Matthew Sinclair

Having been born in 1983, I am a part of Ed Howker’s ‘jilted generation’.  I think it is quite reasonable for him to argue that governments of all parties have made choices which do not reflect our interests, or those of future generations. They have increased public spending, which will reduce medium term growth and diminish our future earnings; they have borrowed eye-watering amounts of money which we will have to pay back; they have taken far too long to undertake vital reforms like putting in place a reasonable schedule of increases in the pension age. More young people think that the moon landings were faked than think that the Government will be able to provide the same level of benefits available today when they retire.

Yesterday's autumn statement included the results of the Treasury's study of the dynamic impacts of the cuts to Corporation Tax, which George Osborne is down from 28 per cent to 20 per cent. This study used the new HMRC Computable General Equilibrium model - as Fraser reported on Wednesday - and the results are impressive. The cuts will increase investment by 2.5-4.5% (£3.6-£6.2 billion in today’s prices). They will increase GDP by 0.6-0.8% (equivalent to £9.6-£12.2 billion). Given the share that we can expect to go to labour, that equates to an increase in wages of £405-£515 a household. As a result of higher profits, wages and consumption, we can expect the cost of the policy to fall by 45-60 per cent in the long run.

First politicians banned cheap energy. They are creating an affordability crisis by insisting on the rapid deployment of expensive technologies like offshore wind and by imposing endless green taxes. It is simply illegal to generate electricity at an affordable price with a modern, efficient coal and gas power plant, without bearing all of those other costs. Ed Miliband was one of the people who imposed those high costs on consumers, as the Secretary of State for Energy and Climate Change in the last government. Now his plan is to fix the situation by banning expensive energy too. The Government already decides which technologies are good – wind, solar, carbon capture and storage – and which are bad – coal and gas.

65 per cent of the people buying a home in London in 2012-13 paid the 3 per cent rate of Stamp Duty or more. You can pay that rate on a one or two bedroom flat in the capital now. But it would be a mistake to think that Stamp Duty is only an issue in London and its leafier suburbs. Just 200,000 of the 500,000 transactions subject to Stamp Duty in 2012-13 were in London and the South East. Family homes around the country are subject to punitive rates. Imagine you bought a house in the West Midlands for £300,000 at the start of 2007. Not a mansion but just a normal family home in a nice neighbourhood like the one picture below. You will have paid £9,000 in Stamp Duty on top of the price of the house. That is probably the largest cheque you will ever write to the tax man.

Today Ed Davey launched the London Array, an enormous offshore wind farm, and the Prime Minister posed for pictures with a sheikh whose sovereign wealth fund put up part of the money to finance it. But HH Sheikh Abduhall Bin Zayed is not backing this project out of the goodness of his heart. The Emiratis aim to make a return out of the lavish subsidies on offer. Just last week, the Government announced that from next year offshore wind will get a guaranteed price – under the new 'contracts for difference' in the Energy Bill – of £155 /MWh. Electricity currently sells on the wholesale market for about £50 /MWh. Offshore wind therefore gets three times the price of conventional energy.

Tim Yeo MP called his proposal for yet another draconian target to decarbonise Britain’s power sector the ‘green jobs amendment’. It was defeated last week by 290 votes to 267. One sweeping new regulation was apparently enough for the day as the Commons settled for casually renationalising the energy sector by passing the government’s bill. The amendment’s defeat is a setback for environmentalists, who had campaigned for it aggressively, but not for Britain’s two and a half million unemployed. ‘Green jobs’ are an utter farce. More expensive sources of energy will destroy more employment than they create. That is not to say that no one has a green job.

The Government is expected to raise around £550 billion in tax revenue this financial year. The Centre for Policy Studies estimates that a mansion tax (of £20,000 on properties of £2 million), would raise at most £1 billion, less than 0.2 per cent of revenue. The tax is, however, likely to weaken the market and reduce prices – reducing receipts from other taxes; so even the CPS’s static analysis is probably optimistic. This proposed tax would be a huge burden on those forced to pay. The rate is not 1 per cent of the property’s value. The standard lifetime of a lease on a new build is 125 years, over which time the government will have confiscated 125 per cent of the value of a £2 million property.

Too many taxes are buried in prices. From Value Added Tax to the cost of extravagant subsidies for renewable energy, all people see is the shop charging them a higher price. That is convenient for politicians trying to hike our taxes, but it distorts democratic decisions over the level of taxes and spending, and which taxes to increase and decrease. That is why we have seen steady increases in Employers’ National Insurance. It is why climate regulations are structured so a huge part of the cost is buried in the electricity market. And it is telling that the taxes people resent most are the lump sums they have to write a cheque for each year.

Tim Yeo is now posing as a friend of the consumer. Launching the latest report from the Energy and Climate Change Committee this morning, he attacked the Treasury for ‘refusing to back new contracts to deliver investment in nuclear, wind, wave and carbon capture and storage’. The report argues that could ‘impose unnecessary costs on consumers’. The basic logic of his claim is this: investments are more expensive when they are riskier. Investors expect to be compensated for the risks being taken with their money. If the Government offers guarantees that reduce the amount of risk energy companies run by investing in expensive sources of energy like offshore wind, then those firms can invest at a lower cost.

The European Union has been handing out grants to environmentalist groups since 1997. New research by the Taxpayers’ Alliance today shows just how much the different groups have received. The European Environmental Bureau, an umbrella group for a number of the others who are funded directly, has received nearly €11 million. More familiar names funded under the LIFE+ programme include Friends of the Earth Europe, which has received over €7m million, and the European Policy Office of the World Wildlife Fund, which has received nearly €8 million. The European Union isn’t the only government to hand taxpayers’ money over to the environmentalists. But they are particularly shameless.

One of the justifications for Britain’s large, and rapidly growing, international development budget is that it promotes our national interests. Politicians are wary of appealing to a public sceptical of the benefits of aid purely on the basis that it will help where it is spent. The idea is that by supporting poorer countries we increase their stability, and thereby create a safer world for British people as well. But the evidence that foreign aid promotes political stability is weak. Harvard economist Nathan Nunn and Yale economist Nancy Qian found in a Working Paper published this January that ‘an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries.

After the Budget there was a lot of anger over the pasty tax and the granny tax. Another big rise — in tobacco taxes — didn't make as many headlines, because it wasn't much of a surprise. But for someone smoking a pack a day it almost wiped out the entire value of the rise in the Personal Allowance. Given that most smokers earn relatively low incomes, it was probably the most regressive measure in the Budget. The idea is that smokers are supposed to be grateful for this impetus to give up. Many will keep smoking though, and this will just be yet another strain on their household budgets. Some will respond by buying more from the illicit market.

When Tim Montgomerie first started calling for new wealth taxes I was horrified. Sweden has only just abolished its wealth tax after seeing hundreds of billions of kroner leave the country in capital flight over a number of years. Other countries have found wealth taxes are associated with narrow bases, high costs of collection and often very unfair treatment for different classes of assets. We should not replicate that here. As his proposals have been refined though, it isn’t that bad. More bands would be a relatively reasonable way of making the Council Tax system more progressive.

Earlier today, the Government announced that it is still planning to go ahead with a new high-speed rail line that will reach Birmingham by 2026, and then be connected to Manchester and Leeds. And it's doing so in the face of widespread scepticism among the public and business leaders. When we at the TPA commissioned YouGov to test public support for different cuts in public spending, 48 per cent of the public supported cutting the project against just 34 per cent opposed. While organisations like the CBI back high-speed rail, the Institute of Directors (IoD) actually asked their members and found that 38 per cent thought HS2 would represent poor value for money, against 30 per cent who thought it would represent good value.