Cash is tight, so why turn down free money?

I spent last night at the annual dinner of the Association of Revenue and Customs. Getting drunk with a 200 or so tax inspectors may not be everyone's idea of fun, but they're a lively bunch and among the sharpest people I know. These are not the ones who come round to snoop through your books and hassle you for missing receipts. These men and women do multinationals for millions, sometimes billions, of pounds. Money they owe us. Money we use to build hospitals and schools. Or money we could be using to reduce the deficit that's frightening the life out of our new government ministers.

With no money left, tax inspectors should be feeling loved at the moment. But instead, everyone I met was full of foreboding. The department is constantly being reorganized and with each round comes a further squeeze on senior posts and cuts in funding for things like training and research. The Labour government's treatment of the Revenue was lamentable, but far from investing in this money-spinning outfit, everyone is expecting the new government to wring further "efficiency savings" out of this battered and demoralised department.

Remember this isn't a department that costs money, it makes money, and every extra pound it raises from people and companies trying to avoid tax is a pound more to spend on the things we like, or a pound less that we have to stump up ourselves. So little work has been done on tax avoidance (exploiting loopholes) and tax evasion (illegal fraud) that no one really knows how much money we're losing, but we do know that it's a lot: estimates for corporation tax alone range from £3.7 billion to almost £14 billion (more than twice as much as the coalition wants to cut this year). And that's before you even start looking at VAT fraud, income tax fiddles and capital gains tax scams.

Every tax inspector I met last night brings in tens if not hundreds of times their own salary in additional tax revenue, so why aren't there more of them and why aren't they better supported? If the new government is serious about reducing the deficit, rather than just cutting spending for the sake of it, it should invest in this valuable resource - give these people what they need and let them get on with the job. In the coalition's policy document, published today, there is a single terse sentence: 'We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals.'

We'll see.

LibCons must come clean on 55%

People seem to be finally waking up to Liberal-Tory proposals to change parliamentary rules so that 55% of MPs are required to being down the government and force an election (see yesterday’s post). Defenders of the coalition (see here for an example) are claiming that if the government is defeated on a confidence motion, Cameron would still have to resign, although there would be no election. It would be up to other parties to try to form a government to carry on for the rest of the five year term. If that isn’t possible, then…well, nobody seems to know. We have to wait for the detail, apparently.

Culture secretary Jeremy Hunt was asked about this by Kirsty Wark on Newsnight last night, but pointedly evaded the question, brushing it aside as a ‘minor change’. William Hague seemed pretty unequivocal when he spoke yesterday, saying there would be no early election, and even naming the date of the next election as 7 May 2015.

Given the events of the last few days, it’s pretty clear that other parties won’t be able to form a government with a majority in this parliament if the LibCon coalition falls apart. But the new rules mean there would be no election unless the Tories want one. So we’d presumably end up with a minority Tory government without a majority and unable to pass any legislation until such time as the Tories feel ready to grant us an election. How this would work is anyone’s guess. We could in theory end up with the government which is defeated on a confidence motion every day and has to keep resigning and reforming itself.

We await the detail, but it’s hard to see how you can reconcile the ‘no dissolution without 55% support’ with the rules on a government having to enjoy the confidence of the House, except by except by extending the 55% rule to confidence motions as well, which I suspect is what they really mean to do.

To LibCons seem to be planning to slip this change through via a ‘binding resolution’ of the House, probably as soon as they can next week, and then deal with details in legislation later. By that time, it might be too late to do anything much about it.

The new government needs to come clean about what they’re planning to do right now. In the meantime, we need to start putting some pressure on them. There is already a website, Say No to 55%, and debate is contuning on the Twitter hashtag #noto55

Update (13.20pm):

A far more learned and erudite explanation than I can manage available from Carl Gardner. LibCons seems to tying themselves in constitutional knots trying to explain how this will work. I think we all know how they want it to work.

Parliamentary democracy first casualty of Tory-Liberal coalition

While David Cameron and Nick Clegg were slapping each other on the back earlier today, their lieutenants were drawing up plans to knife parliamentary democracy between the shoulder blades.

It went almost unnoticed, but the Tory-Lib Dem plans for fixed term parliaments (all in the interests of ‘stability’, you understand) include new rules that will allow Cameron to stay in office even if he is defeated in a confidence motion. Yup, that’s right, Cameron stays unless 55% of MPs vote against him.

This does brutal violence to our constitution. Until now, if there was one thing that was certain about our creaking, cranky old system is was that a government must command a majority in the House of Commons. Not any more. Cameron is special: he will only need 292 votes (maybe less if some MPs abstain or are absent) to remain prime minister for a full five years. Conveniently, there are 306 Tory MPs, so he doesn’t need the Liberal Democrats. Even if they leave the coalition, Cameron stays. For five years.

This wasn’t in either the Liberal Democrat or Tory manifestos. There will be no referendum. Just a bill, which will presumably be rammed through the Commons with the Liberal Democrat support. How a party with ‘Democratic’ in its name can support this is beyond me. New politics? It just goes to show what a sniff of power does.

I suppose no one told Gordon you could do that. If only he’d known that you only need 45% of MPs to form a government, it might have been a different story yesterday. But there you go, the Tories have always been adept at changing the rules to suit themselves. But this is brazen even by their standards. It’s a shame they’ve dragged what used to be a progressive party with them into this shabby assault on our democracy.