As the FT reports this morning:
First, note the mockery this makes of local autonomy.
Second, note the blame shifting.
Third, note what I have already written about the injustice of this.
Then consider the alternatives. One of making council tax more progressive but when it is appreciated that this is a central government decision the options become considerably more significant.
The funding required appears to be between £2.6 billion and £5 billion. This is a range of tax reliefs that could be altered to help raise that sum:
The data comes from HMRC. It understates the true cost of pension reliefs because tax paid by pensioners is offset against it and there is no economic justification for that.
Then let's remember the UK has a glut of savings at present.
And that tax reliefs for those with savings automatically means that the tax benefit goes to those who do not need it: if you can save you can meet your current need. The social care crisis is about meeting the needs of those who cannot do that.
This list also ignores the £3 billion or more cost of small business incorporations at present, as estimated by the OBR.
And it ignores that if corporation tax was at a sensible rate of at least 25% more than £10bn of extra revenue a year would be available and some of that £3 billion abuse would be prevented.
So, how to raise the money needed if not by council tax?
First, raise corporation tax to 23%. This would have no impact at all on UK employment, just as the cuts in it did not. It might raise £6 billion.
Second, cut higher rate pension relief. That would save between £8 billion and £10 billion.
Then eliminate ISA tax relief. What is that about? That's another £2.6 billion saved.
And get rid of the savings rate of income tax which also leaves £1,000 of income tax free.
If you want more, get rid of VCTs. EIS, EMI and other such schemes none of which can be shown to have any real benefit.
And by now I have so over-funded social care we can help others as well.
I make the point deliberately.
There is no funding crisis for social care.
There is no need for regressive tax rises.
There is no need for this political stress.
The capacity to pay for the social care we need exists. It can be delivered without cost to economic well-being. It only requires willing to reduce some of the tax subsidies to the wealthiest in this country who do not need the reliefs they are given.
It only needs someone to say we are punishing those in need as a matter of choice.
It only needs a little courage. The courage that's needed to stand up to those who have and tell them they need to forego a bit for the sake of those who have not.
And that's what is in short supply.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Dear Mr. Murphy
Your expertise in this area is invaluable. Your list of alternatives acts as a powerful condemnation of this torrid, clueless May government. Why is there no politician voicing these alternatives .I am intrigued a to what replies you receive following your discussions with them. How can we get you more publicity
I am not expecting many replies
And it seems the press is not interested
Not sure why
Not that I ever believed it, but May’s so called solution – and more tellingly, the fact that this crisis was known about before the autumn statement and a choice was made to do nothing about it – also blows May’s claim to be a PM who acts in the interests of all into a million pieces. I find it interesting how she has so quickly been shown to be as callous (and witless) as any other Tory PM given her well known comments on the Tories being the Nasty Party.
Beyond that, this “policy solution” (which is too kind a way of describing it) is yet another illustration of the distain for and disinterest in local government that successive central governments have had. Local administration – for that is what it really is – is simply kept in existence to provide a convenient whipping boy for the failure of a range of policies that are promoted as local, but where they are in fact actually central government policy locally delivered. For years now I’ve been increasingly amazed by the willingness of local politicians (and it has to be said the LGA) to go along with this lie and thus shelter the ministers and government departments who are actually responsible for the increasing level of policy failures at local level. They must enjoy taking a constant beating – or are they simply cowardly politicians?
I wish I knew the answer to your last question
They range from enthusiastic co-conspirators and cowards. No local council has yet attempted to offset the cuts to its central government grant by either setting a deficit budget (illegal for councils) or holding the referendum that is now required (by central government diktat) to increase council tax by more than 4%. The Bedford Police and Crime Commissioner held a referendum to increase his funding level by 15%, but lost heavily, over twice as many people voting against as for.
As I see it, the only way this stranglehold can realistically be broken is if all councillors on the council decide to put national party affiliations aside for the good of their community, and all campaign for a YES vote in such a referendum. Clearly explaining that government funding is insufficient to run all council services is a requirement. I do, however, see it as cowardly to not even try.
I certainly accept that council tax is regressive, and that funding from central government funds would be far more progressive. But at some point, local politicians have to stand up, say that local council funding is insufficient, and demand an increase in the only tax that they can control.
Never a truer word, Richard. Callous doesn’t begin to describe this government but why, other than selfishness, do so many fall for it?
Superb response thoughtful, insightful pragmatic.
But there is something disgusting in the fact that it is not the Labour party or the Lib-Dems who should be stating the bleeding obvious instead.
I believe that Jeremy Corbyn made the link between this and the reduction in Corporation Tax in PMQ yesterday. Of course you won’t hear about that in the MSM.
I think he tried to
https://twitter.com/jeremycorbyn/status/809061328753147905/video/1
Carol
Labour isn’t working. Simple as that.
Indeed Richard; very sensible. Can’t help but think that regarding Tax the pendulum is swinging the other way. May is turning out even worse than I feared.
At PMQs yesterday May had the cheek to say that Labour had ignored this crisis for 13 years. When Andy Burnham suggested a supplement to Inheritance Tax to pay for social care for all, the MSM created a storm about Labour’s Death Tax – the clamour crossed the Atlantic. So much so that the idea did not make it into the manifesto. I’m not sure whether EdM’s Mansion Tax ever got into the manifesto either, but it would surely have been preferable than raising Council Tax.
No tax on savings or ISA changes are going to happen, you only have to look at the demographics of those with the most savings and who they vote for.
I know
But that does not stop me pointing it out
You may as well stand and point at passing cars, at least then you’d get noticed 😉
“if you can save you can meet your current need”
Well, duh yeah. But I’m not saving to meet my current needs, I’m saving to meet my future needs, I pay the costs of staying alive in the future by using the money I have today. Every year of working income needs to pay to keep you alive both for that year of working, *but* *also* for the time you are alive and do not have an income.
That’s great
But many can’t do that and need social care
I put the welfare of those suffering now as a higher priority than tax relief for those with an excess at present
Do you think otherwise?