Will this poster return to haunt the Lib Dems?

Tories and Lib Dems are likely to raise VAT in first Budget, warn economists.

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One of the most memorable posters of the election campaign was the Lib Dems' attack on the Tories' "VAT bombshell". It rightly identified George Osborne's claim that he had "no plans" to raise VAT as a non-denial denial and launched a spirited attack on this most regressive of taxes.

But could the poster now return to haunt Vince Cable et al? A BBC survey of 28 influential economists found that 24 believe the new government will be forced to raise VAT from 17.5 per cent to 20 per cent before the end of next year. Meanwhile, the Institute for Fiscal Studies (IFS) has predicted that George Osborne's emergency Budget will include a significant increase in the tax.

History teaches us that when in need of revenue, the Tories raise VAT first of all. It was Margaret Thatcher who almost doubled VAT from 8 to 15 per cent in 1979 in order to slash the top rate of income tax, and it was John Major who raised VAT by 2.5 per cent to its current level of 17.5 per cent.

Yet an increase in VAT would not only hit the poorest, who spend a disproportionate amount of their income on basic goods, hardest, but it would also suck vital demand out of the economy. A recent report for the Centre for Retail Research found that raising the VAT rate to 20 per cent would cost each household £425 a year on average. It added that the resultant drop in consumer spending could cost 47,000 jobs and lead to the closure of almost 10,000 stores.

The Tories' willingness to raise VAT is partly based on the mistaken belief that its temporary reduction to 15 per cent failed to stimulate the economy. In fact, three economists from the IFS found that the cut had raised real consumption by 1.2 per cent.

David Cameron may have echoed Winston Churchill in declaring that eating your words is an "excellent diet", but I doubt whether the Lib Dems will feel so comfortable about their own "VAT bombshell".

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George Eaton is political editor of the New Statesman.

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As crime moves online, the police need the investment in technology to follow

Technology offers solutions, not just threats.

It’s perhaps inevitable that as the world becomes more digital, so does crime. This week Alison Saunders, director of public prosecutions, recognised that online crime is as serious as face-to-face crime. “Hate is hate,” Saunders wrote referring to internet abuse, and the police should protect people from it wherever they are. This will add demand to under-pressure police forces. And it is only the tip of the iceberg. 

Forty-seven per cent of crime involves an online element. Police recorded 30,000 instances of online stalking and harassment last year. People are 20 times more likely to be a victim of fraud than robbery, costing businesses an estimated £144bn a year. On a conservative estimate, 2,500 UK citizens use the anonymous dark web browser, Tor, for illegal purposes such as drug dealing, revenge porn and child sexual exploitation.

The police need new technology to meet demand, a Reform report published today finds. Some progress has been made in recent years. West Midlands Police uses an online portal for people to report incidents. Durham uses evidence-gathering software to collect social media information on suspects, and then instantly compile a report that can be shared with courts. Police have benefited from smartphones to share information, and body-worn cameras, which have reduced complaints against police by 93 per cent.

Yet, Theresa May’s 2016 remarks that police use “technology that lags woefully behind what they use as consumers” still stand. Officers interviewed for Reform’s research implored: “Give us the tools to do our job”.

Online evidence portals should be upgraded to accept CCTV footage. Apps should be developed to allow officers to learn about new digital threats, following the US army’s library of knowledge-sharing apps. Augmented-reality glasses are being used in the Netherlands to help officers identify evidence at digital crime scenes. Officers would save a trip back to the station if they could collect fingerprints on smartphones and statements on body-worn cameras.

New technology requires investment, but forces are reducing the resources put into IT as reserves have dried up. Durham plans to cut spend by 60 per cent between 2015-16 and 2019-20. The government should help fund equipment which can meet demand and return future productivity savings. If the Home Office invested the same as the Department of Health, another department pushing “transformative” technology, it would invest an extra £450m a year. This funding should come from administrative savings delivered through accelerating the Government’s automation agenda, which the think tank Reform has previously calculated would save Whitehall £2.6bn a year.

As crime moves online, police must follow. Saunders is right to point to the importance of meeting it. But technology offers solutions, not just threats. Installing the next generation of equipment will give police the tools to do their jobs, addressing online hate and more. 

Alexander Hitchcock is a senior researcher at reform