Liz Kendall has announced a review into Britain’s tax relief bill, potentially paving the way to massive reductions in the amount that the Treasury gives away in tax breaks.
The Labour leadership hopeful, who has described regaining the party’s reputation for economic credibility as “the gateway to government”, has appointed Margaret Hodge, the former chair of the Public Accounts Committee and a renowned tax avoidance campaigner, to look into the United Kingdom’s £100bn annual tax relief.
Although Kendall regards many of the tax breaks as vital to attracting investment to important sectors of the economy, including manufacturing and IT, she also believes that other reliefs are impossible to defend.
The Late Night Taxi Relief is a particularly egregious example: a tax break for people who work late hours and are given taxis home, paid for by their employers. Bankers and hedge fund traders regularly claim this tax break. But shift workers, night bus drivers, care workers and security guards are not entitled to claim the relief, as they are contracted to work unsocial hours. Between 80 to 90 per cent of the relief is claimed by city firms.
The Kendall campaign also hope to highlight the rise in tax relief under the Conservative-led government, in contrast to the cuts to tax credits and the ongoing public sector pay freeze. Over the last five years, tax reliefs rose from 5.5 per cent of GDP to six per cent of GDP, while the cost of working age welfare fell from 5.7 per cent of GDP to 5.2 per cent. Even a reduction to 2010 levels would generation £10 billion for the Treasury, while the combined £100bn cost is greater than that paid to the NHS.)