Paul Johnson

And the government essentially decided not to do anything about that for some considerable period of time.

And there is an issue there.

I have to say across the welfare system, it's not the case that we're spending huge amounts more.

Once you're on benefits, it's actually – and this is one of the things that is an issue about the number of hours that people work.

Benefits have actually got quite a good incentive for people to get into work, but it really punishes low-earning people who want to increase their benefits.

because you've still got a very high rate at which that money is withdrawn.

So what we've done deliberately over the last 30 years, actually, is move from a system which gave people very little incentive to go into work at all, but once you're in, it's worth working full-time, to one where you've got much better incentive to work part-time, but once you're in, the incentive to go to full-time is much less.

So again, there are always balances here.

Then you've got these kind of ludicrous things in the tax system where you have 50%, 60%, 70% marginal tax rates as your child benefit gets withdrawn as you go over 100,000 and all of these things.

So all of them together begin to make – you need to act on to make a difference.

And again, coming back to this issue about the politics and why it's hard to do, there is no single thing that's going to make a huge difference here.

You need to do a whole series of things together in order to change the shape of the market.

Well, I don't remember that, but it sounds plausible.

I think it's more that they're just avoiding, certainly in public, the issues that we face.

And, you know, we're seeing this a bit at the moment.

You mentioned this policy from reform, which I can see will be, you know, you can see the attractions, but it's probably not practical.

You've got the potential contenders for the Labour leadership talking about capital gains tax and wealth taxes and all those sorts of things.

Yes, but only if you give a significant allowance for certainly inflation and inflation plus a bit.

I mean, what you don't want to do is equalize the rate of capital gains tax with income tax and still tax purely inflationary gains.

And certainly not if you leave capital gains untaxed at death, because in that world, I mean, no one's going to sell anything.