There are plenty of people willing to defend the chancellor’s controversial raid on the self-employed, not least the chancellor himself who was out and about yesterday claiming that the government faced “some new challenges” and that it has “to pay for these things somehow”.
As opposition to the move grows on his own backbenches, he would have taken some comfort from the country’s top wonks at the Institute for Fiscal Studies (IFS) who yesterday described the move as “a modest but welcome change designed to shore up the tax base”.
Read more: Philip Hammond picks a pocket or two
Other economists claim the policy is progressive (hitting the well-paid harder than the poorest) and other talking heads have welcomed the principle but winced at the broken manifesto pledge to not raise taxes. Indeed, the head of the IFS, Paul Johnson, criticised politicians for making “silly pledges” that “tie your hands to an absurd extent.”
I don’t agree with the hike in National Insurance for the self-employed, but I do agree with Johnson’s broad point on the perils of politicians making stupid commitments that end up getting in the way of effective policy-making.
The most striking example of ‘smart politics’ leading to bad policies is of course healthcare and the NHS. Most politicians would agree that if tasked with designing a system of healthcare provision from scratch there is no way they would propose anything like the current NHS, but to speak such truth would be political suicide.
Another example is in the commitment some MPs show to the 45p and even 50p rate of income tax. Even if it were proven beyond doubt that high rates reduce tax revenues, few MPs would dare make the case for a cut.
There’s a difference between believing in a policy with which others disagree and clinging to one even though you know it to be less than effective. Hammond is now in a political fix of his own making, but it won’t be the last time a chancellor falls down the gap between politics and policy.
Bigger threats to media than Murdoch
This week, 21st Century Fox told the government that its proposed takeover of Sky is “in the interest of the UK”. Much of the political opposition comes from Labour MPs who simply don’t like Rupert Murdoch.
This is a blinkered view of a company (and a man) who is at least still investing in a media landscape that currently faces huge pressure from online giants like Google and Facebook. If MPs want to rail against something, rail against that.
UK needs a new army of trade negotiators
Last week I attended a discussion hosted by the International Business and Diplomatic Exchange, on whose advisory board I sit.
One senior banker reflected on conversations he’d had with a US embassy official on trade negotiations – who told him: “We’re the best in the world at this – followed by the Europeans.”
The message was clear – the UK still lags way behind when it comes to skilled negotiators. HMG needs to go on a hiring spree, starting now.
Irony award goes to Lincoln University
Permit me a detour away from City matters as I touch on a subject close to my heart: freedom of speech.
In the past I’ve helped run various campaigns on the subject – including one that resulted in a change to the law.
So imagine my anger (though not disbelief) that Lincoln University has officially censured their student Conservative club who had the temerity to point out that the university ranked terribly on a recent campus freedom of speech ranking. What an absolute shower.
Make life easier for black cab drivers
The battle between Uber and black cabs is one I’ve often found myself in the middle of.
I debated the taxi union boss on Newsnight and suggested that his sector was over-regulated, making it harder to compete.
He didn’t respond well to that, but now academics have backed me up – pointing out that cabbies pay more than three times as much as private hire drivers to enter the industry and calling for the ‘knowledge’ test to be simplified. Sounds pretty sensible.