Category Archives: Political

A new slogan for the bus

The real price of Brexit begins to emerge as FT research shows that the weekly hit to the British economy could be the same £350m that Leave campaigners promised to claw back

The big red bus emblazoned with the words “we send the EU £350m a week, let’s fund our NHS instead” is credited as being decisive in Britain’s vote to leave the EU last year. It promised — in absolute terms — financial gains for the British public if they voted to leave, a stark counterweight to a majority of economists who warned that a departure would hurt Britain.

The pre-referendum estimates of the long-term pain ranged from a hit to the economy of 1 to 9% of national income — an annual loss of gross domestic product of between £20bn and £180bn compared with remaining in the EU yet the Leave campaign won the battle of the slogans, and the referendum.

But who is winning the economic argument?

Almost 18 months on from the Brexit vote and with 15 months of detailed UK data, it is now possible to begin to answer that important question.

Economists for Brexit, a forecasting group, predicted that after a leave vote growth in GDP would expand 2.7% in 2017. The Treasury expected a mild recession. Neither was right. The 2017 growth rate appears likely to slow to 1.5% at a time when the global economy is strengthening.

A more pressing question is to assess the impact compared with what would have happened had the vote gone the other way.

This work has started, and includes a range of estimates calculated by the Financial Times suggesting that the value of Britain’s output is now around 0.9% lower than was possible if the country had voted to stay in the EU.

That equates to almost exactly £350m a week lost to the British economy — an irony that will not be lost on those who may have backed Leave because of the claim made on the side of the bus.

Jonathan Portes, professor of economics and public policy at King’s College London and one of the academics leading publicly funded research into the effects of Brexit, says: “The conclusion that, very roughly, Brexit has already reduced UK growth by 1% or slightly less seems clear.”

Companies are becoming more vocal over the economic hit, blaming the government’s slow handling of the Brexit negotiations for a weaker business climate. In October, the International Monetary Fund highlighted Britain as a “notable exception” to an improving global economic outlook, while the OECD, the Paris-based club of mostly rich nations, has raised concerns about “the ongoing slowdown in the economy induced by Brexit”.

Thomas Sampson and colleagues at the London School of Economics have examined the direct effect of sterling’s depreciation since the EU referendum on prices and living standards. With the pound falling about 10% following the June 2016 result, inflation has risen more in Britain than in other advanced economies.

It started with petrol prices and spread to food and other goods, pushing overall inflation up from 0.4% at the time of the referendum to 3.1% last month. When looking at prices, depending on the level of import exposure of different goods and services, the LSE study estimates that the Brexit vote directly increased inflation by 1.7% of the 2.7 percentage-point rise in the 12 months after the referendum.

And with wage inflation stuck at just over 2%, “the increase in inflation caused by the Leave vote has already hurt UK households”, Mr Sampson says. He calculates that “the Brexit vote has cost the average worker almost one week’s wages”, but adds the figure could be higher or lower if a complete evaluation of the economic impact was applied rather than just the initial squeeze on incomes from leaving the EU.

Other effects are more apparent.

Business investment grew at an annual rate of 1.3% in the third quarter, compared with a March 2016 official forecast for annual growth of 6.1% for the whole of 2017.

Exports, boosted by sterling’s depreciation, have proved more resilient. The OBR now expects a 5.2% rise in the volume of goods and services sold abroad in 2017 compared with a pre-referendum prediction of 2.7%.

Net migration to the UK from the EU fell by 40% in the first 12 months after the vote. Professor Portes last year predicted an ultimate decline of between 50 and 85% on net migration levels before the referendum. “Arithmetically, this reduction [of 40%] of net EU migration translates into a reduction in growth of 0.1 to 0.2%,” he says.

Economists working to estimate the overall Brexit impact on the economy need to build a counterfactual scenario — an imagined world in which Britain had voted to remain in the EU — to compare that with Britain’s economic performance since the vote. The counterfactual cannot be known for certain but it is possible to take a number of approaches, in three broad categories.

The first is to compare recent UK economic performance with its past. A worse performance than the UK has achieved over long historical periods or in recent years would support the view that the vote has hurt economic performance. But a shortcoming of this approach is that if the past year was always likely to be rather weak, this method could suggest a Brexit hit when there was none.

Comparing the UK performance with that of other countries is another option. Using its normal position in the G7 league table of leading economies is one possible technique, as is contrasting UK performance with the average of similar economies. A more sophisticated approach is to use a statistical algorithm to devise a historically accurate set of comparator countries, a method recently performed by a group of academics from the universities of Bonn, Tübingen and Oxford. These geographical techniques often smooth out concerns that the recent period might be unusual, but they are vulnerable to variations in other countries, such as a sudden boom in the eurozone that Britain was never likely to match.

A third tactic is to look at forecasts made for Britain’s economy before the referendum on the basis of staying in the EU and compare the actual outcome with these prior forecasts. Its weakness is that there was a wide range of pre-referendum forecasts, while its strength is that the figures reflect the best knowledge available at the time.

Jagjit Chadha, director of the National Institute of Economic and Social Research, says each of the methods are reasonable for generating an estimate of the impact of Brexit so far. “We can’t know how the [UK] economy would have responded to the news over the past 18 months, but there have not been any large shocks and the rest of the world has done slightly better than we thought likely a year ago.”

The results vary according to the comparisons made, but all show the UK economy has been damaged even before it formally leaves the EU on March 29 2019.

When the past five quarters are judged against the UK’s historical average growth rate, the 1.9% expansion in GDP achieved between the second quarter of 2016 and the third quarter of 2017 is lower than history would suggest is normal for the UK economy.

Depending on the period of comparison chosen, the UK economy would normally have been expected to expand by between 2.5% and 3.2% over the same period. The lower end of the range comes from more recent history, such as the average since a Conservative-led government came to office in 2010, while the upper boundary reflects Britain’s long-term performance in the 30 years before the financial crisis. The hit to the economy on this comparison is between 0.6 and 1.2% of national income.

Geographical comparisons produce a similar conclusion. Britain’s year-on-year growth rate tended to be close to the G7 upper range of outcomes over the past 25 years. Had that performance continued, British GDP would have grown 2.9% since the referendum. The statistical algorithm produces a significantly larger estimate of what would have been possible, suggesting Brexit has already removed 1.3% from GDP since the vote. This equates British performance to a weighted average of other countries, with the US, Canada, Japan and Hungary having the largest weights.

Asked whether it was reasonable to judge the UK’s performance against that of Hungary, Professor Moritz Schularick of Bonn University says, “like the UK, Hungary is a European economy and integrated into the production chains, but remained outside the eurozone with a floating exchange rate and therefore could use monetary policy more aggressively after the crisis”. Estimates using pre-referendum forecasts provide a range within almost the exact same boundaries — between 0.6% of GDP and 1.1%. The larger figure is based on analysis from Economists for Brexit, which initially predicted strong growth after the vote. Professor Patrick Minford, who carried out the forecasts for the group, blames “Office for National Statistics productivity estimates, [which] are not convincing because they have made no real attempt to estimate the growth in quality of services, such as in education and healthcare”.

But all of this was known before the referendum. Companies have been critical of Theresa May’s government saying that delays in talks with the EU have hit business

Overall, 14 different counterfactuals estimated by the FT and others give a range of a hit between 0.6% of national income and 1.3%, with an average of 0.9%.

With national income of £2tn in the year ending in the third quarter of 2017, it means the UK is likely to be producing £18bn less a year than would have been reasonable to expect and this is directly attributable to Britain’s decision to leave the EU. That is just short of £350m a week.

Brexit-supporting economists say the figures are reasonable.

Julian Jessop, head of the Brexit unit at the Institute of Economic Affairs, says: “Lots of sensible Brexiters accept there will be a short-term hit and it is unarguable that the economy is weaker than it would have been, I would say between 0.5 and 1% weaker.

As for the longer term, it’s all to play for. Brexit creates lots of opportunities, it is for the government to make the most of them.” Recommended Britain has more illusions to shed on Brexit

The UK economy since the Brexit vote — in 5 charts Brexit and the Budget: Hammond pressed to go ‘big and bold’ In the referendum campaign the big red bus was making a different comparison, an incorrect one, about the budgetary costs of the EU to Britain. It suggested Britain contributes almost £18bn a year to the budget, when the net cost in 2016 was calculated by the Treasury to be £8.6bn. And this leaves one last comparison that it is possible to make. Paul Johnson, director of the Institute for Fiscal Studies, says that “for every 1 per cent of GDP you lose, that’s getting on for £10bn a year of foregone tax revenues”. If 0.9 per cent of GDP has been lost over the five quarters for which data exists, there has already been a £9bn hit to the public finances.

So even before the UK has left the EU, the referendum result is costing the UK government more than can possibly be recovered by ending net contributions to Brussels.

Trump – Feck Off

So let’s get this straight, not content with suggesting people carrying torches and marching shouting anti-semitic chants were “good folk” the president of the US has started re-tweeting racists on-line.

He’s retweeted video clips from a neo-nazi group in the UK involved in the murder of Jo Cox, one of our MPs. & I’m left trying to imagine the outrage if our leader re-tweeted the words of someone who had killed a US senator

When called on this behaviour he’s doubled down and criticised our PM.


Not content with doubling down on being a nazi, he’s also supported Roy Moore alleged child abuser. Just a reminder of the form he has when it comes to sexual harassment and abuse:

Donald Trump’s official position, as his spokeswoman Sarah Sanders recently clarified in a White House press briefing, is that the 20 women accusing him of assault and harassment are lying. Trump has also suggested some were not attractive enough for him to want to sexually assault.

As the conversation around sexual conduct continues to evolve, and new abusers are revealed, here are the cases against the president.

“He was like an octopus … His hands were everywhere.”Jessica Leeds

Leeds alleges Trump groped grabbed her breasts and tried to put his hand up her skirt. Source: The New York Times

“I referred to this as a ‘rape’, but I do not want my words to be interpreted in a literal or criminal sense.”Ivana Trump

In a divorce deposition, Trump’s first wife used “rape” to describe an incident that transpired between them. After a settlement was reached, and the rape allegation became public in a 1993 book, Ivana softened the claim. As part of her nondisclosure agreement, she is not allowed to discuss her marriage to Trump without his permission. Source: Lost Tycoon: The Many Lives of Donald J Trump

“He pushed me up against the wall, and had his hands all over me and tried to get up my dress again.”Jill Harth

A former business partner, Harth alleges Trump forcibly kissed her on the lips and groped her breasts and grabbed her genitals, in what she referred to in a 1997 lawsuit as “attempted rape”. On a previous occasion, she alleges, he groped her under the table during dinner with colleagues at the Plaza Hotel. Source: The Guardian

“He did touch my vagina through my underwear.”Kristen Anderson

Anderson alleges Trump put his hand up her skirt and touched her genitals through her underwear. Source: The Washington Post

“[Trump] stuck his head right underneath their skirts.”Lisa Boyne

Boyne alleges Trump insisted the female models walk across the table and that he looked up their skirts, commenting on whether they were wearing underwear and their genitalia. Source: The Huffington Post

“He took my hand, and grabbed me, and went for the lips.”Cathy Heller

Heller alleges Trump forcibly kissed her on the lips in public. Source: The Guardian

“He kissed me directly on the lips.”Temple Taggart

The former Miss Utah alleges Trump forcibly kissed her on the mouth on two occassions, including the first time she met him. Source: The New York Times

“I remember putting on my dress really quick because I was like, ‘Oh my God, there’s a man in here.'”Mariah Billado

The former Miss Vermont Teen USA and other unnamed accusers allege Trump walked into the dressing room unannounced while teen beauty queens aged 15 to 19 were naked. Source: BuzzFeed

“Then his hand touched the right side of my breast. I was in shock.”Karena Virginia

Virginia alleges Trump grabbed her arm and touched her breast. Source: Gloria Allred press event

“The time that he walked through the dressing rooms was really shocking. We were all naked.”Bridget Sullivan

The former Miss New Hampshire alleges Trump walked in to the dressing room unannounced while contestants were naked. Source: BuzzFeed

“Our first introduction to him was when we were at the dress rehearsal and half-naked changing into our bikinis.”Tasha Dixon

The former Miss Arizona alleges Trump entered dressing rooms while her fellow contestants were “half-naked”. Source: CBS News

“All of a sudden I felt a grab, a little nudge.”Melinda McGillivray

McGillivray alleges Trump grabbed her buttock in a pavilion behind the main house in the middle of a group of people. Source: Palm Beach Post

“I was thinking ‘Oh, he’s going to hug me’, but when he pulled my face in and gave me a smooch. I was like ‘Oh – kay.’”Jennifer Murphy

The former contestant on The Apprentice alleges Trump forcibly kissed her after a job interview.

“[Trump] kissed me directly on the mouth.”Rachel Crooks

Crooks alleges Trump kissed her forcibly on the lips. Source: New York Times

“I turned around, and within seconds he was pushing me against the wall and forcing his tongue down my throat.”Natasha Stoynoff

Stoynoff alleges Trump forcibly kissed her. Source: People

“Trump stood right next to me and suddenly he squeezed my butt.”Ninni Laaksonen

The former Miss Finland alleges Trump grabbed her buttocks during a photoshoot before an appearance on The Late Show with David Letterman. Source: Finnish newspaper Ilta-Sanomat

“When we entered the room he grabbed each of us tightly in a hug and kissed each of us on the lips without asking for permission.”Jessica Drake

Drake alleges Trump forcibly kissed her and two female friends on the lips and when rebuffed, pursued her, asking: “How much?” Source: Gloria Allred press event

“He would step in front of each girl and look you over from head to toe like we were just meat, we were just sexual objects, that we were not people.”Samantha Holvey

The former Miss North Carolina alleges Trump would barge into the pageant dressing room and inspected women like “meat”. Source: CNN

“He then grabbed my shoulder and began kissing me again very aggressively and placed his hand on my breast.”Summer Zervos

The former contestant on The Apprentice has accused Trump of groping and kissing her on two occasions. She has filed a defamation claim against the now-president. Source: Gloria Allred press event

“He probably doesn’t want me telling the story about that time he continually grabbed my ass and invited me to his hotel room.”Cassandra Searles

The former Miss Washington 2013 alleges in a comment on Facebook that Trump repeatedly grabbed her buttocks and invited her to his hotel room. Source: Facebook, via Yahoo News

What problem?

There is an excellent article published by the LSE which looks at the UK economy.

As the UK negotiates to leave the EU, the UK government has made much of the strength of our economy and our competitive advantage & it’s true that our growth and employment rates do not appear to have been damaged by the vote to leave the EU. Many businesses have been quick to identify potential opportunities associated with an independent approach to global trade.

But despite strong growth rates in 2016, the UK is not expected to experience GDP growth as strong as that anticipated in Europe and the US over the next several years. Our predicted growth rates of 1.6% in 2017 and 1% in 2018 are dwarfed by an anticipated 2.1-2.4% for the US and 2% in Germany. Part of this can be put down to the uncertainties of Brexit.

But slowing growth rates are also partly driven by long-standing structural issues in the UK economy.

In fact, as the Interim Report of the IPPR Commission on Economic Justice highlights, on a whole host of issues – from wages to productivity investment to trade – the UK’s economy lags behind its major competitors.

The government likes to boast that the UK has recently achieved record levels of employment. But this has been accompanied by the growing insecurity of the labour market.

Surveys suggest that as much as 8% of the workforce is now under-employed – that is, wanting to work more hours than they do. The number of people on zero hours contracts has increased more than five-fold since 2007, to more than 900,000. Self-employment has increased from 13% of the workforce in 2008 to 15% today, yet self-employed people earn less on average than they did 20 years ago.

This insecurity is linked to the ‘flexibility’ of our labour market, which is ranked 8th of 140 in the World Economic Forum’s rankings, achieving the same score as the United States.

Normally, economists would expect high levels of employment to lead to increases in average real wages. But the reverse has happened. Indeed, the decline in UK real wages since the financial crisis has been the largest of all developed countries apart from Greece, Mexico, and Portugal.

Between 2007 and 2016, annual real wages grew 10.8% in Germany, 9.5% in France and 6.4% on average across the countries of the OECD. In the UK, however, they fell by 2.6%. If inflation continues to erode nominal wages for the next four years, as projected by Office for Budget Responsibility, the period since 2007 will rank as the longest period of earnings stagnation since the 1860s.

The low-pay, insecure labour market that exists in the UK is partly responsible for our poor performance on productivity. Measured by output per hour, productivity in the UK is 13% below the G7 average, and productivity growth has more or less completely stalled in the last decade. The disparity between the UK’s productivity and those of our major competitors is sometimes expressed in the form ‘it takes the average British worker five days to produce what a worker in Germany, France, or the US produces in four’.

But of course this is nothing to do with how hard people work: it arises from the much lower levels of investment in physical and human capital in the UK. Public and private investment is around 17% of GDP in the UK, more than 5% below the OECD average.

Corporate investment in the UK is much lower than in most of our major competitors. Corporate investment in fixed assets (not including construction) fell from 11% of GDP in 1997 to just 8% in 2014, compared with (for example) 12% in the USA. This is much lower than the rate of depreciation, meaning that the stock of capital in the UK is actually declining. This disparity is partly accounted for by the lower share of manufacturing in the UK economy, but is still lower even when this is taken into account. And it is especially reflected in the lower share of research and development investment, which is of particular concern given the importance of innovation in driving future growth.

The sectoral make-up of the UK’s economy has also led to the emergence of a large current account deficit: our trade deficit has exceeded 2% of GDP for 15 of the last 16 years. This is at least partly due to the decline of our manufacturing base, which, though familiar to most of the developed world, has been far more acute in the UK than in competitors such as Germany and France.

The depreciation of the pound which followed the EU referendum has helped to raise exports somewhat – but not by as much as might have been expected, because the UK is particularly reliant on a small number of exporting sectors (of which financial services is much the largest) and many exports are made up of imported components. The UK’s trade performance is a consistent indicator of the weakness of UK productivity and competitiveness.

As such, it is hard to accept the government’s view that the UK economy is in a strong position to cope with the challenges of Brexit. Underneath the headline figures it is actually much weaker than most of our major European competitors. And Brexit will make many of these weaknesses more difficult to address. That is why the IPPR Commission on Economic Justice is calling for a fundamental rethink of economic policy in the UK.

The first step is to acknowledge that we have a problem.


In order to balance the books, the UK government can either raise more money through taxes or cut the amount of money it spends. For the last few decades, the emphasis has all been on cutting costs, in particular the cost of welfare though the emphasis has always been placed on culling “undeserving poor” rather than pensioners.


The overall breakdown of spending lumps a great deal together under the heading “social protection” which needs to be broken down further in order to understand where the money goes.

Other large areas of expenditure are health and education but these are difficult to cut without offending great swathes of the population.


Government departments are essentially organised to manage these budgets.

The welfare budget total is temptingly large and yet political sensitivities make it difficult to cut. It’s also important to remember that the UK spends less on welfare relative to other developed countries.

The charts show that about half of welfare goes to pensioners, a very sensitive group since they are sensitive to small changes and tend to vote in significant numbers. The next largest amounts go to families with a disabled person, and support and housing for low income families,the majority of whom are in work.

Less than 1 in 5 households receive any housing benefit. Unemployment benefits make up a very small percentage of all social spending.

Currently UK pensioners are guaranteed a state pension the increases in line with the so-called triple lock, the lower of 2.5%, any increase in living costs or any increase in average wages. The amount paid is not generous at just £6,200 but still, there is no rationale for setting a minimum of 2.5% in times of low inflation and flat salaries unless you believe pensions are too low.

As a demographic group, pensioners are no longer the worst off in UK society so I would look to abandon the triple lock and reduce it to the lowest of either inflation (living costs) or salary increases.

Inflation is currently running at 0.6% whilst salaries are flat. Abandoning the commitment to 2.5% increases would save the government around  £1.3m (1.9% of £70m) in the first year and potentially every year thereafter.

The story of the left ought to be a narrative of hope and progress. The greatest problem with the academic left is that it has become fundamentally aristocratic, writing in bizarre jargon that makes cliches seem abstruse. If you can’t explain your ideal to a fairly intelligent 12-year-old, it’s probably your own fault. We need a narrative that speaks to millions of ordinary people. It all starts with reclaiming the language of progress.

So we are moving into an age where people may or may not work, due neither rhyme nor reason within their own control. Jobs are increasingly temporary, precarious and either multiple or absent. Think of the technology changes that have brought us uber as a working model.

Working poverty is going to be increasing feature of our lives. Rather than rushing to reinforce a rather Calvinist view of all paid work as morally good and uplifting, in and of itself, whilst totally disregarding and undervaluing the unpaid contributions of carers everywhere, let’s reinvent the model.  How? Universal basic income.

Every adult in the UK should be paid the equivalent of the standard pension ie. currently £6,200 with unto £2,000 paid for people also looking after children.

It isn’t a huge sum for an individual to live on. It is set at the amount of pension, just below the JRF estimate of a living wage (about £7,000 per person per annum) for purely political reasons: it would be impossible to justify paying more to the unemployed of working age, than to the unemployed post-retirement, even though the latter should probably be enjoying a life post mortgage with greater disposable income.

No one of working age is going to want to live on such a small amount alone. People will still find plenty of reasons to work. It is no more than a safety net that should work in our brave new precarious world.

To be practical, it’s a benefit that could only realistically be offered to British citizens, the pull factor from poorer countries would just be too big to offer it as an unconditional benefit. Currently everyone in the UK reaching the age of 18 is given a national insurance number, a universal identifier that in theory allows our tax and benefits system to work efficiently and personally. The universal income could therefore only be paid to those people living in the UK with a national insurance number, which would be dependant upon either being British born and turning 18 or living and working in the UK.

Personal taxation would require companies to pay national insurance contributions to cover the universal basic income (say £6,200) for each and every job, probably through 50% deductions of salary. At this rate an individual would have to earn £ 12,400 to cover their welfare cost.

An individual earning the equivalent of today’s average salary £27,000 pa, would more than cover any cost of this benefit for themselves – they would receive £6,200 from the state and £20,800 from their employer directly, subject to income tax rules.

The rates of tax would have to change.

Without change, the new universal credit would be deducted pre-tax, then a £10,000 tax exempt band applied and only then  would the 25% tax rate be applied to  £10,800. They would pay (net) just £2,700 tax rather than the current tax liability of £4,250 which would be unaffordable. If basic rate tax was increased to 40%, the tax paid under the new system would end up being much the same ie. £4,320 after receiving £6,200 from the state directly, plus £10,000 from the employer tax free, plus £6,480 taxed (£22,680).

Although an individual ends up paying very slightly more in tax, they have a lot more certainty in their income thanks to the universal income.

People are no longer able to work themselves out of the poverty they were born into. Reforms? Let’s reinvent the welfare state and eradicate poverty for good – now that’s an investment that will pay for itself.

This could be the basis of a fundamental change to the way we look at work and welfare, possibly the only practical, humane response to the changing work patterns we are seeing in the developed world. It could form the basis of a positive, socialist message, one that could be the basis of an ongoing and constructive engagement with the electorate.

Efficiency, Productivity? That should be the point of centre-left socialist policy.  Every pound invested in a homeless person returns triple or more in savings on care, police and court costs. Let’s imagine what the eradication of child poverty might achieve. Solving these kinds of problems is a lot more efficient than “managing” them.

But first, the underdog socialists will have to stop wallowing in their moral superiority. Everyone who believes themselves progressive should be a beacon of not just energy but ideas, not only indignation but hope, and equal parts ethics and hard sell. Ultimately, what the underdog socialist lacks is the most vital ingredient for political change: the conviction that there truly is a better way.


The UK Government income is based around tax receipts, typically:

  1. Income tax (main tax rate is 20%)
  2. National Insurance
  3. VAT (20% most goods and services)
  4. Corporation tax (main rate 21-20%)
  5. Council Tax (local government)
  6. Business rates
  7. Excise duties (alcohol, cigarettes)
  8. Other taxes include (stamp duty, carbon tax, airport tax, inheritance tax, capital gains)


Most tax is collected by HM Revenue and Custom.

However, the central government also get revenue from other sources which can be identified through {public sector finances at ONS (less detailed). Total tax revenue was around £90 billion.

Since the UK government has mainlined on balancing the books, and we live in an ever more expensive world where we all want more and more “stuff” including the government, then essentially every UK government is faced with either cutting spending or increasing revenue.

Since taxing more is unpopular, the emphasis has always been on trying to cut spending but we have had quite a few stealth taxes, increases to the lesser know or lesser observed taxes such as national insurance. One other wheeze is to push expenditure off onto local government, whilst limiting them to raise additional taxes through the local Council tax thus making local government the villain of the piece.

So if I was in charge of the government, what would I think about doing?

Honesty. Transparency. Fairness.

Let’s start with openly combining income tax and national insurance. In peoples minds they monitor the former very tightly and the latter barely at all and yet, they are all essentially the same tax, used interchangeably.


So although the headlines focused on raising the tax limit for income tax to above £10,000, it totally ignores the NI contributions payable from £8,060. Although the base rate of tax discussed is said to be 20%, taking into account NI means the lower effective rate of tax that most people pay is actually more than 30%.

We should be honest about this.

Honest. Transparent. Fair.

Income tax in the UK is largely taxed at source, deducted from pay packets before people have access to it and therefore for most people entirely unavoidable. It is essentially a progressive tax which takes a bigger % of income from higher earners. It is therefore also a fairly redistributive system.

It seems unreasonable to charge anyone more in tax than they are able to keep. Something feels unreasonable or unfair about the idea of taxing more than 50% of a person’s efforts but looking at the graphic above, it seems clear that aside from some very minor tweaks when child benefit is taxed and allowances lost, the highest effective rate of tax is just over 40%.

So what would happen if we set the basic rate threshold at £10,000 for the new combined all-income tax (income tax + NI) setting the rate at the current effective level of around 32%? This would be with a view to tweaking the rate up or down once people had got used to the combined all-income tax and the effects could be quantified in practice.

More of the poorest people should be taken out of tax entirely by avoiding NI contributions. Most people would pay slightly more at the lower rate (£600×32%- £192) which would hopefully pay for the lost NI income

And then suppose we leave the higher rate threshold unchanged but set the higher rate of combined all-income tax at 50% ie. higher than the current effective rate of 42% but not gouging. We should abandon all the claw-backs for child benefit and lower tax thresholds. The system would be simpler and easier to understand. It feels honest, transparent and fair.

Although the income tax system is progressive, other taxes are more regressive.

At 20% VAT tends to be more regressive. People on low income have a higher marginal propensity to consume. Therefore, the VAT they pay is a higher % of their total income. People on high income will spend more and will pay more VAT, but they will have a lower marginal propensity to consume (People on high incomes can afford to save a higher % of income). Therefore, VAT will be a smaller % of income spent. The regressive nature of VAT is slightly compensated by the fact that in theory, necessities like food (e.g. cold pastries, cabbages) don’t have VAT. VAT is supposed to be targeted at luxury goods. It’s also worth noting that a significant amount of income received by people on low income comes from the state in the form of benefits.

Other taxes like excise duties on cigarettes and taxes on alcohol are much more regressive. Smoking rates tend to be higher amongst people with lower incomes. Also, it will be a much bigger % of income than for rich smokers. We persuade ourselves that these taxes are for the health benefit of the individuals involved.

We could therefore consider intruding a sugar tax, on similar grounds, that high-sugar foods, especially those targeted at children are bad for their health. This is likely to be highly regressive since obesity is more commonplace amongst people on low income but it’s also likely to be popular with the voting public because of it’s health benefit.

Council Tax, a UK tax on domestic properties, can also be quite regressive and arguably unfair. People living in expensive areas end up having high housing costs, but also a higher council tax band. Arguably a fairer method of collecting local tax would be a local income tax but there are sizeable barriers to implementing any change. the minute a widow is forced out of her large (and expensive) house to pay her tax bill, is the minute a government gets into trouble.

Business rates are the property taxes charged on non-domestic problems and have recently been amended to allow local government to retain 50% amount raised rather than paying into a central pot and having money allocated back.

Inheritance tax raises a relatively small amount of money each year, at around £4.6 million a year but obviously this is in part because of significant tax planning for large scale landowners. The new Duke of Westminster will inherit control of an estate (held in trust) worth in excess of £9billion and pay no tax whatsoever.

It is not the business of the government to encourage the build up of inherited wealth within the hands of the privileged few. Any inheritance should be taxed as a receipt by the beneficiaries in the year in which the gain is realised, as part of the combined all-income tax. For people on low income, an inheritance would be subject to the standard tax bands and rates, treated as a top layer of income.

Since of most people the bulk of any inheritance is property, and the capital gains on houses are not the result of any intrinsic hard work or merit, it seems unreasonable to encourage windfalls for the next generation through any tax system.

It also seems unreasonable to ask the state to fund care in old age in order to preserve any such inheritance for the next generation. Treating any inheritance as windfall income should reduce the temptation to preserve wealth at the expense of paying for a decent standard of living, including care costs in old age.

Another much discussed problem with the UK tax system is the scope for having offshore accounts and avoiding paying tax through tax avoidance schemes.  Tax avoidance is often easier by people with high incomes. Unfortunately it is also perhaps the most expensive problem to address since high income people can afford high fees for good advice.

So my no doubt incredibly unpopular suggestions for change on the “income” side of the puzzle include:

  • Combining Income Tax and National Insurance
  • Set the threshold for basic all-income tax at £10,000
  • Set the tax rate for higher rate tax payers for the new all-income tax at 50%
  • Abolish the various tweaks re: child benefit and removing nil bands
  • Introduce a sugar tax
  • Abolish inheritance tax and treat any inheritance as a windfall to be subject to the all-income tax as a top layer of income.

Not going to happen.

Morning Glory

Every morning this last week, I have woken up, and switched on the news over my first cup of coffee, half expecting to hear that Trump has declared war on N Korea via twitter.

Most recently I heard he had not ruled out military action against Venezuela.

And yet this is a man strangely unwilling to call-out the terrorist actions of a white neo-nazi in America, driving his car into the ranks of anti-racism protestors. Even though he felt no compunction about wading into the furore surrounding a British guy who similarly drove into pedestrians half way across the world in my home city, at around 6am US time.

And since I subscribe to the NYT, I’m struck by the number of comments in a liberal NY newspaper suggesting that someone has to tackle NKorea, sooner or later, so maybe Trump should just go ahead.

Actually, no. No.

There is no benefit to starting a nuclear war early. None

Starting a war with a country as piss poor as N Korea might seem cheap but then you have to take into account it’s neighbour and ally, China. You have to take into account the millions of people living in SKorea who will be killed as a result of Amercian aggression.



On one day in June last year, just over half of the people who could be bothered to vote, voted to leave the EU. I voted the other way.

And people voted for all sorts of reasons, but people were not ignorant or stupid, unless they chose to be. There was plenty of information out there. Basically if you believed in the economic argument you voted remain and if anything else was important you voted leave, which essentially meant you voted to leave if “immigration” or “sovereignty” was the important issue.

& it is probably a step too far to say that those voting on the basis of immigration were out and out racists, though clearly a racist argument was made by the leave campaign and people voting for that reason have failed to distance themselves from that argument. But fear of immigrants, of the foreign, is xenophobic at the very least.

& sovereignty is a tricky topic because the word can mean so many different things to different people. At some level it’s tempting to view this as a cleaned up version of immigration ie. control over our borders and anxiety about foreigners. At another maybe it’s anxiety about the role of the EU in setting rules and regulations that apply to the UK, and the relatively low status and lack of respect paid to EU MEPs in this country, a lack of understanding about the UK’s ability to influence and effect change within the EU context and structure.

Either way, if you voted for leave because of immigration or sovereignty, you have been taken for fools. According to government ministers, immigration numbers post-brexit will increase. The government of the day has used the brexit process to attempt a power grab from parliament throughout and continues to undermine and diminish parliamentary sovereignty at every opportunity. The government plans to transfer all EU legislation onto the UK statute book where it will ossify. It takes cross-party support to change, amend or repeal statute and as a consequence the UK government structure is incredibly badly suited to deal with such a huge body of statute.

As time goes by, the EU will amend it’s own laws and the UK has no practical process to amend the legacy laws written onto its books.

No surprise – I believe that brexit will be a disaster for the UK.

But not every brexit platitude can or should be ignored. As the NYT wrote in a recent article, just because it’s something that Trump says, doesn’t mean it’s wrong or trivial.

What brexit issues need to be addressed? Here’s my list:

• immigration needs to be seen to be controlled. Freedom of movement in the EU was never meant or required to be without constraint or limit. People are allowed to move to find work, no more and no less. Foreigner in Belgium who fail to find a job after 3 months are deported. We should do the same. & that would require introducing an ID card and system. It would mean requiring people to register, to show their ID cards before claiming healthcare or welfare. All of this could have been done decades ago and wasn’t because it will inevitably cost more money than it’s worth, but it seems necessary to reassure people that someone somewhere is managing the process.

• The immigration argument is in part racist, in particular feeding off anxiety about uncontrolled immigration from muslim countries such as Turkey, and refugees naturalised elsewhere in the EU making their way to the UK. it’s important to recognise that parts of the Muslim world have a problem with pluralism — gender pluralism, religious pluralism and intellectual pluralism — and suggesting that terrorism has nothing to do with that fact is naïve; countering violent extremism means constructively engaging with Muslim leaders on this issue. It means visible active engagement with everyday Muslim citizens

• The British people want a government focused on growing the economic pie, not just redistributing it. We have a problem with globalisation,  with automation wiping out middle-skilled work and we need to generate more working class jobs to anchor communities. We have a problem with the rise of precarious, short term, high risk employment and the resulting financial insecurity. We have a problem with the concentration of wealth in London and other metropolitan areas, within the Service sector.

The brexit vote was significantly different to the election of Trump in many ways yet similar in one striking fashion: people voted with their emotions in large numbers. Brexit gave many people an opportunity to say loud and clear that they were unhappy with the status quo, whether that meant poverty, the haves and have-nots, or the scale and speed of change within an ever more diverse society.

The UK government needs to re-connect with the electorate. And when you connect with voters, they feel respected, and when they feel respected, they will listen to anything — including big issues that are true even if socialists believe them. Such as the fact that a majority of their children and grandchildren like being Europeans as well as British.


Inconvenient truths

A recent piece of research has broken down the expected impact of brexit by industry sector and by political constituency ( Not surprisingly the economic impact is negative, no matter where you live and no matter what type of brexit. The economic argument has always been clear.

People who voted ‘leave” voted for other reasons.

And yet whatever those reasons were, they seem doomed to disappointment. We were told that the main reasons given for voting leave were “immigration” and “sovereignty” with a vague suggestion of “control” coming in as well.

Let’s assume that immigration may or may not be related to dog-whistle racism. Let’s assume that “control” means control over the numbers of immigrants entering the country or control over the laws enacted within the UK. Will this brexit deliver what these voters have asked for?

Start with the basic fact that most immigrants to the UK are not from the EU. Most immigrants enter on visas from outside of the EU, either work visas or student visas. This matters because research has shown that in fact the voters of the UK vastly prefer EU ie. white immigrants to non-EU immigrants, though ‘leave” campaigners vigorously deny racism (

The long term net migration for non-EU migrants is around  175,000 according to the ONS ( which makes a mockery of the Tory “target to reduce all net migration to the tens of thousands.

Any proposed immigration controls currently being suggested by the government, were ones available within the EU anyway. EU freedom of movement has always been in service of work and industry. An example might be Belgium’s immigration practice of deporting any EU citizen who hasn’t found a job within three months – all perfectly consistent with the EU rules.

The ONS figures see a fall in the rate of immigration, largely because EU nationals have started returning to their country of origin and fewer are arriving in the UK to take up jobs. It seems likely that a reduction in the increase of immigrants will continue, but that the overall number of immigrants here will still increase i.e. if people voted leave to reduce the number of immigrants they will be disappointed. They have been taken for fools.

So what about those people voting to ‘leave” the EU on the basis of sovereignty? Interestingly the recent Conservative White Paper makes clear that sovereign power has always resided within the UK. The arguments over exercising Article 50, have largely been one of sovereignty, where the government has sought to undermine parliament and grab power for the executive, suggesting that if anything the brexit process could have led to a reduction in parliamentary sovereignty without the intervention of the judicial system. That argument continues with the parliamentary tussle over executive powers when drafting the upcoming Repeal Bill.

Aside from being an incredible example of double-speak (what kind of repeal involves taking each and every part of EU legislation onto British statute books?) there is considerable anxiety within parliament at the scope of cut and paste required to complete the stated objective of this piece of legislation, plus a real sense of distrust that maybe, the government will take this opportunity to change the law rather than just transfer it by perhaps deliberately forgetting to transfer key pieces of protective legislation around workers rights, environmental protections etc.

Let us assume that the government sets out to do exactly what has been described. No one actually knows the extent of legislation that the EU has passed and it’s implications for the UK statute book, because no one has ket a record, There was never thought to be a need. So there is a very real risk that pieces will be left out by accident, and will only be identified when something goes wrong down the line, requiring the attention of the courts and possibly parliament to rectify.

Let’s assume that the UK government, despite the logistical hurdles, manages to transfer each and every piece of EU law onto our own statute book. Does that give us sovereignty in any meaningful sense?

In order to change statute, there must be cross-party support, unless the government of the day has a stunningly large majority and consensus on the topic. The chances of this happening on significant EU legislation are vanishingly small. The UK has always been and will always be, really really bad at revising statute. So actually taking this law onto our own statute book makes it practically impossible to change any of it.

Furthermore if we want to continue to trade with the EU, and as our single largest trading partner we’d be stupid not to, then each and every piece of ew legislation relating to trade etc. will have to be implemented on our own statute book. Leaving the EU has gained us nothing in terms of EU law and regulation so anyone voting “leave” for those reasons should be gutted. They have been taken for fools.

But what about non-EU trade? Well, the Foreign Office are currently looking at our independent WTO trade schedule which will need to be ratified by all members of the WTO once we formally cut our ties to the EU. In order to make this work practically, the FO have decided to copy the EU trade schedule that we currently use, word for word, clause for clause. This is the only practical way to ensure that the other countries sign-off without dispute. So no change, no sovereign gain to be made there.

What about post-brexit, surely we will be able to change our trading schedule as we like? Well, maybe. We’ll be able to try to change the schedule, but each change will need to be signed off by all of the other members including the EU, and to be frank, there are political limitations to what can be achieved without trade-offs. Argentina might decide to cut-up rough about the Falkland island. Spain and the EU might decide to cut up rough about Gibraltar etc. All the practical reasons for adopting the EU trade schedule initially will remain in place making any changes difficult.

But surely we will be able to negotiate trade deals with other countries more easily? Maybe. But the first priority will have to be renegotiating the 50 or so trade deals that the EU has negotiated already with countries such as S Korea, Canada, Japan etc. and that we will no longer benefit from. Any suggestions that brexit might benefit UK trade with the developing world, Africa etc. failed to take into account the damage done by the UK stepping outside of EFTA when it leaves the EU.  Any benefit from a US deal, a newly protectionist US under Trump,  is likely to be offset with damaging concessions within the UK agricultural sector and health sector.

The political reality of becoming a small country once more, one trying to negotiate with much larger countries, is likely to be sobering politically. We may be more noble politically speaking but we will be playing catch up. At a basic level we will be trying to rebuild a negotiating team that we have long outsourced to the EU. We will be trying to catch-up with new deal with those countries whose trade deals we have lost with our EU membership. We be trying not to be pushed around by the sharks, despite our new status as a minnow.

Anyone voting “leave” for reasons of non-EU trading relationships is going to be facing some stark realities for the next decade or so.

Yet when engaging in conversations around brexit, there are plenty of “leave” voters still cheering. When faced with the argument that their reason for voting just isn’t going to be realised, most fall silent. Some retreat to other reasons such as “yes, but … fishing”

The problem is there is an obvious economic rebuttal to be made for each and every alternative (including Fisheries: 80% of the UK catch is sold into the EU and will be subject to tariffs).

But obviously people din’t vote leave because of the economy, they voted leave despite it, partly maybe because they didn’t believe in the predictions but also maybe because they didn’t believe that their local economy could get any worse.

As the regional breakdown of the expected impact of brexit shows, they’re about to find out how wrong that could turn out for them. The greatest impact of brexit will be felt in areas that voted remain, but in many ways those areas are also the wealthiest and also therefore best placed to cope with the downturn. Those areas voting “leave” will be impacted less, but will still lose 1-2% of their economy as a result of brexit. Since the UK as a whole will lose out more, the chances of regional or trade sector grants and allowances being maintained seem slim, so poorer areas dependent on regional regeneration grants, or subsidised sectors such as agriculture, fisheries etc. will be hit hard.

Ho hum. However you voted in the brexit referendum, you are not getting what you voted for. People who voted remain are just the ones who found out first.