Dec
2021
Beginning to See the Light:’This government represent a clear and present danger to UK democracy’
DIY Investor
16 December 2021
Before we get to the main event, some comments on two subjects.
Firstly, the war on drugs which this column has visited twice before. This week saw Johnson launch the government’s latest, which is C. the sixth new drugs strategy that a UK government has announced in the past 25-years.
The new policy, sold as being ‘groundbreaking’, that the current policy is not working, and then promises to continue with more of the same. As I have written before, despite Trillions being spent on enforcing prohibition, it recognises that ‘the global availability of drugs is higher than ever before’ and that we are registering record levels of drug-related deaths.
Despite the obvious, Johnson refused to even consider suggestions that the UK learn from more radical models of drug policy reform being implemented across the world, dismissing talk of decriminalising drugs by saying there is ‘no evidence that that’s the right thing to do’.
‘a fall in the rate of drug-related deaths, infectious disease transmission and the overall social costs of drug use’
The macho ‘crackdown’ suits Johnson’s persona, whereas, around the world policies such as legalising the cultivation, trade and use of some recreational drugs is being tried, with drugs such as cannabis in Uruguay, Canada and 18 states in the US. Last month, Germany’s incoming coalition government confirmed that it would also legalise the sale of recreational cannabis as part of its economic programme.
Others have adopted a policy of decriminalisation, meaning that drug possession, whilst not legal, is treated as a minor civil offence. Portugal has adopted this policy , and redirected the money that was being spent on policing them into public health. The result was a fall in the rate of drug-related deaths, infectious disease transmission and the overall social costs of drug use. For intravenous drugs, there are the safe consumption rooms that exist in Spain and Switzerland among others, where users who are going to inject anyway can at least do so in a safe and clean environment.
From drugs we turn to the rape crisis. I don’t use the term crisis lightly, but in London something very wrong is happening. A report by Claire Waxman, London’s independent victims’ commissioner, who warns that victims, predominately women, are being belittled and deterred from pursuing justice.
Among those who allege rape or sexual assault to police, 65% dropped out, up 7% compared with the last survey covering the capital two years ago. Of those, there has been a huge rise in complainants dropping out quickly: 64% withdrew their support for an investigation within 30 days, up from 18% two years ago.
‘They didn’t believe me, they belittled me, questioned my lifestyle and minimised my experiences’
A female victim quoted in the study said: ‘Reporting to the police was the biggest mistake I have ever made. They didn’t believe me, they belittled me, questioned my lifestyle and minimised my experiences.’
Waxman said myths about victims were causing the crisis and that rape had ‘effectively been decriminalised’.
It seems the Met really cannot get it right. Having a difficult job shouldn’t be an excuse for consistently doing it badly.
Keen observers will note that in this week’s title I used ‘Government’ rather than ‘Johnson’. This was deliberate as I now regard it as when the party drops him, not if. What I don’t expect is any great change in direction, the hard right will continue their ascendency. With Johnson gone there will be Tory economic ‘orthodoxy’, less spending more balanced budgets, which will marginalise their ‘red wall’ MPs.
‘Levelling-up’ was created by Dominic Cummings and proved a strategy that gave Johnson his overwhelming majority. With both the puppet and puppeteer gone, the charade will die with them, and the wealth gap will continue to grow.
An endorsement of my thoughts has been demonstrated by the current Chancellor, Rishi Sunak, who seems to be staking his claim for No.10 already.
Sunak had been expected to increase capital gains tax (‘CGT’) rates, a policy that would have increased tax revenues, and viewed as largely voter friendly, raising large sums from a few of the richest. However, of the minority it impacts, many of whom are Tory donors with influencers who will choose their next leader.
‘With both the puppet and puppeteer gone, the charade will die with them’
The country needs to raise additional revenue, areas such as social care are woefully underfunded. Perhaps with better funding that poor little lad Arthur Labinjo-Hughes might have been saved from his evil parents. And, with the new Covid variant running riot the NHS will be under yet more strain and requiring increased budgets. I would have thought that a Chancellor with ambitions might fear this, however, it is obvious that political calculations rank ahead of common people.
Sunak had asked his own Office for Tax Simplification (‘OTS’) to report on raising the tax from its current 20% to 25%. This would have impacted high earners with personal service companies or private equity magnates and hedge fund managers who ‘disguise’ their annual income as a capital gain as it is taxed at a lower rate than income tax. One method used is deferring pay by taking company stock which is taxed at 20% rather than 45%.
The OTS report found that the proposed increase in CGT would raise up to £14bn in additional revenue. Sunak has discarded this approach at a time when undertaxed, unearned wealth is soaring, instead preferred to raise National Insurance (‘NI’) from all of us.
‘Capital gains trebled to £63bn in the eight years before the pandemic: Arun Advani of Warwick University reports the rise of ‘super gainers’ who declare more than £1m a year of their income as a capital gain. Only weeks ago the ONS reported the assets of the rich were turbocharged during the pandemic. The Resolution Foundation warns that the pandemic has widened wealth gaps ‘with profound consequences for social mobility and future income inequality’.
‘the assets of the rich were turbocharged during the pandemic’
Even a Thatcherite chancellor such as Nigel Lawson saw the need to equalise tax rates when, in 1988 he told the Commons: ‘There is little economic difference between income and capital gains.’ Taxing all income at the same rate removed any incentive to disguise earnings as profits.
Sunak is already playing to the gallery by deliberately increasing tax injustice, he doesn’t see any value in levelling-up. He has already told the Times he will be cutting taxes not raising them. Even us mere mortal will get a crust with his proposed 2p cut to income tax, whilst his mates continue to make-out like bandits.
The cut would cost the Treasury an estimated £12bn. Meanwhile he is piling on extra bonanzas, with plans to scrap the top 45% rate altogether and cut inheritance tax. Not surprisingly, the Institute for Fiscal Studies has responded brusquely: the income tax cut would be ‘indefensible’, said its director, Paul Johnson, as it ‘discriminates in favour of the wealthy’.
These are monstrous sums for the state to forgo while failing to keep basic services afloat in the NHS, social care, schools, skills and transport, let alone progressing to net zero emissions. Will he say where his axe will fall to pay for these tax cuts? Michael Gove’s white paper on levelling up has been postponed until the new year, amid a reported dispute over the chancellor’s decision to allocate only a paltry £4.8bn over three years for all levelling-up projects. Many have compared that with the £2tn it cost to level up East and West Germany – which only took them 85% of the way.
Labour’s shadow chancellor, Rachel Reeves, did say she would tax wealth more fairly, but without revealing a plan or responding to Sunak’s capital gains retreat. She mentioned a windfall on Covid profiteers, so she could adopt the proposals in Tax Justice UK’s report about the six companies that made £16bn in excess pandemic profits. Some easy wins might include scrapping business asset disposal relief and reforming council tax and inheritance tax, according to Helen Miller, the deputy director of the IFS.
Another move could be removing the VAT zero rate on food, which is an additional bonus for high spenders. This may sound regressive, but Miller says it would yield so much that it would be easy to compensate all lower earners and make them better off. A small fortune could be saved from the gigantic hidden welfare state that the well-off benefit from, such as pension tax relief, ISAs, charitable relief for private health and education and a host of other perks. These are waiting to be stripped away by any Labour chancellor brave enough to do so.
Sunak may have only one thought: how to prove himself a small-state anti-taxer to win the backing of the hardline Tory party selectorate. Maybe he’s right that cash in the pocket buys most votes. But he risks a pyrrhic victory if the price of seducing a small and unrepresentative rightwing clique is to lose the next election due to public repugnance at levelling down everything, everywhere.
Simon Fell, a member of the 2019 intake who has not voted against Covid restrictions before, said while he had ‘no doubt about just how serious this new variant could be’, he would not support Covid passports. He said: ‘We are not a ‘papers please’ society, and such passports would be an unethical and discriminatory step. I will not be supporting their introduction.’
Presumably Simon and ilk will carry this on and defeat the government’s attempts to adopt ID for voters in future general election. A cynical ploy that will stop many poor and immigrants voting, helping to ensure a continuation of Tory government. My suspicion is that Simon will have double-standards and see those sort of papers as a different issue.
Some tough reading from Philip this week; all subjects that have appeared in the column before, but all apparently deteriorating.
‘This week’s piece starts with Johnson’s much vaunted drug strategy, which is macho posing and samo, samo’; because the HoP has apparently become the Corridors of Powder, perhaps Dibble should start by introducing drug testing there.
Although given the Met’s inability to unearth any evidence of illegal gatherings at No10 – despite the plethora of photographic material that has graced the pages of the Daily Mirror and appeared all over social media – I’d not hold out much hope of a conviction.
Eclipsing stiff competition, Shaun Bailey must surely take a bow as Mental Midget of the Week; whilst chair of the London Assembly police and crime committee no less, he thought it would be a good idea to attend a ‘business meeting’ with Tory donor Nick Candy, replete with outdoor catering, Christmas jumpers and oceans of festive grog.
Apparently Constable Savage still reported an ‘absence of evidence’, so Led by Donkeys thought his guvn’r might need a wee reminer of the concept of public service:
Then ‘we move to rape in the capital, where the socially aware Met police seem to think all victims got what they were asking for’; another tough read that suggests the need for a root and branch review, but mostly attitundinal and cultural change.
The main course this week is ‘the government’s continued attempts to turn us into a dictatorship’. Philip is convinced that Johnson is a spent force, and will be gone by summer; he believes Mr Sunak may be waiting for Covid to die down, and then strike on a ‘small state, low tax’ ticket – although ‘preferring to put the tax burden on all of us, rather than making him and his mates pay more CGT’.
Having really dropped a political bollock over Owen Patterson, things have gone progressively downhill for Johnson of late; surely he wouldn’t be cynical enough to frantically try to divert attention on to the Omicron variant ripping it’s way through the country would he?
Well, of course he would, but in this instance, it looks very much like the real deal; record numbers of daily infections and a very real prospect that hospitalisations will rocket as the army is drafted in to get the population boosted.
There is a saying that ‘if we don’t learn the lessons of history we are doomed to repeat them’; Boris’ determination to sign a trade deal with India led to delays in closing the borders and allowed the Delta variant to access all areas.
This time around, facing fierce lobbying from the travel sector, the ‘red list’ of countries was scrapped on the basis that Omicron was already here; now France has put restrictions on Brits travelling there. Another own goal – and cue Gallic shrug.
Still, at least we can still have a Christmas – unless, of course, you work in hospitality and have seen your bookings collapse, are struggling to pay your hiked fuel and utility bills, can’t stretch to the increased cost of food and everyday items, are petrified by the thought of soaring inflation, rising interest rates………
Two tracks this week – The Rolling Stones with ‘Gimme Shelter’ – which you can here Crisis at Christmas – and the haunting ‘Robber’ from The Weather Station. Ho, bloody ho.
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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