Mansion tax - jobs for the boys (and girls)?

We're in the run-up to the Budget, and the temperature is rising.

Today there's been the spectacle of the Business Secretary trying to dictate the details of the Chancellor's proposals, in a way that would be slapped down very quickly in a single party Government, but which is apparently acceptable in a coalition.

Time and again, under the last Government and under this one, proposals are made and then become policy without the support of a proper impact analysis.

The 50p Income Tax rate was brought in as a political headline grabber without a decent analysis of its likely impact. There's always been concern that by driving away potential high earners, by making the UK appear less business-friendly, and by giving people a greater incentive to optimise their tax arrangements, this has actually had a negative effect on the total tax take. At least it's easy to collect, through the normal income tax system of PAYE and self-assessment returns, and payments are made direct to HMRC.

Now Dr Cable is trying to hit the rich through a so-called 'mansion tax', in exchange for which apparently his party would be happy to see the 50p rate abolished. Someone said on the BBC this morning that a 1% per annum tax on the value of properties above a £2 million threshhold could for some given set of assumptions bring in £1.7 billion, which is an improvement on the most optimistic guesses for the 50p rate. By the way, that's at least £10,000 that the owners of a £3 million property will have to cough up. Each year, and whether they have any free income or not.

Issue	Impact
No mechanism in this country for annual charges by central government on the owners of property - it only gets involved at sale or inheritance	Would the Government ask local authorities to collect the tax and hand it over? Would they pay local authorities a proportion of the collected amount for this service? And would they ask them to identify the target properties or would a whole new register, inspectorate and system of appeals be needed?
Tax would be assessed on unrealised gains	Either taxes have to be paid by liquidating some other asset or they have to be put on account and collected when the asset in question is sold or transferred. And that could be a very long wait.
Valuations can go up and down	It's fair to charge tax against capital gains when the gain is realised, but it must also be possible to reclaim or offset tax if a loss is made

I don't have a mansion or even an average-priced London house, but I fear that yet again, the UK is in danger of introducing a whole new piece of complexity to the taxation system. This will create jobs for the boys and girls - lawyers, tax collectors, surveyors and other hangers-on. However, it's quite likely that there will be little real positive benefit (after these costs) for the public purse, and an increasing level of misery for those affected.

It would be much better to direct the lawmaking effort aggressively at the Stamp Duty system, bringing all property in the UK under its scope, regardless of ownership, and then only giving relief against it under carefully-assessed criteria.

The West Lothian question writ large

The new UK Parliament will meet in Westminster with no party able to command an absolute majority.  Although there was a decisive rejection of Labour, there is still the possibility that the defeated Government will be able to cobble together an agreement to stay in power, needing an unholy alliance of nationalists to reach the magic figure of 326 votes.
What's really striking is the way that England is overwhelmingly represented by Conservative MPs but others can control events. English MPs can be - and frequently have been - overruled on questions of education, local government, economic and social policies by the MPs of the other three countries of the Union. In contrast, Scotland, Wales and Northern Ireland all have their own assemblies, where English MPs have no influence.
This issue was exposed by the great parliamentarian, Tam Dalyell, who asked

For how long will English constituencies and English Honourable members tolerate ... at least 119 Honourable Members from Scotland, Wales and Northern Ireland exercising an important, and probably often decisive, effect on English politics while they themselves have no say in the same matters in Scotland, Wales and Northern Ireland?

Due to boundary reform, that figure of 119 is now 116, but the West Lothian question (as Enoch Powell dubbed it), is vitally important as the UK electoral system faces a significant shake-up, whichever party reaches an agreement with the Lib Dems.   Should MPs from the other countries be allowed to change the electoral system in England?
Here are the statistics.  I couldn't find such a table online, so this analysis is based on the Daily Telegraph results page and used the BBC results as an additional authoritative source. I've gone through the table relying on my own geographical notions to split by country, and if I've slipped up, no doubt someone will be kind enough to let me know.

Country	CON	LAB	LD	Eng Other	SNP	Plaid Cymru	DUP	Sinn Fein	NI Other	None	Total
England	295	192	42	2						1	532
Scotland	1	39	12		6						58
Wales	8	26	3			3					40
N Ireland							8	5	5		18
Total	304	257	57	2	6	3	8	5	5	1	648

The current Speaker is counted as a Conservative and the Thirsk and Malton constituency didn't vote due to the death of one of the candidates.

Best ever road deaths figure, but rural speed limits to be cut

In April, I blogged about the UK Government's initiative to cut speed limits in order to reduce the number of road deaths. My objections were:

Restriction of mobility when the UK already has some of the safest roads in the world

The method of enforcement (24x7 cameras) and civil liberties impact - everyone's movements could be logged and traced

The cost of installation and ongoing enforcement, including the possibility of another failed Government IT project

These proposals haven't gone away - they're out to consultation. The open consultation finishes on Tuesday 14th July, so if you have an opinion, you still have a few days to respond.

The Times reported on 25th June that Deaths on UK roads fall to record low.

Lord Adonis, the Transport Minister, says that "Britain now jointly has the safest roads of any major nation in the world".

I agree that every road death is unnecessary, but I disagree with the speed limit proposals. These will have a huge set-up and operating cost, and will restrict mobility outside built-up areas by increasing journey times at all times of day and night.

Some better approaches would be

Harsh penalties for causing death and serious injury; killing someone with a car is manslaughter or murder, and should be treated that way

Better road education: males under the age of 20 seem to be particularly likely to kill themselves, their friends, and innocent third parties

Restrictions on new drivers during the first few months after passing the test; curfews and rules about number of passengers, P plates (showing Passed - but recently)

Invest in better road layouts where these are known to be unsafe

Enforce speed limits in known black spots; this should be far cheaper than country-wide speed restrictions

Brown broke Britain

It's time for blame to be given where it's due. I'm fed up with hearing the spin that "Gordon's done a great job for Britain." Gordon Brown has messed up almost everything he's touched.

On the credit side, he freed the Bank of England in May 1997 to set interest rates. Sadly, quite soon after, in June 1998, he screwed up banking supervision, and that is the root cause of the current financial crisis. The Bank was, at the time, a world-renowned centre of excellence for banking supervision. Famously, a 'raised eyebrow' was all that was needed when supervisors wanted a change made. This was replaced by a rules-based supervisory regime under the Financial Services Authority which had power to penalise and set rules, but lacked the reputation and clout that had enabled the Bank to keep a tight rein. Whenever there's a published set of rules, clever people will find ways to push the envelope - which is what's happened in spades in the sub-prime loans scandal and Credit Default Swaps debacle.

He's also messed up the UK pension system. Our defined benefits system was the best in the world before he and his mate Ed Balls got their dirty fingers into it. They axed the dividend tax credit in 1997. Very few private sector organisations can now afford to offer defined benefits pensions - thanks largely to Brown's pension grab which in March 2007 was already estimated to have taken more than £100 billion out of private sector pensions (Daily Telegraph article).

Finally, he's saddled us with unaffordable obligations that won't go away. Public sector spending has been a diarrhea of give-aways to anyone whose acquiescence needed to be bought, much of it funded by present or future borrowing. Rather than work out a cost-benefit analysis for new initiatives, money has been sprayed into wild ideas that have been more to do with popularity or grabbing headlines than solving the needs of the country. Many Government IT projects have been a complete shambles. Pay settlements have been much more generous than those available to most private sector workers. MPs and many other public sector have defined-benefit pensions, on massively generous terms, that they will go on collecting for the next forty or fifty years.

We'll be paying for Brown for two generations. Brown did a great job for Brown.

Speed limit to be cut

The Times (21 April) reports that the speed limit on many UK A roads will be cut to 50 mph under plans to reduce the number of road deaths by a third. The default limit will be reduced from 60 mph to 50 mph unless the local council gives acceptable reasons to retain the higher limit. It would become easier for councils to reduce the limit on residential roads from 30 mph to 20 mph, and average speed cameras would be introduced to enforce the new limits.

The UK achieved huge improvements in road safety between 1990 and 1995, when the annual death rate fell from over 5000 to under 4000. It's now under 3000, and continuing to improve. This is despite a rising population and hugely increased number of vehicles using the roads. So despite the success of the current measures, our heroic Government has come up with an idea that will restrict everyone who lives outside a built-up area and uses cross-country routes. The unpopular measure can be enforced through the recruitment of thousands of new automated police officers (average speed cameras) that can issue penalties 24 x 7, regardless of the traffic and weather conditions, and into the bargain develop a database to show the vehicle movements of a majority of the population. So useful to maintain public safety.

Of course, in revenue terms, this will be 'free'. The cameras, data network, central fines processing and recovery, repairs, replacement, surveillance database if required, signposting, etc., will cost a few billions per year. But the Government probably reckons that it can get the money back through fines - and if they don't collect enough, keep raising the fines. If all else fails, print a bit more money. Of course, we can be sure that this HM Government IT project will be a glowing success. So important when taxpayers money is involved.

Of course, this may be just another kite-flying initiative either (a) to distract the mob from the appalling Government debt that will be revealed in today's Budget or (b) to allow the spin doctors to say "we've listened" when the whole thing is scrapped. Time will tell...