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George Osborne’s last chance: 40p…or childcare?

14 March 2014

5:27 PM

14 March 2014

5:27 PM

Next week’s Budget is the last chance for George Osborne to make a ‘game-changing reform’. Backbench Tories have been clamouring for Osborne to reduce the number of people paying the 40p rate – in the hope that this will secure middle class votes. Lords Lawson and Lamont have added their august voices to that camp. And UKIP joined the fray this afternoon by pledging, according to the Telegraph, to raise the 40p threshold to £45,000.

Without denying that the 40p rate has become a serious issue (our own Melanie McDonagh takes a dim view of the government for having lowered the threshold), The Spectator proposes a simpler and politically more inclusive reform option: childcare. Here’s an extract from the leading column in this week’s magazine:

‘Study after study highlights this problem. The OECD recently calculated that the economic growth that the Chancellor now likes to boast about could be half a percentage point higher each year if Britain had as many women in work as France or Holland have. This amounts to £46 billion — and tax revenues of almost £20 billion — over a parliamentary term. Crudely put, the Exchequer could gain more than the tax relief costs.

‘To be cruder still, the Tories have a women problem. If Osborne was able to show that his attempt to run a ‘workers’ party’ also applied to members of the opposite sex, he might be taken more seriously.’

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Subscribers can read about how this reform could be delivered with the minimum of fuss by clicking here. Non-subscribers can do so by clicking here.


On the evening of Wednesday 19 March 2014, Fraser Nelson, James Forsyth and Andrew Neil will be discussing what George Osborne’s 2014 budget means. Click here to book tickets.

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Show comments
  • Fraz Glencross

    Only the top 15% of all earners are in the 40p bracket. It is NOT the
    squeezed middle. The average income is around 27k. The last thing the
    top 15% need or deserve is a tax cut. Osborne doing the right thing be
    resisting the calls from the bat sh*t loons on the tory right to cut taxes
    again for the most well off in society.

  • Paul Hughes

    How about letting us keep our own money and allowing us to decide how to spend it? What’s so wrong with that idea?

    I’m so bored with social engineering.

  • Mr Creosote

    Please do not give away any more “free” childcare – this is simply a tax on nurseries and will result in further closures.

  • kyalami

    Neither 40p nor childcare. 50p off the price of a litre of fuel would supercharge the economy and politically reach out to many who don’t normally vote or don’t vote Tory.

  • Tom Tom

    This article in incredible, there are 6.7 million women <64 in Netherlands and 25 million in the UK but the journalist states more women work in NL than in UK which I find frankly incoherent and untrue

  • Smithersjones2013

    The Spectator really is filled with dim-witted fools. As Lord Ashcroft no less pointed out the Tories do not have women problem. They have a people problem.

    • Tom Tom

      Yes but Ad men obsess that there are more women than men. They then focus on selling tampax and forget the alienation of the rest of the population

    • Holly

      The ‘people problem’ being, everyone got everything, and it appeared to everyone that no one paid for it.

      Reality is a bitch.

      • Samuel Kaine Wheeler

        Prior to the global financial crisis, debt was lower as a proportion of GDP than what Labour inherited in 1997.

        Damn those tricky facts ruining your rhetoric.

        • Nicholas chuzzlewit

          Here’s a fact for you, the last Labour government bequeathed a 7.4% contraction of the economy and a £160 Billion structural deficit because of overspending at the top of the economic cycle when it should have been running substantial surpluses. And no, it did not all start in America. Damn those tricky facts ruining your rhetoric.

          • Samuel Kaine Wheeler

            When Labour left office the economy was growing again. The economic mismanagement of the Coalition has succeeded in hurting the vulnerable while undermining growth, making this the slowest recovery in modern British history.

            While I would love to think the British government raising health spending to the European average could bring global capitalism to the brink of collapse, sadly it’s simply not the case.

            • Nicholas chuzzlewit

              One last spending binge to try and give the impression of growth prior to the election. Typical Brown, all that matters is my career and the country can hang. If you spend money you get temporary growth but it is unsustainable. If it were all we would need to do is never stop borrowing and spending which is obviously ridiculous. By reducing costs on order to shrink the structural deficit we now have imperfect but sustainable growth. Indeed, the UK has the fastest growing western economy and record levels of employment. Capitalism is the best medium for reducing poverty and to suggest otherwise is simply socialist nuttery.

              • Samuel Kaine Wheeler

                Except Osborne is borrowing far more than Labour planned to, so it’s nonsense to say the current situation is sustainable. That we are now seeing growth we should have seen four years ago would not be success under any circumstances, however in this case it, along with the ‘record numbers in work’ are a pure creation of population growth. Productivity in Britain saw its greatest fall in 2012, 2.4%, since the OECD started keeping records in 1970.This is a race-to-the-bottom, sweatshop recovery.

                The modern world, from Silicon Valley to satellites to cyberspace is built on the backs of massive R&D and start-up funding by national governments. Even Jack Cohen, of Tesco fame, got started with a government subsidy. This Randian nonsense that governments are drags on human progress is the real nuttery.

                • Nicholas chuzzlewit

                  When you are faced with a 7.4% contraction of the economy it is inevitable that tax revenues will fall and borrowing will rise. The only way to avoid an increase in borrowing would be to slash public expenditure to the point where every socialist nutter like yourself would be screaming blue murder. Labour has opposed every public spending reduction and pledged to spend more and so that ‘Labour would borrow less’ is typical leftist dissembling rubbish. Much of the increased borrowing is QE a programme instigated under Labour whereby we issue debt to ourselves and ‘print’ money electronically to pay for it. Most of that will be switched into zero coupon bonds and the certificates left in a drawer to rot.

                • Samuel Kaine Wheeler

                  Good, I’m glad we agree that borrowing in a recession is a necessity.

                  The point is that by talking down the economy by comparing it to Greece, and cutting in the wrong places, the Coalition fundamentally undermined public and business confidence in 2010. Sustaining investment at a higher level at that time would have meant a quicker recovery, a stitch in time and all that. Now Osborne is once again stoking a housing bubble, because none of his other ideas worked.

                • Nicholas chuzzlewit

                  Wrong as always. After 13 years of profligate madness and waste we had to demonstrate to the international capital markets that we could act responsibly and cut costs which we could not and never could afford. Now I only have so much time for socialist nutters like yourself and your barking interpretation of economics and your time, thankfully, is up.

            • Colonel Mustard

              I’ve read your tweets. Huge ego. Big mouth. Red, red, red.

              • Samuel Kaine Wheeler

                I’m flattered, but I don’t think you’re my type darling.

        • Holly

          Remind me again who it was who needed to pump our banks with billions of taxpayers money.
          Labour lauded over an illusion that millions fell for, then blamed the lot on the rest of the world.

          NOT rhetoric, or right wing bias, just the plain simple truth.
          It was Labour, and their complete inaction to avoid something, before it happened, instead of their usual bone idle cop out of throwing OUR money at it.
          My point was Labour are unfit to govern…whatever the GDP stats say.

          • Samuel Kaine Wheeler

            Depositors should have been guaranteed, a state bank set up for those assets and the rest allowed to fail. No argument here. Labour became too cosy with Big Finance. However the idea that the solution is a party even more in hoc to the City is madness.

  • JoeDM

    Childcare is the responsibility of the parents NOT the State.

    • Daniel Maris

      Child mortality is the responsibility of the parents NOT the State.

  • anyfool

    Raise the tax threshold to £45000 saying its to keep the actual workers above the £25000 benefits cap which equates to a wage of almost 40 grand.
    Also raise the starting point for NI to the £10000 tax starter rate, it would cost little as a lot would lose top up tax credits.

  • London Calling

    No comment, except on Tony Benn RIP I can’t leave a comment on his memorial thread…………I remember playing the drum that led millions into Hyde park on the war against Iraq march in London…..Tony Benn was one of the speakers who were on stage and he spoke well……….:)

    • London Calling

      correction : I led a million into Hyde Park, not millions………

      • Makroon

        And only a few of the Benn acolytes actually bothered to listen to the old geezer – probably because most didn’t want to be associated with the hard-left who tried to hijack the march.

      • Daniel Maris

        Why? Do you support dictators who invade member states of the UN?

  • andagain

    I see that the median income in the UK is thought to be £21,300 for 2012-2013. http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

    You have got to hand it to the Tories, standing up for those poor unfortunates with little more than twice the median income.

    • HookesLaw

      Ever since they came to power the ‘tories’ have been raising tax allowances for the lowest paid and paying for it by not indexing the upper limit.
      So your sneers are wrongly placed.
      The BBC evidently is campaigning for a 40p rise – not surprising since many of its employees will have to be paying tax like the rest of us from now on – it’s News ran a piece about a car worker – a common or garden ‘bog standard’ car worker who was complaining about being drawn into payng 40p tax. You have to feel sorry for all those tube drivers as well.

      • andagain

        This is supposed to be a “game-changing” election winning move. A move that reinforces every negative stereotype about the Conservative Party is a strange way to win an election.

        • HookesLaw

          Who says its game changing? I don’t. But as and when the finances can afford it I and many others would want to see the 40p allowance rise – rise back to where it was under the socialists. At least.
          As far as direct tax goes I would like to see everyone paying less. Unfortunately there is a lot of socialist inherited spending to be paid for.

          • telemachus

            It is self evident that a return to the safety net ofvthe workhouse and a return to fee for service in health would have great fiscal benefits
            And begin to benefit the pension demographic

      • Samuel Kaine Wheeler

        Er, no. Rises to the personal allowance do not help the poorest or lowest paid, as they never earnt enough in the first place, especially when you pay for it with a VAT rise.

        The rises to the personal allowance however still help everyone up to the £100,000 mark (and a bit beyond because of the taper).

        Again, what Conservatives imagine the middle to be is their own circumstances.

        • Colonel Mustard

          “Rises to the personal allowance do not help the poorest or lowest paid, as they never earnt enough in the first place, especially when you pay for it with a VAT rise.”

          That is generalised, dogmatic rubbish of the head in the sand (or somewhere else) variety that refuses to concede an inch of socialist rhetoric to Coalition progress. In fact it depends very much on personal circumstances and the amount earned. For the part-time and self-employed (risen by over 10% since the downturn began and often the necessary refuge for those older workers victimised by ageist-motivated redundancies), who earn £10,000-15,000, it has made a significant difference and overturned Brown’s regressive abolition of the 10p rate.

          Throw away that stupid bouquet, take the mask off and your head out.

          • Samuel Kaine Wheeler

            Again, putting in a regressive tax cut funded by a regressive tax rise isn’t progressive, no matter how you try and spin it.

            • Colonel Mustard

              I’m not trying to spin it but just trying to be fair rather than tribal. It is ridiculous to describe raising the personal allowance as “regressive”.

              • Samuel Kaine Wheeler

                It helps someone on thirty grand more, both absolutely and proportionately, than someone on six grand. A tax cut which gives more to high earners than low earners is the definition of regressive, particularly when it’s paid for by a hike in another regressive tax.

      • Tom Tom

        The basic rate used to be 35%

  • Gazcon

    Has to be the 40p rate, and preferably to £50k. It’s crazy that people who cannot afford to get on the housing ladder are paying higher rate tax (more a problem about the housing market in the south east rather than tax per se, but we are where we are).

    Besides, the principle should be to let people keep more of their own money. They can then spend this on whatever is most important to them, including childcare. Surely that would be the “more inclusive option”.

    I won’t hold my breath though, childcare would make better headlines and dodges another “tax cuts for the rich” bullet.

    • monty61

      An obvious way to address the housing market would be to level the playing field in the taxation of BTL – at the moment BTL buyers have huge advantages over normal buyers (deliberately, according to Mark Prisk in his brief tenure – the only thing he achieved was to load the dice even further against ordinary people).

      Or how about a supplemental council tax regime for landlords (to claw back the squillions blown in housing benefit through inflation of rents, an outrageous scam for a long time).

      Of course a Register of Landlords would help enormously with revenue collection (only need to count up the lost hundreds of millions from lax enforcement that was the result of Grant Shapps’s very first act as housing minister – cancelling that register).

      • HookesLaw

        You want rented accomodation but you do not want landlords. Typical socialism.
        Based on what you say we should cut housing benefits to cut rents.

        • Samuel Kaine Wheeler

          No man has any right to buy and sell the earth for private gain.

          • Colonel Mustard

            Can I come and live in your garden then?

            • Samuel Kaine Wheeler

              I don’t have a garden. No-one does. All land belongs to the Crown, you just have certain rights over it granted at its discretion.

              • Colonel Mustard

                Can I come and live in your broom cupboard then?

                You should brush up on your Common Law – not all land is Crown land. Most restrictions on real property come from neighbour obligations and councils but rarely impact freehold or fee simple ownership.

                • Samuel Kaine Wheeler

                  Feel free. But you’re going to have to come out of that closet eventually Mustard.

        • monty61

          I say no such thing. What I do say is that the state shouldn’t disadvantage private aspiration, while supporting rent-seeking. Landlords have had it far too easy for too long.

          The Conservative case against state support of Landlordism runs like this: by encouraging, supporting and giving advantages to rent-seeking over productive, wealth creating forms of investment, we skew investment towards the non-productive. This is bad for the country – it not only beggars the state (in Housing Benefit – which ought to be cut by 50% immediately) but has negative economic consequences for the private sector.

        • Tom Tom

          Crap. Change tax law so rented property can be depreciated as in normal countries and lower rents

      • Tom Tom

        Too many MPs are on BTL rackets

    • McClane

      I don’t have children so don’t need childcare. I’d rather have the cash.

      I envy those who have children but that envy doesn’t extend to paying for them. I’d still rather have the cash.

      • Makroon

        A good point.
        The “problem” with child care is that it is ridiculously expensive in the UK. The Conservatives made a feeble attempt to deregulate and lower the cost, but of course, the Labour-loving LibDems stopped it.
        It makes zero sense to keep the costs high but make them tax deductible.

        • Tom Tom

          Regulatory cost and cost of property

    • Tom Tom

      Yes but let’s keep spending money and borrow so we don’t need any taxes – like the US does……why pay taxes when spending is free ?

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