Friday, 27 July 2007

A tax on living in the countryside

A row is brewing over plans by the Royal Mail for something called 'zonal pricing' for postal services. The idea is that when a big business pays the Royal Mail to deliver in bulk it should pay more for delivery if its customers live in remote villages and less if they live in big cities where it is cheap to deliver. The worry is that over time businesses will pass these costs on so that in the end if you live in a small town or village you end up paying more for your services.

I was alerted to this by a group called the "Mail Competition Forum" who warned that nearly half the houses in Northavon could be affected.

The only catch is that the 'Mail Competition Forum' is the trade body for the people who want to compete with the Royal Mail. If the Royal Mail can offer discounts for businesses who want to post things to cities then the Royal Mail can compete with rival operators more effectively, and that is not what the trade association wants. So their concern is not entirely altruistic!

It seems to me that the answer is that if society thinks (as I do) that there is a value in having common prices for town and country, then the business that suffers through having to bear the additional costs (ie the Royal Mail) should get transparent public subsidy for providing the service, rather than be at a comparative disadvantage relative to the competition who, of course, aren't interested in delivering to remote farmhouses.

Things are never quite as straightforward as they seem!

Tuesday, 17 July 2007

Watch out for the 'cliff edge'!

I've recently had over a thousand letters and e-mails from women around Britain raising issues with me about their pensions. In the course of reading all of these letters, something suddenly struck me. The state pension changes being introduced on 6th April 2010 would be of huge benefit to many of these women - but they are too old to benefit as most of them will have turned 60 by that date. (In brief, the new rules make it much easier for a woman who has spent time out of paid work bringing up children to get a decent pension).

Now you may say that any change in the rules is bound to have a set of people who don't benefit, and you would be right. But my point (as aired on the Today programme this morning and in the Telegraph and Mail yesterday) is that the difference for some women is so huge, it is quite unfair to bring the changes in overnight. It's like a 'cliff-edge' where if you are the right side of the line you could get an extra £20,000-£30,000 extra over the course of your retirement, but if you are just one day older you miss out completely.

My argument is that pension changes are usually phased in, and so should this one be. I would suggest that people who reach state pension age within (say) 3 or 5 years of 2010 should get part of the benefit of the new rules - perhaps on a sliding scale the nearer they retire to 2010.

I accept it would be a bit messy, but it would remove a very arbitrary cut-off which would just increase the sense of resentment that many women feel about their pensions.

Saturday, 14 July 2007

Your guide to the new Lib Dem tax plans!

Ask people to name a Lib Dem policy and those who don't really follow these things very closely will say "1p on tax for education". And indeed, that was our policy up until about 6 years ago! Since then, the Government has substantially increased spending on public services like health and education, and the focus is much more on how the money is spent rather than on assuming that "another billion" will sort the problem out.

But this week we launched (for debate at our conference) a detailed package of tax plans. The main features were:

a) tax greener - more tax on new purchases of gas-guzzling cars, higher tax on half-empty planes and on air freight etc.;

b) tax fairer - closing tax loopholes on the very wealthy; using the money raised (and from the green taxes) to cut income tax for low and middle income earners, by taking 4p off the standard rate; also, continuing our policy of scrapping the council tax and replacing it with a local income tax;

The overall effect is good news if you are a pensioner, or on low or middle incomes - or if you care about the planet!. The main increases are for those who take advantage of tax loopholes and those who pollute. No doubt (as before) the best ideas will be 'borrowed' by the other parties, but if we continue to set the agenda on tax, that's fine by me.

Saturday, 7 July 2007

Brown's first PMQs

As the dust settles on the new Prime Minister's first PMQs, the reaction has been surprisingly critical. The assumption seems to be that after 10 years of waiting to be PM, the transition to actually doing the job would be straightforward.

But, although I'm no great fan of Gordon Brown, I think the critics are missing the point. As Chancellor he had to answer questions once a month. And at Treasury questions there are three other ministers to share the load. And you know what the topic is going to be before you start. Whereas the PM has to answer questions every week, and in most cases (except those tabled by toadying backbenchers) you don't know what they are going to be about.

He gave some good answers, and some weak ones (eg protesting that the reason a terrorist group had not been banned yet was that he had only been in the job for five days). Probably the least helpful intervention came from former Home Secretary John Reid from the backbenchers who basically told the PM the answer he should have given to an earlier question!

But taking together Brown's reshuffle, his handling of the terrorist incidents and his opening statement on constitutional reform, I would say he has made a good start overall - as indeed the polls seem to be saying. So I'd cut him a bit of slack at PMQs for now!