Wonk Wars: The Rankings

ComRes have today revealed their rank bank of think tanks, assessing where the esteemed establishments rank among MPs of different parties. Their bi-annual survey of MPs has found that the Centre for Policy Studies and the Institute of Economic Affairs come out on top among Tory MPs, with 65% and 59% of Tory MPs respectively endorsing them for their ‘high quality output’. Free market ideas still rule the roost, despite the leanings of the current party leadership…

Additionally, 39% of Conservative MPs say the CPS is one of the most influential think tanks, with the IEA nearest on 35%. The Centre for Social Justice, Institute for Fiscal Studies and The Taxpayers’ Alliance follow closely behind to round out the top five. The CPS are by far the biggest climbers with a sizable 13% jump, testament to their recent star hires

Labour MPs liked the IPPR best, with the Joseph Rowntree Foundation and IFS falling in behind. On an overall cross-party basis, the top five most influential wonks were the IFS (37%), followed by the JRF (30%), Chatham House (28%), the IEA (28%), and the CPS (24%).

Oddly, the Adam Smith Institute wasn’t included in the list for MPs to choose from, despite some big policy wins this year. Guido hears the CPS has sportingly called on ComRes to include the ASI next time round…

Read the report in full below:

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CPS Propose ‘Universal Working Income’ to Take Poorest 2.4 Million out of Paying Tax

The Centre for Policy Studies launched their new policy agenda at a snazzy reception with the Prime Minister last night. The first report in the agenda is entitled ‘Make Work Pay’ and suggests a simple change to the UK’s currently ludicrously complicated tax structure.

The CPS’s ‘Universal Working Income’ would see everyone keep the first £1,000 they earn each month entirely tax-free – taking the lowest paid 2.4 million people out of paying both Income Tax and National Insurance altogether. It would be a progressive tax cut, with the poorest seeing the biggest benefits:

It would also be a hugely popular policy – CPS polling reveals it is supported by more than three quarters of the electorate…

CPS Claim ‘Cost-Neutral’ Policy Will Create One Million Homeowners

The Centre for Policy Studies has come up with a novel proposal which they say could see one million more people become homeowners in one year. ‘Help to Own’ aims to make it easier for ‘Generation Rent’ to buy while also incentivising landlords to sell to their tenants by introducing a scheme for a single year that would pool capital gains tax receipts on the sale of rented homes in order to then grant them back as rebates to landlords and tenants.

33% of each rebate would go to the landlord while 66% would go towards the deposit of the purchasing tenant. The CPS have crunched the numbers and say the net effect would be to increase revenue to the Treasury, while the tenant would only need to stump up the cash for 3.33% of the property upfront, with the capital gains rebate making up the rest of the 10% deposit they need to get on the property ladder. Like ‘Right to Buy’, ‘Help to Own’ could be a game changer in granting people a tangible stake in the economy, all at no extra cost to taxpayers…

Truss: Fund Spending Plans With Cuts Not Taxes

The Truss / Gove banter last night has been blown out of all proportion, with one headline about the story actually reading: “Tory Cabinet Falls Into Open Warfare”. It was a joke about Gove rhyming with stove. Believe it or not, there are more important Cabinet splits than this one…

The row has distracted from the more interesting contents of the Truss speech, which was as sound an intervention as you are ever going to get from a minister in a Theresa May government. You can read it in full here. One interesting line was her endorsement for the Centre for Policy Studies’ campaign to fund the government’s spending plans with cuts rather than tax rises. She wants MPs to attend a series of meetings to make proposals for cuts to waste and low value areas of spending, to be published by the CPS at Tory party conference.

“The more government spends, the higher taxes have to be… higher tax means less money for me to decide when to go on holiday or buy a new car… there are many ageing countries with advanced economies that do not have high tax and spend… Canada, after the misconceived expansionist years in the 1960s, when they raised taxes and nationalised businesses…rescued their economy in the 90s by cutting spending and balancing the budget… All across the world, countries are addressing their problems not simply by raising tax and spend, but by reshaping and reinventing themselves… Some of my colleagues are not being clear about the tax implications of their proposed higher spending… I want to take a zero-based, zero-tolerance approach to wasteful spend. We need to take a look at ourselves and think “what is the best way to use the money entrusted to us?” We have to make every pound pull its weight. We have to make every pound pull its weight.”

It is all too rare these days that any Tory makes these noises. It is the polar opposite of Number 10’s approach, and far more interesting than the Gove bluster. At least one leadership candidate will be backing lower taxes next time round…

CPS Warns May Against NHS Tax Rise

Following Guido’s report that Number 10 is considering a possible NHS tax or general tax rise to fund new health spending, the Centre for Policy Studies has written to Tory MPs warning them against the idea. The CPS is calling for reform rather than throwing money at the problem, and funding through economic growth not tax rises:

Depressing that this even has to be said. There is not much conservative about the Conservatives at the moment.

Will the Young Still Grow into Old Tories?

Who Would You NEVER Vote For?

The Centre for Policy Studies is trying to convert the young away from socialism and fix “the urgent need for the Conservative Party to make the case for its values and principles to the younger generation”.  What Guido noticed in their pamphlet was the party people say they would never vote for. No surprises, antipathy to the Tories halves as the decades pass – and the number for whom voting Labour becomes anathema triples. It echoes that ever-contested quote: “If a man is not a socialist by the time he is 20, he has no heart. If he is not a conservative by the time he is 40, he has no brain.” Perhaps the age brackets are out of date…

Stephen Bush argued in the New Statesman that “this time it is different” and as people get older their values won’t change, they will basically stay socially liberal and keep voting Labour. An argument that has been made since the 1960s and it still hasn’t stopped the centre-right governing for most of the last half-century in most of the West. He could be right about the future, however it is the populists who are hoovering up support from socially conservative types intolerant of minorities. Conventional centre-right conservative parties are already socially liberal in most Western democracies.

David Aaronovitch, Emily Thornberry and others argue that the “Brexit generation” are dying out. Demographics suggest otherwise, people are living longer and voting for right-of-centre parties for longer. Their numbers will be refreshed, just as they have throughout the last century, as younger Labour voters become parents and homeowners. That is so long as the Tories fix the housing affordability problem…

Wonk Watch: Ex-No.10 Aides Form New CPS Team

Wonk world transfer news: the think tank founded by Margaret Thatcher and Keith Joseph, the Centre for Policy Studies, has unveiled a new team and policy programme this afternoon:

  • Alex Morton: ex-No.10 policy unit and Policy Exchange, he will oversee the new policy programme
  • Rachel Wolf: also former No.10 and founder of the New Schools Network, commissioned to work on welfare with her firm Public First
  • Rosie Lyburn: former SamCam aide is head of development
  • Tom Clougherty: ex-ASI and Cato, will be head of tax
  • Graham Edwards: Telereal Trillium property boss will lead work on housing
  • Emma Barr: joins from CCHQ press office as the new head of comms
  • Declan Pang: former IEA, now head of external engagement
  • John Ashmore is joining CapX from PoliticsHome as deputy editor

The plan is to make the case for free markets, ownership and control of people’s lives to a new generation…

Abandoning Austerity Wouldn’t Increase Wages

Boris, Jeremy Hunt, Justine Greening and other MPs flirting with Torbynism should read today’s Centre for Policy Studies report ‘Abandoning Austerity is No Solution‘.

Ireland’s significantly larger fiscal consolidation has seen it experience a larger fall in its deficit, a larger proportionate fall in unemployment and better wage growth than the UK, counteracting the narrative that a higher level of austerity leads to economically harmful outcomes. If only Osborne had been as radical as his Irish opposite number Michael Noonan. Osborne excused his lack of radicalism on the deficit on the grounds he was in a coalition and “had to get re-elected”. Fine Gael were also in a coalition and got re-elected… 

This is reflected across other OECD countries that had a large budget deficit in 2010. There is a strong correlation between those countries that cut spending by a higher degree, and countries which achieved better economic growth and better wage growth.

As the CPS says:

“Even John Maynard Keynes argued that austerity should be used at the top of the business cycle, and it is vital that the UK’s budget deficit continues on a downward trajectory… In fact, the UK’s budget deficit reduction programme is already very modest and the UK’s tax burden is already set to climb to its highest level in four decades by 2025.”

The report finds that the only responsible ways to increase public sector wages would be to re-gear spending priorities, for example by making savings in the international aid budget or ring-fenced pensioner benefits. It also suggests further extending regional pay structures (apart from London weightings, there are no other areas of England where huge differentials in cost of living are matched by pay). Take note Torbynistas…

New Free Schools Raise Local House Prices

The Centre for Policy Studies has a new report out today about How to Overcome Selection by House Price which deals with the issue raised nearly 20 years ago by the then Labour Education Minister Andrew Adonis: “Comprehensive schools have largely replaced selection by ability with selection by class and house price”. Good state schools are in middle-class areas with high house prices.

Which is why Michael Gove was determined to put free schools, which on average have higher standards, in the most deprived areas. Free schools are deliberately ten times more likely to be in poorer areas.

This has had an interesting side-effect according to a New Schools Network report: the average house price rise since 2011 in areas where a free school has opened is 73% more than in areas where there are no free schools. Guido suggests that highlighting this point might help overcome opposition to free schools more than any arguments about standards and social mobility…

Wonks Slam Hammond’s White Van Man Bashing Budget

Philip Hammond’s brutal Budget attack on Britain’s army of hardworking self-employed is going down like a cup of cold sick in the wonk world.

Centre for Policy Studies:

“Changes around national insurance and the tax-free dividend allowance will have an impact on UK competitiveness.”

Institute of Economic Affairs:

“It is right that the self-employed and employed should pay similar National Insurance Contributions – the Government should not set tax rates that artificially favour one form of employment over another. However, it would have been better to level the playing field by cutting NICs for the employed rather than raising those for self-employed. NICs are a tax on jobs and wages and reducing their burden would help many lower-income households.”

Taxpayers’ Alliance:

This should be done by cutting rates rather than hiking taxes on entrepreneurs.”

The Association of Independent Professionals and the Self-Employed:

“If you are one of the hardworking self-employed people who face a significant increase on your tax bill, you might feel that the Chancellor has it in for you. When you look at the additional support offered for business rates it appears as if the Chancellor is supporting SMEs by hitting entrepreneurs and the smallest of businesses.

“Adding in the reduction in Dividend Tax allowance, whether you work as a sole trader or through limited company you will be facing higher bills. The Chancellor shouldn’t forget that growth in self-employment has driven our labour market in recent years and punitive rises in tax will make many people have second thoughts about striking out on their own.”

Centre for Economics and Business Research:

“People who work for themselves and who set up and run companies should be encouraged. Instead the Chancellor has singled this group out for a £1,425m tax hike on the misleading ground that they pay less tax, ignoring the risks they take. Disdain to this group is a typical Treasury attitude. Many of the self employed are IT consultants and are especially critical to the economy.”

Institute of Directors:

“The ‘nothing to see here’ approach adopted by the Chancellor will only fly for so long. The Chancellor’s jokes may have been funnier than anybody expected, but it’ll be business leaders’ resilience that’ll be needed to ensure we’re still smiling in November.”

And just wait until you see tomorrow’s papers…

Bank of England Must Stop ‘Depending on Kindness of Strangers’ to Bolster Economy

We’re fast approaching the eighth anniversary of UK interest rates being lowered to 1%. This is unprecedented, as is QE. This “unconventional monetary policy” is having severe economic consequences, argues Brian Sturgess for the Centre for Policy Studies in Stop Depending on the Kindness of Strangers.

In the foreword, Sir Martin Jacomb writes: “The idea that credit should be cheap, that savings are pointless, and that borrowing levels do not matter, is contrary to common sense. Harm is being done to individuals, to businesses and to the next generation.”

Sturgess warns these policies have failed to stimulate economic growth and encouraged ‘zombie capitalism’ and the rebuilding of corporate balance sheets ahead of productive investment, among multiple other side effects, contributing to the kind of unfairness that Theresa May and Donald Trump have both highlighted. It’s time to grow up and return monetary policy to normal, or we could be in for even greater pain.

Content produced and sponsored by the Centre for Policy Studies.

Tyrie: Government Job Would be “Greatest Honour”

TYRIE

As expected Andrew Tyrie came out for Remain today with a speech at the Centre for Policy Studies. Equally unsurprisingly, Tyrie told the room he was open to a government job in the future:

“I’ve always said it would be the greatest honour to serve in any government.”

Asked if Nadine Dorries was right that he’d been offered a “sniff of Osborne’s dirty socks”, he replied: “David Cameron’s never offered me anything. I’m not aware that he is going to me anything”. Yet…

The long-term Europhile said he was “disappointed by the EU negotiations, I felt we could have asked for more”. Tyrie has condemned both the Leave and Remain campaigns for misleading figures. What was it that made him reserve stronger criticism for Leave today?

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