Super Tuesday, Budget Wednesday and the dreaded taxman

I spend a lot of my time thinking. A fair amount of that time is dedicated to thinking about what other people, smarter than myself (which isn’t all that difficult), are thinking and often marvelling at their observations and conclusions. When my friend Ed Gottesman, the Apocalypticist, died a couple of weeks ago I wrote to a mutual friend that when in his presence I felt that I was walking amongst giants. 

Being naturally gregarious, I have had the privilege of meeting and spending time with many hugely bright and interesting people. In their company, one is consistently having what the Germans call “Aha Erlebnisse”, which translates literally as an “Aha experiences”.

I enjoyed such a moment over the weekend when I received Iain Martin’s weekend newsletter. In his piece, he referenced Gerry Baker’s article in The Times which raises the prospect of Nikki Haley losing the Republican nomination to Trump but then, with the backing of some of her billionaire hedge fund and private equity fans, running as an independent, centre right third party candidate. Given the heartrending prospect of a Trump/Biden runoff, that idea alone made me feel a lot better about life. Why, I wondered, had I not thought of it?

Today is “Super Tuesday” which is when 16 states hold their primaries and it is, therefore, the day when “Alea iacta est”, the die is cast. With the PR folks on both sides steadfastly maintaining that their man is both physically and mentally at the top of their respective game there is a priori no prospect of either of them stepping away. Both Biden and Trump, but especially the former, will have to be elected with the knowledge that they might not make it through the full four-year tenure and that therefore the Veep will be closer than ever to becoming President. 

In corporate governance, succession planning is essential and always carefully tracked. Appointing Kamala Harris had, if you permit, nothing to do with succession planning but with ticking diversity boxes and leaving her on the Democrat docket would for me, were I an American voter, be enough to make me put my cross next to Biden. I suddenly have no interest in Super Tuesday. All I care for is whether and when Haley declares. 

On Wednesday, Chancellor of the Exchequer Jeremy Hunt will rise in the House to present his Spring Budget. In the past, the content of the now famous dispatch box which the Chancellor traditionally shows to the media as he departs 11 Downing Street for the House of Commons was a tightly held secret. Leaks did not occur and in 1947 Hugh Dalton was forced to resign as Chancellor for having revealed part of the content of his budget to a journalist on the way to parliament. No more. Leaking the main content has become the norm even though there will always be a few gems held back for show purposes. We shall see.

I believe it to be generally agreed that the Tories are in for a properly good whipping at the next general elections and that Hunt could turn a dozen and a half fiscal somersaults to little electoral avail. I trust he will have had as few quiet words with Rachel Reeves MP, his prospective successor, in order to assure that the boat is not rocked to the point where it begins shipping water. 

 Some years ago HMRC ran an ad campaign under the title of “Tax need not be taxing”. Never a greater nonsense spoken in jest. I have for years paid all of my taxes on time and in full. When I set up and registered my first independent business I hired an accountant to whom I explained that I didn’t mind paying tax in full, that I had little interest in wild tax avoidance schemes and that if anything, I never wanted a knock on the door from HMRC declaring that they wanted to investigate me. The thought of a huge tax demand arriving on the doorstep many years after the money had been spent was not to my liking. So, I have always had a comfortable relationship with HMRC.

 Then, as my monthly pension payment for January – the self-invested one, not the state pension which amounts to not much more than petrol and beer money – there was a huge drop in the payout. HMRC had, so I was to discover, altered my tax code and of a sudden nearly half of my monthly drawdown had been withheld under PAYE. Like any sane individual, I got on the phone to HMRC. I sat and waited for over 50 minutes to be picked up. Then a nice young gentleman took my call. Unfortunately, after less than 5 minutes, the line collapsed. I presume the call had been automatically forwarded to his mobile – most of the civil service seems to now be working from home – so that he will not have had my number to call me back. An hour of my time up in smoke. Was I going to start again? Not on your nelly, or at least not yet.

 I suddenly began to wonder how much all this waiting around on the phone actually costs the economy. Anyone wanting to speak to HMRC has to do so during their working hours which more or less coincide with everybody else’s. So, if Joe Sixpack, employed by Anycorp, needs to speak to HMRC, he has to do so on Anycorp’s time and at Anycorp’s cost. Although whatever an employee at the tax office gets paid is added to the GDP figure, it does not as such produce any tangible value added which Joe Sixpack might have been delivering, had he not been hanging on the phone to HMRC listening to muzak.

 When Gordon Brown, the man who as Chancellor had once declared that he had abolished the boom and bust cycle and had saved the world, had succeeded Tony Blair as Prime Minister I wrote a piece on GDP, deficit, debt, and value added. It has been my “obsession” for many years. I pointed out that if he borrows a billion pounds and hires nurses to whom he pays that billion, the deficit to GDP ratio remains stable, even if the debt position deteriorates. It is, however, not until the end of the fiscal year that the government’s P&L is reset to zero, when the deficit converts and is formally added to the national debt pile. 

My contention was that “investing” a billion on nurses – part of the British obsession with the National Health Service, spending any amount on which is inherently saintly – might boost GDP but it does not create value added. I got a note from a reader insisting that I was wrong. Because nurses help to make people well so that they can go back to work, they are in fact contributing to the economy and creating value added. At the time I opted not to argue. Currently we are reported to have nearly 22 per cent of the working age population inactive, many of them on long term sick leave. Maybe the nurse argument needs be revisited.

So, what is the hidden cost of time spent waiting on the phone to HMRC? Fortuitously, HMRC publishes its performance figures, the latest of which are for December 2023, when it took 2,141,692 calls. Of these 1,754,624 were answered. I suppose the other 387,068 callers gave up. After vainly waiting for how long is not recorded. So, 81.9 per cent of calls are picked up. Of all the calls, 1,382,111 were trying to find a call handler of which 995,655 succeeded. The average wait time was 22 minutes and 46 seconds. That would mean that in December alone 22,651,151 unproductive minutes were spent by taxpayers waiting to talk to the tax office. That equates to 15,730 24 hour days or, assuming an eight-hour working day, 47,189 work days. That is alone what to the economy was in one month lost by people probably trying to sort out their tax affairs. The same report revealed that in the fiscal year to date, that’s since the beginning of April, the service had taken 26,889,007 calls. At the same waiting time, that amounts to an equivalent 424,808 workdays lost which is for only 8 months. That must nearly be as much as was lost to strikes. And those figures are just waiting to talk to HMRC. The mind boggles.

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