The annual Council Rich List is out and the data provides insights into local government. Rather than moaning about the increase in six-figure earning local officials, Guido thought we should perhaps pay tribute and applaud one council, Epping Forest, where the number of officials drawing six-figure pay packets has halved from ten to five. Guido notes that the council has not one Labour Party representative on it…

The Taxpayers’ Alliance has created this very handy interactive map so you can see for yourself how your council is performing:

They highlight that:

• The number of officials earning over £100,000 has increased five-fold since the Council Rich List was first published. In 2007, there were 578 council officials earning above £100,000. In the last financial year, which this list covers, at least 2,921 people were employed by local authorities on this amount.
• The number of officials earning over £150,000 has increased ten-fold since the Council Rich List was first published. In 2007 there were 64 council officials earning above £150,000, compared to 739 in the 2020-21 financial year. There are now more council officials on over £150,000 than there were total officials on over £100,000 15 years ago.

Something to contemplate when you consider your council tax bills before the local elections. Are the most effective councils really the ones with the most highest paid officials?

Ahead of Rishi’s Spring Forecast Statement due in two weeks, the Centre for Economics and Business Research has issued a chilling scenario analysis which calculates the likely knock on effect from Russian sanctions on global commodity prices and consequently UK inflation. They expect GDP growth this year will be halved – down from a previously forecast 4.2% in 2022 to 1.9%, with growth in 2023 reduced to zero. They calculate the reduction in GDP to cost more than £90 billion per annum…

Higher commodity prices will:

• Reduces the level of disposable income by 1.9% in 2022 and by 2.1% in 2023. As a result they estimate disposable incomes will fall in 2022 by 4.8%, with a further fall of 1.4% in 2023. The fall in 2022 is the largest since records started in 1955.
• The forecast fall in living standards this year is an estimated £71 billion – which amounts to £2,553 per household. The part of it due to invasion of Ukraine is about half – £35 billion (£1,259 per household) – with a further reduction from this source in 2023 of £29 billion (£1,043 per household).
• The combined effects of sanctions and slower world trade growth reduce export growth in 2022 by 2.1% and by 0.5% in 2023. Export growth was previously predicted to be 3.0% this year and 0.4% next so these combined impacts more or less wipe out the predicted export growth.
• Inflation by Q4 2022 is likely to be 4.1 percentage points higher than CEBR previously forecast. They now expect quarterly CPI inflation to hit 8.7% in Q2 and to remain above 7% until Q1 2023.
• The CEBR now expects the Bank of England to guide interest rates to 1.25% in 2024 rather than the previous forecast of 2%.

CEBR’s analysis was based on oil and other commodities being at lower prices than they actually are today. Rishi is going to be under pressure to put the economy on a semi-wartime setting in his spring statement…

As the Tories become the party of tax and spend it’s noticeable that Starmer’s essay references a newfound emphasis on keeping taxes low for workers and being careful when spending taxpayers’ money. Here’s a flavour of some extracts:

Why when government departments are funded by taxpayer money are we so lax about ensuring that money is spent appropriately? …

There can surely be no greater example of the misplaced priorities and hubris of this government than the fact it is currently spending hundreds of millions of pounds of taxpayer money on a vanity yacht when that money could be spent on tackling anti-social behaviour. 

The government should treat taxpayer money as if it were its own. The current levels of waste are unacceptable.

Starmer seems to have even come to appreciate capitalism:

The role of government is to be a partner to private enterprise, not stifle it.

All very encouraging. Guido asked the wonks at the Taxpayers’ Alliance to have a read of Starmer’s 12,300 word-long Fabian essay and tell him what they thought:

Looking at the report, the comments on waste, transparency and efficiency in the public sector through technology are welcome. One line also mentions that Labour wants the low-paid to keep more of the money they earn.

On the other hand:

Our concerns would include the commitment to increasing the minimum wage, emphasis on significantly more public spending to tackle climate change and increased role of the government in business. He also promises to buy, make and sell in Britain – a fundamentally a protectionist policy and means taxpayers don’t get best value for money.

They have, however, decided that on balance Starmer’s newfound commitment to low taxes means he would be welcome to join the thousands of members of the Taxpayers’ Alliance. Starmer can register his support here!

The Adam Smith Institute has today published a paper on how to implement an Israeli-style deployment to deliver vaccines at a greater pace. The paper notes that every additional week of the pandemic costs the taxpayer £6 billion, while reducing economic activity by £5 billion. In order to end it, the paper insists Government has to fully utilise the private sector, armed forces, and volunteers. Israel is currently vaccinating ten times faster than the UK.

From drive-in vaccine centres and 24/7 sites, to immediate approval of the Moderna vaccine, prizes for best employees and centres, and home delivery kits for diabetics who already self-inject – there is a lot here for policy makers to take up. The paper recommends boosting jab targets to six million doses per week, and to go even higher once that target is reached. Guido’s own suggestion is to turn now available empty schools and pubs into local vaccination centres.

Read how below:

Read More

The government released new details today of a study on their impending bonkers ad ban, which, despite all previous evidence that such illiberal clampdowns don’t work, they hoped would justify the move. The government’s own research suggests an ad ban will reduce children’s calories consumption by just 2.8 calories per day. 

2.8 calories per day per child would – assuming no exercise – add 1 pound per three and a half years – and all for the destruction of thousands of small and medium businesses, and depressing the advertising industry. Not only is a 2.8 calorie reduction pathetic, the ASI’s Matthew Lesh points out even this is likely to be an exaggeration:

“The review that the Government’s calculations are based on – Viner et. al (2019) – does not contain any studies that simulate a realistic environment in which children are exposed to ‘junk food’ advertisements. In all of the 11 studies included, children were allowed to consume an unlimited quantity of food at no cost and none featured parental supervision.”

The government’s figures also calculate the advertising market – for what Whitehall refers to as “high fat, sugar and salt (HFSS)” – is £438 million (59% of the total online food and drink advertising market) with a hit to online platforms of £271 million per year.

With around 11 million children from 5–18, the UK government is set to sacrifice £813 million of online advertising revenue in return for one pound lost per child. Turns out this weight loss malarkey isn’t as easy as just taking candy from a baby…

Away from the glossy spin now expected from team Rishi, there is a distinctly nervous reaction from the right’s ideological bastions. Delving into the details of the Chancellor’s spending review announcement, think tank responses range from at best unease to at worst some disdain for the government’s decision to double down on further increasing record levels of public spending. Is this the start of a growing gulf between wonk world and Number 10?

The Centre for Policy Studies are the warmest, claiming credit for the two most obvious examples of fiscal restraint within the announcement: the cut to international aid and the so-called public sector pay freeze. It’s clear however that the organisation, which was heavily involved in constructing the Tories’ successful 2019 manifesto, wants the government to more clearly return to the traditional Tory ground of letting the private sector drive the post-Covid recovery:

“But ultimately it will be the private sector, not the public, which digs us out of this economic hole – so as the pandemic recedes we urge the Chancellor to embrace pro-growth, pro-enterprise stimulus measures, such as tax incentives to encourage businesses to hire and invest.”

The ASI doesn’t hold back, accusing the government of a “public sector splurge” in spite of the ‘pay freeze’; and singling out the rise in the minimum wage as an “unforgivable”:

“This public sector spending splurge fails to put the United Kingdom onto a strong fiscal footing for the recovery. Rishi Sunak cannot tax our way out of debt or spend our way out of a recession”

“Increasing departmental budgets as the economy shrinks is just spending money we don’t have.”

“For the party of business, the lack of thought about their needs and the increase in costs they’re facing coming from the government, this is a massive and unforgivable oversight.”

Unfortunately for Rishi, the IEA goes in even harder, arguing that while the chancellor’s diagnosis of doom was correct, his pledges to boost departmental funding are “vague” and his support for apprentices, and extra work coaches are “retro policies drawn from dusty files last seen in the 1980s.”:

“Recovery from the recessions of the 1980s and 90s was not the result of extra government spending, but was rather associated with deregulation and freeing up markets. There was no sign of this in today’s announcement. Government intervention, however justified by health concerns, has created the current economic situation; the answer is not yet more intervention, but rather to allow businesses maximum freedom to reorient and rebuild.”

The Taxpayers’ Alliance adds to the voiced concerns about Rishi’s fiscal splurge:

“The lack of focus on value for money in today’s spending review will no doubt disappoint taxpayers.

“Coronavirus has undeniably left a large hole in the nation’s finances. But instead of forever dipping back into taxpayers’ pockets, the government should prioritise policies to get the economy going.”

The Centre for Social Justice welcomed the focus on jobs but wants “warm words” on families and communities to be followed by action.

“as the Chancellor said, a job is the best route to personal prosperity – an identity, purpose, and reason to get up each morning. Various investments in housing, city growth deals, and a very welcome community levelling-up fund will all help to enable this. 

“support for the most vulnerable such as rough sleepers, and our prisons was welcome, but warm words on families and communities, where many find their greatest support, must be followed by action.”

It’s clear a great many Tories – whether sitting quietly on the back benches or orbiting in wonk world – want a private sector-led recovery, and a definitive end to the endless splurge of taxpayer cash with little thought to the consequences. The question is whether Boris or Rishi will be brave enough to lead their new voters from the front, or surrender the battle of ideas entirely…