail.  Rival delivery operators will rightfully be rubbing their hands in glee.  A large scale move away from the Royal Mail will end the critical mass the Post Office depends on, hence ending the viability of the Royal Mail.  The very jobs a Trade Union seeks to protect will be undermined and lost to an act of madness.

Post Office workers need to search their soul.  Do they really think that in the midst of a devastating recession, at a time which brings some much needed relief and joy to the population, (aka Christmas), that they will win public support.  There is more chance of Sooty the Silent Bear winning the singing competition the ‘X Factor’ or Roland Rat dancing to victory in ’Strictly Come Dancing’.  Recent National Post Office strikes have shown that workers quickly return to work as their pay becomes the priority as their wallets empty and their families have less food on the table and recent history shows they win little concessions for their efforts.

Of course the Royal Mail needs to be modernised.  The whole organisation is in a dire mess, with a pensions deficit throttling its stability, (estimated to be £10 billion in deficit).  But strike action is not the answer.  We live in a digital age where email and instant communication is a priority.  But many businesses still depend on traditional post like Ebay and Amazon.  Both are now reviewing the best methods to get their goods out at Xmas. The Post Office could have a very healthy future but until the industrial militancy to any modernising moves is ended, the Post Office will sink like the Titanic.

Dave Ward, see the light, look after your workers, dont allow the biggest corporate suicide to take place. 

We all want this dreadful recession to end.  Many of us have friends who have been affected by this harsh recession be it, losing their job, falling into debt, having their house re-possessed, destroying their marriage/family life, through the stress of potential redundancy / working longer hours to hold their jobs.  The sooner we see ‘green shoots’ the better.  Alastair Darling has been more encouraging lately as he sees those green shoots emerging and that the UK is back into recovery mode.  He has to be positive to talk up the markets but economic data paints a darker picture and one which shows that whilst the economy is fighting to get out of recession, the dangers of a double dip recession are serious and real.  For that we must all be worried.

Politics is currently in suspended animation.  Everything on hold until the next election.  The Government are deferring key decisions until after that election.  Tough medicine the economy needs NOW is being held until post election….why?….because tough decisions are unpopular and this Government wants to win the next election.  The lack of decision making, total procrastination at the heart of Government is damaging the economy still further.  Let’s have that election today and get on with the job of getting people back to work and this great economy on its path to recovery and prosperity.

Key economic data yesterday painted a worrying position.  Government debt is far worse than expected and spiralling.  Government revenue received through tax receipts is dropping like a stone whilst benefit payments are shooting skywards.  Bank lending, seen as key to small businesses rejuvenation, is again falling.  Banks, several of which this Government now own, (ie we do as British tax payers), are failing in their duty and stated promises to push bank lending again and get the economy moving.  These stated goals are not being implemented and not evident.  Many small businesses are delaying on investment decisions because they cannot get bank funding, (we heard that story from a recent post by Russ Rec).  In the meantime, whilst banks don’t lend, they are grabbing with the other hand.  Credit card rates are rising.  Bank charges reappearing for minuscule errors.  Private household debt the highest of European nations.

Despite the abuse Gordon Brown threw at David Cameron over the Conservatives Spending plans ie branding DC Mr 10%, we now see from leaked Treasury papers that the Government are planning 10% across the board cuts.  Hypocritical is one word Mr Brown!  The politics of dishonesty is never attractive and this electorate have long memories.

Lets make no bones about it, tough spending cuts HAVE to follow.  For the sake of the economy.  Whoever wins power.  Cuts will involved public sector job losses, hence adding to the unemployment queues.  But if we don’t, we are in danger of having to go cap in hand to the IMF for a bail out by them….again!.  They will impose tough conditions to the bail out and cuts could be even more savage.  We all know that UK PLC is in danger of losing its ‘AAA’ credit rating on the world stage. 

Any public sector losses, especially job losses/pay freezes, WILL see the Unions swing into action.  A winter of discontent beckons.  The Post Office have balloted members for strike action.  The Tube Drivers have been striking this year already.  We can expect the nation grinding to a halt at various stages this winter due to Union protests, hence damaging the recovery.  Power workers have threatened walkouts, hence the return of black outs is a real possibility.

So a lot can undermine our economy.  Double dip recession is a real possibility.  But lets take a closer look at the stats……

Our debt situation is horrific.  No over word describes the cancerous, spiralling debt this country is storing up for our children.  Yesterday we learn that bankrupt Britain borrowed £6,000 every second last month.  The Government amassed a humongous £16.1 billion debt in one month…the largest on record.  This was a 63% increase borrowed in the same month last year.  The Government has borrowed £63.5bn since the beginning of the financial year in April.  Britain’s overall debt now stands at £800bn—heading for the £1 trillion mark. That is frightening.

Our nation’s finances are out of control.  This is shameful mismanagement of the economy on a criminal scale.  Quantative easing draws mixed responses from the world’s best economists and whether it is having any effect on the UK economy.  The IMF even stated that they could not assess whether any impact had been made by pumping a huge amount into the economy.  Bank of England data shows that broad money supply grew by just 0.1% in August, after a 1.3% increase in July.  This dragged the annual growth rate down to 12.6% from 14.4% a month earlier, hence demonstrating quantative easing’s limited/zero effect.

It now looks like we are on track to amass a debt of over £200bn by the end of the fiscal year, some predicting an overshoot of Govt Spending targets by £50bn.

With the economy still seeing dire unemployment figures, predictably total tax take over the first five months of the year to the end of August was 11.4% lower compared to the first 5 months of last year, while benefits spending was 9.5% higher.

Net lending to British businesses also fell in July, (by the largest amount since records began).  it fell by £15.5bn, even more sharply than the £3.6bn drop in June.  Why?  Companies paid back more than banks lent.  The figures for August are projected to worsen.

We cannot gamble our nation’’s future any more….for the sake of our children let’s have that election now and let the people decide.

Guest Blog from John Laity on the hot topic of the day….unemployment.  Over to you John………..

——————————

UK unemployment rises to 2.47m

Britain’s jobless rate climbed to its highest in almost 13 years in July and while there were signs the pace of layoffs may be slowing, analysts cautioned dole queues could lengthen for some time yet.

The Office for National Statistics said the number of Britons out of work on the internationally-comparable ILO (International Labour Organisation) measure rose by 210,000 to 2.47 million in the three months to July. That took the jobless rate up to 7.9 per cent, the highest since November 1996.

Unemployment is a lagging indicator and both analysts and policymakers have warned it would continue to rise even as the economy comes out of the worst recession in decades.

Some expect the jobless total to hit three million next year, bad timing for Labour and an election by June.

The number of people claiming unemployment benefit rose by 24,400 to 1.607 million in August, the highest since May 1997.
…So expect more Labour cuts than they can admit to !

The next election is still a long way from being won.  We cannot be complacent.  But it is interesting to start reflecting, should the Conservatives win, what Gordon Brown’s legacy will be.  What has he achieved?  How will history judge him?

All big questions.  Historians would say it is too early to judge as Prime Minister’s have to be viewed after a passage of time.  But there is no harm looking at what Gordon will potentially bequeath an incoming Conservative Administration.

So let’s do this succinctly and look at the major policy areas.

Economy

- Britain is in a deep recession.  It has been savage.  Brown claims this is due to Global economic shocks but the IMF has stated in their most recent report:  ‘Imbalances and balance sheet strains had emerged even before the recent global shocks triggered a sharp decline in economic activity’.  ie we were heading into recession BEFORE the Global shocks took place. 

- Changes made by Gordon Brown, as Chancellor, to the way banks regulated, widely credited for the severest banking crisis in the history of the UK.

- Unemployment of nearly 3 million, (official figures), (in reality closer to 6 million).

- Unprecedented National Debt of £2.2 trillion – just under 150pc of gross domestic product. This would be the worst debt total since the 1950s, when Britain was in the process of paying back its war debts.

- Bailing out a banking system.  Cost of the bailouts - broken down. Total: £904bn or 63% of GDP. A few highlights:

Northern Rock — £14.6bn.
Bradford & Bingley — £24bn
Kaupthing Singer & Friedlaender — £3.3bn
Landsbanki — £4.5bn
Heritable — £500m
Dunfermline — £1.6bn
All bank recapitalisation — £78.1bn
Credit Guarantee Scheme — £250bn
Working Capital Scheme — £11.5bn
Asset-Backed Securities Guarantee Scheme — £50bn
Asset Protection Scheme — £466bn

TOTAL TAXPAYER EXPOSURE: £904bn or 63% of GDP.

- UK Households severely in debt.  In the run-up to the crisis household debt increased to 175 percent of disposable income—one of the highest levels among advanced countries

- House prices have dropped by more than 20 percent from their peak and commercial real estate prices are down by 40 percent.

- Endemic Fraud.  HM Customs and Excise looks odds on to miss its stated target of reducing fraud and error to 5% by 2011.  It has been revealed that mistakes had risen to 8.6%, (from 7.8), in 2007 – 08, which are the latest figures available. This means that fraud and errors in the tax credit system cost £2 billion last year, which amounts to £1 in every £10 paid out.

- Falling tax receipts… Tax receipts have fallen by £32 billion according to the National Audit Office.  This includes a £6.4 billion drop in VAT income following Alastair Darling’s decision to cut the rate to 15% last November. 

- The policies that Brown has employed no-one knows if they are working.  The IMF cannot make any judgement on the effects of Quantative easing.  Is it working?  Has it had any effect?  Who knows?  The IMF don’t

- Lack of support for Small Business.  Claim:  This Government has offered more support to small businesses in the recession. Reality:  Official statistics show that it has guaranteed fewer loans in the year to march 31st. Businesses received 2,360 loan guarantees worth £177.8m under the Small Firms Loan Guarantee (SFLG) scheme and its successor the Enterprise Finance Guarantee (EFG) scheme, launched by Peter Mandolsen. Please remember…….This was a central plank in the Governments economic strategy for the recession. But this total, which includes loans approved before April 3rd is significantly less than the £205 guaranteed in the previous year, (taken from the Department for Business, Innovation and Skills report). This is also far below the scheme’s £360m budget set by the Government in March 2008, which was raised to £1.3bn in January.  This lack of lending under the schemes runs contrary to the banks’ pledges to make more use of the SFLG and EFG schemes.

Defence & Afghanistan

- An ongoing war, with no end date in sight.  No clear, measurable, objectives.

- A British Army with insufficient resources, including manpower and equipment eg helicopters.

- 207 dead soldiers and rising

- With a stated aim of helping democracy Helmand’s province, a region with a potential electorate of 80,000 voters….only 150 voted.  That’s a turnout of 0.18% .

 A dis-United Kingdom

- Between 1998 and 2003, for example, economic growth across different local areas of the UK ranged between the drastic extremes of minus 1.2 per cent and 9.6 per cent, expanding the gulf between the poorest and the most prosperous. These marked trends have persisted through the rest of the decade, further aggravating the national divide. The latest data for the 12 principal regions of the country show that total GDP growth from 2004 to 2007 ranged between 13 per cent in the West Midlands and in Wales to more than 20 per cent in London. The divergences of performance become ever greater, too, as one considers smaller localities. The consequence is that the gap between the standard of living in the most affluent parts of the nation and its poorest areas is now wider in Britain than in any other developed economy.

Politics

- Politicians with no respect and distrusted by the electorate following the expenses scandal.

- Brown’s team closely associated with the politics of smear and lying, the Damien McBride affair typifying the lows of Brown’s closest aides.

- Lack of Leadership.  Ducks the big issues eg whether he agreed with Megrahi release

Education

- 50,000 A-level students will miss out on a place at university.  This year 52,000 more people applied to University but only 13,000 extra places were made available.

- The number of young people not in employment, education or training (Neet) has leapt by more than 100,000 in the past year.  Government statistics show there are now almost 960,000 16- to 24-year-old Neets in England, more than 230,000 of whom are aged between 16 and 18. 

Welfare dependency

- NEARLY two-thirds of council housing tenants get all their rent paid by the taxpayer.  dip their hands in their pocket to pay a total of £10billion a year.  That is the equivalent of £476 every year for every privately-owned home in Britain.  How do you feel paying £476 of your money to this cause?

 Health

- A society ill prepared for Swine Flu.  Call centres manned by non medical professionals prescribing Tamiflu to everyone that calls.  Children advised not to take Tamiflu.  Vaccine in full production but untried and untested.

- Almost 1 in 4 adults in England are currently obese, and if we carry on as we are by 2050, 9 in 10 adults will be overweight or obese.  Did you know about 46% of men in England and 32% of women are overweight (a body mass index of 25-30 kg/m2), and an additional 17% of men and 21% of women are obese (a body mass index of more than 30 kg/m2 ).  The cost of overweight and obese individuals to the NHS is estimated to be £4.2 billion and is forecasted to more than double by 2050. The cost to the wider economy is £16 billion, and this is predicted to rise to £50 billion per year by 2050 if left unchecked

- Britain has the worst cancer survival rate in Western Europe.

Immigration

- MigrationWatch UK has provided an estimate that the population of the UK, (which is already the most overcrowded country in Europe), will hit………a massive 70 million in the next 20 years, (whoever is in power). Yes that is 9 million more than today.

- Keith Vaz, Chairman of the Home Affairs Committee has announced that tens of thousands of illegal immigrants have entered Britain posing as students at bogus colleges and coupled with this the Government is doing nothing to track them down.

Going Green

- Going Green ….at a cost and massive debt.  It is reported that Britain faces a bill of up to £1.2 trillion to meet the agreed target set by G8 nations to cut carbon dioxide emissions in each country by 80% by 2050. This is made up of £600bn from the estimated cost of making all transport low-carbon by switching to electric or furl efficient vehicles.  £350bn which is the estimated cost of moving the majority of industrial and domestic energy needs to low carbon electricity. £250bn estimated cost of moving all heating from gas boilers to low carbon equivalent.

I could go on…and on…..please let me know what you would add to this.

Not a great legacy Gordon.  How can you sleep at night?

Today we learn more of the shocking state of our nation.  We are in one hell of an economic mess.  It’s time for radical thinking and ‘workfare’.

First up, official figures show that the number of 18-24 year olds Not in Education, Employment or Training (NEET) have hit a record highof 835,000, (equivalent to 17.6% of that age bracket).  Graduates, fresh from their studies, find themselves winding their way in a queue for state benefits.  Put yourself in the shoes of a graduate.  Just finished your Degree, the purpose mainly being to give you a head start in life, and you have no where to go.  The wasting of a generation of talent.

This follows hot on the heels of a report by Policy Exchange think-tank which puts the actual number of Britons out of work and living on benefits at 5.96 million – (note Official Government figures state 2.44 million).  The UK is creating a generation dependent on welfare.

Policy Exchange calculates the figure based on the number of those of working age living off the following state benefits:

• 1.58 million on Jobseeker’s Allowance
• 2.6 million on incapacity benefit and the new Employment and Support Allowance
• 736,000 on lone parents’ benefits
• 400,000 on carers’ benefits
• 363,000 on disability benefits
• 95,000 on bereavement benefits
• 182,000 on other income-related benefits 

So this begs the question about the cost to us tax payers and the value society receives from paying blanket benefits.  The cost of the benefits system has risen from £93 billion in 1997 to £193 billion today.  That is a huge tax burden on the system especially given the cancerous debt burden which is spiralling daily.

So, it is time for Conservatives to think the unthinkable and enter a period of blue sky thinking over welfare and particularly unemployment benefits.

We are facing an unparalleled National Debt and hence a new approach is needed.  Workfare, whilst derided by the Left, should be on the table for debate today.  What is workfare?…. well…..it’s a scheme in which the long-term unemployed, in return for welfare payments, are required to undergo either skills training or work, in jobs supported by state subsidy or in community-service activities.  One of the most successful ‘workfare’ schemes has been employed in the USA, in the State of Wisconsin.  Workfare was the key principle behind the 1996 US federal welfare reforms which, with the threat of a loss of benefits after two years, led to a sharp drop in welfare recipients.  Welfare to work programs aim to break the cycle of poverty where welfare dependence can become a way of life.

So, Conservatives should include a Manifesto promise to introduce a system which obligates able – bodied unemployed people, not in re-training schemes, who are looking to work, to undertake work that is beneficial to their community in return for unemployment benefits.   This would be popular for two reason.  Firstly, taxpayers may feel that they get “more value for their welfare pounds” when they observe welfare recipients working for benefits.  This helps add to the political popularity of such schemes.  Secondly, putting unemployed people into a workplace-like environment attempts to address the argument that one of the biggest barriers to employment for the long-term unemployed is their lack of recent workforce experience.

There is plenty wrong with this country and where ‘workfare’ help could be utilised.  Imagine, if companies or the public sector were presented with extra workforce, at no extra charge to them, to help them in their business life.  Consider these ares for example:

-  Call Centres.  Rather than outsource all the call centre work to India and other Asian countries, why not staffed via workfare?

-  Schools:  Help at schools, after passing background checks, classroom help, help with PE, cleaning, making school dinners etc.

-  Manufacturing Industry:  Why not provide a stream of workers in our manufacturing plants.  This ‘free labour’ would help some of the struggling industries like the car industry.

-  Post Office:  Again, if the Post Office is to be privatised, why not utilise workfare for Post deliverers.

-  Hospitals:  Help with general work around the hospital eg the Hospital Superbug MRSA is due to dirty wards, why not have more cleaners in the hospitals instead of people sitting at home

-  Building:  with a boom in building contracts eg Olympics, more manual labour

-  Civil Service:  With so much bureaucracy, plenty of paperwork could be finally completed

-  Street cleaning & refuse collection:  (why should council pay full time salaries when this could be a workfare role?)

-  Help in Supermarkets/retail:  Be it Customer Service or managerial.

This is but a few examples of where labour can be directed.  Yes some is skilled, some unskilled.  But there are plenty of areas of opportunity to get Briatin working and ensure welfare dependence does not creep in.

To be successful a ‘workfare’ system has to include a number of elements:

- Applies to all able bodied unemployed

- Has time limits  (eg people need time to apply for new jobs etc and therefore workfare may exist for 4 days a week work or maybe all afternoons, as mornings are spent job seeking.

- Possesses Tiers of payments.  For those working more hours, they reach a higher level of state unemployment benefits.  Those who choose to work less or not participate get lower benefits.

-  Those who wish to re-train or get extra skills, receive a lower benefit as the state invests more into their future.  But this can be buttressed back up by workfare projects. 

- After 2 years, an individual would no longer receive state support.  Hence, they have the motivation to seek work, which may involve retraining. 

These ideas, obviously are fairly radical for the UK.  Again, desperate times, call for stronger measures.  We are faced with an unparalleled debt.  We have to maintain a work ethic amongst the population.  We have to ensure that the UK does not embed a welfare dependency culture.