Numbers game

October 20, 2006
Green taxes

The shadow chancellor, George Osborne, is much taken by the concept of environmental taxes. But the idea that revenue from green taxes can substitute for other forms of tax is mistaken. There is an intrinsic conflict between the goals of raising taxes and of making people's behaviour more eco-friendly. If people do change their behaviour in response to eco-taxes, revenues may be much less than anticipated.

The London congestion charge is a good example. Just before the charge was introduced, Transport for London estimated the net benefits over a ten-year period would be £1.3bn, an average of £130m a year. But they predicted that traffic would fall by only 15 per cent, and it actually fell by 30 per cent. With fewer people paying the charge, in the first year of operation, net revenue was only £68m.

This has risen as traffic levels have crept back up, but data for the latest year shows a net revenue of still only £100m. No wonder the charge has been raised to £8, despite Ken Livingstone's 2003 pledge to keep it at £5 for ten years. And a huge geographical extension into west London is taking place next year. Even more worryingly for the revenue base, just over one-third of the total appears to come from fines.

Tony Blair's record

So, Tony Blair will fail to beat Margaret Thatcher's time in office of 11 years 209 days, let alone the record of 20 years 314 days set by Robert Walpole. But the great leader can take comfort from the fact that his tenure overlapped with the longest individual innings ever to be played in first-class cricket. In the 1999-2000 season, Rajiv Nayyar batted for no less than 1,015 minutes for Himachal Pradesh. And our helmsman guided athletes to break world records in men's track events no fewer than 28 times, beating the 26 occasions on which world records were set under Thatcher. Alas, women have failed to connect with Blair's message, breaking track world records only 11 times compared to 57 under Mrs T.

More seriously, on several of the key issues on which a premiership is judged, Blair compares well to Thatcher. For example, violent crime was just over a fifth higher at the end of Thatcher's period of office (1990) than it was at the start (1979). For Blair it fell by over a third. The jobless total was 5.3 per cent in 1979, and Thatcher left it at 6.9 per cent. In 1997 it was 7.2 per cent and is now 5.4 per cent. Income inequality widened markedly in the 1980s. The Gini coefficient, the measure of these things, rose from 27 in 1979 to 35 in 1990, far higher than Britain was used to. In 1997 it stood at 34, and estimates suggest that in 2006 there will have been a slight fall to 32. Lower violent crime, lower unemployment, a more equal income distribution—not a bad legacy for a social democratic prime minister.