Conservative Conference 2020: Reading the tax tea-leaves at the coronavirus conference

Normal politics were on hold at the online Conservative Party Conference, with shortened speeches and curtailed policy debate. The Chancellor committed himself to putting the “overwhelming might of the British state” at the service of struggling businesses and workers, but said that the books would need to be balanced eventually. On the fringe, and in media interviews and reports, there are clues as to which taxes are likely to rise. 

Contents

Normal politics and economics on hold at the coronavirus conference
Pride at scale of coronavirus economic response
Chancellor vows to balance the books but won’t confirm that means tax rises
Will the ‘tax triple lock’ survive? Probably.
A ‘mighty’ state in a market economy – a Conservative contradiction?
Employment taxes – speculation focuses on national insurance for the self-employed
Capital gains – tax increase could be a key battleground
Inheritance and wealth taxes – it will be a brave chancellor who touches these
Government under pressure on business rates
Property taxes – is a Capital Values Tax a serious runner?
Online sales tax – the next new tax?
VAT at the crossroads as UK leaves single market
Corporate taxes – a tempting target, but goes against Conservative instincts
Green taxes - carbon tax in serious contention
The tax cuts for deficit reduction gambit – and other strategies for growth
Levelling up – and other pressures for higher public spending
The impact of COVID-19 on the world of work and working age benefits
Brexit – remember that?
Scotland – will Conservatives seek to scrap Scottish income tax rates?

Normal politics and economics on hold at the coronavirus conference

The Conservative Party Conference (especially when the party is in government) is rarely a forum for policymaking, but it does usually yield a string of policy announcements and agenda-setting speeches. This year, with politics as usual on hold due to coronavirus, most of the messages were either decidedly short-term (‘we will continue to protect jobs in the face of COVID’) or vaguely aspirational (‘we’ll balance the books’, ‘we’ll build back better’), with little in the way of policy plans.

The online nature of the conference did not help. With most of the conference plenary sessions reduced to just shortened ministerial speeches, debate was focused even more heavily than usual on the fringe programme. While substantial, even this was a little less lively than normal, with most audience participation coming through typed questions rather than vocal contributions from the floor. Repeated technical problems – including for Chancellor Rishi Sunak’s keynote speech – added further to the sense of disconnect.

Rather than the celebratory mood you might expect at the conference following a general election victory the atmosphere, to the extent there was any, combined trepidation and resolve. Like a conference in wartime normal politics (and economics) is on hold, with the focus simply on ‘getting through this’. It is hard to see the future through the fog of the present. That is why this report, as well as reporting on what government ministers and others actually said at the conference, relies more heavily than usual on media rumour and tea-leaf reading to assess the likely direction of future Conservative (and thus government) tax policy.

Pride at scale of coronavirus economic response

In his keynote conference speech, Chancellor Rishi Sunak claimed that it is only because of 10 years of sound Conservative management of the economy that the government has been able to act with the ‘pace and scale’ it has in responding to COVID-19.

Sunak spoke about how the government had deployed ‘one of the most comprehensive and generous packages of support in the world’ to deal with the economic impact of COVID-19. He reeled off 19 measures during the speech including CJRS, Job Support Scheme, SEISS, stamp duty holiday, VAT cut for the tourism and hospitality sectors and a 12-month business rates holiday. He said: “It has been for many, for the first time in their lives, a moment in which government ceased to be distant and abstract, but became real, and felt, and something of which people could be proud.”

In a Today programme interview during the conference Sunak defended the design of the Job Support Scheme. Challenged that, under the scheme, it was cheaper for business to put one person in a job full-time than two to three people part-time, the chancellor said that the analysis being referred to was simplistic and did not take account of lost knowledge and redundancy costs.

Financial Secretary Jesse Norman was ebullient in his praise of HMRC and Treasury officials and their response to the pandemic. At an event hosted by The Spectator he said that “If someone had said we’d be able to get the kind of programmes out that we have at short notice, get the number of people furloughed and supported through the self-employment scheme and other schemes, and then most recently to roll out this latest wave of changes, if someone had said that even a few months ago it would have been regarded as astonishing, so to have done it since March and under these circumstances, and while HMRC itself has been rescaling, leaving the office and dealing with a COVID problem of its own is remarkable.” His colleague John Penrose MP observed, vividly, that “the elephant in Whitehall has danced at bewildering speed and quality”.

But Norman also warned of the challenges facing the government, businesses and individuals in the weeks and months to come. Asked if the Treasury was holding back economic firepower to provide more generous subsidies in the event of so-called ‘circuit-breaker’ lockdown he responded; “Who can say what the future will bring…we certainly do have firepower if we need it, but no one would want us to use it if we didn’t have to.”

Chancellor vows to balance the books but won’t confirm that means tax rises

Rishi Sunak told conference attendees his immediate focus was protecting jobs but that “over the medium term” he would get debt and borrowing back under control. “[T]his Conservative government will always balance the books,” he vowed. However, pressed on whether this would mean tax rises he said (repeatedly) that he could not comment on future fiscal policy outside of fiscal events.

Referring to the government’s “sacred responsibility” to leave the public finances strong, the Chancellor told the conference that the government could not “simply borrow our way out of any hole” and that there were “hard choices” ahead. He was pressed on these choices during a series of media interviews, but gave little away, sticking to broad statements about the need for ‘long-term sustainable public finances’ and noting that current levels of borrowing cannot be sustained.

Jesse Norman was similarly tight-lipped when questioned about future tax policy at the CIOT/Institute for Fiscal Studies (IFS) conference fringe debate. He said that the decision to postpone the autumn Budget, “does not mean that the Treasury’s policy about not commenting on fiscal measures between fiscal measures is going to be relaxed.” He told The Spectator, “There are things we can do and we are doing many of them now, but what we’re not going to do is start discussing long-term tax strategy at this particular moment.” But at a Policy Exchange debate he did acknowledge the general principle “that at some point the size of the state and the size of our deficit has to be brought back into some kind of proportion.”

The postponement of the Budget until the spring indicates the government feel the public finances are currently too uncertain to make medium-term planning worthwhile. However when the Budget comes the government will be under intense pressure to set out in broad terms how and when they intend to reduce the deficit, even if the largest tax increases do not kick in for a further two to three years. (According to the BBC’s economics editor, Treasury sources suggest ‘getting borrowing under control’ is unlikely to have happened by 2024.) “They will want to reassure the markets that there is a plan,” commented former Treasury minister David Gauke, advocating a ‘road map for taxes’. Economist Roger Bootle made a similar call at a conference fringe meeting, recommending that the government produce a ‘forward-looking tax plan’, giving businesses and individuals greater confidence to plan for the future.

Will the ‘tax triple lock’ survive? Probably.

The Conservative Party’s manifesto on which they won December’s general election contained a ‘guarantee’ personally signed by Boris Johnson promising: “We will not raise the rate of income tax, VAT or National Insurance.” It is a sign of the desperate state of the public finances that commentators are questioning whether this ‘tax triple lock’ still stands.

Rishi Sunak was questioned at a fringe event about whether the commitment could be scrapped. His reply seemed designed to maximise his freedom of manoeuvre: “I think most party manifestos at most elections contain many, many different pledges. You want to do your best to fulfil as many of them as possible. Is this a once in a century situation? It is. Are we going to be able to meet every single one? Our manifesto also had rules around borrowing and debt. It’s safe to say those are going to be tricky to meet. Without question this is a once-in-a-century episode. We have to respond flexibly.” He added that the “mismatch” between public spending and tax revenues “can’t go on for ever”.

However ‘Treasury sources’ told The Times that while Sunak was not ruling out tax rises generally, he supported maintaining the tax triple lock. Referring to the pledge to reduce government debt over the Parliament, as well as the tax triple lock, Sunak himself told Radio 4’s Today programme: “Those promises are very important to us and we fully intend to deliver our commitments”.

At the CIOT/IFS debate IFS Head of Tax Helen Miller suggested that the pandemic might offer the government a force majeure escape from its triple lock pledge. But Jesse Norman took umbrage at this, exclaiming: “it’s a bit difficult to say how important it is to have trust and consent in politics and then say that the recently elected government’s early decision should be to set aside one of its principal manifesto commitments.”

So will the triple lock survive? Probably. While Sunak would surely prefer to have full freedom of manoeuvre on taxes there are enough possibilities open to him – including ways to raise the take from the three taxes in question – without ripping up the guarantee for a breach to be avoidable. However, while some tax increases are likely before the end of this Parliament the heavy lifting in this respect may not come until the following Parliament. The triple lock may not be repeated in 2024. Even if it survives this Parliament it may not last into the next.

A ‘mighty’ state in a market economy – a Conservative contradiction?

All governments contain contradictions but the current one, partly by design but mostly by circumstance, contains more than most. A Prime Minister whose trademark is optimism presides over a pandemic and perhaps the gloomiest economic outlook ever in peacetime Britain. A party that champions a small state and limited government has found itself implementing massive state intervention in the economy and people’s lives. A government elected on the promise of a low tax economy looks likely to find itself bringing in – eventually – some of the most swingeing tax increases in living memory.

The keynote conference speeches of Chancellor Rishi Sunak and Prime Minister Boris Johnson embodied these seeming contradictions. Sunak’s 10 minute oration (half the length of most previous Chancellors’ speeches) was largely a defence of how big government could be good government. While it did feature the usual praise of free enterprise and entrepreneurialism Sunak spent much longer setting out how the government had intervened powerfully to deal with the economic impact of COVID-19. He committed himself to putting the “overwhelming might of the British state” at the service of struggling businesses and workers, promising to help them “find new opportunities and develop new skills”. Using language that would have been startling from a Conservative Chancellor at the start of the year he referred to his ‘Winter Economy Plan’ as “but the latest stage of our planned economic response”.

The Prime Minister, meanwhile, kept his eyes trained on the sunlit uplands, setting out a vision of the UK in 2030 full of EV digital taxis, home-owning millennials, new hospitals and a population altogether healthier, happier, united and culturally fulfilled, rich in skills and revelling in a start-up, can-do society.

Now of course the unprecedented (for peacetime) state intervention in the economy is a product of the pandemic. Johnson emphasised this in his speech, saying the government had been “forced by the pandemic into erosions of liberty that we deeply regret, and to an expansion of the role of the state… that go against our instincts”. While many in the Labour Party “regard this state expansion as progress” and “want to keep the state pre-empting and spending almost half our national income”, he proclaimed, Conservatives “believe that way lies disaster, and that we must build back better by becoming more competitive, both in tax and regulation.”

However, even before the pandemic struck, this was an atypical Conservative administration, focused at least as much on spending more - on health, education, infrastructure and technology – as on tax cuts. Greater investment in the towns and cities of northern England is the central pillar of the ‘levelling up’ agenda (see below) which helped the Conservatives win a swathe of seats in the previously Labour ‘red wall’ last December. It is for this reason (as well as a wider shift in public opinion since 2010) that, notwithstanding the existence of a vocal strand of conservative opinion which argues for a ‘tax cuts = growth’ approach to deficit reduction, observers are pretty much unanimous in their expectation that tax rises will bear the lion’s share of the strain of balancing the books.

But where will those tax rises fall? Ministers won’t say explicitly, and have probably not yet decided for sure, so we will need to do some reading between the lines, and listen to those who influence them.

Employment taxes – speculation focuses on national insurance for the self-employed

If the ‘tax triple lock’ is to be unpicked the likeliest breach is on national insurance (NI) rates for the self-employed. Higher rate tax relief on pension contributions may also be under threat.

Announcing the Self-Employment Income Support Scheme in March, Rishi Sunak had told MPs: "It is now much harder to justify the inconsistent contributions between people of different employment statuses. If we all want to benefit equally from state support, we must all pay in equally in future." (Self-employed workers currently pay an NI rate of 9 per cent on earnings between £9,500 and £50,000 compared to a rate of 12 per cent for employees. Additionally they are not subject to employers’ NI.) Interviewed by The Sun during the party conference Sunak stood by this point, saying “the way that we have treated the self-employed has been comparable to how we've treated those who are employed” and “[t]hat is something that we should all reflect on because there is a difference currently in the [tax] system.”

Equalising rates has long been advocated by economists and IFS Head of Tax Helen Miller repeated the case for it at the conference. She also agreed that merging income tax and NI – suggested by an audience member – should be considered, though she warned that it would be hard to achieve in practice.

According to newspaper reports in late August, cuts to tax relief on pension contributions were among a series of options drawn up by Treasury officials for a possible autumn Budget. A plan to set a single 30% flat rate relief was apparently worked up by former chancellor Sajid Javid before he left the Treasury in February. But Treasury officials are now said to be looking at cutting the relief to a flat rate of 20 per cent. Any change would reportedly take 2-3 years to implement, as it would require HMRC to design a new system for calculating contributions.

Of course it is one thing for officials to work up an option and quite another for ministers to adopt it. However it is noteworthy that while the leaked options were generally dismissed as “nonsense speculation” (a classic example of a ‘non-denial denial’) by the Treasury the reaction from the top of government appears to have been more nuanced. While the Prime Minister’s office shot down directly the suggestion of a big fuel duty hike (see below) the Telegraph reported that Downing Street may not be opposed to some of the tax rises mentioned, especially the closing of ‘perceived loopholes for the wealthiest’ in regard to capital gains (see below) and pensions. Similarly, during the conference The Times reported that, while Rishi Sunak “supported maintaining the tax triple lock... he is not ruling out other tax rises, such as increases in capital gains tax, corporation tax or cuts to pensions tax relief for higher earners.”

Capital gains – tax increase could be a key battleground

The tax options worked up by Treasury officials and leaked in August also included a proposal for aligning capital gains tax (CGT) with income tax. Conservative MPs aren’t keen on this but voters, including Conservative ones, seem at least open to it.

Officials were said in August to be considering proposals that would effectively represent a return to the 80s, when the government taxed gains at the taxpayer’s marginal income tax rate. The levy on profits from asset sales would rise from 10 per cent to 20 per cent for basic-rate taxpayers, and from 18 per cent to 20 per cent for profits on the sale of second homes. For higher and additional rate taxpayers, CGT would rise from 20 per cent on asset sales and 28 per cent on property sales to 40-45 per cent.

The reaction to the leak was fast and furious from some Conservative MPs and business groups. An anonymous former Tory minister was quoted as saying: "I won't be voting for the Budget ... I am not voting to put taxes up on entrepreneurs so people can eat half price f------ burgers. Tory MPs are going absolutely insane in the backbench WhatsApp group." Adam Marshall of the British Chambers of Commerce said: “Raising the tax burden on business and entrepreneurs before they have a chance to recover could create serious issues for the trajectory of the UK’ s overall recovery.”

However it’s worth noting that public opinion, even among Conservative supporters, is far from hostile to this policy. A poll carried out by Survation for Tax Justice UK in June found 61 per cent of people (and 67 per cent of Conservatives) agreeing that people who earn money from investments like stocks and shares should pay the same tax rate as those who earn money from work. A poll carried out in August by Demos found 46 per cent of the public supporting equalising the tax treatment of capital gains with income from work, and just 18 per cent opposing it.

Discussions have also reportedly been held within government over scrapping the various reliefs applied to CGT and replacing them with indexation allowances, meaning only gains in excess of inflation would be taxed. Anonymous Treasury insiders told the Sunday Telegraph any potential change to CGT would be about longer-term reform to make the taxation system “fairer”, rather than a quick fix to “fill a fiscal hole”. The Office for Tax Simplification is of course currently reviewing CGT looking for ‘opportunities to simplify’ the charge though it is not expected to make recommendations with significant revenue altering effects. Additionally, a think tank with good Conservative connections has advocated levying CGT on main residences (see Property taxes, below).

Inheritance and wealth taxes – it will be a brave chancellor who touches these

The leaked August tax options also included a tax-raising ‘simplification’ of the inheritance tax (IHT) system. Given the extreme antipathy most Conservatives have to this tax anything which smacks of an increase would spark horror and is unlikely to be given the time of day. A wealth tax, however it is badged, is likely to fare just as badly.

The mooted IHT ‘simplification’ garnered much less reaction than the CGT proposal, perhaps because there were no details of what was under consideration. It was left to commentators to speculate whether business relief, the seven-year rule and the ability to give regular gifts from excess income IHT free might be in scope. Regardless, given the known opinions of both the public (‘Inheritance tax is deeply disliked’ concluded a report of a recent focus group convened by Tax Justice UK) and especially Conservative members any change which increases IHT is unlikely to get past Treasury ministers let alone Number 10. Even a ‘fairness reform’ bringing assets currently excluded into scope of IHT would be likely to be controversial.

Anyone who doubts the hatred Conservative members have for IHT should revisit the section of last year’s conference report which covered a standing room-only fringe meeting where the tax was condemned as ‘nasty’ and ‘immoral’ and one of the loudest cheers of the whole conference came in response to a call for its abolition. Memories are still strong of George Osborne’s 2007 conference announcement (in opposition) of plans for a big IHT cut – a proposal so popular it is widely believed to have caused Gordon Brown to cancel his plan for a general election.

A questioner at the CIOT/IFS fringe debate suggested a ‘solidarity tax’ to acknowledge the contribution of the NHS to the fight against coronavirus – along the lines of the solidarity surcharge introduced following German reunification. Helen Miller of IFS suggested that if it was designed as a one-off wealth tax to pay for the structural deficit, the main questions to consider would be who would pay it and on what it would be levied. She cautioned against hypothecation, noting that over time governments and political priorities (and therefore the use of revenues) change. Tax minister Jesse Norman said transparency and purpose would be important factors to consider in any future discussion on the matter while also noting that the Treasury, as a general rule of thumb, was reluctant to go down the hypothecation route.

Government under pressure on business rates

Business rates are a major headache for the government at the moment. A ‘fundamental review’ of the tax was promised in the party manifesto and is currently ongoing. It is unlikely this will be able to satisfy all with an interest. Businesses are currently benefitting from reduced business rates during the pandemic, with (in particular) retail, leisure and hospitality companies with a rateable value of less than £51,000 not paying any business rates this year. Over the months ahead calls to renew this temporary relief are likely to grow. Neither of these problems looks soluble without the government throwing large sums of money at it.

At the conference business minister Paul Scully encouraged attendees at an event organised by the Onward think-tank to participate in the business rates review. He acknowledged that while businesses had benefited from the alleviation of business rates during the pandemic, it would be a challenge for them once the scheme ended. At the same event Devizes MP Danny Kruger – a former speechwriter to David Cameron – called for a ‘better model of taxation designed around more than the size of premises.

There were also calls for a rethink of the business rates regime at a Centre for Policy Studies (CPS) fringe debate. Both Sam Bowman of the International Center for Law and Economics and Tom Clougherty of the CPS believed that the present regime disincentivised investment in property and, in the case of Clougherty, that it saw poorer places pay more as a proportion of their income. Both would like to see the system reformed with a focus on the value of the land that business properties are sited on. But Clougherty warned that tax changes on their own won’t solve the decline in the high street and that planning reform would also need to be considered.

The government’s business rates review seeks views on the introduction of alternative taxes to either replace or complement business rates. The government is not entering this exercise with a completely open mind. It is apparent that it is minded to retain a recurrent tax on non-domestic property. For this reason they float two main alternative options – a Capital Values Tax (see below) on the combined capital value of non-domestic land and property, replacing business rates; and an Online Sales Tax (again, see below) which, because of its limited revenue-raising capacity, they would expect to operate alongside business rates.

Due to devolution, the government’s business rates review applies only to England. Scotland and Wales are doing their own thinking about the tax. It is unclear whether an Online Sales Tax would be UK-wide.

Property taxes – is a Capital Values Tax a serious runner?

The proposal for a Capital Values Tax in place of business rates (see above) is the most significant policy debate in this area. Support for a ‘Proportional Property Tax’ for residential property is also growing, and there is pressure on the government to make its temporary cut to SDLT permanent.

How different would Capital Values Tax be from business rates? Well, it would not be a Land Value Tax (LVT), despite a trail in The Times, quoting ‘government sources’ under the heading “Tories ‘to save high street’ with land tax to replace business rate”. Somewhere between that briefing in February and the launch of the review in July the government appear to have had second thoughts and decided that the value of property had to be considered in the new tax as well as land. The new tax would be paid by the owner of the property rather than the business leasing it – a move described in trade media as “a bombshell for commercial landlords”, though it is hard to believe it would not eventually be reflected in rent levels. In reality the extent of differences would largely come down to the valuation process (purchase price or regular revaluations?), how that would translate into a tax charge (banding or a fraction of the value?) and how much the tax base changes (would agriculture and charities remain exempt?)

Campaigners for LVT will be disappointed by the government’s failure to include LVT in the business rates review, as may be the Treasury Select Committee, who asked for more research on the tax’s potential in a report last year. Questioned at the CIOT/IFS conference debate Financial Secretary Jesse Norman said the difficulty with a land-based replacement for council tax and business rates “is that it would involve…the valuation or revaluation of every premises in the country…a task that you might properly ask whether or not, for all its benefits – if there are such benefits…you would need to make quite a convincing cost-benefit analysis to show why that was a good idea.” Pressed to revalue properties for council tax Norman said this may be ‘astonishingly complex and difficult’.

Sir John Redwood will be among those Conservatives arguing for the temporary increase to the zero-rate band of SDLT to be made permanent beyond March of next year. He told a Centre for Policy Studies event at the conference that the charge acted as a disincentive for older property owners looking to downsize, while lower (or no) SDLT rates helped to free up money for buyers to invest in their homes and, by extension, their local economies. This could be an issue to watch over the coming months.

An even more radical step would be levying CGT on main residences. The Social Market Foundation (SMF), a think tank with good Conservative connections, advocated this in a report published in July. The new Property CGT could be set at 10 per cent of the increase in the value of the property since it was last sold, the foundation suggests. They calculate this would raise £421 billion over the next 25 years. In return, stamp duty could be scrapped. SMF present the proposal as a way of ensuring the costs of the coronavirus crisis do not fall unfairly on younger people. However critics such as estate agents have expressed dismay at the idea, saying property owners would put off selling, waiting for a change of government which may remove such a tax.

Also arguing for abolition of SDLT is the Fairer Share campaign. This campaign argues for the replacement of SDLT and council tax by a Proportional Property Tax, set at 0.48 per cent of the value of each residential property. The profile of this non-partisan campaign is continuing to grow, including among Conservatives. Three North of England Tory MPs – Kevin Hollinrake, John Stevenson and Richard Holden – are supporters of the campaign. Hollinrake, who once managed a chain of estate agents, wrote to the Prime Minister earlier this month making the case for the change and was among the signatories of an open letter to the Chancellor published in the Sunday Times in September.

It does seem unlikely that a government ramping up the rhetoric on ‘the fundamental life-affirming power of home ownership’ (as the Prime Minister did in his conference speech) will pick up and run with either CGT on main residences or a proportional tax on residential property values (which even some of its advocates acknowledge sounds a bit like a wealth tax). However, squint a bit and it is just about possible to envisage a scenario where a chunk of the money raised is channeled into support for first time buyers, enabling it to be presented as part of a pro-ownership agenda, albeit at the expense of some of those who have already benefited from the house prices roller-coaster, and while simultaneously redistributing from the south east of England to the north, thus supporting the levelling up agenda. But Tory MPs in the south would still hate it – so don’t hold your breath.

Online sales tax – the next new tax?

Momentum appears to be growing behind a proposal for an online sales tax. The new tax was recommended in a report from the Treasury Select Committee in October last year, and has now been floated by the government in its business rates consultation (see above). Business and political views seem split on the measure, however, and it may be that the mass migration online of smaller, independent retailers in response to the pandemic will damage support for the measure.

In July, as the business rates consultation was being launched, The Times reported that the government was considering two possible forms for such a tax. The first would be a levy of around 2 per cent on goods sold online, which would raise about £2 billion a year. The second would be a mandatory charge on consumer deliveries, which would form part of a campaign to cut congestion and toxic emissions.

Asked about the proposal during the conference, business minister Paul Scully said that digital businesses had to pay a fairer share, but called for a more fundamental discussion about the future of the British high street. He said both debates couldn’t be mutually exclusive.

A survey of just over a thousand business leaders by BDO found more than four out of five executives believe the business rates system should be replaced with an online sales tax. However the British Retail Consortium called it “another burden on an already overtaxed industry”. The Taxpayers’ Alliance have estimated that a 2 per cent levy would cost a typical UK household an extra £56 per year. It said that the poorest 10 per cent of households would have to pay an extra £20 per year, meaning that they would pay “almost half of their gross income to direct and indirect tax”.

Conservative MPs also seem divided on the proposal. Norfolk MP Duncan Baker has backed it. Somerset MP Ian Liddell-Granger, chair of the all-party parliamentary group on taxation, is opposed to it, arguing that the increase in online shopping has been “a levelling-up exercise for many thousands of country-dwellers who previously were paying a rural premium on their shopping because of the travelling costs”. North Yorkshire MP Kevin Hollinrake is worried about the complexity of an online sales tax, in distinguishing what was bought purely online, what was bought on click and collect and what was bought by customers walking into a store. The simplest thing to do would be to raise VAT, he observes.

VAT at the crossroads as UK leaves single market

Raising the VAT rate would, of course, breach the government’s tax triple lock. But there are lots of changes that could be made to the tax’s base without breaking a manifesto commitment. The government’s scope for these will increase when the UK leaves the single market at the end of the year. The difficulty the government face however is that most of the changes on offer either cost them money or would be likely to prove unpopular.

There were a number of suggestions – across a series of conference events – that the UK should review its generous system of zero and lower rated-VAT reliefs to raise revenue. Economists are especially keen on this. Sam Bowman of the International Center for Law and Economics said that broadening the VAT base could generate an additional £60 billion in revenue. Helen Miller of the IFS noted that broadening the VAT base would be fraught with political difficulty, particularly with respect to low income families, but argued that this could be offset by a more generous benefits system.

The problem for the government is that parliamentarians of all political stripes seem keener on adding in additional zero and reduced rates. Among Conservative MPs Craig Mackinlay is seeking the introduction of a zero rate of VAT on improvements to listed buildings, while Philip Dunne has suggested VAT could be reduced to five per cent on renewable energy initiatives involving listed properties. Vicky Ford and Maria Caulfield have called for VAT rates for the installation of renewables, such as solar panels, to be cut.

In July the government announced a temporary reduced rate of VAT for hospitality, holiday accommodation and attractions. This is due to end on 12 January 2021 but, as with other time-limited coronavirus relief measures, it is likely there will be pressure to extend it again.

The proposed abolition of the VAT Retail Export Scheme at the end of the year has also caused ructions in the Conservative Party. The leaders of two flagship councils for the party – Westminster and Kensington and Chelsea – have written to the chancellor warning that plans to axe tax-free shopping could cause “irreversible damage” to their economies. “As a result of this decision, Britain will now be the only country in Europe not to offer tax-free shopping to international visitors,” they say in the letter. 

Corporate taxes – a tempting target, but goes against Conservative instincts

What does the future hold for corporation tax (CT)? It is the biggest revenue raiser outside the ‘tax triple lock’, which ought to sound alarm bells. After a decade (arguable four decades) on a downward path its descent was halted by the announcement shortly before last year’s election that the Conservatives were dropping plans to cut it further from 19 per cent. The leaked Treasury options from August included a proposal to increase it to 24 per cent, a move that could raise £17 billion a year (though CT revenues are always volatile depending on economic conditions).

Unsurprisingly the reaction of business to the prospect of higher taxes has been one of alarm. Advertising mogul Sir Martin Sorrell told the Telegraph: “The government will claim if they are going to do this that 24 per cent is not out of line with France or Germany or Spain, but I don’t think that is the point here. Like everybody else we have to deal with Covid, but unlike everybody else we have to deal with Brexit. What business needs is a further stimulus not a further depressant or downer.”

Many Conservative parliamentarians are also instinctively opposed. An unnamed Cabinet minister told the Telegraph: "This is not the time to be increasing tax. The cost of coronavirus is a one-off, and to pay off the debt you have to grow the economy. We should be looking to cut corporation tax and other taxes to increase transactions. Putting taxes up now would be like acid rain falling on the green shoots of recovery.” Treasury Committee member Steve Baker expressed himself “extremely skeptical that there is any headroom in terms of increasing taxes.” Somerset MP Marcus Fysh said “counter-productive” tax rises were the wrong response to the current situation and called on the chancellor to consider “urgent fiscal incentives to boost activity, investment and productivity.”

However public opinion appears to favour higher CT. A poll by Survation in June found 66 per cent of people supporting an increase in CT, including an eye-catching 74% of Conservative voters polled.

No-one is arguing for more taxes on business right away, but it is easy to imagine that an increase (possibly time-limited) in the tax levied on profitable business could be sold as a counterpart to the support provided to business during the pandemic (and potentially continuing in some form afterwards as the government tries to revive the economy). Help for those who need it, higher taxes for those who can afford them, is a plausible sales pitch.

What form could that help come in? CIOT Deputy President Peter Rayney – with the Financial Secretary listening in – offered a number of thoughts at the CIOT/IFS debate on what the government could do to support small and medium-sized businesses coming through, and hopefully out of, the pandemic. First, Rayney urged the chancellor to follow the lead of his predecessor, Nigel Lawson, in simplifying the tax system. Second, he called for greater certainty and stability within the tax system, advocating a new post-COVID CT roadmap as well as retaining the £1 million annual investment allowance which is due to be cut at the end of this year. Third, he argued in favour of extended trading loss carrybacks for struggling businesses, saying that it would be ‘logical and sensible’ for the government to enable businesses impacted by the pandemic to recover taxes paid in the three years from the 2017-18 tax year. “Yes, I know it costs money, but we do need this form of reform for struggling companies and their battered cash flows.”

The Financial Secretary did not respond directly to these suggestions, but he did emphasise that the Treasury has, even at this time, been ‘extremely active’ in thinking about tax policy, irrespective of COVID. He highlighted the introduction of the Digital Services Tax (DST), which he called a ‘toe in the water’ for the evolution of tax in response to the growing online economy, the review of business rates (see above) and the development of a long-term focus on tax administration and strategy.

Green taxes - carbon tax in serious contention

The government is looking seriously at a carbon tax to replace Britain’s membership of the EU emissions trading scheme (ETS). According to a report in The Times (9 October) Rishi Sunak and the Treasury want to replace ETS membership with a carbon tax while the Department for Business favours a UK-only ETS. A Whitehall source told the paper that Sunak saw the idea as a way of “raising revenue while cutting emissions”.

Under the proposal understood to be favoured by the Treasury, companies would get a tax emission allowance that could fall over time, above which they would be charged for every tonne of carbon produced. The scheme would have to be agreed in principle with the EU as part of Brexit trade negotiations. Treasury officials are also said to be looking at longer-term proposals to extend the tax to other areas including domestic gas and agriculture. Some environmental groups are, perhaps surprisingly, said to be concerned about the proposal, worrying that the tax could be set low and/or be subject to political pressure, thought to be likelier with a carbon tax than an ETS. A decision between a carbon tax and a UK ETS is expected in December.

According to The Times, Treasury officials are very interested in a report which suggested that a carbon tax of £75 per tonne of CO2 emitted by 2030 charged on greenhouse gas producers could raise £27 billion. This report was produced by a commission set up by the Zero Carbon Campaign, whose founder, Stephen Fitzpatrick (who is also CEO of OVO Energy), was a speaker at a fringe event at the conference which explored whether a carbon tax is ‘the right’s answer to climate change’. Fitzpatrick said he thought a carbon tax would be politically very popular. Dieter Helm, Professor of Economic Policy at the University of Oxford, speaking at the same event, said a single uniform carbon tax across the economy with border adjustment would be the best way forward. Helm said he was ‘pretty confident’ we would end up with a UK carbon tax; the UK’s own ETS (which operated prior to the EU one being set up in 2005) had not gone well.

There was some endorsement from the right for the principle of a carbon tax – provided that it was accompanied by a reconciliation of existing green levies – at an event hosted by the Centre for Policy Studies. Tom Clougherty of the CPS suggested a carbon tax could provide a ‘single clear carbon price’ but warned that the regime could become complicated if other nations failed to follow suit. Scott Hodge of the US-based Tax Foundation said that there were discussions ongoing about a carbon tax in the US, but that it would need to be offset by reductions in taxes elsewhere (corporate and personal taxes specifically) to mitigate its impact on economic growth. At the same event the veteran Conservative MP Sir John Redwood said that the UK was ‘riddled with carbon taxes already’ – citing fuel duty in particular - and warned against any moves to extend a future carbon tax to the cost of heating homes, which he said would be a ‘national scandal’.

Last month The Sun reported that Rishi Sunak was considering raising fuel duty, but a No. 10 ‘source’ rejected that, saying: “Raising fuel duty by 5p would be an act of self harm. Whatever the Treasury machine might think, we are not doing it.” However Sunak, asked by The Sun during the conference whether he intended to keep the fuel duty freeze in place, was non-committal, saying he cared about the cost of living and that fuel is a big part of that, “[b]ut you know what, we need to pay for the things that we all care about, right?” The Sun interpreted this as a signal he would end the freeze next year.

Bright Blue, a think tank and pressure group for liberal conservatism, staged a debate on a ‘Green Recovery’ with energy minister Kwasi Kwarteng and John Penrose, Chairman of the Conservative Policy Forum. Kwarteng told the audience to expect soon a government strategy on decarbonizing heating and a related building strategy. Government is also looking at asking companies to carry out a ‘green audit’ of their supply chain, their working processes and the impact of their business, he added. Asked about the opportunity for personal carbon trading, Kwarteng said this may not be possible for 10 to 15 years until we digitalise the energy system. Penrose said we should change how we incentivise investment, to give investors greater confidence in investing in technologies related to Net Zero. This includes using the tax system, he said, adding that we should change tax incentives away from borrowing to investing.

The week before the conference Bright Blue published an analysis of UK public attitudes to the target of net zero carbon emissions. It found high levels of support for a range of policies, including requiring firms that work for government to assess and report on their carbon footprint (66 per cent), providing tax breaks for businesses which have cut emissions (59 per cent), introducing a carbon tax (52 per cent), taxing investment in fossil fuels (51 per cent) and establishing a new emissions trading scheme for businesses (50 per cent).

The One Nation Caucus of Conservative MPs released a report in August titled ‘Build Back Greener’, setting out options for how to protect the environment and tackle climate change while boosting the economic recovery. The section on carbon pricing, written by new MP Jerome Mayhew, advocates a domestic carbon tax, with a border carbon adjustment tariff process for all manufactured imports and exports.

Another supporter of a carbon tax is the Prime Minister’s father, Stanley Johnson. Johnson senior joined a panel for a Conservative Policy Forum plenary session at the conference, arguing that you could have a carbon tax (with border adjustments) and eliminate other taxes. But Robert Halfon MP, on the same panel, argued that rather than punishing people by taxing them ‘which is not the Conservative way’ the government should be incentivizing green behaviour such as using electric cars.

The tax cuts for deficit reduction gambit – and other strategies for growth

Not all Conservatives subscribe to the view that, eventually, balancing the books will require either or both of spending cuts or tax rises. In a recent Times column Tory peer Danny Finkelstein neatly described the government and the Conservative Party at large as divided between ‘the Treasury view’, ‘the Vote Leave view’ and ‘the Laffer curve view’. The Treasury view is the traditional one, that an immediate stimulus is one thing but that in the long term we must pay for what we buy and buy only what we are willing to pay for. The Vote Leave view, as Finkelstein characterises it, is not to allow ‘wayward so-called expert guesses’ (that is, economic forecasts) to constrain the government. The Laffer curve view, meanwhile, is that ‘increasing revenue is easy – you just cut taxes’.

This view, that the route back to fiscal fitness lies through low taxes (as well, usually, as a deregulated economy) was heard frequently on the conference fringe. There are two overlapping strands to it – first that lower taxes lead to immediate behavioural change, and second that a low tax environment is one in which businesses thrive in the medium to long term, thereby raising profits, wages, dividends and all the other things that can be taxed in due course.

Sir John Redwood told a CPS event: “we need to make the case for lower and flatter taxes”. He wants to “reeducate the Treasury on the rules of Laffer” in order to cut taxes and generate more revenue. Nigel Lawson had, he said, reduced the top rate of income tax in two stages to 40 per cent, and this had increased the amount of income tax paid by the richest in society both in cash terms and as a percentage of the UK’s total tax take. His recommendations for today’s government? Lower income taxes, lower capital gains tax and lower taxes on savings. Redwood also argued that lower SDLT would boost growth by freeing up money for buyers to invest in their homes and, by extension, their local economies.

Economist Roger Bootle said that ‘the last thing government should be doing is contemplating big increases in tax’. Steve Baker MP said – citing recent evidence to the Treasury Select Committee of which he is a member – that the UK is “at or beyond the limits of taxation”. The post-pandemic focus of government, he said, had to be on creating the right conditions to embrace a free-market, entrepreneurial-driven society. His thoughts were echoed by John O’Connell of the TaxPayers’ Alliance, who said that it was ‘immoral’ for government to forcibly close a business during the pandemic, only to then “clobber it with tax rises when it opens”. O’Connell argued for ‘aggressive’ cuts to employer National Insurance and dynamic modelling of tax changes from the Treasury.

Baker was one of the signatories of an open letter published by the Institute of Economic Affairs on the day of the chancellor’s conference speech. Rather than (as one might expect) harking back to the time of Thatcher and Lawson, the letter – signed by a group of free-marketeer economists, academics, businesspeople and Conservative politicians – encourages Rishi Sunak to take his inspiration from the economic policies of the more centrist governments of John Major and Tony Blair, noting that, in the last 40 years, the highest period of growth of government revenue was 1993-2003. “The conditions that pertained at the time make a convincing case for the policies needed to stimulate and sustain our economic recovery,” say the signatories, citing relatively low rates of capital gains tax (after taper relief), income tax (top rate) and SDLT, corporation tax falling from 33 to 19 per cent, and a ‘light regulatory burden on all productive sectors’.

Low taxes were not the only strategy for growth being advocated at the conference. At a Conservative Home event, John Glen, Economic Secretary to the Treasury, argued for tax simplification, more ‘nimble’ regulation and expressed the hope that Britain will be a world leader in Fintech. Rishi Sunak, interviewed at a fringe event immediately after his conference speech, emphasised investment in infrastructure, remaining ‘strong on research and development’, being ‘more vocal’ on free trade and protecting the UK’s ‘precious ecosystem in financial services’. We should expect small changes in regulation to maintain the UK’s competitiveness post Brexit, said Sunak. Not being in the EU allows us a chance to do things in a different way, such as looking again at Solvency 2 (EU directive codifying and harmonising insurance regulation), he added.

Levelling up – and other pressures for higher public spending

The Treasury is having to find money not just for emergency spending related to COVID-19, but for already existing commitments and objectives. These range from pension increases to infrastructure to public services.

While the chancellor has scrapped plans for an autumn Budget, at time of writing the Treasury is still planning to go ahead with a multi-year spending review before the end of 2020. The chancellor has already confirmed that departmental spending will increase above inflation – both for day-to-day spending and longer-term investment.

According to press reports the chancellor had been pushing for the ‘triple lock’ on increases to the state pension to be suspended, but the Prime Minister has ‘put his foot down’ and overruled him. As a consequence the state pension will rise by 2.5 per cent next year and is set to rise in line with wages (which are expected to sharply rebound upwards after the furlough scheme ends) the following year.

At the heart of the government’s ‘levelling up’ agenda is greater capital investment in England’s less prosperous towns and cities, especially those in the north. At a fringe event John Penrose MP, Chairman of the Conservative Policy Forum, said “infrastructure investment is essential for productivity and vital for the levelling up agenda”. Skills are essential, not just academic but practical skills and continuous learning, he said. He cited transport and digital infrastructure as especially vital post-Brexit.

At a separate event Scott Hodge of the Tax Foundation warned that the tax treatment of infrastructure was a threat to investment in the UK.  Sam Bowman of the International Center for Law and Economics said that that this was because of changes made by George Osborne that focused on headline grabbing rate cuts, offset by changes to various tax allowances that made these less generous. He said government should review the CGT treatment of infrastructure investment to ‘remove regional biases’ that prevent investment and favour London and the South East.

At a discussion on London’s role in regional economic growth Catherine McGuinness of the City of London was keen to say levelling up should include London where there are areas of deprivation. She is in favour of levelling up in so far as it creates clusters of expertise. Lancashire MP Katherine Fletcher said she hoped the levelling up agenda is not a replacement for the ‘Northern Powerhouse’.  She said that the North needs to be more ambitious in asking for money and government support. Stephen Barclay, Chief Secretary to the Treasury, said it is a pity that many people in some communities have to leave those areas to achieve their career goals.  The government needs to look at industrial policy and have a ‘place-based element’ to decisions, to address this unfairness.

Barclay spoke supportively of a Centre for Cities report that calls for a simplification of the Treasury's Green Book methodology, stronger local government, and a government strategy and resources to achieve ‘levelling up’. A focus of these critiques is the claim that the Treasury’s guide for making investment decisions, the Green Book, uses a method of calculating Benefit Cost Ratios (BCRs) which skews public spending towards London and other prosperous parts of the country. However, this report found BCRs themselves are not biased towards these regions.

That event was hosted by the think tank Onward, long-time advocates of the levelling up agenda. Last month Onward published a new research paper, Measuring up for levelling up, which looks at how government can best measure progress on levelling up, and examines how the economy has been performing in different parts of the country over recent decades. The report by Neil O’Brien MP marked the launch of The Levelling Up Taskforce, a group of 40 MPs representing seats all around the country, who champion ideas to boost Britain’s lagging areas and aim to ensure that everyone has the opportunity to make the best of their talents, no matter where they are from.

Many of these lagging areas are in the so-called ‘red wall’ – a large band of traditionally Labour seats across the north of England, many of which were lost to the Conservatives last December. Pollster Deborah Mattinson has written a book about what happened in these seats and offered thoughts at the CIOT/IFS debate on what voters in these seats think and expect. They continue to feel that they and their communities receive a ‘bad deal’ from the government, said Mattinson. 64 per cent of North East voters surveyed think their communities receive less in return for what they pay in, compared with just 30 per cent of Londoners. These voters have set a high bar for the government. ‘They see they have political power’, Mattinson said, ‘and they want to exercise it’.

Support for higher public spending – and taxes – has risen generally since 2010. A Survation poll carried out in June found 54% of people wanted to see the government invest more in essential public services in the long term to help recovery from the COVID-19 crisis, with 22% saying investment levels should stay the same and only 15% saying they should be reduced. In the same poll, 49% of respondents (and 46% of Conservatives) said that they were personally prepared to pay more tax to fund services, with only 24% saying that they wouldn’t. 27% of respondents supported tax cuts, even if this meant less funding for public services.

Former chancellor Sajid Javid does think there is room to cut public spending. He told a fringe meeting that the Treasury should hold a zero-based spending review to identify and eliminate wasteful spending or legacy projects of former government ministers. He said that taxes should be used to fund day-to-day spending and borrowing to support infrastructure and capital investment. Acknowledging that public spending would need to remain higher than normal for some time he added that, “Eventually, public spending will need to be brought back under control, but it won’t and shouldn’t happen overnight”.

The impact of COVID-19 on the world of work and working age benefits

The effect of coronavirus on working practices has inspired a certain amount of policy thinking. Additionally people are falling back on the social security safety net who have never previously needed it, and some are shocked at its flimsiness.

A discussion hosted by the Women's Budget Group and the Conservative Women’s Organisation explored how an inclusive society can be created following the pandemic. Caroline Nokes, Chair of the House of Commons Women and Equalities Committee, observed that COVID has hit women harder, both in terms of job losses and working women ending up doing the lion’s share of childcare and home schooling. She noted there was a lot of emphasis on technology and construction apprenticeships, traditional male areas, and worried “that this is a recovery designed by men for men”. One thing I’d like government to do is fund childcare better, she said.

Laura Farris, co-chair of the All Party Parliamentary Group on Women and Work, speaking at the same event, hoped we would see the whole role of working from home being recalibrated as a result of recent events. She thought the government could improve how the right to request flexibility in the workplace works. She wondered whether the Job Retention Bonus could be done in a way that incentivises retention of women because they were unduly impacted by the lockdown and the months that followed; perhaps some kind of childcare tax break where, for example, an employer who could show that 3-6 months later they have retained a mother with young or pre-school children as an employee would get a tax break, part of which could be used for the employee’s benefit to fund a childcare arrangement. She suggested the Treasury was “already thinking along those lines”.

Telegraph columnist Matthew Lynn, at an IEA / TaxPayers’ Alliance event, argued for a review of employment, which, he suggested, could look at home workers as a new class of employee, potentially with knock-on effects for workers’ rights.

Hertfordshire MP Bim Afolami said a danger is that people in senior white-collar jobs stick to working at home because they already have contacts and experience. In contrast, more junior staff need to learn physically from their managers on a day to day basis and also need to make and build their own contacts. Is this another case of intergenerational unfairness, he asked.

A CPS event explored what the pandemic will mean for the future of UK welfare policy. There was a general view that universal credit (UC) had had a ‘good’ crisis, with the temporary boost to UC levels delivered effectively. Is this the moment UC could be accepted, wondered James Heywood of CPS. Helen Barnard of the Joseph Rowntree Foundation observed that people coming into UC now are experiencing a system where the basic amount of support is higher than it has been, and with sanctions and conditionality temporarily lifted. (The government increased UC and Working Tax Credits by £20 per week for the current financial year, but say – controversially – that this temporary increase will not be renewed in April.)

Baroness Stroud, who as a DWP adviser helped launch UC, said many people going onto UC now had been on quite high incomes and had not realised how basic the support is. “‘I’ve been a faithful taxpayer, I thought there would be more for me,” is a refrain she has heard. What does it mean for people whose day to day incomes are significantly greater than the welfare state allows for? She thought wage protection would be looked at. Edward Davies of the Centre for Social Justice agreed but did not think the state could do a better job than employment insurance which already exists. Stroud concurred but thought the issue should be part of a national conversation. Is auto-enrolment a model for some form of income protection, she asked. Davies said as UC gained ‘a different kind of clientele’ people had started talking about the £16,000 savings cap. He worried that we would start forgetting about people in extreme poverty “because we’re [too busy] talking about airline pilots’ savings”.

Brexit – remember that?

Amid coronavirus, Brexit appeared to have been almost forgotten at the conference, rating just a few sentences in the Prime Minister’s speech (mostly in the context of his rosy vision of a post-Brexit Britain) and no mention at all in the Chancellor’s. Mention of the current negotiations on a trade deal was left to the Foreign Secretary, Dominic Raab, who repeated the government’s red lines and vowed that Britain will not be "held over a barrel by Brussels".

In an interview on the conference fringe, Secretary of State for International Trade Liz Truss talked up the UK’s free trade agreement with Japan, which is the UK’s first major trade deal as an independent trading nation post-Brexit. She claimed the British public underestimate other countries’ desire for trade deals with Britain. She said Britain’s historic role is to promote free trade, and that international trade rules are old, and Britain should lead efforts to update them. The UK global tariff makes it clear to other countries how they must deal with us, she said. From 1 January 2021, the UK will apply a UK-specific tariff to imported goods. Truss said there will be an announcement on freeports soon and she hopes it will bring jobs and manufacturing to traditional ports.

At a ConservativeHome / Port of Dover event maritime minister Robert Courts praised the Government’s launching of a major new public information campaign that sets out the actions businesses and individuals need to take to prepare for the end of the transition period on 31 December 2020. Campaign advertisements will include a “Check, Change, Go” strapline which directs people and businesses to a checker tool at GOV.UK which quickly identifies the necessary next steps they need to take. He suggested that businesses should diversify where they obtain essential supplies for their respective supply chains. The government is looking at freeport models that are more akin to Enterprise Zones, he added.

Doug Bannister, CEO of Dover Harbour Board, speaking at the same event, said the government could do more to get the message out to businesses about the new paperwork needed for customs post-Brexit. He called on the government to consider ‘virtual’ versions of freeports that can be extended across the UK. A ‘virtual’ freeport will link a multi-site, digitally enabled free trade zone across a number of nationally significant clusters such as advanced manufacturing, low carbon energy and development sites.

Negotiations with the EU continue.

Scotland – will Conservatives seek to scrap Scottish income tax rates?

Looking ahead to next year’s Scottish Parliament election, the Conservatives can offer clear blue water between themselves and the SNP on matters of devolved taxation. At Holyrood, the party have been the most vocal opponents of the SNP-led Scottish Government’s policy to diverge rates and bands of income tax from the rest of the UK, although they have yet to indicate whether they will enter next year’s election with a policy of reversing the distinctive Scottish rates and bands.

The new Scottish Conservative leader Douglas Ross MP was a visible – and vocal – presence at the conference. Ross only became leader at the beginning of August, succeeding Jackson Carlaw, who himself had only been full-time leader since February, having succeeded Ruth Davidson. Ross currently leads the Scottish Conservatives from Westminster, although he is expected to return to the Scottish Parliament next year. Until then, Davidson is standing in for him as Holyrood leader. Opinion polls suggest that the Scottish Conservatives will once again be the official opposition in the Scottish Parliament after next May’s election.

Amid a backdrop of rising and sustained support among Scots for independence, Ross gave an impassioned speech to party members on the opening day of conference in which he challenged his UK colleagues to stop “talking down our Union” and treating Scottish independence “as a question of when and not if”.

The Scottish Conservatives’ influence on Westminster politics can be seen in the UK Government’s decision to compensate UK servicemen and woman based in Scotland who have to pay higher rates of Scottish Income Tax. The Scottish Income Tax Mitigation policy – first introduced in 2018 – was made permanent by the Ministry of Defence in July this year. The 2017-19 contingent of Scottish Conservative MPs also claim success in efforts to freeze taxes on Scotch Whisky, as well as an agreement to exempt Police Scotland and the Scottish Fire and Rescue Service from VAT. Supporters of the party – and of Scotland’s place in the UK – point to these as examples of the party’s influence on UK government policy (though SNP supporters claim their party was instrumental in achieving these changes).

A party review on Scottish tax policy had been trailed ahead of an expected launch late last year, but it remains forthcoming. Therefore we remain unaware of the specific tax policies that the party will put to voters in the spring.

Additional reporting by Hamant Verma and Chris Young

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