Pipe Down, Sir Stephen! You’re wrong; Boris is right

I must confess that I had not previously heard of him (but then, he’s probably none too familiar with me either), but I have to report that Sir Stephen Bubb (sic) is a deeply confused man.  It appears that he is Chief Executive of something called AVECO (hadn’t heard of them either), which represents 2000 “Charity Leaders” in Britain.
Sir Stephen is concerned that government’s “ill-considered cuts” may have a dramatic impact on “the voluntary sector”, and “wreak havoc in communities”.  He accuses local councils of contemplating “a Neanderthal approach to cuts” (though I am not aware that the Neanderthals, whose genes, according to recent research, may run in our own veins, had tax-payers, or cuts, or a voluntary sector).  In parentheses, let me note that while I have a number of criticisms of Sir Stephen (see below), I can scarcely fault his colourful use of language.  Get more on the story at http://www.bbc.co.uk/news/uk-12102105.
Sir Stephen is wrong on so many counts that it is difficult to know where to start.
Of course he has an ex-officio obligation to speak up in favour of charities, and he seems to interpret that responsibility in terms of perpetuating the right of charities to continue to suckle on the teat of the Welfare State.  But we are surely entitled to point out the difference between charity, based on voluntary contributions from the public, on the one hand; and delivery of state-funded services, on the other.  I recently wrote about a “charity” called BookStart, which was threatened with closure by the proposed withdrawal of tax-payer funding.  In my book, that’s not a charity at all – it’s become an agency of the government.
But let that distinction pass, and let Sir Stephen have the benefit of the doubt on his special pleading for his client-base.  We may allow that he is entitled to complain at proposed cuts, and to express his own view, and his members’ views, on the potential damage that such cuts may cause (though we may take them with a pinch of salt).
What he is not entitled to do is to dictate to the government how the additional funds which he requests should be raised.  That is what we elect a government for.  (In any case there is a deeper philosophical argument against all attempts to raise hypothecated taxes, since they assume we know what would have been spent in the absence of the hypothecated tax – but that’s a “What-if?” question to which no one knows the answer).
In particular, it is an example of the most egregious and self-serving cynicism that he picks on the bankers and their bonuses, hoping to curry favour with a public brain-washed by banker-bashing rhetoric from the media – and from politicians who should know better.  (The prime responsibility for the financial crisis rests with politicians and policymakers who deliberately promoted loans for poor risks, and held interest rates too low for too long while a bubble economy developed).
Sir Stephen also parades his deep ignorance of economics.  He makes the regular leftist assumption that higher taxes will raise more revenue.  But if taxes are too high, and especially if they are seen to be unfair, raising rates will not raise any revenue at all.  In this case, it will result in sophisticated avoidance schemes, followed by a mass emigration of London’s financial sector to more welcoming jurisdictions.  We will have killed the Goose that laid the Golden Eggs, and there will be even less funding for Sir Stephen’s clients.
These points have been made with great vigour by London Mayor Boris Johnson – and with great courage too, given the equivocal attitude to the banks shown by some of his senior party colleagues.  He has highlighted the risks to the City from rhetorical bank-bashing; from threats of arbitrary taxes; and indeed from the proposed 50% income-tax rate.  Boris is clearly right, and well done him for fighting his (and the City’s) corner.  There was a time when all Conservatives would have seen immediately that Boris is right, and it is highly disturbing that some in the Cabinet can’t quite get their heads around it.  http://www.telegraph.co.uk/news/newstopics/politics/8233578/Boris-warns-Cameron-on-bank-tax-and-rhetoric.html

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12 Responses to Pipe Down, Sir Stephen! You’re wrong; Boris is right

  1. ukiplocal says:

    Does Sir Stephen provide his services as a volunteer, and who appointed him? Or does he receive remuneration and does any of it come from the tax payers?

    It ought to be a sufficient cause for denying charitable status to any organisation which instructs, authorises or tolerates the use of their name to criticise any policy of HMG unless it specifically and uniquely impacts the charity. On this ground his umbrella organisation should be immediately denied charitable status.

  2. Mike Spilligan says:

    I’ve nothing to add to this posting per se, and agree with it in entirety.
    I don’t know why you put “sic” after Sir Stephen Bubb’s name, though his “K” dates from only today, actually. Apparently he’s been well thought of by Liam Byrne, Hazel Blears, The Guardian, etc., which might enlighten us a little about ACEVO’s self-styling as a “high profile body”.

  3. matthew fox says:

    I think conservatives really need to get there story straight over the 50p tax rate.

    Simon Heffer stated the rate wouldn’t really collect any money, now Boris Johnson is complaining that the rate will harm the country.

    What is the message?

  4. I could not find any points to disagree with, in this latest post. In addition to the above, I would simply like to add a few further comments. The case for relatively low rates of income tax has been proven, both in theory and in terms of the evidence. Indeed, a “flat tax” could be a worthwhile aim for the longer term? It would be easier to administer, collect and seen as fair (in the sense that all pay the same percentage of their income)? Whatever one’s point of view, actually raising taxation rates is certainly not an option which the public would support with any enthusiasm (particularly in the current economic climate).

  5. Edward Green says:

    I will be sounding like a right winger when I say that I understand and agree that “bashing” or excessively taxing the bankers and the Financial Sector will actually reduce tax revenue in the medium and long term. Higher taxes do drive business away from the country, but left wingers refuse to accept this. Many lefties continue to refuse to acknowledge it even when you shove statistical proof of this under their noses.

    However, I will now sound like a left winger, or a namby pamby liberal, when I say that I understand better than most when Sir Stephen Bubb explains that the charity sector is going to be hit harder than people realise by the austerity cuts. I also agree that it will wreak havoc on the voluntary sector and it will be devastating for the standard of care for a variety of categories of people needing various forms and levels of support.

    There are many charities that raise monies in the usual way of charitable giving but also have contracts with local authorities that provide funding for the services that they provide in the care sector. It is often the state contracts that provide the majority of their funding but the fact that they are charities as well should not be used as some sort of stick to beat them with when they are frightened for their vulnerable clients when their state funding is withdrawn.

    I have a small business so I am more familiar with the economic argument put forward here. I certainly agree that putting extra taxes on bankers is a damaging idea regardless of the specific purpose of those taxes.

    However, I am also a carer for my older brother who has learning difficulties. I rely on help from various charities and from the local Social Services network so I am seeing at first hand how this is affecting the care of the vulnerable.

    I am very saddened to see how you advocate our taking Sir Stephen’s views and those of the members of AVECO with a pinch of salt. It shows that you have no experience or knowledge of the needs of a proportion of society that cannot help itself. Sir Stephen is certainly wrong in the way he wishes to see funding for this area of care raised. He is certainly correct in his assertions about the damage being done by the cuts.

    • It would be a nice thing to see a clear distinction between state-funded services and charity: Otherwise we’ll see the nationalisation of charities, and the real charitable ethos will be lost. I don’t doubt Sir Stephen’s integrity, but anyone appointed as a spokesman for a cause will be tempted to over-state their case.

  6. I think the quality of you argument is measured by the level of the personal abuse you direct at me. I suggest that you consider why many of your constituents believe the level of bankers bonus to be unacceptable after the bail out of said banks by us the people. Charities must one pick up the consequences of the bank bail out. I bow to your superior knowledge of economics ( which in fact I read at Oxford) but surely if a Government put large sums of money into a bank bail out that is money not available for other public priorities and so charities and the people they support suffer.
    And you may well not have heard of me , or my organisation but I suspect this demonstrates your lack of support for your Party position on Big Society or you certainly would. I am very happy to engage in debate but may I suggest this is best done in a manner which respects the character ,integrity and intelligence of the person you disagree with.

    Happy New Year.

    • Sir Stephen: Thank you for your comment. But the main thrust of my remarks was against hypothecation, which you seem not to address. There may well be a case for more support for charities (although I continue to be concerned about the confusion between being a charity and being an arm of the state). But if that involves cuts in other areas of government spending, we all have our own targets. I’d start with Foreign Aid, EU budget contributions, and green energy initiatives. I am objecting to your special pleading in linking your concern for charities to your anti-bank prejudice.

  7. That is affair point. Indeed my main thrust in my Times interview was to highlight the alarming prospect for charities facing rising costs , the loss of gift aid transitional relief,the failure to properly reform the bureaucracy of gift aid, which is coupled with the growing tide of cuts in grants by the State and rising demand for our services. Against this sad story we do not see a rise in giving. Indeed the evidence is that rich people give significantly less of their income than poorer people so I doubt that the recipients of large bonuses wil be generous with their wealth. Perhaps I will be proved wrong. Of course if the Government were to find another way to support our great charities that would be most welcome. I see no sign of that at present and hence my call for a dramatic move to support us by a tax on bonuses that would raise the money to fill the gaping funding hole that means the people we support will suffer.

    • Thanks for this measured response. Two points: if taxes weren’t excessive already, richer people might be more inclined to give. And the second point, which I should have made earlier: there is overwhelming evidence that raising tax rates from already high levels does not (as you seem to assume) increase revenues. Rather, it drives avoidance — and drives higher-rate tax-payers (and businesses) overseas. Whatever our problems, higher tax rates are not the solution.

  8. Oh, and incidentally I do like the picture of your dog. An excellent hound! I have a marvellous Parsons Jack Russell!

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