Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.
I resist commenting on Brexit as virtually everything there is to say has been said. The Conservative Government has been elected on the mandate of the referendum to take Britain out of the EU; Boris Johnson was overwhelmingly supported to be Prime Minister by Conservative Party Members. Tory MPs seeking to undermine him should either leave the party or be removed.
Last month, my contribution to ConservativeHome was on tax reform. I argued for a reversal of the huge increase in Stamp Duty on residential properties which has dried up the market particularly in London; and an end to the hated inheritance tax.
There is a need for a full review of UK tax policy. I hope in due course this is something which David Cummins could manage and implement. What is needed is the principle of “tax payer value”. There are still many areas of duplication and overlap and unnecessary excessive numbers of civil servants. Citizens want good value for the taxes they pay: there are many areas where this is not the case.
I focus this month in particular on Business Rates and foreign vehicle road usage.
Business Rates raise circa £25 billion a year. They are cheap and easy to collect, and so popular with the Treasury. But it has failed to recognise the revolution occurring in in retail shopping. In excess of 30 per cent now goes through on line purchasing: many Buyers review potential purchases in High Street shops but then order them, often at lower prices, on line.
Business Rates are now a larger overhead cost than rent for many small businesses. The organisations handling online purchasing and out of town shopping centres pay substantially lower rates than high street-based businesses. There is the obvious need for major reform cutting high street rates and increasing out of town rates. Without a major shift in overhead costs, high streets will continue to die; ironically, the charity shops replacing small businesses pay no business rates. Market holder stalls also pay no business rates.
In a different territory, I fail to understand why we do not copy the Swiss model of charging everybody, including foreign vehicles, for the use of our roads. The Swiss system requires everyone using motorways to buy a special annual permit. The cost of this is 45 Swiss franks for cars and significantly more for lorries. You are fined by the police if found driving on a motorway without the annual permit.
While the cost of fuel was lower in continental Europe than in the UK, typically lorries coming to the UK filled up in France and avoided the need to buy any fuel in the UK. We thus get no contributions from foreign vehicles to the expenditure for maintaining our roads. Despite the £100 billion EU trade surplus with the UK there is also no automatic balance of attributable costs and contribution to road expenditure. But the EU contribution to the UK should be significantly larger than the UK contribution to the EU.
Since my July contribution, I have noticed an announcement praising the fact that twelve million people no longer pay income tax. Much wiser would be a policy where everyone pays some tax – the less well off a very modest tax. If cititizens know “the pain of taxation” they will be much more engaged in their views on government expenditure and feel some ownership thereof. If you take the majority out of the tax system, irresponsible “soak the rich” policy becomes popular automatically. This was recognised by Margaret Thatcher.
Brexit also prompts the need for a single and well managed ID card regime. This is being looked into and implemented by many councils in order to sharpen their management of facilities and entitlements. The Government could roll out a national ID card regime based on the work already done by the councils, and the ID card should include all information relating to the public sector, e.g: NHS Number; state pension number; freedom pass, etc. Post- Brexit where there will be some differences in rights and entitlements as between British and non-British citizens: the handling of this will be much easier and less expensive with an ID card regime.