What the new #skiptax scandal tells us about the government
On 29th May, Lord Kennedy of Southwark (Lab) damaged the government to the core when he asked in the Lords:
My Lords, is the noble Lord [Strathclyde] aware that yesterday HMRC increased the tax on skips depositing in landfill sites from £2.50 per tonne to £64 per tonne, with no notice? That is an increase of nearly 2,500%. I thought that those sorts of figures were from wonga.com, not HMRC. Is he not aware of the great risk to business that causes and that it should therefore have been brought to Parliament and announced here?
Labour MPs have been quick to jump on this little heralded change, which the skip hire industry says may drive many firms out of business.
Within 48 hours, Siobhain McDonagh MP had organised a meeting at parliament with representatives of an emergency industry committee set up just 24 hours before that, and big hitter Rachel Reeves was there too. By the end of the meeting, Treasury officials were promising ‘urgent consideration’.
In the twittersphere, #skiptax may not yet be trending, but with MPs Bill Esterson, Graham Jones (with immediate constituency research corroborating industry concerns and others on the case, that may not be long.
No wonder Labour have been so quick to seize on this. It has all the ingredients of a massive hit on the government.
The #skiptax may, technically speaking, the removal of a tax exemption in the wake of an HMRC victory in court, but it’s still a massive, ‘overnight’ hike in what skip hire firms have to pay (actually 13 days between HMRC guidance and implementation).
#skiptax comes, of course directly in the wake of #pastytax. This time, though, it’s serious.
This isn’t a consumption tax, which may have medium to long-term effects on sales, but doesn’t close a business overnight; it’s an immediate hit on the viability of firms, and the industry’s concern about job losses, and even the capacity of firms to pick up skips already out on streets (with consequent flytipping concerns both now and in the future) is very real.
Moreover, as news spreads, it will come to be seen as an unfair tax. Skip hire firms don’t, after all, produce the ‘trommel fines’ waste they’ll now be taxed to dump; they just move it. Of course they’ll need to pass the tax on in increased hire charges, but that doesn’t help them now.
Overall then, #skiptax may be a bigger disaster for the government than #pastytax and #grannytax combined, whether or not the Treasury makes yet another u-turn (I suspect it will). [Update 12.28 MPs/Lord K on twitter now saying there has been a u-turn. It's almost certainly because of this post. TCF has saved thousands of jobs...... Update 13.57 Or maybe not. The Treasury now denying a u-turn].
It reeks not just of serial incompetence, but of a total ‘out of touchness’ with the realities of industry and working life, especially if Labour can tie it in people’s minds to the other ’overnight’ decision: to slash solar power feed-in tariffs, which also damaging that industry massively, and which was found to be illegal by the courts.
The government increasingly seems simply unable to work out what effect its Whitehall policy decisions on real people. This inability to connect to real life, now clearly associated with the Cameron/Osborne posh arrogance factor, is what’s hurting the Tories even more than the Hunt/Coulson corruption whiff. Labour knows this now (and should have known it two years ago when I was first setting out why and how this could be the Tories’ downfall).
Support for the Tories is already down to 22% amongst C2DEs. If Labour gets this right – and it looks like it will – this latest display of out-of-touch, arrogant incompetence could dump them in the mid-teens.
Forget Mondeo Man. Labour is after Skip Man.