Saatchi urges May to merge starting threshold for NI and income tax

Ex Tory chairman Lord Saatchi urges Prime Minister to merge starting threshold for national insurance and income tax at £12,000

  • Lord Maurice Saatchi said Tories must do more to show capitalist system works 
  • Called for reforms to ensure ‘everyone keeps at least 51p in every pound earnt’
  • Said Conservative party is ‘transfixed by Brexit’ and needs to show new thinking

A former Tory chairman today urges Theresa May to slash taxes at both ends of the income scale as part of a drive to reinvigorate the country and party after Brexit.

Lord Saatchi, chairman of the Centre for Policy Studies (CPS) think-tank, warns that the Conservatives must do more to demonstrate that the capitalist system still works for ordinary people.

Writing in the Daily Mail, he says the Brexit vote and the last election ‘seemed to show that voters are just as sceptical of capitalism as they are of socialism.

Lord Maurice Saatchi (pictured) has urged Theresa May to slash taxes at both ends of the income scale to help reinvigorate the party after Brexit

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‘The former is seen as efficient, but cruel. The latter is caring, but incompetent. As for the centre ground, it’s the worst of both worlds’.

Lord [Maurice] Saatchi, who with his brother Charles famously came up with the ‘Labour Isn’t Working’ poster that helped Margaret Thatcher to power in 1979, warns that the political class has become ‘transfixed by Brexit’ and needs to demonstrate new thinking to show it is ready to ‘build a better country after the exit deal is done.’

His comments come ahead of the launch by the Prime Minister tonight of a new CPS project designed to map out a post-Brexit Conservative agenda. The project will look at four key areas of policy – taxation, housing, business and welfare.

The Prime Minister (pictured) is set to launch a new Centre for Policy Studies project designed to map out a post-Brexit Conservative agenda today

Previewing the tax research, Lord Saatchi today calls on Mrs May to do more to put cash in people’s pockets.

The Tory peer calls for the starting thresholds for national insurance and income tax thresholds to be aligned at £12,000 to allow workers to earn £1,000 a month without paying either. Currently, the starting point for NI stands at £8,424, far below the £11,850 threshold for income tax.

Lord Saatchi says aligning the two would take 2.4 million low-paid workers out of the tax system. He also calls for reforms to stop some better-paid workers facing marginal tax rates of more than 60 per cent. And he says reforms should ensure ‘everyone always keeps at least 51p in every pound they earn’. 

Theresa can fix Britain – By putting you back in control

By Lord Saachi

Two years ago, Theresa May stood on the steps of No 10 and gave one of the most powerful, and effective, political speeches ever given by an incoming Prime Minister.

She spoke of inequality, injustice and unfairness. Of the need to ‘do everything we can’ to give people ‘more control over your lives’.

‘When we take the big calls, we’ll think not of the powerful, but you,’ she promised. ‘When we pass new laws, we’ll listen not to the mighty, but to you. When it comes to taxes, we’ll prioritise not the wealthy, but you.’

That theme of giving ordinary people more control of their lives was at the heart of the Brexit debate. Even for Remainers, it was impossible to deny the power of that slogan: ‘Take Back Control’.

Because taking back control isn’t a slogan. It’s a solution. It’s the solution to what happens when people’s hopes and dreams hit the painful brick wall of ‘the real world’. When they feel like they don’t have a say in what happens to them, or a stake in their own future.

Too often these days, we feel we don’t have control. That younger people in particular are asked to embrace capitalism when they have no capital. We tell them competition is a wonderful thing, but deny them the table stakes to play the game in the first place. We tell them they should have control over their own lives, without the means to exert it.

The British political class has been transfixed by Brexit. But if we are to build a better country after the exit deal is done, we need to move forward the meaning of that famous phrase – from taking control from Europe to helping people take control of their lives.

The 2017 election, alongside the Brexit vote, seemed to show that voters are just as sceptical of capitalism as they are of socialism. The former is seen as efficient but cruel. The latter is caring but incompetent. And as for the centre ground – it’s the worst of both worlds.

And economic circumstances have played into this. The Government had to make many difficult decisions to clean up the mess Labour made. It has also done much good. Increasing the personal allowance, for example, has taken millions of people out of tax and put thousands of pounds in everyone’s pockets.

But we still face difficult economic problems. While the Chancellor’s Budget was broadly welcome, the growth projections he outlined were a world away from what the British people were used to before the crash.

In the ten years before the financial crisis, GDP growth averaged just over 3 per cent a year. Since 2010, when the economy returned to growth after the crash, growth has averaged around 1.9 per cent, and the latest forecasts are for only 1.5 per cent or so per year over the next five years. If that rate of growth continues over the long term, we are doomed to a hellish combination of high taxes and inadequate public services.

If growth returned to that pre-crisis trend, it would mean an extra £10 billion a year in tax revenues to pay for the NHS and more – as well as much more money in the pockets of the people.

As Margaret Thatcher put it: ‘If you want a bigger slice of cake, the best thing to do is to bake a bigger cake.’

Or, as she also said: ‘Caring that works costs cash.’ Because, like the Good Samaritan, you need the money in order to do the good works.

We NEED to ensure, in other words, that the economy is fighting fit for Brexit. But it is not just about money. The housing crisis threatens to deny an entire generation control of their futures – unless they have access to the Bank of Mum and Dad.

It is no accident that Margaret Thatcher won multiple election victories after she brought in the Right to Buy – an emblematic policy to give people ownership of their homes and control of their lives.

All this is why the Centre for Policy Studies, the think-tank I chair, embarked on a campaign to develop a new generation of conservative thinkers – and thinking. We wanted to help fulfil the promise the Prime Minister made on the steps of Downing Street, by developing emblematic, clearly understood policies in the four key areas of housing, welfare, business and tax that give people that control of their lives. And we are delighted that she will be joining us tonight at our launch reception, ahead of the publication of the first report tomorrow.

That first report, on taxation, builds on the work already done by the Conservative Party, and by the Prime Minister and her Chancellor in the recent Budget. Its central argument is that the tax system should do everything possible to make work pay: first, by introducing a universal working income – a guarantee that the first £1,000 a month you earn will be not just clear of income tax, but also clear of National Insurance (which is just income tax by another name). This would be a tax cut of almost £500 for everyone on £12,000 a year or above – and would take more than 2 million low earners out of the tax system completely.

Next, we should ensure that the tax system always lets you keep at least 51p in every £1 you earn from that point – which is not the case at many points today. This problem particularly affects those trying to move from welfare into work, so we can have a situation where a cleaner can end up losing more of her income than the CEO whose office she tidies.

We also urge the Government to continue to improve the work incentives in the Universal Credit scheme, so the benefit system does not take away what the tax system gives. And we explain, for the Treasury, how it could be paid for.

What is truly striking is how in tune these ideas are with the public. Our polling shows that they believe, overwhelmingly, that these are good ideas. They believe, again overwhelmingly, that work should pay – that it is not only unfair and counter-productive but actively immoral for the state to take more than half of every pound you earn. They think the main purpose of the tax system should not be to rake in as much cash as possible, or redistribute from rich to poor, but to make work pay.

The same is true of the other areas of what we call our ‘Big Four’: The public want every sinew to be strained to turn renters into homeowners… to help those running small and family businesses… to ensure the welfare system rewards those who are trying their best… and they believe in the power of work, the virtue of effort and reward.

We need to bring a new sense of purpose and confidence to Britain after Brexit. To raise people’s eyes and lift their spirits. To replace anger and frustration with control and self-confidence.

A society without ownership, without aspiration, without control, is one in which inequality and resentment flourish – which splits between the haves and have-nots.

Labour are on the wrong side of this dividing line. They want you to have a home – but they don’t like you owning it. They want you to work for them, not for yourself. They want to profit from your firm’s success, rather than help you prosper. They want to break that link between effort and reward.

When Charles de Gaulle came to London in exile in 1940, he issued a rallying cry to his countrymen: ‘Honour, common sense, and the interests of the country require that all free Frenchmen, wherever they be, should continue the fight as best they may.’ He called upon the nation to join him.

In the face of Labour’s hard-Left agenda, we need the same spirit of urgency – to drive up the growth rate, get the country fighting fit, and above all fulfil the Prime Minister’s promise to ‘do everything we can to give you more control over your lives’. 

Lord Saatchi is the Chairman of the Centre for Policy Studies. The first of its new reports, Make Work Pay, will be published tomorrow.

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