Boris gets off the bus

As a bold act of redistribution it is hard to beat. Oh, hang on . . .

Boris Johnson will see out New Year's Eve 2009 convinced that he has made it as cheap as possible. London's official fireworks display, which under the "profligate" Ken Livingstone regime lasted ten whole minutes, will be reduced to a mere seven and a half minutes.

Free rail travel will be scrapped, and Boris will enter 2010 having scrimped several hundred thousand pounds off the mayor's budget.

This is all part of Boris's drive to "ease the burden" of City Hall on taxpayers. However, as Boris counts his pennies, the rest of the capital will wake to the largest set of multimillion-pound fare rises brought in by a London mayor.

Boris will increase single bus fares by 20 per cent, with "hard-pressed families" paying hundreds of pounds more a year. And while the average household has saved just 11p a week from Boris's tax freeze, Boris will take hundreds of millions of pounds extra in fare revenue during his term.

These rises will help close the financial black hole created by the removal of the western extension of the congestion charge, but will also go towards much-needed improvements to the Underground. They will also help fund initiatives such as his bike hire scheme.

But while some of the extra burden may be necessary, it is how Boris has chosen to share the burden that is most revealing.

Boris will protect those Londoners most able to pay by freezing the price of almost all season tickets for the year. Meanwhile, he will raise single bus fares by a third from the level he inherited. Overall, bus users will be hit hardest by the rises.

As a bold act of redistribution, it is hard to beat, with Boris asking those least able to pay to subsidise those most able to pay.

This is reportedly a worry for the Conservative leadership: David Cameron's aides are quoted as saying that Boris is "making us look bad". But although Cameron is keen not to scare off voters before an election, Boris is merely doing what most Conservatives would have expected him to do once in power.

Ken Livingstone famously had a policy of shifting people out of their own vehicles and on to public transport. For a self-proclaimed cycle- and car-loving libertarian, this was always going to be anathema.

To shift the balance, Boris plans to raise fares, halve the size of the congestion charge zone, reduce the level of bus subsidy and pour millions into making London the "electric car capital of the world".

Whether masses of Londoners will ever follow Boris's electric dreams remains to be seen.

But while the mayor can easily afford to take part in his "electric car revolution", for most Londoners the real revolution will be an ever-increasing burden from Boris in fares.

Adam Bienkov is a blogger and journalist covering London politics and the mayoralty.

 

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Adam Bienkov is a blogger and journalist covering London politics and the Mayoralty. He blogs mostly at AdamBienkov.com

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Theresa May's U-Turn may have just traded one problem for another

The problems of the policy have been moved, not eradicated. 

That didn’t take long. Theresa May has U-Turned on her plan to make people personally liable for the costs of social care until they have just £100,000 worth of assets, including property, left.

As the average home is valued at £317,000, in practice, that meant that most property owners would have to remortgage their house in order to pay for the cost of their social care. That upwards of 75 per cent of baby boomers – the largest group in the UK, both in terms of raw numbers and their higher tendency to vote – own their homes made the proposal politically toxic.

(The political pain is more acute when you remember that, on the whole, the properties owned by the elderly are worth more than those owned by the young. Why? Because most first-time buyers purchase small flats and most retirees are in large family homes.)

The proposal would have meant that while people who in old age fall foul of long-term degenerative illnesses like Alzheimers would in practice face an inheritance tax threshold of £100,000, people who die suddenly would face one of £1m, ten times higher than that paid by those requiring longer-term care. Small wonder the proposal was swiftly dubbed a “dementia tax”.

The Conservatives are now proposing “an absolute limit on the amount people have to pay for their care costs”. The actual amount is TBD, and will be the subject of a consultation should the Tories win the election. May went further, laying out the following guarantees:

“We are proposing the right funding model for social care.  We will make sure nobody has to sell their family home to pay for care.  We will make sure there’s an absolute limit on what people need to pay. And you will never have to go below £100,000 of your savings, so you will always have something to pass on to your family.”

There are a couple of problems here. The proposed policy already had a cap of sorts –on the amount you were allowed to have left over from meeting your own care costs, ie, under £100,000. Although the system – effectively an inheritance tax by lottery – displeased practically everyone and spooked elderly voters, it was at least progressive, in that the lottery was paid by people with assets above £100,000.

Under the new proposal, the lottery remains in place – if you die quickly or don’t require expensive social care, you get to keep all your assets, large or small – but the losers are the poorest pensioners. (Put simply, if there is a cap on costs at £25,000, then people with assets below that in value will see them swallowed up, but people with assets above that value will have them protected.)  That is compounded still further if home-owners are allowed to retain their homes.

So it’s still a dementia tax – it’s just a regressive dementia tax.

It also means that the Conservatives have traded going into the election’s final weeks facing accusations that they will force people to sell their own homes for going into the election facing questions over what a “reasonable” cap on care costs is, and you don’t have to be very imaginative to see how that could cause them trouble.

They’ve U-Turned alright, but they may simply have swerved away from one collision into another.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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