Promoting effective competition in UK defence procurement: the case of UK Maritime Patrol

airbus coverToby Fenwick
June 2015

This paper updates CentreForum's July 2014 interim report, and our further work found greater evidence of the importance of effective and transparent competition in defence procurement.  Our case study is the Maritime Patrol Aircraft (MPA) capability deleted in the 2010 Defence Review, as MPA is likely to be reinstated under the current government.  As it involves recreating a capability largely from scratch, operational and value-for-money (VfM) considerations make it critical that an effective competition is conducted.

The report finds that the MoD should conduct a conventional competition, starting with the early publication of a detailed operational requirement and assessment criteria.  The report argues that to maximise VfM, the Government should consider maritime surveillance holistically, including a high-low capability mix.  Finally, the operational requirement and the assessment criteria need to be backed up by a rigorous, real-world threat assessment, rather than a gold-plated requirement which could favour a particular platform.

These balanced recommendations provide a blueprint for a new UK MPA force, as well as a formula for other MoD procurements. 

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Moving beyond Mansion Tax

Moving beyond Mansion TaxIndia Keable-Elliott and Tom Papworth with Tom Frostick and Nikki Stickland
May 2015

This report argues that the Council Tax band system in Britain should be abolished and replaced with a flat rate levy set by individual local authorities. Revenue from homes valued at £2 million or below would be retained by councils to pay for local services, while revenue from properties worth more than £2 million would be pooled and distributed nationally.

The flat rate levy would end the regressiveness of the current Council Tax regime which, among other things, sees the lowest value properties charged the same amount of tax as the highest value homes in each band. The change would also strengthen the link between taxpayers and local services and be a fairer way of rebalancing UK property taxation than an annual Mansion Tax on £2 million homes.

The latter featured prominently in the Labour and Liberal Democrat election manifestos but was rejected by the Conservatives in coalition government and is criticised by CentreForum for being "bad policy disguised as good politics". A comprehensive analysis of the Mansion Tax proposal is contained in the report.

The report further recommends the establishment of a Royal Commission to consider the appropriate balance of taxes on property and the issue of "unearned economic rents on land". It concludes that a reformed system of UK property taxation that is both effective and fair should have wide electoral appeal.

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Select media coverage: LocalGovMunicipal Journal, Public Finance

Unbiased capital: making tax work for business

Unbiased capitalIndia Keable-Elliott and Tom Papworth
April 2015

Equity investments are taxed four times – through Stamp Duty, Corporation Tax, Income Tax and Capital Gains Tax – while interest payments on debt are treated as a business expense and are thus tax deductible.

This 'debt bias' stifles innovative SMEs in the early stages of their development, preventing them creating jobs and growth. Early stage fims need investors who are willing to share the risks and rewards of providing capital, so equity is more suitable than debt. But the tax bias pushes the cost of equity capital up, making some investments unprofitable and giving an advantage to to old, established firms.

'Unbiased capital: making tax work for business' recommends creating an Allowance for Corporate Equity (ACE), which would permit an imputed rate of return on equity to be deducted against corporate profits. This would result in taxes falling solely on economic rents and not returns on investment. The report also urges the abolition of Stamp Duty Reserve Tax, which increases the bias towards debt, while driving investment away from the UK to countries abroad.

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Select media coverage: Public Finance

The social democratic hegemony

Rethinking the Blair DoctrineMark Littlewood
May 2015

"A myth seems to have arisen that we in the UK – and in the West more generally – live in a neo-liberal age. That there is, indeed, a neo-liberal hegemony. Were this to be true, it might be fair to associate systemic policy failures with this neo-liberal hegemony and look for a very different model of organising society. But it isn’t true. We live in a social democratic age. There is a social democratic hegemony."

The essay is the sixth in a series of papers addressing contemporary issues in public policy from a liberal perspective. A selection of these papers will be published collectively in a forthcoming special edition publication, 'The Challenges Facing Contemporary Liberalism: 2015-2025'. Here are the others released so far:

Maajid Nawaz: On Blasphemy
Tim Farron, Neil Stockley and Duncan Brack: Economic liberalism, climate change and green growth
Adam Corlett: Bold, liberal tax reforms
David Boyle: How to save public service choice for liberalism?
Nick Tyrone: Rethinking the Blair Doctrine

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Reforming retail energy markets

Reforming retail energy marketsTom Papworth and Patrick Day with Josh Thomas
April 2015

Commissioned by comparethemarket.com, this report finds that confusing tariffs and badly presented billing information are stopping people from getting the best deal on their energy. It warns that rates of switching have been in decline since 2012, despite efforts by the coalition government and watchdog Ofgem to make it easier for customers to change energy supplier.

As well as identifying general barriers to switching - such as lack of internet access - the report finds that the biggest problem facing energy consumers is the deliberately confusing way that suppliers present information.

Survey evidence suggests that bills are too complex and that tariff descriptions are buried in cryptic terminology, making like for like comparisons extremely difficult. This 'confusopoly' prevents effective competition in the energy market and leads to customers being ripped off.

Among the report's recommendations is a call for the regulator imposed 'Tariff Comparison Rate' to be scrapped - or better communicated - on the basis it can be misinterpreted as an accurate comparison tool for all consumers rather than the average customer.

The report also calls for a standardised 'Tariff Information Label', set out on a single page, so that people can make faster and more informed choices about their energy supplier.

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Select media coverage: BBC NewsCity AM, Evening Standard, MailOnlinePress Association