Today the bent Mayor of Tower Hamlets, Lutfur Rahman, was defenestrated in the High Court. There are two Ealing personalities who will be glad they are well off out of it.
One is the Ealing Council Chief Executive, Martin Smith. Martin was the Chief Executive of Tower Hamlets until he fell foul of Lutfur Rahman.
Martin is an all round good guy and Ealing is lucky to have him. He is also the returning officer for the three Ealing constituencies that will be contested in two weeks’ time – which brings me to the second Ealingite.
Huq stood as the Unison candidate and both Lutfur Rahman and John Biggs were on the shortlist. Eight years later and Unison in Tower Hamlets had switched its allegiance from Rupa Huq to Lutfur Rahman.
Both Smith and Huq must be glad to be operating in genteel Ealing in the west rather than bent, broken Tower Hamlets in the east.
I don’t live in a mansion. I live in an upmarket mid-terrace but given that it is in London the lower threshold of £2 million of Labour’s proposed mansion tax is in sight. It is still a distant sight but it is there on the horizon. I will share basics of successful investment journey you must know.
Labour’s Shadow Chief Secretary to the Treasury Chris Leslie was on the BBC Radio 4 Today programme this morning being challenged on the details. Labour still refuses, two weeks before the election, to spell out how this major new tax wedge is going to be implemented.
The Mansion Tax will essentially be a successful Londoners’ tax and as such may well be attractive to many people in the country who are not successful Londoners. If you are a successful Londoner with a mortgage on a £2 million plus home it is likely that you are paying income tax at the “Additional rate” of 45%. Labour proposes to increase this rate to 50% as well as imposing its Mansion Tax. Leslie did admit on the radio this morning that these people will be paying £250 per month. It sounds modest until you multiply it by 12. You can multiply by 2 again in order to pay the 50% tax on the earnings you need to earn. These Londoners will have to earn an extra £6K a year just to carry on with their lives.
It is easy to propose new taxes on people who work hard and take risks. Don’t be surprised if they opt out of giving you the cash. Once the principle of the Mansion Tax is established the government will start to look at more modest houses to make up the shortfall and grow the tax base.
Buying a house in England is about twice as hard as it was in 1997. It got to be twice as hard in the ten years between 1998 and 2007. Since then it has pretty much stayed twice as hard. If you recently bought a house and need to get the garage door fixed head to the United Garage Doors site. In 1997 the ratio of median house prices in England to median earnings was 3.5. In the next ten years it doubled, peaking at 7.23 in 2007 at the peak of the boom. It dipped towards 6 as the effects of the credit crunch were felt in the property market but has sinced bounced back towards 7 and has stayed there since. I guess it has ticked up a bit since but the figures aren’t available yet.
The main point is that housing affordability got out of kilter in the 1998 to 2007 period. It happened year-on-year so rather crept up on us when we were feeling relatively comfortable. Don’t let anyone tell you it is all the Tories’ fault because it ain’t. This was the same period that Labour spent ten years building the lowest number of social houses since the war.
I noticed a tweet today from the Labour candidate for the Ealing Central & Acton constituency Rupa Huq offering some pledges. Ah! I thought. Some meat to get into at last. I will get back to her pledges but the first thing I noticed about her website was the photo showing Rupa with a bike at the Bike Hub at Ealing Broadway. I have often bumped into Rupa and I have never seen her on a bike. This does not make her a bad person. I have an old Holdsworth racer that I use rarely when the weather is fine. It doesn’t really make me a cyclist – or a bad person that I don’t cycle much. When I saw the photo of Rupa with a bike my first impression was “fake”.
When I looked again and saw it was a huge, fancy road bike with those lay downy elbow support things I knew it was a posed picture with someone else’s bike. At least when council leader Julian Bell and Labour transport spokesman Bassam Mahfouz endlessly pose on their bikes you know they do actually cycle regularly.
There is something inauthentic about Rupa. She keeps telling little lies.
One of her favourite ones, repeated only this week is that she has had any role in local politics. She spent one year as Deputy Mayoress to Labour Councillor John Gallagher in 2010/11. John didn’t have a partner so Rupa was his official wife for the year. This role involved riding around in the Mayor’s car and eating vol au vents at official functions. Rupa wants people to think she has played a substantive role in local politics. She hasn’t. She is fibbing.
If you want to read something really embarrassing about this period in her life read this in the Guardian. Please!
Rupa keeps missing out information about her schooling. She is up front about going to Montpelier Primary School but keeps missing out the elite Notting Hill and Ealing High School in her CV. Maybe leave out both or discuss both but to mention one and not the other is to seek to deceive.
Her third fib is the whole Dr Huq thing. Sure she has a doctorate and she is a bright woman no doubt. But, if you are going to talk about the NHS as your main campaign theme and call yourself Dr, then you invite people to make an assumption about you that simply isn’t true.
Yes, Rupa is a local woman and capable I am sure but she comes across as being inauthentic.
Labour spokespeople are consistently talking about the way they will close the deficit over the next Parliament. They talk about three routes:
Sensible cuts
Making the rich pay more, and
Making work pay.
The sensible cuts line was best debunked by this cartoon by Peter Brookes in the Times. Apparently when the Tories cut it always harrowing and unfair. The Labour axe is so much more fragrant and “sensible”. The reality is that Labour will probably not cut as much as the Tories will as they ultimately don’t see the need even if they could get cuts past their union backers. The biggest “cut” they will make is by ramping up council tax to pass the burden of paying for local services from central government to Council Tax payers. So not a cut really but a tax rise for council tax payers. More on this another time.
Making the rich pay more is Labour’s get out of jail free card. The Mansion Tax, non-doms (today’s easy target that will more likely reduce the tax take), 50% rate, bankers’ bonuses, etc. They all sound grand. They all sound like someone else is going to pay and that regular people can really have free loveliness at no cost to them. In reality all of these changes are likely to disincentivise risk takers and wealth producers and make us all poorer. Good politics but bad economics. Ultimately all of these measures are likely to have only a negligible effect on the overall tax take.
The making work pay line is Labour’s latest magical money tree. They know that they cannot admit that taxes will rise and that they have to try to capture some financial credibility. The idea simply is that by mandating higher pay this will flow through to a higher tax take. It is a nice idea. Companies pay higher wages and we will all live happily ever after. The trouble is we already have too low a productivity in this country and Labour are going to ramp the cost of labour. What effect will this have? Businesses will start to shed labour. Unemployment will rise. Sure some workers will be better off. The state will have to pick up the tab for the unemployed. Maybe the tax take will rise, but so will the benefits bill. There is no such thing as a free lunch.
Ultimately the UK tax base rests on the VAT, NI and income tax that ordinary people pay. If Labour fails to cut and keeps spending and borrowing then ordinary people will pick up the tab. The non-dom thing, and all the rest of it, is just a distraction from the main event. Who do you trust? Do you trust the people making up stories or the ones telling it straight?
Labour local councillor Shital Manro has a passing interest in economics. He is a nice chap and we often debate economic issues on Twitter. A bit trainspotterish I know but call it a hobby.
The next time you hear a Tory MP boast of how amazing they are at creating jobs, please may ask them to peek at this? pic.twitter.com/K1PJskiDhP
Shital highlighted this picture yesterday which was originally published by a Labour PPC called Amina Lone. I don’t know if she just republished something that she didn’t understand or whether she created it. Anyway it is total nonsense and whoever created probably did so knowing it was nonsense.
The underlying data comes from the ONS. You will search their document in vain for this picture. The reason ONS didn’t make a chart out of their data is because it would be misleading and show a trend that does not really exist. The data comes from the Labour Force Survey and records how many people report that they are on Zero Hours contracts. Because these arrangements have been in the news, especially in 2013, more people are reporting that they are employed on this basis. No-one really knows how many people are on these arrangements, which are ill-defined. More here from Full Fact.
Anyway, a quick look at the graph and the fact that the number more than doubled between 2012 and 2013 tells you it is a glitch in the data and not a real effect in the labour market. Employment practices and people’s behaviour simply don’t change that fast. The data the graph was made from has this caveat at the top:
Councillor Manro might like to check for himself if the council still has 303 staff on zero hours contracts. When this was all in the news in August 2013 this is what officers told us was the situation in Ealing.
In many cases these flexible contracts work well for both sides. The government is seeking to ban exclusivity (which is self-defeating if you think about it). When Shital has sorted out Ealing Council he can come and tell us.
Ed Miliband’s ill thought out proposal to restrict high rate relief for people saving for a pension and to dish out £10 billion to rich kids is the latest example of the left not understanding the wealth lifecycle. There are all sorts of stupidities in this decision – why not fix the student loan system rather than keep it in reduced form? Making the universities dependent on the state for funds will end in tears (for the universities). I could go on but what about the savers that Miliband is hitting?
When you analyse wealth by looking at the 1% or the top decile or the top quintile you quickly lose sight of the fact that most people move through a wealth lifecycle. They start in the bottom quintile when they leave school with no savings or graduate with debt. In their 20s they might get into the second quintile. In their 30s as they save for deposits they might move up again. In their 40s as their pension savings and property wealth start to accrue they move up another notch, with also their viatical settlement to back them up. In their late 40s, through their 50s they will be at the height of their careers and for the first time in their lives maybe paying top rate tax. At this stage in life they start to think about their pensions and want to pile money into them to provide for their increasingly long retirements. Now Ed Miliband says no.
Now Ed Miliband says I will break the decades old compact between the saver and the state – if you save for your old age you can do it tax free but I will tax you when you draw your pension. Miliband is essentially saying to the middle aged who have worked hard for 20-30 years and maybe haven’t gone to university you will subsidise those young people who have been to university and done well. It is unfair. And if we keeping messing with pension savers we will come to regret it.
Overwhelmingly the wealthy are not aliens. They are us, just older.
The doctor’s union, the BMA, is spending some £100,000s if not millions of Pounds on its No more games campaign. It was kicked off last week with posters. I was only dimly aware of it until one of their paid for ads was pushed into my face by Twitter at doctors’ expense.
There are three planks to the BMA’s campaign. The first is public health. It advocates minimum pricing of alcohol, legalizing the weed vape pen and plain packages for cigarettes. Both of these are quite attractive policies in some ways but they are hard for politicians to push through. The second plank is protecting funding and the third is keeping the private sector out of the NHS.
This is hugely disappointing. The doctors fail to mention quality of patient outcomes and innovation. You might hope that the representatives of the scientists, the doctors that care for us, might have some ambition to ferociously drive towards higher quality and new ways of doing things, but no. They are spending many £100,000s of their members’ money to basically ask for more cash and keep things the same. Maybe they want NHS coal to be dug in NHS mines to fire NHS blast furnaces to make NHS steel for NHS scalpels? They may as well ask the world to stop turning.
When the BMA talks about funding it can’t bring itself to acknowledge Simon Stevens’, the new chief executive of NHS England’s, NHS Five Year Forward View. All the three main political parties are very near to being on the same page as Stevens so it is bizarre indeed that the doctors are not. The Labour government kicked off the £20 billion Nicholson savings in 2009 and the Coalition has presided over their roll out. Stevens accepts that another £22 billion of savings are required even if whoever is in government agrees to find £8 billion of new money which itself is a huge sum to find. The Stevens prescription sees the need for further restraint hand in hand with massive change and innovation. It seems that doctors’ real motive is not cross party agreement, which may well follow Stevens’ impressive lead, but their own lack of appetite for change and willingness to lead the NHS through continuing change.
The video of Dr Mark Porter, BMA council chair, using the phrase “petty point scoring” will come to be regretted by many doctors I suspect. The NHS consumes 10% of GDP and about 1/6th of all government expenditure. The idea that it will not be at the centre of political debate is ridiculous. If doctors want health to be out of politics they need to get off the public payroll. The political class in the form of Messrs Straw and Rifkind have ably demonstrated their shortcomings today but with this campaign so does the medical profession.
The doctors had a chance to spend their money on leading and setting the terms of the debate. Instead we have an expensive whine.
The Labour party has paid for Royal Mail to deliver their latest national leaflet to the Ealing Central and Acton marginal constituency, judging by the fact that it landed on my doorstep this week with a bunch of junk mail.
As has been pointed out by the Guido Fawkes blog the out of date promise to freeze energy bills until 2017 would end up costing people money. It isn’t just me who has pointed out that Ed Miliband’s badly judged intervention in the domestic energy markets mean that people are already paying more than they need to thanks to the Labour party’s threat to intervene, see here, here and here.
Miliband’s ill-judged energy freeze policy is costing consumers more now.
No doubt over the next three months we will hear the phrase “tax cuts for millionaires” from Labour rather more times than we need to.
I figured it was worth noting the records of the Labour government and the Coalition with respect to the taxation of high earners.
The higher rate for income tax was set at 40% by Nigel Lawson in 1988 and it came into force on 6th April 1988. It remained unchanged for 22 years, 13 years of which were Labour years. So Labour had a 40% rate for almost 4 years longer than the Thatcher/Major governments did.
On April 6th 2010 a new 50% additional rate for those earning £150,000 was introduced by Alistair Darling as a trap for the Conservatives. After almost 13 years of thinking that the correct higher rate to promote economic growth in the UK was 40%, the Labour party introduced a 50% rate purely for party political reasons. The rate didn’t raise any significant additional tax income. It just “sent a signal”. The wrong signal. This rate was in place for one month before the Labour government left power. One month in thirteen years.
The Coalition reduced this rate to 45% in 2013 causing paroxysms of faux rage from Labour. The Coalition had a 50% rate for 2 years and 11 months. By the next election it will have had a 45% rate for two years and one month. The Coalition has had a 50% rate for 35 times longer than Labour.
One is the Ealing Council Chief Executive, Martin Smith. Martin was the Chief Executive of Tower Hamlets until he fell foul of Lutfur Rahman. 
In 2007 I am sure that Ealing Central and Acton Labour candidate, Rupa Huq, was disappointed to lose out to Rushnara Ali in the competition to become Labour’s prospective parliamentary candidate for the Bethnal Green & Bow constituency. 
Phil Taylor 