The Impossibility Of 'Progressive' Spending Cuts

Only the very most stupid continue to argue that large spending cuts to address the dreadful black hole that the Coalition government inherited in May are unnecessary. However, the main line of argument against the spending cuts is itself a nonsense. Left-wing critics argue that low income groups will be most affected. But is there a permutation of government spending cuts which would not be regressive?

Of course, many elements of government expenditure are targeted at the poorest, but for illustrative purposes let's assume that the benefit of government spending is evenly distributed.

Let's imagine that in this theoretical nation, the highest earning half of the population segment have average take home pay of £30,000 and the lowest half £10,000. Say there is £10,000 of government spending per head and an across the board of 10% reduction is announced. The £1,000 cut in government expenditure represents 3.3% for the richest and 10% for the poorest. As it is obviously the case that poorer people have more spent on them by the government, a large scale expenditure reduction is always going to have a bigger percentage effect on the poorest than the richest.

Speaking on TV, Carl Emmerson, the acting director of the IFS suggests on the one hand that the cuts may not be sufficient but complains that the cuts are regressive. You can't have it both ways. To support spending cuts but argue against regressive cuts is demanding the impossible.

What Is The Housing Crisis?

When house prices spiral out of the reach of the average family, they call it a housing crisis, now there are signs of price slippage, the message is similar. Tails, they win, heads, we lose. Some commentators appear to place the blame firmly with the Great British Public castigating our apparent obsession with owning a home for our ills, (See Note below) but I don't agree.

The housing crisis isn't about the level of house prices, significant as that is for aspiring and actual home-owners, but rather the housing shortage. The most relevant symptom of the UK housing crisis is the 5 million people on the council house waiting list. This is a record and a friend of mine who is in the sector tells me that many of these people will never get to the top of this particular 'waiting list'. Please don't go away with the idea that I am advocating a massive council house-building programme. Surveys show that most people would like to live in their own homes so what is the point of spending money we don't have, on things people don't want.

Instead, reflect on the incentives created by our current system of property taxes. In my apartment block of 20 flats, I reckon we spend £25,000 a year on council tax. If a similar-sized plot next door was derelict scrub, it would not attract any taxes. Seems strange that land put to productive use is highly taxed, but that in relative terms, owners of semi-abandoned land are rewarded. But this is just one feature of a British property tax system which penalises built property (council tax, rates, VAT etc) and property transactions (capital gains, stamp duty and inheritance tax).

Let us the consider the relative outcomes that arise from different ways of organising taxes on properties.

Taxes On Built Property - Taxes On Land

Housing Shortages - No Housing Shortages

Unaffordable Housing - Affordable Housing

Narrow Property Ownership - Wide Property Ownership

Poverty Trap - Incentives To Progress

Sclerotic Property Market - Dynamic Property Market

What's not to like?

Note re British obsession with owning a house - 1. I don't detect a relative lack of appetite in other countries to own a home 2. For a family the alternative to owning a home is living on a council state or depending on a private landlord. Neither is an appetising prospect.

Katherine Birbalsingh

In my sidebar links under education, I link to "To Miss With Love" a teacher who has been blogging for years about how the poorest kids are badly let down by the educational system and culture. I found and so have others, that there comes a point when you run a successful blog when you have said all you have to say to your online audience and want to find a way to make a greater impact in the real world. For the author of "To Miss With Love", Katherine Birbalsingh that epiphany came recently.

So the other day she stopped blogging and appeared on the main stage at Conservative Party Conference. She brought the house down with an insightful testimony into how education was failing and what needed to be changed. Click to 1.17 for her impassioned speech. Well, naturally enough, she has now been asked to stay away from her work as deputy head at St Michael and All Angels Academy C of E in Southwark, London.

Cranmer's got the story by the scruff of the neck as have some of the nationals. Some people suggest that she should work in the private sector or help Michael Gove with helping to reform education. I would humbly submit that it isn't in those areas where there is a lack of talent or an excess of wrong-headedness. No. She should remain as teacher in the state sector.

She hasn't been punished by her school for speaking against the establishment but rather, for doing so effectively. She should keep her job and the people who punished her for exercising freedom of speech need to go. This is the sort of battle we need to win.

Update

The battle has been won. Katharine has been reinstated. However, in the fight against the left-wing establishment, Katharine may need our support again, so please join this facebook group.

During conference, I am blogging for the Birmingham Post. Check out my daily blogs here



Here's a picture of me with a rather more famous Tory. Phillip Blond, an academic pioneer promoting localism and the Big Society is the Red Tory.

Party Conference Planning

I am planning on doing a bit of writing in and around conference. The following is a brief overview of conference plans.

Saturday

3pm - Chairmans Meeting

5pm - Blogger Meetup

7pm - Erdington Fund-raiser at Mechu

9pm - Tory Bear & YBF Karaoke?

Sunday

8am - Rethinking Older Age (CSJ)

9.30 - National Convention

Midday - Fighting off invading hordes

12.30 - Tax Reform - A Blueprint for Revolution (ASI)

2.30 - Blitz leafleting with CF

5.30 - West Midlands Reception

7 - Centre Of Cities (invite pending lol)

8.30 - Some Respublica event

10.00 - Hyatt drinks?

Monday

8am - What can the govt do to support business growth? (RBS)

9 - 6 Flexible - somewhere between the Freedom Zone and the ICC.

6.30 - Conference church service at the Town Hall

7.30 - Birmingham Uni CF event

9.30 - Twitter

Tuesday

9 - 6 Flexible - somewhere between the Freedom Zone and the ICC.

6.30 - Non-political commitment

8.30 - Pop quiz hosted by Feargal Sharkey and free-flowing booze. I predict our team will win.

10.30 - Iain Dale event

Wednesday

9 - Fringe stuff

2 - Leader's speech but no way am I queueing for hours so I'll catch on TV somewhere.

A Top Conservative Blog

I came in number 92 in Total Politics Top 100 Conservative blogs. As I average 2 blogs per month over the last year, I have got to pleased with that. I'd like to thank both of my readers and the person who voted for me.

Update

I note that another Conservative blog from a member of Birmingham Ladywood association was a high new entry. Congratulations guythemac on firing in at number 45.

Ferry Cross The Mersey

Defecting between the major parties is something I find a little incomprehensible in general. The funny thing is that most of the individual decisions are even less easy to understand. As we might expect, the BBC has taken to reporting council level defections which is how I found out about this oddity.

Here's what the BBC reports.

Mr Jobling, who was first elected in 2003 and is a member of Merseyside Police Authority, said the proposed cuts to the police force had really bothered him.

So lemme get this straight. A Lib Dem defects to Labour because of proposed cuts to the police force. This is confounding on so many levels? To name 3

1. Why was he a Lib Dem in the first place if policing is his number one issue?
2. Where did he get the idea that Labour is the law n order party?
3. Why did he have to wait so long to jump ship? It's been clear for months that due to the previous Labour overspending, budgets would need to contract in all departments but health and international development.

In a word, odd.

New Conservative Future Branch For Birmingham

Birmingham is well known in Conservative circles for the activities of the branch based out of Birmingham University which has over a 100 members. However, there has been a gap in the market for an organisation serving all young Conservatives in the city and especially those who don't go to Birmingham University. For example, my home association has several members from Aston University. Well this weakness is being rectified with the creation of a new Conservative Future for Birmingham. Conservative members from the city (including the university) can claim automatic membership or you can join up by coming along to one of the regular events the organisation has planned.

Three of the four founding members were council candidates in May. Best of luck to Amil, Gareth, Gary and Louise with making a success of this welcome initiative. For more, go to their website or mail the Committee at birminghamcf@gmail.com.

Tax Simplification Idea

Now that the Office for Tax Simplification has been set up, I suppose they will be looking for ideas. Mine would be to abolish all property taxes (council tax, stamp duty, capital gains tax, inheritance tax, business rates and telly tax) and replace with land value taxation. Further reading on the case for land value tax, here.

Golden Boy

I didn't expect to be saying this, but my firstborn has bowled me over. Adam is, without doubt, the cutest baby. He's only 2 months, but has been smiling since he was 3 weeks old. Of course, he will smile back at you now, but he also smiles with his eyes - and melts your heart in the process.


He's also been able to hold his head up since a very young age and flatters you with his full attention by lifting his head and staring at you when he's lying down on his front.


He's a real water baby who loves being washed. Even at his baptism he didn't cry. This picture of Adam in the bath turned out beautifully.


I can happily spend hours watching Adam sleep. In between him mouthing something or other and waving his arms about, he looks like this.


Dads can sometimes feel useless, but I found my niche as a winding specialist. I would tap or rub his back to try to get trapped air to rise. Thing is Adam started to massage me back. That's what he is doing in this picture.


How cute is that? To cap off, he was looking pretty alert and aware of the camera in this photo which I have made my facebook profile for now.


My personal view is that the time of maximum cuteness has passed - we shall see.