Wednesday, December 09, 2009 

The real "we are all in this together".

At one point during the pre-budget report, you had to wonder whether Alistair Darling, tired of the deliberately tedious nature of what he was delivering, had inserted a concealed joke just to see if anyone would notice. To be vulgar for a second, you suspect that there are plenty of people out there, politicians included, whom have paid money for old boilers in their time, although £400 seems a bit steep.

It was the one moment of levity in what was otherwise a tour de force in the completely expected, the responses also seemingly written weeks in advance and not updated to take account of any late changes. George Osborne, who courtesy of Steve Bell I now can't look at without seeing buttocks on his nose, did the now standard New Tory act of claiming this meant Labour had completely abandoned the aspirational, while the Daily Mail has somehow construed a pre-budget which hits more or less everyone in some way or another as class war.

If the Mail's right, then this is class war on all of the classes rather just the middle or the upper. While the additional increase in national insurance will affect anyone earning above £20,000 (the average wage before the recession being somewhere around the £24,000 mark) the freeze in public sector pay across the board, which will in effect be a cut in real terms, spreads the pain across the board. George Osborne ought to be pleased: Darling, with the tax on bank bonuses and freeze on the inheritance tax threshold is ensuring that we truly "are all in this together", something you doubt his own plans will accurately reflect.

Like when some papers and the Tories cried that the Queen's speech was nothing but pure politics, as if this was something new and terrible, Darling's effort today could be condemned in similar terms. Depending on your view, it could be cowardly, as it puts off almost all the big decisions until after the election; political, in that as it's more than likely that the Tories will then be the ones to pick up the pieces; and also the right thing to do, as cutting now in the way that the Tories propose, when the recession is not over and everyone is just assuming that growth will return in this fourth quarter, will just damage the recovery even further. It can also be all three of these things, which is the view I take.

In short, what was billed as being significant was nothing of the sort, or wasn't presented by almost anyone in those terms. The real significance was in the back of the documents which accompanied the speech as always (PDF), showing that the deep cuts are coming in the years to come, just unannounced, although everyone already assumes the worst. The battle is now over who can be the most optimistic in the public whilst being a pessimist behind closed doors, and the government has to hope that the gap in the polls can still be made up by portraying the Tories as the ruthless cutters of old. One suspects however that even with the Tory lead being reduced of late, the victory is still the Tories' to lose rather win.

Labels: , , , , , ,

Share |

12/09/2009 10:29:00 PM | | | links to this post

Wednesday, November 26, 2008 

Advertising bombshells.


The problem with combining political strategy with advertising campaigns is that when the facts change you can be quickly left looking daft.

This is exactly the trap that the Conservatives have fallen into. Last week, when all we had was rumours and guesswork over what was going to be in the pre-budget report, but where the inkling was that the government was going to produce a stimulus package worth somewhere in the region of between £15bn and £30bn, the Tories thought they were being incredibly clever by bringing back their 1992 tax bombshell campaign. Cheap, effective and simple, and they tried something similar back in 2003. It's partly down to this campaign that Alistair Darling had to set out in such detail how he was going to pay for it, which he did to a fairly decent extent. As it turned out, this wasn't really a bombshell budget in tax terms; yes, the borrowing figures are frightening, but this was negated by the taxing of the rich, which was the distraction measure and sop to the left rather than the main revenue raiser. The real surprise was that national insurance would go up by 0.5%, the part that could be accurately described at least as a potentially painful tax rise.

Almost all of the Conservative fire was concentrated on the national debt. The drop in VAT was the distraction, until an apparently wrongly issued, uncorrected paper on the changes to the tax system still read that VAT was to rise by 1% after 2011, to 18.5%. It was a pretty obvious mistake, as the government quickly made clear, also admitting that they had discussed raising VAT but had decided in the event to raise national insurance instead. You can't however blame the Conservatives for seizing on it, and trying to make hay with the idea that this was a secret plan to raise VAT, with the government not being straight about it. Fair enough.

What you cannot then realistically say is that a 1% rise in VAT is going to be a bombshell, especially when you have been sniffy about a 2.5% drop in the first place. True enough, VAT is a regressive tax, which hits the low paid who don't save but instead spend far harder than it does anyone else. Raising it by 1% would hurt them; Daniel Davies estimates that the cut gives someone working 40 hours a week on the minimum wage £2 a week back, so it isn't outlandish to suggest that a 1% raise would cost them between £40 and £60, possibly more, a year. Not a major sum, but for someone struggling it can more than make a difference. It is not though by any stretch of the imagination a tax rise which is going to put someone into instant penury, especially the mythologised "hard-working families" which both parties so bend over to talk about and discuss. It's equally risible that the country is going bankrupt, as Cameron also claimed at prime minister's questions.

The problem for the Conservatives is getting the balance right between such potentially damaging statements as the country is going bankrupt, which scares people, and attacking the government's lackadaisical and potentially even more damaging plans. Likewise, their own proposals are both rightly and wrongly being lost in the mire, more rightly judging by Cameron's piss-poor examples of what they would do differently, their promised freezing of council tax being revenue neutral and the other two suggestions ones that the government is already doing. Technically, all they have to do is sit and wait and see if the cut in VAT has an effect: if it doesn't, they can claim that their stance was the right one all along. If not, they might be in further trouble. Even then, there's no accounting for whether the public then decide that the softening of a recession created more than in part by Brown means that they'll vote Labour. The Conservatives might still be floundering somewhat, but the end result is still far from certain.

Labels: , , , , , , , , ,

Share |

11/26/2008 11:54:00 PM | | | links to this post

Monday, November 24, 2008 

The pre-budget report.

The media can often be accused of overstating otherwise run of the mill events, both for effect and to try to put conflict into politics which has for some time not been there, but today at least it has both been right to describe the pre-budget report as a gamble and to point to it as at least the end of a 14-year long, if not 30-year long economic orthodoxy.

Let's not get too carried away with ourselves though. This isn't, as Pollyanna herself is promoting it, the end of New Labour and the beginning of social democracy, only a year after she declared that social democracy was dead, but rather a readjustment forced on New Labour by events of their own making. Keynes may have been taken out of the box, dusted down and decorated like a soon to be hauled out of the loft artificial Christmas tree, with Friedman, monetarism and supply-side economics placed on the naughty step, but this was still a cautious, as it had to be, reappraisal of what New Labour's economic policy would become when faced with recession. If anything it was far too cautious when it came to deciding that some of the stimulus package would be paid for by increasing the top rate of tax on those earning over £150,000 a year to 45% - raising a little over £2bn, a pitiful amount. They could have surely got away with making it 50p in the £1, and dropping it to those earning over £125,000, even £100,000, as the old Liberal Democrat policy was, raising a much more substantial amount.

Even if it it is timid, it's still the breaking of the Labour promise at the last three general elections not to increase income tax; the last major shift was 20 years ago when the rate was dropped to 40% by Nigel Lawson, causing uproar on the Labour benches. It is long overdue, an overt return to redistribution, previously carried out almost by stealth on tax credits, where the scheme is so complex that the costs of running it and frustration of those on it who often end up having to pay back that which they weren't supposed to take almost do more harm than good. It also leaves the Tories in a quandary: do they attack it as a tax on wealth creation, on hard work, or agree with the progressive thinking behind it in their new, caring, tough on bonus culture way? At the moment they seem to be uncertain.

As welcome as the shift to taxing the rich more was, the rest of the PBR was almost teeth-grindingly awful, not in the policy sense, but in the doom that pervaded it and which we have to look forward to. Darling, for his part, who I'm willing to suggest is a far more accomplished politician than he has ever been given credit for, did his best to offset this both in his familiar dull delivery, without bombast, and only a few party political jibes at the party opposite, the old style bank manager within him shining through, and in the very optimistic estimates for how quickly we will pull ourselves out of the mire. The Treasury forecast is that we will only be in negative growth for four quarters, the second of which we are currently in. Next year will see a fall in output of between 0.75% and 1.25%, which again seems highly optimistic, both by other forecasts and by the fact that the economy shrank last quarter alone by 0.5%. Equally hopeful is that savings can be found, yet again, within Whitehall which will help to lower overall borrowing, which Darling expects to reach 57% of GDP by 2013-14 - or about £500bn, which really will put us amongst the most indebted of the G7, if not the world.

All of which makes it all the more dark-eyebrow raising to see that £12.7bn of the £20bn stimulus package is to come by cutting VAT by 2.5%. Making it even less attractive is that the duty on tobacco, alcohol and petrol will rise to ensure that there is no overall difference, thus leaving the only things on which the cut will make any real difference expensive electronic goods, cars and furniture. You get the impression that they must somehow know something which we don't, as surely a far better way to have inspired spending would have been the American way of cutting income tax, directly sending cheques back out with the rebate instantly cashable. Unity argues that it will result ultimately in lower consumer prices even on zero-rated goods, which is what the government must also be hoping for. It will become quickly apparent if it has worked or not: if this Christmas is as bad as the retailers have been suggesting it might be, and their sales in January also fail to spark interest, the indication will be that it will have already failed.

The unsurprisingly unleaked other major change was that alongside the tax rises for the rich, national insurance will rise by 0.5% from 2011, which will directly hit the middle classes, and even the upper-working class, affecting those earning over £20,000 a year. With the average wage being somewhere around £24,000 a year, although if we face a far harsher recession than that forecast by the Treasury with deflation a major issue that could in fact drop, it's bound to further embitter those already fed up with Labour and who haven't benefited from the 10 years of relatively benign conditions. At least however they know what's coming: the government's spelling out of exactly what will have to rise to pay for the stimulus, as they had to do and also did to pre-empt the Tory shouts of a coming "tax bombshell" was for the most part well-handled.

George Osborne, for his part, was mostly dreadful in response. The only real hit he landed was that the gap between the stimulus ending and the tax rises kicking in signified that what they were really concerned with was the political cycle rather than the economic one, and it does indeed now look as though Brown will wait until the last moment to call the election, although any party in the same position would have almost certainly done the same thing. This was again though the blundering Conservative party which we have become accustomed to on economics over the past couple of years, decrying Labour while offering no substantive alternative, or indication of what they would do instead. Osborne gave no specifics whatsoever, surely a mistake, even if his anger may have struck a chord.

For all the talk of shifting back towards the comfortable ground on which both parties once stood, at best what they have done is take a few steps to the left in Labour's case and a few steps to the right in the Tories'. Unfamiliar to begin with, but easy to adapt back into. A far bigger change is that all three parties will go into the next election having to promise not tax cuts, or as it has been over the past three elections, the investment versus the status quo dichotomy, but instead tax rises. We will back to the biggest question being who you trust the most to run the economy. After 10 years of New Labour economics, if there is such a thing, the answer ought to be obvious. Yet whilst the Tories both fail to look convincing or offer anything even approaching an all encompassing policy, you'd still have to more than consider the odds on the devil we know. How deep the recession will turn out may will be the ultimate decider. Politics may not have just become interesting again, as per the cliché, but it certainly has, after years of economic consensus, suddenly got far more intriguing.

Labels: , , , , , , , ,

Share |

11/24/2008 09:32:00 PM | | | links to this post

Friday, October 12, 2007 

Social democracy died long ago, Polly.

Unlike some others in the "blogosphere" who love to tear apart Polly Toynbee's twice-weekly prognostications in the Grauniad (she's columnist of the year, doncha know?), I usually just read her articles, filled as they are with a bizarre Labour love fetish, agree or disagree, and move on. Sure, she talks a lot of bull on occasion, but then so do most newspaper comment piece providers.

Today though she's having one of her twice yearly doubts about just how marvellous Tony/Gordon are. These inevitably follow the latest budget/pre-budget report, which again failed to allocate significant amounts of money to tax credits and abolishing child poverty. It happens invariably every year, but still Polly brushes it off and goes back to pleasuring herself with the clunking fist still foremost in her mind, unable to see the reality that should be staring her in the face: Labour's finished, and all it cares for now is staying in power and standing very, very slightly to the left of the Conservatives.

The really perplexing thing about all this is that Polly once admitted as much in a rare, truly honest piece back in January last year, when she wrote that the Social Democratic Party she was a part of back in the "bad old days" of Militant and Foot was to the left of where New Labour is now. She opined:

But there is a need for a party more radical than Labour, a party that says no to war and no to wasting billions on new nuclear weapons or nuclear reactors, that dares to talk of the greed of the rich, of boardroom kleptocracy and the duty of top earners to shoulder a fairer share.

She wrote that then, and must have believed it. She must have seen all the warning signs since Brown has taken over: after the competent start and the refusal to play politics with the almost immediate "terror" attacks, it's been all downhill. Where Blair once delighted in playing the hard man and trying his best to appeal to the Sun, Brown's every movement was calculated to please Paul Dacre and the Mail. First the u-turn on the reclassification of cannabis, the change on the supercasinos which so exemplified the Blair era of ultra-consumerism, mass-materialism and living for today, now replaced by the Scot son of the manse's almost puritanical stance which Dacre espouses almost as much as a "double-cunting" to his hacks. Like with Blair, such a ploy was doomed to failure from the beginning. No one, even on the soft centre/centre-right like Blair and Brown can keep such right-wingers on their side for long; after a while they start hankering for the real thing, as Toynbee in today's article herself notes, but even going by the short attention span that afflicts the tabloid press the change in tone after Monday's daylight robbery was brutal. The result was Tuesday's Daily Mail front page: vicious, wounding, and more than accurate.

Why only now then does Toynbee finally realise that it was this week that Labour's leaders left social democracy for death? For years she's put up variously with Labour's ruthless social ill-liberalism (notoriously writing one abysmal article on how the middle class is more concerned about ID cards and civil liberties than child poverty), the disastrous foreign policy post 9/11, its incestuous relationship with the rich and powerful and its complete contempt both for the truth and the public, at the last election urging voters to wear nose pegs and disregard Iraq to vote for the party, yet it takes a predictable and nowhere near as egregious as some of Blair's manoeuvres (rules of the game are changing, dropping of SFO's investigation into BAe, refusal to call for an immediate ceasefire during last year's Lebanon conflict, years of spin and lies) act of political shamelessness for Toynbee to get the message.

Toynbee writes:

We now have a centrist government in Europe's most unequal country. Our government stands somewhat to the right of Angela Merkel's coalition in Germany, to the right of economic policy in France, where Nicolas Sarkozy has absorbed social democrats. Fusion politics, like fusion music and food, is one description of this strange death of the centre-left. At least in Europe there are leftwing parties still to make the public arguments: in England, due to our malfunctioning electoral system, a political generation has barely heard the case for social justice.

Yet whose fault is this? Toynbee helped cut the Labour vote at the exact time when it needed it most in the 80s, and then she urged support for it when it deserved it the least. Through her undying belief that Labour's mild policies on redistribution have been making the difference, she might well have helped destroy any chance of the exact leftwing policies she yearns for being introduced. It's come to something when the Liberal Democrats are the only even slightly appealing mainstream political party, and they're flatlining in the polls, stuck with a decent and honourable leader but one who can't make the difference up. The need for a genuine alternative has never been greater, but Polly has helped towards ensuring that any such alternative is almost impossible under our current system.

Related post:
Mr Eugenides - Polly's Viking lets her down

Labels: , , , , , ,

Share |

10/12/2007 08:31:00 PM | | | links to this post

Tuesday, October 09, 2007 

Oh, Darling...

For the first time in years, the Conservatives tonight seem to be the ones defining the current political agenda, thanks to the panic-striken, knee-jerking antics of Darling and Brown. The idea behind stealing the policies or the ideas behind them of your political opponents is that you wait a favourable amount of time so that the general public forgets who came up with them first; only then can you take the credit, even if the pipsqueak that first mooted them then pipes up and complains.

The cliché says that a week is a long time in politics, and last week arguably proved the cliché, but it's an incredibly short time in the memory. For Alistair Darling in his first pre-budget report to announce an effective doubling of the inheritance tax threshold, even if it actually isn't that and is less generous than it looks on close inspection, not just smacks of desperation, it suggests that Labour now need the Conservatives, the party with no new ideas except soaking the rich and well-off while pounding the poor and sick to lead the way before they move. It's actually worse than that: as well as considering the Conservatives' uncosted, ludicrous inheritance tax policy as worth emulating, he also directly pinches the Liberal Democrats' proposal for taxing flights rather than passengers. That might be a sound idea as it stands, but this was meant to be the Brown government's first major chance to show both how it was going to be different to the 10 years of Blairism, but also to ridicule the Tories' spending plans and their lack of intellectual rigour.

What we got instead was reasonably solid, but disappointing in the extreme. The inheritance tax change is on much firmer economic ground than the Tories' laughable idea to charge non-domiciles £25,000 to pay for the raise to a threshold of £1 million, but just looks like a reaction to their hugely popular but spineless and indefensible new tax cut. Private equity bosses face an 80% rise in tax, but seeing as that they were only paying capital gains tax of 10% to begin with, a rise to 18% is hardly going to break their stuffed piggy banks. As Robert Peston also points out, this will not just affect them but also those who start up and sell their own small businesses, who pay capital gains tax when they do. That's a tax on aspiration, whilst inheritance tax is most certainly not.

As Chris says, this really ought to put the nail in the coffin of Labour as the party of the working class. About the only real reforms or changes in this report which affect them are that Darling's been kind enough to pledge an extra £30 million to go on tax credits, which have been notoriously badly managed. Larry Elliot explains that's only £970 million less than what Darling will be blowing on raising the IHT threshold. The amount of child maintenance a family can receive without it affecting their other benefits will also rise to £40 by 2010, while £4bn will be given to help those in what the BBC describe as "poor-quality" housing spruce up their dwellings. How very kind.

If this was going to be the statement which would have launched the election that never was, then for Labour's sake if no one else's it was for the best. It would have only showed how threadbare the ideas currently are on both sides of the so-called debate. Would those in the marginals, who went all weak-kneed at the chance of passing down their wealth and property without any being grabbed by the taxman have felt the same about Darling's proposals today? Why have the monkey when you can have the organ grinder? For all Brown's undisguised glee and grinning during Darling's statement, itself a horrible, frightening sight to behold, the Tories will be the ones left feeling delighted. They might have dropped their big, vote-winning policies in order to stave off an election, but now they've had that their decision to do that vindicated by Labour's instant response. With possibly two years to go until the next election, that's more than enough time for them to mold more dog-whistles to the middle classes, when Darling could have used today to start the argument against them. Brown's cowardice only shines through again.

Labels: , , , , ,

Share |

10/09/2007 09:05:00 PM | | | links to this post

About

  • This is septicisle
profile

Links

Last posts

Archives

Email me
Syndicate this site (XML)
Powered by Blogger
and Blogger Templates