Head of Insight AccountingWEB
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Tax debates take back seat at Labour conference

The Labour Party conference in Brighton this week took place in a highly charged and occasionally chaotic atmosphere dominated by Brexit, leaving little time or attention for detailed tax policies.

24th Sep 2019
Head of Insight AccountingWEB
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Labour 2019 conference light on tax detail
Brighton Centre_AW
Labour 2019 conference sidesteps tax detail

It’s a pattern that is likely to be repeated when the Conservatives gather in Manchester next week.

Shadow chancellor John McDonnell, often credited as the primary mover of policy within Jeremy Corbyn’s team, took the stage on Monday morning to declare an end to austerity with a raft of spending commitments and measures to improve workers’ rights including:

  • Universal free social care for the elderly
  • An end to universal credit
  • A ban on zero-hour contracts and reducing the working week to 32 hours.
  • A return to collective bargaining, with share ownership widened to employees
  • A £10/hr min wage.

The menu certainly lives up to Labour’s radical stance, but according to Institute for Fiscal Studies director Paul Johnson, both Labour’s plans and the government’s own commitment to increase spending on education and health over the next four years fall short of the amounts spent by the previous Labour government after the financial crisis hit in 2008-10.

“Total government spending is up, but as a percentage of net income, it’s pretty similar to the last Labour government. The size of the state hasn’t fallen,” Johnson told a meeting convened by the IFS, Institute for Government and CIOT to debate the “end of austerity”.

A no-deal Brexit would lead to economic contraction and rising government debt, he added.

TUC general secretary Frances O’Grady echoed his comments, but in starker terms: “The Tories are splashing cash around before the election, promising tax cuts to individuals and wealthy corporations. All this would be dwarfed by the impacts of a no-deal Brexit.”

Even with the return of rhetoric around fairness and inequality, one constituency delegate bemoaned, “Nobody argues for a redistributive tax system anymore.”

In response, CIOT president Glyn Fullelove reminded the fringe audience of an old joke about the Tax Genie, who’s first rule was that you could have fairness or simplicity, but not both. 

Instead, O’Grady and Labour shadow business secretary Peter Dowd focused on reversing the reductions in corporation tax rates in recent years. This stance was very similar to a motion passed by the Lib Dems in Bournemouth the week before to reject “Conservative plans to turn Britain into an unregulated tax haven and calls for a return to a corporation tax rate of 20%, reversing the rate cut to 19% and the planned reduction to 17%, which are not necessary for international competitiveness and are an unjustified tax giveaway.”

Charitable status for private schools targeted

Back in the main conference hall, delegates voted to abolish private schools by removing their charitable status and redistributing their endowments, investments and properties to the state sector.

The motion stipulated that the commitment would be written into the party’s next general election manifesto, with an additional requirement for universities to limit the proportion of private school admissions to 7% - matching the current percentage of pupils who go to private schools.

The private schools vote was another throwback to Labour policies of the 1960s and 70s, but when AccountingWEB members were polled on the likely impacts on the growing academies sector, the consensus was that the likelihood of the motion reaching the statute book was extremely remote.

Removing charitable status from private schools might raise the cost of school fees and mildly dent numbers, according to Ireallyshouldknowthisbut. But, they added, “The chances of private schools being banned, assets being seized and redistributed? None whatsoever.”

The Brexit effect

Such is the political turmoil at the moment that almost any policy put forward during the current conference season will be dwarfed by the endgame around Brexit.

Looking for more detail on taxation issues, the AAT’s observer in Brighton this week, tax policy expert Brian Palmer, said that Making Tax Digital was greeted with “stony faces” when it was raised at a fringe meeting.

“We can’t do anything about it until we get a government,” Palmer explained. “HMRC is still trying to put together policy but is hamstrung by the political climate. Everybody is trying to do something, but who will take it forward and in what direction? The decks are being cleared for Europe and all contentious issues are being pulled.”

Anthony Walters, head of public affairs at ACCA, agreed that the level of detail on tax measures was in short supply. Walters and his team have been in Brighton liaising with Labour politicians including shadow trade and international trade minister Bill Esterson, who told a fringe event about plans to introduce a “single front door” business support service.

“Our objective here is about visibility and having a voice among politicians,” said Andrews. “It’s important for chartered professional bodies to be seen as independent experts acting in the interest of wider society. We’re trying to demonstrate what we can offer to aid policy development and we have been asked to provide details certain items.”

In addition to helping with the Labour’s business support plan, ACCA’s public affairs team has been arguing for a slower, more sensitive approach to the off-payroll IR35 rules and indicated that the Labour shadow ministers were taking their suggestions on board – without going too deeply into the detail.

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