Don't fall for the Tories' spin over the 45p rate

Why the increase in tax revenues doesn't prove that the coalition was right to scrap the 50p rate.

The Treasury is busy spinning the latest income tax receipt figures as proof that it was right to abolish the 50p rate. Last month the new top rate of 45p raised £11.5bn, £1.3bn more than its predecessor. So, has Art Laffer (of the eponymous "curve") been vindicated? Do lower rates, as the right has long claimed, produce higher revenues? Not quite. The spike in tax receipts is most likely due to the income shifted from last year to this year in order to benefit from the lower rate. As the Institute for Fiscal Studies notes: "Receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012–13 to 2013–14 in anticipation of the fall in the top rate of income tax from 50 per cent to 45 per cent". 

This, of course, is a trick the rich can only play once (unless the rate is reduced again), just as, in the opposite direction, they shifted £16bn into the previous tax year when the rate was still 40p (the real reason that the 50p rate raised less than forecast, although a £1bn isn't to be sniffed at). There was never a "normal" year of the 50p rate. This, of course, was precisely Osborne's intention. Having falsely claimed that the (anomalous) first year of the 50p rate proved that it was ineffective, he will now use the (anomalous) first year of the 45p rate to argue that he was right to scrap it. How much would the 50p rate have raised? We'll never know; Osborne cancelled the experiment at birth. 

The 45p rate may well raise more in the months ahead but we'll have no means of detaching this from any concurrent increase in growth. But don't expect that to stop Osborne declaring victory in the 2014 Budget.

George Osborne arrives to attend a press conference at the conclusion of the IMF UK mission. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Goodbye, Sam Allardyce: a grim portrait of national service

In being brought down by a newspaper sting, the former England manager joins a hall of infamy. 

It took the best part of 17 years for Glenn Hoddle’s reputation to recover from losing the England job.

Between leaving his job as manager in February 1999 and re-surfacing as a television pundit on ITV during the 2014 World Cup, Hoddle was English football’s great pariah. Thanks to his belief in faith healer Eileen Drewery and a string of unconventional and unacceptable views on reincarnation, he found himself in exile following in a newspaper interview during qualification for England’s Euro 2000 campaign.

But just as Hoddle is now cautiously being welcomed back to the bosom of English football, current incumbent Sam Allardyce has felt the axe fall. After less than two months in charge of the national side and with only a single game under his belt, the former Bolton Wanderers manager was caught up in a sting operation by the Daily Telegraph — allegedly offering guidance on how to circumvent his employer’s rules on third-party player ownership.

The rewards for guiding an English team to major international success promise to be spectacular. As a result, the price for any failure — either moral or performance-related — is extreme.

Hoddle’s successor – the endearing Kevin Keegan – resigned tearfully in a toilet at Wembley after a tumultuous 18-month spell in charge. His replacement, the laconic Sven-Göran Eriksson, provided moments of on-field excitement paired with incredible incidents of personal indiscretion. His tangle with "fake sheikh" Mazher Mahmood in the run up to the 2006 World Cup – an incident with haunting parallels to Allardyce’s current predicament – led to a mutual separation that summer.

Steve McClaren was hapless, if also incredibly unfortunate, and was dispatched from the top job in little over a year. Fabio Capello – who inspired so much optimism throughout his first two years in charge – proved himself incapable of lifting the hex on English major tournament fortunes.

The Italian’s star was falling from the moment he put his name to the oddly timed Capello Index in 2010, although his sustained backing of then captain John Terry over a string of personal misdemeanours would prove to be the misjudgement that ultimately forced his exit. As Allardyce has found out, the FA has become increasingly hard on lapses in moral judgement.

English football is suffused with a strange mix of entitlement and crushing self-doubt. After a decade that has given us a Wimbledon champion, several Ashes triumphs, two Tour de France winners and eye-watering Olympic success, a breakthrough in this area has never felt further away.

In replacing Capello, Roy Hodgson — the man mocked by Allardyce during his hours supping pints with Telegraph reporters — had hoped to put a rubber stamp on a highly respectable coaching career with a spell managing his own country. But this summer’s farcical defeat to Iceland at Euro 2016 put his previous career in a much harsher light.    

Allardyce was a mix of the best and worst of each of his predecessors. He was as gaffe-prone as Steve McClaren, yet as committed to football science and innovation as Hodgson or Capello. He also carried the affability of Keegan and the bulldog spirit of Terry Venables — the last man to make great strides for England at a major tournament.  

And as a result, his fall is the most heartbreaking of the lot. The unfairly decried charlatan of modern football is the same man who built a deeply underrated dynasty at Bolton before keeping Blackburn, West Ham and Sunderland afloat in the most competitive league in Europe.

And it was this hard apprenticeship that convinced the FA to defy the trendy naysayers and appoint him.

“I think we make mistakes when we are down here and our spirit has to come back and learn,” Hoddle mused at the beginning of his ill-fated 1999 interview. As the FA and Allardyce consider their exit strategy from this latest sorry mess, it’s difficult to be sure what either party will have learned.

The FA, desperately short of options could theoretically turn again to a reborn Hoddle. Allardyce, on the other hand, faces his own long exile. 

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