The high-tax Left-wingers advising the Treasury

No wonder everyone keeps paying more to the state – just look at who is shaping the ideology

With the tax burden fast approaching a 70-year high, the Chancellor, Jeremy Hunt, is under growing pressure to ease the strain on taxpayers when he delivers his long-awaited budget on Wednesday.

Elected on a 2019 manifesto pledge not to raise tax or VAT, the Conservatives are fast losing their reputation as a low-tax party as calls for a redrawing of the tax thresholds and a rethinking of the 6 per cent corporate tax hike have so far gone unheeded.

Having lingered around the 33 per cent mark for decades, tax as a percentage of national income is now set to top 37 per cent by the late 2020s, its highest ever.

Organisations like the Institute for Fiscal Studies (IFS) claim “higher taxes are the new normal”, with Paul Johnson, its director, predicting that the tax take “will not return to 33 per cent in my lifetime” adding: “I can reasonably expect still to be around in the 2050s.” He also once declared: “Tax rises are perfectly feasible, we are not a highly taxed country.”

Yet take a look at the people currently advising the Treasury on tax and you could be forgiven for wondering whether the everincreasing tax burden is being driven by market forces or something rather more ideological.

Considering it derives 78.72 per cent of its income in the form of grants directly and indirectly from the UK and other national governments, it is perhaps unsurprising that the IFS is more comfortable with higher taxes than your average self-funding SME.

According to its accounts for the year ending Dec 31 2021, the IFS received £8,771,724 in donations, legacies and investment income including £3,777,987 (43.07 per cent) from the Economic & Social Research Council – a non-departmental public body funded by the UK government – and a further £3,127,416 (35.65 per cent) in other government funding. The highest paid person earns between £210,001 and £220,000.

Carl Emmerson, the IFS’s deputy director, sits on the advisory panel of the Office for Budget Responsibility (OBR) – a non-departmental public body funded by the Treasury to provide independent economic forecasts and independent analysis of the public finances.

Its characteristically gloomy forecasts are used to direct Tory fiscal policy – despite many of its staff having links to the Left-leaning Resolution Foundation, headed up by Ed Miliband’s former director of policy, Torsten Bell. The organisation responded to the former chancellor Kwasi Kwarteng’s mini-Budget with a paper headlined: “Chancellor announces largest tax cuts in 50 years, driving a £411 billion borrowing surge that will break the fiscal rules”.

Criticising the “unwise” chancellor for “not allow[ing] the Office for Budget Responsibility to update its forecasts”, it opined: “Almost half of the personal tax cuts confirmed today will go to richest 5 per cent of population.” The former prime minister, Liz Truss, subsequently blamed “the Blob” for helping to bring down her premiership, although the likes of Bell argued it was the unfunded nature of her spending plans and the markets’ adverse reaction.

Richard Hughes, the OBR’s chair, was a research associate at the Resolution Foundation, while Laura Gardiner, its deputy chief of staff, was research director there from 2014 to 2020. Cara Pacitti worked at the Resolution Foundation from 2019 to 2021 before joining the OBR as a senior fiscal analyst and then returning to the Resolution Foundation.

Another person linked to these organisations is the tax lawyer Dan Neidle, a former partner at Clifford Chance, who has produced many proposals to increase the tax burden, including increasing capital gains tax (CGT), widening the scope of inheritance tax and stamp duty, and hiking corporation and windfall taxes. Neidle is on Labour’s National Constitutional Committee and was election agent for the Labour MP Stella Creasy at the 2019 general election.

He is the after dinner speaker at the IFS residential conference at Worcester College, Oxford, on March 30. He will be joined at the two-day event by Emmerson, who is appearing as a panellist on a plenary session chaired by his fellow IFS deputy director, Helen Miller, entitled “Taxing employee remuneration”. She is also down as a keynote speaker on “Who are the top 1 per cent and how much tax do they pay?”. A technical adviser to the Tax Justice UK campaign group, Ms Miller has called for CGT relief for higher-rate taxpayers to be abolished.

The Wealth Commission is another pro-tax body with representatives at the IFS conference. Mr Neidle coauthored a report by the Wealth Commission calling for a wealth tax in Britain along with Arun Advani, Emma Chamberlain and Andy Summers who will all be with him at the IFS conference in two weeks’ time.

They will be joined by fellow contributor, the IFS’s Stuart Adam.

Other contributors at the Wealth Tax Commission include George Bangham, who worked at the Resolution Foundation for three years before becoming a senior adviser to the Treasury, and Jack Leslie, who has worked at the Resolution Foundation since 2019.

While all these economists would no doubt balk at any suggestion of groupthink, when it comes to the Treasury orthodoxy on tax… you only need to add up the connections and do the maths.

‘You could be forgiven for wondering whether the tax burden is driven by market forces or ideology’