the ‘appropriate balance’ is the level of CIL which maximises the amount of development in the area. If the CIL charging rate is above this appropriate level, there will be less development than there could be, because CIL will make too many potential developments unviable. Conversely, if the charging rate is below the appropriate level, development will also be less than it could be, because it will be constrained by insufficient infrastructure.

So, because the proposed levy is not going to be zero, the Council obviously thinks that the extra Income Tax, Corporation Tax, Capital Gains Tax, Business Rates, stamp duties and Council Tax receipts the development would generate is not enough to fund necessary infrastructure. Presumably, the bureaucrats who wrote it think there are potential developments out there which developers do not currently believe to be viable because the levy isn’t yet in place.

The borough plans to introduce no levy on office and industrial development, however. Only residential and retail developments will be lucky enough to enjoy the new tax. Retail developments will be hit with a £100 per square metre levy anywhere in the borough whereas residential developments will be subject to one of three levies, depending on where it is. £42/m2 in the least affluent third, £140/m2 in the middle and £385/m2 for new homes in the most affluent third of the borough.

If the levy is supposed to finance infrastructure, why would the that required infrastructure per square metre of floorspace developed cost nine times as much in one part of the borough as another? If the levy is set at the level which “maximises the amount of development in the area”, why would developers only find it profitable to develop with a tax nine times as onerous as that in the other section of the borough? And is it really only retail and residential developments which need infrastructure – don’t offices and industrial developments benefit from infrastructure, too?

The answer is that the levy is an attempt to squeeze cash out of development and into town hall coffers. Buildings, obviously, do not require infrastructure. It is, to say the least, highly unlikely that building big expensive houses in the rich part of town requires nine times as much revenue per square metre to fund the additional NHS GP surgeries or local public transport infrastructure as the typically much smaller homes in the poorer part of the borough. The assessment produced by the Council’s consultants possibly ‘captures’ a more honest account of the rationale:

we test the these different developments without CIL, to see if they are viable in their own right and how far they produce a surplus value, or overage, from which CIL may be extracted. Secondly, we consider how much of this estimated surplus value (where it exists) should be captured through CIL.

Merton’s proposed rates are significantly higher than those recommended by the independent consultants, too. In all three areas they have proposed the levy should be 40 per cent above the recommendation (£42, £140 and £385 instead of £30, £140 and £275 per square metre).

The Community Investment Levy is proving to be little more than a naked cash grab by councils like Merton’s that will do little more than take off the pressure to stop wasting money while hitting development hard and with it all the jobs and prosperity it creates. Councils should look harder for savings from waste and factor in new revenues from existing taxes on additional residents and businesses to fund infrastructure projects. Hard pressed taxpayers and homebuyers simply can’t afford the job losses, higher taxes and higher rents that the CIL will create.

And as the councillors continue to insist that they have no option but to increase council tax – despite the Government offering funding to allow for a freeze – figures have now come to light showing the true extent to which those funds are being used to subsidise the trade unions.

Our report into the taxpayer funding of trade unions last November suggested that the two Full Time Equivalent Unison activists being funded by Peterborough City Council (see p.52) were costing £56,385 of council tax payers’ money (based on them each being paid the median gross annual public sector salary of £22,902 and then taking into account pension and NI contributions, taking their cost to £28,192 each).

However, today we can reveal the identities of the two full –time tax-payer funded UNISON activists and how their higher than median salaries are meaning that even more of Peterborough council tax payers’ money is being channelled to the unions than was first thought.

A letter from Cllr Irene Walsh, Peterborough’s Cabinet member for Finance, to Stewart Jackson, Peterborough’s MP, has reached our attention and we have published it online today in order that people can see the costs for themselves.

Rona Hendry is the UNISON branch secretary and will cost the Peterborough council tax payer no less than £43,600 over the coming year. Her branch Assistant Secretary, Mark Burn, is also being fully funded by the taxpayer to the tune of £29,700.

Cllr Walsh adds that when you include the value of free office facilities and other costs, the estimated bill to the Peterborough tax payer of supporting this branch of UNISON is £83,500 – 48% more than the cautious TPA estimate.

We maintain that while trade unions can have a role to play in workplaces, it should not be for taxpayers to foot their bills – that is exactly why people pay a subscription to a union. Likewise, they should be invoiced for their taxpayer-funded offices, yet in her letter Cllr Walsh opines that “I do not believe it would be in the interests of promoting good industrial relations to do so.”

It’s a shame that Cllr Walsh is not more interested in promoting better taxpayer value for money in Peterborough by stopping this subsidy to the unions and more closely monitoring other staff time taken off for union meetings – activities which she says are “more difficult to monitor”.

This makes it all the more disappointing that civic leaders are intent on hiking the council tax in Peterborough.

As Labour MP Chris Evans said: “If he didn’t agree with her, he should have said so – so he should now forfeit the £17,207 he is entitled to.”

Tim Farron, President of the Liberal Democrats said it would be right for him to “take a lead” in these tough times..

I agree that Mr Huhne should show he is sensitive to the economic climate and the circumstances surrounding his resignation by declining his severance package. Particularly at a time when taxpayers can ill afford it.

In the wake of the expenses scandal we revealed that many MPs who had fiddled their expenses were entitled to resettlement grants. These one-off payments are not the same as severance payments but are worth 50-100 per cent of an MP’s annual salary, dependent on their age and length of service. At the time we called for these grants to be abolished entirely as MPs are aware that they take their job on a five-year fixed contract, so there is no reason to hand them these payments. Similarly if an MP or minister, like nine-homes-Huhne leaves office under the cloud of such scandal as this, they should no longer be entitled to golden goodbyes like severance payments at taxpayers’ expense. Huhne should save himself any further embarrassment and forfeit his payoff, regardless of whether or not he is later cleared of these charges.

Early Day Motions are often referred to by their critics as “parliamentary graffiti”, since several thousand of these motions are tabled by MPs every year in Parliament but are never debated: they are merely printed alongside other Commons business papers the day after they are tabled, and reprinted on future days whenever they attract new signatories.

They can cover virtually any topic, and MPs often use them as a way of highlighting a local issue or cause, after which they can tell their local papers that they have “tabled a motion in Parliament” on the issue of the day in their constituency.  You can see that recent entries on the current list of EDMs includes one celebrating the Golden Anniversary of Livingston New Town and another wishing good luck to the Northern Ireland football team, for example.

Those examples are clearly quite parochial, but the motions can equally apply to national or international issues, and on a positive note, they offer MPs a way of setting out their stance on free vote issues or getting a head of steam behind a particular campaign. No one could doubt that getting a couple of hundred MPs’ signatures in support of an EDM is a good way of demonstrating strength of feeling on an issue. However, if truth be told,  very few of the EDMs ever reach that level of support. Instead, most languish with a couple of dozen signatures and are forgotten very quickly.

The big problem with EDMs is their cost, as cited in Craig Woodhouse’s blog. He wrote that they end up costing £290 each – equivalent to £1 million a year – which is quite clearly an exorbitant amount.

But I would not want to see EDMs abolished altogether: as I said above, occasionally they can be a useful tool for demonstrating strength of feeling on an issue and one such example was the Save General Election Night campaign I ran in a previous life. The EDM on that issue in 2009 attracted 220 signatures from across the political spectrum – the 20^th-most signed of the 2,424 EDMs in 2008-09 – and helped build support for a change in the law.

I’m pretty sure that the lion’s share of the cost of EDMs must go in the paper, ink and administration of the daily printing of the EDMs, so I suggest that in order to save money they should not be printed as a matter of course. Instead, EDMs should become an MPs-only version of the Government e-petitions site: it would surely cost a fraction of the current system to administer, but would not remove that potentially powerful mechanism from an MP’s armoury.

What’s more, if you want to make EDMs more meaningful, topical and relevant, the BackBench Business Committee should be encouraged to take note of the most popular EDMs when deciding which issues it wants brought to the floor of the House in backbench time.

My neighbour in Kent has a ramshackle garden and wood of about 12 acres. He can’t maintain it himself, as he works on average 60 hours a week. When he bought the property, he had planned to employ a part-time gardener to maintain it. As a result of the 50p he is holding back. His house could also do with a cleaner – who is also not employed for the same reason.

I have heard similar stories about window cleaners, house cleaners, chauffeurs, gardeners, housekeepers, child minders and painters-decorators. In other words: punishing ‘the rich’ has meant that people who do not earn a lot have lost their jobs.

A person with an income of £500,000 now pays £50,000 extra in tax since the 50p rate was introduced. A full time live out nanny-housekeeper in London earns, on average, £20,000 a year. Guess which savings are made first?

Sometimes the full-time position is tuned down to part-time day work, often cash-in-hand instead of fully legal. A number of the freshly fired may end up on welfare, paid for by the same state which is so eagerly hoping for extra cash from the 50p.

As a story, these job losses remain largely under the radar. They are held by people who have no loud public voice, and who are usually not unionised. The right hold back from pointing it out, as they fear the left’s accusation that they only care for the rich. Observe that it is not the ‘rich’ person who loses his job in the process.

The jobs lost because of the 50p rate are often held by people who have no other employment options. They are pushed off the lowest rung of the job ladder by greedy government. Often they are women; sometimes the sole breadwinners or single mothers.

Many on the centre right have claimed that the 50p would bring in less money, rather than more, as those targeted by it would move money abroad, move abroad themselves, or pay extra for good tax advice to avoid it. Back in November Chief Secretary to the Treasure Danny Alexander poured cold water on the clamour to scrap the 50p, claiming it raised “hundreds of millions of pounds” for the Treasury. John Redwood MP pointed out that the Treasury’s own figures show that income tax fell by 8% in the year to September 2011, and that most of the reduction came from the top income scale. I doubt whether the report will also report on the extra welfare paid as a result of the 50p.

Today the Trades Union Congress (TUC) has released a new study looking at facility time, arguing that it provides benefits in excess of the costs to taxpayers.  There is no genuinely new research, an old estimate of the benefits is simply adjusted for inflation, but more than that the study is misleading in a number of ways.

Misrepresenting the source

Within the study, it is described as a “short report, commissioned by the TUC from the Work & Employment Research Unit at the University of Hertfordshire”.  This suggests that the source is, while commissioned by the TUC, not ideologically motivated.  Though the author is not identified in the report itself, their website identifies him as Gregor Gall, Professor of Industrial Relations at the University of Hertfordshire.  At his page on the university’s website he makes clear his close and longstanding relationship with the unions, saying that: “In this I have work [sic] with the Institute of Employment Rights, established a research service for trade unions, write [sic] regularly for the Morning Star and conducted research for unions like the FBU, PCS and RMT.”

The Wikipedia page about him records his history in far left politics:

Originally a member of Labour Students and the Labour Party, he ended his membership of these over the issue of the poll tax, then joining the Socialist Workers’ Party (SWP) in 1990. He joined the Scottish Socialist Party (SSP) in advance of the SWP joining on mass, leaving the SWP in 2004 after many years of growing disagreements. He remains a member of the SSP and is a member of the editorial board of the Scottish Left Review,[2] editor of its book arm, the Scottish Left Review Press, and the chair of the editorial committee of the journal of the Scottish Labour History Society, called Scottish Labour History. He is a member of the board of management of the Jimmy Reid Foundation. He is working on a biography of Tommy Sheridan (due out late 2011), and a history of the SSP (due out late 2012).

While the author’s political history does not mean we should discount this study, the TUC clearly give the impression of a far more disinterested relationship between the researcher and their movement than actually exists.

The cost of facility time

The study compares estimates of the benefits of facility time across the public sector with the cost of union subsidies that we identified in our study.  However, as we made clear in our report, that estimate is a conservative one for a number of reasons:

• “Some authorities did provide an actual remuneration or cost for facility time taken, and in nearly every case it was higher than our figure of £28,192.36. For example, our total for Barking and Dagenham council was £183,250 in remuneration; the local authority disclosed remuneration of £235,008. For methodological clarity, we used our – generally lower – estimate in all cases.”
• Not all public bodies responded to our Freedom of Information (FOI) requests.  In part because some union staff urged the staff responsible for answering freedom of information requests to say that they could not provide an estimate of facility time taken.  That problem is discussed in the 2010 edition of our research.
• There will be other costs to hosting those staff, such as office space and other facilities, that were not included in our estimate.
• Not every public body was included in our FOI request.  Small quangos for example were often left out in order to minimise the cost of administering and complying with the requests needed to produce the research.

That is all the result of the fact our report was an attempt to discover how facility time affected different public bodies, not to maximise the estimate of the total subsidy to the unions.

There are official estimates of the total amount of facility time taken, which are, to quote the Channel 4 Fact Check blog, “far higher” than the figure in our report “at £230m to £243m”.

Comparing the total found in our survey with an estimate of the value of facility time across the entire public sector will obviously bias the results in favour of the benefits of facility time.  It is hard to believe that the author of the TUC report was not aware of the higher official figure, which suggests that this was an intentional attempt to mislead the reader.

Lower dismissal rates

A major element in the purported benefits of facility time is that dismissal “rates were lower in unionised workplaces with union reps – this resulted in savings related to recruitment costs of £107m-£213m pa”.  But that is clearly only part of the picture when it comes to dismissal rates.  Dismissals can be a bad thing to the extent they represent the loss of workers who could otherwise have represented good value for the taxpayer in their roles.  Or they can be a good thing to the extent they get rid of workers who have behaved improperly or are not well suited to their roles.  In some cases, such as teaching, there are longstanding concerns that it may be too difficult to dismiss bad employees.

In some cases, it may be the case that union reps have helped to turn around situations where workers were not productive, or prevent someone being dismissed inappropriately.  In others they may have worked to frustrate a dismissal that should have taken place to improve services.  The RMT union once urged members to strike after “a union activist was sacked for playing squash while off on sick leave with an ankle injury”, for example.

Lower voluntary exit rates

Another large element is that voluntary “exit rates were lower in unionised workplaces with union reps, which again resulted in savings related to recruitment costs of £72m-143m pa”.

Again this could be a good thing or a bad thing.  It could be that the workforce is better motivated as a result of the union reps work, or it could be that having full-time activists working for a union secures more generous pay for their members, and means that they are more likely to stay.  To the extent it is the latter, taxpayers will more than pay, in the bill for higher salaries and benefits, for any improvement in exit rates.

Lower numbers of employment tribunal cases

This is a relatively small component in the overall calculation.  It is likely to be a corollary of the lower rate of dismissals, which as noted above could be for good or bad reasons.  And it could also be driven by the types of industry that are unionised or not unionised.

Lower rate of workplace-related injuries

Without a more detailed investigation of the underlying data it is difficult to fully assess the validity of this finding.  But there will be a number of differences between unionised and non-unionised workplaces in both the private sector and the public sector that are not the result of the work of union reps, as entire industries tend to be unionised or non-unionised rather than individual organisations.  That could be particularly important in this case.  It could be as stark as the difference between police officers and soldiers on the one hand, and officials working in a Government Department on the other.  Or fishermen on the one hand, and others working in an office.

Lower rates of workplace-related illness

This is subject to some of the reservations noted above.  It may reflect other qualities of unionised and non-unionised workplaces and union reps extracting more favourable terms of employment, which are paid for by the taxpayer in other ways.  At the same time, this is hard to reconcile with the fact that public sector staff take far more time in sick leave than those in the private sector, but public sector workers get far more facility time.  Productivity growth in the private sector is also higher and there are fewer strikes, as I discussed in an earlier article.

Conclusions

Our study was not a comprehensive attempt to study the costs and benefits of facility time.  An honest attempt to do so would be a welcome contribution to the debate.  However this study is both extremely simplistic in its analysis of the benefits and misleading in its presentation of the cost.

It is utterly inadequate as a justification for the counter-intuitive claim that higher quality public services can be delivered when public sector staff work for their union, rather doing the jobs they are supposed to be paid for on the front line.  There are case studies of union reps doing valuable work included in the TUC study.  But those case studies ignore the opportunity cost of those staff being unavailable to work on the front line, and have to be balanced against the cases exposed by MPs, the media and the Order-Order.com blog that show union reps engaging in work that is not in the interests of taxpayers.

And, on top of the direct cost of funding well over two thousand union activists, subsidies to the unions distort the democratic process.  They allow the unions to spend money they raise from their members on building their institutional weight and political power, instead of their immediate work representing those members.

The Government should act to end taxpayer subsidies for the unions, and reject this misleading analysis.

I think the starting point for any discussion of crony capitalism has to be William Baumol’s work on entrepreneurship.  Here is the abstract to his classic paper Entrepreneurship: Productive, Unproductive and Destructive:

The basic hypothesis is that, while the total supply of entrepreneurs varies among societies, the productive contribution of the society’s entrepreneurial activities varies much more because of their allocation between productive activities such as innovation and largely unproductive activities such as rent seeking or organized crime.  This allocation is heavily influenced by the relative payoffs society offers to such activities.  This implies that policy can influence the allocation of entrepreneurship more effectively than it can influence its supply.  Historical evidence from ancient Rome, early China, and the Middle Ages and Renaissance in Europe is used to investigate the hypotheses.

The reason why calls to abandon capitalism are getting such short shrift is that it has proved unbelievably productive.  Jesse Norman explains how it is both productive and moral, and Baumol’s hypothesis explains why.

Smart and ambitious people will always come up with inventive ways of gaining greater wealth and status.  Greed isn’t new and also isn’t good or bad.  The question is how they do that.  In feudal societies they would physically fight over land, people and property.  Under Communism they would desperately fight for political power, often with extremely high stakes.  By contrast, when capitalism is working well entrepreneurs succeed by innovating and addressing some need that had previously gone unmet.  That drives economic growth.

What we call crony capitalism is when that process breaks down.  When the best way to do well is to play a zero sum game beggaring your neighbour instead of engaging in more productive activities.  That can happen because of failures of corporate governance: smart people get rich by lobbying for unjust rewards at the expense of shareholders.  Or failures of politics: they get rich by lobbying for subsidies or protection against the consequences of risks they have taken, and been rewarded for taking.

There are a number of recent examples in which interference has promoted crony capitalism rather than free markets: extravagant solar subsidies; procyclical banking regulations; and quangos that take money raised in taxes from all businesses and spend it supporting a favoured few.  All of those are instances in which regulatory or fiscal interventions have created an economy in which profits depend more on using politics and the law to seek rents instead of innovating.

Laws that politicians promise will fix the situation are likely to end up being captured in just the same way as existing rules have.  On balance, crony capitalism seems most likely when politics is big and remote from the people who pay the bill.  That might be why decentralised public finances are associated with greater restraint in public spending and greater economic growth.

It isn’t more or less capitalism, or more or less regulation, that will determine how cronyish our economy is, but clear and simple rules built on healthy democratic accountability.

This gets at the problem with attempts by advocates of sin taxes to have it both ways when they argue for those taxes.  On the one hand they’re all trying to save us from some vice, like driving to work or enjoying a drink.  On the other they promise a new, friendly way of financing public spending. To the extent that you succeed in changing behaviour that revenue will evaporate.  The fact that some of these taxes raise so much money shows that they are mostly about politicians’ just taking the cash to prop up wasteful spending – often particularly from people on low and middle incomes – rather than improving the nation’s health or helping the environment.

The best argument for these taxes is that they are needed to control externalities, costs our actions impose on others that we don’t pay for without the taxes.  That logic doesn’t necessarily work out either in theory or in practice.  Politics rarely produces the neutral, efficient interventions that the theory requires.

And that argument can’t justify our existing sin taxes.  I’ve looked at the problems with green taxes in research for the TPA and in detail for the book Let them eat carbon.  But tobacco duties are another example where the evidence to justify high taxes on smokers who will bear most of the costs of their addiction themselves is very weak.  I wrote for ConservativeHome about the weaknesses in a Policy Exchange report that was a good example of the problems with that evidence.

If these are just taxes to raise revenue then they start to look very unfair, and a very bad idea.  Taking money from people on low and middle incomes means leaving them either more dependent on benefits, reducing their ability to stand on their own two feet, or impoverished.  Not very virtuous at all.

Citing our recent research note, Taxpayer funding of trade unions 2011,  Ms Patel’s dossier – as previewed over the weekend in the Sunday Express  – makes the case for urgent reforms.

Ms Patel has uncovered:

• Examples of how unions encourage their members to abuse taxpayer-funded facility time by stretching the definition of what counts as legitimate union activity. She cites a Unison guide to facility time which instructs its members: “…Although you’re entitled to unpaid time off to attend conference, branch meetings, etc., why not try to get those activities covered by your paid time off?”;
• Examples of trade unionists with public sector jobs using taxpayer-funded time for political campaigns against the cuts being implemented by the Government. Cases highlighted in the dossier include a PCS union official abusing taxpayer-funded resources to promote the “Blackpool Against the Cuts” campaign (alongside evidence that the PCS trade union has formally advised its reps to abuse facility time);
• How the taxpayer subsidy to the unions is increased further when councils or other public sector organisations provide them with free office space. Camden Council has been providing free of charge a disused council building for nine taxpayer-funded union officials organising anti-cuts campaigns – resources worth hundreds of thousands of pounds;
• Abuse of the money given to unions by the Department for Business, Innovation and Skills via the Union Learning Fund – with over £20,000 now being repaid by the TUC, by order of the Skills Minister, after the cash was found to have been used to publish politically inappropriate material;
• Details of the millions of pounds of taxpayers’ money channelled to unions through European Union funds, some of which is merely paying to train trade unionists in organising and activism, and for which they are then awarded Diplomas and Certificates.

Ms Patel’s dossier – which you can download here – has been passed to David Cameron and Cabinet Office Minister, Francis Maude, for further consideration and is an extremely valuable contribution to the ongoing debate about taxpayer funding of trade unions.

The TaxPayers’ Alliance will continue to make the point that while it is perfectly legitimate for trade unions to represent their members’ interests, it is simply unfair and wrong that taxpayers’ money should be subsidising them: all union activities should be funded by their members’ subscriptions.

The most important aspect of the Autumn Statement was the omission of the Public Data Corporation. A consultation was launched late in the summer to discuss the proposal to set up a fee charging organisation which would aggregate government data and charge for open data which we the taxpayers have already paid for. The Public Data Corporation proposal would also seek out private sector investment to eventually privatise a public body with open data. There were many other details discussed in this consultation, but the bottom line was that the government sought a way to seek direct revenue from open data instead of indirect revenue through innovation of free and freely available open data.

In our consultation response we made the argument for the free release of open data and discussed the fact that the Public Data Corporation did not need to be created. We cited a number of compelling case studies in our argument – further details can be found in our report here.

So today at the Government meeting Francis Maude said that the government itself is moving away from the charging model proposed in the Public Data Corporation consultation. Instead, the Open Data Institute has been created to bring together academia, public sector, and private enterprises so that new ways of opening up data can be discussed and implemented. We will need to keep close watch and make sure that any vestiges of the Public Data Corporation don’t creep into the Open Data Institute or the newly announced Open Data Group. But for now the Public Data Corporation will not be created.