The truth about the truth about corporate welfare

Students of the relationship between business and society will, of late, have encountered a new discourse, that around “corporate welfare”.


That headline comes from here but you could as easily look at “The £93bn handshake: businesses pocket huge subsidies and tax breaks“; “Britain’s corporate welfare is out of control: increasing it makes no sense” and “Direct aid, subsidies, tax breaks – the hidden welfare budget we don’t debate.”

So what is “corporate welfare”?

The 43 page paper that put the idea on the map in the UK – ‘The British Corporate Welfare State: Public Provision for Private Businesses‘ – doesn’t define it. So I asked the Sheffield Political Economy Research Institute (SPERI) which published the paper. They directed me to this definition on the ‘Corporate Welfare Watch‘ site:

…efforts made by the state to directly or indirectly subsidize, support, or rescue corporations, or otherwise socialise the cost and risk of investment and production of private profits and capital accumulation

(my emphasis). So corporate welfare is where the state acts such that the risks attached to generating private profit are shared by us all.  But dig a little deeper: let’s try to understand the concept by its composition.

Corporate welfare, the report tells us, costs “between £93bn and £180bn a year”: £93bn represents the “most direct category of corporate welfare”; £180bn includes the education and public health care that delivers indirect benefits to business through an educated workforce not stricken with illness.

This is how the £180bn is made up.


I don’t want to set out a full analysis of those categories. So let me just make a few points about some of the bigger items.

The biggest, at £44bn, is “Corporate tax benefits” and, of these, the biggest is capital allowances (at £20bn pa). But capital allowances are the statutory equivalent of depreciation. They do no more than recognise that, in order to make profits (on which they pay tax), many businesses have to buy equipment (or “capital”) which then wears out and needs replacement. The report, quite wrongly, says that capital allowances “socialise the risks associated with private business investment.” It misses that capital allowances operate to reduce the tax paid on profits – the profits the business owner has to buy the capital assets to make – and if the business doesn’t make profits the cost of buying those assets stays with the business owner. Nor do they “subsidise the production of private profits” (to borrow from the definition). Rather they recognise that in earning those profits the business owner incurs costs.

Of “direct” corporate welfare, numbers two and three by size are “subsidies and grants” and “procurement”.

Subsidies and grants are support given by Government to business to influence levels of production, prices and suchlike. They include subsidies to bus and train operators to run services at particular levels of frequency and at particular price points. They include payments made under the Common Agricultural policy (the objectives of which can be seen at Article 39 here). They include regional aid to encourage business to invest in economically neglected regions. SPERI describes these payments as “unrequited” transfers but if, by this word, the implication is that Government is not delivering its perception of the public interest through them, it is wrong.

There is, of course, scope for arguing that its perception of the public interest is flawed. But that argument is not advanced by badging these payments as “corporate welfare” or “unrequited”. To make that argument requires engagement with the different policy agendas advanced – and the extent to which the money buys value enhancements to those agendas.

The procurement figure of £15bn is arrived at by applying to aggregate Government spending on private sector procurement – including social care, defence, construction and so on – a rate of “average profits of 6.5% per annum in the period leading up to 2012” for the big four procurement companies. But does paying a price for government procurement that enables the provider to make a profit involve socialising the risks of private profit? Delivering goods or services to the public sector requires an investment of risk capital which is only made in the expectation of a return. The fact that this capital is risked can be seen from the share price performance of two procurement companies explicitly mentioned in the report. Over five years Capita’s share price has almost doubled but Serco’s has fallen by more than 75%. If the risks of investment are being socialised, they’re not being socialised very well. Remove that return and capital doesn’t get invested and the goods and services aren’t delivered.

The report also asserts that “such transactions take place outside of the regular market, meaning that government often gets a worse deal.” Where poor value for money is obtained from procurement that point is well worth making. But the point is not well made through bland assertion – and confidence in the rigour of the treatment is diminished by the fact that the report ignores the legal requirement for government procurement contracts above a de minimis limit to be subject to open competition.

Moving from the direct (£93bn) to the indirect (£180bn) measure of corporate welfare brings in measures such as working and child tax credits (because they enable workers to work for corporates), education and training (because they deliver to corporates a workforce) and the NHS (because good heath care contributes to high productivity). But are these costs to the public purse ones which “socialise the cost and risk of investment”?

They are big numbers – respectively 13% of 25% of all public expenditure. But still they are said to be “conservative”.

They exclude other forms of support identified in the welfare continuum – including legal and regulatory instruments, the system of money, the right to hire and fire and the right to trade – because the business benefits are simply too difficult to separate out.

One could easily add law and order – which allows business to operate – and defence which protects it from confiscation by unfriendly powers. Indeed, it is tempting to ask whether there is any element of Government expenditure that does not deliver benefit to corporates; is the entire of state spending indirect corporate welfare?

Without a clear distinction between that which is, and that which is not, corporate welfare are we left with any more than the idea that corporates cannot function without the state? Indeed, is it “corporate” the paper means or “business”? And why characterise a relationship where corporates are used to achieve Government policy as “welfare”?

Don’t ponder that last question too long. By equating Government policy which benefits corporates to welfare payments made to individuals; by contending that “conservatively” 25% of all public expenditure delivers “unrequited” benefits to corporates; by suggesting that public policy purposes are advanced modestly if at all through that expenditure, the report seeks to steady and advance the narrative of corporate capture of the public sphere.

Does any of this really matter?

It does. As bank shareholders agitate at the consequences – in particular, its impact on banking profitability – of implementing the lessons learned from the credit crunch, and as Government’s inclination to resist diminishes, what will society at large be left with? Little more, perhaps, than higher public indebtedness with its sequelae of austerity and a heightened public interest in the nature of the relationship between business and government.

How that relationship should function poses questions for all governments, including on the centre-right.  But for many on the left it has become the defining political issue of our day.

No one could argue against proper scrutiny of individual policy decisions that deliver from public funds direct or indirect benefits to business. Nor would many contend that Government’s modes of engagement with business are perfectly delivered. But lump together tendentious assertions of value, couch the sum in the language of unrequited welfare, ascribe the result to corporate capture and you do no more than fuel a prejudice searching for a justification.

My particular concern is this: that prejudice is hugely damaging to a centre-left embarked on an existential struggle to restore public confidence in its ability to deliver an environment in which responsible capitalism can flourish. It drags the left to a fairytale land of Government in crippled obeisance to mendacious business.

Fairytale, and unelectable. Both Corbyn and Kendall – the former explicitly; the latter through the language of “£100 billion of reliefs” – have sought to mine this promising vein to pay, respectively, for greater spending and the austerian’s equivalent: closing the deficit. Unlock these riches and we need not engage with difficult decisions.

Goethe tells of how Faust arrives in a Kingdom plagued by debt and is provided by Mephistopheles with a solution:

there is gold in the earth, coined and uncoined,
Hoards hidden under walls, rocks precious-veined:
This treasure’s for the wise man to collect,
By Nature’s power and human intellect.

But like that other alluring promise, the £120bn Tax Gap, the corporate welfare gold can only plausibly be spent on policy objectives if the means of extracting it can plausibly be identified. What particular tax reliefs will be cut – and what will the savings be? What precisely is Government getting wrong in its procurement decisions?

Turn your eyes from these questions and you might blind yourself – but you won’t fool a sceptical electorate.

Follow me @jolyonmaugham.

End of the road for “parasite” Member States?

In a move that emphasises the new activism of the EU in matters of corporate tax avoidance, the EC Commission has directed EDF to repay to the French State an €889 million tax break granted in 1997, together with interest of a further €488 million.

The move marks the second direction of the Commission that EDF make repayment, the first having been annulled by the European in 2012.

Under Article 87 of the EC Treaty, any aid granted by a Member State which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the common market.

The practice of tax authorities in member states granting tax rulings to companies can perform the desirable function of giving to those companies the clarity to make investment decisions. However, there is a temptation for member states to seek to grab tax revenues from other states by offering ‘sweetheart deals’ to induce a company to base itself there. This behaviour distorts the market – companies cannot fairly compete with one another if they are subject to different tax treatments – and can constitute unlawful state aid.

The Commission has been investigating tax rulings granted by Ireland to Apple, by the Netherlands to Starbucks and by Luxembourg to Amazon.

It was exposure of abuses of this practice in Luxembourg that lead to the #LuxLeaks scandal leading Margaret Hodge, then Chair of the Public Accounts Committee, to dub Luxembourg a “parasite state”.

There are profound issues at stake here. The UK is explicitly pursuing a policy of tax competition through lowering its rate of corporation tax – at 20% already the lowest in the G20 – to 18% from 2020-21. By way of comparison, Germany has a 30% corporation tax rate, France 33.33%, Spain 28% and so on. And although the EU has focused to date on tax rulings granted to member states the language adopted by the Commission suggests there is a broader interest in leveling the playing field:


Such interventions would be politically explosive in the UK. Speaking to the European Tax Policy Forum, Financial Secretary to the Treasury, David Gauke said:


But the institutions of the EU, including the ECJ, have a long – and some would say proud – history of interventionism where such is necessary to overcome political impediments to delivering a single market. Indeed, there are said to be continuing state aid threats to our own (reformed) Patent Box tax regime.

It is not easy to identify any rational sense in which a distinction can be drawn between tax competition in the form of preferential tax rulings on the one hand and preferential tax regimes on the other. Both distort the market. And, writing in the Guardian earlier this year (in an article well worth reading), Margrethe Vestager (Competition Commissioner) and Pierre Moscovici (the Commissioner for Economic and Financial Affairs, Taxation and Customs) noted that:

In the worst-case scenario, unfair tax competition could create a race to the bottom, in which countries feel compelled to give handouts to multinationals in the form of tax breaks.

The losers are the taxpayers, who foot the bill, the small businesses that cannot compete, and national governments, which lose tax revenue needed to maintain roads, power grids and schools. The winners are the big businesses that play European countries off against each other.

Tax rulings granted by HMRC in the UK are under investigation by the EC Commission.

Jeremy Corbyn and Some Maths

It would be nice to think… I’ll start again, for those who would like an effective opposition it would be nice to think that the Times has it wrong and Corbyn can’t possibly be 17% ahead in the Labour Leadership polls.

But just in case it isn’t another witty exercise by YouGov in trolling the Labour Party I thought I’d take a short look at one of Corbyn’s few concrete pronouncements about tax. Because, as Jim Pickard of the Financial Times has observed, he isn’t exactly inviting scrutiny of his economic policy:

Speaking on Sunday Politics earlier this week – and you can watch it here from 18.13. He said this:

I would bring back the 50 pence rate. It does bring in more money. It would help to deal with some of the problems with spending.

When asked by Andrew Neil how much it would bring in he replied:

About £5bn.

A figure that came from:

Some research I’ve had done for me by some very clever people.

But on the data available today that figure is mathematically impossible.

Back in 2014 the IFS looked at what raising the rate from 45p to 50p would yield and arrived at – on the back of some HM Treasury research signed off by the Office for Budget Responsibility – a figure of £100m.*

This figure was arrived at by a two stage process. First, how much income is earned above £150,000; and what is 5% (i.e. the tax increase) of that income? Call that the theoretical yield. Second, calculate the effects of people changing their behaviour in consequence of the tax rate going up 5%. People will retire early, emigrate, engage in tax avoidance or evasion, work less hard and so on. Call these the behavioural effects. And in the case of a tax rise, they reduce the theoretical yield.

It’s important to note that calculating the behavioural effects is difficult – and (as each of the IFS, HM Treasury and the OBR recognise) there are reasonable grounds upon which one might disagree with an analysis of those effects.

But Corbyn’s advisors’ £5bn exceeds even the theoretical yield from raising the rate. On HMRC’s figures, it is mathematically impossible.

The theoretical yield is relatively straightforward to calculate.

HMRC produces statistics which show income tax liabilities by tax band. They can be seen here and the key table is 2.6 for 2015-16. What it shows is that the aggregate income tax paid on income earned above £150,000 per annum was £31.989bn. That’s the sum of the Additional Rate yield from Earnings, Savings and Dividends.

The Additional Rate taxes at 45% all income earned in a tax year over £150,000. One ninth of £31.989bn (£3.554bn) represents what the Additional Rate (at 45%) collects compared with the Higher Rate (40%) (5% being one ninth of 45%). Putting it another way, that £3.554bn is what the extra 5% yields. Corbyn has suggested raising the Additional Rate by another 5% (from 45% to 50%) which would, ignoring any behavioural effects, yield a further £3.554bn. That’s the theoretical yield – and it’s substantially below £5bn.

There’s plenty of room to argue about how profound the behavioural effects would be of increasing income tax rates from 45-50%. No one argues that there would be no behavioural effects. But even if you make the heroic assumption in Corbyn’s advisers’ favour that there are none, on HMRC’s figures he still doesn’t get to £5bn

*Just for the record I should say that I don’t remotely agree with The IFS that that figure represented Labour’s Manifesto pledge yield. But that’s for another day.

The Tax Lock: smashed on installation

Remember the Tax Lock? I wrote about it here and here. But let me remind you:

It derived from the Manifesto which provided:


You’ll remember the Budget Red Book published last week which recorded an increase of 7.5% in the rate of tax paid on dividend income above £5,000:


The Red Book was very careful not to describe it as an increase in income tax rates. Osborne, too, skirted around the issue in his budget speech:


At times like this, lawyers always reach for Lord Templeman in Street v Mountford, who famously observed:


Because, as the Income Tax Act 2007 makes clear, a tax on dividend income is a tax on income:


And an increase in the rate at which you pay tax on dividend income is an increase in income tax rates.

The Finance Bill – published earlier this afternoon – attempts to weasel out of this conundrum by redefining the tax lock:


As redefined it includes some, but not all, rates of tax on income.

But as Gavin Kelly noted in the Observer of the so-called National Living Wage:

Just because I call my cat Rover, it doesn’t make it a dog.

It’s hardly an insignificant increase either, as these yield figures from the Red Book make clear:


Farewell, then, the Manifesto Pledge and Tax Lock: smashed before installation.

(NB: Edited to add Red Book yield figures).

The marvellous, magical £8bn

Sandwiched between the rise in Insurance Premium Tax (which raises between 2015-16 and 2020-21 the sum of £8.16bn) and the increases in the rate of tax payable on dividends (which, over the same period, raises £6,785bn) is this measure:

Capturewhich over that period apparently delivers £7.83bn of new tax receipts.

What, you might well ask, is this? Further detail is provided here:


So this £7.83bn isn’t new money at all. It’s tomorrow’s corporation tax receipts, that we’re getting today instead. But because receipt of it is being accelerated into 2017-18 and 2018-19 we can all pretend that financial security has been delivered unto us:

This isn’t the first time the Tories have pulled this trick either. It was delivered to the tune of £10bn in the last Parliament too (as I explain here).



Improving business tax compliance

Back in January I called for businesses to take steps to improve their corporate governance around tax. Here’s what I wrote:

Boards need to take ownership of the tax issue. They should publish, with their annual reports, statements of tax policy. What strategy should the tax department pursue? What is the target rate of tax on corporate gains? Will the Group transact purely for tax advantages?

For meaningful buy in, statements should be developed internally. And, to remain relevant, there should be annual compliance audits. For laggards, a new Government will want to consider changes to the Companies Act.

Business has been on this journey before. The transparency and management of the supply chain is critical to such B2C businesses as Apple and Nike. Environmental concerns influence investment behaviour beyond pure ethical plays. Why should tax be any different?

It is, of course, a particularly significant cost. Perhaps it is this that has caused Boards to be slow to engage. But, although we have yet to experience a fiscal Deepwater Horizon, the EU State Aid probe should shake from complacency those businesses benefitting from sweetheart deals in Luxembourg, Ireland or the Netherlands.

Tax transparency, of course, brings risks and rewards. XCo, which chases post-tax gains, will be closely scrutinised by the revenue authorities. YCo, which adopts a principles based approach, may suffer a higher effective tax rate. But openness will draw the sting of the charge – beloved of campaigners and the media – of hypocrisy. And through the mechanic of statements of tax policy Boards will be able to set the strategic direction of this crucial, but ill-understood, function.

The alternative, I said, was “to leave a gap that politicians have no choice but to occupy.”

In an article published in the Tax Journal last week, on where Labour goes next on tax, I repeated the call:



Happily, Labour won’t need to take these steps because the Conservatives have, sensibly, picked up the baton:


This will be the third piece of Labour’s tax clothing the Chancellor has donned in a single budget. And this, of course, is cause for applause.


The political challenges of merging income tax and national insurance contributions

Of all the questions about why our tax system is structured like it is, the question whether to merge income tax and national insurance must surely be the most asked – but least answered. Why is that?

Proponents of a merge include Gavin Kelly (Chief Executive of the Resolution Foundation), the Taxpayers Alliance, the Institute of Fiscal Studies, the Centre for Policy Studies, PWC, the Centre Forum (a liberal think tank), Judith Freedman, UKIP. Why, then, has it not happened? They are, as all of the above have pointed out, both taxes on personal income.

The short answer is the enormous political challenges that a merger would involve.

  • It would expose a not terribly progressive tax system: once you include primary and secondary NICs, income tax currently starts (for the employed) at over 40% on income above £10,600. And it rises to more than 53% (ignoring for a second the anomaly consequential on withdrawal of the personal allowance for those earning between £100,000 and £120,000).
  • It would expose the bias in favour of unearned income – which of course doesn’t suffer NICs.
  • It would expose differing rates of tax for the employed and self-employed, sometimes differing by more than 11%.
  • It would reveal that raising the income tax personal allowance isn’t the best way to help the poorest.
  • And it would demonstrate that we pay really quite high rates of income tax.

How would the Government address the fall-out from each of these challenges? Let’s examine them in a little more detail:

  • A not terribly progressive tax system. Will Government reduce the basic rate of tax? It’s difficult to see it pushing up the higher rate or the additional rate. If it did, what would the cost of this reduction be? Could it be a spur for adopting a flat tax?~
  • A bias in favour of unearned income. How would living with this bias play with an electorate that has already tagged the Conservatives – unfairly or fairly – as being the party of the rich? Could the Government increase income tax on unearned income without sledge-hammering off the five year tax lock? If it could, how would this play with the very wealthy who already pay a huge proportion of our aggregate income tax take? Taken in combination with the heralded changes to the non-dom rules, would it amplify so-called behavioural effects causing our highest contributors to leave the country?
  • What about differing rates of tax for the employed and self-employed? There are those who say the difference is not justified – and that it simply leads to people gaming the system by entering into contracts of self-employment in circumstances that look more naturally like employment. Sometimes they are right to say so. There are others who say we need to reward risk taking. And there’s a very compelling school of thought that, but for the flexibility of the UK labour market, the country would not have enjoyed the huge decline in unemployment that we have seen. What would requiring all of those individuals to be treated and taxed as employees do for the flexibility of the labour market?
  • What about the effects of raising the personal allowance? The Government has promised to raise the personal allowance to £12,500 by the end of this Parliament. But even in that world, tax at a rate of 20% would still be paid on the employment income of those who earn £8,000 or more. This Government wasn’t the first to adopt the politically attractive route of cutting the headline rate of income tax rather than focusing on delivering measures that really help the poor. And it won’t be the last. But raising the NICs floor so it matches the income tax floor would be a hugely expensive commitment. Will Government tackle it? It’s not impossible to imagine it might – but certainly not in order to deliver the technical win of unifying the two taxes.
  • And, finally, the very high rates of income tax that we pay. People might be surprised to learn that employment income above £10,600 presently bears an effective tax rate of over 40%. One can see that shock as being enormously politically helpful to a party that believes in a smaller state. So there is an argument in favour of merging the two taxes. It would absolutely be a helpful stepping stone on that path. But, gosh, this Government has some rather uncomfortable shoes to don before it takes that first step.

And all of this ignores the biggest political challenge of them all. Those over the state pension age are not presently liable to pay national insurance contributions. Merging income tax and national insurance contributions would require the Chancellor either to render transparent this discrimination – or to take a substantial political hit. I have argued here that now is the moment for the Chancellor to do so. But it’s an undoubted political risk.

How not to fund an inheritance tax cut

In his Budget the Chancellor is expected to announce a number of changes to pension tax relief. One of these was foreshadowed in the Conservatives’ Manifesto:


Pause, for a moment, and wonder at how a narrative is formed. We dis- and then re- aggregate from a bundle of tax measures, matching together cut and rise in a way that shapes the story we wish to tell the electorate. But what, here, is that story?

One narrative, that spelled out in the Manifesto, is that high earners should fund the ability of families to pass their home down a generation.

But another, on which the Manifesto is silent, is that the rewards from working are diminished to increase the rewards from not working. Leave aside the numbers: 332,000 people are expected to earn over £150,000 this tax year (Table 2.1). And they will pay more tax to enlarge the after tax pot available to be shared between the beneficiaries of (fewer than) 43,800 estates. So the rewards from the many will accrue to the few. But what is the story you tell the electorate when you diminish the rewards from work in order to enhance those available to be shared between people whose sole claim to them lies in an accident of birth?

If, as has been widely trailed, George Osborne tomorrow goes beyond these signalled changes to pension tax relief I will write more. Michael Johnson of the Centre for Policy Studies has advanced some radical suggestions in this report, including scrapping up-front pension tax relief. And his suggestions are said to be under serious consideration. However, that CPS report all but ignores the central question of whether such a change would encourage people to save more for their retirement or kick the can further down the road? Consider it in that light and it makes for rather less compelling reading.

Where does Labour go now on Tax?

The Tax Journal asked me to write a piece suggesting what Labour’s tax offer might be going forward. It was published last week and is republished here with kind permission.

Shortly after the election I wrote a piece for the New Statesman picking the bones from Labour’s three key manifesto pledges on tax – the 50p rate, the mansion tax and the changes to the non-dom rules. The 50p rate alone, I argued, failed the basic litmus test for a headline tax measure:  fairness. Days later, Andy Burnham and Yvette Cooper, the leadership front-runners, both announced that they supported a 50p rate.

There are different ways to read that short narrative. Perhaps Labour doesn’t know where it is on tax; perhaps I don’t know where Labour is on tax. Or there may be truth to both. But, call it from the rooftops, what follows is my speculation.

Your task in Opposition is to craft through your tax offer a narrative of who you are and what you’re for – and not for. Shading in the detail will await that day when the electorate tells you it cares. If it does. And it’s not exactly like you have a choice – detailing and selling good tax policy is tough in government. In Opposition, denuded of resource and lacking the soft authority of the Treasury crest, it is, well, harder.

Think of the task before Labour in those terms and you’ll see that it’s early in the electoral cycle for it to be contemplating the tax offer it might put to the electorate in 2020. And anyway: a moment or two, please, for the existential throes traditional to a party restored to opposition.

But when it emerges? With a renewed sense of identity? What then? The answer, of course, depends on what it emerges with. But with that hefty proviso, here are three speculations.

Three speculations

The public focus on corporation tax avoidance will have mystified the Tax Journal’s erudite readership. CT receipts amount to a mere £42bn or 8.8% of total tax receipts, and the so-called tax gap for corporation tax is under £4bn. Of course, the tax gap figure doesn’t capture all that one might describe as avoidance but there’s still a compelling argument that we’ve been looking for money in all the wrong places. Even David Bradbury, the OECD’s head of tax policy and statistics, recently observed that an important driver for the BEPS project was (as he politely put it) a ’broader question about political economy’. So will Labour leave alone?

No. The staying power of the corporate tax avoidance story – and on both sides of the political divide (remember the diverted profits tax) – stems from its position in a bigger narrative around inequality and corporate capture. Without some shift in our understanding of the role business plays in society that narrative – for all its distortions, but its truths too – isn’t going away.

Coming changes in the international corporate tax landscape will speedily make a fool of anyone who descends to detailed speculation as to the shape of a manifesto five years hence. Labour’s offer in the corporate tax arena will also be contingent on how Labour chooses, over time, to respond to the allegation that it was anti-business. But there will remain scope for domestic measures – likely outside the tax code – which nudge business to become better fiscal citizens through embracing transparency and improving corporate governance.

Second, if Labour does harbour serious aspirations at government it will have fiscally to bulk up on inheritance tax reform. Twice in the last decade Labour has offered this glass jaw to the Conservatives and twice they have delivered the electoral uppercut of a rise in inheritance tax thresholds. It is reasonable to expect Labour will have raised its policy guard in advance of 2020. Expect or hope.

I’ve written elsewhere about what that reform might look like: cutting the rate to 20% and part funding the cost by removing some of the hugely expensive and economically counterproductive (there is no economically literate case for the continuation of APR which costs £420m per annum) exemptions. Labour might find surprising allies for such a course: the (Thatcherite) Centre for Policy Studies took up this very idea in a paper titled How to cut inheritance tax published earlier this month.

Third, such a reform might go hand in hand with the bold offer of a promise to look at wealth taxes. A narrative of cutting taxes on the income of successful strivers and replacing it with taxes on fallow wealth might well fit the party mood. Certainly such an approach would mediate more easily between the party’s focus on, and the actual data on, inequality. That data shows broadly static levels of income inequality but, as Piketty points out, continued growth in wealth inequality. Over time, of course, even if income inequality remains static wealth inequality grows.

Could that notion catch the imagination of the party? It could. The mansion tax was a first, faltering footstep towards a wealth tax. And it polled well – even in London where its burden fell.

When I worked with Labour to devise its non-dom proposals my instinct was for a quiet mechanic which maximised the tax take. How might you raise the tax paid by mobile individuals in such a way that they might remain, and others remain inclined to come? In anticipating political criticism, it sought cover in technical incidences of design.But the party had other ideas. Rather than leading with the changes as a revenue raiser, it sold them as a matter of basic fairness: why should wealthy foreigners be taxed more lightly than Middle England? And the party was right: sold as a matter of basic fairness the non-dom proposals were hugely popular across the electorate. Of course, the Conservatives are smart enough not to leave a huge open flank in 2020.

I tell this story only to illustrate that we sometimes underestimate the electorate’s demand for bold steps that enhance fairness. A wealth tax might fit that bill.