Capital Gains should they be taxed?

 

July 14 2024

Dear Colleague, 

The John McTernan interview on planetnormal@telegraph.uk was a very important one, because while he appeared to speak diligently, what he actually did was remind us of the damaging prelude to the last 14yrs which Blair & Brown presided over. None more so in speaking of the potential for Capital Gains Tax on principal residence, which he describes as taxing a 'windfall'. 

Policy changes behaviour & whilst the Thatcher years broadened house & share ownership, it was the New Labour years that saw unbridled asset inflation, house prices more than trebling in 13 years to 2010. 

Brown made many changes to the Monetary regime, including bank oversight, which led to policy too loose for too long. Mervyn King clashed often with Brown over budget deficits & asset prices, being rebuked for focussing attention on an overheating housing market. 

House prices are not included in the consumer price index, making housing a natural asset to use to protect your wealth from inflation. Many used it as a pension pot. 

This became all the more acute when policy makers latest great idea, quantitative easing, made borrowing rather than saving the obvious option. Buy-to-Let was born & people leveraged to move up. 

All of this was the result of policy, and to describe it as a windfall is, I believe, to cover up the mistakes that have been made & to punish people for making correct decisions. Decisions that to a large extent protected people from financial repression. For others, good investments, based on government-driven fundamentals. 

If CGT were indexed using real inflation numbers, calculated to include usable & essential assets such as residential housing, there would be minimal tax to pay. Instead, the Labour government is punishing people for the inflation it & subsequent governments largely created but choose to ignore. 

This raises another questions in an age of quantitative easing: Should some asset prices be included in the inflation index thus making central banks jobs easier & more honest? 

We would never go to the damaging zero bound again & monetary policy might actually become as boring as Mervyn King always hoped. 

As for the Starmer government, the warning is that, as with Blair & Brown, ill-considered tinkering rather than laissez-faire will be the order of the day. As Thomas Sowell reminds us, today's problems are yesterday's solutions. 

Best wishes, 

Bruce Goodwin

Conservative Leadership Election - Another fine mess?

 

Conservative Leadership Election – Another fine mess?

 

This week I received the following email from the Chairman of the 1922 Committee:

John, 

 

Following meetings of the 1922 Executive Committee and the Conservative Party Board, the rules on how the Conservative Party leadership contest will proceed have been agreed.

 

Rishi Sunak has formally stepped down as Leader of the Conservative and Unionist Party and will remain as Acting Leader until a successor is elected. The announcement of the new leader will take place on Saturday November 2nd.

Candidates will need a proposer, a seconder and 8 nominations to proceed to the ballot. 

 

This is a sensible step and should be kept for future Leadership Elections.   Thank goodness they did not specify 100 nominations like the last Leadership election!

 

Nominations will open on Wednesday 24th July at 7pm and will close on Monday 29th July at 2:30pm.

In September the Parliamentary Party will narrow the field down to four candidates. 

 

No detail is given as to how this will be done but if it is the same as previously this is the time when MPs will only have one question – “What is in it for me to support you as the candidate?”

This is the time when the process is manipulated by promises of jobs, gongs, appointments peerages, knighthoods, position on the front bench (not so valuable now), etc.

 To avoid this conflict  of interest voting should be done all at once on a preferential basis as follows:

 

Procedures for Balloting of the Parliamentary Party to determine the four candidates to be presented to the General Membership of the Conservative Party for election as Leader.

14      The Returning Officer will prepare a ballot paper listing the names of all the candidates and will issue a copy for the purpose of balloting to each member of the House of Commons in receipt of the Conservative Whip.

15      Any candidate may withdraw his or her name by advising the Returning Officer to that effect no less than 24 hours prior to the opening of the ballot unless by doing so only one nomination remains, in which case the withdrawal is not permitted.

16      If there are four candidates or less in the first ballot, then those candidates shall go forward to the  membership of the Conservative Party for election.

17      If more than four valid nominations are received the Returning Officer shall announce that a ballot will be held on the Tuesday immediately following the closing date for nominations.

18      If more than four candidates remain in the first ballot, each Member of Parliament will indicate their choice from the candidates listed, listing them in order of preference.

19      Where any Member is unavoidably absent from the House on the day of the ballot for any reason acceptable to the Returning Officer, the Returning Officer shall make appropriate arrangements for the appointment of a proxy.

20      The ballot will be secret and neither the names of those who have voted nor the names of those who have abstained from voting shall be disclosed by the Returning Officer.

21       The Returning Officer will announce the number of votes received by each candidate.

22      If there are more than four candidates in the first ballot, then the candidate receiving the fewest votes in the ballot shall withdraw and their second preference votes distributed to the other candidates. Further counts will be held using the same process until there are only four candidates left.

23      The four candidates who are left after the distribution of second preference votes shall go forward to the  Party members for election.

24      None of the candidates to go forward  to the membership may withdraw without the agreement of both the Chairman of the 1922 Committee and the Board of the Party. In the event of the death of any candidate the ballot of the Parliamentary Party will be reopened and re-run.

 

Those four will then make their case to Party Members at Conservative Party Conference in Birmingham (29 September to 2 October)

After Conference, the parliamentary party will then whittle it down to the final two candidates, who will then be subject to a vote by Conservative Party members.

 

More opportunity for wheeler dealing, manipulation, etc to take place by the MPs.   Why not put all four candidates to the Party members and let them vote on a preferential basis as follows:

Procedure for the election of the Leader of the Party by the Membership of the Conservative Party.

25     Only those Party Members and Scottish Party Members who are United Kingdom citizens over the age of 18 and were members of the Party from the time of the call for nominations by the Chairman of the 1922 Committee for the election of the Leader and have been members for at least three months immediately prior to the close of nominations for the election of the Leader shall be eligible to vote in a Leadership election.

 26    The Chairman of the 1922 Committee will be responsible for the conduct of all ballots specified in these rules and will settle all matters in relation thereto.

 27    The candidates selected by the Parliamentary Party will go forward to a secret online ballot of all members of the Conservative Party.   The Secretary of the Board shall provide for voting to take place by post in respect of any member for whom there is no recorded email address.

28     The Returning Officer shall agree with the Board the closing date for the ballot which shall be as soon as practicable after the date of the ballot of the of the Parliamentary Party.

29     The ballot shall be closed at Noon on the date selected and the votes counted thereafter.

30     Voting by the Party members will be done on a preferential basis with the voter listing their order of preference, the winner being the first Candidate to obtain more than 50% of the vote. If on counting the first preference votes no Candidate gets over 50% the Candidate with the lowest number of votes drops out and their votes are distributed to the other Candidates according to their second preferences. Should no Candidate get more than 50% of the vote after the redistribution, the process is repeated.

31     In the event of two candidates receiving an equal number of votes for the winning place the matter shall be resolved by re-balloting the membership of the Party with just those two candidates.

32     The Returning Officer shall agree with the Board who is responsible, under his direction, for receiving and counting the votes in the online ballot.

33     The Returning Officer will announce the results of the election as soon as practicable to a meeting of the Parliamentary Party and representative members of the Conservative Party to be called by the Board.

 

As Chairman of the 1922 Committee I will be acting as the returning officer in this leadership election.

 

Once the parliamentary process is completed, the Party Board will assume responsibility for the administration of the vote of the Conservative Party membership.

 

Only members who have been a Party member for 90 days or more immediately prior to the ballot closing, and have been an active member at the time of the nominations for candidates opening, will be eligible to vote. 

 

The Party Constitution states as follows:

“Only those Party members and Scottish Party members who were members of the Party from the time of the call for the nominations by the Chairman of the 1922 committee for the election of the Leader and have been members for at least three months immediately prior to the close of the ballot for the election of the Leader shall be entitled to vote.”

 

Why didn’t CCHQ use this wording as per the Constitution in making this announcement.   They have inserted “active” before member.   What does “active” mean.   No one knows! Are they trying to change the Constitution?   What a fine mess!

 

The ballot of qualified members will be conducted via secure online voting and it will close on Thursday 31st October at 5pm. 

The result will be announced on Saturday 2nd November.

 

Adopt the proposals suggested above and the dates could easily be brought forward BY 3 WEEKS!

One further point Foreign citizens are able to be members of the Conservative Party.   Their support is welcome but they owe no allegiance to the United Kingdom so should not be allowed to vote for the Leader of the Conservative Party. Only those Party Members and Scottish Party Members who are United Kingdom citizens over the age of 18 should be eligible to vote in the Leadership election.

 

Elect the Conservative Party Chairman

 

The following is an article written by Henry Hill on the conservativehome web site,11th July 2024:

During each of the leadership contests the Conservative Party has laid on with increasing frequency in recent years, there have been mutterings about cutting the membership out of the process.

One prominent champion of this idea has been William Hague, who first introduced the members’ vote in 1998. In  a 2022 column for the Times, he wrote that:

“Many activists will not like the idea of losing their vote, and a previous attempt at that failed to obtain the necessary supermajority under the party constitution. Ultimately, however, they subscribe to a party because they want it to succeed and be part of a healthy democracy. That does now require returning the choice of a party leader to the MPs.”

The use of the word ‘returning’ is interesting, because he makes no mention of unwinding any of the other changes made at that time. As John Strafford argued on this site shortly after Hague’s piece, the vote on the leadership was offered to balance a wider curtailing of the members’ role in the Party. He wrote:

“At that time the organisations campaigning for democracy in the Conservative Party, including the Campaign for Conservative Democracy, wanted a Party Chairman elected by all the members of the Party on the basis of One Member One Vote, and for the Party Board to have a majority of voluntary Party members.

“CCHQ refused to agree to this because they wanted central control of the Party, so they gave the members a sop by saying they could have a vote in the Leader’s election; the member’s mistake was to accept this sop.”

So far, those Tory MPs who’ve spoken up on this subject have stressed their support for the members’ vote – as well they might, with an eye on the leadership contest.

We thought we would test the proposition properly. Our post-election survey asked not just whether members support a democratic role in the Party, but what sort of role, and tested both the leadership vote and several of the other options Strafford and others have advocated.

Unsurprisingly, almost seven in ten of those surveyed supported retaining their final say on the leader. Almost as popular – and again unsurprisingly, given the fury in many quarters about how CCHQ has handled candidates and selections in recent contests – was restoring to associations the free hand they used to have in selecting their candidate.

A majority also support electing the Party Chairman. This is a major prize for advocates of the more old-school democratic structures of the Party.

But given the narrowness of the result, one must wonder whether it might have been the recent memory of Richard Holden’s chicken run that pushed this over the top; the idea of returning Conference to the voluntary party, with floor speeches and motions, was supported by less than a quarter of members.

Election of the Conservative Party Leader - what the rules should be!

  There has been some discussion about the rules for the election of the Conservative Party Leader.   I set out below what the rules should be if the Conservative Party was a democratic organisation.   These rules are only part of the radical reform that is required in the Conservative Party.  They are part of the Party's Main Constitution so can be changed by the members of the Party at a General Meeting with a 60% majority. Other changes to the rules include having an elected Party Chairman accountable to the membership at an Annual General Meeting.   Allowing the Constituency Associations to select their parliamentary candidates with minimum interference by CCHQ and having the right to deselect their MP as was the position prior to 1998. etc. etc.

Schedule 2

 

RULES FOR THE ELECTION OF THE LEADER

 

1             The Leader shall be elected by the Party Members and Scottish Party Members.

2         If the position of Leader of the Party becomes vacant the Chairman of the 1922 Committee shall arrange for an election process to begin as soon as practicable.   The Chairman of the 1922 Committee, acting on behalf of the Party, shall act as Returning Officer for all stages of the election.

Vote of Confidence.

3          If a number of Members of the House of Commons in receipt of the Conservative Whip, amounting to not less than 15% of the members of the Parliamentary Party advise the Chairman of the 1922 Committee in writing, either collectively or separately, that they wish there to be a vote of confidence in the Leader, the Chairman, without disclosing the names of any of the signatories, shall inform the Leader of the Party that a vote of confidence is to be held.

4          The Chairman of the 1922 Committee, after consultation with the Leader shall determine the actual date of such a vote, which  shall be held as soon as possible in the circumstances prevailing.

4.1        If the Leader fails to obtain a majority of the votes cast, he shall resign as Leader of the Party.   If the Leader receives a simple majority of the votes cast in the ballot, he shall remain as leader and no further vote of confidence shall be called for a period of at least three months from the date of the ballot.

5          A Leader resigning from the Leadership of the Party is eligible for re-nomination in the consequent Leadership election and have their name added to the list of Candidates and to be considered fully nominated.

6          Upon the initiation of an election for the Leader, it shall be the duty of the 1922 Committee to present to the Party, as soon as reasonably practicable, a choice of candidates for election as Leader.

7          In the event of only one valid nomination is received at the close of nominations prior to the first ballot being held by the Parliamentary Party for the election of the new Leader, the Returning Officer shall declare that Candidate elected subject to ratification by a ballot of the Party Members and Scottish Party Members to be held within one month of the close of nominations.   If the Candidate does not get over 50% of the votes cast in favour of the ratification the nomination process shall be started again.

Procedure for nominations for Leader of the Party

8             The Returning Officer shall call for nominations for the position of Leader of the Party from Members of the House of Commons in receipt of the Conservative Whip.

9             Candidates shall be proposed and seconded in writing by Members of the House of Commons in receipt of the Conservative whip.

10          Each candidate will indicate on the nomination paper that they are prepared to accept nomination, and that they will abide fully by the rules governing the election.

11        The Returning Officer and scrutineers designated by him/her will receive the nomination papers.

12        The names of the proposer and seconder of each candidate will be published by the Returning Officer.

13       Nominations will close at noon on a Thursday and the Returning Officer at the close of nomination, will  immediately publish a list of the valid nominations received.

Procedures for Balloting of the Parliamentary Party to determine the four candidates to be presented to the General Membership of the Conservative Party for election as Leader.

14          The Returning Officer will prepare a ballot paper listing the names of all the candidates and will issue a copy for the purpose of balloting to each member of the House of Commons in receipt of the Conservative Whip.

15          Any candidate may withdraw his or her name by advising the Returning Officer to that effect no less than 24 hours prior to the opening of the ballot unless by doing so only one nomination remains, in which case the withdrawal is not permitted.

16          If there are four candidates or less in the first ballot, then those candidates shall go forward to the  membership of the Conservative Party for election.

17          If more than four valid nominations are received the Returning Officer shall announce that a ballot will be held on the Tuesday immediately following the closing date for nominations.

18          If more than four candidates remain in the first ballot, each Member of Parliament will indicate their choice from the candidates listed, listing them in order of preference.

19          Where any Member is unavoidably absent from the House on the day of the ballot for any reason acceptable to the Returning Officer, the Returning Officer shall make appropriate arrangements for the appointment of a proxy.

20          The ballot will be secret and neither the names of those who have voted nor the names of those who have abstained from voting shall be disclosed by the Returning Officer.

21       The Returning Officer will announce the number of votes received by each candidate.

22          If there are more than four candidates in the first ballot, then the candidate receiving the fewest votes in the ballot shall withdraw and their second preference votes distributed to the other candidates. Further counts will be held using the same process until there are only four candidates left.

23          The four candidates who are left after the distribution of second preference votes shall go forward to the  Party members for election.   Should any of the four Candidates have less than 20% of the votes their name will not be included in the list to be put forward to Party members.

24          None of the candidates to go forward  to the membership may withdraw without the agreement of both the Chairman of the 1922 Committee and the Board of the Party. In the event of the death of any candidate the ballot of the Parliamentary Party will be reopened and re-run.

Procedure for the election of the Leader of the Party by the Membership of the Conservative Party.

25       Only those Party Members and Scottish Party Members who are United Kingdom citizens over the age of 18 and were members of the Party from the time of the call for nominations by the Chairman of the 1922 Committee for the election of the Leader and have been members for at least three months immediately prior to the close of nominations for the election of the Leader shall be eligible to vote in a Leadership election.

 26      The Chairman of the 1922 Committee will be responsible for the conduct of all ballots specified in these rules and will settle all matters in relation thereto.

 27         The candidates selected by the Parliamentary Party will go forward to a secret online ballot of all members of the Conservative Party.   The Secretary of the Board shall provide for voting to take place by post in respect of any member for whom there is no recorded email address.

28          The Returning Officer shall agree with the Board the closing date for the ballot which shall be as soon as practicable after the date of the ballot of the of the Parliamentary Party.

29          The ballot shall be closed at Noon on the date selected and the votes counted thereafter.

30          Voting by the Party members will be done on a preferential basis with the voter listing their order of preference, the winner being the first Candidate to obtain more than 50% of the vote. If on counting the first preference votes no Candidate gets over 50% the Candidate with the lowest number of votes drops out and their votes are distributed to the other Candidates according to their second preferences. Should no Candidate get more than 50% of the vote after the redistribution, the process is repeated.

31          In the event of two candidates receiving an equal number of votes for the winning place the matter shall be resolved by re-balloting the membership of the Party with just those two candidates.

32          The Returning Officer shall agree with the Board who is responsible, under his direction, for receiving and counting the votes in the online ballot.

33          The Returning Officer will announce the results of the election as soon as practicable to a meeting of the Parliamentary Party and representative members of the Conservative Party to be called by the Board.