Is it really a 'moral duty' to cut taxes?

According to my copy of the Times last week, David Cameron has proposed some pretty hefty tax cuts on the basis that it is a moral duty to cut taxes. Personally, I always worry when I hear the words 'moral' and 'tax' in close proximity, as what happens next may very well not sit comfortably with my personal morals.

The problem is, cutting taxes is, in itself, not necessarily desirable. Yes, if the State is doing too much, perhaps, or if it is doing it inefficiently, there may be scope to cut taxes, but if by cutting taxes, you increase the numbers of vulnerable people, or cause the withdrawal of key services, your behaviour might be immoral, not moral.

It is far from easy to argue what the purpose of taxation is in philosophical terms. Much depends upon your view as to the size of the State, or its obligations towards individuals and communities but also whether or not the State is an effective and efficient provider of services. It is not unreasonable to assume that relatively high tax rates, combined with efficient services valued by the community are more likely to achieve sustained support than relatively low tax rates combined with hopeless services. But the 'satisfaction tipping point' will vary over time, and with local culture. In 1997, voters concluded that more spending on public services was required, and elected a government committed to doing that. And yet, by 2010, the mood had changed. Had extra spending really improved outcomes, and was that improvement sustainable?

I would argue that the moral duty of any government is to ensure the freedom of its people, to protect the vulnerable and strengthen them against threats. That might mean increasing taxes in the short term, it may not. And, given the small, and rather inconvenient, fact that the Government will be spending £53 billion on debt interest, closing the deficit might well be seen by some as being rather more of a moral imperative.

I'm a fiscal conservative, so I would be on the side of deficit reduction, so that we can build a sustainable State, capable of protecting those in need of protection, efficiently run and responsive to the wishes and needs of the population as a whole. So, when the time comes for further tax cuts, my questions will be, what are your proposals aimed at achieving, and what impact do you expect them to have?

Politics has to about a bit more than pure ideology, it has to be about the human impact of your decisions...

David Cameron and the Civil Service - it's bound to end in tears...

No, they don't look like that any more

And so, rather earlier than I might have predicted, David Cameron has lost patience with the bureaucracy. And like Tony Blair, it is clear that he doesn't really get it.

What do I mean by that? Simple, if you really want to overcome years of administrative inertia, you need to bring the Civil Service with you. By attacking the senior ranks, the very people who will give the instructions to the likes of me, you make it all the more likely that they will be unenthusiastic. And to change, you really need enthusiasm.

But it's about much more than being nice to bureaucrats. Firstly, the Civil Service implements all of that legislation that you, and your predecessors, want to introduce. There's an awful lot of it out there, some good, some bad, much of it complex or obscure. As the Coalition have discovered, taking an axe to the red tape risks discovering that you've lost something important or, perhaps more salient, something that the Daily Mail won't like.

Morale is an issue too. Pay freezes, job losses, office closures, none of these are likely to earn an administration any friends. There is no new blood, because you aren't recruiting any, and your senior civil servants are increasingly politicised. Worst of all, on the frontline, there is a sense that junior staff are being stifled by 'this week's initiative', whatever programme has been devised to make it look as though things are getting better. If you're interested, Dave, it won't.

And yet, you could make it all so much better. Work out what government is for, what you want it to do, then look at the relevant legislation. Do we need to do this any more? Is the cost of monitoring, regulation and supervision worth the price tag, or would we be better off trusting to a little common sense? No, that isn't an excuse to slash health and safety legislation, by the way.

Now I come to mention it, is the production of all of those statistics that nobody believes worth the candle? It's all very well saying that 76% of this believes that, or that 82% of something is dealt with within 32 days, but if the general response is "Oh, really? Pull the other one...", you've wasted your effort. Actually, public perception is a reasonably good judge of performance.

Finally, a word to the wise. Long after you're gone, Dave, we'll still be here, dealing with the consequences of your actions, and those of your Government. We know that, and some of my more cynical, senior colleagues know it only too well. If you like, we're part of your legacy. And you want one of those, don't you...

Public sector efficiency savings - is there no-one in the Conservative Party paying attention?

Listening to David Cameron this morning on the Today Programme, it suddenly dawned on me why he keeps George Osborne as his Shadow Chancellor. It's because he knows less about finance than even George does. His bumbling efforts to justify how he was going to find £6 billion made the back of the envelope job that George uses to justify the NIC non-rise (it isn't a cut, might I make it clear) look like an IMF report.

So, for the benefit of Conservatives everywhere, and for any journalists keen to actually probe Conservative fiscal policy, here are a few points to be borne in mind;

1. Most of the Civil Service is now covered by multi-year pay deals. Most of them aren't exactly generous, with some Departments already having a pay freeze in place.
2. Most of the paybill increases go towards those junior staff whose salaries are further down the pay scale, i.e. they're being paid less than their colleagues for doing the same job.
3. Many departments have severely curtailed recruitment in recent years, for example, HM Revenue & Customs is in the middle of cutting 25,000 jobs over six years whilst avoiding compulsory redundancies - until now, that is.
4. If you lose staff through natural wastage, they may very well not be the people you want to lose - after all, it's the ambitious and the more highly-skilled who attract most offers of alternative employment.
5. Rates of natural wastage are lowest during a recession and in the period shortly thereafter - government jobs are seen as more secure.
6. Any alteration to NIC rates would impact upon a whole year's income, whereas the impact of natural wastage disproportionately falls in the later part of the fiscal year.

But I come back to a point that I've made in the past, the most effective way to deal with the size of government is to decide what you want it to do, then staff it accordingly. Making changes on the hoof stretches out the inefficiencies caused by process changes, demoralises staff - making them less efficient and less motivated - and tends to create waste as the level of monitoring increases to justify the changes made.

There is another point too. The Conservatives have made it clear that they will protect some areas of government activity at the expense of others. What that means is that they will have to recruit new staff in some areas, or transfer staff from one Department to another. The former is a breach of their declared policy, the latter is expensive, with excess fares, grants for house moves, and all the rest of it.

Significant savings are to be found from the Government estates, by transferring them to the private sector, from retrenchment. Interestingly, the fact that there might be leasehold agreements appears to have been overlooked. And given that this was the week in which the House of Commons Public Accounts Committee published its report into the impact of the transfer of the Inland Revenue estate to Mapeley, an off-shore tax avoidance device (was that embarassing or what?). What that demonstrated was that public sector organisations aren't great at managing such contracts, and that ability isn't going to develop overnight.

All in all, the notion that there are efficiency savings to be had isn't a nonsensical one. The problem is, in the rush for 'quick wins', much that will be done will be negative in the medium and long term. Over an economic cycle, the rewards for getting it right are potentially huge. In the short term, that might mean upfront investment, and there are no signs that the Conservatives understand that...

Matthew d'Ancona - kissing arse, and doing it badly

So, having let Josh have his 150-200 words, it's time to give some less sparing comment on what did Matthew d'Ancona actually wrote. To be honest, especially as Matthew seems so keen on not being so, I am astounded by the astonishing chutzpah that he calls upon in writing it. If Dylan Jones is a rather embarrassing cheerleader for 'Project Cameron', then Mr d'Ancona is equally guilty of donning the tight sweater, short skirt and pompoms in support of his man.

The first paragraph is an clear indication of the intellectual rigour that we can expect...

No less than Tony Blair, his occasional role model, David Cameron has an “irreducible core” of beliefs: convictions so close to his heart that they are non-negotiable. And none is more deeply-felt than his faith in marriage as the cornerstone of society. His belief in the institution is neither aggressive in character or puritanical in origin. But it is the hard kernel of his politics.

So deeply felt that he was one of the team who started the process of reducing the impact of the married couples allowance in the 1993 Budget - Chancellor of the Exchequer Norman Lamont, Special Advisor David Cameron. Did he indicate his disapproval then? Like hell he did...

So for Ed Balls to attack the Tory leader's plan to recognise marriage in the tax system as “hugely expensive and unfair”, as he did in yesterday's Sunday Telegraph, was an act of typically brazen aggression. The Secretary of State for Children, Schools and Families was ridiculing a policy that is as dear to Mr Cameron's heart as it is controversial: the Tory plan, Mr Balls said, was “designed to say that some types of families are first class, and other types of families are second class”.

I'm no friend of Ed Balls but on this occasion, he's right. If Conservatives believe that a family headed by a married couple is the ideal, then anything else is less than that. It isn't brazen aggression, it's a valid opinion. Or perhaps it is only acceptable for Conservatives to ridicule their opponents?

This week, the Government will publish its own green paper on family policy, while the Conservatives unveil the section of their draft manifesto on repairing the Broken Society. And in this case, the ideological “dividing lines” of which Mr Balls is so fond will be clear and unambiguous.

You'd better believe it, kid...

There are two quite separate questions to be posed about Mr Cameron's plan: would it work, and is it the right thing to do? Let us say that the tax break amounts to a £20 weekly boost for married couples. This sum is derided by those who forget how poor the poor truly are: the least affluent 10 per cent have a disposable income of less than £90 a week. So, for them, an additional £20 would be no small windfall.

No, they aren't separate questions at all. If the plan works, it is evidently the right thing to do. If it doesn't, it's the wrong thing to do. Since when was it right to waste billions of pounds to make a statement? At least this demonstrates that Matthew is less capable of running than the economy than George Osborne. Unfortunately, there are still too many people who are more so. 

£20 per week? What he means by disposable income can only be speculated at, but if you earn £4,500 per annum, you would fall below the income tax and NIC thresholds. Accordingly, the married couple's allowance wouldn't help you at all. And for it to be worth £20 per week, the allowance for a basic rate taxpayer would have to be £5,200. At its abolition in 1999/2000, it was worth £1,970 (at 10%, remember), or less than £4 per week. That represents about £6 per week now. Anyone would think that Matthew was plucking a figure out of the air. And of course, they'd be right, he is.

But let us be realistic: a tax break of this sort is not, in and of itself, going to drive millions of young people to church or the nearest registry office to tie the knot. That, indeed, would not be its purpose. Would it “incentivise” marriage? Possibly, though it would rarely, one imagines, be the clinching argument (“He married me for my tax break”). Instead, it would alter the message which claimants are given as they wander through the impenetrable thickets of the welfare system, encountering a series of signals and symbols freighted with meaning.

But surely the whole point is that it would influence behaviour? So, what is its purpose? What is worth spending so much money regardless of whether it justifies the expenditure?

At present, the message they take away is that the state is at best neutral and at worst actively hostile to marriage. The Married Couple's Allowance introduced by Nigel Lawson in the 1988 Budget was restricted in scope by Norman Lamont and Kenneth Clarke and finally abolished by Gordon Brown in 1999, replaced by an elaborate system of tax credits. And the perverse consequence of the credit structure has been the so-called “couple's penalty” — the price a couple pays for staying together.

And, lest we forget, David Cameron. If you're such a fan of young Dave, why don't you bother to find out what he was doing in 1993? Oh yes, I forget, you're a fan. But don't worry, I did the research for you. It took less than five minutes but you're probably paid by the word rather than by the hour, so I perfectly understand why you didn't.

According to calculations based on figures published by the Department for Work and Pensions, for instance, a family earning about £35,000 a year would be better off by £186 a week if the parents split up.

Is this figure as reliable as the £20 per week you quoted earlier? The calculation is based on figures published by the DWP? Did you get someone to hold the calculator for you?

There is no shortage of studies and anecdotal evidence suggesting a surge in divorce among the lower-paid since the new credit system was introduced. What is beyond dispute is that the present structure is antagonistic to marriage and incentivises separation: a status quo that is scarcely defensible. True, the old Married Man's Allowance, introduced in 1918, and the Married Couple's Allowance that replaced it 70 years later did not thwart the onward march of divorce. No single policy could possibly do that. But, since the MCA began to wither on the vine in the early Nineties, the process of social breakdown, particularly among the poorest in the inner cities, has gathered pace to a frightening extent. In such a context, it seems bizarre, to say the least, that the institution of marriage has no voice whatsoever in the system. Indeed, as far as the tax structure is concerned, marriage is invisible and irrelevant.

So, what does this tell you? That tax credits are damaging to social cohesion? Possibly, but so is a recession, changes in divorce law, the influence of celebrity divorces, the introduction of Independent Taxation in 1990... when for the first time, for tax purposes, a woman ceased to be considered a chattel of her husband. But seriously, if the gradual reduction in the value of the Married Couples Allowance is, as implied, linked to the process of social breakdown, that would be the fault of the people who cut it, right? So it's David Cameron's fault, correct? No? Should we review your statement again, or do you see the contradiction now?

But does that mean it is appropriate to reward marriage? “I have no desire to make windows into men's souls,” Queen Elizabeth I declared, and there is part of the British character that recoils from such measures as an invasion of privacy: some of Mr Cameron's closest colleagues feel similar qualms. Would the Tory plan be, as Mr Balls claimed yesterday, an improper attempt “to socially engineer family life”?

Improper? Not necessarily, if that is the sort of society you wish to promote. Social engineering has been at the heart of tax and benefit policy pretty much since taxes were first levied on an unwilling populace. So, what's the underlying principle, Matthew? What do you and David hope to achieve? 

To which the answer is: no more than every other nudge, wink and prod. The tax and benefits system is, by definition and intrinsically, a moral system, bristling with moral judgments and moral messages. Mr Brown's tax credit structure, for instance, has favoured work and lone parenthood. Thanks to a reform in 2005, gay civil partners may now claim the Married Couple's Allowance (as could heterosexuals already) provided one or more partners was born before 6 April 1935. In this instance, the system favours older gay couples over younger straights. No more or less than Mr Cameron's proposal, that reflects a moral position translated into a policy. If the Tory leader is, as Mr Balls claims, a “social engineer”, then so is he, the Prime Minister and every other member of this Government.

I agree, the tax and benefits system is a morals-based one. In the case of the Labour Party, the aim is to redistribute from those that have money, to those who do not, using heavily bureaucratic systems which take money away in tax, only to return the money in the form of credits. Matthew also likes to make tax fairness look bad, comparing young straight couples with old gay ones. Perhaps a fairer comparison is that of older couples against younger ones. The same allowance is available to all couples over the age of 65, so it isn't gender that is the 'discriminating factor', it's age. Older people have higher costs to bear, heating and utilities, personal care etc. Society has accepted that old people need to be protected, a fact that costs.

David Cameron was a Cabinet adviser during the “back to basics” debacle in 1993. He knows full well that all this is political kryptonite. A government that takes a stand on the desirability of marriage and rewards it in the tax structure is opening itself up to the most pitiless scrutiny. If his reform goes ahead, it will be quite legitimate for the media to ask deeply personal questions of Cabinet ministers that would presently be off-limits. Indeed, it is a measure of quite how much Cameron believes in this that he is willing to take that risk, to persist with what is going to be one of the biggest political rows of the coming years. Brace yourself for trouble and strife.

Oh yes, remind me again, who was he working for?... 

I'm sorry, but whilst I'm sure that David believes in it now, he also believes in winning, and without a price tag (come on George, you might not have that long to answer this one!), this smacks of populism without principle. Given that his colleagues are already rowing away from the sort of allowance that would genuinely make a difference, it's all just a pretty soundbite. And for those Conservative MPs with a skeleton in their closet, don't worry, you can only be thrown to the wolves once, unless of course you're a mate, in which case don't get caught next time...

Cameron and Osborne: small boys acting up...

Our Conservative friends are becoming increasingly upset with the way things are developing. Their lead in the polls is ebbing away, their Shadow Chancellor is looking increasingly vulnerable and they have little to say in terms of what to do next. Their response? Repeated claims that Gordon Brown isn't answering David Cameron's questions...

Now I would be one of the last to suggest that Gordon is inclined to provide direct answers to direct questions. However, it might help if he was asked some. David's tendancy to harp back to events past merely exposes the fact that he has nothing salient to add to the debate on our economic future. He knows that Gordon is hardly going to admit to mistakes, yet he insists on attempting to provoke one. Now one may well have legitimate doubts about the management of the British economy by Gordon, and now Alastair, but one can hardly look seriously to a political party who merely parrot what Vince Cable was saying five years ago.

So, a word to the wise for the Conservatives. Stop trying to score debating points as though you're still in the Oxford Union, ask the question, and then critique the answer outside afterwards. That way, you can ask more questions about more Labour failings. Or, if that's too much like hard work, you could leave holding them to account to the Liberal Democrats, Plaid Cymru, the Scottish Nationalists, the DUP et al. Maybe, just maybe, we, the public, might learn something...

Baby P: emotion above reason - why politicians need to take a deep breath

There is no doubt that the tragic events leading up to the death of Baby P present a huge challenge to government, both local and national. However, they also present a challenge to politicians who, in their role as tribunes for the public, have multiple responsibilities. I've now watched the incident at Prime Ministers' Question Time which has caused so much controversy, and I'll return to that in a moment.

In his initial intervention, David Cameron condemned Haringey Council for having one in four social work posts left vacant. Interesting, really, given how many of his party's supporters are so critical of social workers in general, claiming that they are overpaid, irrelevant and, in general, unworthy of our support and/or sympathy. That said, he makes an excellent point. In the modern era, where local government comes under tremendous pressure to cut costs whilst meeting various obligations placed upon them by central government, leaving unfilled posts vacant helps to square the circle of falling grants and rising expectations.

That said, even if attempts are made to fill the vacancies, the general derision poured upon social workers tends to discourage applications. On one side of the debate, social workers are condemned for acting too precipitously - see John Hemming's blog for tales of inappropriate interventions, and at the other, they are condemned for failing to act quickly enough. Who would be a social worker under such circumstances? It is the sort of job where it is difficult to avoid taking your work home with you, and not one that I would fancy.

This is not to excuse any failings that the enquiry ordered into Haringey's Child Protection Services exposes, and I have little doubt that it will uncover them. However, finding errors of judgement and of process is only part of the task of fixing a department which is now perceived to be in crisis. We need to know why these mistakes were made, and whether the lack of staff led to a culture of shortcuts and superficiality, so often what happens when an organisation - public or private - is insufficiently resourced to carry out its allotted task.

Politicians have a responsibility to avoid hyperbole and nurture an environment whereby high quality, lasting solutions can be found - and implemented. And so I return to the events in the Commons...

David Cameron condemned "a social services department that gets £100 million a year and can't look after children". That was a cheap shot, unworthy of a serious politician. Is it really the case that Haringey Council is so awful, or was this a one-off case where, once things started going wrong, they kept going wrong? Does such a blanket accusation serve any purpose other than to get an easy headline?

Gordon Brown's response was ill-advised, although Conservative claims that he accused David Cameron of 'party politics' are on slightly shaky ground. He said, "I do regret making a party political issue of this issue..." - unwise, although not necessarily an accusation of the type alleged by David Cameron in his response. Equally, I thought that David Cameron's cheap comment, "I don't expect an answer, you never get one.", was wholly inappropriate given the gravity of the debate.

Regardless of the rights and wrongs of the debate itself, it is a sad reflection of our political culture that the issue appeared to overshadow the root problem, that of a critical failure of child protection services to do their job in a specific instance.

Frankly, I expect better. I want my politicians to engage in measured debate rather than lapsing into outrage. Unlike some commentators, I presume that David Cameron's outrage was genuine, if ill-directed, but government by outrage is government by knee jerk. It prejudices outcomes and leads to the sort of snap legislation that stores up trouble for later on.

So, ladies and gentlemen, take a deep breath, encourage the enquiry to do its job and do it well, and then come up with a measured response. If you do that, then perhaps Baby P will not have died in vain...