Left triumphs in Chancellors’ Debate
I imagine most of the analysis of Channel 4’s Chancellors’ Debate will be about which Vince politician Cable “won” it, analysis of any “gaffes”, and what it means for the Leaders’ Debates.
But what struck me about the debate tonight was how much Darling, Osborne and Cable agreed on. They all supported higher taxes on the rich, dismissed the idea that high taxes would lead to a “brain drain” of high earners, and saw an active role for government in helping people into employment and reducing economic inequality. They were competing on different ways of taxing bankers more, and different ideas for regulating the City of London.
Osborne angrily denied Cable’s claim that the top Tory priority was to cut taxes for millionaires, and said that the priority had to be to help “the many, not the few”. And unlike the media elite, who analyse changes in the budget in terms of how they affect the top 10%, they all presented their tax plans in terms of how they would affect people on middle incomes of around £20,000 per year.
And the biggest applause from the audience was for Cable’s attack on Thatcher’s policy of demutualising the building societies.
Five years ago, all of this would have been deemed unthinkably and electorally suicidally left-wing. And now, whether the politicians really believe it or not, it is the new political consensus. So the instant verdict on the debate – clear win for the left.
The mystery of Blond, revealed
I was surprised last night. I read a Phillip Blond article in Prospect, and it was less asinine than I expected.
Rather than being mouth achingly stupid, it was merely utterly unrealistic and impossible as a platform for governing, which puts it with oooh, 99.9999% of articles written for political magazines.
Mind you, Blond didn’t make one mistake – a firm proposal that a Tory government should mutalise BA. (“Cameron should push a radical economic policy — mutualising British Airways…” ran the email I got promoting the piece). With what? I thought, Jellybeans? BA’s Market Cap is what, three billion. I can think of a few things we should be doing with three billion quid other than buying companies and turning their shares over to their workforce.
Anyway, turns out Blond doesn’t quite say this. Instead he just says mutuality provides a model for energy companies and BA, and leaves the thought hanging there, with no suggestion about what should be done with such a lovely model.
This is the tenor of the whole piece. Blond proposes a whole series of rather vague things that the Conservatives are never going to do continue reading… »
The economics of Stephen Byers
Chris Dillow:
Here’s a horrible example of the middle England error from David Aaronovitch:
For eight years [Stephen Byers] remained on the backbenches, periodically suggesting an engagement in forming policy ideas for Labour’s future, but then announced his retirement at the next election. He was isolated and possibly rather bitter.
And almost certainly not well off.
Almost certainly not well off? Consider this. continue reading… »
Media out of touch with public on cuts
One should never take any opinion poll in isolation, but the latest results from each of the main polling firms suggest a tightening pre-election race. The headlines – such as over the BA strike – have been consistently bad for Labour, so there seems to be an increasing disconnect between what the national media think is going on, and which issues an uncertain public are thinking hardest about as they prepare to make up their minds.
The biggest disconnect between elite debate and public opinion may well be over the central question of “cuts” in public spending.
The evidence is growing that the public are yet to be convinced by arguments for very heavy cuts in public services. On balance, they are more concerned on the impact of cuts on public services than the consequences of not cutting for the budget deficit. And they appear more open to a balanced approach to spending cuts, tax increases, debt and the pace of deficit reduction than many commentators would like.
The response from much of the commentariat, especially on the right, is to charge the public with denial: ‘they just don’t get it. National bankruptcy stares us in the face’.
But it doesn’t. If one wanted to take a (perhaps excessively) sanguine view of the question, one could take the sole Budget speech of the leading ‘progressive Conservative’ of the last century, in which Harold Macmillan held fast to his centrist, pro-public services Keynesian outlook:
It was 1956, and the national debt was 150% of GDP. Current projections suggest it could rise to half of that over the next four years.
Macmillan quoted the historian Macauley over the debt fears of the 18th century.
At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand; yet still the debt kept on growing, and still bankruptcy and ruin were as remote as ever.
“In fact the debt was gradually reduced from these peaks without any heroic gestures”, as FT columnist Samuel Brittan has written.
It was primarily growth what did it.
It has been argued that the post-war welfare state was unaffordable – though less often how this insight could have been carried through in the face of overwhelming democratic support for it. It has been more credibly argued that, if Britain was to expand domestic public spending, it needed to move more quickly from a global power to a European one.
Of course, Macmillan remains second only to Heath in the Thatcherite hall of villainy. As a consequence, his status among Progressive Conservatives is far from clear, though David Cameron’s press team have characteristically briefed that he has a picture of SuperMac, not Maggie, in his office. Since Cameron seems to entirely reject Macmillan’s economic outlook, one might not seem to make so much difference to the choices he would make in government.
Today, the budget deficit is a problem that needs to be dealt with – though one can not simply short circuit the political and policy debates and choices about how to do that.
But, if only progressive Conservatives knew their own history, they would realise that claims of an existential crisis of national debt are bunk.
The case for a hung parliament
Guest post by Max Rashbrooke
If an enemy of your enemies is automatically your friend, then a hung parliament is undeniably a friend of Britain and of the left. Ken Clarke has become the latest conservative big beast to come out against a hung parliament, warning the Evening Standard that it would be “catastrophic”.
Many commentators have already refuted that claim, pointing out (as Larry Elliott did in the Guardian) that coalition governments have no problems tackling massive budget deficits, and that sharing power has hardly been a disaster in Scotland, Germany and numerous other countries. But no one has yet had the courage to set out why a hung parliament would actually be good for Britain. continue reading… »
Why aren’t our banks backing green projects?
Guest post by Adam Ramsay
There is much to write about yesterday’s budget, but I thought I would highlight just one paradox – one I genuinely don’t understand.
Alistair Darling announced a £1bn fund for low carbon projects. This green investment bank is designed to provide the stimulous which will encourage other lenders to also back renewable energy projects and the like. The Treasury reckon this will lead to a total of £2bn extra for low carbon infrastructure. In itself this is to be welcomed, but is nothing like the level of investment we need in climate protecting technologies if I am to have a comfortable retirement come 2050.
So far so normal.
Alistair Darling also announced that the bailed-out banks would be given new requirements to lend to small businesses. They did a similar thing back in November with their ‘asset protection scheme – again, no massive surprise.
OK, so, here’s the paradox. continue reading… »
The Cider Tax Rules
Just about the most immediately contentious announcement in yesterday’s budget was the decision to increase the rates of alcohol duty levied on cider by a whopping 10% over and above the inflation rate of 3% used as the basis for other rises in excise duties.
Within what seemed to be a matter of minutes of the announcement, the provisional wing of the Wurzel’s Appreciation Society had a Facebook group up and running while I understand that in Hereford, today, the SAS have been placed on stand-by in case it becomes necessary to protect the Bulmer’s factory from a rampaging mob of anonymous protesters, all wearing Justin Lee Collins masks. Rumours also suggest that a bomb threat may have been issued to the Burnham-on-Sea branch of Oddbins by a group calling itself the People’s Front of Somerset*, prompting the Home Office to raise the terrorist threat level in Minehead to ‘who gives a fuck, Butlins doesn’t open for another fortnight’.
(Or was that the Somerset People’s Front? Hell, I dunno, might have been the People’s Popular Front of Somerset for all I give a toss!)
Truly, the End of Days is upon us all, but do cider drinkers really have any cause for complaint?
Or is this just another lame excuse for me knocking up a graph… continue reading… »
The challenge for the centre left
This was a good budget. Perhaps unsusually, I thought the best bits were the bits that will probably get the least attention.
While the stamp duty holiday will benefit me personally and (given the age and salary profile of most journalists and editors), get a lot of headlines, it is essentially a measure designed to ensure housing values stay steady. Fair, enough – but not where the real action is.
Instead, I’m more excited by what Alistair Darling talked about, in his understated way, as the Growth Agenda.
Let me put it this way: the prime political challenge of the centre left for the next decade has to be the creation of around two million jobs. If we succeed in doing this, we will be able to pay down debt. If we succeed in doing this, we will be able to fund public services. If we succeed in doing this, we will be able to fund the research, development and technology that is needed for long term growth.
Doing that won’t be easy. People talk about export led growth, and that’s important. But everyone will want to export their way to growth. People talk about public works spending, but such projects can only do so much. continue reading… »
Cameron’s money problems
My brief reaction to the Budget is: I heard loads of micro-things from Darling, all of them adding up to “support for investment”. MoneySupply at the FT has 50 different items, from the questionable ‘forcing banks to lend’, to the substantial £2bn Green Investment Bank, from a tiny £35m for University Venture Capital to £5bn in cuts. All in all I think this was an attempt to do what Michael Burke called for: invest.
Yes, there was missing detail on spending cuts, and the usual optimism about efficiency gains. But as Ed Conway explains in more detail, it all adds up to quite sensible. The deficit improvements have nearly all been banked. Investment is more about pushing the private sector in that direction, with measures such as doubling the annual investment allowance, and bringing all the various schemes they have under an umbrella called “UK Finance for Growth”.
So, in many ways fussy and micro, but insofar as it risked public money, it tried to do the right things. Like David Smith, I suspect a lot of people in small businesses will like it.
You would not be surprised that I was annoyed by Cameron’s response continue reading… »
VAT on Royal Mail services?
I think I’d better nip this one in the bud before any conspiracy nuts latch on to it…
VAT on Royal Mail services in 2011?
Here’s a curious thing, buried in the back of the Budget document it says;
“VAT and postal A.96 – From 31 January 2011 VAT will be applied at the standard rate to certain postal services provided by the universal service provider (Royal Mail).”
Did the price of stamps and other stuff in the future just go up by 17.5% or more?
So much for his comment of “I have no further announcements on VAT”
NOTE: Currently Royal Mail services are zero-rated and exempt from VAT.
Google is your friend as a quick search turns up this report from last November…
Royal Mail is facing another serious threat to its efforts to compete with private-sector rivals, just weeks after trades unions agreed to call a halt to a debilitating series of strikes during negotiations with the company.
The postal operator has been told by HM Revenue & Customs (HMRC) that it will soon be forced to begin charging valued added tax (VAT) for many of its services, having previously been exempt. At a stroke, that would add 17.5 per cent to the prices it charges businesses, rendering it at a serious competitive disadvantage.
HMRC’s ruling follows a judgment in the European Court of Justice (ECJ) in a case brought by TNT Post, one of Royal Mail’s fiercest competitors in the UK. Under European Union law, publicly owned postal operators are exempt from having to charge VAT on their services and Royal Mail has always been able to enjoy this protection.
However, last month, TNT successfully challenged Royal Mail’s exemption, on the grounds that it should not apply on commercial contracts subject to a competitive tendering process. The ECJ ruling means that in most cases where Royal Mail pitches for work with business customers – the most crucial part of its market – it will now have to begin charging VAT, as all of its private-sector rivals already do.
So, no – the price of stamps won’t be going up and as technical change resulting from an legal ruling on the correct interpretation of existing law, its not something that would announced in the main Budget Speech.
Budget round up
Here’s a quick summary of what the liberal-left people in our live budget discussion did and did not like about today’s Budget:
Good things:
Labour’s record on keeping unemployment down
Nigel Stanley (TUC): Tax credits, a desire to keep skilled workforces together by employers, and sensible union negotiators have all helped build the right kind of flexibility – not easy hire and fire.
Sunder Katwala: Where tax credits flexed upwards, for 440,000, that average £38/week is worth quite a bit more for those families even than the £700/year threshold change for earners over £10k in the LibDem tax threshold plan.
Will Straw: Job Guarantee extended for young people – a really critical development for dealing with youth unemployment. Will the Tories support it? continue reading… »
Budget 2010 Live – #budget2010
Join us from 12 Noon for our live coverage of this year’s crucial pre-election Budget speech, where we’ll be linking up with our friends at Left Foot Forward (who’re providing the hosting), Labour List and the TUC’s ToUChstone blog.
For twitter uses, you can follow all the action via the #budget2010 hashtag, where you’ll find us and Channel 4.
See you below the fold at Midday – and bear with me if it takes a minute or two’s tinkering to get everything running smoothly.
‘Cash Gordon’ campaign designed by US anti-healthcare lobbyists
Political Scrapbook has pulled off a hell of scoop this morning…
On the day the US Congress passed legislation providing health coverage to 32 million Americans without insurance, Political Scrapbook can reveal the Conservatives’ Cash Gordon campaign was developed by an anti-healthcare lobbyist described as “Karl Rove 2.0?.
Writing on the Blue Blog yesterday, the affable Sam Coates claimed that Conservatives’ campaign site against Labour/Unite links was “built in just a few days”. What he doesn’t tell you is that the system has been purchased off-the-shelf from Republican strategists David All Group and was originally developed to galvanise opposition to Barack Obama’s healthcare reforms.
Cash Gordon is based on Operation Waiting Game, which leverages social media against reforms which, it is claimed, “will have the same devastating effects in the United States as it has in Canada and in nations across Europe: longer wait times and lower quality care”.
To make matters even worse for the Tories…
In an embarrassment for CCHQ, the party’s flagship campaign is currently hosted alongside those attempting to ”rescue America from government-run health care”, including NotSoSure.org and Hands Off. Another site rails against homosexuals in the armed forces, stating the military “should not be used as a tool to advance the goals of gay activist groups”.
For a party that’s now supposedly ‘gay friendly’, the Tories do seem to have rather a lot of queer-bashing ‘friends’.
Data abuse
Guest post by luis enrique
I wish people spent more time looking at data and less time pontificating, so in theory I ought to love the flourishing of attention paid to household income data
But I don’t, because I think it’s being misused. It’s possible to misuse data like this in lots of ways, but I want to focus on just one. The household survey data offers a static snapshot of household incomes, but the right way to think about poverty, and wealth, is to look at lifetime income profiles.
Here’s what I mean. continue reading… »
The illogical heart of the European Union
Today the European Commission release their (Reuters-leaked) report under the ‘excessive deficit procedure’ warning the UK that it needs to get its deficit down towards 3% of GDP quicker than the government is currently planning.
Stephanie Flanders has a good article setting out the way in which the Tories have been talking a good game about all of this, while actually being a lot less specific about how they’ll do it than Labour have.
Here, though, I’ll focus on why the European Commission is producing this report, and what this tells us about the European Union as a whole. continue reading… »
Guns versus butter
William Hague’s recent remarks in an FT interview, and in a speech to the Royal United Services Institute give us some idea of the purposes and shape of Conservative foreign policy, in the aftermath of a Tory election win. In short, it is exactly the same sort of interventionist twaddle spouted by New Labour, overlaid with the same veneer of humanitarian concern that Blair liked to bathe in.
All the recent talk about whether or not British troops have been given the equipment they need reflects a fundamental problem in British politics: all of the main parties accept Britain’s intervention in Afghanistan, and, to a lesser extent, Iraq. William Hague’s speech gives every indication that a Tory government will continue, and risk expanding, Britain’s military presence abroad.
Hague, unsurprisingly, also repeats the meme about Britain’s credit rating being a worry, citing the ‘recent’ Fitch warning about the loss of the triple-A rating. I say ‘recent’ because Fitch has been carping about this since last year, so a new press release about it is hardly serious news. What makes this interesting is that Hague is all about the deficit reduction…and yet continuously talks up “Britain’s role” abroad.
With what equipment, in this Tory-led deficit-free utopia? Spitballs and paper aeroplanes? continue reading… »
Tax dodger, moi?
You don’t have to be a non-dom to avoid paying income tax. Over the last 12 months, I’ve paid less than 10% tax and national insurance on my income. This isn’t because I’m a non-dom – I haven’t been abroad for 15 years – or because I have a fancy accountant. continue reading… »
Fabians fail the Fairness Test
I’ve been itching to get my paws on the latest Left Foot Forward report on the Lib Dem proposal to raise the income tax threshold to £10,000. “Think Again, Nick!” (pdf) purports to show that, far from being the most redistributive policy on offer in this general election, it is in fact deeply regressive and a hallmark of the Lib Dems’ rightward shift.
I’ve been reading the headlines on both Left Foot Forward and Next Left over the weekend, thinking, “They’re not going to take the personal allowance proposal in isolation are they? Surely, this analysis must purport to show how, contrary to all the evidence I’ve seen, equalising capital gains, equalising tax relief on pensions, closing various other loopholes and introducing a mansions tax will actually have a minimal impact on the incomes of the wealthiest on society? That’s got to be some pretty bloody impressive research.”
How wrong I was continue reading… »
Weekly grocery bill of £420?
The rising number of repossessions is the forgotten issue of the pre-election campaign.
In a different world, this incredibly insightful piece of research by the housing and homelessness charity Shelter would be front page news.
Referring to 1971 as a starting date, Shelter discovered that if food and other essential items had gone up as fast as the average property price, a box of washing powder would now cost £28-53, a jar of coffee over £20 and a pint of milk £2-43. continue reading… »
Contra Stimulus!
Some of the “big names” of the Labour/Left Blogosphere, (Including Will Straw, Sunder Katawala, Alex Smith and Ellie Gellard) joined MPs and journalists on the left of politics in signing a letter to the Guardian on Thursday calling for further fiscal stimulus.
I disagree with them – not because I think the economy is roaring along fine, but because I believe that a widening of the short run deficit at the moment would be recieved negatively by both the markets and the media, and end up being an expensive and politically disastrous mistake, with little economic benefit.
Yet, on reading the “stimulus” letter again, I’m not sure that the letter writers are talking about a “stimulus package”, as I understand it. continue reading… »
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» Why don’t MPs pay back tuition fees instead of increasing ours?
» Obama is right to slam BP – and why capitalists should too
» Why does Phillip Blond see civil cohesion as a security issue?
» So what if the Labour candidates went to Oxbridge?
» Last night’s Labour hustings: will it get interesting or turn to torture?
» It’s now down to Ken to win London for Labour
» The Labour people need
» Blog Nation: what would you like to see discussed?
» The Labour leadership’s token contender.. and it’s not Diane Abbott
» In defence of these fraternal nominations
» Is this the end for the socialist left?
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