Moving beyond Mansion Tax

Moving beyond Mansion TaxIndia Keable-Elliott and Tom Papworth with Tom Frostick and Nikki Stickland
May 2015

This report argues that the Council Tax band system in Britain should be abolished and replaced with a flat rate levy set by individual local authorities. Revenue from homes valued at £2 million or below would be retained by councils to pay for local services, while revenue from properties worth more than £2 million would be pooled and distributed nationally.

The flat rate levy would end the regressiveness of the current Council Tax regime which, among other things, sees the lowest value properties charged the same amount of tax as the highest value homes in each band. The change would also strengthen the link between taxpayers and local services and be a fairer way of rebalancing UK property taxation than an annual Mansion Tax on £2 million homes.

The latter featured prominently in the Labour and Liberal Democrat election manifestos but was rejected by the Conservatives in coalition government and is criticised by CentreForum for being "bad policy disguised as good politics". A comprehensive analysis of the Mansion Tax proposal is contained in the report.

The report further recommends the establishment of a Royal Commission to consider the appropriate balance of taxes on property and the issue of "unearned economic rents on land". It concludes that a reformed system of UK property taxation that is both effective and fair should have wide electoral appeal.

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Select media coverage: LocalGovMunicipal Journal, Public Finance

The social democratic hegemony

Rethinking the Blair DoctrineMark Littlewood
May 2015

"A myth seems to have arisen that we in the UK – and in the West more generally – live in a neo-liberal age. That there is, indeed, a neo-liberal hegemony. Were this to be true, it might be fair to associate systemic policy failures with this neo-liberal hegemony and look for a very different model of organising society. But it isn’t true. We live in a social democratic age. There is a social democratic hegemony."

The essay is the sixth in a series of papers addressing contemporary issues in public policy from a liberal perspective. A selection of these papers will be published collectively in a forthcoming special edition publication, 'The Challenges Facing Contemporary Liberalism: 2015-2025'. Here are the others released so far:

Maajid Nawaz: On Blasphemy
Tim Farron, Neil Stockley and Duncan Brack: Economic liberalism, climate change and green growth
Adam Corlett: Bold, liberal tax reforms
David Boyle: How to save public service choice for liberalism?
Nick Tyrone: Rethinking the Blair Doctrine

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Unbiased capital: making tax work for business

Unbiased capitalIndia Keable-Elliott and Tom Papworth
April 2015

Equity investments are taxed four times – through Stamp Duty, Corporation Tax, Income Tax and Capital Gains Tax – while interest payments on debt are treated as a business expense and are thus tax deductible.

This 'debt bias' stifles innovative SMEs in the early stages of their development, preventing them creating jobs and growth. Early stage fims need investors who are willing to share the risks and rewards of providing capital, so equity is more suitable than debt. But the tax bias pushes the cost of equity capital up, making some investments unprofitable and giving an advantage to to old, established firms.

'Unbiased capital: making tax work for business' recommends creating an Allowance for Corporate Equity (ACE), which would permit an imputed rate of return on equity to be deducted against corporate profits. This would result in taxes falling solely on economic rents and not returns on investment. The report also urges the abolition of Stamp Duty Reserve Tax, which increases the bias towards debt, while driving investment away from the UK to countries abroad.

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Select media coverage: Public Finance

Reforming retail energy markets

Reforming retail energy marketsTom Papworth and Patrick Day with Josh Thomas
April 2015

Commissioned by comparethemarket.com, this report finds that confusing tariffs and badly presented billing information are stopping people from getting the best deal on their energy. It warns that rates of switching have been in decline since 2012, despite efforts by the coalition government and watchdog Ofgem to make it easier for customers to change energy supplier.

As well as identifying general barriers to switching - such as lack of internet access - the report finds that the biggest problem facing energy consumers is the deliberately confusing way that suppliers present information.

Survey evidence suggests that bills are too complex and that tariff descriptions are buried in cryptic terminology, making like for like comparisons extremely difficult. This 'confusopoly' prevents effective competition in the energy market and leads to customers being ripped off.

Among the report's recommendations is a call for the regulator imposed 'Tariff Comparison Rate' to be scrapped - or better communicated - on the basis it can be misinterpreted as an accurate comparison tool for all consumers rather than the average customer.

The report also calls for a standardised 'Tariff Information Label', set out on a single page, so that people can make faster and more informed choices about their energy supplier.

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Select media coverage: BBC NewsCity AM, Evening Standard, MailOnlinePress Association

Rethinking the Blair Doctrine

Rethinking the Blair DoctrineNick Tyrone
April 2015

On the 24 April 1999, Tony Blair gave a speech to the Economic Club of Chicago in which he outlined what he described as the 'Doctrine for the International Community', but quickly became known as the 'Blair Doctrine'.

This paper argues that the former PM's rules of engagement remain a solid starting point for devising a liberal approach to foreign affairs policy – even though Blair chose to ignore his own advice in the lead up to the Iraq War.

The essay is the fifth in a series of papers addressing contemporary issues in public policy from a liberal perspective. A selection of these papers will be published collectively in a forthcoming special edition publication, 'The Challenges Facing Contemporary Liberalism: 2015-2025'. Here are the others released so far:

Maajid Nawaz: On Blasphemy
Tim Farron, Neil Stockley and Duncan Brack: Economic liberalism, climate change and green growth
Adam Corlett: Bold, liberal tax reforms
David Boyle: How to save public service choice for liberalism? 

Download the report

Select media coverage: NewStatesman (Staggers)

A labour of love?

A labour of love?Tom Frostick and Chris Thoung
March 2015

If the Labour party enters government in May 2015 it plans to reduce the undergraduate tuition fees cap in England from £9,000 to £6,000 a year. It also wants to increase maintenance grant support for students from lower income backgrounds.

This analysis finds that the negatives of the proposal – judged by what Labour says it wants to achieve – outweigh the positives. On the upside, the policy acknowledges that maintenance grants could have a positive impact on university participation. It would apply equitably to all undergraduates including those already studying when the policy is introduced. And it offers a choice to voters by reopening the debate about the balance between state and individual investment in undergraduate education.

On the downside, the typical beneficiary of the fees proposal is a graduate, 28 years after leaving university, earning more than £80,000 a year. Conversely, the lowest 60% of graduate earners by lifetime income gain little to nothing from the policy. In addition, Labour seems to overlook that applications from disadvantaged students have increased since the fees cap was raised to £9,000 a year, weakening the case that cap needs to be reduced.

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The route to employment

The route to employmentHolly Taggart and James Kempton
March 2015

Moving from economic inactivity into work can be challenging for someone with a mental health problem. But recovery colleges can help people make this transition. This report examines the role of these unique institutions, and suggests ways that their effectiveness can be enhanced. 

Initial evidence points to the uniquely educational approach of recovery colleges within secondary mental health services as having significant potential for impact on improving employment outcomes. 

The report argues that recovery colleges should therefore increase their focus on these employment outcomes, supported by more rigorous and systematic evaluation of the overall impact of the model.

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The liberal case for aviation

The liberal case for aviationTom Papworth and India Keable-Elliott with Patrick Day and Josh Thomas
March 2015

This paper considers questions of UK airport expansion from within a liberal tradition. Airports have both benefits and disbenefits, and balancing these so as to maximise individual freedom and social progress is the challenge faced by liberals of all parties.

On the positive side, airports facilitate travel and improve our connectivity with the rest of the world, thus providing a good for which people have a strong and increasing demand, and helping strengthen our links (personal, commercial and political) with the rest of the world. They also have profound economic effects, creating hundreds of thousands of jobs and billions of pounds of income for staff, shareholders and the government.

On the negative side there are a number of environmental externalities. Globally, the main challenge is the emission of greenhouse gases. Locally, the biggest issue is noise, though airports also have impacts on air and water quality, biodiversity, landscape and waste. It is these undesirable impacts on individuals or society generally – including indirect effects through impacts on nature – that fuel opposition to runway expansion.

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Open public services – better public services?

Open public servicesQuentin Maxwell-Jackson
March 2015

'Open public services – better public services?' contains a series of case studies to show where privatised and public owned services have succeeded and failed.

The report finds that competition only works when there is a realistic prospect of providers losing their contract, and that the most successful outsourcing deals are small in scope and easy to manage.

It also finds that success across both sectors - public and private - can be attributed to common ways of doing things, including the use of appropriate information and performance measures.

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Rt Hon Danny Alexander MP, Chief Secretary to the Treasury, said: "When looking at a discussion in the public sphere which at present mostly revolves around a simplistic Labour-public sector provision good versus Tory-public sector provision bad axis, it is refreshing to see a paper which outlines the strengths and weaknesses of both, as well as identifying why the success stories from either side of the fence worked as they did."

How to save public service choice for liberalism?

Bold, liberal tax reformsDavid Boyle
March 2015

This paper looks at choice and its meaning through the prism of public service provision. David Boyle asserts that neither the Right’s response to poor choice in regards to public services (let bad providers go bust) nor the Left’s (grin and bear bad services for the overall common good) is really good enough.

"Quality" is another word that has lost a great deal of meaning dependent on which political party stripes it’s being uttered under. What counts as quality in public service provision will inevitably cover a huge number of factors.

The essay is the fourth in a series of papers addressing contemporary issues in public policy from a liberal perspective. A selection of these papers will be published collectively in a forthcoming special edition publication, 'The Challenges Facing Contemporary Liberalism: 2015-2025'. Here are the others released so far:

Maajid Nawaz: On Blasphemy
Tim Farron, Neil Stockley and Duncan Brack: Economic liberalism, climate change and green growth
Adam Corlett: Bold, liberal tax reforms

Download the report