Covering the IEA’s new report on the free speech-attacking Online Harms Bill (OHB) this morning, Guido noted “If the government wants to get the Boris show back on the road, and reassure Tory members and MPs that this government is worth fighting for – while saving at least £2.5 billion – scrapping swathes of this big-state bill could not be a more obvious starting point.” New polling released today, coinciding with the IEA’s report, shows this was on the money…
The poll of 982 Tory Party members, conducted by YouGov on behalf of the Legal to Type, Legal to Say campaign, is crystal clear that the government is utterly barking up the wrong tree here. When asked “Do you think people should or should not be able to post content online that is legal, but that some people might find offensive or harmful?”, as the OHB aims to prevent, 79% of members said people should be able to do so.
Asked whether they believe there should be a discrepancy between what is legal to say online and offline, as Lord Frost today points out the OHB will create, again 79% say “anything that is legal to say in public should be legal to say online”. Just 17% believe “there are some things that are legal to say in person, which should not be legal to say online”.
Asked whether they trust Ofcom to be impartial, 51% of members said either not very much or not at all, versus 38% who answered a great deal or a fair amount.
Asked to rank issues relating to online safety by priority for the government, 73% agreed that illegal content such as child sexual abuse is important, followed by 58% for terrorism materials and 41% for illegal online abuse such as stalking, racial abuse and harassment. Just 3% said the government should prioritise “comments which are offensive but do not break any laws”.
While 81% of Tory members trust Boris Johnson to care about freedom of speech, by contrast 80% do not trust social media companies – the people who will be given much greater moderating responsibilities after the OHB comes into force – to protect it. This all seems cut and dry. It will be very difficult for the PM to point to a change of thinking and strategy over the coming months if the anti-free speech provisions in the Online Harms Bill are not dropped…
On Saturday, Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy wrote to the Competition and Markets Authority (CMA) requesting that it
“conduct an urgent review of competition in the fuel market, and to provide advice to the UK Government on steps that might be taken to improve outcomes for consumers across the UK.”
Guido can save Kwasi and the CMA a lot of effort. No inquiry is needed. Government taxes account for more than ten times* as much of the cost of fuel than retailer margins. If you want to improve outcomes for consumers, cut fuel taxes.
Andy Mayer, Energy wonk at the Institute of Economic Affairs, predicts:
“The inquiry will also find nothing new. There are over 8,000 fuel stations in Britain. It is self-evidently a competitive market, and could be more so by removing restrictions to competition, like motorway service licensing. The answer to high prices today is lower fuel duty. The answer to local differences is to build a rival, not more regulation. And the answer to lower long-term prices is more domestic production, not windfall taxes, banning onshore drilling, and dependency on imports.”
The failure to frack, along with high fossil fuel extraction taxes, add further hidden costs to wholesale barrel prices, which are then passed on to consumers at the pump. All due to the government…
*Retail fuel profits account for between the 2-4% (RAC) of each tank. Whereas, 45%-46% are taxes and 7-10% from the biofuel mandate.
On cue, Westminster’s wonks have whirred into action to give their two pennies’ worth on Rishi’s big cost of living cash splurge. As usual, Guido brings you the lowdown on what Westminster’s think tanks – and a few others this time – have to say about today’s announcements:
The Adam Smith Institute is broadly supportive of the measures, although they’re less enamoured by the government’s plan to pay for them. Director of Operations Morgan Schondelmeier said:
“A one off cash payment direct to the most vulnerable households is the clearest way to provide immediate support with the least distortionary effects. Uprating benefits in line with CPI is also a sensible measure to ensure the least well off don’t get left behind. Finally, the Chancellor is right to scrap the repayments on the energy bills rebate – a poorly designed scheme from the start… A conclusion the Chancellor never should have reached was that a windfall tax is a good idea. Spending months arguing against it both practically and ideologically and then caving to pressure from the left leaves much to be desired for a ‘fiscally conservative’ Chancellor.”
The Institute of Economic Affairs is much more critical, lambasting Rishi for u-turning while still refusing to cut taxes. Director General Mark Littlewood said:
“The worst way to make policy is to oppose something half-heartedly in principle, then procrastinate and finally change position as a result of political expediency. It is painfully obvious that in the battle of ideas, the government enters the arena wholly unarmed. Rachel Reeves, the Shadow Chancellor, is right to say that this represents a policy victory for Labour. The default setting of the Conservatives now is to respond to virtually any problem by increasing taxes and spending even more money. The appetite and ability of the government to lower taxation or reduce the regulatory burden on businesses is approximately zero.”
The TaxPayers’ Alliance isn’t impressed either, claiming the move is “little more than the government taking with one hand and giving with the other“. Chief Executive John O’Connell said:
“Taxes are the single biggest bill families face and these huge handouts will see politicians hoovering up the incomes of struggling taxpayers, creating a cost of government crisis. If the chancellor wants to boost growth and help households, he can deliver both right now by bringing forward the planned income tax cut and slashing costly levies on energy bills.”
The Centre for Policy Studies welcomes the support for the vulnerable, although like the Adam Smith Institute, they’re sceptical of paying for it via a windfall tax. Head of Welfare and Opportunity James Heywood said:
“The measures strike a good balance between limited universal support, in recognition of the pressures all households are facing, and targeted support for those on the lowest incomes. They also reflect the need to get cash to households quickly and minimise the numbers of people falling through the cracks, given the limits on government’s ability to administer such schemes.”
Head of Tax Tom Clougherty added:
“We remain highly sceptical of the fiscal and economic case for a windfall tax. We are concerned about the impact it could have on long-term investment in the UK energy sector… That said, the chosen version of the levy was not as bad as it could have been, due to the inclusion of generous investment allowances as a compensatory measure.”
Resolution Foundation Chief Torsten Bell is obviously hugely supportive of policies that involve printing money. He writes:
“The Chancellor has announced a big and very welcome package of support for households facing fast rising energy bills. It almost doubles the level of energy support to over £30 billion, and fills the huge gap in previous announcements with large targeted support for those hit hardest. The decision to provide one-off payments this year to poorer households, pensioners and those with a disability is a good attempt to target those with higher energy bills – although the relative lack of support for larger families stands out.”
The Institute for Fiscal Studies also gives the announcement the thumbs up, albeit with the caveat that the policy is “less generous to poor families with children than to those without.” Director Paul Johnson said:
“Rishi Sunak has announced a genuinely big package of support for households. On average the poorest households will now be approximately compensated for the rising cost of living this year. The flat rate nature of payments to benefit recipients does mean, though, that the package is less generous to poor families with children than to those without. Even so, put these benefit increases alongside the tax rises just implemented, and Mr Sunak is engaging in some serious redistribution from rich to poor – albeit against a backdrop of rising inequality.”
Money saving expert Martin Lewis, who’d been calling for a big intervention for weeks, is also happy with the plans. He’s sitting down with Rishi at 5.30 today for a live Q&A on the plans. In the meantime, he’s put out a reaction video on Twitter:
My instant response video & analysis of the Chancellor's energy cost of living announcements and changes (done at speed)... pic.twitter.com/Mcvth3p8we— Martin Lewis (@MartinSLewis) May 26, 2022
Returning to parliament, so far only John Redwood and Richard Drax have come forward to question Rishi’s thinking. Redwood welcomed the move to protect vulnerable consumers, though he gave Rishi a stern warning about uncontrolled inflation:
Rishi responded by insisting he has “long been concerned about the risk of rising inflation”. Richard Drax wasn’t buying it, warning Rishi that
“throwing red meat to socialists by raising taxes on businesses and telling them where to invest their money is not the Conservative way of encouraging those who create our prosperity and jobs to do just that.”
The Tories can’t, and shouldn’t be trying to, outspend Labour…
Westminster’s wonks have once again whirred into action, poring over every dot and comma of Rishi’s spring statement. Guido brings you the lowdown on what Westminster’s think tanks have to say about today’s announcements:
Unsurprisingly the Centre for Policy Studies are the happiest of the bunch, given they’ve been campaigning for Rishi’s NIC-Income Tax threshold parity for four years now – a report first launched by Theresa May herself. Tweeting an immediate reaction that no doubt Rishi’s advisors will be delighted with, director Robert Colville said the Chancellor had “decided to go full Lawson.”, with the wonks’ full reaction saying:
“We are delighted that the Chancellor has adopted our proposal to increase the National Insurance payment threshold to match the Income Tax threshold and create a Universal Working Income. It is great to see CPS ideas continue to make their way into Government and help reduce the tax burden for millions of people.”
The Adam Smith Institute isn’t so impressed, claiming the statement “leaves a lot to be desired” despite a welcome rise to the NIC threshold. ASI Director of Operations Morgan Schondelmeier writes:
“At a time when gas prices are only getting higher, we don’t need to be gaslit by a Chancellor who continuously claims to be a low tax fiscal conservative… In an ideal world, the Chancellor would have scrapped the planned National Insurance Contribution rise, although it is encouraging to see that he plans to raise the NIC threshold in line with income tax thresholds… All in all, the Spring Statement leaves a lot to be desired. There are promising mentions of a review of full expensing policy and increasing private sector investment, but more immediate relief for the rising cost of living and our oppressive tax burden are needed.
The Taxpayers’ Alliance calls it a mixed bag, praising the NI threshold hike while claiming the planned income tax cut is “taking with one hand to give away with the other”. Chief Executive John O’Connell says:
“Taxpayers suffering through a cost of living crisis will welcome wins on fuel duty and income taxes. Soaring inflation has given the chancellor extra wiggle room, but this tax plan needs to come alongside an efficiency drive to eradicate waste and tackle the colossal cost of covid. Rishi must get a grip on spending if he wants to restore balance to the public finances while boosting growth and letting taxpayers keep more of their own money. Though a cut in income tax is welcome, in reality the Treasury is taking with one hand to give away with the other.”
The Centre for Social Justice also welcomes the NI threshold rise, though inevitably added they wanted to see uplifts to Universal Credit. A spokesperson says:
“We welcome the measures the Chancellor announced today to shield those on lower incomes from the impact of the National Insurance rise. But the reality is this cost of living crisis is just getting started – and today we needed to see a strategy for those struggling the most.
Resolution Foundation Chief Torsten Bell doesn’t mince his words, calling the statement “badly designed” and nonsensical. He writes:
“It’s crazy to raise National Insurance so you can cut Income Tax. Really not clear to me that what 21st Century Britain needs is to make things harder for workers and easier for pensioners/landlords… It’s even crazier to only have £0.5bn of support for lower income households in the face of the biggest cost of living hit for generations – contrast with the £10bn real terms benefit hit they face in the year ahead. This is a bigger package than many are saying, but it’s a really badly designed one.”
The Institute of Economic Affairs praises the promised cuts to income tax and fuel duty, although warned of the dangers of inflation and labelled the statement a “mitigation mini-Budget“. Director General Mark Littlewood says:
“The reduction in fuel duty will make a small difference to households. The decision to raise the National Insurance threshold means workers on an average wage will see their contributions fall, despite the planned 2.5 percentage point rise going ahead. The pledge to reduce the basic rate of income tax is welcome. But the UK will spend £83 billion on debt interest this year – almost double our entire defence budget. The Chancellor will not achieve economic ‘security’ without a commitment to drastically bringing down our tax bill and reducing government spending, which has spiralled out of control. Only then will he boost our anaemic growth forecasts.”
Onward‘s director praises Sunak for protecting the lowest earners against inflation, and dismissed critics for insisting he should have scrapped the NI rise. Will Tanner said:
“Today’s statement was a firefighter’s statement. The Chancellor has warned about inflation since he entered the Treasury and today his warnings were realised. The 5p cut to fuel duty and the rising threshold for National Insurance contributions offer considerable protection against spiralling inflation, especially for those on the lowest incomes – and, from 2024, he ensured that voters will keep an extra penny from every pound they earn. Critics will say he should have scrapped the planned National Insurance rise. But doing so would have meant finding £12 billion elsewhere for the NHS and social care, or explaining to voters why they must wait months for operations in the run up to a general election. Ultimately this left him with no easy choices.
James Kirkup, Director of the SMF, said:
“Public spending as a share of the economy is at its highest since the late 1970s. The tax burden is at its highest since the 1940s. Higher debt interest payments will cost almost £100 billion in the years to 2027.
Politically, the state is as big as it can get and any politician who wants cash to fund crowd-pleasing policies – be they tax cuts or more spending – will have to think creatively about how to fund them. That means reforming public services to make them more efficient – taxpayers deserve to get more bang for their bucks.”
Connor MacDonald, Head of Policy Exchange’s Economic Unit, said:
“This Spring Statement comes at a time of immense volatility. It is not surprising that the Chancellor stuck to the fiscal rules, given that it is likely that in the Autumn more fiscal firepower will be needed. This is probably the prudent approach, and it should be pointed out that the Chancellor did use more of the fiscal upside from increased revenues that previous Chancellors have done. It is right that the Chancellor simplified the tax code by aligning income tax and NIC thresholds, and it is vital that the consultation on tax that the Chancellor announced today delivers substantial pro-growth reforms. One area that may need to be reviewed is that benefits were not uprated relative to the new inflation projections. Given current volatility, six-month lags in uprating benefits to CPI are probably not helpful. Continuing to uprate at 3.1pc may be particularly problematic for disabled people, a group where there has been a widening employment participation gap since the pandemic, according to the IES. The Chancellor has very hard choices in extremely difficult circumstances, and the decisions made today highlight the extent to which there are choppy waters on the horizon.”
Guido will have his own response coming out soon…
Aside from partygate yesterday, the government celebrated the two year anniversary of Brexit, publishing a 100-page document of the victories so far and plans for future Brexit-enables successes. According to Steve Barclay and the Cabinet Office, the government’s achieved 76 policy changes so far that wouldn’t have been possible within the EU. Most are sound and should be shouted about, some were rather tenuous…
Wonks were quick to share their two cents on the paper and the government’s stated plans to use Brexit to improve the country’s regulations and legislation.
The CPS welcomed the white paper, particularly supporting the intention to make Britain the best regulated economy in the world; as well as ensuring regulators take into consideration competition, growth and innovation when assessing the impact of decisions; simplifying burdens for SMEs; and the freeports agenda. They did, however, criticise the abandoning of a ‘one in, two out’ pledge on new regulations…
“Fixing our regulatory system is one of the great opportunities of Brexit. But that needs to apply to all regulations, not just those inherited from Brussels.
The £1 billion target for cutting post-Brexit regulation is headline-grabbing but relatively unambitious. We need more detail on what will replace the current system of regulatory budgeting and business impact targets, which are due to expire. It is especially concerning to note that a one-in-two-out system was considered but rejected – apparently because it will be too difficult to implement alongside Net Zero.”
The IEA were more critical, saying the government “is talking a good talk on cutting red tape yet failing to walk the walk”:
“The Prime Minister is making the right noises about tackling the regulatory burden all the while introducing laws and regulations that go in the opposite direction.”
“Brexit was meant to provide us with greater freedom not even more burdensome rules derived from Whitehall rather than Brussels. From online safety to Net Zero, it’s hard to see how the government is sticking to its own principle of regulating only when “absolutely necessary”.”
UK In A Changing Europe’s Anand Menon accused the document of “missing the trade-offs”, and it appeared the report had been published “because of where the Prime Minister is”. Guido presumed it was more to do with the two year anniversary of Brexit…
Top Taxpayer’s Alliance research out this morning reveals the average cost of each MP skyrocketed during the pandemic, from £157,747 per member in 2019-20, to £203,880 in 2020-21 – a 29% increase. This shouldn’t come as a surprise to co-conspirators, given Guido’s repeated coverage of boosts to their expense allowances:
This goes without mentioning the new funding for extra staff and, of course, Airpod-gate.
Now the TPA has put together a list of Britain’s most expensive MPs, which can be read in full below. Coming in at number one is Anna Soubry’s replacement in Broxtowe, Darren Henry, who racked up a total of £280,936. This compares to the least expensive, Philip Hollobone, who spent £80,709. Kit Malthouse takes the crown for most expensive MP attending cabinet.
This year’s figures are especially interesting as, for once, they’re not dominated by Scottish and Northern Irish MPs, who usually take all the top spots thanks to their high travel costs. The virtual parliament has, however, allowed Britain’s biggest spending MPs to really shine through…