Squeezing the rich is not an option

Let's hope Tony Blair continues to ignore your advice to raise the top rate of income tax to 50% (Leaders, August 3). This would lift Britain in the top-tax league, way above the US, of course, but also higher than France and Germany (which have all been cutting taxes), not to mention the eastern European countries that have adopted flat tax regimes and the vibrant and competitive economies of India and the Far East.

Concern for social justice should not blind us to the compelling evidence that higher-tax regimes suppress growth and cut revenues. The EU now has a lower GDP per capita than all but four states in the US (that was before enlargement). You rightly bemoan that the low-paid here are disproportionately taxed. The answer is to cut taxes. Not as much fun as squeezing the rich, but at least it works.
Nick Herbert
Director, Reform

The defence of PFI (Letters, July 28) is predictable. PFI is based on a dogma - that capital projects should be procured on a rental or hire-purchase basis - that is commonly attributed to the lack of adequate capital budgeting and control at the Treasury. As a private-sector finance director, I could not recommend such a general dogma.

Traditional methods of procurement ensure that requirements, including terms of payment, are sufficiently and independently specified at the outset so that bidders can compete on an equal basis. PFI has often called for bids from what are essentially finance companies, without giving them adequate specifications. The results include school corridors with no windows, hospital wards too small for beds to be moved in and out etc. If you want to build a house, would you go to a hire purchase company to look after the project?

There is a big job to be done in government to install commonly accepted revenue and capital control procedures so that we have proper competitive bidding and fewer cases, for instance, of schools and hospitals being unable to pay essential revenue bills. Let's tackle the real problems and enjoy the benefits and reduced risks that come from good commercial practice.
John Pickering
Vice-chairman, Labour finance and industry group