In the first part of this book Paul Johnson explains clearly and succinctly the British Tax system: its rules and its consequences. The second part summarises the challenges ahead. In addition to Climate Change the biggest future issue results from Britain’s aging population. Not only will health and social care costs ramp up but also the proportion of those of working age and paying taxes will decline. The Office of Budget Responsibility (OBR) estimates that just to stand still expenditure will have to rise in the next 50 years by almost 10% of national income. This is huge; we currently pay 37% of National Income – taxes will have to go up by 25%. No political party is daring to tell electors this truth.
In his final paragraph Johnson gives an outline of what is required to manage the financial challenges ahead:
The repair job starts with honesty about costs and benefits and trade-offs inherent in any policy decisions. Promising the earth, lower taxes and higher spending, is a way to ruin. Effective policy acknowledges that change takes time , and puts in place long-term strategies to accomplish sustainable change. It recognizes the importance of delivery and values over theories. It appoints competent ministers and keeps them in post for long enough to get on top of the brief. It values effective management throughout the public sector. It rewards public servants appropriately. It is brave when it comes to confronting vested interests, whether they be taxpayers benefiting from quirks of the current system, homeowners preventing development, or public sector institutions resisting necessary change. It focuses on growth and on the delivery of services.
Does anyone think our current democratic system is capable of following through on this approach.? Political focus is always on the short term, driven by a natural need to get re-elected. Difficult decisions are almost always postponed and vested interests are rarely confronted, especially if they are contributing to the party coffers. Ministers change posts increasingly frequently; we have had 4 prime ministers and 6 chancellors since 2016.
We are in for some tough times ahead. To get through it our democratic system of government will need a thorough overhaul.
