Centre for Policy Studies E-Bulletin 2 March 2011
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CPS Headlines

David Martin's Corporation Tax report continues to gain coverage

Pensions industry must overhaul annuities says Michael Johnson

CPS Fair Share scheme wins new supporters

Cutting Corporation Tax will benefit us all 

The Great Euro Swindle
David Martin's report into the benefits of a Corporation Tax cut continues to gain coverage ahead of this month's budget. 

A review of tax policies by the Spectator provided OECD evidence that our call for an immediate Corporation Tax cut to 20% is the most likely to drive growth in the long-run.

Meanwhile, CPS Director Tim Knox blogged for the LSE on the benefits of such a tax cut: 

"Our high corporation tax is punishing successful, revenue generating companies. Tim Knox argues that the Coalition government should cut the tax immediately so businesses and the country at large can reap the benefits of restored growth, innovation and a simplified tax regime.

We have heard rather a lot recently about how we must not tolerate “high rewards for failure”. There runs a logical corollary to this particular line: we should be equally enthusiastic about not imposing high penalties on success.A cut in corporation tax will be beneficial to everyone

The Telegraph also examined the proposal: "Think-tank, the Centre for Policy Studies, has already urged the Government to cut corporation tax to 20pc in the 2012 Budget, because "profitable businesses are the only source of a viable economic recovery". The CPS would also like to see plans to reduce the rate to as little as 10pc over the longer term." Budget 2012: Business calls on George Osborne to make growth the top priority

And with the debate around tax cuts continuing to rumble ahead of the budget in three weeks’ time, here is a selection of some of the policies we have advocated:

The problem with annuities

The Great Euro Swindle
Leading pensions expert Michael Johnson highlights the public’s growing awareness that the annuity market is “opaque and unfair” and “toxic”, and deprives retirees of up to £1 billion of income each year in a new Briefing Note, A market-orientated solution to the problem with annuities, published on Wednesday 29 February by the CPS.

Johnson argues that the public’s growing disillusionment with annuities has been fuelled by low annuity rates, due to low interest rates, poor investment returns (over the last decade) and increasing longevity. In addition, the lack of annuity contract standardisation (which renders price comparison websites useless).

In response, he suggests that the industry should establish a new annuities clearing house; essentially, a marketplace in which all annuity providers participate. Providers could then bid, daily, for the annuity business, with unsold annuities being retendered the following day. This process should introduce pricing tension and the transparency that is currently lacking. Individuals would then have the information they require to choose the particular annuity which best suits their needs.  If the industry failed to do this, then the government should step in. 
The note has received much publicity in the industry including leading pensions news organisations CityWire, Money Marketing, Public Service and Pension Calculator. To read more, visit our media impact page
Fair share scheme wins new support

The Great Euro Swindle
Michael O'Connor, one of the authors of 'Give Us Our Fair Shares' (the CPS proposal to reprivatise the nationalised RBS and Lloyds banks by issuing shares to UK taxpayers), appeared on the Today programme on BBC Radio last Thursday to discuss the idea.  

Ryan Bourne has also written for Conservative Home on the strengths of the policy. This week Policy Exchange backed our calls.

Bourne writes, "The proposal put forward… is structured to ensure that the banks are placed into private hands in one go, by means of a free distribution to taxpayers, instantly removing the risk of a long term cultural shift in the state owned banks which (bonus discussions aside) could be perilous for the UK balance sheet. But it also allows for any future improvement in the valuation of the banks to pass directly into the hands of the taxpayer, and by extension, back into Treasury as a floor price set by the Government is paid on sale.Ryan Bourne: The CPS share scheme idea is still the least bad alternative, as taxpayers, for disposing of our stake in RBS

Also read

Coming soon...

On Monday, the CPS publishes "Taxing Mansions: The Taxation of High Value Residential Property" by Lucian Cook, Director of Research at Savills. Follow us on Twitter @CPSThinkTank to keep up to date. 
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Media Round Up

CPS Research Fellow Kathy Gyngell continues her series for the Daily Mail's Right Minds blog with 'Emasculated Labour straps itself to the mast of childcare – while male unemployment goes up and up'.

Director Tim Knox took part in a newsletter debate for The Stockholm Network, arguing No on the question "Has Britain lost influence in Europe?".

Web 2.0 Manager Lewis James Brown authored an article for the latest edition of Parliament's 'The House Magazine' on the findings of the Home Affairs Select Committee into the UK Border Agency controvery last summer. He also wrote for The Commentator on taking offence "Shut Up and Be Offended". 

CPS energy expert Tony Lodge took part in a University of Westminster debate on Energy Security. You can view the debate on YouTube

Robin Harris, former aide to Margaret Thatcher, wrote for American site The Cutting Edge, taking an authoritative look at the Coalition's journey and quoting our research on Monetary Policy Committee predictions "The U.K. Governing Coalition: The Challenges Ahead and Why America Has a Stake in Britain’s Success

From the Blog

"A Classic of Liberal Thought" Professor Jeremy Jennings

"The social mobility challenge for school reformers is to educate, not to equaliseKathy Gyngell

"Tax cuts: avoid short-term thinkingRyan Bourne

Have something to say about policy? Would you like to blog for the CPS? Get in touch with with your suggestions and submissions. 

The Keith Joseph Memorial Lecture 2012
This year's lecture in honour of CPS founder Lord Joseph will be given by Roger Bootle - Managing Director of Capital Economics - on "The Limits to the Market - Lessons from the Financial Crisis".

To find out more, visit our events page
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