On reflection

On reflection

When buy to let = economic growth

It was the most depressing figure of the week. The government has looked back over the past 15 years to determine what have been the biggest contributors to Britain's economic growth, which the Chancellor tirelessly tell us has outstripped all our competitors.

So what has helped our economy grow so wondrously? The answer, according to the Office of National Statistics (ONS), is not computing or internet-based businesses. No, the biggest driver to economic growth has been the rise of the landlord class.

It almost beggars belief, but the way our economic growth figures are calculated is based on "gross added value". The ONS found that the gross added value to the economy from things such as iron and steel, railway transport and clothes making had fallen by 50% or more since 1992. But the "value" created by the letting of dwellings rose to £45bn, a gain of 120%.

In modern Britain, it seems, putting up the rent is somehow regarded as economic growth. The US dominates in technology, Germany makes millions of cars, Japan still makes consumer electronics. Britain produces buy-to-let landlords. How our competitors must envy our economic success.

Inheritance tax should be raised not scrapped

The new propertied class spawned by the buy-to-let industry must have been rubbing their hands with glee when former cabinet minister Stephen Byers called for.....continued below

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the scrapping of inheritance tax (levied at a flat 40% rate on estates worth more than £285,000) which he described as a "penalty for hard work, thrift and enterprise". Inheritance tax is one of the few progressive, redistributive taxes still in existence. It needs to be strengthened rather than weakened.

The very rich get away with it, using devices such as the Potentially Exempt Transfer rules. It is these that should be scrapped, not the tax itself. The resulting revenue could be used to increase the £285,000 threshold so maybe we'd hear less of the nonsense written about "middle class" families falling into the inheritance tax trap.

The reality is that 94% of people who died last year did not pay a penny of inheritance tax on their estate.

In the longer term we need to think seriously about a wealth tax, such as those operated in France, Spain, Greece, and Sweden. Even in the USA, there are proposals for a 1% annual tax on total wealth above $100m.

But given how Britain is so terrified of offending the very well-off (viz the LibDems' backpeddling on their proposal of a 50% tax on incomes above £100,000), the chances of reform are sadly negligible.

The smooth operators who should be cut off

Who has not received a high-pressure sales call promising savings if you switch to a new mobile tariff? "Hi, I'm calling from Orange. You've been a loyal customer and we want to reward you with a 10% discount..."

Only later you find it wasn't Orange, but a third party seller. The deal was a "money back" contract, and the savings are only achievable if you later remember to apply for a refund. Try cancelling, and you find yourself passed from pillar to post.

Mobile regulator Ofcom is famously "light touch". It should be more heavy-handed about these sales tactics.

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