Cllr Adrian Pascu-Tulbure is deputy leader of the Conservative opposition in Hammersmith and Fulham
Plucking geese is not a core competency often seen on Treasury job descriptions.
But every good HMT official would recognise the maxim of Jean-Baptiste Colbert, Louis XIV’s Finance Minister, that “the art of taxation consists in plucking the goose so as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”.
Of course, you don’t know how loudly the goose will hiss until it is too late. Sometimes it stays remarkably silent; sometimes the honks bring down Prime Ministers. But recent years, and the ever-increasing predisposition for politicians to U-turn if there is sufficient outcry, have created strong incentives for every group that loses out at Budget time to kick up a gigantic fuss.
If you are a politician that 1) wants to be liked and 2) needs to balance the books, you therefore have a problem. The most recent wheeze has been to try and apply some accounting jiggery-pokery and reclassify various pots of money, but that has to receive seals of approval from cold-eyed executives in the OBR (tough) and, down the line, financial institutions (very tough). Otherwise, it remains about hoping for growth, cutting spending, or raising taxes.
Know, then, that any individual spending cut or tax rise is going to raise a stink. It’s relatively easy to see who the winners and the losers are. And those on the losing side will use every possible means to fight those changes, with activists, interest groups and tactical opponents cheerfully piling on.
The question then arises: how many political fronts can you fight on? Conventional wisdom says it’s very few. But what if that’s wrong?
Consider this. You argue that the whole of the tax and spending system – personal, property, and business taxes, capital projects, departmental expenditure, grant funding – needs major structural changes: tinkering around won’t help any more. You offer the nation a Grand Fiscal Bargain. And then you pile as much as you can onto the table.
To sweeten the pill, you present this as solving wicked issues (“finally a solution to social care / the refurbishment of Parliament”). Finally, to muddy the waters further, you do this alongside other major structural reforms, most obviously devolution.
Instantly, there will be a huge rush to work out what all these changes mean in practice. But the truth is, if you are changing the lot, it will be incredibly difficult to work out precisely what the implications are, who bears what portion of the burden, and – crucially – how best to unpick it all.
Sure, some headlines will be tough. But there is only a finite number of front pages. And there will be other voices – perhaps surprising amounts of them – that will give you credit for at least trying.
Will Andy Burnham do this? There are two good reasons to think he may give it a go.
Put simply, introducing radical change suits the narrative of a man who has been open about his intention to “try to do things in a different way”. “This is our last chance”, Burnham has not been shy of saying, in a not-too-subtle nod to his processor’s failings. His mission is no less than to “rewire” the state, tackling issues that had been left to fester for (an important number) 40 years – so under Blair and Brown too. These are not the words of a man who dreams small.
And – at least in the short term – it might work from a goose-plucking perspective. Big, sweeping changes offer plenty of options to insert hidden fiscal nasties. The Exchequer likes this: more revenue. Labour likes this: more money to spend on crowd-pleasing announcements. Plus, as argued above, the fog of war makes it difficult to see precisely what’s going on until very late in the day.
A case in point is allowing local government to take income from business rates and, from 2028, income tax. An intriguing idea that seems like a great earner on paper, but with a major sting: because alongside this, the Government will “rebalance public investment, including considering the balance of subsidy and other finance mechanisms”. In other words, well-off and efficiently-run councils are going to see even more of their central funding cut, and the better they do, the less they will get. Not only that, councils won’t have the power to spend any of this new income on tax cuts, so the burden falls on the ratepayer. This potentially nets Government billions on the quiet, while allowing Burnham / Healey to make the right noises about devolution.
There are obvious challenges to a Grand Fiscal Bargain. Implementing change of this scale presents vast challenges of coordination and implementation. Treasury officials will relish that level of challenge and will try to meet it in good faith – but with so many moving pieces, the chances of something going wrong shoots up. If your best bet is that there’s so much going on that errors won’t matter, that is vastly beyond Government’s normal risk tolerance.
Perhaps a more profound challenge is around cumulative impact. A Grand Fiscal Bargain implies trade-offs, but it could equally mean multiple whammies. There’s a theoretical logic to arguments such as “yes, family X gets hit by a land value tax and a social care levy but they won’t have to pay any more stamp duty if they move and they might keep more of Aunt Brenda’s inheritance”, but what actually happens is that some people will be made worse off, possibly heavily worse off, by practically every change introduced.
It does, potentially, get worse. If sufficient numbers of people get sufficiently clobbered in a sufficiently similar way, and then take action, this could have genuinely destabilising longer-term economic impact. We know the thrust of Burnham’s agenda is that those with the “broadest shoulders” should bear an ever-greater part of the burden. Imagine, not one, but seven or eight tax changes, all coming at roughly the same time, each of which insidiously ratchets up the pressure on a certain segment of the population. Will the goose hiss? Or fly away? Or will it just expire?
When faced with grand difficulties, there is a tendency in politics to argue in favour of throwing the cards up to see where they land: something must be done, here is something, therefore let’s do it.
We are currently at the “something must be done” stage. I suspect we will soon hear the siren calls of “here is something” – either in the form of a Budget, or a call for a fresh mandate. And I fear that what Labour will offer will be plausible, even slick; and, if implemented, utterly catastrophic.
It won’t be a Grand Fiscal Bargain but a Grand Fiscal Land Grab, and as Conservatives we will need all our ingenuity to fight against it.
Cllr Adrian Pascu-Tulbure is deputy leader of the Conservative opposition in Hammersmith and Fulham
Plucking geese is not a core competency often seen on Treasury job descriptions.
But every good HMT official would recognise the maxim of Jean-Baptiste Colbert, Louis XIV’s Finance Minister, that “the art of taxation consists in plucking the goose so as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”.
Of course, you don’t know how loudly the goose will hiss until it is too late. Sometimes it stays remarkably silent; sometimes the honks bring down Prime Ministers. But recent years, and the ever-increasing predisposition for politicians to U-turn if there is sufficient outcry, have created strong incentives for every group that loses out at Budget time to kick up a gigantic fuss.
If you are a politician that 1) wants to be liked and 2) needs to balance the books, you therefore have a problem. The most recent wheeze has been to try and apply some accounting jiggery-pokery and reclassify various pots of money, but that has to receive seals of approval from cold-eyed executives in the OBR (tough) and, down the line, financial institutions (very tough). Otherwise, it remains about hoping for growth, cutting spending, or raising taxes.
Know, then, that any individual spending cut or tax rise is going to raise a stink. It’s relatively easy to see who the winners and the losers are. And those on the losing side will use every possible means to fight those changes, with activists, interest groups and tactical opponents cheerfully piling on.
The question then arises: how many political fronts can you fight on? Conventional wisdom says it’s very few. But what if that’s wrong?
Consider this. You argue that the whole of the tax and spending system – personal, property, and business taxes, capital projects, departmental expenditure, grant funding – needs major structural changes: tinkering around won’t help any more. You offer the nation a Grand Fiscal Bargain. And then you pile as much as you can onto the table.
To sweeten the pill, you present this as solving wicked issues (“finally a solution to social care / the refurbishment of Parliament”). Finally, to muddy the waters further, you do this alongside other major structural reforms, most obviously devolution.
Instantly, there will be a huge rush to work out what all these changes mean in practice. But the truth is, if you are changing the lot, it will be incredibly difficult to work out precisely what the implications are, who bears what portion of the burden, and – crucially – how best to unpick it all.
Sure, some headlines will be tough. But there is only a finite number of front pages. And there will be other voices – perhaps surprising amounts of them – that will give you credit for at least trying.
Will Andy Burnham do this? There are two good reasons to think he may give it a go.
Put simply, introducing radical change suits the narrative of a man who has been open about his intention to “try to do things in a different way”. “This is our last chance”, Burnham has not been shy of saying, in a not-too-subtle nod to his processor’s failings. His mission is no less than to “rewire” the state, tackling issues that had been left to fester for (an important number) 40 years – so under Blair and Brown too. These are not the words of a man who dreams small.
And – at least in the short term – it might work from a goose-plucking perspective. Big, sweeping changes offer plenty of options to insert hidden fiscal nasties. The Exchequer likes this: more revenue. Labour likes this: more money to spend on crowd-pleasing announcements. Plus, as argued above, the fog of war makes it difficult to see precisely what’s going on until very late in the day.
A case in point is allowing local government to take income from business rates and, from 2028, income tax. An intriguing idea that seems like a great earner on paper, but with a major sting: because alongside this, the Government will “rebalance public investment, including considering the balance of subsidy and other finance mechanisms”. In other words, well-off and efficiently-run councils are going to see even more of their central funding cut, and the better they do, the less they will get. Not only that, councils won’t have the power to spend any of this new income on tax cuts, so the burden falls on the ratepayer. This potentially nets Government billions on the quiet, while allowing Burnham / Healey to make the right noises about devolution.
There are obvious challenges to a Grand Fiscal Bargain. Implementing change of this scale presents vast challenges of coordination and implementation. Treasury officials will relish that level of challenge and will try to meet it in good faith – but with so many moving pieces, the chances of something going wrong shoots up. If your best bet is that there’s so much going on that errors won’t matter, that is vastly beyond Government’s normal risk tolerance.
Perhaps a more profound challenge is around cumulative impact. A Grand Fiscal Bargain implies trade-offs, but it could equally mean multiple whammies. There’s a theoretical logic to arguments such as “yes, family X gets hit by a land value tax and a social care levy but they won’t have to pay any more stamp duty if they move and they might keep more of Aunt Brenda’s inheritance”, but what actually happens is that some people will be made worse off, possibly heavily worse off, by practically every change introduced.
It does, potentially, get worse. If sufficient numbers of people get sufficiently clobbered in a sufficiently similar way, and then take action, this could have genuinely destabilising longer-term economic impact. We know the thrust of Burnham’s agenda is that those with the “broadest shoulders” should bear an ever-greater part of the burden. Imagine, not one, but seven or eight tax changes, all coming at roughly the same time, each of which insidiously ratchets up the pressure on a certain segment of the population. Will the goose hiss? Or fly away? Or will it just expire?
When faced with grand difficulties, there is a tendency in politics to argue in favour of throwing the cards up to see where they land: something must be done, here is something, therefore let’s do it.
We are currently at the “something must be done” stage. I suspect we will soon hear the siren calls of “here is something” – either in the form of a Budget, or a call for a fresh mandate. And I fear that what Labour will offer will be plausible, even slick; and, if implemented, utterly catastrophic.
It won’t be a Grand Fiscal Bargain but a Grand Fiscal Land Grab, and as Conservatives we will need all our ingenuity to fight against it.