Outgoing Institute for Fiscal Studies director Paul Johnson is giving the think tank’s summary of the spending review. There are criticisms…
First Johnson attacks Labour for pretending the economy is better than it was in “Phase One” when it made small cuts and raised taxes. Those cuts which it is now reversing…
“Despite some of the rather odd recent claims, neither the economic forecasts nor the public finances have improved relative to the genuinely difficult situation we knew about a year ago, rather the reverse.”
Johnson added Reeves’ speech “did not appear to be a serious effort to provide any useful information to anybody.” Huge council tax hikes are baked into government expectations and the review “assumes that council tax bills will rise by 5% a year” which means “bills look set to rise at their fastest rate over any parliament since 2001-05.” Most of which is getting sucked up by the NHS, which gets 90% of increases in day-to-day spending…
The IFS chief said there is no longer space for massive handouts to the public sector in pay – teeing up for a battle with the unions. Economists say that today’s poor GDP statistics are not an aberration and are likely to continue. If the OBR scores down its forecast for economic growth Reeves is headed for another clanger of a budget…
The Institute for Fiscal Studies has announced this morning that its Head of Tax Helen Miller will be replacing outgoing director Paul Johnson. Miller has sometimes been vocal on her actual views about tax:
- She has called for a gargantuan wealth tax to confiscate assets of productive wealthy taxpayers: “The case for a one-off wealth tax is simple. If it were unexpected and credibly one-off this would be an efficient way to raise revenue and could be used to address existing wealth inequality.”
- Miller has served since at least 2020 as a formal adviser for the far-left campaign group Tax Justice UK, along with distinguished figures like Jolyon Maugham and Richard Murphy. This group advocates, among many other things, doubling capital gains tax, taxing corporations on global profits (a growth killer), and applying a 2% wealth tax on assets over £10 million (bye bye taxpaying millionaires)…
- Tax Justice UK has also funded far-left think tank IPPR.
- She thinks capital gains tax should be equalised with income tax rates, an effective hike of over 100%.
- Miller supports Reeves’ highly destructive farm tax: “We should treat similar assets similarly for the purposes of inheritance tax, or any other tax, unless there are very good reasons not to. It is not obvious that such reasons exist in this case.“ When even Dan Neidle has backed off it…
- She opposes simplification of the tax system, instead arguing for tax hikes: “We have to have some complexity in order to achieve other aims such as redistribution… Simplification in & of itself shouldn’t be the goal.” Immediately after this Miller said CGT should be hiked…
If the Institute for Fiscal Studies had any credibility under Johnson that has been blown out of the water now. Hacks take note…
Starmer has finished in the Commons answering questions on his defence uplift to 2.7% GDP by 2027. Outside the chamber eyebrows are being raised at the PM’s sums…
The PM said the increase in defence spending would be achieved by slashing funding for overseas aid from 0.5% of gross national income to 0.3%: “And let me spell it out, that means spending £13.4 billion more on defence every year from 2027.” Badenoch asked if that would be funded by tax or borrowing increases, which Starmer batted away:
“She asks me if we’re going to tax to pay for the 2.5% or to borrow to pay for the 2.5%, the answer to that is no which is why I’ve set out precisely pound for pound how we will pay for it today. That has meant a very difficult decision on overseas development, a very difficult decision and not a decision I wanted to take or that I’m happy to take.”
As the Institute for Fiscal Studies has immediately pointed out the sums aren’t quite adding up there:
“The Prime Minister followed in the steps of the last government by announcing a misleadingly large figure for the “extra” defence spending this announcement entails. An extra 0.2% of GDP is around £6 billion, and this is the size of the cut to the aid budget. Yet he trumpeted a £13 billion increase in defence spending. It’s hard to be certain without more detail from the Treasury, but this figure only seems to make sense if one thinks the defence budget would otherwise have been frozen in cash terms. This is of course dwarfed by the significance of today’s announcement but is frustrating nonetheless.”
Serious spin from Starmer there by ignoring the planned increases in the defence budget. Unless the PM misspoke or Labour has another £7.4 billion in its pocket. There’s always the £18 billion for the Chagos deal…
Back in the election campaign the non-dom tax, new private equity rules, and levying VAT on private schools were touted as Labour’s main revenue-raisers for all of its manifesto commitments. Remember that?
The Telegraph has dug out a video from the IFS in which director Paul Johnson spells out what the policy actually means for the Treasury’s coffers. Zilch…
Johnson was promoting a report from the think tank which predicted the taxman would at least take in more from the policy that it would lose – a proposition contested by numerous other reports. As Guido revealed last month the report was literally written by the best man of the minister implementing the tax…
Even Johnson couldn’t hide how useless the tax grab is for revenue. He says it will not make “any real difference to the amount of money available” for state education, will raise “a tiny, tiny amount of money,” and that the public should not “be fooled into thinking this is going to make any real difference to the amount of money available for public services.” Back to the blackboard…
Paul Johnson has just announced he is stepping down as Director of the Institute for Fiscal Studies. He’s been in post since 2011…
Johnson says “after 14 years at the helm, it feels like the right time to move on and start a new chapter in my life.” He will become Provost of Queen’s College, Oxford. The IFS says the search for his replacement will “take place over the next few months.” Plenty of tax fans circling around SW1 to choose from…
Eyebrows have long been raised about the widely-cited “independent” Institute for Fiscal Studies report into private school VAT. It has been used to “fact check” widely-held worries that Starmer’s class war on private schools will 1) funnel unsustainable numbers of children into the state system, and 2) not raise enough money. The report has for many months been the only shield for Labour politicians seeking to bat away legitimate concerns over its tax plan…
Last week it was confirmed that already 10,540 fewer students are at private schools – and that’s before Labour’s tax is even introduced. The IFS claimed 17,000-40,000 students in total would shift to the state sector. Co-conspirators might wonder why their report is so sympathetic to Labour’s policy…
As it turns out the caveat-filled report’s only author Luke Sibieta has been close mates for years with the Labour minister responsible for its implementation. Sibieta and Matthew Pennycook lived together in the noughties – Pennycook was even Sibieta’s best man at his wedding. Details of which have been meticulously scrubbed from almost everywhere on the internet…
The government has confirmed that the business rates policy change, one half of the tax raid on private schools, “will be legislated for through a Local Government Finance Bill led by the Ministry of Housing, Communities and Local Government.” Pennycook’s department…
Lobby journalists treat interventions from ‘independent’ tax-fanatics at the IFS – such as today’s new call to massively hike capital gains tax – as gospel. Maybe when hacks work out that these wonks might not be as impartial as they are so desperate to appear they will treat endlesss calls for tax increases with a little more scepticism…
Speaking at his speech on how to achieve “progressive capitalism” Wes Streeting fired a dig and Andy Burnham:
“Bond markets are not bond villains and fiscal rules matter.”
