New research from the TaxPayers’ Alliance has revealed the risks of the multi-billion pound council commercial property portfolio, with some yields coming in at millions below forecasts. In the last three years English councils have spent £6.6 billion on commercial property.
With the economy reeling from the effects of coronavirus and the way we work set to change, councils' portfolios could be hit hard, leaving taxpayers to pick up the tab. Of the nine councils surveyed, five reported that yields were lower than expected.
Our research was widely covered in local and national press, most notably The Times. On Friday evening we held a webinar with councillors Ferris Cowper and Gerald Vernon-Jackson. Both are big advocates of commercial investments but their unique insight gave a very balanced view of the matter. You can watch the discussion in full here.
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This thorny subject is bound to divide opinion but the TPA leads the way, bringing clarity to this grey area. Proponents cite falls in central government funding as a major reason for choosing the investment route. In some cases council tax bills have fallen. On the other hand the devastating economic impact of coronavirus should cause councils to think twice before rolling the dice with huge sums of taxpayers’ cash.
There are no guarantees with any investment and ultimately it’s ratepayers that will end up footing the bill for under-performing portfolios. As we emerge from the coronavirus crisis, new measures and mindsets will be needed if we are going to make sure this doesn’t become a disaster waiting to happen for local authority finances.
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TaxPayers' Alliance in the news
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Foreign aid debate rages on
Reports this week suggested that chancellor Rishi Sunak wants to divert foreign aid money into defence spending. The news once again provoked a debate on the effectiveness of overseas aid. Talking part in a panel discussion for TimesRadio our research director Duncan Simpson stood up for taxpayers.
It's fair to say he was outnumbered by foreign aid apologists but he more than held his own. He reminded the panellists and presenter Mariella Frostrup about the shocking examples of money wasted overseas. Adding, that in the current economic circumstances money might be better spent at home.
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Carrying on from Duncan, I wrote a piece for the Express showing why the government should scrap the 0.7 per cent spending target:
"For too long taxpayers have tolerated wasteful aid spending. Select recent examples include training imams to preach against smoking in Pakistan; dance and juggling lessons in Tanzania; conserving eels in the Philippines and salt reduction projects in China. Consequently, millions, if not billions of pounds of taxpayers’ cash has been wasted."
As Duncan said in the discussion, lowering the aid budget doesn't mean the UK is a less charitable nation. In fact Brits are some of the most charitable citizens in the world when it comes to private donations. With the economy on the brink, fiscal prudence has never been more important.
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Should the furlough scheme be extended?
A report by the Treasury Committee has recommended "targeted extensions" of the Job Retention Scheme. The panel argues that jobs need to be protected and the current Jobs Retention Bonus (JRB) is not "effectively targeted". Weighing into the debate on BBC Radio 5Live I went head-to-head with shadow Exchequer Secretary to the Treasury, Wes Streeting MP.
He was eager for the government to heed the committee's findings and splash the cash. But I countered, arguing that the short term gain of such a policy will be outweighed by the long term pain. The same report wants the chancellor to layout his plans for restoring finances to a "sustainable footing". The nation can't have it both ways, spending billions propping up jobs (many of which sadly will probably not exist after support ends) and trying to balance the books at the same time is impossible.
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However, I did agree with Wes' comments that the JRB is ineffective. I added that a simpler and more sustainable solution would have been to cut employer's national insurance.
The country cannot borrow or spend its way out of the dire economic circumstances. That's why the TaxPayers' Alliance is making the case for cutting taxes, slashing red tape and eradicating wasteful spending.
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"Two-tier" licence fee won't wash with taxpayers
The new director general of the BBC, Tim Davie, hasn't been in the job long and is already courting controversy. Many in the press are reporting that he is plotting a "two-tier" licence fee. The idea is that a standard and premium BBC package would be available to the public. Details are sketchy but this scheme still doesn't address the fundamental problem with the Beeb - you shouldn't be charged a tax simply for owning a television.
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Taking up the fight on talkRadio, our policy analyst Jeremy Hutton told presenter Kevin O'Sullivan that the corporation "has got to embrace a modern way of funding itself. Suggestions of a broadband tax and now a two-tier licence fee are ridiculous!" Hear! Hear!
As we did with Lord Hall, we will continue to hold the new director general's feet to the fire. The BBC must move into the 21st century. It's time to Axe the Tax!
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£2.4m is Mickey Mouse money to the Sussexes, but not to us taxpayers
Following on from our "Megflix" victory, our new media campaign manager Danielle Boxall - who previously worked at the online magazine UnHerd and as a newsreader at her local radio station - wrote a superb article for The Conservative Woman detailing why taxpayers were right behind our campaign. She says:
"This groundswell of public feeling shouldn’t come as a surprise to anyone. Taxpayers are sick and tired of those who want the perks and powers of public office without the responsibilities; those who expect cash from the public purse with little to no care for the hard-working ratepayers who stump up the funds."
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The TPA very much welcomes the decision by Harry and Meghan to cough up the cash but taxpayers have long memories. Let this be a lesson to the luvvies who are quick to lecture, the moneyed mandarins with their massive golden handshake payoffs, and the well-paid and worthy public health nannies interfering in our lives. Taxpayers have had enough!
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10 times quangos got it wrong
The TPA has tirelessly campaigned to cut back the quangocracy. We recognise that quangos are unaccountable, a burden to the taxpayer and often not fit for purpose. David Cameron's promise of a bonfire of quangos in 2010 has been well and truly forgotten. The bonfire has not been lit and instead has become a pile of dead wood - allowing quangos to remain in British politics for too many winters.
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This week our very own Kieran Neild puts the spotlight on ineffective public bodies with 10 examples of their costly mistakes. From the BBC to Highways England taxpayers have had to foot the bill to the tune of billions for their ineptitude. Read the blog in full here.
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Credit catastrophe
And finally... we're finishing where we started with risky investments. The front page of The Herald on Sunday revealed that the Scottish government is set to lose nearly £120 million in loans it gave to struggling companies.
The payments were awarded to Prestwick airport, a shipbuilder and a fabrications company. According to The Herald "ministers have so far been unable to account for how much if anything they have received" - a worrying lack of oversight if ever there was one!
In his stinging rebuke - quoted on the front page - our chief executive John O'Connell didn't hold back, "It's incredibly worrying that millions of pounds of taxpayers' cash could go down the drain... the Scottish government shouldn't be trying to pick winners and losers. The best way to help businesses flourish is by reducing the burdens placed on them. Cutting taxes and slashing red tape would be a boon to many entrepreneurs."
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Harry Fone
Grassroots Campaign Manager
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