In an interview with The Daily Telegraph to-day, reports political editor Andrew Porter, Boris Johnson, Mayor of London, expresses himself shocked by the levels of income tax, saying he never thought he would see the day when other large European countries had lower rates of personal taxation than those in Britain. He fears this high taxation is harming her competitiveness.
In the face of criticism that high taxation is harmful to Britain’s global competitiveness the Prime Minister and the Chancellor of the Exchequer have been vague in assuring critics of their intention to lower it ; Mr. Osborne has refused to cut the 50-per-cent. rate on highest incomes — instituted by the Labour government — despite being urged that, although it acts as a disincentive to the entrepreneurial creators of jobs and economic activity, it generates little extra revenue for the Treasury.
Mr. Johnson’s comments echo the strongly worded valedictory speech of director-general Sir Richard Lambert to the Confederation of British Industry (CBI). Sir Richard urged the government to set out a ‘road map’ of how rates of personal taxation would come down, a recommendation given more weight by the publication of figures for the last quarter of 2010 suggesting that gross domestic product (GDP) had declined by 0.5% and the economy might be about to fall back in to recession.
Mr. Johnson, attending the annual World Economic Forum in Davos, says the coalition government needs to develop its ‘Norman Tebbit side’ — a reference to Margaret Thatcher’s enforcer on industrial matters — and raises three points he thinks call for its immediate attention :
- The first is the problem of high rates of personal taxation.
- He urges the Prime Minister to strengthen the legislation on industrial relations to hinder the calling of politically motivated strikes.
- He describes as ‘nonsense’ the claim of Transport Secretary Philip Hammond that a high-speed rail link will be an effective substitute for what he calls a ‘credible aviation strategy’, pointing out that European competitors to the London airports are already exploiting global markets.
Boris Johnson, seen by some senior Conservatives as having his eye on leadership of the party, is something of a fly in Downing Street’s ointment. (Mr. Cameron addressed political and business leaders in Davos to-day, Friday 28 January.)
Although reluctant to criticize his friends, London’s mayor says, “I need to speak up for London and its interests. I think we need to set out a pretty clear […] pro-enterprise direction of travel.
“I understand about 50p tax politically but there has got to be a sense of where we are going and where we want to be as a country.”
He says he knows that the need to reduce rates of tax is something of which the Chancellor is aware and that it is something he wants to do. “Labour have created a climate that is miserable and anti wealth creation ; and was resentful : it takes a real effort of political will to dispel that. I hope very much that that is what George [Osborne] will do and I will lay money he will. That is the way forward and I know he thinks this.”
The Prime Minister to-day told the Davos forum how long he expects Britain’s road to recovery to be, saying, “We can’t just flick on the switch of government spending or pump the bubble back up.” He told delegates that the task before his government is immense and that the transformation will call for painstaking work and take time : “We must stick to the course we have set out.”
Mr. Johnson, however, wants the Prime Minister and the Chancellor to address the three points he raises quickly. With statistics having just been published suggesting the economy might have stalled and the government being accused of lacking a strategy for growth, he explains, “On things like union law, aviation and on tax we need to send out very, very positive messages.”
He urges the Coalition’s leadership to follow the example of the Thatcher Administration of the 1980s (in which Norman Tebbit tackled the trade unions and Michael Heseltine addressed the need of industrial and commercial regeneration), indicating redevelopment in London’s East End such as Canary Wharf and the Docklands, projects that would never have come about “without inspired Tory leadership”. He regards his proposed new airport for London — in the Thames Estuary — as being in that tradition.
Of the government’s plan for a high-speed railway link (as an alternative to developing London as an aviation hub) he says, “What nonsense. You can’t take a high-speed train to Beijing. We cannot go on shunting jobs overseas to other countries,” pointing out that French and German airports are already doing better than London’s in the Far East.
In London in the past two years the Rail, Maritime & Transport Union (RMT) has called strikes several times and Mr. Johnson is keen to see legislation to curb politically motivated action : “This is vital because […] with some union leaderships there is evidence of political decision-making and going for strikes that will damage the Coalition or a Conservative Mayor and we want to protect the majority of union members from capricious and vexatious strikes that are triggered by a minority.
“So the 50-per-cent. threshold [of members needed for a strike] is the right way to go.”
Although the Prime Minister seems to favour new laws on industrial relations, he would face opposition.
Meanwhile the Chancellor last night told the conference at Davos that his budget in March would be full of measures aimed at reviving the British economy. “Our competitiveness has suffered a lost decade. That is why this Coalition will be as bold in promoting enterprise as we have been in dealing with the deficit. The ambition of my Budget will be to turn the tide on the forces of stagnation. The guiding principle will be : the future favours the bold.”